----

----

| **S** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

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

**OREGON      PACIFIC BANCORP**

*(Exact      name of Registrant as specified in its charter)*

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

**1355      Highway 101**

**Florence,      Oregon  97439**

*(Address      of principal executive offices)*

**(541)      997-7121**

*(Issuer’s      telephone number)*

**S**

**£**

**S**

**£**

**S**

----

----

----

**OREGON      PACIFIC BANCORP**

**INDEX**

| Part                I. |  Financial                Information |
|------------------------|--------------------------------------------|

| 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 |
|                      |                                                                                   | Notes                  to consolidated financial                  statements                                                                   | 8-11 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  2.                                                               | Management’s                  Discussion and Analysis of Financial Condition                  And                  Results of Operations | 11-17 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  3.                                                               | Quantitive                  and Qualitive Disclosures about Market                  Risk                                                       | 17 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  4.                                                               | Controls                  and Procedures                                                                                                       | 17-18 |
|                      |                                                                                   |                                                                                                                                           |   |
| Part                  II. | Other                  Information                                                     |                                                                                                                                           |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  1.                                                               | Legal                  proceedings                                                                                                             | 18 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  1A.                                                              | Risk                  Factors                                                                                                                  | 18 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  2.                                                               | Unregistered                  sales of equity securities and use of                  proceeds                                                  | 18 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  3.                                                               | Defaults                  upon senior securities                                                                                               | 18 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  4.                                                               | Submission                  of matters to a vote of security                  holders                                                          | 18 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  5.                                                               | Other                  information                                                                                                             | 19 |
|                      |                                                                                   |                                                                                                                                           |   |
|                      | Item                  6.                                                               | Exhibits                  and Reports on Form 8-K                                                                                              | 19 |
|                      |                                                                              |                                                                                                                                           |
|                      | Signatures                                                                             | 20                                                                                                                                             |
|                      | Certifications                  of Chief Executive Officer and Chief Financial Officer | 21-23                                                                                                                                          |

----

***Index***

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

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

**OREGON      PACIFIC BANCORP**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                                                                                              |   | SEPTEMBER                30, |        |   | DECEMBER                31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|--------|-----------------------------|--------|
| ASSETS                                                                                                                                                                                                                                            |   | 2007                         |        |   | 2006                        |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |
| Cash                and cash equivalents                                                                                                                                                                                                          |   | $                            | 3,797,570   |   |                        | $      | 4,473,047 |   |
| Interest-bearing                deposits in banks                                                                                                                                                                                                 |   |                         | 9,941,511   |   |                        |   | 2,986,418 |   |
| Available-for-sale                securities, at fair value                                                                                                                                                                                       |   |                         | 9,506,815   |   |                        |   | 10,297,348 |   |
| Restricted                equity securities                                                                                                                                                                                                       |   |                         | 1,023,550   |   |                        |   | 1,023,100 |   |
| Loans                held-for-sale                                                                                                                                                                                                                |   |                         | 360,784     |   |                        |   | 152,095 |   |
| Loans,                net of allowance for loan losses and deferred fees                                                                                                                                                                          |   |                         | 119,252,960 |   |                        |   | 121,066,553 |   |
| Premises                & equipment, net                                                                                                                                                                                                      |   |                         | 8,143,028   |   |                        |   | 6,986,301 |   |
| Intangible                assets, net                                                                                                                                                                                                             |   |                         | 315,100     |   |                        |   | 377,200 |   |
| Accrued                interest and other assets                                                                                                                                                                                                  |   |                         | 2,864,658   |   |                        |   | 3,943,232 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Total                assets                                                                                                                                                                                                                       |   | $                            | 155,205,976 |   |                        | $      | 151,305,294 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                                                                                               |   |                         |        |   |                        |   |   |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Deposits:                                                                                                                                                                                                                                         |   |                         |        |   |                        |   |   |   |
| Demand                deposits                                                                                                                                                                                                                    |   | $                            | 37,133,790  |   |                        | $      | 32,942,095 |   |
| Interest-bearing                demand deposits                                                                                                                                                                                                   |   |                         | 35,934,659  |   |                        |   | 39,953,529 |   |
| Savings                deposits                                                                                                                                                                                                                   |   |                         | 15,022,234  |   |                        |   | 15,588,636 |   |
| Time                certificate accounts:                                                                                                                                                                                                         |   |                         |        |   |                        |   |   |   |
| $100,000                or more                                                                                                                                                                                                                   |   |                         | 18,254,934  |   |                        |   | 16,543,011 |   |
| Other                time certificate accounts                                                                                                                                                                                                    |   |                         | 17,296,857  |   |                        |   | 15,583,499 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Total                deposits                                                                                                                                                                                                                     |   |                         | 123,642,474 |   |                        |   | 120,610,770 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Federal                Home Loan Bank borrowings and other debt                                                                                                                                                                                   |   |                         | 10,731,222  |   |                        |   | 11,479,806 |   |
| Floating                rate Junior Subordinated Deferrable Interest                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Debentures                (Trust Preferred Securities)                                                                                                                                                                                            |   |                         | 4,124,000   |   |                        |   | 4,124,000 |   |
| Deferred                compensation liability                                                                                                                                                                                                    |   |                         | 2,391,153   |   |                        |   | 2,294,717 |   |
| Accrued                interest and other liabilities                                                                                                                                                                                             |   |                         | 1,179,254   |   |                        |   | 895,168 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Total                liabilities                                                                                                                                                                                                                  |   |                         | 142,068,103 |   |                        |   | 139,404,461 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Stockholders'                equity                                                                                                                                                                                                               |   |                         |        |   |                        |   |   |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Common                stock, no par value, 10,000,000 shares authorized with 2,206,794                and                2,187,349 issued and outstanding at September 30, 2007 and December                31,                2006, respectively |   |                         | 5,274,510   |   |                        |   | 5,100,037 |   |
| Undivided                profits                                                                                                                                                                                                                  |   |                         | 7,841,341   |   |                        |   | 6,795,987 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Accumulated                other comprehensive income, net of tax                                                                                                                                                                                 |   |                         | 22,022      |   |                        |   | 4,809 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Total                stockholders' equity                                                                                                                                                                                                         |   |                         | 13,137,873  |   |                        |   | 11,900,833 |   |
|                                                                                                                                                                                                                                              |   |                         |        |   |                        |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                         |   | $                            | 155,205,976 |   |                        | $      | 151,305,294 |   |

