Conformed Copy

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       ----------------------------------
                                   FORM 10-QSB


          Quarterly Report Under Section 13 or 15(d) of The Securities
                              Exchange Act of 1934

                For the Quarterly period Ended September 30, 1999

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

           Virginia                                       54-1914902
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 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)

Securities registered under Section 12(g) of the Exchange Act:
  Common Stock, par value $1.00 per share.

         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
                              -------   -------



As of September 30, 1999, 2,294,617 shares of the registrant's common stock were
outstanding.

Transitional Small Business Disclosure Format:  Yes ____  No _X___



<PAGE>
<TABLE>

                                    HERITAGE BANCORP, INC.
                                 INDEX TO FINANCIAL STATEMENTS


                                                                                      Page(s)
                                                                                      -------
Part I Financial Information:
<S> <C>
 Item 1.  Financial Statements:
  Consolidated Statements of Financial Condition as of September 30, 1999
   and December 31, 1998                                                                3

  Consolidated Statements of Operations for the three and nine month periods ended
    September 30, 1999 and 1998                                                         4

  Consolidated Statements of Stockholders Equity for the nine month periods ended
    September 30, 1999 and 1998                                                         5

  Consolidated Statements of Cash Flows for the nine months ended
    September 30, 1999 and 1998                                                         6

  Notes to Financial Statements                                                         7

 Item 2. Managements Discussion and Analysis of Financial Condition and
   Results of  Operation and Selected Financial Data                                    7

Part II. Other Information:

  Item 1.  Legal Proceedings                                                            16

  Item 2.  Changes in Securities and Use of Proceeds                                    16

  Item 3.  Defaults Upon Senior Securities                                              16

  Item 4.         Submission of Matters to a Vote of Security Holders                   16

  Item 5.  Other Information                                                            17

  Item 6.  Exhibits and Reports on Form 8-K                                             17
</TABLE>
                                              2
<PAGE>
<TABLE>
    ITEM I.
    Part I.  Financial Information

                                       HERITAGE BANCORP, INC.
                                           AND SUBSIDIARY

                                Consolidated Statement of Condition
                              September 30, 1999 and December 31, 1998
(dollars in thousands, unaudited)
<CAPTION>
        Assets                                                            1999             1998
                                                                     ------------     ------------

<S>                                                                <C>               <C>
    Cash and due from banks                                        $       1,736     $      5,825
    Federal funds sold and securities purchased under                      7,700            8,550
                                                                     ------------     ------------
           Total cash and cash equivalents                                 9,436           14,375

    Securities available for sale, at approximate market value            23,023           19,824
    Loans, net                                                            28,749           29,181
    Premises and equipment, net                                              816              376
    Accrued interest receivable                                              529              460
    Other real estate owned                                                  263              263
    Other assets                                                             382              297

                                                                     ------------     ------------
           Total assets                                            $      63,198     $     64,776
                                                                     ============     ============

        Liabilites and Stockholders' Equity

Liabilities
    Noninterest-bearing deposits                                   $      13,456     $     17,385
    Savings and interest-bearing demand deposits                          22,298           20,734
    Time deposits                                                         14,461           15,323
                                                                     ------------     ------------
           Total deposits                                                 50,215           53,442
    Accrued interest and other liabilities                                    77              119
    Securities sold under agreement to repurchase                          4,103            2,287
                                                                     ------------     ------------
           Total liabilities                                              54,395           55,848
                                                                     ------------     ------------

Stockholders' Equity
    Common stock, $1 par value; authorized 10,000,000
        shares; issued and outstanding 2,294,617                           2,295            2,295
    Capital surplus                                                        6,530            6,530
    Retained earnings                                                        194               29
    Accumulated other comprehensive income (loss)                           (216)              74
                                                                     ------------     ------------
           Total stockholders' equity                                      8,803            8,928

                                                                     ------------     ------------
           Total liabilites and stockholders' equity               $      63,198     $     64,776
                                                                     ============     ============

Notes to financial statements are an integral part of these statements.
</TABLE>

                                                 3
<PAGE>
<TABLE>
                                                  HERITAGE BANCORP, INC.
                                                      AND SUBSIDIARY

