<PAGE>

                     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 1934

                      For the quarter ended March 31, 1999

          [ ] Transition report pursuant to section 13 or 15(d) of the
                       Securities and Exchange act of 1934

               For the transition period from ________ to ________

                             Commission file number
                                     0-23881
                             COWLITZ BANCORPORATION
             (Exact name of registrant as specified in its charter)

           Washington                                           91-152984
  (State or other jurisdiction of                             (IRS Employer
   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 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, 1999:    4,004,052


<PAGE>

                     TABLE OF CONTENTS

                                                                         Page
Part I
Financial Statements

     Consolidated Balance Sheets -
     March 31, 1999 and December 31, 1998                                   3

     Consolidated Statements of Income -
     Three months ended March 31, 1999 and March 31, 1998                   4

     Consolidated Statements of Cash Flows
     Three months ended March 31, 1999 and March 31, 1998                   5

     Consolidated Statements of Changes in Shareholders' Equity             6

     Notes to Consolidated Financial Statements                             7

     Management's Discussion and Analysis of Financial Condition
     And Results of Operations                                             11

Part II

Other

     Changes in Securities and Use of Proceeds                             20

     Exhibits and Reports on Form 8-K                                      20

     Signatures                                                            21


                                       2


<PAGE>



                             COWLITZ BANCORPORATION
                      CONSOLIDATED STATEMENTS OF CONDITION
                            (in thousand of dollars)

<TABLE>
<CAPTION>

                                                                                         March 31,     December 31,
                                                                                           1999            1998
                                                                                        (unaudited)

<S>                                                                                       <C>            <C>
ASSETS
Cash and due from banks ...............................................................   $ 24,688       $ 22,705
Investment securities:
   Investments available-for-sale (at fair value, cost of $5,998 and $6,994 at
     March 31, 1999 and December 31, 1998,
     respectively) ....................................................................      6,031          7,065
   Investments held-to-maturity (at amortized cost, fair value of
     $4,479 and $4,487 at March 31, 1999 and December 31, 1998,
     respectively) ....................................................................      4,465          4,465
                                                                                          --------       --------
     Total investment securities ......................................................     10,496         11,530
                                                                                          --------       --------
Loans .................................................................................    128,193        132,046
Allowance for loan losses .............................................................     (1,988)        (1,814)
                                                                                          --------       --------
   Loans, net .........................................................................    126,205        130,232
                                                                                          --------       --------
Premises and equipment, net of accumulated depreciation of $1,980
   and $1,837 at March 31, 1999 and December 31, 1998,
   respectively .......................................................................      5,926          5,859
Federal Home Loan Bank stock ..........................................................      2,925          2,869
Intangible assets, net of accumulated amortization of $516 and $432
   at March 31, 1999 and December 31, 1998, respectively ..............................      2,966          3,110
Other assets ..........................................................................      2,312          2,040
                                                                                          --------       --------
     Total assets .....................................................................   $175,518       $178,345
                                                                                          --------       --------
                                                                                          --------       --------
LIABILITIES
Deposits:
   Demand .............................................................................   $ 30,319       $ 33,062
   Savings and interest-bearing demand ................................................     50,560         47,367
   Certificates of deposit ............................................................     38,742         41,932
                                                                                          --------       --------
     Total deposits ...................................................................    119,621        122,361
Short-term borrowings .................................................................      2,475          2,275
Long-term borrowings ..................................................................     21,603         21,799
Other liabilities .....................................................................        876            990
                                                                                          --------       --------
     Total liabilities ................................................................   $144,575       $147,425
                                                                                          --------       --------
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 5,000,000 and no shares authorized as of March
   31, 1999 and December 31, 1998, respectively; no shares issued and
   outstanding at March 31, 1999 and
   December 31, 1998, respectively ....................................................   $  -           $  -
Common stock, no par value; 25,000,000 and 3,937,500 authorized
   as of March 31, 1999 and December 31, 1998, respectively;
   4,002,377 and 4,001,999 shares issued and outstanding at
   March 31, 1999 and December 31, 1998, respectively .................................     18,254         18,251
Additional paid in capital ............................................................      1,538          1,538
Retained earnings .....................................................................     11,127         11,085
Net unrealized gains on investments available-for-sale ................................         24             46
                                                                                          --------       --------
     Total shareholders' equity .......................................................     30,943         30,920
                                                                                          --------       --------
     Total liabilities and shareholders' equity .......................................   $175,518       $178,345
                                                                                          --------       --------
                                                                                          --------       --------
</TABLE>

                                       3

<PAGE>

The accompanying notes are an integral part of these statements.

                     COWLITZ BANCORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
     (in thousand of dollars, except number of shares and per share amounts)

<TABLE>
<CAPTION>

                                                                           Three months ended
                                                                              March 31,
                                                                          1999          1998
                                                                       ---------      ---------
                                                                              (unaudited)

<S>                                                                    <C>            <C>
INTEREST INCOME
Interest and fees on loans........................................     $   3,585      $   3,344
Interest on taxable investment securities.........................           215            195
Interest on non-taxable investment securities.....................             2              -
Interest from other banks.........................................           251            242
                                                                       ---------      ---------
   Total interest income..........................................         4,053          3,781
                                                                       ---------      ---------
INTEREST EXPENSE
Savings and interest-bearing demand...............................           477            402
Certificates of deposit...........................................           543            899
Short-term borrowings.............................................            31             17
Long-term borrowings..............................................           408            343
                                                                       ---------      ---------
   Total interest expense.........................................         1,459          1,661
                                                                       ---------      ---------
   Net interest income before provision for loan losses...........         2,594          2,120

