##### Table of Contents



FORM 10-Q

UNITED STATES
FEDERAL RESERVE BOARD

Washington, D.C. 20551


(Mark one)

|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- |  | ---------------------------------------------------------------------------------------

| |  |                                              
| |  | ---------------------------------------------
| |  | For the quarterly period ended March 31, 2003

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

| |  |                                                           
| |  | ----------------------------------------------------------
| |  | For the transition period from
                         to

OREGON PACIFIC BANCORP

(Exact name of small business issuer as specified in its charter)


|                                                                     |  |                                               
|-------------------------------------------------------------------- |  | ----------------------------------------------
|Oregon(State or other jurisdiction of
incorporation or organization) |  | 71-0918151(I.R.S. Employer
Identification No.)

1355 Highway 101
Florence, Oregon 97439(Address of principal executive offices)

(541) 997-7121(Issuers telephone number)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the 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 [  ]

The number of shares outstanding of the issuers Common Stock, no par
value, as of April 30, 2003, was 2,140,353.

1



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TABLE OF CONTENTS



|                              |                                                                                               |                                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|Part 1. Financial Information
|                              | Item 1.Financial statements                                                                  
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS                               
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitive and Qualitive Disclosures about Market Risk                               
|                              | Item 4. Controls and Procedures                                                              
|PART 2. OTHER INFORMATION    
|SIGNATURES                   
|CERTIFICATIONS               
|EXHIBIT 99.1                 
|EXHIBIT 99.2                 



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##### Table of Contents



OREGON PACIFIC BANCORP

INDEX

|         |                                                                      |                                                            |       |      
|-------- | -------------------------------------------------------------------- | ---------------------------------------------------------- | ----- | -----
|Part I.  | Financial Information                                                |                                                            |      
|         | Item 1.                                                              | Financial statements                                       |       |      
|         |                                                                      | Consolidated balance sheets                                |       | 3    
|         |                                                                      | Consolidated statements of income and comprehensive income |       | 4-5  
|         |                                                                      | Consolidated statements of changes in stockholders equity |       | 6    
|         |                                                                      | Consolidated statements of cash flows                      |       | 7-8  
|         |                                                                      | Notes to consolidated financial statements                 |       | 9-11 
|         | Item 2.                                                              | Managements Discussion and Analysis or Plan of Operation  |       | 11-15
|         | Item 3.                                                              | Quantitive and Qualitive Disclosures about Market Risk     |       | 16   
|         | Item 4.                                                              | Controls and Procedures                                    |       | 16-17
|Part II. | Other Information                                                    |                                                            | 17   
|         | Signatures                                                           |                                                            | 18   
|         | Certification of Chief Executive Officer and Chief Financial Officer |                                                            | 19-20

2



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##### Table of Contents






PART 1.     FINANCIAL INFORMATION




Item 1.     Financial statements

OREGON PACIFIC BANCORP
CONSOLIDATED BALANCE SHEETS




|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |            |            |             | 
|----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------- | ------------------------------------------ | ---------- | ---------- | ----------- | ------------ | ---------- | ---------- | ----------- | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            | Unaudited  |             | Audited     
|                                                            |                                                                                                                                                                    |                                 |                                            |            | MARCH 31,  |             | DECEMBER 31,
|                                                            |                                                                                                                                                                    |                                 |                                            |            | 2003       |             | 2002        
|                                                            |                                                                                                                                                                    |                                 |                                            |           
|ASSETS                                                      |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|Cash and due from banks                                     |                                                                                                                                                                    | $                               | 3,164,911                                  |            |            | $           | 3,886,203    |           
|Interest-bearing deposits in banks                          |                                                                                                                                                                    |                                 | 8,467,436                                  |            |            |             | 8,078,510    |           
|Available-for-sale securities, at fair value                |                                                                                                                                                                    |                                 | 14,362,413                                 |            |            |             | 13,913,137   |           
|Restricted equity securities                                |                                                                                                                                                                    |                                 | 843,900                                    |            |            |             | 831,750      |           
|Loans held for sale                                         |                                                                                                                                                                    |                                 | 3,657,129                                  |            |            |             | 5,327,661    |           
|Loans, net of allowance for loan
losses and unearned income |                                                                                                                                                                    |                                 | 76,113,293                                 |            |            |             | 70,988,652   |           
|Premises & equipment, net                                   |                                                                                                                                                                    |                                 | 2,815,749                                  |            |            |             | 2,726,595    |           
|Other real estate owned                                     |                                                                                                                                                                    |                                 | 10,259                                     |            |            |             | 117,494      |           
|Accrued interest and other assets                           |                                                                                                                                                                    |                                 | 1,494,122                                  |            |            |             | 1,149,886    |           
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            |                                                                                                                                                                    |                                 | Total assets                               |            | $          | 110,929,212 |              |            | $          | 107,019,888 | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|LIABILITIES AND STOCKHOLDERS EQUITY                        |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|Deposits                                                    |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            | Demand deposits                                                                                                                                                    |                                 | $                                          | 17,500,491 |            |             | $            | 18,512,436 |           
|                                                            | Interest-bearing demand deposits                                                                                                                                   |                                 |                                            | 39,130,297 |            |             |              | 35,996,332 |           
|                                                            | Savings deposits                                                                                                                                                   |                                 |                                            | 13,041,509 |            |             |              | 12,750,616 |           
|                                                            | Time certificate accounts:                                                                                                                                         |                                 |                                            |            |            |             |              |            |           
|                                                            |                                                                                                                                                                    | $100,000 or more                |                                            |            | 7,843,659  |             |              |            | 7,629,913  |            
|                                                            |                                                                                                                                                                    | Other time certificate accounts |                                            |            | 15,090,836 |             |              |            | 13,625,754 |            
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            |                                                                                                                                                                    |                                 | Total deposits                             |            |            | 92,606,792  |              |            |            | 88,515,051  | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|Other liabilities                                           |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            | Federal Home Loan Bank borrowings                                                                                                                                  |                                 |                                            | 8,740,000  |            |             |              | 8,852,500  |           
|                                                            | Other borrowings                                                                                                                                                   |                                 |                                            | 250,000    |            |             |              | 0          |           
|                                                            | Deferred compensation liability                                                                                                                                    |                                 |                                            | 832,743    |            |             |              | 795,272    |           
|                                                            | Accrued interest and other liabilities                                                                                                                             |                                 |                                            | 491,504    |            |             |              | 964,143    |           
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            |                                                                                                                                                                    |                                 | Total liabilities                          |            |            | 102,921,039 |              |            |            | 99,126,966  | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|Stockholders equity                                        |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            | Common stock, no par value, 10,000,000 shares
authorized with 2,140,353 and 2,135,244 issued
and outstanding at March 31, 2003 and
December 31, 2002, respectively |                                 |                                            | 4,705,085  |            |             |              | 939,507    |           
|Surplus                                                     |                                                                                                                                                                    |                                 |                                           |            |            |             | 3,730,019    |           
|Undivided profits                                           |                                                                                                                                                                    |                                 | 2,816,679                                  |            |            |             | 2,735,032    |           
|Accumulated other comprehensive
income, net of tax          |                                                                                                                                                                    |                                 | 486,409                                    |            |            |             | 488,364      |           
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            |                                                                                                                                                                    |                                 | Total stockholders equity                 |            |            | 8,008,173   |              |            |            | 7,892,922   | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           
|                                                            |                                                                                                                                                                    |                                 | Total liabilities and stockholders equity |            | $          | 110,929,212 |              |            | $          | 107,019,888 | 
|                                                            |                                                                                                                                                                    |                                 |                                            |            |            |             |              |           