                                           Consolidated Statement of Operations
                              Nine and Three Month Periods Ended September 30, 1999 and 1998
(dollars in thousands, unaudited)
<CAPTION>
                                                                      Nine Months Ended            Three Months Ended
                                                                        September 30,                September 30,
                                                                  --------------------------    -------------------------
Interest Income                                                      1999           1998           1999          1998
                                                                  -----------    -----------    -----------    ----------
<S>                                                             <C>            <C>            <C>            <C>
    Loans                                                       $      2,014   $      1,744   $        623   $       614
    Securities                                                         1,036            802            361           316
    Federal funds sold                                                   213            213             68            75
                                                                  -----------    -----------    -----------    ----------
           Total interest income                                       3,263          2,759          1,052         1,005
                                                                  -----------    -----------    -----------    ----------

Interest Expense
    Savings and interest-bearing demand                                  375            445            297           162
    Time deposits                                                        654            452             41           161
    Securities sold under agreement to repurchase                         63             24             28            17
                                                                  -----------    -----------    -----------    ----------
           Total interest expense                                      1,092            921            366           340
                                                                  -----------    -----------    -----------    ----------

           Net interest income                                         2,171          1,838            686           665

    Provision for loan losses                                             18            102              5            98
                                                                  -----------    -----------    -----------    ----------

           Net interest income after provision for loan losses         2,153          1,736            681           567
                                                                  -----------    -----------    -----------    ----------

Other Income
    Service charges on deposit accounts                                   85             80             31            27
    Other operating income, net                                           64             23             47             9
    Gain (loss) on sale of securities                                      1             (1)             -             -
                                                                  -----------    -----------    -----------    ----------
           Total other income                                            150            102             78            36
                                                                  -----------    -----------    -----------    ----------

Other Expenses
    Salaries and employee benefits                                     1,022            792            373           267
    Occupancy and equipment expense                                      323            212            126            46
    Other operating expenses                                             714            669            241           328
                                                                  -----------    -----------    -----------    ----------
           Total other expenses                                        2,059          1,673            740           641
                                                                  -----------    -----------    -----------    ----------

           Income before income taxes                                    244            165             19           (38)

    Income tax expense (benefit)                                          79              3             46             1
                                                                  -----------    -----------    -----------    ----------

           Net income                                           $        165   $        162   $        (27)  $       (39)
                                                                  ===========    ===========    ===========    ==========

Earnings Per Share, basic                                       $       0.07   $       0.09   $      (0.01)  $     (0.02)

Earnings Per Share, assuming dilution                           $       0.07   $       0.09   $      (0.01)  $     (0.02)
Notes to financial statements are an integral part of these statements.
</TABLE>

                                                            4
<PAGE>
<TABLE>
                                    Consolidated Statements of Change in Stockholders' Equity
                                Nine Month Periods Ended September 30, 1999 and September 30, 1999
(dollars in thousands, unaudited)
<CAPTION>
                                                                                        Accumulated
                                                                                           Other
                                                           Comprehensive  Retained      Comprehensive    Common         Capital
                                                Total         Income       Earnings     Income(loss)      Stock         Surplus
                                             ------------  -------------  ------------  -------------  ------------   ------------
<S>                                         <C>           <C>            <C>           <C>            <C>           <C>
Balance January 1, 1998                     $      4,730                 $       (105) $          18  $      1,490  $       3,327
Comprehensive income
    Net income                                       162  $         162           162
    Unrealized holding gain(loss) arising
      during period net of tax                                      101

    Less reclassification adjustment
    Other comprehehsive income, net of tax           101            101             -            101
                                                           -------------
      Total comprehensive income                          $         263
                                                           =============
    Stock options exercised                           10                                                         3              7
    Repurchase of stock in odd lot tender            (15)                                                       (3)           (12)
    Issuance of common stock                       4,013                                                       805          3,208
                                             ------------                 ------------  -------------  ------------   ------------
Balance September 30, 1998                  $      9,001                 $         57  $         119  $      2,295  $       6,530
                                             ============                 ============  =============  ============   ============

Balance January 1, 1999                     $      8,928                 $         29  $          74 $       2,295 $        6,530
Comprehensive income
    Net income                                       165  $         165           165              -             -              -
    Unrealized holding gain(loss) arising
      during period net of tax                         -           (290)            -              -             -              -
    Loss reclassification adjustment                                                -
                                                           -------------
    Other comprehehsive income, net of tax          (290)          (290)            -           (290)            -              -
      Total comprehensive income                          $        (125)
                                             ------------  =============  ------------  -------------  ------------   ------------
Balance September 30, 1999                  $      8,803                 $        194 $         (216)$       2,295 $        6,530
                                             ============                 ============  =============  ============   ============
</TABLE>


