<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB
             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM _________________ TO _________________

COMMISSION FILE NO. 0-25020
                    -------
                              HERITAGE OAKS BANCORP
--------------------------------------------------------------------------------
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                               STATE OF CALIFORNIA
--------------------------------------------------------------------------------
         (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

                                   77-0388249
--------------------------------------------------------------------------------
                      (I.R.S. EMPLOYER IDENTIFICATION CODE)

                     545 12TH STREET, PASO ROBLES, CA 93446
--------------------------------------------------------------------------------
                         (ADDRESS OF PRINCIPAL OFFICE)

                                 (805) 239-5200
--------------------------------------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

          INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING TWELVE (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 NINETY (90) DAYS.

                              YES   X      NO
                                  -----       -----

AGGREGATE MARKET VALUE OF COMMON STOCK OF HERITAGE OAKS BANCORP AT OCTOBER 3,
2000: $21,396,673.

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:

NO PAR VALUE COMMON STOCK - 1,222,667 SHARES OUTSTANDING AT OCTOBER 3, 2000.


                                     PAGE 1
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                               PAGE
<S>                                                                                            <C>
Consolidated Balance Sheets as of December 31, 1999
and September 30, 2000                                                                           3.

Consolidated Statements of Income for the THREE months ended September 30, 1999
and September 30, 2000                                                                           4.

Consolidated Statements of Income for the NINE months ended September 30, 1999
and September 30, 2000                                                                           5.

Consolidated Statements of Cash Flows for NINE months ended September 30, 1999
and September 30, 2000                                                                           6.

Consolidated Statements of Stockholders' Equity for periods ended
September 30, 1999 and September 30, 2000                                                        7.

Notes to Consolidated Condensed Financial Statements                                             8.-10.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations                                                                                    11.-21.

Part 2.  Other Information
Item 1.  Legal Proceedings                                                                       22.

Signatures                                                                                       22.
</TABLE>


                                     PAGE 2
<PAGE>

                              HERITAGE OAKS BANCORP
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                           12/31/99             09/30/00
                                                                                (1)          (UNAUDITED)
<S>                                                                    <C>                  <C>
ASSETS
Cash and due from banks                                                 $17,159,073          $17,065,293
Federal funds sold                                                        1,200,000            4,500,000
                                                                          ---------            ---------

Total cash and cash equivalents                                          18,359,073           21,565,293

Interest bearing deposits other banks                                       375,255              198,000

Securities available for sale (see note 2)                               18,663,504           16,068,861
Securities held to maturity                                                       0                    0
Federal Home Loan Bank, cost                                                395,300              375,400
Loans Held For Sale                                                         120,382            1,636,850
Loans, net (see note 3)                                                 102,426,192          127,288,386

Property, premises and equipment, net                                     3,427,289            3,167,687
Other real estate owned                                                           0                    0
Cash surrender value life insurance                                       1,305,787            1,353,232
Other assets                                                              2,226,486            2,443,963
                                                                          ---------            ---------

TOTAL ASSETS                                                           $147,299,268         $174,097,672
                                                                       ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand, non-interest bearing                                            $39,901,884          $49,369,079
Savings, NOW, and money market deposits                                  55,251,328           62,073,465
Time deposits of $100,000 or more                                        10,596,650            5,047,817
Time deposits under $100,000                                             27,211,711           43,090,745
                                                                         ----------           ----------
Total deposits                                                          132,961,573          159,581,106

Other borrowed money                                                        350,000              350,000
Securities Sold under an Agreement to Repurchase                          2,211,000                    0
Other liabilities                                                         1,234,533            1,630,010
                                                                          ---------            ---------
Total liabilities                                                       136,757,106          161,561,116

Stockholders' equity
Common stock, no par value;
20,000,000 shares authorized; issued and outstanding
1,144,282 and 1,222,667 for December 31, 1999,
and September 30, 2000, respectively.                                     5,288,179            6,235,725
Accumulated other comprehensive income                                     (658,840)            (419,401)
Retained earnings                                                         5,912,823            6,720,232
                                                                          ---------            ---------
Total stockholders' equity                                               10,542,162           12,536,556
                                                                         ----------           ----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                               $147,299,268         $174,097,672
                                                                       ============         ============
</TABLE>

(1) These numbers have been derived from the audited financial statements.
See notes to consolidated financial statements


                                     PAGE 3
<PAGE>

                              HERITAGE OAKS BANCORP
                        CONSOLIDATED STATEMENTS OF INCOME
                    FOR THE THREE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
                                                                               1999                 2000
                                                                         (UNAUDITED)          (UNAUDITED)
<S>                                                                      <C>                  <C>
Interest Income:

Interest and fees on loans                                               $2,223,295           $3,330,366
Investment securities                                                       276,835              231,582
Federal funds sold and commercial paper                                      46,030               77,228
Time certificates of deposit                                                  3,986                2,743
                                                                              -----                -----
Total interest income                                                     2,550,146            3,641,919

Interest Expense:

Now accounts                                                                175,765              216,693
MMDA accounts                                                                52,863               79,908
Savings accounts                                                             73,999               76,010
Time deposits of $100,000 or more                                            84,266               76,020
Other time deposits                                                         252,949              595,411
Other borrowed funds                                                          8,161               32,812
                                                                              -----               ------
Total interest expense                                                      648,003            1,076,854

Net Interest Income Before Prov. for Possible Loan Losses                 1,902,143            2,565,065
Provision for loan losses                                                    42,000              105,000
                                                                             ------              -------
Net interest income after provision for loan losses                       1,860,143            2,460,065