PROVISION FOR LOAN LOSSES.........................................          (634)          (106)
                                                                       ---------      ---------
   Net interest income after provision for loan losses............         1,960          2,014
                                                                       ---------      ---------
NONINTEREST INCOME
   Service charges on deposit accounts............................           157            164
   Other income...................................................           114             95
   Net gains on sales of available-for-sale securities............             -              5
                                                                       ---------      ---------
     Total noninterest income.....................................           271            264
                                                                       ---------      ---------
NONINTEREST EXPENSE
   Salaries and employee benefits.................................         1,166            938
   Net occupancy and equipment expense............................           252            195
   Business tax expense...........................................            65             58
   Amortization of intangibles....................................            84             69
   Other operating expense........................................           509            359
                                                                       ---------      ---------
     Total noninterest expense....................................         2,076          1,619
                                                                       ---------      ---------
     Income before income tax expense.............................           155            659

INCOME TAX EXPENSE................................................            53            224
                                                                       ---------      ---------
     Net income...................................................     $     102      $     435
                                                                       ---------      ---------
                                                                       ---------      ---------
BASIC EARNINGS PER SHARE..........................................     $    0.03      $    0.15
DILUTED EARNINGS PER SHARE........................................     $    0.02      $    0.14

</TABLE>

The accompanying notes are an integral part of these statements.

                                       4

<PAGE>

                      COWLTIZ BANCORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
<TABLE>
<CAPTION>

                                                                           Three months ended
                                                                              March 31,
                                                                          1999          1998
                                                                       ---------      ---------
                                                                              (unaudited)

<S>                                                                      <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income.....................................................       $   102      $   435
   Adjustments to reconcile net income to net cash provided by
     Operating activities:
     Depreciation and amortization................................           227          125
     Provisions for loan losses...................................           634          106
     Net amortization of investment security premiums and accretion
       of discounts...............................................            (1)          (1)
     (Increase) in other assets...................................           (95)        (293)
     Increase (decrease) in other liabilities.....................          (114)          254
     Federal Home Loan Bank stock dividends.......................           (56)         (53)
                                                                         -------      -------
         Net cash provided by operating activities................           697          573
                                                                         -------      -------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities of investment securities
     held-to-maturity.............................................           991          694
   Proceeds from sales and maturities of investment securities
     available-for-sale...........................................         1,000        1,000
   Purchases of investment securities:
     Held-to-maturity.............................................          (990)      (1,190)
     Available-for-sale...........................................             -       (3,996)
   Net (increase) decrease in loans...............................         3,288         (223)
   Purchases of premises and equipment............................          (210)        (126)
                                                                         -------      -------
       Net cash (used in) provided by investment activities.......         4,079       (3,841)
                                                                         -------      -------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in demand, savings, and interest-bearing
     demand deposits..............................................           450        5,580
   Net increase (decrease) in certificates of deposit.............        (3,190)      (2,031)
   Dividends paid.................................................           (60)         (32)
   Net increase in short-term borrowings..........................           200          450
   Repayment of long-term borrowings..............................          (196)        (514)
   Issuance of common stock for cash, net of amount paid for
       fractional shares..........................................             3       14,997
                                                                         -------      -------
       Net cash provided by shares financing activities...........        (2,793)      18,450
                                                                         -------      -------
       Net increase (decrease) in cash and due from banks.........         1,983       15,182

CASH AND DUE FROM BANKS AT BEGINNING OF YEAR......................        22,705       23,109
                                                                         -------      -------
CASH AND DUE FROM BANKS AT END OF PERIOD..........................       $24,688      $38,291
                                                                         -------      -------
                                                                         -------      -------
</TABLE>

The accompanying notes are an integral part of these statements.

                                       5

<PAGE>

                     COWLITZ BANCORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               (in thousands of dollars, except number of shares)

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                   Additional                  Other       Total
                                                  Common Stock       Paid-in    Retained  Comprehensive Shareholders' Comprehensive
                                                Shares      Amount   Capital    Earnings      Income       Equity        Income
                                               ---------   -------  ---------   --------  ------------- ------------- -------------
<S>                                            <C>         <C>      <C>         <C>       <C>           <C>           <C>
BALANCE AT DECEMBER 31, 1997                   2,604,543     3,262     1,538       9,071          16        13,887
Comprehensive Income:
  Net income .................................         -         -         -       2,226           -         2,226       $2,226
  Net change in unrealized gains on
     investments available-for-sale, net
     of deferred taxes of $16 ................         -         -         -           -          30            30           30
                                                                                                                         ------
  Other comprehensive income, net of tax .....         -         -         -           -           -             -           30
                                                                                                                         ------
  Comprehensive Income .......................         -         -         -           -           -             -       $2,256
                                                                                                                         ------
                                                                                                                         ------
  Issuance of common stock for cash .......... 1,396,251    15,019         -           -           -        15,019
  Purchase of treasury stock .................   (50,000)     (494)        -           -           -          (494)
  Issuance of common stock for
  acquisition ................................    51,282       465         -           -           -           465
  Cash dividends paid ($.06 per share) .......         -         -         -        (212)          -          (212)
Cash paid for fractional shares ..............       (77)       (1)        -           -           -            (1)
                                               ---------   -------  ---------   --------     --------   -------------
BALANCE AT DECEMBER 31, 1998                   4,001,999   $18,251    $1,538     $11,085      $   46       $30,920
Comprehensive Income:
  Net income .................................         -         -         -         102           -           102       $  102
  Net change in unrealized gains on
     investments available-for-sale, net
     of deferred taxes of $12 ................         -         -         -           -         (22)          (22)         (22)
                                                                                                                         ------
  Other comprehensive income, net of tax .....         -         -         -           -           -             -          (22)
                                                                                                                         ------
  Comprehensive Income .......................         -         -         -           -           -             -       $   80
                                                                                                                         ------
                                                                                                                         ------
  Issuance of common stock for cash ..........       378         3         -           -           -             3
  Cash dividends paid ($.015 per share) ......         -         -         -         (60)          -           (60)
                                               ---------   -------  ---------   --------     --------   -------------

