8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported):  January 25, 2008 

Cowlitz Bancorporation
(Exact Name of Registrant as specified in its charter)

Washington	0-23881	91 - 529841
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

927 Commerce Ave.
Longview, Washington 98632
Address of Principal Executive Office and Zip Code

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

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 2.02 Results of Operations and Financial Condition.

     On January 25, 2008, Cowlitz Bancorporation issued a press release announcing financial results for the fourth quarter and fiscal year 2007. A copy of the press release is attached as Exhibit 99.1.

Item 9.01	Financial Statements and Exhibits.
	(a)	Not applicable.
	(b)	Not applicable.
	(c)	Exhibits.
		99.1 Press Release

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 hereunto duly authorized.

			COWLITZ BANCORPORATION
			(Registrant)
Date:	January 25, 2008	By:	/s/ Gerald L. Brickey
			Gerald L. Brickey, Chief Financial Officer

EX-99.1

EXHIBIT 99.1

For Immediate Release 

January 25, 2008 

Company Press Release 

SOURCE: CONTACTS: Cowlitz Bancorporation Richard J. Fitzpatrick, Chief Executive Officer
Gerald L. Brickey, Chief Financial Officer
(360) 423-9800

Cowlitz Bancorporation Reports Fourth Quarter and Full Year 2007 Results

LONGVIEW, Wash., Jan. 25, 2008/PRNewswire/ --

Flash Results
Cowlitz Bancorporation (NASDAQ: CWLZ)
(Numbers in Thousands, Except Per Share Data)

					Three Months Ended				Twelve Months Ended
		December 31,					September 30,		December 31,
		2007			2006		2007		2007		2006
Net Interest Income	$	5,390		$	6,256	$	5,673	$	22,355	$	22,375
Net Income (Loss)	($	3,141	)	$	1,245	$	1,276	$	86	$	4,759
Diluted EPS	($	0.62	)	$	0.24	$	0.25	$	0.02	$	0.93
Total Period End Loans								$	397,325	$	358,390
Total Period End Deposits								$	441,179	$	399,450

Cowlitz Bancorporation (NASDAQ: CWLZ - news) today reported a net loss of $3,141,000 or ($0.62) per diluted share for the fourth quarter of 2007, compared with net income of $1,245,000, or $0.24 per diluted share, during the same period of 2006. Net income for the year was $86,000, or $0.02, compared with $4,759,000, or $0.93 per diluted share, for the year 2006.

The Company recorded a provision for credit losses of $6.8 million in the fourth quarter of 2007. This fourth quarter provision equated to $0.85 per diluted share (after-tax) compared with $0.09 per share provision expense for the third quarter of 2007 and $0.15 per share for the fourth quarter of 2006. The Company recorded net loan charge-offs of $6.9 million in the current quarter, primarily related to residential land acquisition and development loans. As of December 31, 2007, the Company’s capital level remained significantly above the minimum to be classified as “well-capitalized” under regulatory requirements.

Richard J. Fitzpatrick, President and CEO of Cowlitz Bancorporation and its wholly-owned subsidiary Cowlitz Bank, commented, “The real estate market in the Pacific Northwest has recently shown signs of deterioration, particularly in the Portland, Oregon and Vancouver, Washington markets. Based on the recent weaknesses evident in our local real estate markets, we have taken a conservative approach to evaluating the underlying collateral of our entire loan portfolio.”

Total loans were $397.3 million at December 31, 2007, compared with $358.4 million a year ago and $398.8 million at September 30, 2007. Average loans in the fourth quarter of 2007 increased 8% on an annualized basis over average loans in the third quarter of 2007. Average loans for 2007 were 20% higher than average loans in 2006.

At December 31, 2007, non-performing loans as a percentage of total loans were 2.72%, compared with 3.06% at September 30, 2007 and 0.32% at December 31, 2006. Subsequent to year-end, on January 25, 2008, one non-accrual loan totaling $2.5 million was sold without additional loss, reducing non-performing loans as a percentage of total loans to 2.10% on a pro forma basis at December 31, 2007. The Company had two large non-accrual loans totaling $11.9 million at September 30, 2007. One loan was partially charged-off and remained on non-accrual status, and a $2.5 million portion

of the second loan was foreclosed on and moved to other real estate owned after recording a $250,000 charge-off. The new loans placed on nonaccrual in the fourth quarter of 2007 primarily related to two real estate collateral dependent loans totaling $4.0 million after charge-offs to bring carrying values in line with current appraisals and management’s assessment of collectible amounts.