----

***Index***

**OREGON      PACIFIC BANCORP**

**CONSOLIDATED      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

|                                                  |   | Three                Months Ended |      |   | Nine                Months Ended |   |
|-------------------------------------------------------|--------|-----------------------------------|-----------|--------|----------------------------------|--------|
|                                                  |   | September                30,      |      |   | September                30,     |   |
|                                                  |   | 2007                              |      |   | 2006                             |   |   | 2007 |   |   | 2006 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |
| INTEREST                INCOME                        |   |                              |      |   |                             |   |   |   |   |   |   |   |
| Interest                and fees on loans             |   | $                                 | 2,831,558 |   |                             | $      | 2,857,354 |   |   | $ | 8,417,964 |   |   | $ | 7,999,133 |   |
| Interest                on investment securities:     |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Treasuries and agencies           |   |                              | 42,828    |   |                             |   | 37,244 |   |   |   | 120,023 |   |   |   | 110,947 |   |
| State                and political subdivisions       |   |                              | 61,002    |   |                             |   | 71,040 |   |   |   | 177,588 |   |   |   | 220,552 |   |
| Corporate                and other investments        |   |                              | 7,680     |   |                             |   | 7,872 |   |   |   | 32,857 |   |   |   | 32,128 |   |
| Interest                on deposits in banks          |   |                              | 96,295    |   |                             |   | 112,981 |   |   |   | 245,824 |   |   |   | 347,580 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest income                  |   |                              | 3,039,363 |   |                             |   | 3,086,491 |   |   |   | 8,994,256 |   |   |   | 8,710,340 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST                EXPENSE                       |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                demand deposits       |   |                              | 295,990   |   |                             |   | 325,055 |   |   |   | 905,579 |   |   |   | 815,436 |   |
| Savings                deposits                       |   |                              | 31,301    |   |                             |   | 28,572 |   |   |   | 85,935 |   |   |   | 80,851 |   |
| Time                deposits                          |   |                              | 393,953   |   |                             |   | 304,193 |   |   |   | 1,143,276 |   |   |   | 865,679 |   |
| Other                borrowings                       |   |                              | 206,297   |   |                             |   | 201,998 |   |   |   | 615,452 |   |   |   | 621,706 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                interest expense                 |   |                              | 927,541   |   |                             |   | 859,818 |   |   |   | 2,750,242 |   |   |   | 2,383,672 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income                    |   |                              | 2,111,822 |   |                             |   | 2,226,673 |   |   |   | 6,244,014 |   |   |   | 6,326,668 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                FOR LOAN LOSSES              |   |                              | -         |   |                             |   | - |   |   |   | - |   |   |   | 26,000 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income after              |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| provision                for loan losses              |   |                              | 2,111,822 |   |                             |   | 2,226,673 |   |   |   | 6,244,014 |   |   |   | 6,300,668 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| NONINTEREST                INCOME                     |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges and fees               |   |                              | 252,672   |   |                             |   | 236,491 |   |   |   | 706,532 |   |   |   | 747,905 |   |
| Trust                fee income                       |   |                              | 180,710   |   |                             |   | 177,885 |   |   |   | 530,205 |   |   |   | 502,077 |   |
| Investment                sales commissions           |   |                              | 108,777   |   |                             |   | 100,530 |   |   |   | 315,829 |   |   |   | 312,347 |   |
| Mortgage                loan sales and servicing fees |   |                              | 96,781    |   |                             |   | 102,005 |   |   |   | 312,921 |   |   |   | 347,589 |   |
| Other                income                           |   |                              | 68,701    |   |                             |   | 51,083 |   |   |   | 163,958 |   |   |   | 124,463 |   |
|                                                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                noninterest income               |   |                              | 707,641   |   |                             |   | 667,994 |   |   |   | 2,029,445 |   |   |   | 2,034,381 |   |