BALANCE AT MARCH 31, 1999                      4,002,377   $18,254    $1,538     $11,127      $   24       $30,943
                                               ---------   -------  ---------   --------     --------   -------------
                                               ---------   -------  ---------   --------     --------   -------------
</TABLE>

        The accompanying notes are an integral part of these statements 



                                       6

<PAGE>

                      COWLITZ BANCORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations

   Cowlitz Bancorporation (the Company) is a one-bank holding company located 
in southwest Washington. The Company's principal subsidiary, Cowlitz Bank 
(the Bank), a Washington state-chartered commercial bank, is the only 
community bank headquartered in Cowlitz County and offers commercial banking 
services primarily to small and medium-sized businesses, professionals, and 
retail customers. During the third quarter of 1998, the Company acquired 
Business Finance Corporation (BFC) of Bellevue, Washington. Business Finance 
Corporation provides asset based financing to companies throughout the 
western United States.

2. Principles of Consolidation

   The accompanying consolidated financial statements include the accounts of 
the Company and its subsidiaries. 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 generally accepted accounting principles 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, 1999 are not necessarily 
indicative of results to be anticipated for the year ending December 31, 1999.

3.  Supplemental Cash Flow Information

   For purposes of presentation in the statements of cash flows, cash and 
cash equivalents are defined as those amounts in the balance sheet caption 
"Cash and due from banks" and 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

   The preparation of financial statements in conformity with generally 
accepted accounting principles 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. Actual results could differ from those estimates.

                                       7

<PAGE>

5. Earnings Per Share

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

<TABLE>
<CAPTION>
                                                                  Weighted     Per Share
                                             Net Income          Avg Shares      Amount

                                                 For the quarter ended March 31, 1999
            <S>                                <C>                 <C>            <C>
            Basic earnings per share           $   102             4,002,343      $ .03
            Stock Options                                             93,828
            Diluted earnings per share         $   102             4,096,171      $ .02


                                                 For the quarter ended March 31, 1998

            Basic earnings per share           $   435             2,844,440      $ .15
            Stock Options                                            198,041
            Diluted earnings per share         $   435             3,042,481      $ .14
</TABLE>

   For the periods reported the Company had no reconciling items between net 
income and income available to common shareholders.

6. Recently Issued Accounting Standards

SFAS No. 133

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 
133, "Accounting for Derivative Instruments and Hedging Activities." The 
Statement establishes accounting and reporting standards requiring that 
derivative instruments (including certain derivative instruments embedded in 
other contracts) be recorded in the balance sheet as either an asset or a 
liability measured at its fair value. The Statement requires that changes in 
the derivative's fair value be recognized currently in earnings unless 
specific hedge accounting criteria are met. Special accounting for qualifying 
hedges allows a derivative's gain and losses to offset related results on the 
hedged item in the income statement, and requires that a company must 
formally document, designate, and assess the effectiveness of transactions 
that receive hedge accounting.

   SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. 
A company may also implement the Statement as of the beginning of any fiscal 
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and 
thereafter). SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must 
be applied to (a) derivative instruments and (b) certain derivative 
instruments embedded in hybrid contracts that were issued, acquired, or 
substantively modified after December 31, 1997 (and, at the company's 
election, before January 1, 1998).

   The implementation of this Statement is not expected to have a material 
impact on the Company's financial position or results of operation.

                                       8

<PAGE>

7. Comprehensive Income

    The Company has adopted Statement of Financial Accounting Standards No. 
130 "Reporting Comprehensive Income," effective January 1, 1998. This 
statement establishes standards for the reporting and display of 
comprehensive income and it's components in the financial statements. 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 for the periods ended March 31, 
1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                          Three months ended
                                                               March 31
                                                           1999         1998
                                                          -----        -----
                    <S>                                   <C>          <C>
                    Net income.........................   $ 102        $ 435
                    Net change in unrealized gain/loss
                      on available for sale securities.     (22)          (6)
                                                          -----        -----
                    Comprehensive income...............   $  80        $ 429
                                                          -----        -----
                                                          -----        -----
</TABLE>

8. Segments of an Enterprise and Related Information:

   The Company adopted Statement of Financial Accounting Standards No. 131, 
"Disclosure about Segments of an Enterprise and Related Information" as of 
January 1, 1998. This statement establishes standards for the reporting and 
display of information about operating segments in financial statements and 
related disclosures.

   The Company is principally engaged in community banking activities through 
its five Bank branches and corporate offices. The 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. In addition, beginning in 1998 with the acquisition of 
Business Finance Corporation, the Company provides asset based financing to 
companies throughout the western United States.

