<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   FORM 10-Q

(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, 1999.

      or

[ ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the transition period from.........to..........

      Commission File Number: 0-29492
                              -------

                            HERITAGE BANCORP, INC.
            (Exact name of registrant as specified in its charter)

          Delaware                                        58-2356162
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

              201 West Main Street, Laurens, South Carolina 29360
     ---------------------------------------------------------------------
                   (Address of principal executive offices)

                                (864) 984-4581
     ---------------------------------------------------------------------
             (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.

                                 [X] Yes [] No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            Common Stock Outstanding: 4,471,770 at August 12, 1999.
<PAGE>

                               Table of Contents

<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                       <C>
Part I.   Financial Information
------    ---------------------

Item 1.   Financial Statements (unaudited)

          Consolidated Balance Sheets at June 30, 1999 and September 30, 1999                1

          Consolidated Statements of Income for the Three and Six Months Periods Ended
          June 30, 1999 and 1998                                                             2

          Consolidated Statement of Stockholders' Equity at June 30, 1999                    3

          Consolidated Statements of Cash Flows for Three and Six Months Periods
          Ended June 30, 1999 and 1998                                                     4-5

          Notes to Consolidated Financial Statements                                       6-8

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                                           8-12

Item 3.   Quantitative and Qualitative Disclosures About Market Risk                        12

Part II.  Other Information                                                                 13

SIGNATURES                                                                                  14
</TABLE>

<PAGE>

ITEM 1:  FINANCIAL STATEMENTS
-----------------------------

                            HERITAGE BANCORP, INC.
                          CONSOLIDATED BALANCE SHEETS
                  (In Thousands of Dollars Except Share Data)

<TABLE>
<CAPTION>
ASSETS                                                                             June 30               September 30,
                                                                                     1999                     1998
                                                                                  (Unaudited)
<S>                                                                               <C>                    <C>
Cash                                                                              $    4,822             $     1,917
Federal funds sold and overnight interest-bearing deposits                            13,642                  72,003
                                                                                  ----------             -----------
          Total cash and cash equivalents                                             18,464                  73,920
Investment securities:
  Held-to-maturity - at amortized cost (market value: June 30,
    1999 - $3,489; September 30, 1998 - $17,208)                                       3,499                  17,112
  Available-for-sale - at fair value (amortized cost:June 30,
    1999 - $18,865; September 30, 1998 - $3,563)                                      22,824                   6,898
Mortgage-backed securities - held to maturity - at amortized cost
  (market value:  June 30, 1999 - $343; September 30
  1998 - $1,691)                                                                         347                   1,695
Loans receivable - net                                                               233,018                 196,789
Loans held-for-sale - at lower of cost or market (market value:
  June 30, - $710; September 30, 1998 - $1,065)                                          703                     849
Office properties and equipment - net                                                  4,060                   4,103
Federal Home Loan Bank stock - at cost                                                 1,689                   2,042
Accrued interest receivable                                                            1,530                   1,335
Real estate acquired in settlement of loans - net                                         52                       -
Other assets                                                                             251                     178
                                                                                  ----------             -----------

TOTAL ASSETS                                                                      $  286,437             $   304,921
                                                                                  ==========             ===========

LIABILITIES AND EQUITY

LIABILITIES:
  Deposit accounts                                                                $  206,363                $206,104
  Accrued interest on deposit accounts                                                   276                     359
  Other liabilities                                                                    3,799                   3,128
                                                                                  ----------             -----------

          Total liabilities                                                          210,438                 209,591
                                                                                  ----------             -----------

STOCKHOLDERS' EQUITY:
  Common stock of .01 par value per share.  Authorized
    10,000,000 shares: issued 4,628,750 at June 30, 1999                                  46                      46
    and September 30, 1998; outstanding: 4,531,270 and 4,628,750
    at June 30,1999 and September 30, 1998, respectively
  Additional paid in capital                                                          67,332                  67,987
  Unallocated ESOP shares                                                             (4,241)                 (5,369)
  Unearned MRDP Shares                                                                (2,743)                      -
  Retained income - substantially restricted                                          15,100                  30,565
  Treasury stock-at cost(97,480 shares at June 30, 1999)                              (1,868)                      -
  Accumulated other comprehensive income                                               2,373                   2,101
                                                                                  ----------             -----------

          Total Stockholders' Equity                                                  75,999                  95,330
                                                                                  ----------             -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $  286,437             $   304,921
                                                                                  ==========             ===========
</TABLE>

See notes to consolidated financial statements.