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##### Table of Contents



OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME




(Unaudited)


|                          |                                        |                                                     |        |                              |           |      |        |           |           | 
|------------------------- | -------------------------------------- | --------------------------------------------------- | ------ | ---------------------------- | --------- | ---- | ------ | --------- | --------- | 
|                          |                                        |                                                     |        | Three Months Ended March 31,
|                          |                                        |                                                     |        | 2003                         |           | 2002
|                          |                                        |                                                     |        |                              |           |     
|INTEREST INCOME           |                                        |                                                     |        |                              |           |      |        |          
|                          | Interest and fees on loans             |                                                     | $      | 1,530,299                    |           |      | $      | 1,218,189 |          
|                          | Interest on investment securities:     |                                                     |        |                              |           |      |        |           |          
|                          |                                        | U.S. Teasuries and agencies                         |        |                              | 29,169    |      |        |           | 52,697    | 
|                          |                                        | State and political subdivisions                    |        |                              | 88,996    |      |        |           | 111,650   | 
|                          |                                        | Corporate and other investments                     |        |                              | 62,267    |      |        |           | 93,564    | 
|                          | Interest on deposits in banks          |                                                     |        | 22,871                       |           |      |        | 5,797     |          
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|                          |                                        | Total interest income                               |        |                              | 1,733,602 |      |        |           | 1,481,897 | 
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|INTEREST EXPENSE          |                                        |                                                     |        |                              |           |      |        |          
|                          | Interest-bearing demand deposits       |                                                     |        | 161,553                      |           |      |        | 99,051    |          
|                          | Savings deposits                       |                                                     |        | 39,805                       |           |      |        | 48,433    |          
|                          | Time deposits                          |                                                     |        | 146,635                      |           |      |        | 204,931   |          
|                          | Other borrowings                       |                                                     |        | 92,159                       |           |      |        | 62,449    |          
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|                          |                                        | Total interest expense                              |        |                              | 440,152   |      |        |           | 414,864   | 
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|                          |                                        | Net interest income                                 |        |                              | 1,293,450 |      |        |           | 1,067,033 | 
|PROVISION FOR LOAN LOSSES |                                        |                                                     | 50,000 |                              |           |      | 35,000 |          
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|                          |                                        | Net interest income after provision for loan losses |        |                              | 1,243,450 |      |        |           | 1,032,033 | 
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|NONINTEREST INCOME        |                                        |                                                     |        |                              |           |      |        |          
|                          | Mortgage loan sales and servicing fees |                                                     |        | 386,714                      |           |      |        | 259,899   |          
|                          | Service charges and fees               |                                                     |        | 102,055                      |           |      |        | 87,707    |          
|                          | Investment sales commissions           |                                                     |        | 25,496                       |           |      |        | 50,742    |          
|                          | Trust fee income                       |                                                     |        | 102,162                      |           |      |        | 82,645    |          
|                          | Other income                           |                                                     |        | 15,978                       |           |      |        | 24,600    |          
|                          |                                        |                                                     |        |                              |           |      |        |           |          
|                          |                                        | Total noninterest income                            |        |                              | 632,405   |      |        |           | 505,593   | 
|                          |                                        |                                                     |        |                              |           |      |        |           |          

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##### Table of Contents



OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME




(Unaudited)
(continued)


|                                           |                                          |                                                   |         |                              |           |      |         |           |           |  
|------------------------------------------ | ---------------------------------------- | ------------------------------------------------- | ------- | ---------------------------- | --------- | ---- | ------- | --------- | --------- | -
|                                           |                                          |                                                   |         | Three Months Ended March 31,
|                                           |                                          |                                                   |         | 2003                         |           | 2002
|                                           |                                          |                                                   |         |                              |           |     
|NONINTEREST EXPENSE                        |                                          |                                                   |         |                              |           |      |         |          
|                                           | Salaries and benefits                    |                                                   |         | 1,002,829                    |           |      |         | 814,534   |          
|                                           | Occupancy                                |                                                   |         | 156,827                      |           |      |         | 102,897   |          
|                                           | Supplies                                 |                                                   |         | 50,461                       |           |      |         | 42,059    |          
|                                           | Postage and freight                      |                                                   |         | 22,891                       |           |      |         | 18,780    |          
|                                           | Outside services                         |                                                   |         | 155,322                      |           |      |         | 94,451    |          
|                                           | Advertising                              |                                                   |         | 36,036                       |           |      |         | 27,694    |          
|                                           | Loan collection expense                  |                                                   |         | 39,538                       |           |      |         | 20,814    |          
|                                           | Securities and trust department expenses |                                                   |         | 33,207                       |           |      |         | 52,205    |          
|                                           | Other expenses                           |                                                   |         | 117,358                      |           |      |         | 88,411    |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|                                           |                                          | Total noninterest expense                         |         |                              | 1,614,469 |      |         |           | 1,261,845 |  
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|INCOME BEFORE INCOME TAXES                 |                                          |                                                   | 261,386 |                              |           |      | 275,781 |          
|PROVISION FOR INCOME TAXES                 |                                          |                                                   | 73,000  |                              |           |      | 61,000  |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|NET INCOME                                 |                                          |                                                   | 188,386 |                              |           |      | 214,781 |          
|OTHER COMPREHENSIVE INCOME                 |                                          |                                                   |         |                              |           |      |         |          
|                                           |                                          | Unrealized holding loss arising during the period |         |                              | (1,955    | )    |         |           | (65,926   | )
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|COMPREHENSIVE INCOME                       |                                          | $                                                 | 186,431 |                              |           | $    | 148,855 |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|EARNINGS PER SHARE OF COMMON STOCK         |                                          |                                                   |         |                              |           |      |         |          
|                                           | Basic earnings per share                 |                                                   | $       | 0.09                         |           |      | $       | 0.10      |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|                                           | Diluted earnings per share               |                                                   | $       | 0.09                         |           |      | $       | 0.10      |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |                                          |                                                   |         |                              |           |      |         |          
|                                           | Basic earnings per share                 |                                                   |         | 2,138,196                    |           |      |         | 2,115,762 |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          
|                                           | Diluted earnings per share               |                                                   |         | 2,152,012                    |           |      |         | 2,129,237 |          
|                                           |                                          |                                                   |         |                              |           |      |         |           |          

