##### Table of Contents



FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark one)
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|           |  |                                                                                         
|           |  | For the quarterly period ended September 30, 2003                                       
|           |  |                                                                                         
|[   ]      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|           |  |                                                                                         
|           |  | For the transition period from  to                                                      

OREGON PACIFIC BANCORP

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


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

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

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

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X ]       No
[   ]

The number of shares outstanding of the issuers Common Stock, no par
value, as of October 31, 2003, was 2,169,042.





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TABLE OF CONTENTS



|                          |                                                                                                 |                                                            |  |  |  |  |  | 
|------------------------- | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                          | Item 1. Financial statements                                                                   
|                          |                                                                                                 | CONSOLIDATED BALANCE SHEETS                               
|                          |                                                                                                 | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                          |                                                                                                 | CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
|                          |                                                                                                 | CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                          |                                                                                                 | Notes to Financial Statements                             
|                          | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                          | Item 3. Quantitive and Qualitive Disclosures about Market Risk                                 
|                          | Item 4. Controls and Procedures                                                                
|PART 2. OTHER INFORMATION
|SIGNATURES               
|EXHIBIT 31.1             
|EXHIBIT 31.2             
|EXHIBIT 32.1             
|EXHIBIT 32.2             



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##### Table of Contents



OREGON PACIFIC BANCORP

INDEX

|         |  |                                                                      |  |                                                            |  |      
|-------- |  | -------------------------------------------------------------------- |  | ---------------------------------------------------------- |  | -----
|Part I.  |  | Financial Information                                                |  |                                                           
|         |  | Item 1.                                                              |  | Financial statements Consolidated Balance Sheets           |  | 3    
|         |  |                                                                      |  | Consolidated Statements of Income and Comprehensive Income |  | 4-5  
|         |  |                                                                      |  | Consolidated Statements of Changes in Stockholders Equity |  | 6    
|         |  |                                                                      |  | Consolidated Statements of Cash Flows                      |  | 7-8  
|         |  |                                                                      |  | Notes to Consolidated Financial Statements                 |  | 9-11 
|         |  | Item 2.                                                              |  | Managements Discussion and Analysis or Plan of Operation  |  | 11-16
|         |  | Item 3.                                                              |  | Quantitive and Qualitive Disclosures about Market Risk     |  | 16-17
|         |  | Item 4.                                                              |  | Controls and Procedures                                    |  | 17   
|Part II. |  | Other Information                                                    |  | 17-18                                                     
|         |  | Signatures                                                           |  | 19                                                        
|         |  | Certification of Chief Executive Officer and Chief Financial Officer |  | 21-22                                                     

2



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##### Table of Contents






Item 1. Financial statements




OREGON PACIFIC BANCORP
CONSOLIDATED BALANCE SHEETS

|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |              |            |   |             | 
|----------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ---------- | ------------------------------------------ | ---------- | ------------- | ----------- | ------------ | ---------- | - | ----------- | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            | Unaudited     |             | Audited     
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            | September 30, |             | DECEMBER 31,
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            | 2003          |             | 2002        
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|ASSETS                                                      |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|Cash and due from banks                                     |                                                                                                                                                                        | $                               | 4,649,309  |                                            |            | $             | 3,886,203   |             
|Interest-bearing deposits in banks                          |                                                                                                                                                                        |                                 | 6,059,327  |                                            |            |               | 8,078,510   |             
|Available-for-sale securities, at fair value                |                                                                                                                                                                        |                                 | 17,946,760 |                                            |            |               | 13,913,137  |             
|Restricted equity securities                                |                                                                                                                                                                        |                                 | 862,500    |                                            |            |               | 831,750     |             
|Loans held for sale                                         |                                                                                                                                                                        |                                 | 4,932,349  |                                            |            |               | 5,327,661   |             
|Loans, net of allowance for loan
losses and unearned income |                                                                                                                                                                        |                                 | 80,474,932 |                                            |            |               | 70,988,652  |             
|Premises & equipment, net                                   |                                                                                                                                                                        |                                 | 3,868,742  |                                            |            |               | 2,726,595   |             
|Other real estate owned                                     |                                                                                                                                                                        |                                 | 9,746      |                                            |            |               | 117,494     |             
|Accrued interest and other assets                           |                                                                                                                                                                        |                                 | 1,474,705  |                                            |            |               | 1,149,886   |             
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            |                                                                                                                                                                        |                                 |            | Total assets                               |            | $             | 120,278,370 |              |            | $ | 107,019,888 | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|LIABILITIES AND STOCKHOLDERS EQUITY                        |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|Deposits                                                    |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            | Demand deposits                                                                                                                                                        |                                 | $          | 23,571,486                                 |            |               | $           | 18,512,436   |           
|                                                            | Interest-bearing demand deposits                                                                                                                                       |                                 |            | 42,954,171                                 |            |               |             | 35,996,332   |           
|                                                            | Savings deposits                                                                                                                                                       |                                 |            | 14,541,884                                 |            |               |             | 12,750,616   |           
|                                                            | Time certificate accounts:                                                                                                                                             |                                 |            |                                            |            |               |             |              |           
|                                                            |                                                                                                                                                                        | $100,000 or more                |            |                                            | 7,059,660  |               |             |              | 7,629,913  |  
|                                                            |                                                                                                                                                                        | Other time certificate accounts |            |                                            | 13,397,206 |               |             |              | 13,625,754 |  
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            |                                                                                                                                                                        |                                 |            | Total deposits                             |            |               | 101,524,407 |              |            |   | 88,515,051  | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|Other liabilities                                           |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            | Federal Home Loan Bank borrowings                                                                                                                                      |                                 |            | 8,351,555                                  |            |               |             | 8,852,500    |           
|                                                            | Other borrowings                                                                                                                                                       |                                 |            | 175,000                                    |            |               |             |             |           
|                                                            | Deferred compensation liability                                                                                                                                        |                                 |            | 892,717                                    |            |               |             | 795,272      |           
|                                                            | Accrued interest and other liabilities                                                                                                                                 |                                 |            | 814,553                                    |            |               |             | 964,143      |           
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            |                                                                                                                                                                        |                                 |            | Total liabilities                          |            |               | 111,758,232 |              |            |   | 99,126,966  | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|Stockholders equity                                        |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            | Common stock, no par value, 10,000,000 shares
authorized with 2,169,042 and 2,135,244 issued
and outstanding at September 30, 2003 and
December 31, 2002, respectively |                                 |            | 4,864,374                                  |            |               |             | 939,507      |           
|                                                            | Surplus                                                                                                                                                                |                                 |            |                                           |            |               |             | 3,730,019    |           
|                                                            | Undivided profits                                                                                                                                                      |                                 |            | 3,171,841                                  |            |               |             | 2,735,032    |           
|                                                            | Accumulated other comprehensive
income, net of tax                                                                                                                     |                                 |            | 483,923                                    |            |               |             | 488,364      |           
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            |                                                                                                                                                                        |                                 |            | Total stockholders equity                 |            |               | 8,520,138   |              |            |   | 7,892,922   | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             
|                                                            |                                                                                                                                                                        |                                 |            | Total liabilities and stockholders equity |            | $             | 120,278,370 |              |            | $ | 107,019,888 | 
|                                                            |                                                                                                                                                                        |                                 |            |                                            |            |               |             |             

