|FORM 10-Q


UNITED STATES
FEDERAL RESERVE BOARDWashington, 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, 2004
| | ---------------------------------------------

||_| | 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                                                         |  | 71-0918151                         
|-------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. EmployerIdentification 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, 2004, was 2,178,038.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 | 11-14
| | ------- | --------------------------------------------------------- | -----

| | Item 3. | Quantitive and Qualitive Disclosures about Market Risk | 14-15
| | ------- | ------------------------------------------------------ | -----

| | Item 4. | Controls and Procedures | 15-16
| | ------- | ----------------------- | -----

|Part II. | Other Information                                                     | 16-17
|-------- | --------------------------------------------------------------------- | -----
|         | Signatures                                                            | 18   
|         | Certifications of Chief Executive Officer and Chief Financial Officer | 19-22

|2
|-

|PART 1. | FINANCIAL
INFORMATION
|------- | ---------------------

|Item 1. | Financial
statements
|------- | --------------------

|OREGON PACIFIC BANCORP
CONSOLIDATED BALANCE SHEETS
|--------------------------------------------------

|                                                            | Unaudited
        MARCH 31,
        2004 |  | Audited
        DECEMBER 31,
        2003 |            
|----------------------------------------------------------- | ---------------------------------------- |  | ----------------------------------------- | -----------
|ASSETS                                                      |                                          |  |                                           |            
|                                                           
|Cash
      and due from banks                               |                                          |  | $                                         | 4,109,603  
|Interest-bearing deposits
      in banks                    |                                          |  |                                           | 12,850,397 
|Available-for-sale
      securities, at fair value          |                                          |  |                                           | 11,754,632 
|Restricted equity
      securities                          |                                          |  |                                           | 1,006,300  
|Loans
      held for sale                                   |                                          |  |                                           | 4,496,527  
|Loans, net of allowance
      for loan                      |                                          | 
|losses
      and unearned income                            |                                          |  |                                           | 87,920,179 
|Premises
      & equipment, net                             |                                          |  |                                           | 5,146,157  
|Other real estate
      owned                               |                                          |  |                                           | 9,746      
|Accrued
      interest and other assets                     |                                          |  |                                           | 1,673,432  
|                                                            |                                          |  |                                           |            
|Total
      assets                                          |                                          |  | $                                         | 128,966,973
|                                                            |                                          |  |                                           |            
|LIABILITIES AND STOCKHOLDERS
      EQUITY                  |                                          | 
|                                                           
|Deposits                                                    |                                          | 
|Demand
      deposits                                       |                                          |  | $                                         | 24,849,185 
|Interest-bearing
      demand deposits                      |                                          |  |                                           | 42,191,712 
|Savings
      deposits                                      |                                          |  |                                           | 17,867,641 
|Time
      certificate accounts:                            |                                          | 
|$100,000
      or more                                      |                                          |  |                                           | 7,794,804  
|Other
      time certificate accounts                       |                                          |  |                                           | 12,590,491 
|                                                            |                                          |  |                                           |            
|Total
      deposits                                        |                                          |  |                                           | 105,293,833
|                                                            |                                          |  |                                           |            
|Other liabilities                                           |                                          | 
|Federal
      Home Loan Bank borrowings                     |                                          |  |                                           | 8,909,056  
|Floating
      rate Junior Subordinated Deferrable Interest |                                          | 
|Debentures
      (Trust Preferred Securities)               |                                          |  |                                           | 4,124,000  
|Deferred
      compensation liability                       |                                          |  |                                           | 1,022,757  
|Accrued
      interest and other liabilities                |                                          |  |                                           | 726,237    
|                                                            |                                          |  |                                           |            
|Total
      liabilities                                     |                                          |  |                                           | 120,075,883
|                                                            |                                          |  |                                           |            
|Stockholders
      equity                                  |                                          |  |                                           |            
|Common
      stock, no par value, 10,000,000 shares         |                                          |  |                                           |            
|authorized
      with 2,178,038 and 2,173,592 issued        |                                          |  |                                           |            
|and
      outstanding at March 31, 2004 and                 |                                          |  |                                           |            
|December
      31, 2003, respectively                       |                                          |  |                                           | 4,924,945  
|Undivided
      profits                                     |                                          |  |                                           | 3,611,079  
|Accumulated
      other comprehensive                       |                                          |  |                                           |            
|income,
      net of tax                                    |                                          |  |                                           | 355,066    
|                                                            |                                          |  |                                           |            
|Total
      stockholders equity                            |                                          |  |                                           | 8,891,090  
|                                                            |                                          |  |                                           |            
|Total
      liabilities and stockholders equity            |                                          |  | $                                         | 128,966,973
|                                                            |                                          |  |                                           |            

|See accompanying notes.


