<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 JUNE 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
JULY 17, 2000: $18,310,425.

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 - 1,220,695 SHARES OUTSTANDING AT JULY 17,2000.


                                       1
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                PAGE
<S>                                                                                             <C>
Consolidated Balance Sheets for periods ended December 31, 1999
and June 30, 2000                                                                                3.

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

Consolidated Statements of Income for the SIX months ended June 30, 1999
and June 30, 2000                                                                                5.

Consolidated Statements of Cash Flows for periods ended June 30, 1999
and June 30, 2000                                                                                6.

Consolidated Statements of Stockholders' Equity for periods ended
June 30, 1999 and June 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.-20

Part 2.  Other Information
Item 1.  Legal Proceedings                                                                       20.

Signatures                                                                                       21.
</TABLE>


                                       2
<PAGE>

                              HERITAGE OAKS BANCORP
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                            12/31/99            06/30/00
                                                                                        ------------        ------------
                                                                                                 (1)         (UNAUDITED)
<S>                                                                                     <C>                 <C>
ASSETS
Cash and due from banks                                                                 $ 17,159,073        $ 19,223,573
Federal funds sold                                                                         1,200,000           6,400,000
                                                                                        ------------        ------------
Total cash and cash equivalents                                                           18,359,073          25,623,573

Interest bearing deposits other banks                                                        375,255              99,695

Securities Available for sale                                                             18,663,504          16,973,582
Securities held to maturity (see note 2)                                                           0                   0
Federal Home Loan Bank Stock, cost                                                           395,300             368,700
Loans Held For Sale                                                                          120,382             541,500
Loans, net (see note 3)                                                                  102,426,192         122,387,823

Property, premises and equipment, net                                                      3,427,289           3,292,535
Other real estate owned                                                                            0                   0
Cash surrender value life insurance                                                        1,305,787           1,337,005
Other assets                                                                               2,226,486           2,591,109
                                                                                        ------------        ------------
TOTAL ASSETS                                                                            $147,299,268        $173,215,522
                                                                                        ============        ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing                                                            $ 39,901,884        $ 52,072,656
Savings, NOW, and money market deposits                                                   55,251,328          57,125,184
Time deposits of $100,000 or more                                                         10,596,650           7,737,478
Time deposits under $100,000                                                              27,211,711          39,646,112
                                                                                        ------------        ------------
Total deposits                                                                           132,961,573         156,581,430

Other borrowed money                                                                         350,000           3,150,000
Securities Sold under Agreement to Repurchase                                              2,211,000                   0
Other liabilities                                                                          1,234,533           1,768,588
                                                                                        ------------        ------------
Total liabilities                                                                        136,757,106         161,500,018

Stockholders' equity
Common stock, no par value;
20,000,000 shares authorized; issued and outstanding
1,144,282 and 1,220,695 for December 31, 1999
and June 30, 2000, respectively.                                                           5,288,179           6,222,714
Accumulated other comprehensive income                                                      (658,840)           (593,903)
Retained earnings                                                                          5,912,823           6,086,693
                                                                                        ------------        ------------
Total stockholders' equity                                                                10,542,162          11,715,504
                                                                                        ------------        ------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                                                $147,299,268        $173,215,522
                                                                                        ============        ============
</TABLE>

(1) These numbers have been derived from the audited financial statements.

See notes to condensed financial statements


                                       3


<PAGE>

                              HERITAGE OAKS BANCORP
                        CONSOLIDATED STATEMENTS OF INCOME
                       FOR THE THREE MONTHS ENDED JUNE 30,

<TABLE>
<CAPTION>

                                                                                            1999                2000
                                                                                         (UNAUDITED)         (UNAUDITED)
<S>                                                                                      <C>                 <C>
Interest Income:
Interest and fees on loans                                                                $1,966,207          $3,062,065
Investment securities                                                                        341,944             265,749
Federal funds sold and commercial paper                                                       55,016              64,131
Time certificates of deposit                                                                   7,120               4,694
                                                                                          ----------          ----------
Total interest income                                                                      2,370,287           3,396,639

Interest Expense:
Now accounts                                                                                 165,764             190,940
MMDA accounts                                                                                 53,972              42,540
Savings accounts                                                                              65,760              76,221
Time deposits of $100,000 or more                                                             52,550             109,247
Other time deposits                                                                          239,910             501,008
Other borrowed funds                                                                          26,050             118,428
                                                                                          ----------          ----------
Total interest expense                                                                       604,006           1,038,384