                                                                5
<PAGE>
<TABLE>
                    HERITAGE BANCORP, INC. AND SUBSIDIARY
                   Consolidated Statements of Cash Flows
               Nine Months Ended September 30, 1999 and 1998
(dollars in thousands, unaudited)
<CAPTION>
                                                                                   Nine months ended September 30,
Cash flows from operating activities                                                 1999               1998
                                                                               -----------------  -----------------
<S>                                                                          <C>                <C>
    Net income                                                               $              165 $              162
    Adjustments to reconcile net income(loss) to net
      cash provided by (used in ) operating activities
        Provision for loan losses                                                            18                102
        Depreciation and amortization                                                        56                 35
        (Gain) loss on sale of available for sale investments                                (1)                 1
        Amortization of investment security premiums, net of discount                        (1)                26
        Increase in accrued interest and other assets                                      (254)              (446)
        Increase (decrease) in accrued interest and other liabilities                       (40)                 -
                                                                               -----------------  -----------------
             Net cash used in operating activities                                          (57)              (120)
                                                                               -----------------  -----------------

Cash flows from investing activities
    Maturities and calls of securities available for sale                                 8,819              7,000
    Maturities of securities held-to-maturity                                                 -                250
    Purchase of securities available for sale                                           (12,552)           (16,524)
    Proceeds from sale of securities available for sale                                     646                499
    Net (increase) decrease in loans                                                        432             (4,402)
    Purchase of premises and equipment                                                     (816)                (2)
                                                                               -----------------  -----------------
             Net cash provided by (used in) investing activities                         (3,471)           (13,179)
                                                                               -----------------  -----------------

Cash flows from financing activities
    Increase (decrease) in demand deposits, NOW
      accounts and savings deposits                                                      (2,365)               913
    Increase (decrease) in time deposits                                                   (862)             2,636
    Proceeds from sale of common stock                                                        -              4,023
    Repurchase of common stock                                                                -                (15)
    Increase in securities sold under agreement to repurchase                             1,816              1,922
                                                                               -----------------  -----------------
             Net cash provided by (used in) financing activities                         (1,411)             9,479
                                                                               -----------------  -----------------
             Net change in cash and cash equivalents                                     (4,939)            (3,820)

Cash and cash equivalents, beginning of period                                           14,375              9,587
                                                                               -----------------  -----------------

Cash and cash equivalents, end of period                                     $            9,436 $            5,767
                                                                               =================  =================

Supplemental disclosures of cash flow information Cash payments for:
      Interest                                                                            1,089                916
      Income taxes                                                                           32                  -

Supplemental schedule of noncash investing activities
    Unrealized gain (loss) on securities available for sale                                (325)               175
Notes to financial statements are an integral part of these statements.
</TABLE>


                                                         6
<PAGE>


HERITAGE BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED FINANCIAL STATEMENTS

(1) Basis of Presentation. The consolidated financial statements included herein
have been prepared by Heritage Bancorp, Inc. (the "Company"),  without audit. In
the opinion of management,  the quarterly unaudited financial statements include
all adjustments,  consisting of normal recurring accruals,  necessary for a fair
presentation of the financial  position and results of operations at and for the
periods  presented.  The Company  believes that the  disclosures are adequate to
make the  information  presented not  misleading,  however,  the results for the
periods  presented are not necessarily  indicative of results to be expected for
the entire year. The  consolidated  statements  include the accounts of Heritage
Bancorp,  Inc.  and  its  subsidiary,   The  Heritage  Bank  (the  "Bank").  All
significant intercompany balances and transactions have been eliminated.

(2) Accounting  Policies.  The interim financial  information  should be read in
conjunction with the Company's 1998 Annual Report on Form 10-KSB.  Management is
required to make estimates and assumptions  that effect amounts  reported in the
financial statements. Actual results could differ significantly from estimates.

(3) 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.  Potential  dilutive common
stock had no effect on income available to common shareholders.
<TABLE>
<CAPTION>
                                                  September 30, 1999        September 30, 1998
                                                             Per Share                 Per Share
                                                 Shares       Amount       Shares       Amount
---------------------------------------------- ------------ ------------ ------------ ------------
<S>                                              <C>              <C>      <C>              <C>
Basic earnings per share                         2,294,617        $ .07    1,714,071        $ .09
Effect of dilutive securities: Stock options        29,455                    20,190
Diluted earnings per share                       2,324,072        $ .07    1,734,261        $ .09
</TABLE>


(4) Holding  Company  Formation.  On October 1, 1998, the Heritage Bank became a
wholly-owned  subsidiary of Heritage Bancorp, Inc., a newly formed stock holding
company,  pursuant to an agreement  and plan of  reorganization  approved by the
Bank's  shareholders on August 26, 1998. Upon completion of the  reorganization,
holders of the Bank's  common stock  became  holders of Heritage  Bancorp,  Inc.
common  stock in a share  for  share  exchange.  The  common  stock of  Heritage
Bancorp, Inc. trades on the Nasdaq SmallCap Market under the symbol "HBVA."