See accompanying notes.

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##### Table of Contents






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

|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |           |           | 
|------------------------- | -------------------------------------- | --------------------------------------------------- | ------ | ------------------ | --------- | ----------------- | ------- | --------- | --------- | ---- | ------- | --------- | --------- |  | ------- | --------- | --------- | 
|                          |                                        |                                                     |        | Three Months Ended |           | Nine Months Ended
|                          |                                        |                                                     |        | September 30,      |           | September 30,    
|                          |                                        |                                                     |        |                    |           |                  
|                          |                                        |                                                     |        | 2003               |           | 2002              |         | 2003      |           | 2002
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |     
|INTEREST INCOME           |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          | Interest and fees on loans             |                                                     | $      | 1,621,427          |           |                   | $       | 1,423,743 |           |      | $       | 4,761,034 |           |  | $       | 3,923,358 |          
|                          | Interest on investment securities:     |                                                     |        |                    |           |                   |         |           |           |      |         |          |           |  |         |           |          
|                          |                                        | U.S. Treasuries and agencies                        |        |                    | 38,650    |                   |         |           | 26,648    |      |         |           | 94,358    |  |         |           | 132,957   | 
|                          |                                        | State and political subdivisions                    |        |                    | 92,825    |                   |         |           | 93,825    |      |         |           | 274,379   |  |         |           | 393,797   | 
|                          |                                        | Corporate and other investments                     |        |                    | 36,831    |                   |         |           | 72,144    |      |         |           | 198,263   |  |         |           | 209,614   | 
|                          | Interest on deposits in banks          |                                                     |        | 13,674             |           |                   |         | 34,299    |           |      |         | 52,340    |           |  |         | 54,358    |          
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          |                                        | Total interest income                               |        |                    | 1,803,407 |                   |         |           | 1,650,659 |      |         |           | 5,380,374 |  |         |           | 4,714,084 | 
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|INTEREST EXPENSE          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          | Interest-bearing demand deposits       |                                                     |        | 117,755            |           |                   |         | 130,746   |           |      |         | 422,801   |           |  |         | 330,196   |          
|                          | Savings deposits                       |                                                     |        | 35,005             |           |                   |         | 49,955    |           |      |         | 111,658   |           |  |         | 148,773   |          
|                          | Time deposits                          |                                                     |        | 128,243            |           |                   |         | 163,286   |           |      |         | 421,236   |           |  |         | 532,541   |          
|                          | Other borrowings                       |                                                     |        | 85,774             |           |                   |         | 100,160   |           |      |         | 271,783   |           |  |         | 248,761   |          
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          |                                        | Total interest expense                              |        |                    | 366,777   |                   |         |           | 444,147   |      |         |           | 1,227,478 |  |         |           | 1,260,271 | 
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          |                                        | Net interest income                                 |        |                    | 1,436,630 |                   |         |           | 1,206,512 |      |         |           | 4,152,896 |  |         |           | 3,453,813 | 
|PROVISION FOR LOAN LOSSES |                                        |                                                     | 40,000 |                    |           |                   | 100,000 |           |           |      | 130,000 |           |           |  | 179,000 |          
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          |                                        | Net interest income after
provision for loan losses |        |                    | 1,396,630 |                   |         |           | 1,106,512 |      |         |           | 4,022,896 |  |         |           | 3,274,813 | 
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|NONINTEREST INCOME        |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          | Mortgage loan sales and servicing fees |                                                     |        | 341,732            |           |                   |         | 236,076   |           |      |         | 1,046,659 |           |  |         | 649,983   |          
|                          | Service charges and fees               |                                                     |        | 129,006            |           |                   |         | 100,624   |           |      |         | 341,264   |           |  |         | 278,581   |          
|                          | Investment sales commissions           |                                                     |        | 62,837             |           |                   |         | 44,392    |           |      |         | 110,005   |           |  |         | 162,594   |          
|                          | Trust fee income                       |                                                     |        | 115,871            |           |                   |         | 99,126    |           |      |         | 333,462   |           |  |         | 274,893   |          
|                          | Other income                           |                                                     |        | 22,572             |           |                   |         | 22,968    |           |      |         | 71,476    |           |  |         | 65,574    |          
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          
|                          |                                        | Total noninterest income                            |        |                    | 672,018   |                   |         |           | 503,186   |      |         |           | 1,902,866 |  |         |           | 1,431,625 | 
|                          |                                        |                                                     |        |                    |           |                   |         |           |           |      |         |           |           |  |         |          