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OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY




|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|----------------------------------------------------------------- |  | ------------ | --------- | ------ |  | ------- | --------- | --------- |  | ------------- | ---------- | ------------- |  | - | --------- | - |  | ----------- | ------- | ----- |  | - | --------- | -
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  | Accumulated |         |       |  |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  | Other       |         | Total
|                                                                  |  | Common Stock |           |        |  |         |           | Undivided |  | Comprehensive |            | Stockholders
|                                                                  |  | Shares       |           | Amount |  | Surplus |           | Profits   |  | Income        |            | Equity       
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |              
|Balance, December 31, 2001 (Audited)                              |  |              | 2,112,493 |        |  | $       | 929,497   |           |  | $             | 3,609,063  |               |  | $ | 2,295,068 |   |  | $           | 277,687 |       |  | $ | 7,111,315 |  
|Cash dividends paid                                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | (250,879  | ) |  |             |        |       |  |   | (250,879  | )
|Dividends reinvested in stock                                     |  |              | 22,751    |        |  |         | 10,010    |           |  |               | 120,956    |               |  |   | (130,966  | ) |  |             |        |       |  |   |          |  
|Net income and comprehensive income                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | 821,809   |   |  |             | 210,677 |       |  |   | 1,032,486 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Balance, December 31, 2002 (Audited)                              |  |              | 2,135,244 |        |  | $       | 939,507   |           |  | $             | 3,730,019  |               |  | $ | 2,735,032 |   |  | $           | 488,364 |       |  | $ | 7,892,922 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Change in capitalization as a result of holding
company formation |  |              |           |        |  |         | 3,730,019 |           |  |               | (3,730,019 | )             |  |   |           |   |  |             |         |       |  |   |          |  
|Cash dividends paid                                               |  |              |           |        |  |         |           |           |  |               |            |               |  |   | (71,180   | ) |  |             |         |       |  |   | (71,180   | )
|Dividends reinvested in stock                                     |  |              | 5,109     |        |  |         | 35,559    |           |  |               |            |               |  |   | (35,559   | ) |  |             |         |       |  |   |          |  
|Net income and comprehensive income                               |  |              |           |        |  |         |           |           |  |               |            |               |  |   | 188,386   |   |  |             | (1,955  | )     |  |   | 186,431   |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Balance, March 31, 2003 (Unaudited)                               |  |              | 2,140,353 |        |  | $       | 4,705,085 |           |  | $             |           |               |  | $ | 2,816,679 |   |  | $           | 486,409 |       |  | $ | 8,008,173 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  

6



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OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)




|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |            |            |           | 
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------- | ---------------------------------- | ---------- | ---------------------------- | --------- | ------- | ---------- | ---------- | --------- | 
|                                                                           |                                                                          |                                    |                                    |            | Three Months Ended March 31,
|                                                                           |                                                                          |                                    |                                    |            | 2003                         |           | 2002   
|                                                                           |                                                                          |                                    |                                    |            |                              |           |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |                                                                          |                                    |                                    |            |                              |           |         |           
|Net income                                                                 |                                                                          | $                                  | 188,386                            |            |                              | $         | 214,781 |           
|Adjustments to reconcile net income to net cash
from operating activities: |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           | Depreciation and amortization                                            |                                    |                                    | 82,759     |                              |           |         | 73,907     |           
|                                                                           | Provision for possible loan losses                                       |                                    |                                    | 50,000     |                              |           |         | 35,000     |           
|                                                                           | Federal Home Loan Bank stock dividends                                   |                                    |                                    | (11,500    | )                            |           |         | (9,600     | )         
|                                                                           | Net change in mortgage loans held-for-sale                               |                                    |                                    | 1,670,532  |                              |           |         | 1,569,835  |           
|                                                                           | Loss (gain) on disposition of premises, equipment, and other real estate |                                    |                                    | 2,286      |                              |           |         | (6,240     | )         
|                                                                           | Decrease in trading securities                                           |                                    |                                    |           |                              |           |         | 3,276,527  |           
|                                                                           | Net increase in accrued interest and other assets                        |                                    |                                    | (342,933   | )                            |           |         | (115,628   | )         
|                                                                           | Net decrease in accrued interest and other liabilities                   |                                    |                                    | (435,168   | )                            |           |         | (164,648   | )         
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           |                                                                          |                                    | Net cash from operating activities |            |                              | 1,204,362 |         |            |            | 4,873,934 | 
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           | Proceeds from sales and maturities of available-for-sale securities      |                                    |                                    | 1,055,347  |                              |           |         | 1,324,195  |           
|                                                                           | Purchases of available-for-sale-securities                               |                                    |                                    | (1,517,560 | )                            |           |         | (2,004,435 | )         
|                                                                           | Proceeds from sale (purchase) of restricted equity securities            |                                    |                                    | (650       | )                            |           |         | 450        |           
|                                                                           | Net increase in interest-bearing deposits in banks                       |                                    |                                    | (388,926   | )                            |           |         | (1,855,000 | )         
|                                                                           | Loans originated, net of principal repayments                            |                                    |                                    | (5,174,641 | )                            |           |         | (923,632   | )         
|                                                                           | Purchase of premises and equipment                                       |                                    |                                    | (162,234   | )                            |           |         | (69,025    | )         
|                                                                           | Proceeds from sale of other real estate                                  |                                    |                                    | 104,949    |                              |           |         | 98,643     |           
|                                                                           | Additions to other real estate owned                                     |                                    |                                    |           |                              |           |         | (5,217     | )         
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           |                                                                          | Net cash from investing activities |                                    |            | (6,083,715                   | )         |         |            | (3,434,021 | )        
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           | Net increase in demand and savings deposit accounts                      |                                    |                                    | 2,412,913  |                              |           |         | 2,252,176  |           
|                                                                           | Net increase (decrease) in time deposits                                 |                                    |                                    | 1,678,828  |                              |           |         | (3,782,204 | )         
|                                                                           | Proceeds from Federal Home Loan Bank borrowings                          |                                    |                                    |           |                              |           |         |           |           
|                                                                           | Repayment of Federal Home Loan Bank borrowings                           |                                    |                                    | (112,500   | )                            |           |         | 487,500    |           
|                                                                           | Proceeds from other bank borrowing                                       |                                    |                                    | 250,000    |                              |           |         |           |           
|                                                                           | Cash dividends paid                                                      |                                    |                                    | (71,180    | )                            |           |         | (69,905    | )         
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           
|                                                                           |                                                                          | Net cash from financing activities |                                    |            | 4,158,061                    |           |         |            | (1,112,433 | )        
|                                                                           |                                                                          |                                    |                                    |            |                              |           |         |           