                                       1
<PAGE>

                            HERITAGE BANCORP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               (In Thousands of Dollars, Except Per Share Data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended                    Nine Months Ended
                                                                      June 30                               June 30
                                                            ----------------------------          ----------------------------
                                                               1999               1998               1999               1998
<S>                                                         <C>                <C>                <C>                <C>
INTEREST INCOME:
  Interest on loans                                         $   4,537          $   3,977          $   12,899         $   11,788
  Investment securities and other                                 780              1,202               3,050              2,560
  Mortgage-backed securities                                        5                 44                  23                181
                                                            ---------          ---------          ----------         ----------
          Total interest income                                 5,322              5,223              15,972             14,529

INTEREST EXPENSE ON DEPOSITS                                    2,625              2,826               8,188              9,122
                                                            ---------          ---------          ----------         ----------

NET INTEREST INCOME                                             2,697              2,397               7,784              5,407

PROVISION FOR LOAN LOSSES
  (RECOVERY OF ALLOWANCE)                                         382                  -                 457               (115)
                                                            ---------          ---------          ----------         ----------

NET INTEREST INCOME AFTER PROVISION FOR
  LOAN LOSSES                                                   2,315              2,397               7,327              5,522
                                                            ---------          ---------          ----------         ----------

OTHER INCOME:
  Service charges and fees                                         52                 69                 149                175
  Gain (loss) on sale of mortgage loans held-for-sale               9                  -                  38                  -
  Gain (loss) on sale of investments available-for-sale           (20)                 -                 (20)                 -
  Other income (expense), net                                       -                 12                  (1)                11
                                                            ---------          ---------          ----------         ----------
          Total other income                                       41                 81                 166                186
                                                            ---------          ---------          ----------         ----------

OTHER OPERATING EXPENSES:
  Employee compensation and benefits                            2,443                448               3,449              1,183
  Deposit insurance premiums                                       34                 34                 115                101
  Occupancy and equipment expense                                  99                103                 317                314
  Data processing - service bureau fees                            58                 48                 188                112
  Office supplies, postage, printing, etc.                         31                  9                  96                 71
  Professional fees                                                36                 29                 211                 63
  (Income) expense of real estate operations                      (14)                 5                 (10)                87
  Other                                                           168                 38                 470                148
                                                            ---------          ---------          ----------         ----------
          Total other operating expenses                        2,855                714               4,836              2,079
                                                            ---------          ---------          ----------         ----------

INCOME (LOSS) BEFORE INCOME TAXES                                (499)             1,764               2,657              3,629

PROVISION FOR INCOME TAXES                                        269                655               1,386              1,345
                                                            ---------          ---------          ----------         ----------

NET INCOME (LOSS)                                           $    (768)         $   1,109          $    1,271         $    2,284
                                                            =========          =========          ==========         ==========

Basic and Diluted Earnings (Loss) per Share                 $   (0.18)             0.026          $     0.30              N/A

Weighted Average Shares Outstanding                             4,199              4,262               4,173              N/A
</TABLE>

See notes to consolidated financial statements.

                                       2
<PAGE>

                            HERITAGE BANCORP, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           (In Thousands of Dollars)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                        Additional   Unallocated   Unearned                             Other
                                 Common   Paid-In        ESOP        MRDP     Retained   Treasury   Comprehensive
                                 Stock    Capital       Shares      Shares     Income      Stock      Income (1)      Total
<S>                              <C>    <C>          <C>           <C>       <C>         <C>        <C>            <C>
BALANCE
   September 30, 1998             $46     $67,987       $(5,369)   $     -   $ 30,565    $     -          $2,101   $ 95,330

Net Income                                                                      1,271                                 1,271
Dividends declared
 ($0.15 per share)                                                               (608)                                 (608)
Change in net unrealized
 gain on available-for-sale
 securities                                                                                                  272        272
Purchase of treasury
 shares                                                                                   (5,686)                    (5,686)
Issuance of treasury
 shares to MRDP                              (347)                  (3,471)                3,818                          -
Vesting of MRDP shares                                                 140                                              140
Adjustment to MRDP                           (588)                     588                                                -
ESOP shares committed
 for release                                  280         1,128                                                       1,408
Special cash dividend
 ($4 per share)                                                               (16,128)                              (16,128)
                             ----------------------------------------------------------------------------------------------
BALANCE,
   June 30, 1999                  $46     $67,332       $(4,241)   $(2,743)  $ 15,100    $(1,868)         $2,373   $ 75,999
                             ==============================================================================================
</TABLE>

See notes to consolidated financial statements.


