SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[x]   QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

For the quarterly period ended March 31, 2000


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

For the transition period from ___________________ to ___________________


                        Commission file number: 000-24933

                             HERITAGE BANCORP, INC.
                  (Name of Small Business Issue in its Charter)


            VIRGINIA                                54-1914902
----------------------------------                  ----------
   (State or Other Jurisdiction           (I.R.S. Employer Identification No.)
 Of Incorporation or Organization)

                1313 DOLLEY MADISON BLVD., MCLEAN, VIRGINIA 22101
                    (Address of Principal Executive Offices)
                                 (703) 356-6060
                (Issuer's Telephone Number, Including Area Code)



--------------------------------------------------------------------------------
      (Former Name, Former Address and Former Fiscal Year, If Changed Since
                                  Last Report)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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
                                                             ---    ---

State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 31, 2000.

            Common stock, $1 par value--2,294,617 shares outstanding
            --------------------------------------------------------

                                       1


<PAGE>


                                      INDEX

Part I.   Financial Information                                         PAGE NO.

          Item 1.  Financial Statements
                   Consolidated Balance Sheets--
                     March 31, 2000 and December 31, 1999                   3

                   Consolidated Statements of Income--
                     Three months ended March 31, 2000 and 1999             4

                   Consolidated Statements of Stockholders' Equity--
                     Three months ended March 31, 2000 and 1999             5

                   Consolidated Statements of Cash Flows--
                     Three months ended March 31, 2000 and 1999             6

                   Notes to Consolidated Financial Statements          7 - 10

          Item 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations              11 - 13

Part II.  Other Information:                                               14

          Item 1.  Legal Proceedings
          Item 2.  Changes in Securities
          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


                                       2

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                      HERITAGE BANCORP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                            (in thousands of dollars)

<TABLE>
<CAPTION>

                                                        (Unaudited)         (Audited)
                                                          March 31,        December 31,
    ASSETS:                                                 2000               1999
                                                        -----------        ------------
    <S>                                                    <C>               <C>

    Cash and due from banks                                $ 2,990           $ 2,667
    Securities available for sale (at market value)         23,764            24,054
    Federal funds sold                                           0                 0
    Loans, net                                              35,649            31,268
    Premises and equipment                                     872               849
    Other assets                                             1,146             1,101
                                                           -------           -------
          Total assets                                     $64,421           $59,939
                                                           =======           =======

LIABILITIES:
Deposits
    Non-interest bearing                                   $11,152           $13,708
    Interest-bearing                                        36,881            34,285
                                                           -------           -------
       Total deposits                                       48,033            47,993
Short-term debt                                              7,603             3,001
Other liabilities                                              217               347
                                                           -------           -------
          Total liabilities                                 55,853            51,341
                                                           -------           -------

STOCKHOLDERS' EQUITY:
    Common stock; $1 par value per share;
     authorized 10,000,000 shares; issued and
     outstanding 2,294,617 shares                            2,295             2,295
    Surplus                                                  6,530             6,530
    Undivided profits                                          235               210
    Accumulated other comprehensive
     income (loss), net                                       (492)             (437)
                                                           -------           -------
          Total stockholders' equity                         8,568             8,598
                                                           -------           -------
          Total liabilities and
            stockholders' equity                           $64,421           $59,939
                                                           =======           =======

</TABLE>


Notes to financial statements are an integral part of these statements.

                                       3

<PAGE>

                      HERITAGE BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                            (in thousands of dollars)
                                   (unaudited)

                                                           Three Months Ended
                                                           ------------------
                                                                March 31,
                                                                ---------
                                                           2000           1999
                                                         -------         -------
INTEREST INCOME:
Loans and fees                                           $   725         $   699
Federal funds sold                                             7              81
Investment securities                                        386             319
                                                         -------         -------
   Total interest income                                   1,118           1,099

INTEREST EXPENSE:
Interest on deposits                                         330             348
Interest on federal funds purchased
 and other borrowings                                         44              12
                                                         -------         -------
   Total interest expense                                    374             360
                                                         -------         -------
   Net interest income                                       744             739

PROVISION FOR LOAN
AND LEASE LOSSES                                             (28)              7
                                                         -------         -------
   Net interest income after
   provision for loan losses                                 772             732