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OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


(continued)

|                                               |                            |   |                              |         |      |   |           |         | 
|---------------------------------------------- | -------------------------- | - | ---------------------------- | ------- | ---- | - | --------- | ------- | 
|                                               |                            |   | Three Months Ended March 31,
|                                               |                            |   | 2003                         |         | 2002
|                                               |                            |   |                              |         |     
|CASH AND CASH EQUIVALENTS, beginning of period |                            | $ | 3,886,203                    |         |      | $ | 2,276,107 |        
|                                               |                            |   |                              |         |      |   |           |        
|CASH AND CASH EQUIVALENTS, end of period       |                            | $ | 3,164,911                    |         |      | $ | 2,603,587 |        
|                                               |                            |   |                              |         |      |   |           |        
|SUPPLEMENTAL CASH FLOW INFORMATION             |                            |   |                              |         |      |   |           |        
|                                               | Cash paid for interest     |   | $                            | 435,976 |      |   | $         | 449,708 | 
|                                               |                            |   |                              |         |      |   |           |        
|                                               | Cash paid for income taxes |   | $                            | 2,880   |      |   | $         | 4,398   | 
|                                               |                            |   |                              |         |      |   |           |        
|SCHEDULE OF NONCASH ACTIVITIES                 |                            |   |                              |         |      |   |           |        
|                                               | Stock dividends reinvested |   | $                            | 35,559  |      |   | $         | 35,719  | 
|                                               |                            |   |                              |         |      |   |           |        

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Oregon Pacific Bancorp
Notes to Financial Statements
March 31, 2003 and 2002
(Unaudited)

Note 1  Organization and Basis of Presentation

Oregon Pacific Bancorp (the Company), an Oregon Corporation and financial
bank holding company, became the holding company of Oregon Pacific Banking Co.
(the Bank) effective January 1, 2003 through a Plan of Share Exchange
approved by Bank shareholders on December 19, 2002. The Bank is a
state-chartered institution authorized to provide banking services by the State
of Oregon, from its headquarters in Florence, Oregon. Full-service banking
products are offered to the Banks customers who live primarily in Lane,
Douglas, and Coos counties and on the central Oregon coast. The Bank is
subject to the regulations of certain federal and state agencies and undergoes
periodic examinations by those regulatory authorities.

The financial information included in this interim report has been prepared by
management without audit by independent public accountants. The unaudited
interim financial statements of the Company have been prepared in accordance
with generally accepted accounting principles for interim financial
information. All adjustments including normal recurring accruals necessary for
fair presentation of results of operations for the interim periods included
herein have been made. However, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts and balances for the periods
presented. Actual results could differ from those estimated. Additionally,
the results of operations for the three months ended March 31, 2003 are not
necessarily indicative of results to be anticipated for the year ending
December 31, 2003. The interim financial statements should be read in
conjunction with the audited financial statements, including the notes thereto,
contained in the Banks 2002 Annual Report to Shareholders.

Stock options  The Company measures compensation cost using the intrinsic
value method, which computes compensation cost as the difference between a
companys stock price and the option price at the grant date. No compensation
cost has been recognized for the Companys stock option plans and no options
were granted during the quarter ended March 31, 2003. Had compensation cost
for the Companys grants for stock-based compensation plans been determined
consistent with Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, its net income and earnings per
common share for March 31, 2003 and 2002 would approximate the pro forma
amounts below.

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|                                   |                                                                                                              |   |                |      |      |   |         |      |  
|---------------------------------- | ------------------------------------------------------------------------------------------------------------ | - | -------------- | ---- | ---- | - | ------- | ---- | -
|                                   |                                                                                                              |   | 3 Months Ended
|                                   |                                                                                                              |   | March 31,     
|                                   |                                                                                                              |   |               
|                                   |                                                                                                              |   | 2003           |      | 2002
|                                   |                                                                                                              |   |                |      |     
|Net earnings, as reported          |                                                                                                              | $ | 188,386        |      |      | $ | 214,781 |     
|Deduct: Total stock-based employee |                                                                                                              |   |                |      |      |   |         |     
|                                   | compensation expense determined
under the fair value-based method
for all awards, net of related tax effects |   |                | (121 | )    |   |         | (66  | )
|                                   |                                                                                                              |   |                |      |      |   |         |     
|Pro forma net earnings             |                                                                                                              | $ | 188,265        |      |      | $ | 214,715 |     
|                                   |                                                                                                              |   |                |      |      |   |         |     
|Basic earnings per common share:   |                                                                                                              |   |                |      |      |   |         |     
|                                   | As reported                                                                                                  |   | $              | 0.09 |      |   | $       | 0.10 |  
|                                   | Pro forma                                                                                                    |   | $              | 0.09 |      |   | $       | 0.10 |  
|Diluted earnings per common share: |                                                                                                              |   |                |      |      |   |         |     
|                                   | As reported                                                                                                  |   | $              | 0.09 |      |   | $       | 0.10 |  
|                                   | Pro forma                                                                                                    |   | $              | 0.09 |      |   | $       | 0.10 |  

The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions for March
31, 2003 and 2002:

|                      |  |       |        |      |  |       |        |  
|--------------------- |  | ----- | ------ | ---- |  | ----- | ------ | -
|                      |  | 2003  |        | 2002
|                      |  |       |        |     
|Dividend yield        |  |       | 0.05   | %    |  |       | 0.05   | %
|Expected life (years) |  |       | 7      |      |  |       | 7      |  
|Expected volatility   |  |       | 0.01   | %    |  |       | 0.01   | %
|Risk-free rate        |  | 4.84% |  5.04 | %    |  | 4.84% |  5.04 | %

Reclassifications  Certain reclassifications have been made to the 2002
financial statements to conform with current year presentations.