   The community banking and asset based financing activities are monitored 
and reported by Company management as separate operating segments. As 
permitted under the Statement, the five separate banking offices have been 
aggregated into a single reportable segment, Community Banking. The asset 
based financing operating segment does not meet the prescribed aggregation or 
materiality criteria and therefore is reported as Other in the following 
table below.

   The accounting policies for the Company's segment information provided 
below are the same as those described for the Company in the summary of 
significant accounting policies footnote included in the Company's 1998 
annual report, except that some operating expenses are not allocated to 
segments.

                                       9

<PAGE>

   Summarized financial information for the period ending March 31, 1999 
concerning the Company's reportable segments is shown in the following table. 
Prior to September 1998, the Company had only one operating segment, 
Community Banking.

<TABLE>
<CAPTION>
                                    Banking           Other         Intersegment         Consolidated
                                  ----------       --------         ------------        -------------
<S>                               <C>              <C>              <C>                 <C>
Interest income                   $    3,796       $    298         $       (41)        $       4,053
Interest expense                       1,459             41                 (41)                1,459
                                  ----------       --------         ------------        -------------
   Net interest income                 2,337            257                   -                 2,594
Provision for loan loss                  286            348                   -                   634
Noninterest income                       271              -                   -                   271
Noninterest expense                    1,867            209                   -                 2,076
                                  ----------       --------         ------------        -------------
   Income before taxes                   455           (300)                  -                   155
Provision for income taxes               155           (102)                  -                    53
                                  ----------       --------         ------------        -------------
   Net income                     $      300       $   (198)        $         -         $         102
                                  ----------       --------         ------------        -------------
                                  ----------       --------         ------------        -------------
</TABLE>


9. Reclassifications

   Certain prior year amounts have been reclassified to conform to the 
current year presentation.

                                      10

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITIONS AND RESULT OF OPERATIONS


The following Management's discussion and Analysis of Financial Conditions 
and Results of Operations includes a discussion of certain significant 
business trends and uncertainties as well as certain forward-looking 
statements and is intended to be read in conjunction with and is qualified in 
its entirety by reference to the consolidated financial statements of the 
Company and accompanying notes include elsewhere herein.

Results of Operations

   Net Income

   The Company's net income of $102,000 or $.02 per diluted share at March 
31, 1999, reflects a decrease compared to net income of $435,000 or $.14 per 
diluted share at March 31, 1998. This decrease is primarily a result of 
provisions to the allowance for loan losses in the first quarter of 1999. 
During the quarter, the Company determined that approximately $348,000 in 
receivables purchased by it Business Finance Corporation subsidiary may not 
be collectible. These receivables have been charged off and the Company has 
increased its provision for loan losses accordingly. Also contributing to the 
decrease was an increase in non-interest expense of $457,000 or 28.2% during 
the first quarter of 1999. The increase in non-interest expense is primarily 
due to an increase in salaries and benefits expense and expenses arising from 
the opening of a loan office in Vancouver, Washington. Earnings per share 
also reflect an increase in average shares outstanding after the Company's 
March 12, 1998 initial public offering.

   Net Interest Income

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

   Net interest income for the quarter ended March 31, 1999 was $2.6 million, 
which was an increase of 22.4% from $2.1 million at March 31, 1998. The 
overall tax-equivalent earning asset yield of 10.41% at March 31, 1999 
compares to 9.51% at March 31, 1998. The increase in interest income is 
primarily due to the addition of loans from Business Finance Corporation 
(BFC) in the third quarter of 1998. These loans typically yield a higher rate 
of interest than those loans generated at Cowlitz Bank (the Bank). Average 
yields earned at the Bank were approximately 9.39% during the first quarter 
of 1999 and approximately 9.42% during the corresponding quarter in 1998. The 
Bank's average yields earned have declined slightly due to lower interest 
rates on loans, as well as a decline in these assets due to market conditions 
and increased competition in its market area.

<TABLE>
<CAPTION>
                   Cowlitz Bank
                                                       Three months ended
                                                      1999              1998
                                                    -------           -------
          <S>                                       <C>               <C>
          Interest earned......................       3,617             3,747
          Average interest earning assets......     154,098           159,046
          Average yields earned................        9.39%             9.42%
</TABLE>


                                      11

<PAGE>

   The average cost of interest bearing liabilities increased slightly to 
5.16% at March 31, 1999 compared to 5.06% at March 31, 1998. Average interest 
bearing liabilities decreased $18.3 million from March 31, 1998 to March 31, 
1999. During the past twelve months the Company has not aggressively priced 
certain higher interest rate certificates of deposit, as a result 
certificates have decreased. While certificates have decreased, there has 
been an increase in Money Market and Savings deposits, as well as a slight 
increase in long and short-term borrowings that have contributed to the 
increase in the interest rate paid on interest bearing liabilities from 
quarter to quarter.

Analysis of Net Interest Income

   The following table presents information regarding yields and interest 
earning assets, expense on interest bearing liabilities, and net yields on 
interest earning assets for periods indicated on a tax equivalent basis.