OTHER INCOME:
Service charges & fees                                        46              34
Securities gains (losses)                                    (13)             --
                                                         -------         -------
   Total other income                                         33              34

OTHER EXPENSES:
Salaries & employee benefits                                 319             295
Occupancy expenses                                           105              52
Furniture & equipment expenses                                64              39
Other operating expenses                                     280             184
                                                         -------         -------
   Total other expenses                                      768             570
                                                         -------         -------
Income before income taxes                                    37             196
Applicable income taxes                                       12              19
                                                         -------         -------
   Net income                                            $    25         $   177
                                                         =======         =======
    EARNINGS PER SHARE, BASIC                            $   .01         $   .08
                                                         =======         =======
    EARNINGS PER SHARE, ASSUMING
    DILUTION                                             $   .01         $   .08
                                                         =======         =======

Notes to financial statements are an integral part of these statements.

                                       4

<PAGE>



                      HERITAGE BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    For the three months ended March 31, 2000
                            (in thousands of dollars)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                  Accumulated
                                                                                    Other
                                                  Common              Retained   Comprehensive     Comprehensive
                                                   Stock     Surplus  Earnings       Income               Income       Total
                                                   -----     -------  --------       ------               ------       -----
<S>                                              <C>         <C>        <C>          <C>                <C>           <C>
Balance, January 1, 1999                         $ 2,295     $ 6,530    $  28        $   75                           $8,928
Comprehensive income:
   Net income                                         --          --      177            --             $   177          177
   Other comprehensive income:
     Unrealized holding gains (losses) on
     securities available for sale arising
     during the period net of tax of $(39)            --          --       --           (74)                (74)         (74)
                                                                                                             --
   Other comprehensive income, net of tax             --          --       --            --                  --
   Total comprehensive income                         --          --       --            --             $   103
                                                  ======     =======    =====        ======             =======       ======
Balance, March 31, 1999                           $2,295     $ 6,530    $ 205        $    1                           $9,031
                                                  ======     =======    =====        ======                           ======


Balance, January 1, 2000                         $ 2,295     $ 6,530    $ 210        $ (437)                          $8,598
Comprehensive income:
   Net income                                         --          --       25            --             $    25           25
   Other comprehensive income:
     Unrealized holding gains (losses) on
     securities available for sale arising
     during the period net of tax of $(28-            --          --       --           (55)                (55)         (55)
   Other comprehensive income, net of tax             --          --       --            --                  --
   Total comprehensive income                         --          --       --            --             $   (30)
                                                  ======     =======   ======        =======            =======       ======
Balance, March 31, 2000                           $2,295     $ 6,530   $  235        $ (492)                          $8,568
                                                  ======     =======   ======        =======                          ======

</TABLE>

Notes to financial statements are an integral part of these statements.

                                       5
<PAGE>

                      HERITAGE BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                      Three Months Ended
                                                                                      ------------------
                                                                                           March 31,
                                                                                      ------------------
                                                                                    2000                1999
                                                                                    ----                ----
<S>                                                                               <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                     $     25            $    177
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                                                      24                  12
     Provision for loan losses                                                         (28)                  7
     Amortization of premiums, net                                                       2                   9
     Loss on sale of securities available for sale                                      13                  --
     Changes in assets and liabilities:
       (Increase) in other assets                                                      (17)               (259)
       (Decrease) in other liabilities                                                (130)                 --
                                                                                  --------            --------
          Net cash provided by operating activities                                   (111)                (54)
                                                                                  --------            --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net (increase) decrease in loans                                                 (4,353)                523
   Purchase of securities available for sale                                          (813)             (7,055)
   Proceeds from sales of securities available for sale                                987                  --
   Proceeds from calls and maturities of securities available for sale                  18               4,000
   Purchase of premises and equipment                                                  (47)                (90)
                                                                                  --------            --------
          Net cash (used in) investing activities                                   (4,208)             (2,622)
                                                                                  --------            --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase (decrease) in deposits                                                      40              (2,820)
   Net increase (decrease) in short-term borrowings                                  4,602              (1,009)
                                                                                  --------            --------
          Net Cash provided by financing activities                                  4,642              (3,829)
                                                                                  --------            --------
            Net increase (decrease) in cash and cash equivalents                       323              (6,505)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                      2,667              14,375
                                                                                  --------            --------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                         $  2,990            $  7,870
                                                                                  ========            ========

Supplemental disclosures of cash flow information
    Cash payments for:
     Interest on deposits                                                         $    369            $    344
     Income taxes                                                                 $     --            $     --

Supplemental schedule of non-cash investing activities
   Unrealized gain (loss) on securities available for sale                        $    (83)           $    (74)


</TABLE>


Notes to financial statements are an integral part of these statements.