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

|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |           |           | 
|------------------------------------------ | ---------------------------------------- | -------------------------------------------------------------------- | ------- | ------------------ | --------- | ----------------- | ------- | --------- | --------- | ---- | --------- | --------- | --------- | - | ------- | --------- | --------- | 
|                                           |                                          |                                                                      |         | Three Months Ended |           | Nine Months Ended
|                                           |                                          |                                                                      |         | September 30,      |           | September 30,    
|                                           |                                          |                                                                      |         |                    |           |                  
|                                           |                                          |                                                                      |         | 2003               |           | 2002              |         | 2003      |           | 2002
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |     
|NONINTEREST EXPENSE                        |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           | Salaries and benefits                    |                                                                      | $       | 1,045,148          |           |                   | $       | 861,430   |           |      | $         | 3,054,936 |           |   | $       | 2,461,288 |          
|                                           | Occupancy                                |                                                                      |         | 155,973            |           |                   |         | 137,527   |           |      |           | 468,201   |           |   |         | 377,530   |          
|                                           | Supplies                                 |                                                                      |         | 44,654             |           |                   |         | 47,144    |           |      |           | 143,125   |           |   |         | 133,644   |          
|                                           | Postage and freight                      |                                                                      |         | 21,339             |           |                   |         | 18,858    |           |      |           | 71,536    |           |   |         | 56,157    |          
|                                           | Outside services                         |                                                                      |         | 141,332            |           |                   |         | 110,492   |           |      |           | 471,237   |           |   |         | 302,383   |          
|                                           | Advertising                              |                                                                      |         | 23,065             |           |                   |         | 36,297    |           |      |           | 82,584    |           |   |         | 86,052    |          
|                                           | Loan collection expense                  |                                                                      |         | 67,419             |           |                   |         | 18,421    |           |      |           | 152,760   |           |   |         | 52,189    |          
|                                           | Securities and trust department expenses |                                                                      |         | 32,339             |           |                   |         | 34,151    |           |      |           | 96,960    |           |   |         | 134,096   |          
|                                           | Other expenses                           |                                                                      |         | 107,477            |           |                   |         | 95,339    |           |      |           | 375,011   |           |   |         | 288,009   |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           |                                          | Total noninterest expense                                            |         |                    | 1,638,746 |                   |         |           | 1,359,659 |      |           |           | 4,916,350 |   |         |           | 3,891,348 | 
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|INCOME BEFORE INCOME TAXES                 |                                          |                                                                      | 429,903 |                    |           |                   | 250,039 |           |           |      | 1,009,412 |           |           |   | 815,090 |          
|PROVISION FOR INCOME TAXES                 |                                          |                                                                      | 156,492 |                    |           |                   | 62,000  |           |           |      | 293,664   |           |           |   | 185,000 |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|NET INCOME                                 |                                          |                                                                      | 273,411 |                    |           |                   | 188,039 |           |           |      | 715,748   |           |           |   | 630,090 |          
|OTHER COMPREHENSIVE INCOME                 |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           |                                          | Unrealized holding gain/(loss)
arising during the period, net of tax |         |                    | (58,249   | )                 |         |           | 127,553   |      |           |           | (4,441    | ) |         |           | 229,604   | 
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|COMPREHENSIVE INCOME                       |                                          | $                                                                    | 215,162 |                    |           | $                 | 315,592 |           |           | $    | 711,307   |           |           | $ | 859,694 |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|EARNINGS PER SHARE OF
COMMON STOCK         |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           | Basic earnings per share                 |                                                                      | $       | 0.13               |           |                   | $       | 0.09      |           |      | $         | 0.33      |           |   | $       | 0.30      |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           | Diluted earnings per share               |                                                                      | $       | 0.13               |           |                   | $       | 0.09      |           |      | $         | 0.33      |           |   | $       | 0.30      |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           | Basic earnings per share                 |                                                                      |         | 2,166,808          |           |                   |         | 2,121,987 |           |      |           | 2,151,496 |           |   |         | 2,121,095 |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          
|                                           | Diluted earnings per share               |                                                                      |         | 2,169,102          |           |                   |         | 2,131,922 |           |      |           | 2,153,950 |           |   |         | 2,127,843 |          
|                                           |                                          |                                                                      |         |                    |           |                   |         |           |           |      |           |           |           |   |         |          

