<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


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

               For the quarterly period ended June 30, 1999

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


             For the transition period from __________ to __________

             Commission file number 000-23277


                               CITIZENS BANCORP/OR
             (Exact name of registrant as specified in its charter)


               Oregon                                91-1841688
       (State of Incorporation)          (I.R.S. Employer Identification Number)


                           275 Southwest Third Street
                             Corvallis, Oregon 97339
                    (Address of principal executive offices)


                                 (541) 752-5161
              (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.

    4,124,091 shares as of July 30, 1999, no par value.

<PAGE>   2

                                CITIZENS BANCORP
                                    FORM 10-Q
                                  JUNE 30,1999
                                      INDEX


<TABLE>
<CAPTION>
                                                                                              Page
PART I.                                                                                     Reference
<S>                                                                                         <C>
ITEM 1. - FINANCIAL INFORMATION - UNAUDITED

Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998                           1

Consolidated Statements of Income and Comprehensive Income for the three
   months and six months ended June 30, 1999 and 1998                                           2

Consolidated Statements of Changes in Shareholders' Equity                                      3

Consolidated Statements of Cash Flows for six months ended June 30, 1999 and 1998               4

Notes to Consolidated Financial Statements                                                      5

ITEM 2. - Management's Discussion and Analysis of Financial Condition
   and Results of Operations                                                                    6

ITEM 3. - Quantitative and Qualitative Disclosure about Market Risk                            12

PART II. - OTHER INFORMATION

ITEM 1. - Legal Proceedings                                                                    13

ITEM 2. - Changes in Securities                                                                13

ITEM 3. - Defaults Upon Senior Securities                                                      13

ITEM 4. - Submission of Matters to a Vote of Security Holders                                  13

ITEM 5. - Other Information                                                                    14

ITEM 6. - Exhibits and Reports on Form 8-K                                                     14

SIGNATURES                                                                                     15
</TABLE>

<PAGE>   3

                          PART I FINANCIAL INFORMATION

ITEM 1
CITIZENS BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)


<TABLE>
<CAPTION>
                                                                     JUNE 30, 1999   DECEMBER 31, 1998
<S>                                                                  <C>             <C>
ASSETS
     Cash and due from banks                                           $   9,637         $  12,771
     Interest bearing deposits in banks                                   23,132            23,406
     Securities available for sale                                        59,873            50,855
     Securities held to maturity                                          10,666             9,733

     Loans, net of unearned discount and prepaid fees                    133,916           132,126
     Allowance for credit losses                                          (1,447)           (1,419)
                                                                       ---------         ---------
     NET LOANS                                                         $ 132,469         $ 130,707

     Premises and equipment                                                4,716             3,435
     Accrued interest receivable                                           2,282             1,853
     Other assets                                                          1,531             1,218

     TOTAL ASSETS                                                      $ 244,306         $ 233,978
                                                                       =========         =========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
     Deposits:
       Demand                                                          $  33,744         $  42,025
       Savings and interest bearing demand                                94,538            81,015
       Time                                                               63,625            65,195
                                                                       ---------         ---------
     TOTAL DEPOSITS                                                    $ 191,907         $ 188,235

     Repurchase agreements                                                18,124            16,299
     Other borrowings                                                      9,369             4,556
     Accrued interest and other liabilities                                  576             2,303

     TOTAL LIABILITIES                                                 $ 219,976         $ 211,393
                                                                       ---------         ---------

SHAREHOLDERS' EQUITY
     Common stock (no par value); authorized 10,000,000 shares;
       issued and outstanding:  1999 - 4,124,091 shares;
       1998 - 3,891,137 shares                                            19,868            16,069
     Retained Earnings                                                     4,770             6,271
     Accumulated other comprehensive income                                 (308)              245
     TOTAL SHAREHOLDERS' EQUITY                                        $  24,330         $  22,585
                                                                       ---------         ---------

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $ 244,306         $ 233,978
                                                                       =========         =========
</TABLE>


See accompanying notes



                                                                               1
<PAGE>   4

CITIZENS BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousand, except per share amounts)


<TABLE>
<CAPTION>
                                                                  SIX MONTHS ENDED               THREE MONTHS ENDED
                                                                      JUNE 30,                       JUNE 30,
                                                               1999            1998            1999            1998
<S>                                                         <C>             <C>             <C>             <C>
INTEREST INCOME:
  Loans                                                          6,198           6,535           3,125           3,380
  Interest on deposits and federal funds sold                      487             401             247             145
  Securities available for sale                                  1,410           1,118             719             568
  Securities held to maturity                                      232             239             140             120
                                                            ----------      ----------      ----------      ----------
  TOTAL INTEREST INCOME                                          8,327           8,293           4,231           4,213

INTEREST EXPENSE:
  Deposits                                                       2,574           2,493           1,278           1,269
  Borrowed funds                                                   150              48              78              32
  Repurchase agreements                                            234             269             120             129
                                                            ----------      ----------      ----------      ----------
  TOTAL INTEREST EXPENSE                                         2,958           2,810           1,476           1,430

  NET INTEREST INCOME                                            5,369           5,483           2,755           2,783

PROVISIONS FOR CREDIT LOSSES                                      (132)           (104)            (66)            (59)

  NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES          5,237           5,379           2,689           2,724

NON-INTEREST INCOME:
  Service charges on deposit accounts                              537             431             264             227
Origination fees and gains on loans sold                            25              29              25              12
Gain(loss) on sales of securities available for sale                 0              20               0               1
Other                                                              615             612             318             365
                                                            ----------      ----------      ----------      ----------
  TOTAL NON-INTEREST INCOME                                      1,177           1,092             607             605

  NON-INTEREST EXPENSE:
  Salaries and employee benefits                                 2,067           1,834           1,012             911
  Occupancy and equipment                                          519             481             271             252
  Other                                                          1,265           1,197             669             631
                                                            ----------      ----------      ----------      ----------
  TOTAL NON-INTEREST EXPENSE                                     3,851           3,512           1,952           1,794

  INCOME BEFORE INCOME TAXES                                     2,563           2,959           1,344           1,535
                                                            ----------      ----------      ----------      ----------

  INCOME TAXES                                                    (873)         (1,058)           (448)           (575)

  NET INCOME                                                     1,690           1,901             896             960
                                                            ==========      ==========      ==========      ==========

Per share data:
Basic earnings per share                                    $     0.41      $     0.47      $     0.22      $     0.23
Weighted average number of common
  shares outstanding                                         4,122,829       4,085,693       4,124,091       4,120,676
</TABLE>



                                                                               2
<PAGE>   5

CITIZENS BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in Thousands)

<TABLE>
<CAPTION>
                                                               SIX MONTHS ENDED JUNE 30, 1999 AND 1998

                                              NUMBER OF                                       ACCUMULATED
                                               COMMON          COMMON                            OTHER
                                               SHARES          STOCK          RETAINED       COMPREHENSIVE
                                             OUTSTANDING       AMOUNT         EARNINGS          INCOME            TOTAL
<S>                                          <C>             <C>             <C>             <C>               <C>
BALANCE, AT DECEMBER 31, 1997                 1,922,321      $   15,517      $    3,832       $       62       $   19,411

COMPREHENSIVE INCOME:

Net Income                                           --              --           1,901               --            1,901

Other comprehensive income, net of tax:
  Unrealized gain on securities, net of
  reclassification adjustment                        --              --              --              (14)             (14)

COMPREHENSIVE INCOME                                 --              --           1,901              (14)           1,887

Issuance of common stock                         23,247             552              --               --              552

2 for 1 stock split (April 21, 1998)          1,945,569              --              --               --               --
                                             ----------------------------------------------------------------------------

  BALANCE, AT JUNE 30, 1998                   3,891,137      $   16,069      $    5,733       $      (14)      $   21,850

BALANCE, AT DECEMBER 31, 1998                 3,891,137      $   16,069      $    6,271       $      245       $   22,585

COMPREHENSIVE INCOME:

Net Income                                           --              --           1,690               --            1,690

Other comprehensive income, net of tax:
  Unrealized gain on securities, net of
  reclassification adjustment                        --              --              --             (553)            (553)

COMPREHENSIVE INCOME                                 --              --           1,690             (553)           1,137

Issuance of common stock                         36,569             607              --               --              607

5% stock dividend (June 1, 1999)                196,385           3,192          (3,191)              --               --
                                             ----------------------------------------------------------------------------

  BALANCE, AT JUNE 30, 1999                  $4,124,091      $   19,868      $    4,770       $     (308)      $   24,330
</TABLE>



                                                                               3
<PAGE>   6
CITIZENS BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)


<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED
                                                                                   JUNE 31,
                                                                             1999           1998
<S>                                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                               $  1,690       $  1,901
  Adjustments to reconcile net income to net
    cash provided by operating activities:
     Provision for credit losses                                                132            104
     Depreciation and amortization                                              550            215
     Stock dividends received                                                   (26)           (24)
     Increase in accrued interest receivable                                   (429)          (121)
     Decrease in accrued interest payable                                       (34)            (6)
     Other                                                                     (534)          (135)
                                                                           -----------------------
  NET CASH PROVIDED BY OPERATING ACTIVITIES                                $  1,349       $  1,934

CASH FLOWS FROM INVESTING ACTIVITIES
  Net decrease in interest bearing deposits in banks                            274            685
  Net decrease in federal funds sold                                              0          1,800
  Proceeds from maturities of available for sale securities                  17,630          1,000
  Proceeds from sales of available for sale securities                            0         11,520
  Proceeds from maturities of securities held to maturity                       100          2,974
  Purchases of securities available for sale                                (27,579)       (15,126)
  Purchases of securities held to maturity                                   (1,048)        (1,770)
  Increase in loans made to customers, net of principal collections          (1,872)       (13,266)
  Purchases of premises and equipment and other                              (1,505)            95
                                                                           -----------------------
  NET CASH PROVIDED BY INVESTING ACTIVITIES                                $(14,000)      $(12,088)

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase decrease in deposits                                           3,672          6,351
  Net increase decrease in repurchase agreements and other borrowings         6,638          3,766
  Payment of dividends                                                         (793)          (755)
                                                                           -----------------------
  NET CASH USED IN FINANCING ACTIVITIES                                    $  9,517       $  9,362