----

***Index***

**OREGON      PACIFIC BANCORP**

**CONSOLIDATED      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

|                                                    |   | Three                Months Ended |      |   | Nine                Months Ended |   |
|---------------------------------------------------------|--------|-----------------------------------|-----------|--------|----------------------------------|--------|
|                                                    |   | September                30,      |      |   | September                30,     |   |
|                                                    |   | 2007                              |      |   | 2006                             |   |   | 2007 |   |   | 2006 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |
| NONINTEREST                EXPENSE                      |   |                              |      |   |                             |   |   |   |   |   |   |   |
| Salaries                and benefits                    |   | $                                 | 1,235,635 |   |                             | $      | 1,265,594 |   |   | $ | 3,682,373 |   |   | $ | 3,714,467 |   |
| Occupancy                                               |   |                              | 224,912   |   |                             |   | 227,108 |   |   |   | 654,343 |   |   |   | 681,511 |   |
| Supplies                                                |   |                              | 43,417    |   |                             |   | 49,557 |   |   |   | 131,625 |   |   |   | 129,826 |   |
| Postage                and freight                      |   |                              | 22,811    |   |                             |   | 27,005 |   |   |   | 76,859 |   |   |   | 76,815 |   |
| Outside                services                         |   |                              | 225,482   |   |                             |   | 178,482 |   |   |   | 593,952 |   |   |   | 524,778 |   |
| Advertising                                             |   |                              | 19,047    |   |                             |   | 33,007 |   |   |   | 54,044 |   |   |   | 63,380 |   |
| Loan                collection expense                  |   |                              | 12,383    |   |                             |   | 48,804 |   |   |   | 39,149 |   |   |   | 73,845 |   |
| Securities                and trust department expenses |   |                              | 81,302    |   |                             |   | 85,123 |   |   |   | 246,599 |   |   |   | 224,725 |   |
| Other                expenses                           |   |                              | 264,260   |   |                             |   | 175,152 |   |   |   | 614,052 |   |   |   | 554,047 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Total                noninterest expense                |   |                              | 2,129,249 |   |                             |   | 2,089,832 |   |   |   | 6,092,996 |   |   |   | 6,043,394 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                BEFORE INCOME TAXES               |   |                              | 690,214   |   |                             |   | 804,835 |   |   |   | 2,180,463 |   |   |   | 2,291,655 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION                FOR INCOME TAXES               |   |                              | 132,334   |   |                             |   | 280,593 |   |   |   | 673,063 |   |   |   | 808,602 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| NET                INCOME                               |   |                              | 557,880   |   |                             |   | 524,242 |   |   |   | 1,507,400 |   |   |   | 1,483,053 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                COMPREHENSIVE INCOME               |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gain/(loss)           |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| arising                during the period, net of tax    |   |                              | 40,031    |   |                             |   | 57,797 |   |   |   | 17,213 |   |   |   | (14,125 | ) |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE                INCOME                     |   | $                                 | 597,911   |   |                             | $      | 582,039 |   |   | $ | 1,524,613 |   |   | $ | 1,468,928 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS                PER SHARE OF                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| COMMON                STOCK                             |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share                 |   | $                                 | 0.25      |   |                             | $      | 0.24 |   |   | $ | 0.68 |   |   | $ | 0.68 |   |
| Diluted                earnings per share               |   | $                                 | 0.25      |   |                             | $      | 0.24 |   |   | $ | 0.68 |   |   | $ | 0.68 |   |
|                                                    |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED                AVERAGE COMMON                  |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| SHARES                OUTSTANDING                       |   |                              |      |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                   |   |                              | 2,210,453 |   |                             |   | 2,181,925 |   |   |   | 2,202,229 |   |   |   | 2,176,705 |   |
| Diluted                                                 |   |                              | 2,212,679 |   |                             |   | 2,191,395 |   |   |   | 2,206,618 |   |   |   | 2,184,979 |   |

----

***Index***

**OREGON      PACIFIC BANCORP**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

|                                               |   |                        |      |   |      |   |      |          |   |   | Accumulated   |   |   |   |    |
|----------------------------------------------------|--------|-----------------------------|-----------|--------|-----------|--------|-----------|---------------|--------|--------|---------------|--------|--------|--------|---------|
|                                               |   |                        |      |   |      |   |      |          |   |   | Other         |   |   | Total  |    |
|                                               |   | Common                Stock |      |   | Undivided |   |      | Comprehensive |   |   | Stockholders' |   |
|                                               |   | Shares                      |      |   | Amount    |   |      | Profits       |   |   | Income        |   |   | Equity |    |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |
| Balance,                December 31, 2005          |   |                        | 2,166,006 |   |      | $      | 4,858,728 |          |   | $      | 5,376,065     |   |   | $      | 28,438  |   |   | $ | 10,263,231 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Bonuses                paid in stock for 2005      |   |                        | 1,686     |   |      |   | 20,000    |          |   |   | -             |   |   |   | -       |   |   |   | 20,000 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Sale                of nonregistered stock         |   |                        | 83        |   |      |   | 1,009     |          |   |   | -             |   |   |   | -       |   |   |   | 1,009 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Stock-based                compensation            |   |                        | -         |   |      |   | 15,251    |          |   |   | -             |   |   |   | -       |   |   |   | 15,251 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Exercise                of stock options           |   |                        | 4,212     |   |      |   | 22,500    |          |   |   | -             |   |   |   | -       |   |   |   | 22,500 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Cash                dividends paid                 |   |                        | -         |   |      |   | -         |          |   |   | (383,566      | )      |   |   | -       |   |   |   | (383,566 | ) |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Dividends                reinvested in stock       |   |                        | 15,362    |   |      |   | 182,549   |          |   |   | (182,549      | )      |   |   | -       |   |   |   | - |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Net                income and comprehensive income |   |                        | -         |   |      |   | -         |          |   |   | 1,986,037     |   |   |   | (23,629 | ) |   |   | 1,962,408 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Balance,                December 31, 2006          |   |                        | 2,187,349 |   |      | $      | 5,100,037 |          |   | $      | 6,795,987     |   |   | $      | 4,809   |   |   | $ | 11,900,833 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Exercise                of stock options           |   |                        | 14,833    |   |      |   | 105,001   |          |   |   | -             |   |   |   | -       |   |   |   | 105,001 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Stock                repurchased                   |   |                        | (6,450    | )      |      |   | (62,740   | )             |   |   | -             |   |   |   | -       |   |   |   | (62,740 | ) |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Stock-based                compensation            |   |                        | -         |   |      |   | 275       |          |   |   | -             |   |   |   | -       |   |   |   | 275 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Cash                dividends paid                 |   |                        | -         |   |      |   | -         |          |   |   | (330,109      | )      |   |   | -       |   |   |   | (330,109 | ) |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Dividends                reinvested in stock       |   |                        | 11,062    |   |      |   | 131,937   |          |   |   | (131,937      | )      |   |   | -       |   |   |   | - |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Net                income and comprehensive income |   |                        | -         |   |      |   | -         |          |   |   | 1,507,400     |   |   |   | 17,213  |   |   |   | 1,524,613 |   |
|                                               |   |                        |      |   |      |   |      |          |   |   |          |   |   |   |    |   |   |   |   |   |
| Balance,                September 30, 2007         |   |                        | 2,206,794 |   |      | $      | 5,274,510 |          |   | $      | 7,841,341     |   |   | $      | 22,022  |   |   | $ | 13,137,873 |   |

