OREGON PACIFIC BANCORP - 10-Q Quarterly Report

FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark one)


x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

OREGON PACIFIC BANCORP

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


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

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

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

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

The number of shares outstanding of the issuer’s Common Stock, no par value, as of July 31, 2003, was 2,164,573.

TABLE OF CONTENTS


PART 1. FINANCIAL INFORMATION
	Item 1. Financial statements
		CONSOLIDATED BALANCE SHEETS
		STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
		Notes to Financial Statements
	Item 2. Management’s discussion and analysis or plan of operation
	Item 3. Quantitive and Qualitive Disclosures about Market Risk
	Item 4. Controls and Procedures
PART 2. OTHER INFORMATION
	Item 1. Legal proceedings.
	Item 2. Changes in securities and use of proceeds.
	Item 3. Defaults upon senior securities.
	Item 4. Submission of matters to a vote of security holders.
	Item 5. Other information.
	Item 6. Exhibits and reports on Form 8-K.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

OREGON PACIFIC BANCORP

INDEX

Part I.

Financial Information

Item 1.

Financial statements

Consolidated Balance Sheets

Consolidated Statements of Income and Comprehensive Income

4-5

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

7-8

Notes to Consolidated Financial Statements

9-11

Item 2.

Management’s Discussion and Analysis or Plan of Operation

11-17

Item 3.

Quantitive and Qualitive Disclosures about Market Risk

17-18

Item 4.

Controls and Procedures

Part II.

Other Information

18-19

Signatures

Certification of Chief Executive Officer and Chief Financial Officer

21-22

PART 1. FINANCIAL INFORMATION

Item 1. Financial statements

OREGON PACIFIC BANCORP
CONSOLIDATED BALANCE SHEETS


					Unaudited		Audited
					JUNE 30,		DECEMBER 31,
					2003		2002

ASSETS
Cash and due from banks					$	4,199,963	$	3,886,203
Interest-bearing deposits in banks						1,242,772		8,078,510
Trading securities						6,004,513		—
Available-for-sale securities, at fair value						15,706,259		13,913,137
Restricted equity securities						853,100		831,750
Loans held for sale						4,975,691		5,327,661
Loans, net of allowance for loan losses and unearned income						78,385,383		70,988,652
Premises & equipment, net						3,091,424		2,726,595
Other real estate owned						10,259		117,494
Accrued interest and other assets						1,557,840		1,149,886

			Total assets		$	116,027,204	$	107,019,888

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
	Demand deposits				$	20,668,007	$	18,512,436
	Interest-bearing demand deposits					41,985,719		35,996,332
	Savings deposits					13,151,718		12,750,616
	Time certificate accounts:
		$100,000 or more				6,965,318		7,629,913
		Other time certificate accounts				14,616,773		13,625,754

				Total deposits		97,387,535		88,515,051

Other liabilities
	Federal Home Loan Bank borrowings					8,577,500		8,852,500
	Other borrowings					250,000		—
	Deferred compensation liability					869,374		795,272
	Accrued interest and other liabilities					581,532		964,143

				Total liabilities		107,665,941		99,126,966

Stockholders’ equity
	Common stock, no par value, 10,000,000 shares authorized with 2,164,573 and 2,135,244 issued and outstanding at June 30, 2003 and December 31, 2002, respectively					4,834,076		939,507
	Surplus					—		3,730,019
	Undivided profits					2,985,015		2,735,032
	Accumulated other comprehensive income, net of tax					542,172		488,364

				Total stockholders’ equity		8,361,263		7,892,922

				Total liabilities and stockholders’ equity	$	116,027,204	$	107,019,888

See Accompanying Notes

OREGON PACIFIC BANKING CO.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)


			Three Months Ended				Six Months Ended
			June 30,				June 30,

			2003		2002		2003		2002

INTEREST INCOME
	Interest and fees on loans		$	1,609,308	$	1,281,427	$	3,139,607	$	2,499,615
	Interest on investment securities:							—
		U.S. Teasuries and agencies		26,539		53,612		55,708		106,309
		State and political subdivisions		92,558		188,322		181,554		299,972
		Corporate and other investments		99,165		43,906		161,432		137,470
	Interest on deposits in banks			15,795		14,262		38,666		20,059