Non-performing assets totaled $13.1 million at December 31, 2007 compared with $12.2 million at September 30, 2007 and $1.8 million at the end of 2006. As a percentage of total assets, non-performing assets were 2.54% at year-end 2007, compared with 2.37% at September 30, 2007 and 0.38% at year-end 2006.

“We are closely watching our construction and land development loans and recently performed an extensive review of the entire commercial real estate portfolio. Our management team has a significant amount of experience dealing with this sector of our business through all business cycles,“ stated Ernie D. Ballou, Vice President and Chief Credit Administrator. At December 31, 2007, approximately 24% of the Company’s total loans were construction and land development loans. The Company did not have any past due loans in its one-to-four family residential portfolio at the end of 2007. Mr. Ballou went on to say, “We have experienced a significant decline in property values within certain of our lending markets. We believe the actions taken will adequately address our current credit concerns and expect no significant amount of additional losses from the existing non-accrual loans.”

The Company’s net interest margin was 4.74% in the fourth quarter of 2007, compared with 5.97% in the same quarter last year and 5.01% in the third quarter of 2007. The decline in the fourth quarter 2007 net interest margin related to several factors, including recent Federal Reserve rate cuts, competitiveloan and deposit pricing, interest reversals on new nonaccrual loans, as well as a higher level of non-accrual loans. The Company estimates the reduction in the fourth quarter 2007 net interest margin due to interest income reversals of $158,000 was 14 basis points. The average rate paid on interest bearing liabilities in the fourth quarter of 2007 decreased ten basis points to 4.21%, compared with 4.31% in the third quarter of 2007 and 3.90% in the fourth quarter of 2006.

The provision for credit losses was $6,800,000 in the fourth quarter of 2007, compared with $1,150,000 in the fourth quarter of 2006 and $725,000 in the third quarter of 2007. Net charge-offs of $6,910,000 and $6,635,000 were recorded for the three and twelve-month periods ended December 31, 2007, respectively, compared with net charge-offs of $1,808,000 and $2,483,000 for the three and twelve-month periods of 2006. The allowance for loan losses was 1.46% as a percentage of loans outstanding at December 31, 2007, compared with 1.25% at December 31, 2006 and 1.46% at September 30, 2007. Management believes the allowance for loan losses is at an appropriate level based upon their evaluation and analysis of portfolio credit quality and prevailing economic conditions. The allowance for loan losses represented 54% of non-performing loans at year-end 2007.

Non-interest income in the fourth quarter of 2007 was $737,000, compared with $806,000 in the fourth quarter of 2006. The fourth quarter of 2007 included losses on securities transactions of $265,000. Excluding securities transactions, non-interest income increased $196,000 in the fourth quarter of 2007 over the comparable 2006 quarter. The increase was primarily related to revenues from the Company’s international trade department.

Non-interest expenses in the fourth quarter of 2007 were $4.3 million, up slightly from the fourth quarter of 2006. Included in the fourth quarter 2007 and 2006 results were non-cash credits of $173,000 and $120,000, respectively, for the ineffective portion of the Company’s cash flow hedges. Excluding the amounts related to hedge ineffectiveness from the fourth quarter of 2006 and 2007 and third quarter of 2007, expenses were higher in the fourth quarter of 2007 primarily due to costs associated with recruiting additional lenders, FDIC deposit insurance assessments incurred as carry forward assessment credits were fully utilized, and the establishment of a valuation reserve on interest receivable related to a nonperforming USDA guaranteed loan acquired in the fourth quarter of 2005 with Asia-Europe-Americas Bank.