----

***Index***

**OREGON      PACIFIC BANCORP**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                     |   | Nine                Months Ended September 30, |       |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                                                                     |   | 2007                                           |       |   | 2006 |   |
|                                                                                                     |   |                                           |       |   |   |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES                                                      |   |                                           |       |   |   |   |
| Net                income                                                                                |   | $                                              | 1,507,400  |   |   | $ | 1,483,053 |   |
| Adjustments                to reconcile net income to net cash from operating                activities: |   |                                           |       |   |   |   |   |   |
| Depreciation                and amortization                                                             |   |                                           | 481,442    |   |   |   | 437,185 |   |
| Provision                for loan losses                                                                 |   |                                           | -          |   |   |   | 26,000 |   |
| Stock-based                compensation                                                                  |   |                                           | 275        |   |   |   | 11,439 |   |
| Net                change in mortgage loans held-for-sale                                                |   |                                           | (208,689   | ) |   |   | 471,379 |   |
| Loss                on disposition of premises, equipment, and other real                estate          |   |                                           | 37,225     |   |   |   | - |   |
| Net                decrease (increase) in accrued interest and other assets                              |   |                                           | 1,066,489  |   |   |   | (181,270 | ) |
| Net                increase (decrease) in accrued interest and other                liabilities          |   |                                           | 380,522    |   |   |   | (231,139 | ) |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| Net                cash from operating activities                                                        |   |                                           | 3,264,664  |   |   |   | 2,016,647 |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES                                                      |   |                                           |       |   |   |   |   |   |
| Proceeds                from sales and maturities of available-for-sale securities                       |   |                                           | 1,810,000  |   |   |   | 690,000 |   |
| Purchases                of available-for-sale securities                                                |   |                                           | (1,000,000 | ) |   |   | - |   |
| Purchase                of restricted equity securities                                                  |   |                                           | (450       | ) |   |   | - |   |
| Net                (decrease) increase in interest-bearing deposits in banks                             |   |                                           | (6,955,093 | ) |   |   | 696,427 |   |
| Loans                originated, net of principal repayments                                             |   |                                           | 1,813,593  |   |   |   | (7,389,816 | ) |
| Purchase                of premises and equipment                                                        |   |                                           | (1,611,028 | ) |   |   | (1,075,604 | ) |
| Proceeds                from sales of premises and equipment                                             |   |                                           | 7,565      |   |   |   | - |   |
| Purchase                of brokerage firm                                                                |   |                                           | -          |   |   |   | (138,000 | ) |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| Net                cash from investing activities                                                        |   |                                           | (5,935,413 | ) |   |   | (7,538,993 | ) |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES                                                      |   |                                           |       |   |   |   |   |   |
| Net                (decrease) increase in demand and savings deposit accounts                            |   |                                           | (393,577   | ) |   |   | 7,433,288 |   |
| Net                increase (decrease) in time deposits                                                  |   |                                           | 3,425,281  |   |   |   | (2,193,070 | ) |
| Proceeds                from Federal Home Loan Bank borrowings                                           |   |                                           | 3,000,000  |   |   |   | 1,200,000 |   |
| Repayment                of Federal Home Loan Bank and other borrowings                                  |   |                                           | (3,855,918 | ) |   |   | (2,441,250 | ) |
| Repayment                of debt from purchase of brokerage firm                                         |   |                                           | 107,334    |   |   |   | - |   |
| Shares                acquired in stock repurchase plan                                                  |   |                                           | (62,740    | ) |   |   | - |   |
| Proceeds                from exercise of common stock options                                            |   |                                           | 105,001    |   |   |   | 22,500 |   |
| Stock                bonuses granted                                                                     |   |                                           | -          |   |   |   | 20,000 |   |
| Cash                dividends paid                                                                       |   |                                           | (330,109   | ) |   |   | (275,116 | ) |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| Net                cash from financing activities                                                        |   |                                           | 1,995,272  |   |   |   | 4,088,352 |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| NET                DECREASE IN CASH AND CASH EQUIVALENTS                                                 |   |                                           | (675,477   | ) |   |   | (1,433,994 | ) |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS, beginning of period                                            |   | $                                              | 4,473,047  |   |   | $ | 5,018,838 |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS, end of period                                                  |   | $                                              | 3,797,570  |   |   | $ | 3,584,844 |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| SCHEDULE                OF NONCASH ACTIVITIES                                                            |   |                                           |       |   |   |   |   |   |
| Stock                dividends reinvested                                                                |   | $                                              | 131,937    |   |   | $ | 138,145 |   |
|                                                                                                     |   |                                           |       |   |   |   |   |   |
| Change                in fair value of AFS securities, net of tax                                        |   | $                                              | 17,213     |   |   | $ | (14,125 | ) |