		Total interest income		1,843,365		1,581,529		3,576,967		3,063,425

INTEREST EXPENSE
	Interest-bearing demand deposits			143,493		100,399		305,046		199,450
	Savings deposits			36,848		50,385		76,653		98,818
	Time deposits			146,358		164,324		292,993		369,255
	Other borrowings			93,850		86,152		186,009		148,601

		Total interest expense		420,549		401,260		860,701		816,124

		Net interest income		1,422,816		1,180,269		2,716,266		2,247,301
PROVISION FOR LOAN LOSSES				40,000		44,000		90,000		79,000

		Net interest income after provision for loan losses		1,382,816		1,136,269		2,626,266		2,168,301

NONINTEREST INCOME
	Mortgage loan sales and servicing fees			318,213		154,007		704,927		413,907
	Service charges and fees			110,203		90,250		212,258		177,957
	Investment sales commissions			21,672		67,460		47,168		118,202
	Trust fee income			115,429		93,122		217,591		175,767
	Other income			32,926		18,006		48,904		42,606

		Total noninterest income		598,443		422,845		1,230,848		928,439

OREGON PACIFIC BANKING CO.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(continued)


			Three Months Ended				Six Months Ended
			June 30,				June 30,

			2003		2002		2003		2002

NONINTEREST EXPENSE
	Salaries and benefits		$	1,006,959	$	785,324	$	2,009,788	$	1,599,858
	Occupancy			155,401		137,106		312,228		240,003
	Supplies			48,010		44,441		98,471		86,500
	Postage and freight			27,306		18,519		50,197		37,299
	Outside services			174,583		97,440		329,905		191,891
	Advertising			23,483		22,061		59,519		49,755
	Loan collection expense			45,803		12,954		85,341		33,768
	Securities and trust department expenses			31,414		47,739		64,621		99,944
	Other expenses			150,175		104,260		267,533		192,671

		Total noninterest expense		1,663,134		1,269,844		3,277,603		2,531,689

INCOME BEFORE INCOME TAXES				318,125		289,270		579,511		565,051
PROVISION FOR INCOME TAXES				64,172		62,000		137,172		123,000

NET INCOME				253,953		227,270		442,339		442,051
OTHER COMPREHENSIVE INCOME
		Unrealized holding gain/(loss) arising during the period, net of tax		55,763		167,977		53,808		102,051

COMPREHENSIVE INCOME			$	309,716	$	395,247	$	496,147	$	544,102

EARNINGS PER SHARE OF COMMON STOCK
	Basic earnings per share		$	0.12	$	0.11	$	0.21	$	0.21

	Diluted earnings per share		$	0.12	$	0.11	$	0.21	$	0.21

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
	Basic earnings per share			2,143,539		2,121,423		2,140,882		2,118,608

	Diluted earnings per share			2,145,883		2,130,591		2,143,451		2,125,355

See Accompanying Notes

OREGON PACIFIC BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


											Accumulated
											Other		Total
	Common Stock							Undivided			Comprehensive		Stockholders'
	Shares		Amount		Surplus			Profits			Income		Equity

Balance, December 31, 2001 (Audited)		2,112,493	$	929,497	$	3,609,063		$	2,295,068		$	277,687	$	7,111,315
Cash dividends paid		—		—		—			(250,879	)		—		(250,879	)
Dividends reinvested in stock		22,751		10,010		120,956			(130,966	)		—		—
Net income and comprehensive income		—		—		—			821,809			210,677		1,032,486

Balance, December 31, 2002 (Audited)		2,135,244	$	939,507	$	3,730,019		$	2,735,032		$	488,364	$	7,892,922

Change in capitalization as a result of holding company formation		—		3,730,019		(3,730,019	)		—			—		—
Exercise of stock options		20,000		100,000		—						—		100,000
Cash dividends paid		—		—		—			(127,806	)		—		(127,806	)
Dividends reinvested in stock		9,329		64,550		—			(64,550	)		—		—
Net income and comprehensive income		—		—		—			442,339			53,808		496,147

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