Note 2  Loans and Allowance for Loan Losses

The composition of the loan portfolio was as follows as of the dates presented:

|                          |  |               |            |               |  |   |            |  
|------------------------- |  | ------------- | ---------- | ------------- |  | - | ---------- | -
|                          |  | MAR. 31, 2003 |            | DEC. 31, 2002
|                          |  |               |            |              
|Real estate               |  | $             | 15,559,524 |               |  | $ | 15,786,018 |  
|Commercial                |  |               | 56,171,537 |               |  |   | 50,608,475 |  
|Installment               |  |               | 6,017,818  |               |  |   | 6,172,952  |  
|Overdrafts                |  |               | 32,307     |               |  |   | 54,995     |  
|                          |  |               |            |               |  |   |            |  
|                          |  |               | 77,781,186 |               |  |   | 72,622,440 |  
|Allowance for loan losses |  |               | (1,223,575 | )             |  |   | (1,173,025 | )
|Unearned loan fees        |  |               | (444,318   | )             |  |   | (460,763   | )
|                          |  |               |            |               |  |   |            |  
|                          |  | $             | 76,113,293 |               |  | $ | 70,988,652 |  
|                          |  |               |            |               |  |   |            |  

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Changes in the allowance for loan losses were as follows for the three-months ended:

|                                 |  |               |           |               |  |   |           |  
|-------------------------------- |  | ------------- | --------- | ------------- |  | - | --------- | -
|                                 |  | MAR. 31, 2003 |           | DEC. 31, 2002
|                                 |  |               |           |              
|Balance, beginning of the period |  | $             | 1,173,025 |               |  | $ | 902,104   |  
|Provision for possible losses    |  |               | 50,000    |               |  |   | 280,100   |  
|Losses                           |  |               |          |               |  |   | (12,620   | )
|Recoveries                       |  |               | 550       |               |  |   | 3,441     |  
|                                 |  |               |           |               |  |   |           |  
|Balance, end of period           |  | $             | 1,223,575 |               |  | $ | 1,173,025 |  
|                                 |  |               |           |               |  |   |           |  

It is the policy of the Bank to place loans on nonaccrual status whenever the
collection of all or a part of the principal is in doubt. Loans placed on
nonaccrual status may or may not be contractually past due at the time of such
determination, and may or may not be secured by collateral. Loans on
nonaccrual status at March 31, 2003 and December 31, 2002 were approximately
$7,000 and $60,000, respectively.

The Bank had no loans past due 90 days or more on which it continued to accrue
interest at either March 31, 2003 or December 31, 2002.

Note 3  Earnings per Share of Common Stock

Basic earnings per share exclude dilution and are computed by dividing net
income by the weighted average common shares outstanding for the period.
Diluted earnings per share reflect the potential dilution that could occur if
common shares were issued pursuant to the exercise of options under stock
option plans. Weighted average shares outstanding consist of common shares
outstanding and common stock equivalents attributable to outstanding stock
options.




Item 2.     Managements Discussion and Analysis of Financial Condition and Results of Operations

This report contains a number of forward looking statements about our
anticipated business, operations, financial performance and cash flows.
Statements in this report that relate to future
plans, events and circumstances are provided to describe managements
intentions and expectations based on currently available information, and
readers should not construe these statements as assurances or guarantees. As
with any predictions, these statements are inherently difficult to make with
any degree of assurance, and actual results may differ materially and adversely
from managements expectations described herein. Likewise, managements plans
described in this report may not come to pass because unforeseen events may
force management to deviate from its expressed intentions. Forward-looking
statements often can be identified by the use of predictive or prospective
terms such as expect, anticipate, believe, plan, intend, and words of
similar construction or meaning. Some of the events or circumstances that may
cause our actual results to deviate from managements expectations include the
impact of competition and local and regional economic factors upon our customer
base, our deposits and our loan portfolio; economic and regulatory limits on
our ability to grow our assets and manage our business; customer acceptance of
our products; interest rate fluctuations that may adversely impact our revenues
and expenses; and the impact of impairment charges upon our intangible and
other assets. Other factors that may adversely impact our performance are
discussed in this report as well as other disclosures we make from time to time
in our filings with the Securities and Exchange Commission or other federal
agencies. Readers also should note that forward-looking statements expressed
in this report are made as of the date of this report, and management cannot
undertake to update those statements to reflect future events or circumstances.

11



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Critical Accounting Policies and Estimates

On an ongoing basis, management evaluates the estimates used, including the
adequacy of the allowance for loan losses and contingencies and the mortgage
servicing asset. Estimates are based upon historical experience, current
economic conditions, and other factors that management considers reasonable
under the circumstances. These estimates result in judgments regarding the
carrying values of assets and liabilities when these values are not readily
available from other sources as well as assessing and identifying the
accounting treatments of commitments and contingencies. Actual results may
differ from these estimates under different assumptions or conditions.

Overview

Oregon Pacific Bancorp (the Company), an Oregon Corporation and financial
bank holding company, became the holding company of Oregon Pacific Banking Co.
(the Bank) effective January 1, 2003. The Company is headquartered in
Florence, Oregon.

The Bank is an Oregon banking corporation organized under the Oregon Bank Act
on December 17, 1979. The Bank is a full-service commercial bank that provides
a broad range of depository and lending services to commercial enterprises,
governmental entities and individuals. In 2002, the Bank expanded from its
main office and a full-service Safeway store branch, both located in Florence
to three additional Oregon locations including Roseburg, Coos Bay and
Sutherlin. Additional financial services provided by the Bank include trust
and asset management services and investment and brokerage services. Such
services are provided at the main office in Florence and at offices in Roseburg
and Coos Bay, Oregon.

The Company operates through a two-tiered corporate structure. At the holding
company level the affairs of the Company are overseen by a Board of Directors
elected by the shareholders of the Company at the annual meeting of
shareholders. The business of the bank is overseen by a Board of Directors of
the Company, the sole owner of the Bank. Currently the respective members of
the Board of Directors of the Bank and the Company are identical.