----

***Index***

**Oregon      Pacific Bancorp**

**Notes      to Consolidated Financial Statements**

**September      30, 2007**

|                                            |   |      |       |   | Gross      |   |   | Gross      |   |   | Estimated |   |
|-------------------------------------------------|--------|-----------|------------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
|                                            |   | Amortized |       |   | Unrealized |   |   | Unrealized |   |   | Fair      |   |
|                                            |   | Cost      |       |   | Gains      |   |   | Losses     |   |   | Value     |   |
| September                30, 2007:              |   |      |       |   |       |   |   |       |   |   |      |   |
|                                            |   |      |       |   |       |   |   |       |   |   |      |   |
| U.S.                Treasury and agencies       |   | $         | 4,000,000  |   |       | $      | 1,250  |       |   | $      | (10,313   | )      |   | $ | 3,990,937 |   |
| State                and political subdivisions |   |      | 5,025,761  |   |       |   | 47,853 |       |   |   | (2,966    | )      |   |   | 5,070,648 |   |
| Corporate                notes                  |   |      | 444,351    |   |       |   | 879    |       |   |   | -         |   |   |   | 445,230 |   |
|                                            |   |      |       |   |       |   |   |       |   |   |      |   |   |   |   |   |
|                                            |   | $         | 9,470,112  |   |       | $      | 49,982 |       |   | $      | (13,279   | )      |   | $ | 9,506,815 |   |
|                                            |   |      |       |   |       |   |   |       |   |   |      |   |   |   |   |   |
| December                31, 2006:               |   |      |       |   |       |   |   |       |   |   |      |   |   |   |   |   |
| U.S.                Treasury and agencies       |   | $         | 4,000,000  |   |       | $      | -      |       |   | $      | (50,937   | )      |   | $ | 3,949,063 |   |
| State                and political subdivisions |   |      | 5,837,779  |   |       |   | 65,221 |       |   |   | (10,156   | )      |   |   | 5,892,844 |   |
| Corporate                notes                  |   |      | 451,554    |   |       |   | 3,887  |       |   |   | -         |   |   |   | 455,441 |   |
|                                            |   |      |       |   |       |   |   |       |   |   |      |   |   |   |   |   |
|                                            |   | $         | 10,289,333 |   |       | $      | 69,108 |       |   | $      | (61,093   | )      |   | $ | 10,297,348 |   |

----

***Index***

| Mortgage                Servicing Rights at September 30, |   | 2007   |     |   | 2006   |   |
|-----------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                      |   |   |     |   |   |   |
| Balance                at beginning of year               |   | $      | 763,203  |   |   | $      | 808,709 |   |
| Additions                                                 |   |   | 41,069   |   |   |   | 67,341 |   |
| Amortization                                              |   |   | (105,926 | )      |   |   | (95,717 | ) |
|                                                      |   |   |     |   |   |   |   |   |
| Balance                at September 30,                   |   | $      | 698,346  |   |   | $      | 780,333 |   |
| MSR                as a % of serviced portfolio           |   |   | 0.79     | %      |   |   | 0.81 | % |

|                                                                          |   | SEPT.                30, 2007 |        |   | DEC.                31, 2006 |   |
|-------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|------------------------------|--------|
|                                                                          |   |                          |        |   |                         |   |
| Real                estate                                                    |   | $                             | 20,558,796  |   |                         | $      | 20,616,479 |   |
| Commercial                                                                    |   |                          | 94,257,780  |   |                         |   | 94,968,156 |   |
| Installment                                                                   |   |                          | 6,571,296   |   |                         |   | 7,670,400 |   |
| Overdrafts                                                                    |   |                          | 35,390      |   |                         |   | 36,279 |   |
|                                                                          |   |                          |        |   |                         |   |   |   |
| Total                Loans                                                    |   |                          | 121,423,262 |   |                         |   | 123,291,314 |   |
| Less                allowance for loan losses                                 |   |                          | (1,852,196  | )      |                         |   | (1,861,221 | ) |
| Less                deferred loan fees                                        |   |                          | (318,106    | )      |                         |   | (363,540 | ) |
| Loans,                net of allowance for loan losses and deferred loan fees |   |                          |        |   |                         |   |   |   |
|                                                                          |   | $                             | 119,252,960 |   |                         | $      | 121,066,553 |   |

|                                        |   | SEPT.                30, 2007 |      |   | SEPT.                30, 2006 |   |
|---------------------------------------------|--------|-------------------------------|-----------|--------|-------------------------------|--------|
|                                        |   |                          |      |   |                          |   |
| Balance,                beginning of period |   | $                             | 1,861,221 |   |                          | $      | 1,858,185 |   |
| Provision                for loan losses    |   |                          | -         |   |                          |   | 26,000 |   |
| Loans                charged off            |   |                          | (12,855   | )      |                          |   | - |   |
| Loan                recoveries              |   |                          | 3,830     |   |                          |   | - |   |
|                                        |   |                          |      |   |                          |   |   |   |
| Balance,                end of period       |   | $                             | 1,852,196 |   |                          | $      | 1,884,185 |   |

----

***Index***

|                                             |   |   |    |   | Weighted                 |   |   | Weighted                Avg.   |   |   |                     |   |
|--------------------------------------------------|--------|--------|---------|--------|--------------------------|--------|--------|--------------------------------|--------|--------|--------------------------|--------|
|                                             |   |   |    |   | Average                  |   |   | Remaining                      |   |   | Aggregate                |   |
|                                             |   |   |    |   | Exercise                 |   |   | Contractual                    |   |   | Intrinsic                |   |
| Options                                          |   | Shares |    |   | Price                ($) |   |   | Term                ( in yrs.) |   |   | Value                ($) |   |
|                                             |   |   |    |   |                     |   |   |                           |   |   |                     |   |
| Outstanding                at January 1, 2007    |   |   | 34,272  |   |                     |   | 8.83   |                           |   |   |                     |   |   |   |
| Granted                                          |   |   | -       |   |                     |   |   |                           |   |   |                     |   |   |   |
| Exercised                                        |   |   | (14,833 | )      |                     |   | 7.08   |                           |   |   |                     |   |   |   |
| Forfeited                                        |   |   | (2,110  | )      |                     |   | 11.85  |                           |   |   |                     |   |   |   |
| Outstanding                at September 30, 2007 |   |   | 17,329  |   |                     |   | 9.95   |                           |   |   | 3.17                     |   |   |   | 19,807 |   |
| Vested                at September 30, 2007      |   |   | 11,125  |   |                     |   | 7.10   |                           |   |   | 1.95                     |   |   |   | 19,807 |   |
| Exercisable                at September 30, 2007 |   |   | 6,357   |   |                     |   | 6.42   |                           |   |   | 1.64                     |   |   |   | 19,807 |   |

