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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 September 30, 2004

[ ] 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    91-1529841 
(State or other jurisdiction    (I.R.S. Employer 
of incorporation or organization)    Identification No.) 

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

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

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

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

Yes[ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value on October 31, 2004: 4,170,975 shares

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TABLE OF CONTENTS

COWLITZ BANCORPORATION AND SUBSIDIARY

TABLE OF CONTENTS

        PAGE 
Part I    FINANCIAL INFORMATION     
         
Item 1.    Financial Statements     
         
    Consolidated Statements of Condition -    3 
    September 30, 2004 and December 31, 2003     
         
    Consolidated Statements of Income -    4 
    Three and nine months ended September 30, 2004 and 2003     
         
    Consolidated Statements of Changes in Shareholders' Equity -    5 
    Year ended December 31, 2003 and nine months ended September 30, 2004     
         
    Consolidated Statements of Cash Flows -    6 
    Nine months ended September 30, 2004 and 2003     
         
    Notes to Consolidated Financial Statements    7-12 
         
Item 2.    Management's Discussion and Analysis of Financial Condition    13-22 
    And Results of Operations     
         
Item 3.    Quantitative and Qualitative Disclosures About Market Risk    22-23 
         
Item 4.    Controls and Procedures    23 
         
Part II    OTHER INFORMATION     
         
Item 1.    Legal Proceedings    23 
         
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds    23 
         
Item 3.    Defaults upon Senior Securities    23 
         
Item 4.    Submission of Matters to a Vote of Security Holders    23 
         
Item 5.    Other Information    23 
         
Item 6.    Exhibits and Reports on Form 8-K    23 
         
    Signatures    24 
         
    Certification of Chief Executive Officer and Chief Financial Officer    25-27 

Forward-Looking Statements

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

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TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements

COWLITZ BANCORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(dollars in thousands)

    September 30,    December 31, 
ASSETS    2004    2003 
Cash and cash equivalents 

$

  6,914   $  24,527  
Investment securities:         
     Available-for-sale (at fair value, cost of $58,400 and $46,658 at         
          September 30, 2004 and December 31, 2003, respectively)    58,817     47,000  
     Held-to-maturity (at amortized cost, fair value of $385 and $8,270         
          at September 30, 2004 and December 31, 2003, respectively)    385     8,144  
               Total investment securities    59,202     55,144  
 
Federal Home Loan Bank stock, at cost    1,047     1,974  
 
Loans held-for-sale    -     8,360  
 
Loans, net of deferred loan fees    186,692     163,490  
Allowance for loan losses    (3,942)    (3,968) 
     Total loans, net    182,750     159,522  
 
Cash surrender value of bank-owned life insurance    8,502     8,170  
Premises and equipment, net of accumulated depreciation of $4,625 and         
     $4,350 at September 30, 2004 and December 31, 2003, respectively    3,961     4,171  
Goodwill, net of impairment adjustments and accumulated amoritzation         
     of $1,987 at September 30, 2004 and December 31, 2003    852     852  
Intangible assets, net of accumulated amortization of $1,933 and         
     $1,734 at September 30, 2004 and December 31, 2003, respectively    37     236  
Accrued interest receivable and other assets    5,174     5,843  
TOTAL ASSETS 

$

  268,439   $  268,799  
 
LIABILITIES         
Deposits:         
     Non-interest-bearing demand 

$

  55,172   $  60,572  
     Savings and interest-bearing demand    78,014     86,375  
     Certificates of deposit    88,030     79,533  
               Total deposits    221,216     226,480  
 
Federal funds purchased    9,300     225  
Federal Home Loan Bank notes payable    518     5,653  
Other borrowings    39     2,739  
Accrued interest payable and other liabilities    2,258     1,900  
TOTAL LIABILITIES    233,331     236,997  
 
SHAREHOLDERS' EQUITY         
Preferred stock, no par value; 5,000,000 shares authorized; no shares         
     issued and outstanding at September 30, 2004 and December 31, 2003    -     -  
Common stock, no par value; 25,000,000 shares authorized; with 4,165,975         
     and 3,898,652 shares issued and outstanding at September 30, 2004 and         
     December 31, 2003, respectively    19,453     17,957  
Additional paid-in capital    2,017     1,609  
Retained earnings    13,364     12,011  
Accumulated other comprehensive income, net of taxes    274     225  
TOTAL SHAREHOLDERS' EQUITY    35,108     31,802  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 