See Accompanying Notes

5



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OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|----------------------------------------------------------------- |  | ------------ | --------- | ------ |  | ------- | --------- | --------- |  | ------------- | ---------- | ------------- |  | - | --------- | - |  | ----------- | ------- | ----- |  | - | --------- | -
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  | Accumulated |         |       |  |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  | Other       |         | Total
|                                                                  |  | Common Stock |           |        |  |         |           | Undivided |  | Comprehensive |            | Stockholders
|                                                                  |  | Shares       |           | Amount |  | Surplus |           | Profits   |  | Income        |            | Equity       
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |              
|Balance, December 31, 2001 (Audited)                              |  |              | 2,112,493 |        |  | $       | 929,497   |           |  | $             | 3,609,063  |               |  | $ | 2,295,068 |   |  | $           | 277,687 |       |  | $ | 7,111,315 |  
|Cash dividends paid                                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | (250,879  | ) |  |             |        |       |  |   | (250,879  | )
|Dividends reinvested in stock                                     |  |              | 22,751    |        |  |         | 10,010    |           |  |               | 120,956    |               |  |   | (130,966  | ) |  |             |        |       |  |   |          |  
|Net income and comprehensive income                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | 821,809   |   |  |             | 210,677 |       |  |   | 1,032,486 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Balance, December 31, 2002 (Audited)                              |  |              | 2,135,244 |        |  | $       | 939,507   |           |  | $             | 3,730,019  |               |  | $ | 2,735,032 |   |  | $           | 488,364 |       |  | $ | 7,892,922 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Change in capitalization as a result
of holding company formation |  |              |          |        |  |         | 3,730,019 |           |  |               | (3,730,019 | )             |  |   |          |   |  |             |        |       |  |   |          |  
|Exercise of stock options                                         |  |              | 20,000    |        |  |         | 100,000   |           |  |               |           |               |  |   |          |   |  |             |        |       |  |   | 100,000   |  
|Cash dividends paid                                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | (184,091  | ) |  |             |        |       |  |   | (184,091  | )
|Dividends reinvested in stock                                     |  |              | 13,798    |        |  |         | 94,848    |           |  |               |           |               |  |   | (94,848   | ) |  |             |        |       |  |   |          |  
|Net income and comprehensive income                               |  |              |          |        |  |         |          |           |  |               |           |               |  |   | 715,748   |   |  |             | (4,441  | )     |  |   | 711,307   |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  
|Balance, September 30, 2003 (Unaudited)                           |  |              | 2,169,042 |        |  | $       | 4,864,374 |           |  | $             |           |               |  | $ | 3,171,841 |   |  | $           | 483,923 |       |  | $ | 8,520,138 |  
|                                                                  |  |              |           |        |  |         |           |           |  |               |            |               |  |   |           |   |  |             |         |       |  |   |           |  

See Accompanying Notes

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OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                           |                                                                          |                                    |         |                                 |             |      |         |             |             |  
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------- | ------- | ------------------------------- | ----------- | ---- | ------- | ----------- | ----------- | -
|                                                                           |                                                                          |                                    |         | Nine Months Ended September 30,
|                                                                           |                                                                          |                                    |         | 2003                            |             | 2002
|                                                                           |                                                                          |                                    |         |                                 |             |     
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |                                                                          |                                    |         |                                 |             |      |         |            
|Net income                                                                 |                                                                          | $                                  | 715,748 |                                 |             | $    | 630,090 |            
|Adjustments to reconcile net income to net cash
from operating activities: |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           | Depreciation and amortization                                            |                                    |         | 258,162                         |             |      |         | 234,747     |            
|                                                                           | Provision for loan losses                                                |                                    |         | 130,000                         |             |      |         | 179,000     |            
|                                                                           | Federal Home Loan Bank stock dividends                                   |                                    |         | (30,100                         | )           |      |         | (31,650     | )          
|                                                                           | Net change in mortgage loans held-for-sale                               |                                    |         | 395,312                         |             |      |         | 340,970     |            
|                                                                           | Loss (gain) on disposition of premises, equipment, and other real estate |                                    |         | 2,286                           |             |      |         | (4,844      | )          
|                                                                           | Decrease in trading securities                                           |                                    |         |                                |             |      |         | 3,276,527   |            
|                                                                           | Net increase in accrued interest and other assets                        |                                    |         | (321,859                        | )           |      |         | (280,711    | )          
|                                                                           | Net decrease in accrued interest and other liabilities                   |                                    |         | (52,145                         | )           |      |         | 417,028     |            
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           |                                                                          | Net cash from operating activities |         |                                 | 1,097,404   |      |         |             | 4,761,157   |  
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           | Proceeds from sales and maturities of available-for-sale securities      |                                    |         | 4,045,721                       |             |      |         | 7,767,603   |            
|                                                                           | Purchases of available-for-sale-securities                               |                                    |         | (8,127,756                      | )           |      |         | (2,946,288  | )          
|                                                                           | Proceeds from (purchase) sale of restricted equity securities            |                                    |         | (650                            | )           |      |         | 450         |            
|                                                                           | Net increase (decrease) in interest-bearing deposits in banks            |                                    |         | 2,019,183                       |             |      |         | (3,545,000  | )          
|                                                                           | Loans originated, net of principal repayments                            |                                    |         | (9,616,280                      | )           |      |         | (16,250,738 | )          
|                                                                           | Purchase of premises and equipment                                       |                                    |         | (1,359,298                      | )           |      |         | (1,106,464  | )          
|                                                                           | Proceeds from sale of other real estate                                  |                                    |         | 104,949                         |             |      |         | 98,643      |            
|                                                                           | Additions to other real estate owned                                     |                                    |         | 513                             |             |      |         | (5,217      | )          
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           |                                                                          | Net cash from investing activities |         |                                 | (12,933,618 | )    |         |             | (15,987,011 | )
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           | Net increase in demand and savings deposit accounts                      |                                    |         | 13,808,157                      |             |      |         | 10,840,181  |            
|                                                                           | Net increase (decrease) in time deposits                                 |                                    |         | (798,801                        | )           |      |         | (2,214,440  | )          
|                                                                           | Proceeds from Federal Home Loan Bank borrowings                          |                                    |         | 550,000                         |             |      |         | 5,600,000   |            
|                                                                           | Repayment of Federal Home Loan Bank borrowings                           |                                    |         | (1,050,945                      | )           |      |         | (2,237,500  | )          
|                                                                           | Proceeds from other bank borrowing                                       |                                    |         | 175,000                         |             |      |         |            |            
|                                                                           | Cash received in exercise of stock options                               |                                    |         | 100,000                         |             |      |         |            |            
|                                                                           | Cash dividends paid                                                      |                                    |         | (184,091                        | )           |      |         | (209,247    | )          
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|                                                                           |                                                                          | Net cash from financing activities |         |                                 | 12,599,320  |      |         |             | 11,778,994  |  
|                                                                           |                                                                          |                                    |         |                                 |             |      |         |            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                       |                                                                          |                                    | 763,106 |                                 |             |      | 553,140 |            