----

***Index***

| **Item                2**. | **Management’s                Discussion and Analysis of Financial Condition and Results of                Operations** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------|

**Critical      Accounting Policies and Estimates**

----

***Index***

**Overview**

----

***Index***

**Financial      Condition**

**Results      of Operations**

*Average      Balances and Average Rates Earned and Paid.  *

----

***Index***

|                                                                |   | Nine                  Months Ended Sept. 30, 2007 |    |   | Nine                  Months Ended Sept. 30, 2006 |   |   | 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)**                                      |   | $                                                 | 123,361 |   |                                              | **$**  | 8,418  |                                 |   |   | 9.10 | % |   | $ | 122,657 |   |   | **$** | 7,999 |   |   |   | 8.70 | % |   | $ | 46 |   |   | $ | 373 |   |   | $ | 419 |   |
| Investment                  securities                              |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                  securities                                 |   |                                              | 5,609   |   |                                              |   | 152    |                                 |   |   | 3.61 | % |   |   | 5,599 |   |   |   | 143 |   |   |   | 3.41 | % |   |   | 0 |   |   |   | 9 |   |   |   | 9 |   |
| Nontaxable                  securities **(1)**                      |   |                                              | 5,239   |   |                                              |   | 270    |                                 |   |   | 6.86 | % |   |   | 6,597 |   |   |   | 335 |   |   |   | 6.77 | % |   |   | (69 | ) |   |   | 4 |   |   |   | (65 | ) |
| Interest-earning                  balances due from banks           |   |                                              | 6,239   |   |                                              |   | 246    |                                 |   |   | 5.26 | % |   |   | 9,575 |   |   |   | 348 |   |   |   | 4.85 | % |   |   | (121 | ) |   |   | 19 |   |   |   | (102 | ) |
| Total                  interest-earning assets                      |   |                                              | 140,448 |   |                                              |   | 9,086  |                                 |   |   | 8.63 | % |   |   | 144,428 |   |   |   | 8,825 |   |   |   | 8.15 | % |   |   | (144 | ) |   |   | 405 |   |   |   | 261 |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and due from banks                            |   |                                              | 4,062   |   |                                              |   |   |                                 |   |   |   |   |   |   | 4,542 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premises                  and equipment, net                        |   |                                              | 7,904   |   |                                              |   |   |                                 |   |   |   |   |   |   | 5,483 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan                  loss allowance                                |   |                                              | (1,855  | )      |                                              |   |   |                                 |   |   |   |   |   |   | (1,880 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  assets                                       |   |                                              | 3,082   |   |                                              |   |   |                                 |   |   |   |   |   |   | 4,316 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                       |   | $                                                 | 153,641 |   |                                              |   |   |                                 |   |   |   |   |   | $ | 156,889 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                      |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  checking and savings accounts     |   | $                                                 | 54,523  |   |                                              | $      | 992    |                                 |   |   | 2.43 | % |   | $ | 60,861 |   |   | $ | 896 |   |   |   | 1.96 | % |   | $ | (93 | ) |   | $ | 189 |   |   | $ | 96 |   |
| Time                  deposit and IRA accounts                      |   |                                              | 34,444  |   |                                              |   | 1,143  |                                 |   |   | 4.42 | % |   |   | 31,643 |   |   |   | 866 |   |   |   | 3.65 | % |   |   | 77 |   |   |   | 200 |   |   |   | 277 |   |
| Borrowed                  funds                                     |   |                                              | 15,167  |   |                                              |   | 616    |                                 |   |   | 5.42 | % |   |   | 15,987 |   |   |   | 622 |   |   |   | 5.19 | % |   |   | (32 | ) |   |   | 26 |   |   |   | (6 | ) |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  interest-bearing liabilities                 |   |                                              | 104,134 |   |                                              |   | 2,751  |                                 |   |   | 3.52 | % |   |   | 108,491 |   |   |   | 2,384 |   |   |   | 2.93 | % |   |   | (48 | ) |   |   | 415 |   |   |   | 367 |   |
| Noninterest-bearing                  deposits                       |   |                                              | 33,436  |   |                                              |   |   |                                 |   |   |   |   |   |   | 34,333 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  liabilities                                  |   |                                              | 3,611   |   |                                              |   |   |                                 |   |   |   |   |   |   | 3,263 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  liabilities                                  |   |                                              | 141,181 |   |                                              |   |   |                                 |   |   |   |   |   |   | 146,087 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’                  equity                         |   |                                              | 12,460  |   |                                              |   |   |                                 |   |   |   |   |   |   | 10,802 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  liabilities and share- holders’ equity |   | $                                                 | 153,641 |   |                                              |   |   |                                 |   |   |   |   |   | $ | 156,889 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                |   |                                              |    |   |                                              | $      | 6,335  |                                 |   |   |   |   |   |   |   |   |   | $ | 6,441 |   |   |   |   |   |   | $ | (96 | ) |   | $ | (10 | ) |   | $ | (106 | ) |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest spread                                |   |                                              |    |   |                                              |   |   |                                 |   |   | 5.10 | % |   |   |   |   |   |   |   |   |   |   | 5.22 | % |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest expense to average earning assets     |   |                                              |    |   |                                              |   |   |                                 |   |   | 2.61 | % |   |   |   |   |   |   |   |   |   |   | 2.20 | % |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                              |    |   |                                              |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest margin                                |   |                                              |    |   |                                              |   |   |                                 |   |   | 6.01 | % |   |   |   |   |   |   |   |   |   |   | 5.95 | % |   |   |   |   |   |   |   |   |   |   |   |   |