Non-interest Income:
Service charges on deposit accounts                                         198,090              295,422
Investment securities gains (losses), net                                         0                    0
Other income                                                              1,444,551            1,185,177
                                                                          ---------            ---------
Total Non-interest Income                                                 1,642,641            1,480,599

Non-interest  Expense:
Salaries and employee benefits                                              883,232            1,091,684
Occupancy and equipment                                                     374,704              399,754
Other expenses                                                            1,573,164            1,432,540
                                                                          ---------            ---------
Total Noninterest Expenses                                                2,831,100            2,923,978
Income before provision for income taxes                                    671,684            1,016,686
Provision for applicable income taxes                                       236,589              383,148
                                                                            -------              -------
Net Income                                                                 $435,095             $633,538
                                                                           ========             ========

Earnings per share:        (See note #4)
Basic                                                                         $0.39                $0.52
Fully Diluted                                                                 $0.35                $0.48
See notes to consolidated financial statements
</TABLE>


                                     PAGE 4
<PAGE>

                              HERITAGE OAKS BANCORP
                        CONSOLIDATED STATEMENTS OF INCOME
                     FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
                                                                               1999                 2000
                                                                         (UNAUDITED)          (UNAUDITED)
<S>                                                                      <C>                  <C>
Interest Income:

Interest and fees on loans                                               $5,957,706           $9,160,714
Investment securities                                                       966,470              770,236
Federal funds sold and commercial paper                                     183,801              149,855
Time certificates of deposit                                                 17,715                7,965
                                                                             ------                -----
Total interest income                                                     7,125,692           10,088,770

Interest Expense:

Now accounts                                                                496,257              567,398
MMDA accounts                                                               150,573              168,603
Savings accounts                                                            202,243              228,625
Time deposits of $100,000 or more                                           182,936              308,050
Other time deposits                                                         775,049            1,476,234
Other borrowed funds                                                         54,513              223,462
                                                                             ------              -------
Total interest expense                                                    1,861,571            2,972,372

Net Interest Income Before Prov. for Possible Loan Losses                 5,264,121            7,116,398
Provision for loan losses                                                   123,500              219,000
                                                                            -------              -------
Net interest income after provision for loan losses                       5,140,621            6,897,398

Non-interest Income:
Service charges on deposit accounts                                         552,682              795,807
Investment securities gains (losses), net                                         0               -2,188
Other income                                                              3,730,866            3,450,799
                                                                          ---------            ---------
Total Non-interest Income                                                 4,283,548            4,244,418

Non-interest  Expense:
Salaries and employee benefits                                            2,638,208            3,134,555
Occupancy and equipment                                                   1,121,958            1,262,062
Other expenses                                                            4,208,488            4,190,606
                                                                          ---------            ---------
Total Noninterest Expenses                                                7,968,654            8,587,223
Income before provision for income taxes                                  1,455,515            2,554,593
Provision for applicable income taxes                                       499,487              881,481
                                                                            -------              -------
Net Income                                                                 $956,028           $1,673,112
                                                                           ========           ==========

Earnings per share:        (See note #4)
Basic                                                                         $0.86                $1.37
Fully Diluted                                                                 $0.76                $1.28
See notes to consolidated financial statements
</TABLE>


                                     PAGE 5
<PAGE>

                              HERITAGE OAKS BANCORP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
<TABLE>
<CAPTION>
                                                                               1999                 2000
                                                                         (Unaudited)          (Unaudited)
<S>                                                                      <C>                  <C>
Cash flows from operating activities:

Net Income                                                                 $956,028           $1,673,112
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                                               483,020              531,823
Provision for possible loan loss                                            123,500              219,000
Increase (decrease) in deferred loan fees                                   123,220              (21,940)
Increase (decrease) in market value of investment securities                107,233             (429,649)
Net loss on sales of investment securities                                        -                2,188
Amortization of premiums (Discount accretion)
on investment securities, net                                              (118,659)            (106,525)
Loss on sale of other real estate owned                                           -                    -
Gain on sale of property, premises, and equipment                                 -                    -
Decrease (increase) in other assets                                          13,724             (264,922)
Increase (decrease) in other liabilities                                   (503,127)             395,477
Net cash used in operating activities                                     1,184,939            1,998,564


Cash flows from investing activities:
Purchase of investment securities                                       (17,433,000)                   -
Proceeds from sales, principal reductions and maturities
from investment securities                                               25,544,613            3,183,898
Increase in time deposits with other banks                                  194,321              177,255
Net additions to real estate acquired in settlement of loans                      -                    -
Purchase of insurance policies                                             (269,593)                   -
Increase in loans, net                                                  (21,413,994)         (26,378,662)
Purchase of property, premises and equipment                             (1,325,616)            (265,211)
Net cash used in investing activities                                   (14,703,269)         (23,282,720)


Cash flows from financing activities:
Increase (decrease) in deposits, net                                      8,548,932           26,619,533
Net (decrease) increase in other borrowings                                (400,000)          (2,211,000)
Proceeds from exercise of stock options                                     111,453               85,766
Cash paid in lieu of fractional shares                                       (2,890)              (3,923)
Net cash provided by (used in) financing activities                       8,257,495           24,490,376


Net increase (decrease) in cash and cash equivalents                     (5,260,835)           3,206,220
Cash and cash equivalents at beginning of year                           24,939,179           18,359,073
Cash and cash equivalents at end of period                              $19,678,344          $21,565,293


Supplemental Disclosures of Cash Flow Information
  Interest Paid                                                          $1,861,571           $2,972,372
  Income taxes paid                                                        $579,609           $1,020,000