Net Interest Income Before Prov. for Possible Loan Losses                                  1,766,281           2,358,255
Provision for loan losses                                                                     39,500              57,000
                                                                                          ----------          ----------
Net interest income after provision for loan losses                                        1,726,781           2,301,255

Non-interest Income:
Service charges on deposit accounts                                                          181,143             267,767
Investment securities gains (losses), net                                                          0                   0
Other income                                                                               1,258,876           1,161,267
                                                                                          ----------          ----------
Total Non-interest Income                                                                  1,440,019           1,429,034

Non-interest Expense:
Salaries and employee benefits                                                               884,259           1,040,958
Occupancy and equipment                                                                      404,845             377,832
Other expenses                                                                             1,408,239           1,576,286
                                                                                          ----------          ----------
Total Noninterest Expenses                                                                 2,697,343           2,995,076
Income before provision for income taxes                                                     469,457             735,213
Provision for applicable income taxes                                                        137,839             201,745
                                                                                          ----------          ----------
Net Income                                                                                $  331,618          $  533,468
                                                                                          ==========          ==========

Earnings per share: (See note #4)
Basic                                                                                     $     0.30          $     0.44
Fully Diluted                                                                             $     0.27          $     0.40
</TABLE>

See notes to condensed financial statements


                                       4
<PAGE>

                              HERITAGE OAKS BANCORP
                        CONSOLIDATED STATEMENTS OF INCOME
                        FOR THE SIX MONTHS ENDED JUNE 30,

<TABLE>
<CAPTION>

                                                                                            1999                2000
                                                                                         (UNAUDITED)         (UNAUDITED)
<S>                                                                                      <C>                 <C>
Interest Income:
Interest and fees on loans                                                                $3,734,411          $5,830,346
Investment securities                                                                        699,017             538,655
Federal funds sold and commercial paper                                                      128,389              72,627
Time certificates of deposit                                                                  13,729               5,222
                                                                                          ----------          ----------
Total interest income                                                                      4,575,546           6,446,850

Interest Expense:
Now accounts                                                                                 320,493             350,705
MMDA accounts                                                                                 97,710              88,696
Savings accounts                                                                             128,244             152,615
Time deposits of $100,000 or more                                                             98,669             232,030
Other time deposits                                                                          522,101             880,824
Other borrowed funds                                                                          46,352             190,651
                                                                                          ----------          ----------
Total interest expense                                                                     1,213,569           1,895,521

Net Interest Income Before Prov. for Possible Loan Losses                                  3,361,977           4,551,329
Provision for loan losses                                                                     81,500             114,000
                                                                                          ----------          ----------
Net interest income after provision for loan losses                                        3,280,477           4,437,329

Non-interest Income:
Service charges on deposit accounts                                                          354,591             500,385
Investment securities gains (losses), net                                                          0              -2,188
Other income                                                                               2,286,316           2,265,624
                                                                                          ----------          ----------
Total Non-interest Income                                                                  2,640,907           2,763,821

Non-interest Expense:
Salaries and employee benefits                                                             1,754,977           2,042,872
Occupancy and equipment                                                                      747,255             793,868
Other expenses                                                                             2,637,811           2,826,505
                                                                                          ----------          ----------
Total Noninterest Expenses                                                                 5,140,043           5,663,245
Income before provision for income taxes                                                     781,341           1,537,905
Provision for applicable income taxes                                                        260,415             498,332
                                                                                          ----------          ----------
Net Income                                                                                $  520,926          $1,039,573
                                                                                          ==========          ==========

Earnings per share:           (See note #4)
Basic                                                                                     $     0.47          $     0.86
Fully Diluted                                                                             $     0.42          $     0.77
</TABLE>

See notes to condensed financial statements


                                       5


<PAGE>

                              HERITAGE OAKS BANCORP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      PERIODS ENDED JUNE 30, 1999 AND 2000

<TABLE>
<CAPTION>

                                                                                             1999                2000
                                                                                         (UNAUDITED)         (UNAUDITED)
<S>                                                                                      <C>                 <C>
Cash flows from operating activities:
(dollars in thousands)
Net Income                                                                                  $520,926          $1,039,573
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                                                                298,528             352,732
Provision for possible loan loss                                                              81,500             114,000
Increase (decrease) in deferred loan fees                                                    (48,024)               (336)
Net loss on sales of investment securities                                                         -              (2,188)
Amortization of premiums (Discount accretion)
on investment securities, net                                                               (166,920)            (79,171)
Loss on sale of other real estate owned                                                            -                   -
Gain on sale of property, premises, and equipment                                                  -                   -
Decrease (increase) in other assets                                                          (38,755)           (395,841)
Increase (decrease) in other liabilities                                                    (291,207)            552,889
Net cash used in operating activities                                                        356,048           1,581,658