                                       6

<PAGE>

                      HERITAGE BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.    GENERAL

         The consolidated  statements  include the accounts of Heritage Bancorp,
      Inc. (the "Company") and its  subsidiary,  The Heritage Bank (the "Bank").
      All  significant   intercompany   balances  and  transactions   have  been
      eliminated.  In the  opinion of  management,  the  accompanying  unaudited
      consolidated  financial statements contain all adjustments  (consisting of
      only normal recurring  accruals) necessary to present fairly the financial
      positions as of March 31, 2000 and  December 31, 1999,  and the results of
      operations  and cash flows for the three  months  ended March 31, 2000 and
      1999.

         The results of operations for the three months ended March 31, 2000 and
      1999 are not necessarily  indicative of the results to be expected for the
      full year.

2.    INVESTMENT SECURITIES

         Amortized cost and carrying amount (estimated fair value) of securities
      available for sale are summarized as follows:

<TABLE>
<CAPTION>
                                                                           March 31, 2000
                                                       ---------------------------------------------------
                                                                           Gross          Gross  Estimated
                                                        Amortized     Unrealized     Unrealized     Market
           (In thousands of dollars)                      Cost        Gains          Losses         Value
                                                       ---------------------------------------------------
    <S>                                                  <C>          <C>            <C>          <C>
     US government agencies & corporations               $ 23,110     $     --       $   723      $ 22,387
     Obligations of states & political subdivisions           510           --             2           508
     Corporate debt obligations                               523           --            19           504
     Other securities                                         100           --            --           100
     Federal reserve stock                                    265           --            --           265
                                                         --------     --------       -------      --------
                                                         $ 24,508     $     --       $   744      $ 23,764
                                                         ========     ========       =======      ========

    Securities available for sale at December 31, 1999 consist of the following:

<CAPTION>
                                                                         December 31, 1999
                                                       ---------------------------------------------------
                                                                           Gross          Gross  Estimated
                                                        Amortized     Unrealized     Unrealized     Market
           (In thousands of dollars)                      Cost        Gains          Losses         Value
                                                       ---------------------------------------------------
    <S>                                                  <C>          <C>            <C>          <C>
    US government & federal agencies                     $ 22,916     $     --       $  (643)     $ 22,273
    Obligations of states & political subdivisions          1,010           --            (4)        1,006
    Corporate debt obligations                                525           --           (15)          510
    Federal reserve stock                                     265           --            --           265
                                                         --------     --------       -------      --------
                                                         $ 24,716     $     --       $  (662)     $ 24,054
                                                         ========     ========       =======      ========
<CAPTION>

                                                                          Three Months Ended
    (in thousands of dollars)                                                  March 31,
                                                                               ---------
                                                                            2000       1999
                                                                            ----       ----
    <S>                                                                    <C>         <C>
    Gross proceeds from sales of securities                                   987         --
                                                                           ======      =====
    Gross gains on sale of securities                                          --         --
    Gross losses on sale of securities                                         13         --
                                                                           ------      -----
      Net securities gains (losses)                                            13         --
                                                                           ======      ======
</TABLE>

                                       7

<PAGE>
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (unaudited)

3.  LOANS

    Major classifications of loans are as follows:

 (in thousands of dollars)                 March 31,       December 31,
                                             2000              1999
                                           ---------       ------------
Commercial                                 $  4,475         $  3,665
Real estate:
   Construction                               1,696            1,157
   Residential (1-4 family)                  10,541           10,475
   Commercial                                16,680           13,088
   Agricultural                                 966              972
Consumer                                      1,331            1,507
All other Loans                                 356              825
                                           --------         --------
                                             36,045           31,689
Less allowance for loan losses                 (396)            (421)
                                           --------         --------
                                           $ 35,649         $ 31,268
                                           ========         ========

The  following  schedule  summarizes  the changes in the  allowance for loan and
lease losses:

                                     Three Months    Three Months
                                       Ending          Ending       December 31,
(in thousands of dollars)           March 31, 2000  March 31, 1999     1999
                                    --------------  --------------     ----

Balance, beginning                       $ 421          $ 429           $ 429
Provision charged against income           (28)             7             --
Recoveries                                   3              2             12
Loans charged off                           --             20             20
                                         -----          -----          -----
Balance, ending                          $ 396          $ 418          $ 421
                                         =====          =====          =====

There were no nonperforming assets on March 31, 2000 or on December 31, 1999.