----

***Index***

|                                                       |   | Three                months ended |    |   |   |   |    |                    |   |
|------------------------------------------------------------|--------|-----------------------------------|---------|--------|--------|--------|---------|-------------------------|--------|
|                                                       |   | September                30,      |    |   |   |   |    |                    |   |
|                                                       |   | 2007                              |    |   | 2006   |   |    | $                Change |   |   | %                Change |   |
|                                                       |   |                              |    |   |   |   |    |                    |   |   |   |   |
| Service                charges and fees                    |   | $                                 | 252,672 |   |   | $      | 236,491 |                    |   | $ | 16,181 |   |   |   | 6.8 | % |
| Trust                fee income                            |   |                              | 180,710 |   |   |   | 177,885 |                    |   |   | 2,825 |   |   |   | 1.6 | % |
| Investment                sales commissions                |   |                              | 108,777 |   |   |   | 100,530 |                    |   |   | 8,247 |   |   |   | 8.2 | % |
| Mortgage                loan sales and servicing fees, net |   |                              | 96,781  |   |   |   | 102,005 |                    |   |   | (5,224 | ) |   |   | -5.1 | % |
| Other                income                                |   |                              | 68,701  |   |   |   | 51,083  |                    |   |   | 17,618 |   |   |   | 34.5 | % |
|                                                       |   |                              |    |   |   |   |    |                    |   |   |   |   |   |   |   |   |
|                                                       |   | $                                 | 707,641 |   |   | $      | 667,994 |                    |   | $ | 39,647 |   |   |   | 5.9 | % |

|                                                       |   | Nine                months ended |      |   |   |   |      |                    |   |
|------------------------------------------------------------|--------|----------------------------------|-----------|--------|--------|--------|-----------|-------------------------|--------|
|                                                       |   | September                30,     |      |   |   |   |      |                    |   |
|                                                       |   | 2007                             |      |   | 2006   |   |      | $                Change |   |   | %                Change |   |
|                                                       |   |                             |      |   |   |   |      |                    |   |   |   |   |
| Service                charges and fees                    |   | $                                | 706,532   |   |   | $      | 747,905   |                    |   | $ | (41,373 | ) |   |   | -5.5 | % |
| Trust                fee income                            |   |                             | 530,205   |   |   |   | 502,077   |                    |   |   | 28,128 |   |   |   | 5.6 | % |
| Investment                sales commissions                |   |                             | 315,829   |   |   |   | 312,347   |                    |   |   | 3,482 |   |   |   | 1.1 | % |
| Mortgage                loan sales and servicing fees, net |   |                             | 312,921   |   |   |   | 347,589   |                    |   |   | (34,668 | ) |   |   | -10.0 | % |
| Other                income                                |   |                             | 163,958   |   |   |   | 124,463   |                    |   |   | 39,495 |   |   |   | 31.7 | % |
|                                                       |   |                             |      |   |   |   |      |                    |   |   |   |   |   |   |   |   |
|                                                       |   | $                                | 2,029,445 |   |   | $      | 2,034,381 |                    |   | $ | (4,936 | ) |   |   | -0.2 | % |

|                                                    |   | Three                months ended |      |   |   |   |      |                    |   |
|---------------------------------------------------------|--------|-----------------------------------|-----------|--------|--------|--------|-----------|-------------------------|--------|
|                                                    |   | September                30,      |      |   |   |   |      |                    |   |
|                                                    |   | 2007                              |      |   | 2006   |   |      | $                Change |   |   | %                Change |   |
|                                                    |   |                              |      |   |   |   |      |                    |   |   |   |   |
| Salaries                and benefits                    |   | $                                 | 1,235,635 |   |   | $      | 1,265,594 |                    |   | $ | (29,959 | ) |   |   | -2.4 | % |
| Occupancy                expense                        |   |                              | 224,912   |   |   |   | 227,108   |                    |   |   | (2,196 | ) |   |   | -1.0 | % |
| Outside                services                         |   |                              | 225,482   |   |   |   | 178,482   |                    |   |   | 47,000 |   |   |   | 26.3 | % |
| Securities                and trust department expenses |   |                              | 81,302    |   |   |   | 85,123    |                    |   |   | (3,821 | ) |   |   | -4.5 | % |
| Other                expenses                           |   |                              | 361,918   |   |   |   | 333,525   |                    |   |   | 28,393 |   |   |   | 8.5 | % |
|                                                    |   |                              |      |   |   |   |      |                    |   |   |   |   |   |   |   |   |
|                                                    |   | $                                 | 2,129,249 |   |   | $      | 2,089,832 |                    |   | $ | 39,417 |   |   |   | 1.9 | % |