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Overview

         The  following  discussion  of the  financial  condition and results of
operations of Heritage Bancorp,  Inc. (the "Company"),  a Virginia  corporation,
should be read in conjunction with the Company's  financial  statements and 1998
annual report on form 10-KSB.  Results reflect the operations of the Company and
The Heritage  Bank,  the  Company's  wholly owned  subsidiary  (the  "Bank"),  a
Virginia  chartered  commerical bank, during the nine months ended September 30,
1999 and 1998.

         The Bank is the only independent financial institution headquartered in
McLean,  Virginia.  Established  in 1987,  the Bank  operated as a  wholly-owned
subsidiary of Heritage Bankshares, Inc. (formerly Independent Banks of Virginia,
Inc.)  until  1992  when  it  became  an   independent   bank.  The  Bank  is  a
well-capitalized,  profitable  community  bank  dedicated to financing  small to
medium sized  business and consumer  needs in its market area.  The Bank also is

                                       7
<PAGE>

committed  to  providing  personalized  quality  service  to  its  customers  by
tailoring  its  products and  services to appeal to its local  market.  The Bank
currently  operates  two  full-service  offices  and engages in a broad range of
lending and deposit services aimed at individual and commercial customers in the
McLean area of Fairfax County, Virginia and the Sterling area of Loudoun County.

         The  business of the Bank  consists  of  attracting  deposits  from the
general  public and using these funds to originate  various  types of individual
and  commercial  loans.  The  Bank's  commercial  activities  include  providing
checking  accounts,  money market accounts and  certificates of deposit to small
and medium sized  businesses.  The Bank also provides credit  services,  such as
lines of credit, term loans,  construction loans, and letters of credit, as well
as real estate  loans and other forms of  collateralized  financing.  The Bank's
products include checking accounts, NOW accounts, savings accounts, money market
accounts,  certificates of deposit, installment accounts, construction and other
personal loans, home improvements loans and other consumer financing.

         On May 18, 1998, the Bank closed a secondary offering of 805,000 shares
of its common stock,  par value $1.00 per share (the  "Offering"),  at $5.50 per
share,  raising  $4.4 million in gross  proceeds.  After  offering  expenses and
underwriting  commission,  the Bank received  $4,012,204 in new capital from the
offering.

                                       8
<PAGE>

         The selected  financial  ratios and other data of the Company set forth
below are  derived in part from,  and should be read in  conjunction  with,  the
Unaudited  Financial  Statements  of the  Company  and Notes  thereto  presented
elsewhere in this report.
<TABLE>
                             SELECTED FINANCIAL DATA
<CAPTION>
                                                                 For the Nine Months Ended
                                                         September 30, 1999       September 30, 1998
                                                         ------------------       ------------------
(dollars in thousands , unaudited)
Summary of operating results:
<S>                                                           <C>                       <C>
Total interest income                                         $  3,263                  $  2,759
Total interest expense                                            1,092                      921
                                                              ---------                 --------
Net interest income                                               2,171                    1,838
Provision for loan losses                                            18                      102
                                                              ---------                 --------
Net interest income after provision for loan losses               2,153                    1,736
Other income                                                        150                      102
Other expenses                                                    2,059                    1,673
                                                              ---------                 --------
Income before taxes                                                 244                      165
Income tax expense(1)                                                79                        3
                                                              ---------                 --------
Net income                                                    $     165                 $    162
                                                              =========                 ========

Per share:
Basic earnings per share                                      $    0.07                 $   0.09
Diluted earnings per share                                    $    0.07                 $   0.09
Book value at period end                                      $    3.84                 $   3.92
Common shares outstanding                                     2,294,617                2,294,617

Balance sheet data (at period end):                       September 30, 1999         December 31, 1998
                                                          ------------------         -----------------