                                       3
<PAGE>

                            HERITAGE BANCORP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In Thousands of Dollars)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                    Nine Months Ended
                                                                                                         June 30,
                                                                                               --------------------------
                                                                                                 1999             1998
<S>                                                                                            <C>               <C>
OPERATING ACTIVITIES:
  Net income                                                                                   $  1,271          $  2,284
  Adjustments to reconcile net income to net cash
    provided by operating activities:
  Deferred income tax benefit                                                                      (305)              (20)
 (Gain) loss on sale of available-for-sale investment securities                                     20                 -
  Amortization of premium on investment and mortgage-backed
   securities                                                                                        (1)               (4)
  Amortization of net deferred income                                                               (89)             (107)
  Provision for loan losses (recovery of allowance)                                                 458              (115)
  Origination of loans held for sale                                                             (1,935)             (989)
  Principal repayments of loans held-for-sale                                                       146               192
  Gain on sale of loans                                                                             (39)              (14)
  Proceeds from the sale of loans held-for-sale                                                   1,994             1,003
  Depreciation on office properties and equipment                                                   208               212
  Allocation of ESOP shares                                                                       1,407               131
  Vesting of  MRDP Shares                                                                           141                 -
  Gain on sales of property                                                                          (6)                -
  Gain on sales of real estate acquired in settlement of loans                                       (4)                -
  Provision for losses on real estate acquired in settlement of loans                                 -                39
  Loss on sales of real estate acquired in settlement of loans                                        -                44
 (Increase) decrease in accrued interest receivable and other assets                               (215)              (82)
  Increase (decrease) in accrued interest payable and other liabilities                             734               (67)
                                                                                               --------          --------
        Net cash provided by operating activities                                                 3,785             2,507
                                                                                               --------          --------

INVESTING ACTIVITIES:
  Proceeds from maturities and calls of available-for-sale investment
    securities                                                                                    2,000             1,500
  Proceeds from maturities and calls of held-to-maturity investment
    securities                                                                                   13,615            10,000
  Proceeds from sales of available-for-sale investment securities                                 2,980                 -
  Purchases of held-to-maturity investment securities                                                 -           (15,614)
  Purchase of available-for-sale investment securities                                          (20,500)                -
  Principal repayments on mortgage-backed securities                                              1,352             3,870
  Purchase of loans                                                                              (8,311)           (9,597)
  Net loan (originations) and principal payments on loans                                       (28,413)            6,810
  Proceeds from sale of Federal Home Loan Bank stock                                                353                 -
  Proceeds from sales of real estate acquired in settlement of loans                                 58               828
  Proceeds from sale of office properties and equipment                                              10                 -
  Capitalized costs of real estate acquired in settlement of loans                                    -              (443)
  Acquisition of office properties and equipment                                                   (169)              (78)
                                                                                               --------          --------
          Net cash used in investing activities                                                 (37,025)           (2,724)
                                                                                               --------          --------
</TABLE>

                                       4
<PAGE>

                            HERITAGE BANCORP, INC.
                     CONSILIDATED STATEMENTS OF CASH FLOWS
                           (In Thousands of Dollars)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                             June 30
                                                                                   ----------------------------
                                                                                      1999               1998
<S>                                                                                <C>               <C>
FINANCING ACTIVITIES:
Net increase(decrease) in deposits                                                        259           (21,480)
Purchase of treasury stock                                                             (5,686)                -
Payment of special cash distribution                                                  (16,128)                -
Payment of dividend                                                                      (661)                -
Increase in deposits from issuance of stock subscriptions                                   -            71,673
                                                                                   ----------        ----------

         Net cash provided by (used in) financing activities                          (22,216)           50,193
                                                                                   ----------        ----------
NET INCREASE (DECREASE) IN CASH AND CASH
         EQUIVALENTS                                                                  (55,456)           49,976
                                                                                   ----------        ----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       73,920            14,659
                                                                                   ----------        ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             18,464            64,635
                                                                                   ==========        ==========

SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION:
   Cash paid during the period for:
     Interest                                                                           6,443             9,082
                                                                                   ==========        ==========
     Income taxes                                                                       1,918             1,000
                                                                                   ==========        ==========

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
     Real estate acquired through foreclosure                                             106               129
                                                                                   ==========        ==========
     Net change in unrealized gain on available for sale securities                       272               536
                                                                                   ==========        ==========
     Transfer of stock from treasury to MRDP                                            3,818                 -
                                                                                   ==========        ==========
 </TABLE>

See notes to consolidated financial statements.