----

***Index***

|                                                    |   | Nine                months ended |      |   |   |   |      |                    |   |
|---------------------------------------------------------|--------|----------------------------------|-----------|--------|--------|--------|-----------|-------------------------|--------|
|                                                    |   | September                30,     |      |   |   |   |      |                    |   |
|                                                    |   | 2007                             |      |   | 2006   |   |      | $                Change |   |   | %                Change |   |
|                                                    |   |                             |      |   |   |   |      |                    |   |   |   |   |
| Salaries                and benefits                    |   | $                                | 3,682,373 |   |   | $      | 3,714,467 |                    |   | $ | (32,094 | ) |   |   | -0.9 | % |
| Occupancy                expense                        |   |                             | 654,343   |   |   |   | 681,511   |                    |   |   | (27,168 | ) |   |   | -4.0 | % |
| Outside                services                         |   |                             | 593,952   |   |   |   | 524,778   |                    |   |   | 69,174 |   |   |   | 13.2 | % |
| Securities                and trust department expenses |   |                             | 246,599   |   |   |   | 224,725   |                    |   |   | 21,874 |   |   |   | 9.7 | % |
| Other                expenses                           |   |                             | 915,729   |   |   |   | 897,913   |                    |   |   | 17,816 |   |   |   | 2.0 | % |
|                                                    |   |                             |      |   |   |   |      |                    |   |   |   |   |   |   |   |   |
|                                                    |   | $                                | 6,092,996 |   |   | $      | 6,043,394 |                    |   | $ | 49,602 |   |   |   | 0.8 | % |

**Liquidity      and Capital Resources**

----

***Index***

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

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

| (a) | The                Company’s management, including the Company’s Chief Executive Officer and                Chief Financial Officer, evaluated the effectiveness of its disclosure                controls and procedures as of September 30, 2007. Based on this                evaluation, the Chief Executive Officer and the Chief Financial Officer                each concludes that as of September 30, 2007, the Company maintained                effective disclosure controls and procedures in all material respects,                including those to ensure that information required to be disclosed                in                reports filed or submitted with the SEC is recorded, processed, and                reported within the time periods specified by the SEC, and is accumulated                and communicated to management, including the Chief Executive Officer                and                the Chief Financial Officer, as appropriate to allow for timely decision                regarding required disclosure. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Changes                in Internal Controls: In the quarter ended September 30, 2007, the                Company                did not make any significant changes in, nor take any corrective                actions                regarding, its internal controls or other factors that could significantly                affect these controls. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Disclosure      Controls and Internal Controls.**

**Limitations      on the Effectiveness of Controls**

----

***Index***

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

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

| **Item                1A.** | **Risk                factors.** |
|-----------------------------|----------------------------------|

| **Item                2.** | **Unregistered                sales of equity securities and use of                proceeds.** |
|----------------------------|------------------------------------------------------------------------------------------------|

|   | a. | None. |
|--------|----|-------|

|   | b. | None. |
|--------|----|-------|

|                             |   |                         |   |   |                      |   |   | Total                Number of  |   |   | Maximum                $  |   |
|----------------------------------|--------|------------------------------|--------|--------|---------------------------|--------|--------|---------------------------------|--------|--------|---------------------------|--------|
|                             |   |                         |   |   |                      |   |   | of                Shares        |   |   | Remaining                 |   |
|                             |   |                         |   |   |                      |   |   | Purchased                as     |   |   | that                May   |   |
|                             |   | Total                number  |   |   | Average                   |   |   | Part                of Publicly |   |   | be                Used to |   |
|                             |   | of                Shares     |   |   | Price                Paid |   |   | Announced                       |   |   | Repurchase                |   |
| Period                           |   | Purchased                (1) |   |   | per                Share  |   |   | Plan                (2)         |   |   | Stock                     |   |
| 7/1/07                - 7/31/07  |   |                         | -      |   |                      | $      | -      |                            |   |   | -                         |   |   |   | 500,000 |   |
| 8/1/07                - 8/31/07  |   |                         | 1,900  |   |                      | $      | 9.55   |                            |   |   | 18,150                    |   |   |   | 481,850 |   |
| 9/1/07                - 9/30/07  |   |                         | 4550   |   |                      | $      | 9.80   |                            |   |   | 44,590                    |   |   |   | 437,260 |   |
|                             |   |                         |   |   |                      |   |   |                            |   |   |                      |   |   |   |   |   |
| Total                for quarter |   |                         | 6,450  |   |                      | $      | 9.73   |                            |   |   | 62,740                    |   |   |   |   |   |

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

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

----

***Index***

| **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 (incorporated herein by                reference to Exhibit 3(i) to Oregon Pacific Bancorp’s Form 10-K for the                year ended December 31, 2002 filed with the Securities and Exchange                Commission on September 30, 2003). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Bylaws                of Oregon Pacific Bancorp (incorporated herein by reference to Exhibit                3(i) to Oregon Pacific Bancorp’s Form 10-K for the year ended December 31,                2002 filed with the Securities and Exchange Commission on September                30,                2003). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | 2003                Stock Incentive Plan (incorporated by reference to Exhibit 1 to Oregon                Pacific Bancorp’s Form DEF 14A filed with the Securities and Exchange                Commission on March 25, 2003). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | 31.2 | Certification                of Chief Financial Officer pursuant to rule 13a-14(a) or Rule 15d-14(a)                and Section 302(a) of the Sarbanes-Oxley Act of                2002.** |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Certification                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. ** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On                February 10, 2007 a Form 8-K was filed under items 2.02 and 9.01                announcing 2006 fourth quarter and year earnings.  On July 27,                2007 a Form 8-K was filed under item 8.01 announcing a stock repurchase                program. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Index***

**SIGNATURES**

|   | OREGON                PACIFIC BANCORP |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   |                                  |
|   | By:                                   | /s/                James P. Clark |
|   |                                  |   |
|   |                                  | James                P. Clark |
|   |                                  | President,                Chief Executive Officer |
|   |                                  | And                Director (*Chief Executive Officer)* |
|   |                                  |   |
|   |                                  |   |
|   | By:                                   | /s/                Joanne Forsberg |
|   |                                  |   |
|   |                                  | Joanne                Forsberg |
|   |                                  | Chief                Financial Officer and Secretary (*Principal Financial                Officer)* |

----