The Company’s hedges provide a floor or fixed rate yields ranging from 7.50% to 7.76% on $125 million of variable rate loans compared with the current prime rate of 6.50% . To the extent the Company’s hedges are ineffective in hedging interest income cash flows from variable rate loans, the ineffectiveness is recognized in the income statement and included in non-interest expenses. The fair value of the Company’s interest rate contracts increased substantially as of the end of the fourth quarter of 2007 to $4.3 million. The Company has recorded cumulative unrealized gains, net of taxes, of $2.4 million as other comprehensive income included in stockholders’ equity as of December 31, 2007.

Cowlitz Bancorporation is the holding company of Cowlitz Bank, which was established in 1977. In addition to its four branches in Cowlitz County Washington, Cowlitz Bank’s divisions include Bay Bank located in Bellevue, Seattle, and Vancouver, Washington;Portland and Wilsonville, Oregon; and Bay Mortgage in southwest Washington. Cowlitz specializes in commercial and international banking services for Northwest businesses, professionals, and retail customers, and offers trust services in southwest Washington and Portland, Oregon.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in this press release as a result of risk factors identified in the Company's Form 10-K for the year ended December 31, 2007, and other filings with the SEC. We make forward-looking statements in this release related to the anticipated amount of losses on non-accrual loans, adequacy of our loan loss reserve and the timing of resolution of non-accrual loans.

INCOME STATEMENT				Quarter Ending								Twelve Months Ending
	December 31,			December 31,				September 30,				December 31,		December 31,
		2007			2006			2007				2007			2006
Interest income	$	9,070		$	9,080		$	9,364			$	36,226		$	31,638
Interest expense		3,680			2,824			3,691				13,871			9,263
Net interest income		5,390			6,256			5,673				22,355			22,375
Provision for credit losses		6,800			1,150				725			7,800			2,640
Net interest income after provision
for credit losses		(1,410	)		5,106			4,948				14,555			19,735
Non-interest income
Service charges on deposit accounts		175			177				171			683			695
Fiduciary income		163			175				165			692			602
International trade fees		219			42				146			644			127
Increase in cash surrender value of bank
owned life insurance		155			128				142			570			516
Net loss on sale of investment securities		(265	)		-				-			(265	)		(348	)
Other income		290			284				286			1,138			1,233
Total non-interest income		737			806				910			3,462			2,825
Non-interest expense
Salaries and employee benefits		2,182			2,251			2,391				9,488			8,567
Net occupancy and equipment expense		596			528				592			2,280			2,110
Data and communication		241			264				248			959			877
Professional fees		354			450				454			1,579			1,131
Foreclosed asset expense		25			-				-			447			(36	)
Equity in limited partnerships (gains)losses		47			92				(77	)		56			195
Interest rate contracts valuation adjustment		(173	)		(120	)			(245	)		215			(5	)
Other expenses		1,071			796				829			3,697			3,260
Total non-interest expense		4,343			4,261			4,192				18,721			16,099
Income (loss) before provision for income taxes		(5,016	)		1,651			1,666				(704	)		6,461
Provision (benefit) for income taxes		(1,875	)		406				390			(790	)		1,702
Net income (loss)	$	(3,141	)	$	1,245		$	1,276			$	86		$	4,759
Earnings (loss) per share:
Basic	$	(0.62	)	$	0.25			$	0.26		$	0.02		$	0.98
Diluted	$	(0.62	)	$	0.24			$	0.25		$	0.02		$	0.93
Weighted average shares outstanding:
Basic		5,048,102			4,885,247			4,995,073				4,972,498			4,845,892
Diluted		5,176,350			5,141,564			5,161,696				5,175,526			5,098,334
Shares outstanding at period end		5,054,437			4,889,323			5,047,325				5,054,437			4,889,323
Efficiency ratio (1)		70.9	%		60.3	%		63.7		%		72.5	%		63.9	%
Number of full-time equivalent employees												146			135
(1) Non-interest expense divided by net interest income plus non-interest income.