3
|---------------------------

|OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF INCOMEAND COMPREHENSIVE INCOME(Unaudited)
|-------------------------------------------------------------------------------------------

|                                                                    | Three
        Months Ended March 31, | 
|------------------------------------------------------------------- | ------------------------------------ | 
|                                                                    | 2004                                 | 
|INTEREST
      INCOME                                               |                                      | 
|Interest
      and fees on loans                                    |                                      | 
|Interest
      on investment securities:                            |                                      | 
|U.S.
      Teasuries and agencies                                   |                                      | 
|State
      and political subdivisions                              |                                      | 
|Corporate
      and other investments                               |                                      | 
|Interest
      on deposits in banks                                 |                                      | 
|                                                                    |                                      | 
|                                                                    |                                      | 
|Total
      interest income                                         |                                      | 
|                                                                    |                                      | 
|INTEREST EXPENSE                                                    |                                      | 
|Interest-bearing
      demand deposits                              |                                      | 
|Savings
      deposits                                              |                                      | 
|Time
      deposits                                                 |                                      | 
|Other
      borrowings                                              |                                      | 
|                                                                    |                                      | 
|                                                                    |                                      | 
|Total
      interest expense                                        |                                      | 
|                                                                    |                                      | 
|                                                                    |                                      | 
|Net
      interest income                                           |                                      | 
|                                                                    |                                      | 
|PROVISION (BENEFIT)
      FOR LOAN LOSSES                           |                                      | 
|                                                                    |                                      | 
|                                                                    |                                      | 
|Net
      interest income after provision (benefit) for loan losses |                                      | 
|                                                                    |                                      | 
|NONINTEREST
      INCOME                                            |                                      | 
|Mortgage
      loan sales and servicing fees                        |                                      | 
|Service
      charges and fees                                      |                                      | 
|Trust
      fee income                                              |                                      | 
|Investment
      sales commissions                                  |                                      | 
|Other
      income                                                  |                                      | 
|                                                                    |                                      | 
|                                                                    |                                      | 
|Total
      noninterest income                                      |                                      | 
|                                                                    |                                      | 

|4
|-

|OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(continued)
|---------------------------------------------------------------------------------------------------------

|                                                        | Three
        Months Ended March 31, | 
|------------------------------------------------------- | ------------------------------------ | 
|                                                        | 2004                                 | 
|NONINTEREST
      EXPENSE                               |                                      | 
|Salaries
      and benefits                             |                                      | 
|Occupancy                                               |                                      | 
|Supplies                                                |                                      | 
|Postage
      and freight                               |                                      | 
|Outside
      services                                  |                                      | 
|Advertising                                             |                                      | 
|Loan
      collection expense                           |                                      | 
|Securities
      and trust department expenses          |                                      | 
|Other
      expenses                                    |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|Total
      noninterest expense                         |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|INCOME BEFORE INCOME
      TAXES                        |                                      | 
|                                                        |                                      | 
|PROVISION FOR INCOME
      TAXES                        |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|NET
      INCOME                                        |                                      | 
|                                                        |                                      | 
|OTHER
      COMPREHENSIVE INCOME                        |                                      | 
|Unrealized
      holding loss arising during the period |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|COMPREHENSIVE
      INCOME                              |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|EARNINGS PER SHARE
      OF COMMON STOCK                |                                      | 
|Basic
      earnings per share                          |                                      | 
|                                                        |                                      | 
|Diluted
      earnings per share                        |                                      | 
|                                                        |                                      | 
|                                                        |                                      | 
|WEIGHTED AVERAGE COMMON
      SHARES OUTSTANDING        |                                      | 
|Basic
      earnings per share                          |                                      | 
|                                                        |                                      | 
|Diluted
      earnings per share                        |                                      | 
|                                                        |                                      | 

|See accompanying notes.