                                       5
<PAGE>

                            HERITAGE BANCORP, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     Heritage Bancorp, Inc. (the "Company") was incorporated under Delaware law
     in November 1997 for the purpose of becoming the holding company for
     Heritage Federal Bank (the "Bank") upon the Bank's conversion from a
     federally chartered mutual savings and loan association to a federally
     chartered stock savings bank (the "Conversion"). The Conversion was
     completed on April 6, 1998 through the sale and issuance of 4,628,750
     shares of common stock by the Company.

     The accompanying consolidated financial statements of the Company have been
     prepared in accordance with instructions to Form 10-Q. Accordingly, they do
     not include all of the information and footnotes required by generally
     accepted accounting principles for complete financial statements. However,
     such information reflects all adjustments (consisting solely of normal
     recurring adjustments) which are, in the opinion of management, necessary
     for a fair statement of results for the interim periods.

     The results of operations for the nine months ended June 30, 1999 are not
     necessarily indicative of the results to be expected for the year ending
     September 30, 1999. These unaudited consolidated financial statements and
     notes thereto should be read in conjunction with the audited financial
     statements and notes thereto for the year ended September 30, 1998,
     contained in the Company's Form 10-K for the fiscal year ended September
     30, 1998.


2.   EARNINGS PER SHARE

     Earnings per share ("EPS") has been computed based upon weighted average
     number of common shares outstanding of 4,199,373 and 4,261,536,
     respectively, for the three months ended June 30, 1999 and 1998 and
     weighted average common shares outstanding of 4,173,091 for the nine months
     ended June 30, 1999. For the purposes of computing weighted average number
     of shares outstanding for the three months ended June 30, 1998, shares
     issued in the Conversion on April 6, 1998 were assumed to have been
     outstanding since April 1, 1998. The Company had no dilutive securities
     outstanding during the three months ended June 30, 1999 and 1998 and the
     nine months ended June 30, 1999; therefore, diluted EPS is the same as
     basic EPS for all periods.

3.   SHARES REPURCHASES

     The Company repurchased 231,438 shares of the Company's outstanding common
     stock pursuant to a stock repurchase plan announced on November 17, 1998.
     On May 21, 1999, the Company received regulatory approval to commence a
     stock repurchase program to acquire up to 185,150 shares of the
     Corporation's outstanding common stock. The program commenced May 24, 1999
     and is expected to be completed within twelve months.

     During the nine months ended June 30, 1999 the Company purchased 282,630
     shares of its common stock at an average price of $20.12 per share. The
     Company used 185,150 shares to grant awards under its Management
     Recognition and Development Plan and 97,480 shares were allocated to
     treasury stock.


4.   COMPREHENSIVE INCOME

     Effective October 1, 1998, the Company adopted the provisions of Statement
     of Financial Accounting Standards ("SFAS") No. 130, "Reporting
     Comprehensive Income." In accordance with the provisions of SFAS No. 130,
     comparative financial statements presented for earlier periods have been
     reclassified to reflect the provisions of this Statement. Comprehensive
     income is the change in the Company's equity during the period from
     transactions and other event and circumstances. Comprehensive income

                                       6
<PAGE>

     consists of net income and other comprehensive income. The Company's "other
     comprehensive income" for the nine months ended June 30, 1999 and 1998 and
     the "accumulated other comprehensive income" as of June 30, 1999 and 1998
     are comprised solely of unrealized gains on investment securities
     available-for-sale.

     Comprehensive income for the nine month periods ended June 30, 1999 and
     1998 is as follows (in thousands):


<TABLE>
<CAPTION>
                                                           1999        1998
                                                        --------------------
     <S>                                                <C>         <C>
     Net Income                                         $  1,271    $  2,284

     Other comprehensive income, net of tax:
       Unrealized gains on investment
       securities available-for-sale arising
       during the period                                     252         536

       Reclassification adjustment for
       losses included in net income                          20           0
                                                        --------------------
     Net unrealized gains                                    272         536
                                                        --------------------

     Total comprehensive income                         $  1,543    $  2,820
                                                        ====================
</TABLE>


5.   STOCK COMPENSATION PLANS

     Restricted Stock - On April 15, 1999, 185,150 shares of restricted stock
     were awarded to participants in the Heritage Bancorp, Inc. Management
     Recognition and Development Plan ("MRDP") that was approved at the
     Company's Annual Meeting of Stockholders on February 3, 1999. The
     restricted stock awards vest over a five-year period. The 185,150 shares of
     stock were issued from treasury stock on the date of the grant. The Company
     recorded the stock award at the market value on the date of grant ($18.75
     per share) as unearned MRDP shares in stockholders' equity and will
     amortize the unearned MRDP shares to compensation expense over the vesting
     period.