There  were no loans  past due 90 days or more and still  accruing  on March 31,
2000 or on December 31, 1999.

4.       EARNINGS PER SHARE

    The following shows the weighted  average number of shares used in computing
earnings  per  share  and the  effect on  weighted  average  number of shares of
diluted potential common stock income available to common shareholders.

<TABLE>
<CAPTION>

                                                       March 31, 2000                    March 31, 1999
                                                       --------------                    --------------
                                                                  Per Share                          Per Share
                                                    Shares          Amount             Shares          Amount
                                                    ------          ------             ------          ------
<S>                                              <C>               <C>                <C>             <C>
Basic Earnings Per Share                         2,294,617         $   .01            2,294,617       $   .08

Effect of dilutive securities:
  Nonemployee directors' stock options              10,000                               24,500
  Employee incentive stock options                  16,125                               31,050
                                                 ---------                            ---------

Diluted Earnings Per Share                       2,320,742         $   .01            2,350,167       $   .08
                                                 =========         =======            =========       =======

</TABLE>

                                       8

<PAGE>


              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (unaudited)

5.  CAPITAL REQUIREMENTS

A  comparison  of the  Company's  capital as of March 31,  2000 with the minimum
requirements is presented below:

                                                                 Minimum
                                                  Actual       Requirements
                                                  ------       ------------
Tier I risk-based capital                         18.34%           4.00%
Total risk-based capital                          19.14%           8.00%
Leverage ratio                                    14.84%           4.00%







                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

    Certain    information    contained   in   this   discussion   may   include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements are generally identified by phrases
such as "the  Company  expects,"  "the  Company  believes"  or words of  similar
import.  Such  forward-looking   statements  involve  known  and  unknown  risks
including,  but not  limited  to,  changes  in  general  economic  and  business
conditions, interest rate fluctuations,  competition within and from outside the
banking  industry,  new  products  and  services in the banking  industry,  risk
inherent in making  loans such as  repayment  risks and  fluctuating  collateral
values,  problems with  technology  utilized by the Company,  changing trends in
customer profiles and changes in laws and regulations applicable to the Company.
Although  the  Company  believes  that  its  expectations  with  respect  to the
forward-looking statements are based upon reliable assumptions within the bounds
of its knowledge of its business and operations,  there can be no assurance that
actual  results,  performance  or  achievements  of the Company  will not differ
materially  from any future results,  performance or  achievements  expressed or
implied by such forward-looking statements.

GENERAL

    The  following  presents   management's   discussion  and  analysis  of  the
consolidated  financial condition and results of operations of Heritage Bancorp,
Inc.  (the  "Company")  as of the  dates  and for the  periods  indicated.  This
discussion  should  be read  in  conjunction  with  the  Company's  Consolidated
Financial  Statements and the Notes thereto,  and other financial data appearing
elsewhere in this report. The Company is the parent bank holding company for The
Heritage Bank (the "Bank").  The Bank is a Virginia chartered bank headquartered
in McLean, Virginia that currently operates two full-service offices and engages
in a broad range of lending and deposit  services  aimed at individual and small
to medium-sized  business customers in their respective market areas. The Bank's
third branch location will open mid May 2000.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND DECEMBER 31, 1999.

    As of March 31, 2000 the Company's total assets were $64,421,000 as compared
to  $59,939,000 as of December 31, 1999,  which  represents an increase of 7.5%.
The 2000  increase  in total  assets  of  $4,482,000  was  primarily  due to the
increased  loan  production.  Total loans  increased by 13.7% or  $4,356,000  to
$36,045,000 at March 31, 2000 from $31,689,000 at December 31, 1999.