5
|---------------------------

|OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
|---------------------------------------------------------------------------------

|                                              | Common
        Stock |  |        |           | Undivided |   | Accumulated
        Other
        Comprehensive |  | Total
        Stockholders |           
|--------------------------------------------- | -------------------- |  | ------ | --------- | --------- | - | ----------------------------------------------- |  | --------------------------- | ----------
|                                              | Shares               |  | Amount |           | Surplus   |   | Profits                                         |  | Income                      |           
|Balance,
      December 31, 2002 (Audited)    |                      |  |        | 2,135,244 |           | $ | 939,507                                         |  | $                           | 3,730,019 
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|Change in capitalization
      as a result of |                      | 
|holding
      company formation               |                      |  |        |          |           |   | 3,730,019                                       |  |                             | (3,730,019
|                                              |                      | 
|Exercise
      of stock options               |                      |  |        | 20,000    |           |   | 100,000                                         |  |                             |          
|                                              |                      | 
|Cash
      dividends paid                     |                      |  |        |          |           |   |                                                |  |                             |          
|                                              |                      | 
|Dividends
      reinvested in stock           |                      |  |        | 18,348    |           |   | 125,010                                         |  |                             |          
|                                              |                      | 
|Net
      income and comprehensive income     |                      |  |        |          |           |   |                                                |  |                             |          
|                                              |                      | 
|Balance,
      December 31, 2003 (Audited)    |                      |  |        | 2,173,592 |           | $ | 4,894,536                                       |  | $                           |          
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|Cash
      dividends paid                     |                      |  |        |          |           |   |                                                |  |                             |          
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|Dividends
      reinvested in stock           |                      |  |        | 4,446     |           |   | 30,409                                          |  |                             |          
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|Net
      income and comprehensive income     |                      |  |        |          |           |   |                                                |  |                             |          
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           
|                                              |                      | 
|Balance,
      March 31, 2004 (Unaudited)     |                      |  |        | 2,178,038 |           | $ | 4,924,945                                       |  | $                           |          
|                                              |                      |  |        |           |           |   |                                                 |  |                             |           

|See accompanying notes.


6
|---------------------------

|OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|------------------------------------------------------------------------

|                                                                          | Three
        Months Ended March 31, | 
|------------------------------------------------------------------------- | ------------------------------------ | 
|                                                                          | 2004                                 | 
|CASH
      FLOWS FROM OPERATING ACTIVITIES                                |                                      | 
|Net income                                                                |                                      | 
|Adjustments
      to reconcile net income to net cash                     |                                      | 
|from
      operating activities:                                          |                                      | 
|Depreciation
      and amortization                                       |                                      | 
|Provision
      (benefit) for loan losses                                 |                                      | 
|Federal
      Home Loan Bank stock dividends                              |                                      | 
|Net
      change in mortgage loans held-for-sale                          |                                      | 
|Loss
      on disposition of premises, equipment, and other real estate   |                                      | 
|Net
      increase (decrease) in accrued interest and other assets        |                                      | 
|Net
      decrease in accrued interest and other liabilities              |                                      | 
|                                                                          |                                      | 
|                                                                          |                                      | 
|Net
      cash from operating activities                                  |                                      | 
|                                                                          |                                      | 
|CASH FLOWS FROM INVESTING
      ACTIVITIES                                |                                      | 
|Proceeds
      from sales and maturities of available-for-sale securities |                                      | 
|Purchases
      of available-for-sale-securities                          |                                      | 
|Purchase
      of restricted equity securities                            |                                      | 
|Net
      increase in interest-bearing deposits in banks                  |                                      | 
|Loans
      originated, net of principal repayments                       |                                      | 
|Purchase
      of premises and equipment                                  |                                      | 
|Proceeds
      from sale of other real estate                             |                                      | 
|                                                                          |                                      | 
|                                                                          |                                      | 
|Net
      cash from investing activities                                  |                                      | 
|                                                                          |                                      | 
|CASH FLOWS FROM FINANCING
      ACTIVITIES                                |                                      | 
|Net
      increase in demand and savings deposit accounts                 |                                      | 
|Net
      increase in time deposits                                       |                                      | 
|Proceeds
      from Federal Home Loan Bank borrowings                     |                                      | 
|Repayment
      of Federal Home Loan Bank borrowings                      |                                      | 
|Proceeds
      from issuance of subordinated debentures                   |                                      | 
|Proceeds
      from other bank borrowing                                  |                                      | 
|Cash
      dividends paid                                                 |                                      | 
|                                                                          |                                      | 
|                                                                          |                                      | 
|Net
      cash from financing activities                                  |                                      | 
|                                                                          |                                      | 
|                                                                          |                                      | 
|NET
      DECREASE IN CASH AND CASH EQUIVALENTS                           |                                      | 