<TABLE>
<CAPTION>
                                      Three Months Ended
(unaudited)                                March 31,               Increase
(in thousands of dollars)               1999         1998          (Decrease)         Change
                                     --------     ---------        ----------        ---------
<S>                                  <C>          <C>              <C>               <C>
Interest income(1).................  $  4,054     $   3,781        $      273            7.2 %
Interest expense...................     1,459         1,661              (202)         (12.2)%
                                     --------     ---------        ----------
Net interest income................  $  2,595     $   2,120        $      475           22.4 %
                                     --------     ---------        ----------

Average interest earning assets....  $155,737     $ 159,046            (3,309)           2.1 %
Average interest bearing liabilities $113,034     $ 131,359           (18,325)         (14.0)%

Average yields earned (2)..........     10.41%        9.51%                .90
Average rates paid (2).............      5.16%        5.06%                .10
Net interest spread (2)............      5.25%        4.45%                .80
Net interest margin (2)............      6.67%        5.33%               1.34
</TABLE>

(1)  Interest earned on nontaxable securities has been computed on a 34% tax
     equivalent basis.
(2)  Ratios for the three months ended March 31, 1999 and 1998 have been
     annualized.


Market Risk

   Interest rate risk and credit risks are the most significant market risks 
impacting the Company's performance. The Company relies on loan reviews, 
prudent loan underwriting standards and an adequate allowance for loan losses 
to mitigate credit risk. 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. 
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. Management has 
assessed these risks and feels that there has been no material changes since 
December 31, 1998.

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 nonperforming and 
impaired loans, evaluation of future economic trends in the Company's market 
area, and other factors relevant to the loan portfolio. See Allowance for 
Loan Losses disclosure for a more detailed discussion.

                                      12

<PAGE>

   The Company's provision for loan losses was $634,000 and $106,000 for the 
quarters ended March 31, 1999 and 1998, respectively. The provision increased 
between quarters due to the determination that approximately $348,000 in 
receivables purchased by BFC may not be collectible. These receivables have 
been charged off during the first quarter of 1999. As a result, net 
charge-offs increased to $460,000 at March 31, 1999 compared to net 
charge-offs of $118,000 at March 31, 1998. Total charge-offs were $496,000 at 
March 31, 1999 and $131,000 at March 31, 1998. Management continues to 
closely monitor the loan quality and existing relationships.

   Nonaccrual loans were $3.0 million at March 31, 1999 and $1.5 million at 
March 31, 1998. From year to year, nonaccrual loans increased primarily in 
commercial loans secured by real estate. BFC accounted for approximately 
$300,000 of the increase, reflecting the more aggressive lending mix of its 
portfolio. It is not unusual in the normal course of business for BFC to have 
loans that become more than 90 days past due and are therefore placed on 
nonaccrual status, although management does not necessarily believe that 
losses are probable on these loans. Approximately $2.0 million of the 
remaining non-accrual loans reflect well-collateralized loans primarily 
secured by real estate. Any losses on nonaccrual loans which are considered 
probable, have been estimated by management in its regular quarterly 
assessment of the allowance for loan losses as discussed in the Allowance for 
Loan Losses disclosure. The increase in the provision for loan losses each 
year is largely reflective of the increases in nonaccrual loans during the 
period and the higher level of charge-offs discussed previously. For a more 
detailed discussion see Allowance for Loan Losses disclosure.

   Other real estate owned increased $357,000 from March 31, 1998 to March 
31, 1999, as a result of the reclassification of loans from nonacrual to 
other real estate owned.

Non-Interest Income

   Non-interest income consists of the following components:

<TABLE>
<CAPTION>
                                                                  March  31,
                                                         ----------------------------
                                                         1999                    1998
                                                         ----                    ----
        <S>                                           <C>                     <C>
        Service charge on deposit accounts............$   157                 $   164
        Net gains on sales of securities..............      -                       5
        Credit Card income............................     30                      27
        Fiduciary income..............................     23                       8
        ATM income....................................     11                       9
        Safe deposit box fees.........................     29                      26
        Other miscellaneous fees and income...........     21                      25
                                                      -------                 -------
        Total non-interest income.....................$   271                 $   264
                                                      -------                 -------
                                                      -------                 -------
</TABLE>

   Non-interest income increased to $271,000 at March 31, 1999 from $264,000 
in the corresponding period in 1998, largely as a result of the increase in 
fiduciary income. Fiduciary income increased to $23,000 at March 31, 1999 
from $8,000 at March 31, 1998. The Company's trust services opened in April 
1997 and this service continues to expand.

                                      13
<PAGE>


Non-Interest Expense

   Non-interest expense consists principally of employees' salaries and 
benefits, occupancy costs, data processing and communication expenses, FDIC 
(Federal Deposit Insurance Corporation) insurance premiums, professional 
fees, and other non-interest expenses. Non-interest expenses increased 28.2% 
to $2.1 million for the quarter ended March 31, 1999 compared to $1.6 million 
for the quarter ended March 31, 1998, primarily due to increased staffing 
costs, occupancy expense and amortization of goodwill from the acquisition of 
BFC in the third quarter of 1998.

   Salaries and benefits expense of $1.2 million at March 31, 1999 represents 
an increase of $228,000 from $938,000 at March 31, 1998. At March 31, 1999, 
the Company had 110 full-time equivalent employees compared to 100 at March 
31, 1998. The increase from quarter to quarter was due to the additional 
employees as well as ordinary salary increases for existing employees 
generally ranging from three to six percent a year.

   Net occupancy expenses consist of depreciation on premises, lease costs 
and equipment, maintenance and repair expenses, utilities and related 
expenses. The Company's net occupancy expense at March 31, 1999 was $252,000 
or 29.2% higher than $195,000 at March 31, 1998. The increase in occupancy 
expense in 1999 was due primarily to leasehold improvements completed at 
branch locations after the first quarter of 1998 and at the new Vancouver 
loan office opened early in the first quarter of 1999.

