Oregon Pacific Bancorp Audit Committee Charter

Mission and Structure
The committee assists the Board of Directors (Board) in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, internal control, and financial reporting practices of the bank. It may also have such other duties as may from time to time be assigned to it by the Board.

One member of the committee shall be appointed as chair. The chair shall be responsible for leadership of the committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The chair will also maintain regular liaison with the CEO, CFO, and the lead independent audit partner.

Membership
The audit committee will be composed of three or more members of the Board. They will be selected by the Chairman of the Board, taking into account prior experience in matters to be considered by the committee, probable availability at times required for consideration of these matters, and their individual independence and objectivity. The committee membership will meet the requirements of the audit committee rules of the Nasdaq stock exchange. Accordingly, none of the members will be an officer or employee of the bank or its subsidiaries or any other individual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment. Each member will be financially literate, and at least one member of the audit committee will have accounting or financial management expertise. Members cannot accept consulting, advisory, or other compensatory fees from the bank, or be an affiliated person of the bank or any subsidiary.

General Responsibilities

1. The audit committee will be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by the bank. Any and all services require pre-approval of the committee.
2. The audit committee will ensure that the independent auditors submit annually a formal written statement of delineating all relationships between the independent auditors and the bank consistent with Independence Standards Board Standard Number 1. They also will consider, with a view to auditor independence, the fees paid to the auditors for audit services, information technology services, and all other services and consider whether the performance of any non-audit services is compatible with their independence. The committee is responsible for engaging in a dialogue with the auditors with respect to such disclosed relationships that may impact the objectivity and independence of the external auditor and recommending that the Board of Directors take appropriate action to satisfy itself of the auditors’ independence.
3. The audit committee will solicit, review, and evaluate (no less than annually) the opinions of management, internal auditors, and external independent auditors regarding financial systems, procedures, and controls to assure effectiveness in monitoring business risks, compliance with banking regulations, and accuracy in financial reporting. Based on the review and evaluation, the audit committee is charged with providing recommendations to management as the audit committee deems appropriate.
4. The audit committee must report committee actions to the full Board of Directors and may make appropriate recommendations.
5. The audit committee has the power to conduct or authorize investigations into matters within the committee’s scope of responsibilities. The committee is authorized to retain independent counsel, accountants or others it needs to assist in an investigation.
6. The audit committee will maintain procedures for the receipt, retention, and treatment of complaints about accounting, internal controls, or auditing matters, as well as confidential, anonymous submission by employees regarding accounting or auditing matters.
7. The committee will meet at least four times each year, more frequently if circumstances make that preferable. The audit committee chairman has the power to call a committee meeting whenever he or she thinks there is a need. An audit committee member should not vote on any matter in which he or she is not independent. The committee may ask members of management or others to attend the meeting and is authorized to receive all pertinent information from management.

Specific Responsibilities
The activities of the committee may result in the following types of actions:

1. Those in which the committee will inform the Board that action has been taken in the Board’s interest and does not require prior board approval.
   1. Review and approval of the scope of the annual audit for the bank recommended jointly by the independent auditors and management.
   2. Provide a report for the annual proxy statement that discloses whether the audit committee reviewed and discussed certain matters with management and the auditors, and whether it recommended to the board that the audited financial statements be included in the Annual Report on Form 10-K for filing with the Federal Reserve Board.
   3. File a copy of the written charter every three years as required by the SEC.
   4. Select, evaluate and, where appropriate, replace the independent auditors.
   5. Pre-approve any non-audit services provided by the independent auditor (not to exceed 5% of the total amount of revenues paid by the bank to its auditor). The chair has authority to approve such services with later disclosure to the full committee.
   6. Establish procedures for: (1) the treatment of complaints received regarding accounting, internal accounting controls or auditing matters; and (2) the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
2. Those in which the committee will review and study and then recommend action by the Board.
   1. Review all proposed filings with the SEC registration statements before signature by other Board members.
   2. Review annual and quarterly audit/review reports and the content of proposed published reports, primarily the Management Discussion and Analysis section for adequate disclosure.
3. Those in which the committee will review and study and provide summary information to the Board when appropriate.
   1. Request that management and external independent auditors disclose to the committee pending or actual accounting policy changes including those required by the Financial Accounting Standards Board, the SEC, the American Institute of Certified Public Accountants and the Public Company Accounting Oversight Board and their expected impact on the financial condition and the results of operation on the Bank.
   2. Review at least annually a summary of the status of bank certifications. Review and approve the annual plan and periodic reporting of the Bank’s internal auditor.
   3. Review insurance coverage with the insurance carrier compared to coverage carried by peer banks, and adjusted, through recommendation by the audit committee to the Board and management, as necessary.
   4. Review reports of each examination made by bank supervising authorities and report to the board within 60 days after the receipt of the report relative to the criticisms and suggestions contained in the report. The report to the board shall be recorded in the minute book of the bank. A certified copy shall be transmitted to the Director of the Department of Consumer and Business Services within five days.