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

|                                               |                                                                     |   |                                 |        |      |   |           |         | 
|---------------------------------------------- | ------------------------------------------------------------------- | - | ------------------------------- | ------ | ---- | - | --------- | ------- | 
|                                               |                                                                     |   | Nine Months Ended September 30,
|                                               |                                                                     |   | 2003                            |        | 2002
|                                               |                                                                     |   |                                 |        |     
|CASH AND CASH EQUIVALENTS, beginning of period |                                                                     | $ | 3,886,203                       |        |      | $ | 2,276,107 |        
|                                               |                                                                     |   |                                 |        |      |   |           |        
|CASH AND CASH EQUIVALENTS, end of period       |                                                                     | $ | 4,649,309                       |        |      | $ | 2,829,247 |        
|                                               |                                                                     |   |                                 |        |      |   |           |        
|SCHEDULE OF NONCASH ACTIVITIES                 |                                                                     |   |                                 |        |      |   |           |        
|                                               | Stock dividends reinvested                                          |   | $                               | 94,848 |      |   | $         | 108,637 | 
|                                               |                                                                     |   |                                 |        |      |   |           |        
|                                               | Unrealized gain (loss) on available for sale
securities, net of tax |   | $                               | (4,441 | )    |   | $         | 229,604 | 
|                                               |                                                                     |   |                                 |        |      |   |           |        

See Accompanying Notes

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Oregon Pacific Bancorp
Notes to Financial Statements
September 30, 2003 and 2002
(Unaudited)

Note 1  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 Oregon banking institution which provides banking products and
services from its branches in Florence, Coos Bay, Roseburg and Sutherlin,
Oregon. The Banks customers live primarily in Lane, Douglas and Coos counties
and on the central Oregon coast. The Bank is subject to the regulations of
federal and state agencies charged with the regulation and supervision of
banks, 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 Bank have been prepared in accordance with
accounting principles generally accepted in the United States of America 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 accounting principles
generally accepted in the United States of America 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 nine months ended September 30, 2003 are not
necessarily indicative of results to be anticipated for the year ending
December 31, 2003. The interim financial statements should be read in
conjunction with the audited financial statements, including the notes thereto,
contained in the Banks 2002 Annual Report to Shareholders.

Stock options  The Company measures compensation cost using the intrinsic
value method, which computes compensation cost as the difference between a
companys stock price and the option price at the grant date. No compensation
cost has been recognized for the Companys stock option plans and no options
were granted during the quarter ended September 30, 2003. Had compensation
cost for the Companys grants for stock-based compensation plans been
determined consistent with Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based Compensation, its net income and earnings
per common share for September 30, 2003 and 2002 would approximate the pro
forma amounts below.

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|                                                                                                                                                |             |   |                    |      |                   |   |         |      |      |   |         |      |  |   |         |      | 
|----------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | ------------------ | ---- | ----------------- | - | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                                                                |             |   | Three Months Ended |      | Nine Months Ended
|                                                                                                                                                |             |   | September 30,      |      | September 30,    
|                                                                                                                                                |             |   | 2003               |      | 2002              |   | 2003    |      | 2002
|                                                                                                                                                |             |   |                    |      |                   |   |         |      |     
|Net earnings, as reported                                                                                                                       |             | $ | 273,410            |      |                   | $ | 188,039 |      |      | $ | 715,748 |      |  | $ | 630,090 |     
|Deduct: Total stock-based employee
compensation expense determined
under the fair value-based method
for all awards, net of related tax effects |             |   | (121               | )    |                   |   | (66     | )    |      |   | (363    | )    |  |   | (198    | )   
|                                                                                                                                                |             |   |                    |      |                   |   |         |      |      |   |         |      |  |   |         |     
|Pro forma net earnings                                                                                                                          |             | $ | 273,289            |      |                   | $ | 187,973 |      |      | $ | 715,385 |      |  | $ | 629,892 |     
|                                                                                                                                                |             |   |                    |      |                   |   |         |      |      |   |         |      |  |   |         |     
|Basic earnings per common share:                                                                                                                |             |   |                    |      |                   |   |         |      |      |   |         |      |  |   |         |     
|                                                                                                                                                | As reported |   | $                  | 0.13 |                   |   | $       | 0.09 |      |   | $       | 0.33 |  |   | $       | 0.30 | 
|                                                                                                                                                | Pro forma   |   | $                  | 0.13 |                   |   | $       | 0.09 |      |   | $       | 0.33 |  |   | $       | 0.30 | 
|Diluted earnings per common share:                                                                                                              |             |   |                    |      |                   |   |         |      |      |   |         |      |  |   |         |     
|                                                                                                                                                | As reported |   | $                  | 0.13 |                   |   | $       | 0.09 |      |   | $       | 0.33 |  |   | $       | 0.30 | 
|                                                                                                                                                | Pro forma   |   | $                  | 0.13 |                   |   | $       | 0.09 |      |   | $       | 0.33 |  |   | $       | 0.30 | 

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
September 30, 2003 and 2002:

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

Reclassifications  Certain reclassifications have been made to the 2002
financial statements to conform 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:

|                          |  |                |            |               |  |   |            |  
|------------------------- |  | -------------- | ---------- | ------------- |  | - | ---------- | -
|                          |  | SEPT. 30, 2003 |            | DEC. 31, 2002
|                          |  |                |            |              
|Real estate               |  | $              | 15,190,001 |               |  | $ | 15,786,018 |  
|Commercial                |  |                | 61,179,382 |               |  |   | 50,608,475 |  
|Installment               |  |                | 5,751,047  |               |  |   | 6,172,952  |  
|Overdrafts                |  |                | 54,468     |               |  |   | 54,995     |  
|                          |  |                |            |               |  |   |            |  
|                          |  |                | 82,174,898 |               |  |   | 72,622,440 |  
|Allowance for loan losses |  |                | (1,275,955 | )             |  |   | (1,173,025 | )
|Unearned loan fees        |  |                | (424,011   | )             |  |   | (460,763   | )
|                          |  |                |            |               |  |   |            |  
|                          |  | $              | 80,474,932 |               |  | $ | 70,988,652 |  
|                          |  |                |            |               |  |   |            |  