$

  268,439   $  268,799  

See accompanying notes

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COWLITZ BANCORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)

     

Three Months Ended 

    Nine Months Ended 
   

September 30, 

    September 30, 
   

2004 

2003 

    2004  2003 
INTEREST INCOME                       
     Interest and fees on loans  $  3,207     $  3,439     $  9,335     $  11,451  
     Interest on taxable investment securities    501       205       1,420       659  
     Interest on non-taxable investment securities    96       27       261       36  
     Other interest and dividend income    19       115       111       450  
 
 
 
 
          Total interest income    3,823       3,786       11,127       12,596  
 
 
 
 
 
INTEREST EXPENSE                       
     Savings and interest-bearing demand    202       276       592       915  
     Certificates of deposit    490       682       1,469       2,546  
     Federal funds purchased    12       3       17       15  
     Federal Home Loan Bank notes payable    10       107       40       361  
     Other borrowings    13       57       99       172  
 
 
 
 
          Total interest expense    727       1,125       2,217       4,009  
 
 
 
 
   
          Net interest income before provision (benefit) for loan losses    3,096       2,661       8,910       8,587  
 
PROVISION (BENEFIT) FOR LOAN LOSSES    73       (36)      160       530  
 
 
 
 
          Net interest income after provision (benefit) for loan losses    3,023       2,697       8,750       8,057  

 
 
 
 
 
NON-INTEREST INCOME                       
     Service charges on deposit accounts    174       211       535       695  
     (Losses) gains on loans sold    (17)      1,110       122       4,106  
     Mortgage brokerage fees    73       336       327       1,830  
     Escrow fees    -       244       -       905  
     Credit card income    159       175       436       471  
     Fiduciary income    104       70       302       240  
     Increase in cash surrender value of bank-owned life insurance    96       74       332       74  
     Net gains on sale of available for sale securities    8       -       8       -  
     Net gains (losses) on sale of repossessed assets    6       (87)      (9)      (50) 
Other income          32       42       112       108  
 
 
 
 
          Total non-interest income    635       2,175       2,165       8,379  
 
 
 
 
 
NON-INTEREST EXPENSE                       
     Salaries and employee benefits    1,499       2,208       4,732       7,297  
     Net occupancy and equipment expense    353       566       1,165       1,778  
     Professional fees    187             528       1,275  
     Business taxes    69       79       173       310  
     FDIC insurance assessment    8       119       215       390  
     Credit card expense    154       163       420       469  
     Data processing and communications    73       126       227       363  
     Loan expense    -       116       27       469  
     Postage and freight    55       104       176       335  
     Travel and education    45       65       125       202  
     Stationery and supplies    29       54       96       169  
     Temporary help    53       45       59       338  
     Amortization of intangible assets    66       66       199       199  
     Expenses relating to other real estate owned    29       46       71       147  
     Other expenses    350       319       947       788  
 
 
 
 
          Total non-interest expense    2,970       4,405       9,160       14,529  
 
 
 
 
          Income before provision for income taxes    688       467       1,755       1,907  
INCOME TAX PROVISION    171       147       402       659  
 
 
 
 
NET INCOME  $  517     $  320     $  1,353     $  1,248  
 
 
 
 
 
BASIC EARNINGS PER SHARE OF COMMON STOCK  $  0.13     $  0.08     $  0.34     $  0.32  
 
 
 
 
DILUTED EARNINGS PER SHARE OF COMMON STOCK  $  0.13     $  0.08     $  0.34     $  0.31  
 
 
 
 
WEIGHTED-AVERAGE SHARES OUTSTANDING - BASIC    4,004,149       3,872,052       3,941,902       3,842,438  
 
 
 
 
WEIGHTED-AVERAGE SHARES OUTSTANDING - DILUTED    4,097,244       4,037,631       4,037,722       3,967,981  
 
 
 
 

See accompanying notes

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TABLE OF CONTENTS

COWLITZ BANCORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(dollars in thousands)

                    Accumulated             
            Additional        Other        Total     
    Common stock    Paid-in    Retained    Comprehensive  &nbs