The Company reported net income of $188,000 or $.09 per basic share for the
three months ended March 31, 2003. This compares to Bank income of $215,000 or
$.10 per basic share for the same period in the prior year. The decrease in
earnings is largely attributable to an increase in noninterest expense
following the opening of three branches in 2002 without sufficient new revenues
to offset that growth in infrastructure.

Financial Condition

Total assets at March 31, 2003 were $110,929,000 compared to $107,020,000 at
December 31, 2002, an increase of $3,909,000 (3.7%). The increase was due
primarily to new loans ($5.12 million), partially offset by the decrease of
loans held-for-sale ($1.67 million).

Total deposits increased $4,092,000 (4.6%) in the three-month period since
December 31, 2002. The increase was in interest-bearing demand deposits as the
banks interest rate on one newer demand deposit product is attractive to
depositors.

March 31, 2003 stockholders equity was $8,008,000, an increase of $115,000
from December 31, 2002. This change resulted from consolidated net income
partially offset by cash dividends paid ($71,000).

Results of Operations

Net interest income

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Net interest income is the Banks primary source of revenue. Net interest
income is the difference between interest income earned from loans and the
investment portfolio, and interest expense paid on customer deposits and debt.
Changes in net interest income result from changes in volume and changes in
rate. Volume refers to the dollar level of interest earning assets and
interest bearing liabilities. Rate refers to the underlying yields on assets
and costs of liabilities.

Net interest income on a tax-equivalent basis was $1,336,000 for the quarter
ended March 31, 2003 compared to $1,131,000 for the same period in 2002 (see
Table 1). The $205,000 increase was due to an increase in the volume of loans
and a decrease in the cost of funds. The effective rate on interest-bearing
liabilities for the quarter was 2.18% compared to 2.73% for the same period in
2002. The increase in interest income of $230,000 was due to a $418,000
increase from the increase in average loans outstanding of $22,510,000 from the
same period one year ago, partially offset by decreased average rates earned.

Table 1

Average Balances and Average Rates Earned and Paid.The following table shows
average balances and interest income or interest expense, with the resulting
average yield or rates by category of average earning asset or interest-bearing
liability:

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|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |   | 
|---------------------------------------------- | ---------------------------------------------- | -------------------------------------------- | ----------------- | ------- | ------------------------------- | ------- | ------------------------------- | ------- | ------------------- | ------- | ------- | ----- | --------- | ------ | -------- | ------ | ---------------- | ------ | ------- | ----- | ----- |  | ---- | ---- | ---- | - | --- | --- | --- | - | ---- | ---- | ---- | - | --- | --- | --- | - | 
|                                               |                                                |                                              |                   |         | Three Months Ended Mar 31, 2003 |         | Three Months Ended Mar 31, 2002 |         | Increase (Decrease)
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         | Interest            |         | Average |       |           |        |          |        | Interest         |        | Average |       |       |  |      |      |      |   |     |     |     |   |     
|                                               |                                                |                                              |                   |         | Average                         |         | Income or                       |         | Yield or            |         | Average |       | Income or |        | Yield or |        | Due to change in |        | Net    
|(dollars in thousands)                         |                                                | Balance                                      |                   | Expense |                                 | Rates   |                                 | Balance |                     | Expense |         | Rates |           | Volume |          | Rate   |                  | Change
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |       
|Interest-earning assets:                       |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |    
|                                               | Loans (2)                                      |                                              | $                 | 79,593  |                                 |         | $                               | 1,530   |                     |         |         | 7.69  | %         |        | $        | 57,083 |                  |        | $       | 1,218 |       |  |      | 8.53 | %    |   | $   | 480 |     |   | $    | (167 | )    |   | $   | 313 |    
|                                               | Investment securities                          |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Taxable securities                           |                   |         | 7,709                           |         |                                 |         | 97                  |         |         |       | 5.03      | %      |          |        | 13,190           |        |         |       | 152   |  |      |      | 4.61 | % |     |     | (63 | ) |      |      | 8    |   |     |     | (55 | )
|                                               |                                                | Nontaxable securities (1)                    |                   |         | 7,416                           |         |                                 |         | 126                 |         |         |       | 6.80      | %      |          |        | 8,691            |        |         |       | 170   |  |      |      | 7.82 | % |     |     | (25 | ) |      |      | (19  | ) |     |     | (44 | )
|                                               | Interest-earning balances due
from banks       |                                              |                   | 7,582   |                                 |         |                                 | 23      |                     |         |         | 1.21  | %         |        |          | 1,423  |                  |        |         | 6     |       |  |      | 1.69 | %    |   |     | 26  |     |   |      | (9   | )    |   |     | 17  |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Total interest-earning
assets                |                   |         | 102,300                         |         |                                 |         | 1,776               |         |         |       | 6.94      | %      |          |        | 80,387           |        |         |       | 1,546 |  |      |      | 7.69 | % |     |     | 418 |   |      |      | (187 | ) |     |     | 231 |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               | Cash and due from banks                        |                                              |                   | 3,706   |                                 |         |                                 |         |                     |         |         |       |           |        |          | 2,550  |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               | Premises and equipment, net                    |                                              |                   | 2,780   |                                 |         |                                 |         |                     |         |         |       |           |        |          | 1,742  |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               | Other real estate                              |                                              |                   | 79      |                                 |         |                                 |         |                     |         |         |       |           |        |          | 84     |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               | Loan loss allowance                            |                                              |                   | (1,192  | )                               |         |                                 |         |                     |         |         |       |           |        |          | (914   | )                |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               | Other assets                                   |                                              |                   | 900     |                                 |         |                                 |         |                     |         |         |       |           |        |          | 1,219  |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Total assets                                 |                   | $       | 108,573                         |         |                                 |         |                     |         |         |       |           |        |          | $      | 85,068           |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|Interest-bearing liabilities:                  |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |    
|                                               | Interest-bearing checking and
savings accounts |                                              | $                 | 50,465  |                                 |         | $                               | 201     |                     |         |         | 1.59  | %         |        | $        | 33,033 |                  |        | $       | 148   |       |  |      | 1.79 | %    |   | $   | 78  |     |   | $    | (25  | )    |   | $   | 53  |    
|                                               | Time deposit and IRA accounts                  |                                              |                   | 21,297  |                                 |         |                                 | 147     |                     |         |         | 2.76  | %         |        |          | 21,383 |                  |        |         | 205   |       |  |      | 3.83 | %    |   |     | (1  | )   |   |      | (57  | )    |   |     | (58 | )  
|                                               | Borrowed funds                                 |                                              |                   | 8,793   |                                 |         |                                 | 92      |                     |         |         | 4.19  | %         |        |          | 6,435  |                  |        |         | 62    |       |  |      | 3.85 | %    |   |     | 23  |     |   |      | 7    |      |   |     | 30  |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Total interest-bearing
liabilities           |                   |         | 80,555                          |         |                                 |         | 440                 |         |         |       | 2.18      | %      |          |        | 60,851           |        |         |       | 415   |  |      |      | 2.73 | % |     |     | 100 |   |      |      | (75  | ) |     |     | 25  |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Noninterest-bearing
deposits                 |                   |         | 18,065                          |         |                                 |         |                     |         |         |       |           |        |          |        | 15,719           |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |  
|                                               |                                                | Other liabilities                            |                   |         | 1,929                           |         |                                 |         |                     |         |         |       |           |        |          |        | 1,217            |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                |                                              | Total liabilities |         |                                 | 100,549 |                                 |         |                     |         |         |       |           |        |          |        |                  | 77,787 |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |   | 
|                                               |                                                | Shareholders equity                         |                   |         | 8,024                           |         |                                 |         |                     |         |         |       |           |        |          |        | 7,281            |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|                                               |                                                | Total liabilities and share-
holders equity |                   | $       | 108,573                         |         |                                 |         |                     |         |         |       |           |        |          | $      | 85,068           |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |     |  
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|Net interest income                            |                                                |                                              |                   |         |                                 | $       | 1,336                           |         |                     |         |         |       |           |        |          |        |                  | $      | 1,131   |       |       |  |      |      |      | $ | 318 |     |     | $ | (112 | )    |      | $ | 206 |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|Net interest spread                            |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         | 4.76    | %     |           |        |          |        |                  |        |         |       |       |  | 4.96 | %    |      |   |     |     |     |   |      |      |      |   |     |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|Net interest expense to average
earning assets |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         | 1.72    | %     |           |        |          |        |                  |        |         |       |       |  | 2.07 | %    |      |   |     |     |     |   |      |      |      |   |     |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    
|Net interest margin                            |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         | 5.22    | %     |           |        |          |        |                  |        |         |       |       |  | 5.63 | %    |      |   |     |     |     |   |      |      |      |   |     |    
|                                               |                                                |                                              |                   |         |                                 |         |                                 |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |     |     |   |      |      |      |   |     |     |    