Cash flows from investing activities:
Purchase of investment securities                                                        (16,472,098)                  -
Proceeds from sales, princ reductions and maturities
from investment securities                                                                24,229,505           2,009,558
Increase in time deposits with other banks                                                         -                   -
Net additions to real estate acquired in settlement of loans                                       -                   -
Purchase of insurance policies                                                              (253,408)                  -
Increase in loans, net                                                                   (13,325,077)        (20,382,749)
Purchase of property, premises and equipment, net                                           (973,406)           (221,656)
Net cash used in investing activities                                                     (6,794,484)        (18,594,847)


Cash flows from financing activities:
Increase (decrease) in deposits, net                                                       1,363,087          23,619,857
Net (decrease) increase in other borrowings                                                 (400,000)            589,000
Proceeds from exercise of stock options                                                       36,524              72,755
Cash paid in lieu of fractional shares                                                        (2,882)             (3,923)
Net cash provided by (used in) financing activities                                          996,729          24,277,689


Net increase (decrease) in cash and cash equivalents                                      (5,441,707)          7,264,500
Cash and cash equivalents at beginning of year                                            24,939,179          18,359,073
Cash and cash equivalents at end of period                                               $19,497,472         $25,623,573
</TABLE>

See notes to condensed financial statements


                                       6
<PAGE>

                              HERITAGE OAKS BANCORP
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         JUNE 30, 1999 AND JUNE 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                          3,500             36,524               0                             36,524

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                                            (2,882)                            (2,882)

Comprehensive Income
  Net Income                                                                        520,926                            520,926
  Unrealized Security Holding Gains/(Losses)
     (net of $97,531 tax)                                                                           (143,344)         (143,344)
                                                                                                -------------     -------------
Total other comprehensive Income                                                                                       377,582
                                           -------------      -------------   -------------     -------------     -------------
BALANCE JUNE 30, 1999                          1,115,950         $4,506,694      $5,672,710        ($331,510)       $9,847,894
                                           =============      =============   =============     =============     =============
</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                         18,961             72,755               0                             72,755

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                                                                      1,039,573                          1,039,573
  Unrealized Security Holding Gains/(Losses)
     (net of $44,167 tax)                                                                             66,250            66,250
      Less Reclassification Adjustment for
      Losses (net of $875 tax)                                                                        (1,313)           (1,313)
                                                                                                -------------     -------------
Total other comprehensive Income                                                                                     1,104,510
                                           -------------      -------------   -------------     -------------     -------------
BALANCE JUNE 30, 2000                          1,220,695         $6,222,714      $6,086,693        ($593,903)      $11,715,504
                                           =============      =============   =============     =============     =============
</TABLE>


                                       7


<PAGE>

Note 1: CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of Management, the unaudited consolidated condensed financial
statements contain all (consisting of only normal recurring adjustments)
adjustments necessary to present fairly the Company's consolidated financial
position at December 31, 1999, and June 30, 2000 and the results of cash
flows for the six months ended June 30, 1999 and 2000 and the results of
operations for the three and six months ended June 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 condensed 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 six months ended June 30, 1999
and 2000 may not necessarily be indicative of the operating results for the
full year.

Note 2: INVESTMENT SECURITIES

The Company adopted 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 June 30, 2000 and December 31, 1999 were:

<TABLE>
<CAPTION>

                JUNE 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           $ 2,627,996       $  12,009       $  (102,506)      $ 2,537,499
Mortgage-backed securities                                           8,703,958             559          (585,002)        8,119,515
Obligations of State and Political
Subdivisions                                                         6,622,828           2,249          (317,147)        6,307,930
Other Securities                                                         8,638               0                 0             8,638
                                                                   -----------       ----------      ------------      -----------
TOTAL                                                              $17,963,420       $  14,817       $(1,004,655)      $16,973,582
                                                                   ===========       ==========      ============      ===========
</TABLE>
<TABLE>
<CAPTION>

            DECEMBER 31, 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>


                                       8
<PAGE>

Note 3: Loans and Reserve for Possible Loan Losses

Major classifications of loans were:

<TABLE>
<CAPTION>

                                                      DECEMBER 31,            JUNE 30,
                                                              1999                2000
                                                      ------------        ------------
<S>                                                   <C>                 <C>
Commercial, financial, and
agricultural                                          $ 38,419,611        $ 42,807,192
Real estate-construction                                12,741,477          19,768,202
Real estate-mortgage                                    50,063,714          58,258,496
Installment loans to individuals                         2,786,034           3,180,210
All other loans (including overdrafts)                     141,846             147,321
                                                      ------------        ------------
                                                       104,152,682         124,161,421

Less - deferred loan fees                                 (485,474)           (485,810)
Less - reserve for possible loan losses                 (1,241,016)         (1,287,788)
                                                      ------------        ------------

Total loans                                           $102,426,192        $122,387,823
                                                      ============        ============

Loans Held For Sale                                   $    120,382        $    541,500
</TABLE>

Concentration of Credit Risk

At June 30, 2000, approximately $78,026,698 of the Bank's 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 $665,485 at December 31, 1999
and June 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 $53,077 for the period ended
December 31, 1999 and June 30, 2000, respectively.

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

<TABLE>
<CAPTION>

                                                         DECEMBER 31,            JUNE 30,
                                                                 1999                2000
                                                         ------------          ----------
<S>                                                      <C>                   <C>
Balance at beginning of year                               $1,069,535          $1,241,016
Additions charged to operating expense                        165,500             114,000
Loans charged off                                             (14,215)            (81,392)
Recoveries of loans previously charged off                     20,196              14,164
                                                         ------------          ----------
Balance at end of year                                     $1,241,016          $1,287,788
                                                         ============          ==========
</TABLE>

At June 30, 2000, the Bank was contingently liable for letters of credit
accommodations made to its customers totaling $641,467 and undisbursed loan
commitments in the amount of $34,676,000. 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.

                                       9
<PAGE>

Note 3: Loans and Reserve for Possible Loan Losses (continued)

In accordance with Financial Accounting Standards Board (FASB) Statement No.
114, "Accounting by Creditors for Impairment of a Loan." 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 June 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 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 share used for calculating
basic and diluted for June 30, 1999 was 1,116,143 and 1,243,082,
respectively. The total number of shares used for calculating basic and
diluted for June 30, 2000 was 1,202,164 and 1,344,495, respectively.


                                       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 June 30, 2000, total consolidated assets of Heritage Oaks Bancorp were
$173,215,522 compared to $147,299,268 at December 31, 1999. This reflects an
increase of 17.6%. This growth is attributable to a de novo branch office in
Arroyo Grande that opened on January 13, 2000 and a continuing healthy
economy in the Central Coast.

Total cash at June 30, 2000 was $19,223,573. The large cash balance reflects
the increased number of branch offices and cash needed to fund the Bank's
automatic teller machine ("ATM") network. As of June 30, 2000, the Bank was
operating approximately 87 ATMs.

Total net loans at June 30, 2000 were $122,387,823 compared to $102,426,192
at December 31, 1999. This increase from year-end is the result of expansion
in the number of branches and the reputation our Bank has established in our
new and existing market area.

Securities available for sale, which are carried at market value, were
$16,973,582 at June 30, 2000 compared to $18,663,504 at December 31, 1999.
Securities have decreased through security maturity and principal cash flow
pay down to supply funds for loan demand.

Federal funds sold were $6,400,000 at June 30, 2000 and $1,200,000 at
December 31, 1999.

Total deposits were $156,581,430 at June 30, 2000 compared to $132,961,573 at
December 31, 1999, which represents an increase of 17.8%. The increase in
total deposits is primarily attributable to the new branch offices and
deposits obtained in relationships as the result of new loans.

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
$148,843,952 represented 95.1% of total deposits at June 30, 2000. The
Company does not purchase funds through deposit brokers.


                                       11
<PAGE>

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

The Bank has established borrowing lines with the Federal Home Loan Bank
(FHLB) of approximately $4.5 million and $2.9 million secured by securities
and certain loans, respectively. At June 30, 2000, the Bank has borrowed
against those lines in the total amount of $2.8 million.

RESULTS OF OPERATIONS

The Company reported net income for the SIX MONTHS ended June 30, 2000 of
$1,039,573 compared to $520,926 for the same period in 1999. Per share
earnings on a diluted basis for June 30, 2000 and June 30, 1999 were $0.77
and $0.42, respectively. Basic per share earnings for June 30, 2000 and June
30, 1999 were $0.86 and $0.47, respectively.