					Quarter Ending										Twelve Months Ending
		December 31,					December 31,				September 30,			December 31,			December 31,
SELECTED AVERAGES			2007					2006			2007				2007		2006
Average loans	$		400,979			$		357,696		$	393,133		$		383,477	$	319,577
Average interest-earning assets			462,604					424,505			459,347				446,337		384,251
Total average assets			507,745					465,119			502,056				489,141		422,133
Average deposits			429,657					394,604			428,724				415,301		354,958
Average interest-bearing liabilities			346,464					289,777			340,080				329,344		266,891
Average equity			56,757					50,533			54,457				53,932		47,642
		December 31,				December 31,					September 30,
SELECTED BALANCE SHEET ACCOUNTS			2007					2006			2007
Total assets	$		514,431			$		468,395		$	517,026
Securities available for sale			51,578					57,688			57,345
Loans (bank regulatory classification):
Real estate secured:
One to four family residential			41,599					39,238			42,599
Multifamily			9,937					11,311			11,248
Construction			97,447					98,278			95,566
Commercial real estate			146,348					127,026			148,111
Total real estate			295,331					275,853			297,524
Commercial and industrial			99,264					80,164			98,532
Consumer and other			3,924					3,451			3,705
			398,519					359,468			399,761
Deferred loan fees			(1,194	)				(1,078	)		(920	)
Loans, net of deferred loan fees			397,325					358,390			398,841
Goodwill and other intangibles			1,833					1,938			1,859
Deposits:
Non-interest-bearing demand			91,662					107,943			107,361
Savings and interest-bearing demand			122,450					95,861			121,990
Certificates of deposits			227,067					195,646			212,436
Total deposits			441,179					399,450			441,787
Borrowings			1,179					738			1,152
Junior subordinated debentures			12,372					12,372			12,372
Stockholders' equity			55,791					50,725			56,856
Book value per share	$		11.04			$		10.37		$	11.26
Tangible book value per share	$		10.68			$		9.98		$	10.90
Tier 1 leverage capital ratio (Q4-07 estimated)			13.49	%				13.14	%		13.30	%

				Quarter Ending							Twelve Months Ending
	December 31,			December 31,			September 30,			December 31,			December 31,
RATIOS ANNUALIZED		2007			2006		2007				2007		2006
Return on average assets		-2.45	%		1.05	%		1.01	%		0.02	%	1.13	%
Return on average equity		-21.96	%		9.63	%		9.30	%		0.16	%	9.99	%
Return on average tangible equity		-22.70	%		10.01	%		9.63	%		0.17	%	10.34	%
Average equity/average assets		11.18	%		10.86	%		10.85	%		11.03	%	11.29	%
Yield on interest-earning assets (TE)		7.90	%		8.63	%		8.20	%		8.23	%	8.31	%
Rate on interest-bearing liabilities		4.21	%		3.90	%		4.31	%		4.21	%	3.47	%
Net interest spread (TE)		3.69	%		4.73	%		3.89	%		4.02	%	4.84	%
Net interest margin (TE)		4.74	%		5.97	%		5.01	%		5.12	%	5.90	%
TE - Tax exempt interest income has been adjusted to a taxable equivalent basis using a 34% tax rate.
		Quarter Ending						Twelve Months Ending
	December 31,			December 31,			December 31,			December 31,
ALLOWANCE FOR CREDIT LOSSES		2007			2006		2007				2006
Balance at beginning of period	$	6,100		$	5,483		$	4,825		$	4,668
Provision for credit losses		6,800			1,150			7,800			2,640
Recoveries		41			15			435			308
Charge-offs		(6,951	)		(1,823	)		(7,070	)		(2,791	)
Balance at end of period	$	5,990		$	4,825		$	5,990		$	4,825
Components
Allowance for loan losses							$	5,801		$	4,481
Liability for unfunded credit commitments								189			344
Total allowance for credit losses							$	5,990		$	4,825
Allowance for loan losses/total loans								1.46	%		1.25	%
Allowance for credit losses/total loans								1.51	%		1.35	%
Allowance for loan losses/non-performing loans								54	%		394	%
Allowance for credit losses/non-performing loans								55	%		424	%
				December 31,			December 31,			September 30,
NON-PERFORMING ASSETS					2007		2006				2007
Non-accrual loans				$	10,827		$	1,137		$	12,220
Other real estate owned and other foreclosed assets					2,250			622			14
Total non-performing assets				$	13,077		$	1,759		$	12,234
Total non-performing loans to total loans					2.72	%		0.32	%		3.06	%
Total non-performing assets/total assets					2.54	%		0.38	%		2.37	%