Supplemental Disclosures of Non-Cash Flow Information
  Change in other comprehensive income                                     $891,688           $1,912,551
  Transfer of loans to other estate owned through foreclosure                    $0                   $0
  Transfer of held-to-maturity securities to available-for-sale                  $0                   $0
</TABLE>

See notes to consolidated financial statements


                                     PAGE 6
<PAGE>

                              HERITAGE OAKS BANCORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                ACCUMULATED
                                                                                                   OTHER               TOTAL
                                                SHARES         COMMON          RETAINED        COMPREHENSIVE       STOCKHOLDERS'
                                              OUTSTANDING       STOCK          EARNINGS            INCOME              EQUITY
                                              -----------      ------          --------        -------------       -------------
<S>                                           <C>             <C>              <C>             <C>                 <C>
Balance January 1, 1999                         1,069,791     $4,470,170       5,154,666           (188,166)          9,436,670

Exercise of Stock Options                          21,802        111,453               0                                111,453

Cash dividends paid                                     0              0               0                                      0

Stock dividend - 4%                                42,659                                                                     0
Cash paid to Shareholders' in Lieu of
   fractional shares on 4% Stock Dividend                                         (2,890)                                (2,890)

Comprehensive Income
  Net Income                                                                     956,028                                956,028
  Unrealized Security Holding Gains
     `(net of $65,4031 tax)                                                                         (93,097)            (93,097)
      Less Reclassification Adjustment for
      Losses (net of $23,125 tax)                                                                    28,757              28,757
                                                                                                     -------             ------
   Total Other Comprehensive Income
Total comprehensive Income                                                                                              891,688

BALANCE SEPTEMBER 30, 1999                      1,134,252     $4,581,623      $6,107,804           (252,506)         10,436,921
</TABLE>
<TABLE>
<CAPTION>
                                                                                                ACCUMULATED
                                                                                                   OTHER               TOTAL
                                                SHARES         COMMON          RETAINED        COMPREHENSIVE       STOCKHOLDERS'
                                              OUTSTANDING       STOCK          EARNINGS            INCOME              EQUITY
                                              -----------      ------          --------        -------------       -------------
<S>                                           <C>             <C>              <C>             <C>                 <C>
Balance January 1, 2000                         1,144,282     $5,288,179      $5,912,823          ($658,840)        $10,542,162

Exercise of Stock Options                          20,933         85,766               0                                 85,766

Cash dividends paid                                     0              0               0                                      0

Stock dividend - 5%                                57,452        861,780        (861,780)                                     0
Cash paid to Shareholders' in Lieu of
   fractional shares on 4% Stock Dividend                                         (3,923)                                (3,923)

Comprehensive Income
  Net Income                                                                   1,673,112                              1,673,112
  Unrealized Security Holding Gains/(Losses)
     `(net of $44,167 tax)                                                                          240,752             240,752
      Less Reclassification Adjustment for
      Losses (net of $875 tax)                                                                       (1,313)             (1,313)
                                                                                                     -------             -------

Total other comprehensive Income                                                                                      1,912,551

BALANCE SEPTEMBER 30, 2000                      1,222,667     $6,235,725      $6,720,232          ($419,401)        $12,536,556
</TABLE>

See notes to consolidated financial statements


                                     PAGE 7
<PAGE>

Note 1: CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of Management, the unaudited consolidated financial statements
contain all (consisting of only normal recurring adjustments) adjustments
necessary to present fairly Heritage Oaks Bancorp's consolidated financial
position at December 31, 1999 and September 30, 2000, and the results of cash
flows for the nine months ended September 30, 1999 and 2000 and the results of
operations for the three and nine months ended September 30, 1999 and 2000.

Certain information and footnote disclosures normally presented in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These interim consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report to shareholders. The results for
the three and nine months ended September 30, 1999 and 2000 may not necessarily
be indicative of the operating results for the full year.


Note 2: INVESTMENT SECURITIES

The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investments in Debt and Equity Securities" on January 1,
1994, which addresses the accounting for investments in equity securities that
have readily determinable fair values and for investments in all debt
securities. Securities are classified in three categories and accounted for as
follows: debit and equity securities that the company has the positive intent
and ability to hold to maturity are classified as held-to-maturity and are
measured at amortized cost; debt and equity securities bought and held
principally for the purpose of selling in the near term are classified as
trading securities and are measured at fair value, with unrealized gains and
losses included in earnings; debt and equity securities not classified as
either held-to-maturity or trading securities are deemed as available-for-sale
and are measured at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of stockholders' equity. Any
gains and losses on sales of investments are computed on a specific
identification basis.

The amortized cost and fair values of investment securities available for sale
at September 30, 2000 and December 31, 1999:

<TABLE>
<CAPTION>

        SEPTEMBER 30, 2000                                                       GROSS             GROSS
                                                              AMORTIZED        UNREALIZED         UNREALIZED          FAIR
                                                                COST             GAINS             LOSSES             VALUE
                                                            ------------     ------------         ----------       -----------
<S>                                                         <C>               <C>                <C>               <C>
Obligations of U.S. government agencies and corporations      $2,425,509         $25,880          ($105,975)         $2,345,414
Mortgage-backed securities                                     8,271,301           1,706           (427,324)          7,845,683
Obligations of State and Political Subdivisions                6,062,415          12,703           (205,991)          5,869,127
Other Securities                                                   8,637               0                  0               8,637
                                                             -----------        --------           ----------       -----------
TOTAL                                                        $16,767,862         $40,289          ($739,290)        $16,068,861
                                                             -----------        --------           ----------       -----------
</TABLE>
<TABLE>
<CAPTION>