  NET DECREASE IN CASH AND DUE FROM BANKS                                    (3,134)          (792)

CASH AND DUE FROM BANKS
  Beginning of period                                                        12,771          9,268

  END OF PERIOD                                                            $  9,637       $  8,476
                                                                           =======================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Interest paid                                                               2,993          2,816
  Income taxes paid                                                             840          1,100
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Fair value adjustment of available for sale, net of tax                      (553)           (14)
  Issuance of common stock through dividend reinvestment plan                   607            553
  Stock Dividend                                                              3,191              0
</TABLE>



                                                                               4
<PAGE>   7

CITIZENS BANCORP
Notes to Consolidated Financial Statements (unaudited)

1.  BASIS OF PRESENTATION

      The interim condensed consolidated financial statements include the
      accounts of Citizens Bancorp ("Bancorp"), a bank holding company and its
      wholly owned subsidiary, Citizens Bank ("Bank") after elimination of
      intercompany transactions and balances. Substantially all activity of
      Citizens Bancorp is conducted through its subsidiary bank.

      The interim financial statements are unaudited but have been prepared in
      accordance with generally accepted accounting principles for interim
      condensed financial statements. Accordingly, the condensed interim
      financial statements do not include all of the information and footnotes
      required by generally accepted financial statements. In the opinion of
      management, all adjustments consisting of normal recurring accruals
      considered necessary for a fair presentation of the interim periods
      included herein have been made.

      The interim condensed consolidated financial statements should be read in
      conjunction with the December 31, 1998 consolidated financial statements,
      including notes there to, included in Bancorp's 1998 Annual Report to
      shareholders.

2.  USE OF ESTIMATES IN THE PREPARATION OF FINANCIALS

      The preparation of financial statements, in conformity with general
      accounting principles, requires management to make 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 the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.

3.  SHAREHOLDERS EQUITY AND NET INCOME PER COMMON SHARE

      The Board of Directors declared a $.36 per share dividend on December 15,
      1998, to Bancorp shareholders of record on that date payable on January
      11, 1999. Through the Dividend Reinvestment Plan (DRIP) 36,569 shares were
      purchased at a price of $16.60 per share. The DRIP resulted in an increase
      of shares outstanding from 3,891,137 to 3,927,706.

      At the April 20, 1999 shareholders meeting the shareholders approved an
      increase of 5,000,000 shares bringing the total authorized shares to
      10,000,000 of which 4,124,091 are issued and outstanding.

      The Board of Directors declared a 5% stock dividend to Bancorp
      shareholders of record on May 10, 1999, payable June 1, 1999. The dividend
      resulted in an increase of shares outstanding from 3,927,706 to 4,124,091,
      an increase of 196,385 shares. The per share basis for the dividend was
      $16.25 resulting in a transfer from retained earnings of $3,191,000 to
      common stock.

      All per share amounts have been restated to retroactively reflect stock
      dividends, stock purchased and stock splits previously reported.

4.  CONTINGENCIES

      Unfunded loan commitments totaled $18.6 million as of June 30, 1999 and
      $19.0 million as of December 31, 1998.



                                                                               5
<PAGE>   8

ITEM 2

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

           Certain statements in this report may constitute forward-looking
statements within the definition of the "safe-harbor" provisions of the Private
Securities Reform Act of 1995. Such forward-looking statements are based on
reasonable assumptions by the Company's management within its current knowledge
of the Company's business and operations. These forward-looking statements are
subject to significant uncertainties which could cause actual results to differ
materially from those set forth in such statements. Forward-looking statements
can be identified by words such as "believe," "estimate," "anticipate,"
"expect," "intend," "will," may," "should," or other similar phrases or words.
Readers are cautioned not to place undue reliance on forward-looking statements.
The Company does not intend to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
the report or to reflect the occurrence of unanticipated events other than in
its periodic filings with the SEC.

OVERVIEW

Citizens Bancorp ("Bancorp"), an Oregon corporation, is the parent corporation
and holding company of Citizens Bank ("the Bank"), which is its sole subsidiary.
The Bank is an Oregon State-chartered banking corporation headquartered in
Corvallis, Oregon. The Bank was incorporated in 1957, Bancorp in 1996.

The Bank recently opened two new full service branches located in the
communities of Albany, Oregon and McMinnville, Oregon.

The new West Albany branch is the second branch in Albany for the Bank. The new
branch opened February 1999 in a newly constructed building of approximately
4,000 square feet on leased land. The land lease is for a term of fifty years.
The manager for the new West Albany branch was the Bank's assistant manager at
its East Albany branch for three years. He has 17 years of lending experience
and has lived in the Albany community for many years.

The new McMinnville branch opened April 1999 in a temporary modular building
while a permanent facility is being constructed. The modular building is owned
by the Bank and will be used for future branch expansion projects or sold. The
McMinnville branch building is the same design as the new West Albany branch
with minor modifications to fit the property, saving the Bank costs relative to
plans and design. The Bank purchased the land for the branch, which is in a
prime location in the downtown area of McMinnville. The McMinnville branch
manager has over 25 years experience in the banking industry with long term ties
to the community.