|7
|-

|OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
|------------------------------------------------------------------------------------

|                                                                   | Three
        Months Ended March 31, | 
|------------------------------------------------------------------ | ------------------------------------ | 
|                                                                   | 2004                                 | 
|                                                                   |                                      | 
|CASH
      AND CASH EQUIVALENTS, beginning of period               |                                      | 
|                                                                   |                                      | 
|                                                                   |                                      | 
|CASH
      AND CASH EQUIVALENTS, end of period                     |                                      | 
|                                                                   |                                      | 
|                                                                   |                                      | 
|SUPPLEMENTAL CASH
      FLOW INFORMATION                           |                                      | 
|Cash
      paid for interest                                       |                                      | 
|                                                                   |                                      | 
|Cash
      paid for income taxes                                   |                                      | 
|                                                                   |                                      | 
|                                                                   |                                      | 
|SCHEDULE OF NONCASH
      ACTIVITIES                               |                                      | 
|Stock
      dividends reinvested                                   |                                      | 
|                                                                   |                                      | 
|Unrealized
      loss on available for sale securities, net of tax |                                      | 
|                                                                   |                                      | 

|See accompanying notes.


8
|---------------------------

|Notes to Financial Statements


March 31, 2004 and 2003
(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, 2004 are not necessarily
indicative of results to be anticipated for the year ending December 31, 2004.
The interim financial statements should be read in conjunction with the audited
financial statements, including the notes thereto, contained in the Banks
2003 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 while one option was
granted during the quarter ended March 31, 2004. 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, 2004 and 2003 would approximate the pro forma
amounts below.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                 | 3
        Months Ended
        March 31, | 
|------------------------------------------------ | ---------------------------------------- | 
|                                                 | 2004                                     | 
|Net
      earnings, as reported                  |                                          | 
|Deduct: Total stock-based
      employee         |                                          | 
|compensation
      expense determined            |                                          | 
|under
      the fair value-based method          |                                          | 
|for
      all awards, net of related tax effects |                                          | 
|                                                 |                                          | 
|                                                 |                                          | 
|Pro
      forma net earnings                     |                                          | 
|                                                 |                                          | 
|                                                 |                                          | 
|Basic
      earnings per common share:           |                                          | 
|As
      reported                                |                                          | 
|Pro
      forma                                  |                                          | 
|                                                 |                                          | 
|Diluted
      earnings per common share:         |                                          | 
|As
      reported                                |                                          | 
|Pro
      forma                                  |                                          | 

|9
|-

|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, 2004 and 2003:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            | 2004 |  | 2003 |      
|--------------------------- | ---- |  | ---- | -----
|Dividend
      yield        |      |  |      | 2.25 
|Expected
      life (years) |      |  |      | 7.5  
|Expected
      volatility   |      |  |      | 19.72
|Risk-free
      rate        |      |  |      | 3.75 

|In the first quarter of
2004, Bancorp adopted Financial Accounting Standards Boards
(FASB) Interpretation No. 46 (FIN 46)
Consolidation of Variable Interest Entities which provided guidance
on how to identify the primary beneficiary of a variable interest entity (VIE)
and determine when the primary beneficiary of a VIE should include the VIE
within its consolidated financial statements. As a result of adoption of FIN 46,
Bancorp was required to no longer consolidate Oregon Pacific Statutory Trust I
(the Trust) within its financial statements and to recognize $4.1
million as junior subordinated debentures due to the Trust effective March 31,
2004.