     As a result of the payment of the special cash dividend (see footnote 6)
     dividends of approximately $741,000 were paid on unvested shares included
     in the Company's MRDP and such payments were accounted for as compensation
     expense. Unearned MRDP shares was reduced (with a corresponding change to
     additional paid in capital) to reflect the reduction in the value of the
     shares held by the Plan.

     Stock Option Plan - On April 15, 1999, the Company granted options to
     purchase 416,588 shares of Company stock with an exercise price of $18.75
     per share to officers and directors of the Company and the Bank under the
     1998 Heritage Bancorp, Inc. Stock Option Plan that was approved at the
     Company's Annual Meeting of Stockholders on February 3, 1999.

     As a result of the payment of the special cash distribution (see footnote
     6), the options were repriced to $15.10 per share.

     Employee Stock Option Plan ("ESOP") - The special cash distribution
     received by the ESOP on unallocated ESOP shares was used to prepay a
     portion of the ESOP's debt obligation to the Company resulting in a charge
     of approximately $1.2 million of compensation expense and the release of
     additional shares to the plan participants.

6.   DECLARATION OF A $4.00 PER SHARE SPECIAL CASH DISTRIBUTION.

                                       7
<PAGE>

     On May 19, 1999 the Board of Directors declared a special cash distribution
     in the amount of $4.00 per share. The cash distribution was paid on June
     22, 1999 to stockholders of record on the close of business on June 1,
     1999. The distribution was conducted to reduce the Corporation's excess
     capital and was paid from cash on hand. It is believed that a portion of
     the distribution will be considered a non-taxable return of capital.

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

This report contains certain "forward-looking statements" concerning the future
operations of Heritage Bancorp, Inc.  We have used forward-looking statements to
describe future plans and strategies, including expectations of our future
financial results.  Management's  ability to predict results or the effect of
future plans or strategies is inherently uncertain.  Factors which could affect
actual results include interest rate trends, the general economic climate in our
market area and the country as a whole, our ability to control costs and
expenses, competitive products and pricing, loan delinquency rates, changes in
federal and state regulation, and the impact of year 2000 issues.  These factors
should be considered in evaluating the forward-looking statements contained in
this report and undue reliance should not be placed on such statements.

Comparison of Financial Condition at June 30, 1999 and September 30, 1998

Total assets decreased $18.5 million, or 6.1% from September 30, 1998 to June
30, 1999.  The decrease resulted primarily from decreases in cash and cash
equivalents offset by increases in the investment and loan portfolios. Cash and
cash equivalents were reduced to fund a special cash distribution to
stockholders, fund loan growth and repurchase the Company's own stock.  On May
19, 1999 the Board of Directors declared a special cash distribution in the
amount of $4.00 per share. The distribution was paid on June 22, 1999 to
stockholders of record as of the close of business on June 1, 1999. Investment
and mortgage backed securities increased $1.0 million, or 3.8% to $26.7 million.
Additionally the loan portfolio increased by $36.2 million, or 18.4 % to $233.0
million.  These increases were funded from cash and cash equivalents.

During the first nine months of fiscal 1999, deposit accounts increased by $0.3
million, or 0.1% to $206.4 million compared to deposit accounts at September 30,
1998.  Total equity declined during the nine month period ended June 30, 1999 by
$19.3 million to $76.0 million primarily as the result of the Company's one-time
$4.00 per share cash distribution and the repurchase of its shares on the open
market.

Nonaccrual loans increased $138,000 to $925,000 from $787,000 at September 30,
1998.  Nonaccrual one-to-four family mortgage loans increased $194,000 while
nonaccrual builder construction loans decreased $67,000.  At June 30, 1999 and
September 30, 1998, total nonaccrual loans accounted for 0.40% of net loans
receivable.  Real estate owned increased to $52,000 at June 30, 1999 as the
result of foreclosure of one single-family residence.  Total nonperforming
assets were 0.34% of total assets at June 30, 1999, compared to 0.26% at
September 30, 1998.

Comparison of Operating Results for the Quarter Ended June 30, 1999 and 1998.