Both Albany and McMinnville are fast growing markets for small to medium size
businesses. The Bank specializes in loans to small and medium sized businesses
and is well positioned to meet the needs for business loans in these
communities. The Bank's strategic focus is relationship banking. Management
anticipates substantial opportunity for both deposit and loan growth for these
new branches.

The Bank believes that expansion into these markets will enhance shareholder
value, contribute to its goal of strong financial performance, and provide
superior financial and customer service to these communities.

The Bank is in the final stages of installing a local and wide area network
("LAN/WAN") throughout its branch's and departments. An August 31, 1999
completion date is anticipated. Management believes that the system will enhance
productivity, efficiency, customer service, and communication as well as its
franchise value. The LAN/WAN will be the building block for future technological
enhancements and customer products.

Bancorp reported net income of $1,690,000, or $.41 per share for the six months
ending June 30, 1999, compared to net income of $1,901,000, or $.47 per share
for the same period in 1998. The net decrease is attributable to a decrease in
interest income from loans due to lower overall interest rates on loans and an
increase in expenses related to the opening of two new branches, improvements to
the technology infrastructure, and expenses related to Y2K readiness.



                                                                               6
<PAGE>   9

LOAN PORTFOLIO

The composition of the loan portfolio was as follows (in thousands):

<TABLE>
<CAPTION>
                                                   June 30, 1999   December 31, 1998
                                                   -------------   -----------------
<S>                                                <C>             <C>
Commercial                                           $  24,343        $  26,234
Agriculture                                             13,854           12,402
Real Estate
   Construction                                          9,001        $   7,900
   1-4 Family                                           30,588           31,390
   Other                                                51,603           50,421
Consumer Loans                                           5,118            4,393

Less:  unearned income and deferred fees                  (591)            (614)

TOTAL LOANS                                          $ 133,916        $ 132,126

Less:  allowance for credit losses                      (1,447)          (1,419)

                                                     ---------        ---------
NET LOANS                                            $ 132,469        $ 130,707
                                                     =========        =========
</TABLE>


Transactions in the allowance for credit losses were as follows for the six
months ended June 30, 1999:

<TABLE>
<CAPTION>
                                                          1999             1998
                                                         ------           ------
<S>                                                      <C>              <C>
Balance at beginning of period                           $1,419           $1,201
Provision charged to operations                             132              104
Loans recovered                                               1                0
Loans charged off                                           105               11
                                                         ======           ======
                                                         $1,447           $1,294
                                                         ======           ======
</TABLE>

It is the policy of the Bank to place loans on nonaccrual after they become 90
days past due unless waived by management when collectability is deemed eminent.
The Bank may place loans that are not contractually past due or that are deemed
fully collateralized on nonaccrual status as a management tool to actively
oversee specific loans.

Loans on nonaccrual status as of June 30, 1999 and December 31, 1998 were
approximately $223,000 and $173,000 respectively. Loans past due 90 days or more
on which the Bank continued to accrue interest were approximately $1,167,000 at
June 30, 1999 and $447,000 at December 31, 1998. Of the $1,167,000, $854,000 is
to one commercial borrower that the Bank is closely monitoring. A portion of the
loan is guaranteed and the balance collateralized with inventory, accounts
receivable and real estate. The Bank anticipates a loss on a portion of the loan
to be charged against the allowance for loan losses. The loss amount will not be
determined until the collateral has been valued. There were no loans with
modified terms as of June 30, 1999 and December 31, 1998.



                                                                               7
<PAGE>   10

INVESTMENT SECURITIES

The amortized cost and estimated book value of the investment securities held by
the Bank, including unrealized gains and losses, at June 30, 1999 and December
31, 1998, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                       Estimated       Unrealized
                                                      Amortized          Fair            Gains
June 30, 1999                                           Cost             Value        (Losses), net
                                                      ---------        ---------      -------------
<S>                                                   <C>              <C>            <C>
AVAILABLE FOR SALE
U.S. Treasury Securities
   (Including securities of government agencies
   and corporations)                                   $ 59,625        $ 51,158         $   (467)
Other                                                       715             715                0
                                                       --------        --------         --------
                                                       $ 60,340        $ 59,873         $   (467)
</TABLE>

<TABLE>
<CAPTION>
                                                                       Estimated       Unrealized
                                                      Amortized          Fair            Gains
June 30, 1999                                           Cost             Value        (Losses), net
                                                      ---------        ---------      -------------
<S>                                                   <C>              <C>            <C>
HELD TO MATURITY
U.S. Treasury Securities
   (Including securities of government agencies
   and corporations)                                   $  2,005        $  2,010         $      5
Obligations of State and Political Subdivisions           8,661           8,557             (104)
                                                       --------        --------         --------
                                                       $ 10,666        $ 10,567         $    (99)
</TABLE>

<TABLE>
<CAPTION>
                                                                       Estimated       Unrealized
                                                      Amortized          Fair            Gains
December 31, 1998                                       Cost             Value        (Losses), net
                                                      ---------        ---------      -------------
<S>                                                   <C>              <C>            <C>
AVAILABLE FOR SALE
U.S. Treasury Securities
   (Including securities of government agencies
   and corporations)                                   $ 49,816        $ 50,198        $    382
Other                                                       657             657               0
                                                       --------        --------        --------
                                                       $ 50,473        $ 50,855        $    382
HELD TO MATURITY
U.S. Treasury Securities
(Including securities of government agencies
and corporations)                                      $  2,014        $  2,036        $     22
Obligations of State and Political Subdivisions           7,719           7,821             102
                                                       --------        --------        --------
                                                       $  9,733        $  9,857        $    124
</TABLE>

MATERIAL CHANGES IN FINANCIAL CONDITION

Changes in the balance sheet for the six months ended June 30, 1999 include an
increase in total assets funded by deposit growth.