Reclassifications 
Certain reclassifications have been made to the 2003 financial statements to
conform to 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, 2004 |  | DEC.
        31, 2003 |           
|------------------------------- | --------------------- |  | --------------------- | ----------
|Real
      estate               |                       |  | $                     | 16,771,063
|Commercial                      |                       |  |                       | 69,919,868
|Installment                     |                       |  |                       | 3,260,361 
|Overdrafts                      |                       |  |                       | 66,148    
|                                |                       |  |                       |           
|                                |                       | 
|                                |                       |  |                       | 90,017,440
|Allowance
      for loan losses |                       |  |                       | (1,642,728
|Unearned
      loan fees        |                       |  |                       | (454,533  
|                                |                       |  |                       |           
|                                |                       |  | $                     | 87,920,179
|                                |                       |  |                       |           

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

|                                             | MAR.
        31, 2004 |  | MAR.
        31, 2003 |          
|-------------------------------------------- | --------------------- |  | --------------------- | ---------
|Balance,
      beginning of period           |                       |  | $                     | 1,315,955
|Provision for (benefit
      of) loan losses |                       |  |                       | (360,000 
|Loans charged off                            |                       |  |                       | (33,252  
|Loan recoveries                              |                       |  |                       | 720,025  
|                                             |                       |  |                       |          
|                                             |                       | 
|Balance, end of period                       |                       |  | $                     | 1,642,728
|                                             |                       |  |                       |          

|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. There were no loans on nonaccrual status at March
31, 2004 or December 31, 2003.


The Bank had no loans
past due 90 days or more on which it continued to accrue interest at either
March 31, 2004 or December 31, 2003.


10
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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.


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, is the holding company of Oregon Pacific Banking Co. (the
Bank). 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 in Florence, to three additional Oregon
locations including Roseburg, Coos Bay and Sutherlin. The Bank also provides
trust and asset management services, and investment and brokerage services, at
its main office in Florence and at offices in Roseburg and Coos Bay, Oregon.


The Company has 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. 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 of the Company are identical.


11
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The Company reported net
income of $367,000, or $.17 per basic share, for the three months ended March
31, 2004. This compares to Bank income of $188,000, or $.09 per basic share, for
the same three month period in the prior year. The increase in earnings is
largely attributable to a large recovery of a loan charged off in 1998 and a
benefit from the provision for loan losses that resulted from the recovery.


Financial
Condition


Total assets at March 31,
2004 were $128,967,000 compared to $120,676,000 at December 31, 2003, an
increase of $8,291,000 (6.9%). The increase was due primarily to
interest-bearing deposits ($8.09 million) and new loans ($5.20 million),
partially offset by the decrease of securities available-for-sale ($5.09
million).


Total deposits increased
$7,829,000 (8.0%) in the three-month period since December 31, 2003. The
increase was primarily due to the opening of the new facilities in both Coos Bay
and Roseburg that attracted new customers.


March 31, 2004
stockholders equity was $8,891,000, an increase of $256,000 from December
31, 2003. This change resulted from consolidated net income partially offset by
cash dividends paid ($91,000).


Results of
Operations


Net interest income


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 $1,627,000 for the quarter ended March 31, 2004
compared to $1,336,000 for the same period in 2003 (see Table 1). The $291,000
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 1.41% compared to 2.18% for the same period in 2003. The increase in
interest income of $156,000 was due to a $199,000 increase from the increase in
average loans outstanding of $10,339,000 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:


12
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    |         | Three
        Months Ended
        Mar 31, 2004 |         | Three
        Months Ended
        Mar 31, 2003 |       | Increase
        (Decrease) |        
|----------------------------------- | ------- | ----------------------------------------------- | ------- | ----------------------------------------------- | ----- | --------------------------- | -------
|                                    |         | Average                                         |         | Interest
        Income or                      |       | Average
        Yield or    |        
|                                    | Balance |                                                 | Expense |                                                 | Rates |                             | Balance
|Interest-earning
      assets:      |         |                                                 |         |                                                 |       |                             |        
|Loans(2)                            |         | $                                               | 89,932  |                                                 | $     | 1,653                       |        
|Investment
      securities         |         |                                                 |         |                                                 |       |                             |        
|Taxable
      securities            |         |                                                 | 8,520   |                                                 |       | 141                         |        
|Nontaxable
      securities(1)      |         |                                                 | 6,376   |                                                 |       | 120                         |        
|Interest-earning
      balances     |         |                                                 |         |                                                 |       |                             |        
|due
      from banks                |         |                                                 | 8,082   |                                                 |       | 18                          |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Total
      interest-earning        |         |                                                 |         |                                                 |       |                             |        
|assets                              |         |                                                 | 112,910 |                                                 |       | 1,932                       |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Cash
      and due from banks       |         |                                                 | 4,702   |                                                 |       |                             |        
|Premises
      and equipment, net   |         |                                                 | 5,001   |                                                 |       |                             |        
|Other
      real estate             |         |                                                 | 10      |                                                 |       |                             |        
|Loan
      loss allowance           |         |                                                 | (1,302  | )                                               |       |                             |        
|Other
      assets                  |         |                                                 | 2,141   |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Total
      assets                  |         | $                                               | 123,462 |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Interest-bearing
      liabilities: |         |                                                 |         |                                                 |       |                             |        
|Interest-bearing
      checking     |         |                                                 |         |                                                 |       |                             |        
|and
      savings accounts          |         | $                                               | 58,164  |                                                 | $     | 117                         |        
|Time
      deposit and IRA          |        
|accounts                            |         |                                                 | 20,144  |                                                 |       | 110                         |        
|Borrowed
      funds                |         |                                                 | 8,144   |                                                 |       | 78                          |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Total
      interest-bearing        |         |                                                 |         |                                                 |       |                             |        
|liabilities                         |         |                                                 | 86,452  |                                                 |       | 305                         |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Noninterest-bearing                 |         |                                                 |         |                                                 |       |                             |        
|deposits                            |         |                                                 | 22,602  |                                                 |       |                             |        
|Other
      liabilities             |         |                                                 | 1,745   |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Total
      liabilities             |         |                                                 | 110,799 |                                                 |       |                             |        
|Shareholders
      equity          |         |                                                 | 12,663  |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Total
      liabilities and         |         |                                                 |         |                                                 |       |                             |        
|shareholders
      equity          |         | $                                               | 123,462 |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Net
      interest income           |         |                                                 |         |                                                 | $     | 1,627                       |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Net
      interest spread           |         |                                                 |         |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Net
      interest expense to       |         |                                                 |         |                                                 |       |                             |        
|average
      earning assets        |         |                                                 |         |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        
|Net
      interest margin           |         |                                                 |         |                                                 |       |                             |        
|                                    |         |                                                 |         |                                                 |       |                             |        

|(1)
Tax-exempt income has been adjusted to a tax-equivalent basis at 34%.


(2)
Nonaccrual loans are included in the average balance.


13
|------------------------------------------------------------------------------------------------------------------------------------------

|Provision
        for Loan Losses


A benefit of $360,000 was
recorded for the three months ended March 31, 2004 compared to a provision of
$50,000 in the same period in 2003. The allowance for loan losses at March 31,
2004 was 1.8% of gross loans, as compared to 1.5% at December 31, 2003.
Management is satisfied that the reserve is adequate for probable loan losses in
the loan portfolio at March 31, 2004. 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
decreased $122,000 or 19.3% for the three months ended March 31, 2004 as
compared to the same period in 2003. The decrease was primarily the result of
decreased mortgage loan sales from the prior year as 2003 loan refinances during
that period of historically low mortgage rates. The decrease was partially
offset by increases in all other categories of noninterest income.


Noninterest Expense


Noninterest expense
increased $244,000 or 15.1% for the three months ended March 31, 2004 over the
same period one year ago. The increase is attributable to costs associated with
the opening of new facilities at two locations and the related costs of
increased headcount and furnishings.