   Other operating expense such as insurance, legal and accounting expenses, 
service charges, postage and other business expenses were $359,000 at March 
31, 1998 and $509,000 at March 31, 1999. The increase from quarter to quarter 
was due to the Company's continued growth and expansion.

Income Taxes

   The provision for income taxes amounts to $53,000 and $224,000 at March 
31, 1999 and 1998, respectively. The provision resulted in an effective tax 
rate of 34.2% and 34% for March 31, 1999 and 1998, respectively.

Loan Losses and Recoveries

   The allowance for loan losses represents management's estimate of probable 
losses, which exist 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 allowance necessary for specific non-performing loans and estimates 
losses inherent in other loan exposures. An important element in determining 
the adequacy of an allowance for loan losses is an analysis of loans by loan 
rating categories. The risk of a credit is evaluated by the Company's 
management at inception of the loan using an established grading system. This 
grading system currently includes ten levels of risk. Risk gradings range 
from "1" for the strongest credits to "10" for the weakest; a "10" rated loan 
would normally represent a loss. These gradings are reviewed annually or when 
indicators show that a credit may have weakened, such as operating losses, 
collateral impairment or delinquency problems.

The result is an allowance with two components:

Specific Reserves: The amount of specific reserves is determined through a 
loan-by-loan analysis of classified and nonperforming loans that considers 
expected future cash flows, the value of collateral and other factors that 
may impact the borrower's ability to pay.

                                      14

<PAGE>

General Allowance: The amount of the general allowance is based on loss 
factors assigned to the Company's loan exposures based on the internal credit 
ratings. These loss factors are determined on the basis of historical 
charge-off experience. The general allowance is composed of two categories. 
The first component is calculated based upon the loan balances classified in 
the five higher risk loan categories of "management attention", "special 
mention", "substandard", "doubtful" and "loss" on the Company's Watch List. 
Suggested regulatory loss reserve factors are then applied to each of these 
categories of classified loan balances, net of the balances of the loans 
already considered in management's determination of its specific reserves. 
The second component is calculated by applying historical loss factors to the 
outstanding loan balance less any loans that are included in the Company's 
specific or higher risk allowances discussed above. Three levels of charge 
off history are considered by management in arriving at this component of the 
general allowance. They are average five-year net charge-offs, the previous 
year's actual net charge-offs and an estimated maximum charge-off factor. 
Each of these amounts is combined with the first component of the general 
allowance yielding a range for the total general allowance. Management 
selects a general allowance somewhere within this calculated range. Factors 
considered by management in making this decision include the volume and mix 
of the existing loan portfolio, including the volume and severity of 
nonperforming loans and adversely classified credits; analysis of net 
charge-offs experienced on previously classified loans; the nature and value 
of collateral securing the loans; the trend in loan growth, including any 
rapid increase in loan volume within a relatively short period of time; 
management's subjective evaluation of general and local economic and business 
conditions affecting the collectibility of the Company's loans; the 
relationship and trend over the past several years of recoveries in relation 
to charge-offs; and available outside information of a comparable nature 
regarding the loan portfolios of other banks, including peer group banks. 
This decision also reflects management's attempt 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 and general loss components 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 and the 
general components of the allowance, management also considers the experience 
of peer institutions and 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. The related 
provision for loan losses, which is charged to income, is the amount 
necessary to adjust the allowance to the level determined through the above 
process.

Approximately $900,000 and $700,000 of the allownace for loan losses at March 
31, 1999 and December 31, 1998, respectively was allocated based on an 
estimate of the amount that was necessary to provide for potential losses 
related to specific classified and nonperforming loans (including impaired 
loans) only. Approximately $1.1 million comprised the general portion of the 
allowance at both March 31, 1999 and December 31, 1998.

Management's evaluation of the factors above resulted in allowances for loan 
losses of $2.0 million and $1.8 million at March 31, 1999 and December 31, 
1998, respectively. The allowance as a percentage of year-end total loans 
increased to 1.55% at March 31, 1999 from 1.37% at year-end 1998. The 
increase in the allowance reflects the increased level of nonaccruals and 
other specifically reserved loans.

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.

                                       15


<PAGE>

   The following table shows the Company's loan loss performance for the periods
indicated:

<TABLE>
<CAPTION>
                                                                   Quarter Ended     Year Ended
(unaudited)                                                          March 31,      December 31,
(in thousands of dollars)                                              1999             1998
                                                                   -------------    ------------
<S>                                                                  <C>              <C>
Loans outstanding at end of period................................   $ 128,193        $ 132,046
Average loans outstanding during the period.......................   $ 130,322        $ 131,495

Allowance for loan losses, beginning of period....................   $   1,814        $   1,970
Loans charged off:
   Commercial.....................................................         444              618
   Real Estate....................................................          29                -
   Consumer.......................................................          16               22
   Credit Cards...................................................           7               87
                                                                     ---------        ---------
     Total loans charged-off......................................         496              727
                                                                     ---------        ---------

Recoveries:
   Commercial.....................................................          36                3
   Real Estate....................................................           -                -
   Consumer.......................................................           -                4
   Credit Cards...................................................           -               10
                                                                     ---------        ---------
     Total recoveries.............................................          36               17
                                                                     ---------        ---------
Provision for loan losses.........................................         634              509
Adjustment incident to acquisition................................           -               45
                                                                     ---------        ---------
Allowance for loan losses, end of period..........................   $   1,988        $   1,814
                                                                     ---------        ---------
                                                                     ---------        ---------

Ratio of net loans charged-off to average loans outstanding.......        .35%              .54%
Ratio of allowance for loan losses to loans at end of period......       1.55%             1.37%
</TABLE>




Loans

   Total loans outstanding were $128.2 million and $132.0 million at March 
31, 1999 and December 31, 1998, respectively. Loan commitments were $17.1 
million at March 31, 1999 and $24.7 million at December 31, 1998.