Loans, net of unearned interest                                $29,186                   $29,610
Allowance for loan losses                                          437                       429
Total assets                                                    63,198                    64,776
Total deposits                                                  50,215                    53,442
Total stockholders' equity                                       8,803                     8,928

Performance and asset quality ratios:
Return on average total assets (3)                                 .36%                     0.26%
Return on average stockholders' equity (3)                        2.54                      1.79
Average stockholders' equity to average total assets             14.28                     14.47
Non-accrual and past due loans to total loans                     1.12                      1.35
Allowance for loan losses to total loans                          1.50                      1.45
Net yield                                                         3.90                      3.87
Net interest margin(2)                                            5.05                      5.09
</TABLE>

(1)      At December 31, 1998, the Company had available  approximately $129,000
         of an operating loss carryforward  which could be offset against future
         income.  In 1999,  the  operating  loss  carryforward  has  been  fully
         utilized.
(2)      Net interest  margin is  calculated as net interest  income  divided by
         average  earning  assets and  represents the Company's net yield on its
         earning assets.
(3)      Annualized for the nine months ended September 30, 1999.

                                       9
<PAGE>

 Comparison of Financial Condition at September 30, 1999 and December 31, 1998.
 ------------------------------------------------------------------------------

         As of September 30, 1999 the Company's total assets were $63,198,000 as
compared to $64,776,000 as of December 31, 1998 which  represented a decrease of
2.4%.  The 1999 decline in total assets of  $1,578,000  was primarily due to the
loss of funds provided by a one time  $8,000,000  deposit into attorneys  escrow
accounts at the end of fiscal year 1998.  These funds were  withdrawn  the first
week of January 1999 decreasing total deposits. Total deposits decreased by 6.0%
or $3,227,000 to $50,215,000 at September 30, 1999 from  $53,442,000 at December
31, 1998.

         Repurchase  agreements at September  30, 1999 were  $4,103,000 or 79.4%
greater than the December 31, 1998 balance of $2,287,000. The Bank increased the
offering of repurchase agreements for customers with larger short term funds.

         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 September 30, 1999 totaled $9,436,000 compared to $14,375,000 at December 31,
1998,  representing  a decrease  of  $4,939,000,  or 34.4%.  Federal  funds sold
represented  $850,000 of the  decrease  with cash and due from banks  decreasing
$4,089,000.  The decrease in due from banks was  attributable  to large clearing
balances at the Federal Reserve at December 31, 1998.

         Securities   available  for  sale  increased  $3,199,000  or  16.1%  to
$23,023,000 at September 30, 1999 from  $19,824,000  at December 31, 1998.  This
investment  in  securities  was made to increase the yield on earning  assets as
compared to the lower yield of Federal Funds Sold.

         Net loans  were  $28,749,000  at  September  30,  1999 as  compared  to
$29,181,000  at  December  31,  1998.  This  decrease  of  $432,000  or 1.5% was
primarily  due to usual  pay down on loans  and  increased  competition  for new
loans.


Results of Operations for the Three Months Ended September 30, 1999 and 1998.
-----------------------------------------------------------------------------

         Net income.  The Company reported a net loss for the three months ended
September 30, 1999 of $27,000 or ($.01) basic and diluted  earnings per share as
compared to the $39,000 net loss or ($.02) basic and diluted  earnings per share
for the same period of 1998.  The net loss  represents an increase of $12,000 or
30.8% in net income  from  September  30, 1998 as compared to the same period of
1999. The Company had used all of its loss  carryforward for tax purposes at the
end of 1998.  The net loss for the third  quarter  ended  September 30, 1999 was
created by an  adjustment  of $46,000 to federal  income  taxes to reflect  this
change in tax  position  as  compared  to $1,000  for the  third  quarter  ended
September 30, 1998.

         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
September 30, 1999 increased $21,000 or 3.2% over the same quarter of 1998.

         Non-interest income.  During the three month period ended September 30,
1999  non-interest  income increased  $42,000 over the same period of 1998. This
increase  resulted  from  increased  overdraft  and return check  charges,  loan
service fees and other  commission  fees such as ATM fees and merchant  discount
fees.