    Total  deposits  increased  $40,000  to  $48,033,000  at March  31,  2000 as
compared to $47,993,000 at December 31, 1999. Repurchase agreements at March 31,
2000 were  $7,603,000  or 153.3%  greater  than the December 31, 1999 balance of
$3,001,000.  The Bank temporarily funded loans with a repurchase  agreement with
another bank using its investment  securities as collateral.  At March 31, 2000,
the total of the Bank's repurchase  agreements with another bank was $4,500,000.
Customer  related  repurchase  agreements  totaled  $3,103,000 and $3,001,000 at
March 31, 2000 and December 31, 1999, respectively.

    Federal funds sold and cash and due from banks  represent the Company's cash
and cash  equivalents.  Federal  funds  sold and cash and cash due from banks at
March 31, 2000 totaled  $2,990,000  compared to $2,667,000 at December 31, 1999,
representing  an increase  of  $323,000,  or 12.1%.  The Bank had no balances in
federal funds sold at March 31, 2000 and December 31, 1999.  The increase in due
from banks was  attributable to usual  fluctuations in clearing  balances at the
Federal Reserve Bank.

    Securities  available for sale decreased  $290,000 or 1.2% to $23,764,000 at
March 31, 2000 from $24,054,000 at December 31, 1999. The net $290,000  decrease
was primarily due to the sale of two securities for liquidity in January and the
purchase of one  additional  floating  rate  security  to increase  the yield on
earning assets.


                                       10
<PAGE>


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999.

    Net income. The Company reported net income for the three months ended March
31, 2000 of $25,000 or $.01 basic and diluted  earnings per share as compared to
the  $177,000  net income or $.08 basic and diluted  earnings  per share for the
same  period of 1999.  Net income  decreased  $152,000  from  March 31,  1999 as
compared  to the same  period  of  2000.  This  decrease  was  primarily  due to
increased operational and facility costs due to the Sterling branch which opened
in April of 1999 and additional  space rented for  operational  expansion at the
Main office address in McLean in March of 1999.

    Net-interest  income. Net interest income is the difference between interest
earned on loans,  investment  securities  and  short-term  investments,  and the
interest  paid on deposits and  repurchase  agreements.  Factors  affecting  net
interest income include interest rates earned on loans and investments and those
paid on deposits and repurchase agreements, the mix and volume of earning assets
and  interest  bearing  liabilities  and the  level of  non-earning  assets  and
non-interest  bearing  liabilities.  Net interest  income for the quarter  ended
March 31, 2000 increased $5,000 or .7% over the same quarter of 1999.

    Non-interest  income.  During the  three-month  period  ended March 31, 2000
non-interest  income  decreased  $1,000 over the same period of 1999.  A loss on
sale of securities of $13,000 in January 2000 was partially  offset by increases
in overdraft and return check  charges,  and other  commission  fees such as ATM
fees and  merchant  discount  fees.  The  securities  were sold to provide  some
liquidity for loan funding.

    Non-interest  expense.  In the first quarter of 2000  non-interest  expenses
increased  $198,000  or  34.7%  over the same  period  of 1999 due to  increased
operational  and facility costs due to the Sterling branch which opened in April
of 1999 and additional space rented for operational expansion at the Main office
address in March of 1999.  These increased  leases raised  occupancy  expense by
$53,000 for the three months ended March 31, 2000 as compared to the same period
of 1999.  Additional  salaries  of  $41,000  due to  increase  employees  at the
Sterling branch also contributed to the increased  non-interest expenses for the
quarter.

    Provision  for loan  losses.  In view of the loan growth for the first three
months of 1999 and the fact that there was no  deterioration  in the Bank's loan
portfolio,  a provision of $7,000 was made for loan losses in the first  quarter
of  1999.  The  allowance  for  loan  losses  at March  31,  1999  was  1.33% of
outstanding  loans. In view of the improvement in the Bank's loan portfolio,  an
analysis of the reserve for loan losses indicated that the reserves were greater
than  required.  Management  determined  that a  reserve  of  1.10%  would be an
acceptable  level.  A credit of $28,000 was made to the  provision to reduce the
reserve balance at March 31, 2000. The level of the allowance for loan losses is
based upon  management's  review of the loan  portfolio and includes the present
and prospective  financial condition of borrowers,  consideration of actual loan
loss experience and projected economic  conditions in general and for the Bank's
service  areas in  particular.  Management  believes that the provision for loan
losses and the  allowance for loan losses are  reasonable  and adequate to cover
any known  losses  and any  losses  reasonably  expected  in the  existing  loan
portfolio.  While  management  estimates  loan losses  using the best  available
information,  such as independent appraisals on collateral,  no assurance can be
given that future  additions to the  allowance  will not be  necessary  based on
changes in  economic  and real estate  market  conditions,  further  information
obtained  regarding known problem loans,  identification  of additional  problem
loans and other factors, both within and outside management's control.