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

<TABLE>
<CAPTION>
(unaudited)                                           March 31, 1999         December 31, 1998
(in thousands of dollars)                          Amount    Percentage     Amount    Percentage
                                                  ---------------------   ----------------------
<S>                                               <C>          <C>        <C>           <C>
Commercial .................................      $101,170      78.61%    $ 103,473      78.04%
Real estate construction....................         3,506       2.72         3,206       2.42
Real estate commercial......................         7,065       5.49         7,026       5.30
Real estate mortgage........................        12,084       9.39        13,774      10.39
Consumer and other..........................         4,875       3.79         5,063       3.82
Contracts purchased.........................             -          -            45        .03
                                                  --------     ------     ---------     ------
                                                   128,700     100.00%      132,587     100.00%
                                                               ------                   ------
                                                               ------                   ------
Deferred loan fees..........................          (507)                    (541)
                                                  --------                ---------
     Total loans............................       128,193                  132,046
Allowance for loan losses...................        (1,988)                  (1,814)
                                                  --------                ---------
     Total loans, net.......................      $126,205                $ 130,232
                                                  --------                ---------
                                                  --------                ---------
</TABLE>

                                      16


<PAGE>

   During its normal loan review procedures, the Company 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). 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 for loan losses when management 
believes after considering economic and business conditions, collection 
efforts, and collateral position, that the borrowers' financial condition is 
such that collection of the principal is not probable.

   Generally, no interest is accrued on loans when factors indicate 
collection of the interest is doubtful or when the principal or interest 
payment becomes 90 days past due, unless collection of the 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 the collection of the remaining 
recorded principal balance is considered probable.

   The Company manages the general risks inherent in the loan portfolio by 
following loan policies and underwriting practices designed to result in 
prudent lending activities. The following table presents information with 
respect to nonperforming assets:

<TABLE>
<CAPTION>
(unadited)                                                             March 31,    December 31,
(in thousands of dollars)                                              1999         1998
                                                                       ---------    ------------
<S>                                                                    <C>          <C>
Loans on nonaccrual status                                               2,974          2,737
Loans past due greater than 90 days but not on nonaccrual status            16              9
Other real estate owned                                                    678            573
Troubled debt restructuring                                                  -              -
                                                                         -----          -----
   Total nonperforming assets                                            3,668          3,319
                                                                         -----          -----
                                                                         -----          -----
Percentage of nonperforming assets to total assets                        2.09%          1.86%
</TABLE>

   At March 31,1999 nonperforming assets were $3.7 million or 2.1% of total 
assets. BFC accounted for approximately $300,000, reflecting the more 
aggressive lending mix of its portfolio. It is not unusual in the normal 
course of business for BFC to have loans that become more than 90 days past 
due and are therefore placed on nonaccrual status, although management does 
not necessarily believe that losses are probable on these loans. 
Approximately $2.0 million of the remaining non-accrual loans reflect 
well-collateralized loans primarily secured by real estate. Other real estate 
increased $357,000 from March 31, 1998 to March 31, 1999, as a result of the 
reclassification of loans from nonaccrual to 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 are customers deposits, 
loan payments, sales of assets, advances from the FHLB (Federal Home Loan 
Bank) and the use of the federal funds market. As of March 31, 1999, 
approximately $1.0 million of the securities portfolio matures within one 
year.

   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 25% of assets. 
Advances from the FHLB have terms ranging from 1 through 15 years and at 
March 31, 1999 bear interest at rates from 5.17% to 8.80%. At March 31, 1999, 
$21.5 million in advances were outstanding from the FHLB and the Company had 
additional borrowing capacity for cash advances of $21.5 million. Due to the 
acquisition of three branches and the cash on deposit with the bank from the 
initial public offering in March 1998 the need for FHLB borrowings has 
decreased. The Company may increase its percentage of borrowings from the 
FHLB in the future if circumstances warrant.

                                      17

<PAGE>

Capital

   The Company is required to maintain minimum amounts of capital to "risk 
weighted" assets, as defined by banking regulators. The Company is required 
to have Tier 1 and Total Capital ratios of 4.0% and 8.0%, respectively. At 
March 31, 1999, the Company's ratios were 22.50% and 23.76%, respectively. At 
December 31, 1998, the company's ratios were 22.21% and 23.46%, respectively. 
The ratio of average shareholders' equity to average assets was 16.33% and 
15.81% at March 31, 1999 and December 31, 1998, respectively.

Year 2000

   This section constitutes a Year 2000 readiness statement and contains 
forward-looking statements that have been prepared on the basis of the 
Company's best judgments and currently available information. These 
forward-looking statements are inherently subject to significant business, 
third party and regulatory uncertainties and contingencies, many of which are 
beyond the control of the Company. In addition, these forward-looking 
statements are based on the Company's current assessments and remediation 
plans, which are based on certain representations of third party service 
providers and are subject to change. Accordingly, there can be no assurance 
that the Company's results of operations will not be adversely affected by 
difficulties or delays in the Company's or third parties' Year 2000 readiness 
efforts. See "Risks" below for a discussion of factors that may cause such 
forward-looking statements to differ from actual results.