         Non-interest  expense.  In  the  third  quarter  of  1999  non-interest
expenses  increased  $99,000  or  15.4%  over  the  same  period  of 1998 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 1999.  These  increased  leases raised rental expense by

                                       10
<PAGE>

$49,000 for the three  months ended  September  30, 1999 as compared to the same
period of 1998.  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 1999 and the
fact that there was no deterioration  in the Bank's loan portfolio,  a provision
of $5,000 was made for loan losses in the third  quarter of 1999.  The allowance
for loan  losses  at  September  30,  1999 was  1.50% of  outstanding  loans.  A
provision  of $98,000 was made for loan  losses in the third  quarter of 1998 to
return the reserve for loan losses to an acceptable  level. The reserve had been
reduced  due to a  charge  resulting  from  the  settlement  of a law  suit.  At
September 30, 1998 the allowance for loan losses was 1.45% of outstanding loans.
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
$46,000 in the third  quarter of 1999,  as compared to $1,000 in the same period
of 1998. A net operating  loss  carryforward  of the Company  became  completely
utilized for accounting purposes by June 30, 1999.


Results of Operations for the Nine Months Ended September 30, 1999 and 1998.
----------------------------------------------------------------------------

         Net income.  The Company  reported net income for the nine months ended
September  30, 1999 of $165,000 or $.07 basic and diluted  earnings per share as
compared to $162,000 net income or $.09 basic and diluted earnings per share for
the same period of 1998. The net income represents an increase of $3,000 or 1.9%
in net income from September 30, 1998 as compared to the same period 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 nine months ended
September  30,  1999  increased  $333,000  or 18.1% over the same nine months of
1998. Although total loans, the highest yielding earning asset,  decreased,  the
mix of earning assets and interest  bearing  liabilities  created  increased net
interest income.

         Non-interest  income.  During the nine month period ended September 30,
1999  non-interest  income increased  $48,000 over the same period of 1998. This
increase  resulted  from  increased  overdraft  and return check  charges,  loan
service fees and other  commission  fees such as ATM fees and merchant  discount
fees.

         Non-interest expense.  During the nine month period ended September 30,
1999 non-interest  expenses  increased $386,000 or 23.1% over the same period of
1998.  This  increase was partially  due to increased  operational  and facility
costs of the Sterling  branch that opened in April of 1999 and additional  space
rented for  operational  expansion  at the Main  office  address in 1999.  These
increased leases raised occupancy and equipment expense by $111,000 for the nine
months  ended  September  30,  1999 as  compared  to the  same  period  of 1998.
Additional salaries and benefits of $103,000 due to the increase in employees of

                                       11
<PAGE>

the Sterling branch also contributed to the increased  non-interest expenses for
the quarter. Incentive bonuses of $52,000 were paid to employees during the nine
months ended September 30, 1999.  Salaries and benefits increased  partially due
to $15,000 in  severance  pay to Bank  employees  during  1999.  Other  expenses
increased by $105,000  caused by legal fees and  consultant  fees in  connection
with a possible  branch location in Great Falls,  Virginia.  Other expenses were
also affected by $40,000 of non-loan charge-offs,  of which a large part was the
payment due under the terms of a lawsuit settled in March 1999.

         Provision  for loan losses.  In view of the loan  balances for 1999 and
the fact  that  there was no  deterioration  in the  Bank's  loan  portfolio,  a
provision of $18,000 was made for loan losses in the nine months ended September
30,  1999.  A provision  of $102,000 was made for loan losses in the nine months
ended  September 30, 1998 to return the reserve for loan losses to an acceptable
level.  The  reserve  had  been  reduced  due to a  charge  resulting  from  the
settlement of a lawsuit. The allowance for loan losses at September 30, 1999 was
1.50% of outstanding  loans. At September 30, 1998 the allowance for loan losses
was 1.45% of  outstanding  loans.  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.  Additions
may 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
$79,000  in the first nine  months of 1999,  as  compared  to $3,000 in the same
period  of  1998.  A net  operating  loss  carryforward  of the  Company  became
completely utilized for accounting purposes by June 30, 1999.

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 September 30, 1999, the Company had
loans for $326000 in  non-accrual or 90 days past due as compared to $838,000 in
non-accrual or 90 days past due as of September 30, 1998.

         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.

                                       12
<PAGE>

         The  provision  for loan  losses is a charge to earnings in the current
period to replenish  the  allowance  and maintain it at a level  management  has
determined to be adequate.  The Company made a provision for loan losses for the
nine months ended  September  30, 1999 of $18,000 as compared to $102,000 in the
same period of 1998. The Bank's total loan balances  decreased with no decreases
in the loan quality and therefore management  determined the above provision was
more than adequate.

         As of September  30, 1999,  the  allowance for loan losses was 1.50% of
outstanding  loans,  which was an increase from September 30, 1998 percentage of
1.45%.  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.