The provision for income
taxes at both March 31, 2004 and 2003 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, calls 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. Sales of the
Banks investment portfolio are 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 the 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 more than sufficient at March 31, 2004 and purchases for the
Banks investment portfolio were made. 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.


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, 2004, the Banks leverage and total risk-based ratios were 10.10%
and 13.40% respectively, which exceed the well-capitalized threshold.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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.


14
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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, policy requires
the estimated net interest margin not to 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,
2004 levels.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | INCREASE
        OR
        DECREASE ININTEREST RATES |  | ESTIMATED
        FINANCIAL
        IMPACT ONNET INCOME |      
| | ----------------------------------------------------- |  | ------------------------------------------------------- | -----
| |                                                       |  |                                                         |      
| |                                                       |  |                                                         | 2.0% 
| |                                                       |  |                                                         | 1.0% 
| |                                                       |  |                                                         | -1.0%
| |                                                       |  |                                                         | -2.0%

|The smaller impact on net
income with a decrease in interest rates of two percent results from the floor
rates on most loans. 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,
2003.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 4. | Controls and Procedures
|------- | -----------------------

|(a) | The
Companys  management,  including the  Companys  Chief  Executive  Officer and
Chief  Financial  Officer,  evaluated the  effectiveness  of its disclosure  controls and
procedures as of March 31, 2004.  Based on this  evaluation,  the Chief Executive
Officer and the Chief Financial  Officer each concludes that as of March 31,  2004, the
Company maintained effective disclosure controls and procedures in all material respects,
including  those to ensure that  information  required to be  disclosed  in reports
filed or  submitted  with the SEC is  recorded,  processed,  and reported  within the
time periods  specified  by the SEC,  and is  accumulated  and  communicated  to
management,  including  the Chief  Executive  Officer and the Chief  Financial  Officer,
as  appropriate to allow for timely decision regarding required disclosure.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Changes
in Internal  Controls:  In the quarter ended March 31, 2004, the Company did not make any
significant  changes in, nor take any  corrective  actions  regarding,  its internal
controls or other  factors that could  significantly affect these controls.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Disclosure
Controls  and  Internal  Controls.  Disclosure  controls are  procedures  that are
designed  with the  objective  of ensuring  that  information  required to be  disclosed
in the  Companys  reports  filed under the  Securities  Exchange Act of 1934
(Exchange Act) is recorded,  processed,  summarized and reported within the time  periods
specified in the Securities and Exchange  Commissions  (SEC) rules and forms.
Disclosure  controls are  also designed with the  objective of ensuring  that such
information  is  accumulated  and  communicated  to our  management,  as  appropriate to
allow timely  decisions  regarding  required  disclosure.  Internal  Controls are
procedures  which are designed with the objective of providing  reasonable  assurance
that (1)  transactions  are  properly  authorized;  (2) assets are safeguarded against
unauthorized or improper use; and (3) transactions are  properly  recorded and  reported,
all to permit the  preparation  of  financial  statement  in  conformity  with
accounting principles generally accepted in the United States of America.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15
|--

| | Limitations
on the  Effectiveness  of Controls. The Companys  management  does not expect
that our  disclosure  controls or our internal  controls will prevent all errors and all
fraud.  A control  system,  no matter how well  conceived and operated, can provide only
reasonable,  not absolute,  assurance that the objectives of the control  system  are
met.  Further,  the  design  of  control  system  must  reflect  the fact  that  there
are  resource  constraints,  and the benefits of controls  must be considered  relative
to their costs.  Because of the inherent  limitations in all control  systems,  no
evaluation of controls can provide  absolute  assurance that all control  issues and
instances  of fraud,  if any,  within the Company  have been  detected.  These  inherent
limitations  include the realities that judgments in  decision-making  can be faulty, and
that breakdowns can occur because of  simple error or mistake.  Additionally,  controls
can be circumvented by the individual acts of some persons,  by  collusion of two or more
people, or by management  override of the control.  The design of any system of controls
also is based in part upon  certain  assumptions  about the  likelihood  of  future
events,  and there can be no  assurance  that any design will succeed in  achieving  its
stated goals under all  potential  future  conditions;  over time,  controls may become
inadequate  because of changes in conditions,  or the degree of compliance  with  the
policies or procedures  may  deteriorate.  Because of the inherent  limitations in a
cost-effective  control  system, misstatements due to error or fraud may occur and not be
detected.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II. | OTHER
INFORMATION
|-------- | -----------------