At June 30, 1999 total assets increased 4.41% or approximately $10.3 million
over total assets at December 31, 1998. Major components of the change in total
assets were:

     -    $1.3 million increase in premises and fixed assets

     -    $1.8 million increase in net loans

     -    $10 million increase in investments

     -    $3.4 million decrease in cash and cash equivalents

The increase in loans was primarily due to loan demand as a result of favorable
economic conditions, increased business development by the Bank's loan officers,
marketing of the Bank's personalized loan services and loans booked at the new
branches in West Albany and McMinnville. Net loans increased from $130.7 million
at December 31, 1998 to $132.4 million for the six-month period ending June 30,
1999. An increase of $1.8 million or 1.35 percent.



                                                                               8
<PAGE>   11

The increase in investments was a result of management's decision to place
excess funds into the investment portfolio. The timing of the maturities are
determined by using the Bank's asset/liability model. The Bank increased its
investments in tax-exempt municipal bonds, US Treasuries, and US Government
Agencies.

At June 30, 1999 and December 31, 1998 the Bank kept its liquid funds in an
interest bearing demand account held at the Federal Home Loan Bank (FHLB) due to
a more favorable interest rate. The majority of the Bank's liquid funds are held
in its interest bearing account at the FHLB. The balance at the FHLB at June 30,
1999 was $23.1 million. This account balance can fluctuate widely on a day to
day basis.

The Bank experienced a net increase in total deposits to $191.9 million at June
30, 1999 from $188.2 million at December 31, 1998 which represents an increase
of $3.7 million or 1.95 percent. The net increase in total deposits was the
result of an overall increase in the number of account relationships and
increases in the balances in demand and interest bearing demand accounts. The
increase in new account relationships is a result of the Bank's business
development activities. Average total deposits for six months ending June 30,
1999 were $186.0 million compared to $169.3 million for the year ending December
31, 1998.

Additionally, the Bank reclassified a portion of its demand deposits under
regulatory guidelines to money market accounts for reserve purposes. This
represents a decrease in demand deposits from $42.0 million at December 31, 1998
to $33.7 million at June 30, 1999. This decrease is reflected in the increase in
savings and interest bearing demand from $81.0 at December 31, 1998 to $94.5 at
June 30, 1999, an increase of $13.5 million.

Long-term borrowings from the Federal Home Loan Bank were utilized to fund and
match large long-term commercial loans. Net long-term borrowings increased by
$3.0 million for the period ending June 30, 1999 as compared to year-end
December 31, 1998.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Company reported net income of $1,690,000 or $.41 per share, for the six
months ended June 30, 1999, compared to net income of approximately $1,901,000,
or $.47 per share for the same period in 1998. This represents a decrease in net
income of $211,000 or 11.1 percent. The net decrease was attributable to a
decrease in interest income from loans, expenses relative to the opening of the
new West Albany Branch in February 1999 and the new McMinnville Branch in April
1999, the installation of a local and wide area computer network, and expenses
related to Y2K readiness.

Net income for the quarter ended June 30, 1999 was approximately $896,000 or
$.22 per share compared to net income of approximately $960,000 or $.23 per
share as compared to the same quarter in 1998.

Total interest income increased approximately $34,000 for the six months ended
June 30, 1999 as compared to the same 1998 period. This increase was primarily
due to increases in interest income on securities available for sale due to
volume increases.

Net interest income decreased $114,000 or 2.1 percent for the six months ending
June 30, 1999. Net interest income decreased for the quarter ending June 30,
1999 approximately $28,000 or 1.0% as compared to the same quarter in 1998. The
net decrease during this six-month period resulted from decreases in interest
income and an increase in interest expense. The decrease in interest income is
primarily from overall lower interest rates on loans compared to the same period
in 1998. The increase in interest expense is primarily due to growth in deposits
and repurchase agreements.

Non-interest income increased approximately $85,000 for the six months ended
June 30, 1999 as compared to the same six-month period in 1998. For the quarter
ending June 30, 1999 non-interest income had an increase of $2,000 as compared
to the same quarter in 1998. These increases are attributable to an increase in
service charge income as a result of deposit growth, service charge increases,
and increases in the volume of bankcard services over last year for the same
period.

Salaries and employee benefits increased approximately $233,000 for the
six-month period ending June 30, 1999 compared to the same six-month period in
1998. These increases were primarily due to routine



                                                                               9
<PAGE>   12

adjustments in officer and staff salaries, staff increases due to the new West
Albany and McMinnville Branch's, and technical support staff.