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

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|                                 |  |                |           |                |  |   |           |  
|-------------------------------- |  | -------------- | --------- | -------------- |  | - | --------- | -
|                                 |  | SEPT. 30, 2003 |           | SEPT. 30, 2002
|                                 |  |                |           |               
|Balance, beginning of the period |  | $              | 1,173,025 |                |  | $ | 902,104   |  
|Provision for losses             |  |                | 130,000   |                |  |   | 179,000   |  
|Losses                           |  |                | (33,765   | )              |  |   | (1,250    | )
|Recoveries                       |  |                | 6,695     |                |  |   | 2,441     |  
|                                 |  |                |           |                |  |   |           |  
|Balance, end of period           |  | $              | 1,275,955 |                |  | $ | 1,082,295 |  
|                                 |  |                |           |                |  |   |           |  

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 September 30, 2003 compared to $350,000 at
December 31, 2002.

The Bank had no loans past due 90 days or more on which it continued to accrue
interest at either September 30, 2003 or December 31, 2002.

Note 3  Earnings per Share of Common Stock

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




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

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

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##### Table of Contents



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

The Bank is an Oregon banking corporation organized under Oregon law 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. From its initial office in Florence,
Oregon, the Bank now serves customers in Lane, Douglas and Coos counties, and
on the central Oregon coast, from its branches in Florence, Roseburg, Coos Bay
and Sutherlin. Additional financial services provided by the Bank include
trust and asset management services, and investment and brokerage services.
The Company operates through a two-tiered corporate structure. At the holding
company level the affairs of the Company are overseen by a Board of Directors
elected by the shareholders of the Company at the annual meeting of
shareholders. The business of the bank is overseen by a Board of Directors
selected by the Company, the sole owner of the Bank. Currently the respective
members of the Board of Directors of the Bank and the Company are identical.

The Company reported net income of $273,000 or $.13 per basic share and
$716,000 or $.33 per basic share for the three months and nine months ended
September 30, 2003. This compares to Bank income of $188,000 or $.09 per basic
share and $630,000 or $.30 per basic share for the same periods in the prior
year. The increase in earnings is due to increases in net interest income plus
noninterest income. This was partially offset by the new expenses for
Sutherlin that opened in fourth quarter 2002 and which is primarily a deposit
gathering branch. The provision for income taxes did not increase
proportionately due to lower levels of tax exempt loans and bonds in 2003.

12



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Financial Condition

Total assets at September 2003 were $120,278,000 compared to $107,020,000 at
December 31, 2002, an increase of $13,258,000 (12.4%). The increase was due
primarily to an increase in net portfolio loans of $9,486,000 and
available-for-sale securities of $4,034,000 funded by an increase in customer
deposits which increased $13,009,000, or 14.7%.

Premises and equipment increased by $1,142,000 as construction continues on
permanent facilities for the two branches located in Roseburg and Coos Bay.
Occupancy is expected in December for both facilities.

September 30, 2003 shareholders equity was $8,520,000, an increase of $627,000
from December 31, 2002. This change resulted from net income, an exercise of
stock options by an executive officer ($100,000), partially offset by cash
dividends paid ($184,000).

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 $4,290,000 for the nine
months ended September 30, 2003 compared to $3,607,000 for the same period in
2002 (see Table 1). The $683,000 increase primarily was due to an increase in
average loans, and was partially offset a decrease in the rates earned on
loans. The increase in interest-bearing liabilities was more than fully offset
by the decrease in the rates paid on deposits. Average loans were up
$19,806,000, while average rates on loans were down 0.67%. Average
interest-bearing liability balances were up $19,816,000 while average rates on
deposits and borrowed funds were down 0.68%. The net interest spread, which is
the difference between the yield on interest-earning assets less the cost of
interest-bearing liabilities, decreased 0.10% during the first nine months of
2003 compared with the same period in 2002. As a consequence of the
historically low interest rate climate of the past year, the net interest
margin eased to 5.38% compared to 5.70% for the nine month
period in the prior year. The ongoing low interest rate climate continues to
cause declining loan yields that compress against an already low cost of funds.