|Item 1. | Legal
proceedings.
|------- | ------------------

|The Company and its Chief
Executive Officer are defendants in a lawsuit filed in the Lane County, Oregon
Circuit Court in August, 2003 by a former Bank employee. The suit alleges breach
of contract and other claims arising from the plaintiffs employment and
compensation arrangements with the Company. The former employee also filed an
administrative claim with the U. S. Department of Labor under the Sarbanes-Oxley
Act of 2002. The Company and its Chief Executive Officer deny any liability in
these proceedings, and have retained counsel to vigorously defend the claims.
The plaintiff has not alleged any specific dollar amount of damages in her
lawsuit.


In the normal course of
its business, the Bank is a party to various debtor-creditor legal actions, none
of which, individually or in the aggregate, are presently material to the
Banks business, operations or financial condition. These include cases
filed as a plaintiff in collection and foreclosure cases, and the enforcement of
creditors rights in bankruptcy proceedings.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2. | Changes
in securities and use of proceeds.
|------- | ------------------------------------------

| | None.
| | -----

|Item 3. | Defaults
upon senior securities.
|------- | --------------------------------

| | None.
| | -----

|Item 4. | Submission
of matters to a vote of security holders.
|------- | ----------------------------------------------------

| | None.
| | -----

|Item 5. | Other
information.
|------- | ------------------

| | None.
| | -----

|16
|--

|Item 6. | Exhibits
and reports on Form 8-K.
|------- | ---------------------------------

|(a) | Exhibits.
|--- | ---------

|The following documents
are filed as part of this Form 10-Q as required by Item 601 of Regulation S-K:
|------------------------------------------------------------------------------------------------------

| | 3.1 | Articles
of Incorporation of Oregon Pacific Bancorp (incorporated herein by reference to  Exhibit
3(i) to Oregon Pacific Bancorps Form 10-K for the year ended December 31,  2002
filed with the Securities and Exchange Commission on March 31, 2003).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Bylaws
of Oregon Pacific Bancorp (incorporated herein by reference to Exhibit 3(i) to  Oregon
Pacific Bancorps Form 10-K for the year ended December 31, 2002 filed with  the
Securities and Exchange Commission on March 31, 2003).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | 2003
Stock Incentive Plan (incorporated by reference to Exhibit 1 to Oregon Pacific  Bancorps
Form DEF 14A filed with the Securities and Exchange Commission on March 23,  2003).
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 | Oregon
Pacific Banking Co. Deferred  Compensation and Incentive Plan  (incorporated  herein by
reference to  Exhibit  10.2 to Oregon  Pacific  Bancorps  Form 10-K for the year
ended  December 31, 2003 filed with the  Securities and Exchange Commission on March 30,
2004).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certification
of Chief Executive Officer pursuant to rule 13a-14(a) or Rule 15d-14(a) and  Section
302(a) of the Sarbanes-Oxley Act of 2002.**
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of Chief Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley  Act of 2002**
| | ---- | --------------------------------------------------------------------------------------------------------

| | 32.1 | Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002**
| | ---- | -----------------------------------------------------------------------------------------------------

| | 32.2 | Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002**
| | ---- | -----------------------------------------------------------------------------------------------------

| | _________________
**  Filed herewith.
| | -------------------------------------

|(b) | On
February  12, 2004 a Form 8-K was filed under items 12 and 5  announcing  2003 fourth
quarter and year  earnings.  The report also included a press release disclosing the
retirement of Company directors.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|17
|--

|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 May  13, 2004.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | OREGON PACIFIC BANCORP
By: /s/ Thomas K. Grove

       Thomas K. Grove
       President, Chief Executive Officer
       And Director (Chief Executive Officer)
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Joanne Forsberg

       Joanne Forsberg
       Secretary and Chief Financial Officer
       (Principal Financial Officer)
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--