Other non-interest expense excluding salaries and employee benefits increased
approximately $106,000 for the six months ended June 30, 1999 as compared to the
same six-month period in 1998. This increase was primarily due to increases in
expense relative to growth of the merchant bankcard and debit card products, an
increase in depreciation expense for the new branch buildings, furniture and
equipment, and the computer network.

CREDIT LOSS PROVISION

The Bank maintains an allowance for credit losses on loans that occur from time
to time as an incidental part of the business of banking. Loans are charged
against this allowance for credit losses which is adjusted periodically to
reflect changing loan volumes, risk potential in the portfolio and general
economic conditions. Additions to the allowance for credit losses are made
through a charge against income.

During the first six months ended June 30, 1999 the Bank funded the allowance
for credit losses $132,000 from operations and $104,000 for the same six month
period during 1998. The increase in the provision for credit losses was incurred
to match the increased loan growth. The Bank experienced $105,000 in credit
losses for the six months ended June 30, 1999 and $11,000 in credit losses for
the same period ended June 30, 1998. Historically, the Bank's loan charge-off
levels have been very low compared to its peers. The $11,000 in credit losses
for the 6 months ending June 30, 1998 was exceptionally low. Although the
year-over-year increase to $105,000 is large in percentage terms, management has
no present reason to believe the increase is significant. Management attributes
part of the increase to what would be expected as a result of growth in the
Bank's loan portfolio. In addition, more than half of the increase is
attributable to the charge-off of one particular real estate loan. The Bank's
management will continue to monitor and analyze charge-off levels closely.
Management's assessment of the allowance for credit losses includes various
factors such as current delinquent and non-performing loans, historical analysis
of industry credit loss experience, knowledge of the present and anticipated
economic future of its market area and loan grades. Management believes that the
allowance for credit losses at June 30, 1999 of $1,447,000 or 1.08% of total
loans is adequate.

YEAR 2000 ISSUES

Bancorp first became aware of the Year 2000 (Y2K) problem through a combination
of industry contacts and the Federal Financial Institutions Examination Council
(FFIEC) statement "The Effect of Year 2000 on Computer Systems" issued in June
1996. The problem, as it is commonly defined, arose out of a shortage of disk
space in the early 1960's and 1970's. Instead of storing dates as four digits
(1997), they were shortened to two digits (97). However, when the clock rolls
over to 2000, many systems will think "00" is 1900, rather than 2000. Hardware
or software that runs on a time schedule or involves calculations based on dates
can be seriously affected. Without correction, the expanded date formats of the
new millennium will cause many operating systems to produce incorrect data or
cause them to fail completely.

Bancorp recognizes this problem as one of more than just a
technological/mechanical risk. We see the Y2K problem representing a regulatory
and ongoing business operations challenge not only to our business but to those
that we interact with as well.

The Y2K challenge is a particular problem for financial institutions, since many
financial transactions, such as interest accruals and payments, are date
sensitive. It also may affect the operations of third parties with whom Bancorp
and its subsidiary Citizens Bank (collectively, the "Company") do business,
including the Company's vendors, suppliers, utility companies, and customers.

The Company is committed to addressing these Y2K challenges in a prompt and
responsible manner. The Company's year 2000 readiness plan ("Y2K Plan") follows
the five-step approach outlined by the FFIEC of Awareness, Assessment,
Renovation, Validation, and Implementation in mitigating this risk on all
fronts. The Company has substantially completed the awareness, assessment, and
testing phases, although appropriate



                                                                              10
<PAGE>   13

follow-up activities are continuing to occur. Validation has taken place after
each piece of testing was completed and renovation done on an "as needed" basis.

The Company has assigned primary responsibility for the Y2K project to its Chief
Operating Officer. The Company has also formed a Y2K committee, consisting of
appropriate representatives from its critical operational areas. In addition,
the Company regularly reports to its Board of Directors in order to assist them
in overseeing the Company's Y2K Readiness.

During the Assessment phase of our Y2K preparation, an individual analysis of
each hardware, software and time sensitive environmental application used by the
Company was completed. This assessment included a risk evaluation, which
measured the criticality of the application, a rating of confidence of the
Company to achieve a ready status, and a determination of the level of control
the Company has in effecting change in the readiness process. The designation
"Mission Critical", meaning those systems that should they fail would have a
significant adverse impact on the Company's operations and financial condition
as well as those of its customers, and "Non Mission Critical", meaning those
system which are less essential to functionality of the Company, were then
assigned to each application.

The Company has also requested and received documentation of readiness from the
vendor of each application. In addition, a primary solution for on site
readiness of each application as used was selected and a testing approach was
established. An individual contingency plan was then written for each
application should testing fail or functionality be effected after the date
change.

Well in advance of all federally mandated time frames, the Company has
internally established and completed each phase within the following tables:

<TABLE>
<S>                                                              <C>
         Mission Critical testing completed                      12/31/98
         Mission Critical process validation completed            3/31/99
         Mission Critical remediation as necessary completed      3/31/99
         Non-Mission Critical testing complete                    5/31/99
         Non-Mission Critical process validation complete         6/30/99
         Non-Mission Critical remediation as necessary complete   6/30/99
</TABLE>

The Company established a budget for extraordinary expenses related to Y2K of
approximately $300,000. The budget includes an estimation of both real costs and
lost opportunities relative to investments and loans. The Company incurred
approximately $6,000 in expenses in 1998. Approximately $42,000 has been
incurred year to date 1999. The Company expects the majority of the remaining
budget to be income lost on overnight invested federal funds as a result of an
increase in vault cash.