         DECEMBER 30, 1999                                                       GROSS             GROSS
                                                             AMORTIZED        UNREALIZED         UNREALIZED            FAIR
                                                                COST             GAINS             LOSSES              VALUE
                                                            ------------     ------------       ------------       ------------
<S>                                                         <C>               <C>               <C>                <C>
Obligations of U.S. government agencies and corporations      $3,642,261              $0          ($138,788)         $3,503,473
Mortgage-backed securities                                     9,494,832           3,294           (610,411)          8,887,715
Obligations of State and Political Subdivisions                6,651,262           4,119           (386,865)          6,268,516
Other Securities                                                   3,800               0                  0               3,800
                                                             -----------          -------       ------------        -----------
TOTAL                                                        $19,792,155          $7,413        ($1,136,064)        $18,663,504
                                                             -----------          -------       ------------        -----------
</TABLE>


                                     PAGE 8
<PAGE>

Note 3: LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES

Major classifications of loans were:

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,        SEPTEMBER 30,
                                                                          1999                 2000
                                                                          ----                 ----
<S>                                                                    <C>                 <C>
Commercial, financial, and agricultural                                 $38,419,611          $42,393,154
Real estate-construction                                                 12,741,477           22,024,748
Real estate-mortgage                                                     50,063,714           61,302,378
Installment loans to individuals                                          2,786,034            3,284,575
All other loans (including overdrafts)                                      141,846              143,407
                                                                            -------              -------
                                                                        104,152,682          129,148,262

Less - deferred loan fees                                                  (485,474)            (463,534)
Less - reserve for possible loan losses                                  (1,241,016)          (1,396,342)
                                                                         -----------          -----------

Total loans                                                            $102,426,192         $127,288,386
                                                                       ------------         -------------

Loans Held For Sale                                                        $120,382           $1,636,850
</TABLE>

Concentration of Credit Risk

At September 30, 2000, approximately $82,327,126 of the Heritage Oaks Bank's
("Bank") loan portfolio was collateralized by various forms of real estate. Such
loans are generally made to borrowers located in San Luis Obispo County. The
Bank attempts to reduce its concentration of credit risk by making loans which
are diversified by project type. While management believes that the collateral
presently securing this portfolio is adequate, there can be no assurances that
significant deterioration in the California real estate market would not expose
the Bank to significantly greater credit risk.

Loans on nonaccrual status totaled $904,773 and $496,173 at December 31, 1999,
and September 30, 2000, respectively. Interest income that would have been
recognized on non-accrual loans if they had performed in accordance with the
terms of the loans was approximately $91,207 and $66,917 for the period ended
December 31, 1999 and September 30, 2000, respectively.


                                     PAGE 9
<PAGE>

Note 3: LOANS AND RESERVE FOR POSSIBLE LOAN LOSSES (CONTINUED)

An analysis of the changes in the reserve for possible loan losses is as
follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,         SEPTEMBER 30,
                                                                            1999                 2000
                                                                        ------------         -------------
<S>                                                                     <C>                  <C>
Balance at beginning of year                                             $1,069,535           $1,241,016
Additions charged to operating expense                                      165,500              219,000
Loans charged off                                                           (14,215)             (81,392)
Recoveries of loans previously charged off                                   20,196               17,718
                                                                         ----------           -----------
Balance at end of period                                                 $1,241,016           $1,396,342
                                                                         ==========           ==========
</TABLE>

At September 30, 1999, the Bank was contingently liable for letters of credit
accommodations made to its customers totaling $780,227 and undisbursed loan
commitments in the amount of $29,460,699. The Bank makes commitments to extend
credit in the normal course of business to meet the financing needs of its
customers. Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total outstanding commitment amount does
not necessarily represent future cash requirements. Standby letters of credit
written are conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The Bank anticipates no losses as a result of such
transactions.

In accordance with Financial Accounting Standards Board Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", the allowance for
credit losses related to loans that are identified for evaluation in accordance
with Statement 114 is based on discounted cash flows using the loan's initial
effect interest rate or the fair value of the collateral for certain collateral
dependent loans.

Management believes that the allowance for credit losses at September 30, 2000
is prudent and warranted, based on information currently available. However, no
prediction of the ultimate level of loans charged-off in future years can be
made with any certainty.


Note 4: EARNINGS PER SHARE

Basic earnings per share are based on the weighted average number of shares
outstanding before any dilution from common stock equivalents. Diluted earnings
per share includes common stock equivalents from the effect of the exercise of
stock options. The total number of shares used for calculating basic and diluted
for September 30, 1999 was 1,116,143 and 1,250,723, respectively. The total
number of shares used for calculating basic and diluted for September 30, 2000
was 1,222,429 and 1,311,224, respectively.


                                    PAGE 10
<PAGE>

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

Heritage Oaks Bancorp (the "Company") commenced operations on November 15, 1994
with the acquisition of Heritage Oaks Bank (the "Bank"). Each shareholder of the
Bank received one share of stock in the Company in exchange for each share of
Heritage Oaks Bank stock owned. The Bank became a wholly owned subsidiary of the
Company. The Bank is the only active subsidiary owned by the Company.

SUMMARY OF FINANCIAL RESULTS

As of September 30, 2000, total consolidated assets of Heritage Oaks Bancorp
were $174,097,672 compared to $147,299,268 at December 31, 1999. This reflects
an increase of 18.19%. This growth is attributable to continuing positive
economic factors along with the opening of a de novo branch office in Arroyo
Grande on January 13, 2000.