General.  Net income decreased $1.9 million, or 169.2%, to a loss of  $768,000
for the three months ended June 30, 1999 from a net profit of $1.1 million for
the three months ended June 30, 1998.  The decrease was primarily the result of
a one-time compensation expense charge of $1.9 million recorded in connection
with the payment of the special cash distribution to recipients of unvested
awards under the Company's Management Recognition and Development Plan and the
payment of the special cash distribution to the unallocated shares in the ESOP,
with such funds being used to prepay a portion of the ESOP's debt obligation to
the Company.  The decrease in net income was also partially a result of an
increase of $382,000 in the loan loss allowance provision.  These decreases in
net income were offset by an increase of $99,000 in interest income, a decrease
of $201,000 in interest expense and a decrease of $386,000 in the provision for
income taxes, which was due to lower income before income taxes.

Net Interest Income.  Net interest income before provision for loan loss
increased $300,000, or 12.5%, for the quarter ended June 30, 1999 due to an
increase in net loans receivable and a decrease in the cost of funds on savings
deposits.

                                       8
<PAGE>

Provision for Loan Losses.   The provision for loan losses for the quarter ended
June 30, 1999 was $382,000 compared to $0 for the quarter ended June 30, 1998.
The increase was primarily the result of growth in the construction loan
portfolio. The construction loan portfolio grew to $38.3 million at June 30,
1999, from $8.7 million at June 30, 1998.   Construction loans, while providing
higher yields, inherently bear more risk than loans on completed single family
residences, and accordingly management increased appropriate loan loss reserves.

Other Income.   Other income decreased $40,000, or 49.4%, to $41,000 for the
three months ended June 30, 1999 from $81,000 for the three months ended June
30, 1998.  This decrease was primarily the result of a loss on the sale of
investments and a reduction in bank check commissions.

Other Operating Expenses.  Other operating expenses increased $2,141,000, or
300%, from the third quarter of fiscal 1998 to the third quarter of fiscal 1999.
The increase was primarily the result of a one-time compensation expense charge
of $1,904,000 recorded in connection with the payment of the special cash
distribution to recipients of unvested awards under the Company's Management
Recognition and Development Plan and the payment of the special cash
distribution to the unallocated shares in the ESOP, with such funds being used
to prepay a portion of the ESOP's debt obligation to the Company.  Additionally,
compensation expense increased due to recognition of normal expenses associated
with the Management Recognition and Development Plan, which was implemented
during the current quarter, and the Company's ESOP and growth in the payroll.

Income Taxes. The provision for income tax was $269,000 in the third quarter of
fiscal 1999 compared to $655,000 in the third quarter of fiscal 1998.  The
income tax provision was lower in fiscal 1999 because of lower taxable income.

Comparison of Operating Results for the Nine Months Ended June 30, 1999 and 1998

General.  Net income decreased $1.0 million, or 44.4%, to $1.3 million, for the
nine months ended June 30, 1999 from $2.3 million for the nine months ended June
30, 1998.  The decrease in net income was primarily the result of a one-time
compensation expense charge of $1.9 million recorded in connection with the
payment of the special cash distribution to recipients of unvested awards under
the Company's Management Recognition and Development Plan and the payment of the
special cash distribution to the unallocated shares in the ESOP, with such funds
being used to prepay a portion of the ESOP's debt obligation to the Company.
The decrease in net income was also partially a result of an increase of
$572,000 in the loan loss allowance provision and other expenses.  These
decreases were offset by an increase of $1.4 million in interest income and a
decrease of $934,000 in interest expense.

Net Interest Income.  Net interest income before provision for loan losses
increased $2.4 million, or 44.0%, from the nine months of fiscal 1998 compared
to the nine months of fiscal 1999.  Total interest income increased $1.4
million, or 9.9%, between the periods.  Interest income on loans increased $1.1
million as a result of an increase in the average balance of loans receivable to
$233.0 million from $196.8 million and an increase in the average yield from
8.07% to 8.09%.  The average balance of interest earning assets increased to
$294.9 million from $264.1 million offset by a decrease in the average yield on
total interest earning assets from 7.33% to 7.22%.  The increase in the average
balance of interest earning assets was due in part to cash received in the
Company's stock offering and invested in federal funds sold and overnight
interest bearing deposits and an increase in the average balance of loans
receivable.

Interest expense on deposits decreased $934,000, or 10.3%, from the nine months
of fiscal 1998 compared to the nine months of fiscal 1999 as a result of a
decrease in the average balance of deposits to $204.9 million from $217.4
million and a decrease in the average yield on deposits to 5.33% from 5.59%.
The decrease in the average balance of deposits was due to the customers' use of
deposits to purchase stock of the Company and normal savings withdrawal
activity.