The Company has further developed a Y2K Business Resumption Contingency Plan.
This addresses the resumption of business by core business process. This plan is
separate from but related to the Company's testing and contingency plan. In
addition to outlining backup plans for each core business process, this plan
also speaks to the Company's plan for liquidity and communication outreach to
its customers.

The potential risk involved with issues brought about by the advent of Y2K are
extensive and could be serious in nature. The possible interruption of business
operations for the Company, its customers, and vendors has the potential to
impact financial condition, liquidity, and create a material loss of revenue.
Based on the Company's extensive investment of resources, both human and
financial, in preparing for the issues surrounding Y2K and the highly regulated
nature of the business, management anticipates that the Company will be well
prepared to avoid any significant detrimental effects. Since the Company has
drawn specific contingency plans for each application it uses that could be
impacted by Y2K, the worst case scenario is believed to stem from the potential
of environmental Y2K failures, such as power or telecommunications, the
preparation for which are generally out of the Company's control. The Company
continues to monitor the progress of these entities toward Y2K readiness and
believes those utilities to be Y2K ready to deliver service without
interruption. The Company also anticipates the possible scenario of several
borrowing customers experiencing short term Y2K cash flow problems and a pre-Y2K
increase in cash demand by all customers. If the Company has borrowers that
experience Y2K cash flow problems, they will be dealt with in the same routine
manner by which normal cash



                                                                              11
<PAGE>   14

flow interruptions experienced by borrowers are addressed. Any increase in cash
demand will be funded by the Company's normal currency ordering procedures
funded by deposits held at the Federal Reserve Bank and investments maturing in
1999. The Company believes it has sufficient liquidity to cover anticipated
withdrawals. In summary, the Company believes it will be Y2K ready by its
internally established timelines which are well ahead of the actual century date
change and will have sufficient contingency plans in place to maintain a
satisfactory level of business operations.

LIQUIDITY AND CAPITAL RESOURCES

Bancorp's subsidiary, the Bank, has adopted policies to maintain a relatively
liquid position to enable it to respond to changes in the Bank's financial
environment. Generally, the Bank's major sources of liquidity are customer
deposits, sales and maturities of securities, the use of borrowing lines with
correspondent banks including Federal Home Loan bank borrowings, loan repayments
and net cash provided by operating activities.

The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first six months of
1999. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income which is adjusted for
non-cash items and increases or decreases in cash due to certain changes in
assets and liabilities. Investing activities consisted primarily of both
proceeds from and purchases of securities, and the net growth in loans.
Financing activities present the cash flows associated with the Bank's deposit
accounts.

Management believes that the Bank's existing sources of liquidity will enable
the Bank to fund its requirements in the normal course of business.

As of June 30, 1999, shareholders' equity totaled $24,330,000 as compared to
$22,585,000 at December 31, 1998, an increase of 7.73%. This increase in equity
was primarily due to the Company's net income.

At the 1999 Annual Meeting of Shareholders, a majority of Bancorp shareholders
approved an Incentive Stock Option Plan authorizing Bancorp to issue incentive
compensation in the form of stock options, and a Stock Bonus Plan authorizing
Bancorp to issue incentive compensation in the form of stock bonuses.

The total number of shares of Bancorp's common stock that may be issued upon the
exercise of all options granted under the Incentive Stock Option Plan may not
exceed in the aggregate four percent (4%) of Bancorp's issued and outstanding
shares of common stock. As of July 30, 1999 Bancorp's issued and outstanding
shares totaled 4,124,091, so the maximum number of shares issuable under the
Incentive Stock Option Plan was 164,963 on that date. As of July 30, 1999 no
options had been granted or shares issued under this Plan.

The total number of shares of Bancorp's common stock that may be issued under
the Stock Bonus Plan may not exceed in the aggregate one percent (1%) of
Bancorp's issued and outstanding shares of common stock. As of July 30, 1999
Bancorp's issued and outstanding shares totaled 4,124,091, so the maximum number
of shares issuable under the Stock Bonus Plan was 41,241 on that date. As of
July 30, 1999 no stock had been issued under this Plan.

Capital ratios for the Company were as follows as of the dates indicated:

<TABLE>
<CAPTION>
                                                 Adequately            Well
                                                 Capitalized       Capitalized                        Bancorp
                                                  Standards         Standards          June 30, 1999           December 31, 1998
<S>                                              <C>               <C>                 <C>                     <C>
Tier 1 Leverage Ratio                                4%                 5%                 10.35%                     9.79%
Tier 1 Risk Based Capital Ratio                      4%                 6%                 17.01%                    15.53%
Total Risk Based Capital Ratio                       8%                10%                 18.02%                    16.53%
</TABLE>


ITEM 3.  QUANTITATIVE & QUALITATIVE ANALYSIS ABOUT MARKET RISK

No material changes have occurred in market risk since reported on December 31,
1998.