Total cash at September 30, 2000 was $17,065,293. The large cash balance
reflects the increased number of branch offices and cash needed to fund the
Banks automatic teller machine ("ATM") network. As of September 30, 2000, the
Bank was operating approximately 71 ATMs.

Total net loans at September 30, 2000 were $127,288,386 compared to $102,426,192
at December 31, 1999. This increase from year-end is the result of branch
expansion and the reputation our Bank has established in our new and existing
market area. The level of loan growth has decreased on a month-to-month basis
from the beginning of the year. No doubt, this is a direct result of the rising
interest rate environment over the first nine months of 2000. Management intends
to continue its moderate increase in the level of loans outstanding while not
compromising underwriting standards.

Securities available for sale, which are carried at market value, were
$16,068,861 at September 30, 2000 compared to $18,663,504 at December 31, 1999.
Securities have decreased through maturity and principal cash flow pay down to
supply funds for loan demand.

Federal funds sold were $4,500,000 at September 30, 2000 and $1,200,000 at
December 31, 1999. Total deposits were $159,581,106 at September 30, 2000
compared to $132,961,573 at December 31, 1999, which represents an increase of


                                    PAGE 11
<PAGE>

20.02%. The increase in total deposits is primarily attributable to the new
branch office, deposits obtained in relationships as the result of new loans and
the Bank's favorable reputation within its market areas.

Core deposits (time deposits less than $100,000, demand, and savings) gathered
in the local communities served by the Bank continue to be the Bank's primary
source of funds for loans and investments. Core deposits of $154,533,289
represented 96.8% of total deposits at September 30, 2000. The Company does not
purchase funds through deposit brokers.

The Company has a $2 million revolving line of credit available with Pacific
Coast Bankers Bank. At September 30, 2000, the balance of borrowed funds on this
line was $350,000 compared to the same at December 31, 1999.


RESULTS OF OPERATIONS

The Company reported net income for the NINE MONTHS ended September 30, 2000 of
$1,673,112 compared to $956,028 for the same period in 1999. Per share earnings
on a diluted basis for September 30, 2000 and September 30, 1999 were $1.28 and
$0.76, respectively. Basic per share earnings for September 30, 2000 and
September 30, 1999 were $1.37 and $0.86, respectively.

Net income for the THREE MONTHS ended September 30, 2000 was $633,538, compared
to $435,095 for the same period in 1999.

Increased year-to-date earnings are the result of numerous factors. Branch
expansion into Santa Maria and Atascadero during the first quarter of 1999
continues to penetrate these relatively new market areas for the Bank. In
addition, a full service branch office was opened in January 2000 in the city of
Arroyo Grande. Deposits gathered from these new branch offices and growth in
existing offices have supplied the necessary liquidity to fund the Banks loan
growth. A continued favorable net interest margin along with controlled
non-interest expense has fueled increased net income.

The following discussion highlights changes in certain items in the consolidated
statements of income.

NET INTEREST INCOME

Net interest income, the primary component of the net earnings of a financial
institution, refers to the


                                    PAGE 12
<PAGE>

difference between the interest paid on deposits and borrowings, and the
interest earned on loans and investments. The net interest margin is the amount
of net interest income expressed as a percentage of average earning assets.
Factors considered in the analysis of net interest income are the composition
and volume of earning assets and interest-bearing liabilities, the amount of
non-interest bearing liabilities and non-accrual loans, and changes in market
interest rates.

Net interest income for the NINE MONTHS ended September 30, 2000 was $7,116,398
as compared to $5,264,121 for the same period in 1999. This represents an
improvement of $1,852,277 or 35.19%. As a percentage of average earning assets,
the net interest margin for the first nine months of 2000 increased to 6.72%
from 6.31% from the same period one year earlier. The increase in the net
interest margin is due to a combination of higher rates on earning assets as the
result of increases to prime during 2000 and a $30,294,000 increase in average
interest earning assets and an increase of only $22,179,000 in interest bearing
liabilities. This improvement was the result of the banks marketing efforts to
attract non-interest bearing demand deposit accounts. The average balance of
demand deposits at September 30, 2000 was $45,334,000 compared to $36,413,000 at
September 30, 1999.

Net interest income for the THREE MONTHS ended September 30, 2000 was $2,565,065
compared to $1, 902,143 for the same period in 1999. This represents an increase
of $662,922 or 34.85%. Interest expense for this three month period was
$1,076,854 at September 30, 2000 compared to $648,003 at September 30, 1999.

Average interest earning assets were $141,194,000 at September 30, 2000 compared
to $110,900,000 at September 30, 1999. Average interest-bearing liabilities
increased to $105,295,000 at September 30, 2000 from $83,116,000 at September
30, 1999. Average interest rates on interest-bearing liabilities increased from
3.00% for the first nine months of 1999 to 3.77% for the first nine months of
2000.