---

|(1) |  | Tax-exempt income has been adjusted to a tax-equivalent basis at 34%.
|--- |  | ---------------------------------------------------------------------
|    |  |                                                                      
|(2) |  | Nonaccrual loans are included in the average balance.                

14



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##### Table of Contents



Provision for Loan Losses

A provision of $50,000 was made for the three months ended March 31, 2003
compared to $35,000 in the same period in 2002. The allowance for loan losses
at March 31, 2003 was 1.5% of gross loans, as compared to 1.6% at December 31,
2002. Non-performing assets at March 31, 2003 totaled $17,000 or 0.02% of
loans. Management is satisfied that the reserve is adequate for potential loan
losses in the loan portfolio at March 31, 2003. Managements assessment of the
adequacy of the allowance for loan loss is based on a number of factors
including current delinquent and non-performing loans, past loan loss
experience, evaluation of customers financial strength, and economic trends
impacting areas and customers served by the Bank. The allowance is based on
estimates, and actual losses may vary from those currently estimated.

Noninterest Income

Noninterest income increased $127,000 or 25.1% for the three months ended March
31, 2003 as compared to the same period in 2002. The increase was primarily
the result of increased mortgage loan sales from loan refinances and home
purchases during this period of historically low mortgage rates.

Noninterest Expense

Noninterest expense increased $353,000 or 27.9% for the three months ended
March 31, 2003 over the same period one year ago. The increase is attributable
to costs associated with the Banks focus on growth as it expanded into three
new locations.

The provision for income taxes at both March 31, 2003 and 2002 remained
consistent with expected statutory rates adjusted for anticipated permanent
differences arising primarily from nontaxable income earned on municipal
security investments.

Liquidity and Capital Resources

Liquidity management involves the ability to meet cash flow requirements. The
Banks major sources of liquidity are customer deposits, sales and maturities
of investment securities, the use of borrowing arrangements through the Federal
Home Loan Bank of Seattle, and net cash provided by operating activities. The
Banks investment portfolio is another source of funds, if needed. The
investment portfolio is of high quality and is highly marketable although a
gain or loss would be realized if the market value of securities sold were not
equal to their adjusted book value at date of sale.

The Bank maintains liquidity levels adequate to fund loan commitments,
investment opportunities, deposit withdrawals and other financial commitments.
Management is satisfied that liquidity is sufficient at March 31, 2003. There
are no known trends, events, regulatory authority recommendations, or
uncertainties that management is aware of that will have or that are likely to
have a material adverse effect on the Banks liquidity, capital resources, or
operations.

In the first quarter of 2003, the Company negotiated a one-year $1.0 million
line-of-credit with U. S. Bank which may be used to make capital contributions
to the Bank.

For purposes of determining a banks deposit insurance assessment, the FDIC has
issued regulations that define a well capitalized bank as one with a leverage
ratio of 5% or more and a total risk-based ratio of
10% or more. At March 31, 2003, the Banks leverage and total risk-based
ratios were 7.20% and 10.26% respectively, which exceed the well-capitalized
threshold.

15



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Item 3.       Quantitive and Qualitive Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and
rates. The Banks market risk arises principally from interest rate risk in
its lending, deposit and borrowing activities. Management actively monitors
and manages its interest rate risk exposure. Although the Bank manages other
risks, such as credit quality and liquidity risk, in the normal course of
business, management considers interest rate risk to be a significant market
risk which could have the largest material effect on the Banks financial
condition and results of operations.

Through the Banks Asset/Liability Management Committee (ALCO), which is
comprised of senior management, the Bank monitors the level and general mix of
earning assets and interest-bearing liabilities, with special attention to
those assets and liabilities which are rate-sensitive. The primary objective
of ALCO is managing the Companys assets and liabilities in a manner that
balances profitability, interest rate risk, and various other risks including
liquidity. ALCO operates under policies and within risk limits prescribed by,
reviewed and approved by the Board of Directors. The Banks strategy has
included the funding of certain fixed rate loans with medium term borrowed
funds in order to mitigate a margin squeeze should interest rates rise.