                                                                              12
<PAGE>   15

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

            None

ITEM 2.  CHANGES IN SECURITIES

            None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

            None

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         (a)   April 20, 1999, Annual Meeting

         (b)   Need not be completed

         (c)   The following matters were voted upon at the Annual Meeting of
               Shareholders on April 20, 1999

               (1)  The re-election of three (3) Directors for terms expiring in
                    2002 or until their successors have been elected and
                    qualified.


<TABLE>
<S>                                                               <C>
                    Director:

                    Rosetta C. Venell
                       Votes cast for:                        2,777,334
                       Votes cast against:                           79
                       Votes withheld:                           42,866
                       Abstain:                                  51,109

                    Scott A. Fewel
                       Votes cast for:                        2,764,098
                       Votes cast against:                       13,314
                       Votes withheld:                           42,866
                       Abstain:                                  51,109

                    Duane L. Sorensen
                       Votes cast for:                        2,777,051
                       Votes cast against:                          361
                       Votes withheld:                           42,866
                       Abstain:                                  51,109
</TABLE>

                    Directors continuing in office are Gene N. Thompson (term
                    expires 2000), Jock Gibson (term expires 2000), James E.
                    Richards (term expires 2000), John Truax (term expires
                    2001), and William V. Humphreys (term expires 2001).

               (2)  At the 1999 Annual Meeting a majority of Bancorp
                    shareholders approved an amendment to Article II, Section
                    (1) of the Articles of Incorporation of Bancorp increasing
                    the authorized shares of its common stock from 5,000,000 to
                    10,000,000. Approval required a simple majority vote. Of the
                    3,927,706 issued and outstanding shares entitled to be voted
                    on the matter as of the record date of March 1, 1999,
                    2,807,698 were voted in favor, and 63,689 were voted against
                    (including abstentions of 4,686).



                                                                              13
<PAGE>   16

                        Prior to the approval of the amendment, Article II,
                        Section (1) provided:

                             "The Corporation is authorized to issue 5,000,000
                        shares of Common Stock."

                        Following approval of the amendment, Article II, Section
                        (1) provides:

                             "The Corporation is authorized to issue 10,000,000
                             shares of Common Stock."

                        Bancorp was incorporated on September 18, 1996, the date
                        of filing of its Articles of Incorporation with the
                        Oregon Secretary of State. The amendment described above
                        is the only amendment made to Bancorp's Articles of
                        Incorporation since September 18, 1996. Articles of
                        Amendment reflecting this amendment were filed with the
                        Oregon Secretary of State on May 13, 1999. A complete
                        copy of the Articles of Incorporation, as amended, is
                        attached hereto as Exhibit 3(i).

                  (3)   At the 1999 Annual Meeting a majority of Bancorp
                        shareholders approved an Incentive Stock Option Plan
                        authorizing Bancorp to issue incentive compensation in
                        the form of stock options. Approval required a simple
                        majority vote. Of the 3,927,706 issued and outstanding
                        shares entitled to be voted on the matter as of the
                        record date of March 1, 1999, 2,668,192 were voted in
                        favor and 203,196 were voted against (including
                        abstentions of 8,761). A complete copy of the Incentive
                        Stock Option Plan as approved by shareholders is
                        attached in Exhibit 99.1 to Bancorp's Form S-8 filed
                        with the Securities and Exchange Commission on June 23,
                        1999, and is incorporated herein by this reference.

                  (4)   At the 1999 Annual Meeting a majority of Bancorp
                        shareholders approved a Stock Bonus Plan authorizing
                        Bancorp to issue incentive compensation in the form of
                        stock bonuses. Approval required a simple majority vote.
                        Of the 3,927,706 issued and outstanding shares entitled
                        to be voted on the matter as of the record date of March
                        1, 1999, 2,649,058 were voted in favor and 222,330 were
                        voted against (including abstentions of 11,847). A
                        complete copy of the Stock Bonus Plan as approved by
                        shareholders is attached as Exhibit 99.2 to Bancorp's
                        Form S-8 filed with the Securities and Exchange
                        Commission on June 23, 1999, and is incorporated herein
                        by this reference.

             (d)  None

ITEM 5.      OTHER INFORMATION

                  None

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (a)  Exhibits

                  The following exhibits are filed as part of this report.

                  3(i)  Amended Articles of Incorporation

                  27.0  Financial Data Schedule for the six months ended June
                        30, 1999.

                  99.1  Citizens Bancorp Incentive Stock Option Plan
                        (incorporated by reference.)

                  99.2  Citizens Bancorp Stock Bonus Plan (incorporated by
                        reference.)

             (b)  Reports on Form 8-K

                  None



                                                                              14
<PAGE>   17

                                   SIGNATURES

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

          Date:  August 4, 1999                    /s/ William V. Humphreys
                                                   -----------------------------
                                              By:  William V. Humphreys
                                                   President and
                                                   Chief Executive Officer

          Date:  August 4, 1999                    /s/ Lark E. Wysham
                                                   -----------------------------
                                              By:  Lark E. Wysham
                                                   Senior Vice President and
                                                   Chief Financial Officer



                                                                              15