                                    PAGE 13
<PAGE>

               AVERAGE BALANCE SHEET INFORMATION FOR SEPTEMBER 30,

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   --------------------------------------     -------------------------------------
                                                                    1999                                     2000
                                                    AVERAGE    AVERAGE YIELD     AMOUNT       AVERAGE    AVERAGE YIELD      AMOUNT
                                                    BALANCE      RATE PAID      INTEREST      BALANCE      RATE PAID       INTEREST
                                                   --------------------------------------     -------------------------------------
<S>                                                <C>         <C>              <C>           <C>        <C>               <C>
Interest Earning Assets:
              Time deposits with other banks           $629        4.46%           $21           $170         6.29%            $8
              Investment securities taxable          16,657        5.87%           731         11,438         6.29%           538
              Investment securities non-taxable       6,544        4.74%           232          6,142         5.07%           233
              Federal funds sold                      4,952        4.97%           184          3,206         6.26%           150
              Loans (1) (2)                          82,118        9.70%         5,958        120,238        10.19%         9,160
                                                   --------                      -----       --------                      ------

              Total interest earning assets         110,900        8.59%         7,126        141,194         9.55%        10,089
                                                   --------                      -----       --------                      ------

Allowance for possible loan losses                   (1,128)                                   (1,293)
Non-earning assets:
              Cash and due from banks                14,560                                    16,306
              Property, premises and equipment        2,767                                     3,325
              Other assets                            3,723                                     4,120
                                                   --------                                  --------

TOTAL ASSETS                                       $130,822                                  $163,652
                                                   ========                                  ========

Interest-bearing liabilities:
              Savings/NOW/money market               54,416        2.09%           849         56,596         2.28%           965
              Time deposits                          27,679        4.63%           958         44,273         5.39%         1,784
              Other borrowings                        1,021        7.20%            55          4,426         6.74%           223
                                                   --------                         --       --------                      ------

              Total interest-bearing liabilities     83,116        3.00%         1,862        105,295         3.77%         2,972
                                                   --------                      -----       --------                      ------

Non-interest bearing liabilities:
              Demand deposits                        36,413                                    45,334
              Other liabilities                       1,296                                     1,492
                                                   --------                                  --------

              Total liabilities                     120,825                                   152,121
                                                   --------                                  --------

Stockholders' equity
              Common stock                            4,512                                     6,235
              Retained earnings                       5,744                                     5,933
              Valuation Allowance Investments          (259)                                     (637)
                                                   --------                                   -------

              Total stockholders' equity              9,997                                    11,531
                                                   --------                                  --------

TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY                               $130,822                                  $163,652
                                                   ========                                  ========

Net Interest Income                                                             $5,264                                     $7,117
                                                                                ------                                     ======
Net Interest Margin (3)                                            6.31%                                         6.72%
</TABLE>

     (1) NONACCRUAL LOANS HAVE BEEN INCLUDED IN TOTAL LOANS.
     (2) LOAN FEES OF $349,500 AND $432,073 FOR 1999 AND 2000, RESPECTIVELY,
         HAVE BEEN INCLUDED IN THE INTEREST INCOME COMPUTATION.
     (3) NET INTEREST INCOME HAS BEEN CALCULATED BY DIVIDING THE NET INTEREST
         INCOME BY TOTAL EARNING ASSETS.


                                    PAGE 14
<PAGE>

The preceding table sets forth the average balance sheet information, interest
income and expense, average yields and rates and net interest income and margin
for the nine months ended September 30, 1999 and 2000.

NON-INTEREST INCOME

Non-interest income consists of bankcard merchant fees, automatic teller machine
transactions, and other fees, service charges, and gains on other real estate
owned. Non-interest income for the NINE MONTHS ended September 30, 2000 was
$4,244,418 compared to $4,283,548 for the same period in 1999. That represents a
decrease of $39,130 or 0.91%. Service charge income increased from $552,682
during the first nine months of 1999 to $795,807 for the NINE MONTHS ended
September 30, 2000. This increase in service charges is a result of the Bank's
additional full service branch offices and subsequent growth in deposit
accounts. ATM transaction fees and interchange income were $2,726,207 during the
NINE MONTHS ended September 30, 2000 compared to $2,288,089 during the same
period for 1999. The Bank receives income for each transaction. While there has
been a 19.15% increase in this type of gross revenue, there has been an increase
in associated gross expense of 27.02% relating to these transactions.
Competition related to the installation of ATM machines has been increasing and
while overall this continues to be a viable form of net revenue, profit margins
related to the business have narrowed. Approximately 20% of the ATMs are located
at gaming sites on Native American lands. In order for non-financial
institutions to utilize the various regional, national and international
networks, they need a financial institution to sponsor them on these networks.
The Bank has entered an agreement with a few non-financial institutions to
sponsor them on these networks. The Bank receives a nominal sponsorship fee for
each transaction run through the networks. The sponsorship revenue for the nine
months ended September 30, 2000 was $14,961 compared to $66,910 for the same
period during 1999.

For the NINE MONTHS ended September 30, 2000, income from bankcard merchant fees
decreased to $86,818 compared to $587,963 for the same period during 1999.
However, on September 1, 1999, the Bank divested itself of the liability in the
Merchant Bankcard Program and receives a monthly check for a percentage of the
NET sales volume of the portfolio. During the first nine months of 1999, gross
revenue of $587,963 was offset by gross expense of $549,742 for a net gain of
$38,221.

Non-interest income for the THREE MONTHS ended September 30,


                                    PAGE 15
<PAGE>

2000 was $1,480,599 compared to $1,642,641 for the same period in 1999. That
represents a decrease of $162,042 or 9.86%. Service charge income was $295,422
for the THREE MONTHS ended September 30,2000 and $198,090 for the same period in
1999. ATM transaction fees and interchange income were $917,548 during the THREE
MONTHS ended September 30, 2000 compared to $743,465 during the same period for
1999. The sponsorship revenue for the THREE MONTHS ended September 30, 2000 was
$2,802 compared to $22,797 for the same period during 1999. Income from bankcard
merchant fees was $31,978 for the three months ended September 30, 2000 compared
to $229,822 for the same period during 1999. The accounting for income regarding
bankard merchant fees changed as of September 1, 1999 as referred to in the
above paragraph.