Table I

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

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|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |   | 
|---------------------------------------------- | ---------------------------------------------- | -------------------------------------------- | ----------------- | ------- | -------------------------------- | ------- | -------------------------------- | ------- | ------------------- | ------- | ------- | ----- | --------- | ------ | -------- | ------ | ---------------- | ------ | ------- | ----- | ----- |  | ---- | ---- | ---- | - | --- | ----- | ----- | - | ---- | ---- | ---- | - | --- | ---- | ---- | - | 
|                                               |                                                |                                              |                   |         | Nine Months Ended Sept. 30, 2003 |         | Nine Months Ended Sept. 30, 2002 |         | Increase (Decrease)
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                    
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         | Interest            |         | Average |       |           |        |          |        | Interest         |        | Average |       |       |  |      |      |      |   |     |       |       |   |     
|                                               |                                                |                                              |                   |         | Average                          |         | Income or                        |         | Yield or            |         | Average |       | Income or |        | Yield or |        | Due to change in |        | Net    
|(dollars in thousands)                         |                                                | Balance                                      |                   | Expense |                                  | Rates   |                                  | Balance |                     | Expense |         | Rates |           | Volume |          | Rate   |                  | Change
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |      
|Interest-earning assets:                       |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               | Loans (2)                                      |                                              | $                 | 81,820  |                                  |         | $                                | 4,761   |                     |         |         | 7.76  | %         |        | $        | 62,014 |                  |        | $       | 3,923 |       |  |      | 8.43 | %    |   | $   | 1,253 |       |   | $    | (415 | )    |   | $   | 838  |     
|                                               | Investment securities                          |                                             
|                                               |                                                | Taxable securities                           |                   |         | 10,442                           |         |                                  |         | 310                 |         |         |       | 3.96      | %      |          |        | 9,651            |        |         |       | 438   |  |      |      | 6.05 | % |     |       | 36    |   |      |      | (164 | ) |     |      | (128 | )
|                                               |                                                | Nontaxable securities (1)                    |                   |         | 7,185                            |         |                                  |         | 389                 |         |         |       | 7.23      | %      |          |        | 8,106            |        |         |       | 452   |  |      |      | 7.43 | % |     |       | (52   | ) |      |      | (11  | ) |     |      | (63  | )
|                                               | Interest-earning balances due
from banks       |                                              |                   | 6,576   |                                  |         |                                  | 52      |                     |         |         | 1.05  | %         |        |          | 4,384  |                  |        |         | 54    |       |  |      | 1.64 | %    |   |     | 27    |       |   |      | (29  | )    |   |     | (2   | )   
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                | Total interest-earning
assets                |                   |         | 106,023                          |         |                                  |         | 5,512               |         |         |       | 6.93      | %      |          |        | 84,155           |        |         |       | 4,867 |  |      |      | 7.71 | % |     |       | 1,264 |   |      |      | (619 | ) |     |      | 645  |  
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               | Cash and due from banks                        |                                              |                   | 3,679   |                                  |         |                                  |         |                     |         |         |       |           |        |          | 2,770  |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |     
|                                               | Premises and equipment, net                    |                                              |                   | 3,122   |                                  |         |                                  |         |                     |         |         |       |           |        |          | 2,213  |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |     
|                                               | Other real estate                              |                                              |                   | 33      |                                  |         |                                  |         |                     |         |         |       |           |        |          | 29     |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |     
|                                               | Loan loss allowance                            |                                              |                   | (1,232  | )                                |         |                                  |         |                     |         |         |       |           |        |          | (961   | )                |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |     
|                                               | Other assets                                   |                                              |                   | 2,301   |                                  |         |                                  |         |                     |         |         |       |           |        |          | 1,806  |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                | Total assets                                 |                   | $       | 113,926                          |         |                                  |         |                     |         |         |       |           |        |          | $      | 90,012           |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |  
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|Interest-bearing liabilities:                  |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               | Interest-bearing checking and
savings accounts |                                              | $                 | 53,542  |                                  |         | $                                | 535     |                     |         |         | 1.33  | %         |        | $        | 35,776 |                  |        | $       | 478   |       |  |      | 1.78 | %    |   | $   | 237   |       |   | $    | (180 | )    |   | $   | 57   |     
|                                               | Time deposit and IRA accounts                  |                                              |                   | 21,558  |                                  |         |                                  | 421     |                     |         |         | 2.60  | %         |        |          | 20,302 |                  |        |         | 533   |       |  |      | 3.50 | %    |   |     | 33    |       |   |      | (145 | )    |   |     | (112 | )   
|                                               | Borrowed funds                                 |                                              |                   | 8,708   |                                  |         |                                  | 266     |                     |         |         | 4.07  | %         |        |          | 7,914  |                  |        |         | 249   |       |  |      | 4.19 | %    |   |     | 25    |       |   |      | (8   | )    |   |     | 17   |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                | Total interest-bearing
liabilities           |                   |         | 83,808                           |         |                                  |         | 1,222               |         |         |       | 1.94      | %      |          |        | 63,992           |        |         |       | 1,260 |  |      |      | 2.62 | % |     |       | 295   |   |      |      | (333 | ) |     |      | (38  | )
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                | Noninterest-bearing
deposits                 |                   |         | 20,050                           |         |                                  |         |                     |         |         |       |           |        |          |        | 17,178           |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |  
|                                               |                                                | Other liabilities                            |                   |         | 1,706                            |         |                                  |         |                     |         |         |       |           |        |          |        | 1,375            |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |  
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                |                                              | Total liabilities |         |                                  | 105,564 |                                  |         |                     |         |         |       |           |        |          |        |                  | 82,545 |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |   | 
|                                               |                                                | Shareholders equity                         |                   |         | 8,362                            |         |                                  |         |                     |         |         |       |           |        |          |        | 7,467            |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |  
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                | Total liabilities and share-
holders equity |                   | $       | 113,926                          |         |                                  |         |                     |         |         |       |           |        |          | $      | 90,012           |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |      |      |  
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|Net interest income                            |                                                |                                              |                   |         |                                  | $       | 4,290                            |         |                     |         |         |       |           |        |          |        |                  | $      | 3,607   |       |       |  |      |      |      | $ | 969 |       |       | $ | (286 | )    |      | $ | 683 |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|Net interest spread                            |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         | 4.99    | %     |           |        |          |        |                  |        |         |       |       |  | 5.09 | %    |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|Net interest expense to average
earning assets |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         | 1.53    | %     |           |        |          |        |                  |        |         |       |       |  | 1.99 | %    |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     
|Net interest margin                            |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         | 5.38    | %     |           |        |          |        |                  |        |         |       |       |  | 5.70 | %    |      |   |     |       |       |   |      |      |      |   |     |     
|                                               |                                                |                                              |                   |         |                                  |         |                                  |         |                     |         |         |       |           |        |          |        |                  |        |         |       |       |  |      |      |      |   |     |       |       |   |      |      |      |   |     |     



|(1) |  | Tax-exempt income has been adjusted to a tax-equivalent basis at 34%.
|--- |  | ---------------------------------------------------------------------
|   
|(2) |  | Includes loan fees.                                                  

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Provision for Loan Loss

The loan loss provision was $40,000 for the three months ended September 30,
2003 compared to $100,000 in the same period in 2002. The provision was
$130,000 for the nine months ended September 30, 2003 compared to $179,000 in
2002. The slowdown to the provision was in response to the slower growth of
the loan portfolio. The allowance for loan losses at September 30, 2003 was
1.55% of gross loans compared to 1.62% at December 31, 2002. There were no
non-performing loans at September 30, 2003. Management is satisfied that the
reserve is adequate for potential loan losses in the loan portfolio at
September 30, 2003. Managements assessment of the adequacy of the allowance
for loan loss is based on a number of factors including current delinquent and
non-performing loans, past loan loss experience, evaluation of customers
financial strength, and economic trends impacting areas and customers served by
the Bank. The allowance is based on estimates, and actual losses may vary from
those currently estimated.