         An analysis of the allowance for loan losses is as follows:

         Loan Loss Reserve

         Balance at December 31, 1998       $429,000
         Provision for loan losses            18,000
         Charge-offs                         (20,000)
         Recoveries                           10,000
                                            --------
         Balance at September 30, 1999      $437,000
                                            ========

Capital Resources
-----------------

         Stockholders'  equity  was  $8,803,000  as of  September  30,  1999  as
compared to $8,928,000 as of December 31, 1998. The $125,000 decrease,  or 1.4%,
was partially due to a $290,000  reduction in the unrealized  gain on investment
securities  available-for-sale  which was offset by net income of  $165.000.  No
dividends have been declared by the Company since its inception. In addition, no
options under the Stock Option Plan have been exercised during 1999.

         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  September  30,  1999 and  December  31,  1998.  The Company
continually monitors its capital adequacy ratios to assure that the Bank remains
within the guidelines.


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.

                                       13

<PAGE>

         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
which  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,  interest  rate risk can be  diminished  by  maintaining  a
nominal level of interest rate sensitivity.  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  $23,023,000 and
$19,824,000 as of September 30, 1999 and December 31, 1998.

Year 2000 Issues

         The year 2000 problem  centers on the inability of computer  systems to
recognize the "00" digits as 2000 rather than 1900. Like most financial  service
providers, the Bank may be significantly affected due to the nature of financial
information.  Furthermore,  if computer  systems are not  adequately  changed to
identify  the  year  2000,  many  computer  applications  could  fail or  create
erroneous results.

         In addition,  noninformation  technology  systems,  such as telephones,
copiers and  elevators  may  contain  embedded  technology  which  controls  its
operations and which may be affected by the year 2000 problem.  Thus, even these
technology  systems may affect the normal  operations  of the  Company  upon the
arrival of the year 2000.

         To address the year 2000 problem,  the Bank hired an outside consultant
to  assess  the  impact  on the  Bank.  Because  the  Bank  outsources  its data
processing operations,  a significant component of the year 2000 plan is working
with external  vendors to test and certify their systems as year 2000 compliant.
The Bank's  external  vendors have  surveyed  their  programs to  inventory  the
necessary changes and have substantially  completed or completed the corrections
to the applicable  computer  programs and replaced  equipment so that the Bank's
information systems will be year 2000 compliant prior to the year 2000. The Bank
has devoted  substantial time to the testing of the upgraded systems in order to
comply with all applicable regulations.

                                       14
<PAGE>

         The Company's timetable for working on the year 2000 problem is divided
into the following five phases:
<TABLE>
<CAPTION>
Phase                   Description                                              Status
----------------------- -------------------------------------------------------- ------------------
<S> <C>
1.  Awareness           Define the problem.                                      Completed 11/1/97

2.  Assessment          Identify all systems and the criticality of systems   .  Completed 6/1/98

3.  Renovation          Program  enhancements,  hardware and software            Completed 6/30/99
                        upgrades, system replacements, and vendor
                        certifications.

4.  Validation          Test and verify system changes.                          Completed 12/30/98

5.  Implementation      Components certified as year 2000                        Completed 6/30/99
                        compliant and moved to production.
</TABLE>

         Contingency Planning.  The Bank has a contingency plan to keep the Bank
in operation in the event that some year 2000 problems have been  overlooked and
system malfunctions occur at the turn of the century. This plan was developed by
the Bank's  outside  consultant  with the help of  management.  The  Company has
developed  contingency or alternate plans for its mission  critical systems on a
department by department  basis in  anticipation of potential  unplanned  system
difficulties  or  third-party  failures  at  January  1,  2000 or dates  beyond.
However,  the Bank  understands  that certain  events beyond its control such as
extended power outages and loss of telecommunications,  may diminish its ability
to provide  minimum  levels of service.  Failure of these  services  will affect
companies,  individuals  and the  government,  and cannot be  remedied by anyone
other than the responsible party. For some systems, contingency plans consist of
using or reverting to manual systems until the problems can be corrected.

         While the Company expects to complete its year 2000 project in a timely
manner,  it cannot guarantee that the systems of companies with whom it conducts
business,  will also be  completed  in a timely  manner.  The  failure  of these
entities to adequately  address the year 2000 problem could adversely affect the
Company's ability to conduct business.