   The Company has an active Y2K plan and committee addressing all systems 
affected by the millennium issue. The plan includes five phases Awareness, 
Assessment, Renovation, Validation, and Implementation.

AWARENESS

   The Company's senior management participates on the committee as well as a 
representative from each critical area of the Bank. The board of directors is 
updated on the progress of the plan on a monthly basis. The awareness phase 
has been completed but will continue to be an on going effort in regards to 
educating customers and keeping abreast of all new Y2K issues. The Bank has 
implemented several awareness programs for customers and is sponsoring Year 
2000 seminars for its larger business customers.

ASSESSMENT

   Assessment of the Company's systems has been completed and all 
hardware/software as well as non-hardware/software systems have been 
identified. The committee has developed a list of products and systems that 
could be affected by the Year 2000 date change. All vendors and suppliers 
have been contacted and have been individually assessed for both their 
criticality to the operation of the Company and if they are satisfactory in 
their Year 2000 efforts.

RENOVATION AND VALIDATION

   The Company is currently in the renovation and validation phases of the 
project. All mission critical systems have been validated for Y2K compliance 
and minor systems will be completed by the end of the second quarter of 1999.

IMPLEMENTATION

   Any system found to be not in compliance with the Year 2000 date change 
has been brought to the attention of senior management and is being upgraded 
or replaced. The systems that have been identified are included in the 
Company's Year 2000 budget. A budget has been approved and the additional 
costs to address the Year 2000 issues at this time are estimated to be 
$235,000. The Year 2000 related costs incurred by the Company to date are 
approximately $196,000.

                                      18

<PAGE>

CONTINGENCY PLAN

   A contingency plan has been established that would be carried out in the 
event that the preventative measures put in place do not prove successful. 
Each area of the Company has completed a mission critical operating plan that 
would be initiated using manual processing. In the event that this plan would 
need to be implemented there would be a substantial increase in staffing and 
related expenses. This plan addresses business operations to be carried out 
assuming the telephone and electrical systems are in working order. The 
contingency plan will continue to be updated throughout 1999.

RISKS

   The Company has attempted to assess the Year 2000 readiness of its loan 
and deposit customers. If these customers were adversely affected by the Year 
2000, no assurance can be given that their ability to repay debt would not be 
affected.

   Based on its current assessments and remediation plans, the Company does 
not expect that it will suffer any material disruption of its business as a 
result of Year 2000 issues. Although the Company has no reason to believe 
that a material disruption will occur, the most likely worst case scenario 
would result from a Y2K failure in the power supply, voice and data 
transmission systems or the federal government. If such a failure were to 
occur, the Company would implement its contingency plan. In such event, it is 
likely that there would be temporary disruption of customer service and 
customer inconvenience and additional costs from the implementation of the 
contingency plan. It is not possible to quantify those costs at the present 
time. Although the Company believes its contingency plan will satisfactorily 
address these issues, there can be no assurance that the Company's 
contingency plan will function as anticipated or that the results of 
operations of the Company will not be adversely affected in the event of a 
prolonged disruption of service.

                                      19
<PAGE>

                           PART II. OTHER INFORMATION

Item 2

Changes in Securities and Use of Proceeds

   On March 12, 1998, the Company completed an initial public offering 
issuing a total of 1,380,000 shares of common stock at $12.00 per share. 
After underwriting discounts of $1.2 million and other offering expenses of 
$472,000 net proceeds were $14.9 million. Of these proceeds $1.1 million has 
been used to repay long-term debt and a subordinated note, $1.8 million was 
used to acquire BFC as described below and the remainder is being used for 
working capital. The managing underwriters were Black & Company, Inc. and 
Pacific Crest Securities, Inc.

   Effective August 31, 1998, the Company acquired Business Finance 
Corporation (BFC) of Bellevue, Washington. BFC provides factoring, leasing, 
and inventory financing services in Washington, Oregon, California, and 
Nevada. The acquisition was accounted for using the purchase method and 
included an initial issuance of common stock with a value of $465,000. A cash 
payment was made in the amount of $1.8 million, with an adjustment to be made 
based on final determination of BFC's shareholders equity. A future 
contingent issuance of common stock valued at approximately $500,000 will be 
issued if BFC achieves earnings targets for the twelve-month period following 
the acquisition.




Item 6

   (a) Exhibits. The list of exhibits is set forth on the Exhibit Index attached
       hereto.

   (b) On March 30, 1999, the Company filed form 8-K containing item 7
       (Exhibits).




                                      20

<PAGE>

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.

                                     Cowlitz Bancorporation
                                     (Registrant)



Dated:                               /s/ Charles W. Jarrett
                                     -------------------------------------
                                     Charles W. Jarrett
                                     President and Chief Operating Officer


Dated:                               /s/ Donna P. Gardner
                                     -------------------------------------
                                     Donna P. Gardner
                                     Vice-President/Secretary-Treasurer




                                      21

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.

3.1*     Restated and Amended Articles of Incorporation of the Company

3.2*     Bylaws of the Company

27       Financial Data Schedule

         *Incorporated by reference to the Company's Registration Statement on 
          Form S-1, File No. 333-44355

                                      22