Provision for Loan Losses.  Loan loss provision for the first nine months of
fiscal 1999 was $457,000 compared to a net recovery of loan losses of $115,000
during the first nine months of fiscal 1998.  The loan loss provision grew as
the Company increased its general loan valuation allowance to reflect growth in
the construction loan portfolio.

                                       9
<PAGE>

Other Operating Expenses.  Other operating expenses increased $2.8 million, or
132.6%, from the first nine months of fiscal 1998 to the first nine months of
fiscal 1999.  Employee benefit and compensation expense increased $2.3 million
in the first nine months of fiscal 1999 compared to the same period in the prior
year primarily due to a one-time compensation expense charge of $1.9 million
recorded in connection with the payment of the special cash distribution to
recipients of unvested awards under the Company's Management Recognition and
Development Plan and the payment of the special cash distribution to the
unallocated shares in the ESOP.  Additionally, compensation expense increased
due to recognition of normal expenses associated with the Management Recognition
and Development Plan (which was implemented in the current period) and the
Company's ESOP and normal payroll growth.  The increase in other categories of
other operating expenses generally are attributable to increased costs
associated with operating as a public company..

Income Taxes.  The provision for income taxes was $1.4 million in the first nine
months of fiscal 1999 compared to $1.3 million in the first nine months of
fiscal 1998.  While the cash distribution to the unallocated shares of the ESOP
increased expenses for book purposes, it was not fully deductible for tax
purposes, hence the increase in provision for taxes in the first nine months of
fiscal 1999.

Liquidity and Capital Resources

The Bank's primary sources of funds are customer deposits, fees, proceeds from
principal and interest payments on and the sale of loans, maturing or sale of
securities and advances from the FHLB of Atlanta.  While maturities and
scheduled amortization of loans are a predictable source of funds, deposit
flows, securities and loan sales and mortgage prepayments are influenced greatly
by general interest rates, economic conditions and competition.  The Bank must
maintain an adequate level of liquidity to ensure the availability of sufficient
funds to fund loan originations and deposit withdrawals, to satisfy other
financial commitments and to take advantage of investment opportunities.  The
Bank generally maintains sufficient cash and short-term investments to meet
short-term liquidity needs.  At June 30, 1999, cash and cash equivalents totaled
$18.5 million, or 6.5% of total assets, and investment securities classified as
available-for-sale totaled $27.4 million.  At June 30, 1999, the Bank also
maintained, but did not draw upon, an uncommitted credit facility with the FHLB
of Atlanta.

As of June 30, 1999, the Bank's regulatory capital was in excess of all
applicable regulatory requirements.  At June 30, 1999, under regulations of the
Office of Thrift Supervision, the Bank's actual tangible, core, and risk-based
capital ratios were 22.05%,  22.05%, and 37.27% respectively, compared to
regulatory requirements of 1.5%, 4.0% and 8.0%, respectively.

Year 2000

As the year 2000 approaches, the Bank's information and data processing system
has been assessed to insure appropriate operation after December 31, 1999.  Many
such systems in use worldwide may not be able to interpret dates after December
31, 1999 properly because such systems allow only two digits to indicate the
year in a date. Programmers initially used a two-digit dating system that has
become integrated into applications and hardware which could cause systems to
function improperly or fail on January 1, 2000. The problem could reside in
computer programs, computer hardware, or electronic devices that reference dates
in the course of their functions.  Also, the Bank has considered the potential
problems that Year 2000 could pose for third party service providers.

Year 2000 risk is present in virtually all of the Bank's normal operating
activities.  To confront these risks, the Bank has developed a Year 2000 Plan,
which has been reviewed by senior management and the Board of Directors. The
plan contains a review of Bank systems that could be affected by Year 2000
problems along with an assessment of the potential impact that Year 2000 system
problems could pose to the Bank's normal operation.   Management categorized
Year 2000 potential risks as either critical, important, or noncritical.
Critical issues were those that would cause the Bank to lose its data
communication and data processing capability and thus render normal operations
virtually impossible.  Noncritical issues were those that would pose an
inconvenience but could be readily remediated through a manual or alternate
processing system.

                                       10
<PAGE>

Important issues were those that would cause some disruption to administrative
or management functions but would cause no immediate operational problems and
could be handled easily in a non-automated manner.