OTHER EXPENSE

The Bank opened a de novo branch in Arroyo Grande on January 13, 2000. Other
expenses have grown as a result of the additional branch and overall growth of
the Bank. Non-interest expense was $8,587,223 and $7,968,654 for the NINE MONTHS
ended September 30, 2000 and the same period in 1999, respectively. Salaries and
employee benefits expense were $3,134,555 and $2,638,208 for the NINE MONTHS
ended September 30, 2000 and 1999, respectively. This represents an increase of
$496,347 or 18.8%. Full time equivalent employees were 89 at September 30, 2000
compared to 86 at September 30, 1999. Full time equivalent employees increased
by 3.5% while salary and related expense increased by 18.8% The difference in
expense is partially attributable to the "Pay for Performance" program
implemented by the Bank in 1999 and enhanced in 2000. This program provides for
a meaningful sales culture that includes customer referrals, sales, community
event attendance and teamwork building exercises. Occupancy and equipment costs
grew to $1,262,062 for the NINE MONTHS ended September 30, 2000 from $1,121,958
for the same period of 1999. Expense associated with the ATM network was
$1,908,809 and $1,501,790 for the NINE MONTHS ended September 30, 2000 and 1999,
respectively. Expense associated with the Merchant Bancard program was $549,742
for the NINE MONTHS ended September 30, 1999 and $0.0 for the same period in
2000 due to the change in accounting effective September 1, 1999. Expense
associated with all other non-interest expense categories was $2,281,797 and
$2,155,956 for the NINE MONTHS ended September 30, 2000 and 1999, respectively.
The increase in other expense reflects increases associated with the growth as a
result of the new branch and the overall growth of the Bank.


                                    PAGE 16
<PAGE>

Non-interest expense was $2,923,978 and $2,831,100 for the THREE MONTHS ended
September 30, 2000 and the same period in 1999, respectively. Salaries and
employee benefits expense were $1,091,684 and $883,232 for the THREE MONTHS
ended September 30, 2000 and 1999, respectively. Occupancy and equipment costs
grew to $399,754 for the THREE MONTHS ended September 30, 2000 from $374,704 for
the same period of 1999. Expense associated with the ATM network was $632,051
and $537,639 for the THREE MONTHS ended September 30, 2000 and 1999,
respectively. Expense associated with the Merchant Bancard program was $171,363
for the THREE MONTHS ended September 30, 1999 and $0.0 for the same period in
2000. Expense associated with all other non-interest expense categories was
$800,489 and $864,795 for the THREE MONTHS ended September 30, 2000 and 1999,
respectively.

LOCAL ECONOMY

The Company is located in the Central Coast region of California, primarily in
San Luis Obispo County and to a lesser degree in Santa Barbara County. The
Central Coast continues to outperform the state with a lower unemployment rate
and higher job creation.

Due to rising interest rates, there are some signs of weakness in real estate.
New permits for both residential and commercial and industrial sites are down.
This has translated to a decrease in loan demand in this sector, however, the
Company continues to gain market share by virtue of its reputation and presence
in six cities within the Central Coast region.

The Central Coast has long been a destination point for tourists due to the many
desirable sites of wineries, coastal attractions, Hearst Castle, quaintness of
the communities and other diversified entertainment. It is expected that with
the high cost of gas and oil, many residents in the Los Angeles area will forgo
long vacations and visit the Central Coast, thereby increasing tourist revenue
to the area.

The Bank's branch locations have been strategically placed to ensure a presence
to take advantage of the still healthy economy. In addition to the two new full
service branches opened in Santa Maria and Atascadero during the first quarter
of 1999, the Bank opened a full service branch Arroyo Grande in January 2000.


                                    PAGE 17
<PAGE>

CAPITAL

The Company's total stockholders equity was $12,536,556 at September 30, 2000
compared to $10,542,162 as of December 31, 1999. The increase in capital was
from net income of $1,673,112, $85,766 from stock options exercised, ($3,923)
for fractional shares from a 5% stock dividend during the first quarter and
$239,439 net change in other comprehensive income related to unrealized security
holding loss, net of tax.

Capital ratios for commercial banks in the United States are generally
calculated using nine different formulas. These calculations are referred to as
the "Leverage Ratio" and two "risk based" calculations known as: "Tier One Risk
Based Capital Ratio" and the "Total Risk Based Capital Ratio." These standards
were developed through joint efforts of banking authorities from 12 different
countries around the world. The standards essentially take into account the fact
that different types of assets have different levels of risk associated with
them. Further, they take into account the off-balance sheet exposures of banks
when assessing capital adequacy.

The Leverage Ratio calculation simply divides common stockholders' equity
(reduced by any Goodwill a bank may have) by the total average assets of the
bank. In the Tier One Risk Based Capital Ratio, the numerator is the same as the
leverage ratio, but the denominator is the total "risk-weighted assets" of the
bank. Risk weighted assets are determined by segregating all the assets and off
balance sheet exposures into different risk categories and weighing them by a
percentage ranging from 0% (lowest risk) to 100% (highest risk). The Total Risk
Based Capital Ratio again uses "risk-weighted assets" in the denominator, but
expands the numerator to include other capital items besides equity such as a
limited amount of the loan loss reserve, long-term capital debt, preferred stock
and other instruments.