    Income Taxes. The Company  recognized a net income tax expense of $12,000 in
the first  quarter of 2000, as compared to $19,000 in the same period of 1999. A
net operating loss  carryforward of the Company became  completely  utilized for
accounting purposes in 1999.

                                       11

<PAGE>

LOAN QUALITY

    The Bank attempts to manage the risk  characteristics  of its loan portfolio
through  various  control  processes,  such as credit  evaluation  of borrowers,
establishment of lending limits and application of lending procedures, including
the holding of adequate collateral and the maintenance of compensating balances.
However,  the Bank seeks to rely  primarily on the cash flow of its borrowers as
the principal  source of  repayment.  Although  credit  policies are designed to
minimize risk,  management  recognizes  that loan losses will occur and that the
amount of these losses will fluctuate  depending on the risk  characteristics of
the loan portfolio, as well as general and regional economic conditions.

    The allowance for loan losses  represents a reserve for potential  losses in
the loan  portfolio.  The adequacy of the allowance for loan losses is evaluated
periodically  based on a review  of all  significant  loans,  with a  particular
emphasis  on  non-accruing,  past due and other loans that  management  believes
require  special  attention.  As of March 31, 2000,  the Company had no loans in
non-accrual or 90 days past due as compared to $17,000 in non-accrual or 90 days
past due as of March 31, 1999.

    For significant problem loans, management's review consists of evaluation of
the financial strengths of the borrower, the related collateral, and the effects
of economic  conditions.  Specific reserves against the remaining loan portfolio
are  based on  analysis  of  historical  loan  loss  ratios,  loan  charge-offs,
delinquency trends, and previous collection experience, along with an assessment
of the effects of external economic conditions.

    As of March 31, 2000, the allowance for loan losses was 1.10% of outstanding
loans,  which  was a  decrease  from the  March 31,  1999  percentage  of 1.33%.
Management's  judgment  as to the level of future  losses on  existing  loans is
based on  management's  internal  review  of the loan  portfolio,  including  an
analysis of the borrowers'  current  financial  position,  the  consideration of
current and  anticipated  economic  conditions  and their  potential  effects on
specific  borrowers,  an evaluation of the existing  relationships  among loans,
potential  loan losses,  and the present level of the loan loss  allowance;  and
results  of  examinations  by  independent   consultants.   In  determining  the
collectibility of certain loans, management also considers the fair value of any
underlying collateral.  However,  management's  determination of the appropriate
allowance level is based upon a number of assumptions about future events, which
are believed to be reasonable, but which may or may not prove valid. Thus, there
can be no  assurance  that  charge-offs  in future  periods  will not exceed the
allowance for loan loss or that additional  increases in the loan loss allowance
will not be required.

CAPITAL RESOURCES

    Stockholders'  equity was  $8,568,000  as of March 31,  2000 as  compared to
$8,598,000 as of December 31, 1999. The $30,000 decrease,  or .3%, was partially
due to a  $55,000  increase  in the  unrealized  loss on  investment  securities
available-for-sale  that was offset by net income of $25,000.  No dividends have
been declared by the Company since its inception.  In addition, no options under
the Stock Option Plan have been exercised during 2000.

    Under  the  Federal  Reserve's  capital  regulations,  for  as  long  as the
Company's  assets are under  $150  million,  the  Company's  capital  ratios are
reviewed  on  a  bank-only   basis.  The  Bank  exceeded  its  capital  adequacy
requirements as of March 31, 2000 and December 31, 1999. The Company continually
monitors its capital  adequacy ratios to assure that the Bank remains within the
guidelines.

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<PAGE>

LIQUIDITY AND INTEREST RATE SENSITIVITY

    The primary objective of asset/liability  management is to ensure the steady
growth of the Company's  primary earnings  component,  net interest income.  Net
interest  income can fluctuate  with  significant  interest rate  movements.  To
lessen the impact of these rate swings,  management  endeavors to structure  the
balance  sheet  so that  repricing  opportunities  exist  for  both  assets  and
liabilities  in  roughly  equivalent  amounts  at  approximately  the same  time
intervals.  Imbalances  in these  repricing  opportunities  at any point in time
constitute interest rate sensitivity.