Management has determined the most critical aspects of the Bank's operations
that could be affected are the Bank's interaction with its data processing
provider and the proper operation of its internal computer system.  While other
areas of concern, such as payroll and accounting services and mortgage escrow
and tax services could pose some inconvenience and delays in normal operations,
problems in these areas would be noncritical and could be readily corrected.

The Bank has requested and received Year 2000 readiness certifications from
third party service providers, whose services have been deemed critical to Bank
operations.  For critical systems, contingency plans have been developed that
make provisions for alternate and/or manual processing.  These plans are being
prepared for four possible scenarios ranging from minor system anomalies to
complete system disfunctionality. The worst case scenario would be the inability
to use the internal computer system, the inability to communicate with the data
processing provider, and the data processing provider's disfunctionality.
Management feels that its preparation exceeds what is necessary for the most
reasonably likely worst case scenario.

The Office of Thrift Supervision has conducted three independent audits of the
Bank's Year 2000 progress.  As a part of their regulatory oversight of all
thrift institutions, the OTS will continue to monitor the Bank's progress
through 1999.

The Bank's primary data processing provider is FiServ.  FiServ has developed a
Year 2000 Plan and provides the Bank with periodic updates.  FiServ completed
all program maintenance associated with its Year 2000 Plan  in November, 1998,
and has certified that its data processing systems are Year 2000 compliant.
FiServ's Year 2000 activities are also monitored by the OTS. The Bank began
testing its software and hardware interfaces in conjunction with FiServ's system
in November, 1998,  and concluded that further testing would be beneficial. That
testing was begun in January, 1999 with successful off-line testing of the
software and hardware interfaces.  A new accounts software upgrade was completed
and tested in February, 1999,  and a final successful online testing with FiServ
was performed in April, 1999. All data processing systems critical to the Bank's
operation have now been tested with successful results.

Heritage Federal has utilized third party consultants to analyze its hardware
and local area network needs to upgrade the Bank's software interfaces.

FiServ is also monitoring the Year 2000 status of third party vendors providing
data exchange functions relating to the Bank.  FiServ has developed a
comprehensive list of these vendors for its clients and evaluated the vendors as
to the critical nature of their functions relating to the Bank.  Testing has
been completed on vendors considered most critical with tests on important but
not critical vendors continuing.

Heritage Federal has identified only one significant commercial borrower with
Year 2000 exposure.  Heritage requested, received, and reviewed the borrower's
certification of compliance.  Most of the company's loans are borrower owned,
single-family residences and involve minimal Year 2000 risk to the Bank.

With successful testing having been completed in the most critical areas of
operations, Heritage is now focusing more attention on employee and customer
awareness of Year 2000 issues and contingency planning.   Employee training and
customer awareness plans have been implemented concentrating on readiness and
employee/customer interaction.  Contingency plans were successfully tested in
July, 1999 to provide for the possibility of FiServ's disfunctionality or the
Bank's inability to communicate with FiServ.

The external costs associated with the Bank's Year 2000 compliance are expected
to be less than $50,000. The Bank does not track internal costs as these are
related to normal payroll costs. At this time, it is not possible to make a
reasonable estimate of the costs to the Company if the Bank or any critical
third party provider failed to complete Year 2000 measures as scheduled.
However, those costs would likely have a material impact on the Company.

                                       11
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the quantitative and qualitative
disclosures about market risks as of June 30, 1999 than presented in the
Company's Form 10-K for the year ended September 30, 1998.

                                       12
<PAGE>

Part II.  Other Information

Item 1.   Legal Proceedings
          -----------------
          Not applicable

Item 2.   Changes in Securities and Use of Proceeds
          ------------------------------------------
          Not applicable

Item 3.   Defaults Upon Senior Securities
          -------------------------------
          Not applicable

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------
          Not applicable

Item 5.   Other Information
          -----------------
          None

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------

          (a)   Exhibits

                (27)   Financial Data Schedule

          (b)   Reports on Form 8-K:

                On May 21,1999, the Registrant filed a Report on Form 8-K
                disclosing under Item 5 the declaration of a $4.00 per share
                special cash distribution.

                                       13
<PAGE>

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                           HERITAGE BANCORP, INC.


Date: August 13, 1999            By:  /s/ J. Edwards Wells
                                     ---------------------------------
                                          J. Edward Wells
                                          President and Chief Executive Officer


Date: August 13, 1999            By:  /s/ Edwin I. Shealy
                                     -----------------------------------
                                          Edwin I. Shealy
                                          Treasurer and Chief Financial Officer

                                       14