         Costs.  The Company  currently  estimates its total direct and indirect
cost will be  $35,000.  To date,  the  Company  has spent  $31,000  on year 2000
issues.  The  costs  of the  project  and the date on  which  the Bank  plans to
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including the
continued availability of certain resources,  third party modification plans and
other factors.  However there can be no guarantee  that these  estimates will be
achieved,  and actual  results  could differ  materially  from those  plans.  In
addition, there can be no guarantee that the systems of other companies on which
the Bank's systems rely will be timely  converted,  or that a failure to convert
by another company, or a conversion that is incompatible with the Bank's systems
would not have a material adverse effect on the Bank.

Financial Services Modernization Bill
-------------------------------------

         In  October  1999,  the  U.S.   Congress   overwhelmingly   passed  the
Gramm-Leach-Bliley   Financial  Services  Modernization  Act  of  1999,  federal
legislation   intended  to  modernize   the  financial   services   industry  by
establishing a comprehensive  framework to permit  affiliations among commercial
banks,  insurance  companies,  securities  firms  and  other  financial  service
providers. The legislation has been forwarded to the President for his approval.
Generally,  the  legislation  would (i) repeal the historical  restrictions  and
eliminate  many  federal and state law  barriers to  affiliations  among  banks,
securities firms,  insurance  companies and other financial  service  providers,
(ii) provide a uniform framework for the functional regulation of the activities
of banks,  savings  institutions and their holding companies,  (iii) broaden the
activities that may be conducted by national banks, banking subsidiaries of bank
holding  companies and their  financial  subsidiaries,  (iv) provide an enhanced
framework for protecting the privacy of consumer information, (v) adopt a number
of provisions related to the capitalization,  membership,  corporate  governance
and other  measures  designed to modernize  the Federal Home Loan Bank  systems,
(vi) modify the laws governing the implementation of the Community  Reinvestment
Act and (vii) address a variety of other legal and regulatory  issues  affecting
both day-to-day operations and long-term activities of financial institutions.

                                       15

<PAGE>

         Bank  holding  companies,  such as the  Company,  would be permitted to
engage in a wider variety of financial  activities  than permitted under current
law,  particularly  with  respect to insurance  and  securities  activities.  In
addition,  in a change from current law,  bank  holding  companies  will be in a
position  to be  owned,  controlled  or  acquired  by  any  company  engaged  in
financially related activities.

         We do not believe that the proposed legislation,  as publicly reported,
would  have a  material  adverse  effect  on our  operations  in the near  term.
However,  to the extent the  legislation  permits  banks,  securities  firms and
insurance companies to affiliate, the financial services industry may experience
further consolidation. This could result in a growing number of larger financial
institutions that offer a wider variety of financial  services than we currently
offer and that can aggressively compete in the markets we currently serve.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Not applicable

ITEM 2.  CHANGES IN SECURITIES

Not applicable

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The 1999 Annual Meeting of  Stockholders of Heritage  Bancorp,  Inc. was held on
September  9, 1999.  The  following  eight  directors  were elected to serve the
designated staggered terms or until their successors have been elected.

                                                             Votes Cast  :
                                                     ---------------------------
         Director                 Term Expires:         For             Witheld
         --------                 -------------      ---------          -------
         Ronald W. Kosh             2000             1,876,335           93,026
         George P. Shafran          2000             1,873,179           96,182
         Terrie G. Spiro            2000             1,877,037           92,324
         George K. Degnon           2001             1,876,235           93,126
         Kevin P. Tighe             2001             1,868,443          100,918
         Stanley I. Richards        2002             1,876,235           93,126
         Harold E. Lieding          2002             1,872,411           96,950
         Philip F. Herrick, Jr.     2002             1,856,562          112,799

In addition the  appointment  of Yount,  Hyde & Barbour,  P.C., as the Company's
independent  public  auditors  for the fiscal year ending  December 31, 1999 was
ratified by 1,945,924 for votes, 15,198 against and 8,239 abstained.

ITEM 5.  OTHER INFORMATION

None.

                                       16
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

A.       Exhibits required by Item 601 Regulation S-K:

         Exhibit 27:       Financial Data Schedule

B.       Reports on Form 8-K:
         None.






                                       17
<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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.
(Registrant)


                                    BY: /s/Terrie G. Spiro ,
                                       ----------------------------
                                             Terrie G. Spiro, President, Chief
                                             Executive Officer, and Director

                                    BY: /s/Janet A. Valentine,
                                       ----------------------------
                                             Janet  A. Valentine, Secretary,
                                             Executive Vice President and Chief
                                             Financial Officer
Date: November 12, 1999


                                       18