    The measurement of the Company's interest rate sensitivity, or "gap," is one
of   the   principal    techniques   used   in    asset/liability    management.
Interest-sensitive  gap is the dollar difference  between assets and liabilities
that  are  subject  to  interest-rate  repricing  within  a given  time  period,
including  both floating rate or adjustable  rate  instruments  and  instruments
which are approaching maturity.

    In theory,  maintaining  a nominal level of interest  rate  sensitivity  can
diminish interest rate risk. In practice,  this is made difficult by a number of
factors,  including  cyclical  variations in loan demand,  different  impacts on
interest-sensitive  assets and liabilities  when interest rates change,  and the
availability of funding sources.  Accordingly,  the Company undertakes to manage
the interest-rate  sensitivity gap by adjusting the maturity of and establishing
rate  prices  on  the  earning  asset  portfolio  and  certain  interest-bearing
liabilities to keep it in line with management's expectations relative to market
interest  rates.  Management  generally  attempts to maintain a balance  between
rate-sensitive  assets and  liabilities as the exposure  period is lengthened to
minimize the overall interest rate risk to the Company.

    The Bank's Executive Committee that oversees the asset/liability  management
function meets  periodically  to monitor and manage the structure of the balance
sheet,  control interest rate exposure,  and evaluate pricing strategies for the
Company. The asset mix of the balance sheet is continually evaluated in terms of
several  variables:  yield,  credit  quality,  appropriate  funding  sources and
liquidity.  Management  of the  liability  mix of the balance  sheet  focuses on
expanding the various funding sources.

    Securities maintained in the available-for-sale  portfolio may be sold prior
to  maturity  in order to  provide  the  Company  and the  Bank  with  increased
liquidity.  Available-for-sale  investment  securities  totaled  $23,764,000 and
$24,054,000 as of March 31, 2000 and December 31, 1999.

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings - None

Item 2. Changes in Securities - None

Item 3. Defaults Upon Senior Securities - None

Item 4. Submission of Matters to a Vote of Security Holders - None

Item 5. Other Information - Definative Merger Agreement

    On April 18,  2000,  the  Company  announced  the  signing  of a  definitive
agreement  providing  for the  merger of the  Company  with  Cardinal  Financial
Corporation  ("Cardinal"),  a bank  holding  company  headquartered  in Fairfax,
Virginia.  Under  the  terms of the  merger  agreement,  Cardinal  will  issue a
combination of cash and shares of convertible  preferred  stock to the Company's
stockholders in exchange for all of the shares of the Company's common stock.

    The Company's stockholders will be able to elect to receive $6.00 in cash or
1.2 shares of convertible preferred stock for each share of the Company's common
stock,  subject  to certain  adjustments  to permit  Cardinal  to issue an equal
amount of cash and convertible  preferred stock. The preferred stock will have a
liquidation  value of $5.00 and

                                       13

<PAGE>

the right to  dividend  payments  at the rate of 7.25% per annum.  Each share of
preferred stock will also be convertible into shares of Cardinal's  common stock
at any time at the option of its holder.

    It is  expected  that The  Heritage  Bank will be renamed  "Cardinal  Bank -
Potomac"  and become a  subsidiary  of Cardinal,  the  surviving  company in the
merger.  Following the merger, three members of the Company's Board of Directors
will join Cardinal's Board.  Subject to certain conditions  including receipt of
regulatory  approval,  and  approval of the  shareholders  of  Cardinal  and the
Company,  the closing of the merger is anticipated to occur in the third quarter
of 2000. The merger will be accounted for under the purchase method.

Item 6. Exhibits and reports on Form 8-K

           a)  Exhibits

                  27     Financial Data Schedule (filed electronically only)

           b)  Form 8-K - None





                                       14
<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.

Date:  May 15, 2000                 BY /s/ Terrie G. Spiro
                                       --------------------
                                                President & CEO

Date:  May 15, 2000                 BY /s/ Janet A. Valentine
                                       --------------------------------
                                              Exec. Vice President
                                              & Chief Financial Officer





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