                                    PAGE 18
<PAGE>

Summarized below are the bank and company's capital ratios at September 30,
2000:

<TABLE>
<CAPTION>
                                  ADEQUATELY
                                  CAPITALIZED       HERITAGE       HERITAGE
                                  REGULATORY        OAKS BANK     OAKS BANCORP
                                   STANDARD
<S>                               <C>               <C>           <C>
Leverage Ratio                       4.00%            7.11%            7.57%

Tier One Risk Based Capital Ratio    4.00%            8.59%            9.15%

Total Risk Based Capital Ratio       8.00%            9.59%           10.14%
</TABLE>

It is the intent of Management to maintain adequate capital ratios and achieve
"well" capitalized standards for Heritage Oaks Bank by the first quarter of
2001.

LIQUIDITY

The objective of liquidity management is to ensure the continuous availability
of funds to meet the demands of depositors, investors and borrowers. Asset
liquidity is primarily derived from loan payments and the maturity of other
earning assets. Liquidity from liabilities is obtained primarily from the
receipt of new deposits. The Bank's Asset Liability Committee (ALCO) is
responsible for managing the on-and off-balance sheet commitments to meet the
needs of customers while achieving the Bank's financial objectives. ALCO meets
regularly to assess the projected funding requirements by reviewing historical
funding patterns, current and forecasted economic conditions, and individual
customer funding needs. Deposits generated from Bank customers serve as the
primary source of liquidity. The Bank has credit arrangements with correspondent
banks that serve as a secondary liquidity source in the amount of $5,000,000 and
additionally can borrow money through repurchase agreements with two brokerage
firms. The Bank utilized the correspondent credit arrangements from time to time
throughout 2000 for an average of $382,938 in Fed Funds Purchased.

As of July 1999, the Bank became a member of the Federal Home Loan Bank of San
Francisco. Certain securities and loans were pledged as collateral during the
first quarter of 2000. The average funds borrowed through these facilities
during the first nine months of 2000 was $3,273,650. These borrowings have
allowed the bank to meet continued strong loan demand that has outpaced deposit
growth. The Bank is able to borrow at a rate that does not significantly impact
the net interest margin. As of September 30, 2000, the bank has no funds
borrowed through these lines.


                                    PAGE 19
<PAGE>

The Bank manages its liquidity by maintaining a majority of its investment
portfolio in federal funds sold and other liquid investments. At September 30,
2000, the ratio of liquid assets to deposits and other liabilities was 13.56%.
The ratio of gross loans to deposits, another key liquidity ratio, was 81.0% at
September 30, 2000.

INFLATION

The assets and liabilities of a financial institution are primarily monetary in
nature. As such, they represent obligations to pay or receive fixed and
determinable amounts of money, which are not affected by future changes in
prices. Generally, the impact of inflation on a financial institution is
reflected by fluctuations in interest rates, the ability of customers to repay
debt and upward pressure on operating expenses. In addition, inflation affects
the growth of total assets by increasing the level of loan demand, and may
potentially adversely affect the Bank's capital adequacy because loan growth in
inflationary periods may increase more rapidly than capital. The effect on
inflation during the period ended September 30, 2000 has not been significant to
the Bank's financial position or result of operations.

YEAR 2000 RISKS AND PREPAREDNESS

As a result of the banking industry's comprehensive Year 2000-readiness
preparations, no substantive problems occurred during the date change period.
However, while the industry can generally claim success, some associated risks
remain. They involve certain critical dates, the expiration of temporary
remediation techniques, record retention and customer risk.

There were no significant withdrawals experienced by the Bank as a result of
concerns surrounding the Y2K issue. There were no disruptions of service
experienced by Bank customers because of Y2K related problems. There have been
no unusual losses experienced by the Bank as a result of extensions of credit to
Bank customers. In summary, there was nothing unusual in the Bank's operations
either during the date change rollover, or since that time. Management does not
expect any future Y2K related disruptions and no material concerns related to
this area exist at this time.


                                    PAGE 20
<PAGE>

CRITICAL DATES
The following are critical dates that may cause system problems. Many of the
dates were included in test scenarios. Institutions are to review processing
results closely.

<TABLE>
<S>                           <C>
     October 10, 2000         First date to require eight-digit field
                              Included in Testing
     December 31, 2000        Last date of year
     January 1, 2001          First date of year
     December 31, 2001        Ensure 365-day year
</TABLE>

TEMPORARY REMEDIATION TECHNIQUES
The Company and its mission critical vendors did not utilize temporary
remediation techniques.

RECORDS RETENTION
Each institution is to retain the documentation of its Year 2000 efforts to
demonstrate it has satisfied its fiduciary, contractual and regulatory
responsibilities.

CUSTOMER RISK
In 1998, the Federal Financial Institution Council issued guidance to
institutions about the Year 2000's potential impact on customers. The statement
provided guidelines for controlling both general and specific risks related to
borrowers, depositors and capital markets/asset management counterparties.
Management is to continue to monitor the potential customer risk for the
remainder of the year 2000.


PART 2.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is not aware of any legal proceeding against it that will have a
material effect on the Company's financial statements.

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.


                                    PAGE 21
<PAGE>

HERITAGE OAKS BANCORP

DATE: NOVEMBER 2, 2000



                                    S/ LAWRENCE P. WARD
                                    --------------------------------------------
                                    LAWRENCE P. WARD
                                    PRESIDENT
                                    CHIEF EXECUTIVE OFFICER




                                    S/ MARGARET A. TORRES
                                    --------------------------------------------
                                    MARGARET A. TORRES
                                    CHIEF FINANCIAL OFFICER
                                    EXECUTIVE VICE PRESIDENT

                                    PAGE 22