Noninterest Income

Noninterest income increased $471,000 or 32.9% for the nine months ended
September 2003 as compared to the same period in 2002, and $169,000 or 33.6%
for the third quarter of 2003. The change was primarily the result of
increased mortgage loan sales as a result of refinances during this time of low
mortgage interest rates.

Noninterest Expense

Noninterest expense increased $1,025,000 or 26.3% for the nine months and
$279,000 or 20.5% for the three months ended September 30, 2003 over the same
periods one year ago. The increase is attributable primarily to an increase in
salaries and benefits. Salaries and benefits expenses have increased as
expected with growth from the Banks opening of the new branches as well as new
staff and increased commissions in the real estate mortgage loan office from
the increased activity. Other expenses increased $87,000 for the nine months
ended September 30, 2003 primarily as a result of interest expense on 1998
taxes as required by an IRS audit ($24,000), increased deferred compensation
expense ($16,000) and training and travel expenses ($14,000).

The provision for income taxes at both September 30, 2003 and 2002 remained
consistent with expected statutory rates adjusted for anticipated permanent
differences arising primarily from nontaxable income earned on municipal
security investments except for the adjustment discussed above.

Liquidity and Capital Resources

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

15



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The Bank maintains liquidity levels adequate to fund loan commitments,
investment opportunities, deposit withdrawals, and other financial commitments.
Management is satisfied that liquidity is sufficient at September 30, 2003.
There are no known trends, events, regulatory authority recommendations, or
uncertainties that management is aware of that will have or that are likely to
have a material adverse effect on the Banks liquidity, capital resources, or
operations.

In the state of Oregon, a limitation exists for property and equipment not to
exceed 50% of tier I and II capital. As the Bank expects to exceed this
limitation before the Roseburg and Coos Bay facilities are completed, in the
second quarter of 2003 the Bank made a request to the State, which was granted,
to waive the limitation until third quarter 2004 when the Bank expects to be
back in compliance.

For purposes of determining the amount of 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 September 30, 2003, the Banks leverage and total risk-based
ratios were 6.93% and 10.01% 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.

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

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

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

16



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##### Table of Contents



of an immediate and sustained shift in interest rates over a twelve month
period from the September 30, 2003 levels.

|               |  |                     |         |  
|-------------- |  | ------------------- | ------- | -
|INCREASE OR    |  | ESTIMATED FINANCIAL
|DECREASE IN    |  | IMPACT ON NET      
|INTEREST RATES |  | INTEREST MARGIN    
|               |  |                    
|2.0%           |  | $                   | 268,000 |  
|1.0%           |  | $                   | 102,000 |  
|-1.0%          |  | ($                  | 169,000 | )
|-2.0%          |  | ($                  | 265,000 | )

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




Item 4. Controls and Procedures

The Companys management,
including the Chief Executive Officer and Chief Financial Officer,
conducted an evaluation of the effectiveness of disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this quarterly
report. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that, to the best of their
knowledge, as of the end of the period covered by this quarterly
report, the disclosure controls and procedures are effective in
ensuring that all material information required to filed in this
quarterly report has been made known to them in a timely fashion.
There were no changes in the Companys internal control over
financial reporting that occurred during the period covered by this
report that have materially affected, or are likely materially
affect, Companys internal control over financial reporting.






|PART 2. |  | OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|Item 1. |  | Legal Proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        |  | The Bank and its Chief Executive
Officer are defendants in a lawsuit filed in the Lane County, Oregon
Circuit Court in August 2003 by a Bank employee, who has resigned
since the lawsuit was filed. The suit alleges breach of contract and
other claims arising from the plaintiffs employment and
compensation arrangements with the Bank. The employee has also filed
an administrative claim with the U.S. Department of Labor under
the Sarbanes-Oxley Act of 2002. The Bank 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. It is
not known when or on what basis these matters will be resolved.
|       
|Item 2. |  | Changes in Securities and Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       
|        |  | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       
|Item 3. |  | Defaults Upon Senior Securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

17



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|        |  | None.                                               
|------- |  | ----------------------------------------------------
|       
|Item 4. |  | Submission of Matters to a Vote of Security Holders.
|       
|        |  | None.                                               
|       
|Item 5. |  | Other Information.                                  
|       
|        |  | None.                                               
|       
|Item 6. |  | Exhibits and Reports on Form 8-K.                   
|       

|     |  |                                                                                                                                                    
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits.                                                                                                                                          
|     |  |                                                                                                                                                    
|3.1  |  | Articles of Incorporation of Oregon Pacific Bancorp*                                                                                               
|     |  |                                                                                                                                                    
|3.2  |  | Bylaws of Oregon Pacific Bancorp*                                                                                                                  
|     |  |                                                                                                                                                    
|31.1 |  | Certification of Chief Executive Officer Pursuant to 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 18 U.S.C Section
1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002** 
|     |  |                                                                                                                                                    
|32.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002**
|     |  |                                                                                                                                                    
|(b)  |  | No reports on Form 8-K were filed during the third quarter of
2003.                                                                                



---

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

18



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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 November 13, 2003.

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

19