In an effort to assess market risk, the Bank utilizes a simulation model to
determine the effect of immediate incremental increases and decreases in
interest rates on net income. Certain assumptions are made regarding loan
prepayments and decay rates of demand deposit accounts. Because it is difficult
to accurately project the market reaction of depositors and borrowers, the
effects of actual changes in interest on these assumptions may differ from
simulated results.

Using net income simulation and given a parallel shift of 2% in interest rates,
the estimated net interest margin may not decrease by more than 25% within a
one-year period. The following table illustrates the simulated impact of a 1%
or 2% upward or downward movement in interest rates on net income. The impact
of the rate movements was computed by simulating the effect of an immediate and
sustained shift in interest rates over a twelve month period from the March 31,
2003 levels.

|               |      |                     |         |        | 
|-------------- | ---- | ------------------- | ------- | ------ | 
|INCREASE OR    |      | ESTIMATED FINANCIAL
|DECREASE IN    |      | IMPACT ON          
|INTEREST RATES |      | NET INCOME         
|               |      |                    
|               | 2.0% |                     | $       | 33,000 | 
|               | 1.0% |                     | $       | 23,000 | 
|-1.0%          |      | ($                  | 20,000  | )     
|-2.0%          |      | ($                  | 131,000 | )     

There has not been a material change in the quantitative and qualitative market
risks faced by the Bank from the risk disclosures reported in Banks form 10-K
covering the fiscal year ended December 31, 2002.




Item 4.      Controls and Procedures

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Companys
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of our disclosure controls and procedures (as defined in
Rule 13a-14(c) and 15d-14 (c) under the Securities Exchange Act of 1934. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in

16



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##### Table of Contents



the Companys internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.




PART 2.      OTHER INFORMATION

Item 1.  Legal proceedings.



| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Bank is not currently involved in any material litigation or
legal proceeding and is not aware of any potential material litigation or
proceeding threatened against it.

Item 2.  Changes in securities and use of proceeds.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective January 1, 2003, the Company issued 2,135,244 shares of
common stock to Bank shareholders in exchange for the Bank shares held by
such shareholders. The exchange was on a one-for-one basis, in order to
consummate a shareholder-approved plan of share exchange in connection
with the formation of the Company as the one-bank holding company of the
Bank. Such issuance was exempt from registration under Section 3(12) of
the Securities Act of 1933.

|        |  |                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------
|Item 3. |  | Defaults upon senior securities.                                                                    
|        |  |                                                                                                     
|        |  | None.                                                                                               
|        |  |                                                                                                     
|Item 4. |  | Submission of matters to a vote of security holders.                                                
|        |  |                                                                                                     
|        |  | None.                                                                                               
|        |  |                                                                                                     
|Item 5. |  | Other information.                                                                                  
|        |  |                                                                                                     
|        |  | None.                                                                                               
|        |  |                                                                                                     
|Item 6. |  | Exhibits and reports on Form 8-K.                                                                   
|        |  |                                                                                                     
|(a)     |  | Exhibits.                                                                                           
|        |  |                                                                                                     
|3.1     |  | Articles of Incorporation of Oregon Pacific Bancorp*                                                
|        |  |                                                                                                     
|3.2     |  | Bylaws of Oregon Pacific Bancorp*                                                                   
|        |  |                                                                                                     
|99.1    |  | Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002**
|        |  |                                                                                                     
|99.2    |  | Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002**
|        |  |                                                                                                     
|(b)     |  | No reports on Form 8-K were filed during the first quarter of 2003.                                 



---

|*  |  | Incorporated by reference to the Banks Form 10-K filed with the
Securities and Exchange Commission on March 28, 2003.
|-- |  | ----------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                       
|** |  | Filed herewith.                                                                                                       

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##### Table of Contents






SIGNATURES

In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto, duly authorized, in the City of Florence, State of
Oregon, on April 30, 2003.

| |  |                            |  |                                                                                          
| |  | -------------------------- |  | -----------------------------------------------------------------------------------------
| |  | OREGON PACIFIC BANKING CO.
| |  |                            |  |                                                                                          
| |  | By:                        |  | /s/ Thomas K. Grove                                                                      
| |  |                            |  |                                                                                          
| |  |                            |  |                                                                                          
| |  |                            |  | Thomas K. Grove
President, Chief Executive Officer
And Director (Chief Executive Officer)
| |  |                            |  |                                                                                          
| |  | By:                        |  | /s/ Joanne A. Forsberg                                                                   
| |  |                            |  |                                                                                          
| |  |                            |  |                                                                                          
| |  |                            |  | Joanne A. Forsberg
Secretary and Chief Financial Officer(Principal Financial Officer)    

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##### Table of Contents






CERTIFICATIONS

I, Thomas K. Grove, President and Chief Executive Officer of Oregon
Pacific Bancorp (the Company), certify that:

1.     I have reviewed this quarterly report on Form 10-Q of the Company;

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

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

4.     The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including any consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which
this quarterly report is being prepared; b) evaluated the effectiveness of the
Companys disclosure controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the Evaluation Date); and c)
presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the audit committee
of the Companys board of directors (or persons performing the equivalent
function): a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability to record,
process, summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls; and b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Companys internal controls; and

6.     The Companys other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

| |  |                                                                          |  | 
| |  | ------------------------------------------------------------------------ |  | 
| |  | Date: April 30, 2003.                                                   
| |  |                                                                          |  | 
| |  | /s/ Thomas K. Grove

Thomas K. Grove
President & Chief Executive
Officer |  | 

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##### Table of Contents



I, Joanne A. Forsberg, Secretary of Oregon Pacific Bancorp (the
Company), certify that:

1.     I have reviewed this quarterly report on Form 10-Q of the Company;

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

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

4.     The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including any consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which
this quarterly report is being prepared; b) evaluated the effectiveness of the
Companys disclosure controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the Evaluation Date); and c)
presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the audit committee
of the Companys board of directors (or persons performing the equivalent
function): a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability to record,
process, summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls; and b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Companys internal controls; and

6.     The Companys other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

| |  |                                                                                    |  | 
| |  | ---------------------------------------------------------------------------------- |  | 
| |  | Date: April 30, 2003.                                                             
| |  |                                                                                    |  | 
| |  | /s/Joanne A. Forsberg                                                              |  | 
| |  | Joanne A. Forsberg
Secretary
Chief Financial Officer of Oregon
Pacific Banking Co. |  | 

20