Net income for the THREE MONTHS ended June 30, 2000 was $533,468, compared to
$331,618 for the same period in 1999.

Increased earnings are the direct result of the Bank's expansion into Santa
Maria, Atascadero and Arroyo Grande and the continued positive economic
environment in the Central Coast. During 1999, the expanded infrastructure
was put in place to allow for growth in the new areas. As these new offices
continue to increase their asset base, income is derived from earning assets
while overhead remains static.

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 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 SIX MONTHS ended June 30, 2000 was $4,551,329 as
compared to $3,361,977 for the same period in 1999. This represents an
improvement of $1,189,352 or 35.4%. As a percentage of average earning
assets, the net interest margin for the first six months of 2000 increased to
6.70% from 6.20% from


                                       12
<PAGE>

the same period one year earlier. The increase in net interest margin is
primarily due to an $27,322,000 increase in average interest earning assets
and an increase of $22,051,000 in interest bearing liabilities and the 100
basis point increase in prime rate since December 1999. The average balance
of demand deposits at June 30, 2000 was $41,890,000 compared to $34,850,000
at June 30, 1999.

Net interest income for the THREE MONTHS ended June 30, 2000 was $2,358,255
compared to $1,766,281 for the same period in 1999. This represents an
increase of 33.5%. Interest expense for this three month period was
$1,038,384 at June 30, 2000 compared to $604,006 at June 30, 1999.

Average interest earning assets were $135,840,000 at June 30, 2000 compared
to $108,518,000 at June 30, 1999. Average interest-bearing liabilities
increased to $103,778,000 at June 30, 2000 from $81,727,000 at June 30, 1999.
Average interest rates on interest-bearing liabilities increased from 2.97%
for the first six months of 1999 to 3.68% for the first six months of 2000.


                                       13


<PAGE>

                 AVERAGE BALANCE SHEET INFORMATION FOR JUNE 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          $    495         5.66%        $   14        $    170          5.93%        $    5
          Investment securities taxable             18,252         5.98%           546          11,744          6.54%           381
          Investment securities non-taxable          6,478         4.72%           153           6,256          5.09%           158
          Federal funds sold                         5,237         4.89%           128           2,395          6.15%            73
          Loans (1) (2)                             78,056         9.57%         3,734         115,275         10.20%         5,831
                                                    ------                       -----         -------                        -----

          Total interest earning assets            108,518         8.43%         4,575         135,840          9.57%         6,448
                                                   -------                       -----         -------                        -----

Allowance for possible loan losses                  -1,106                                      -1,278
Non-earning assets:
          Cash and due from banks                   14,091                                      16,384
          Property, premises and equipment           2,839                                       3,373
          Other assets                               3,443                                       4,064
                                                     -----                                       -----

TOTAL ASSETS                                      $127,785                                    $158,383
                                                  --------                                    --------

Interest-bearing liabilities:
          Savings/NOW/money market                  53,444         2.04%           546          55,104          2.17%           592
          Time deposits                             26,926         4.61%           621          42,773          5.25%         1,113
          Other borrowings                           1,357         6.63%            45           5,901          6.53%           191
                                                     -----                          --           -----                          ---

          Total interest-bearing liabilities        81,727         2.97%         1,212         103,778          3.68%         1,896
                                                    ------                       -----         -------                        -----

Non-interest bearing liabilities:
          Demand deposits                           34,850                                      41,890
          Other liabilities                          1,324                                       1,594
                                                     -----                                       -----

          Total liabilities                        117,901                                     147,262
                                                   -------                                     -------

Stockholders' equity:
          Common stock                               4,500                                       5,752
          Retained earnings                          5,608                                       6,073
          Valuation Allowance Investments             (224)                                       (704)
                                                      ----                                        ----

          Total stockholders' equity                 9,884                                      11,121
                                                     -----                                      ------
TOTAL LIABILITIES AND STOCKHOLDERS'
          EQUITY                                  $127,785                                    $158,383
                                                  --------                                    --------
Net Interest Income                                                             $3,363                                       $4,552
                                                                                ------                                       ------
Net Interest Margin (3)                                            6.20%                                        6.70%

</TABLE>

      (1) NONACCRUAL LOANS HAVE BEEN INCLUDED IN TOTAL LOANS.
      (2) LOAN FEES OF $213,454 AND $296,624 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.

The preceding table sets forth average balance sheet information, interest
income and expense, average yields and rates and net

                                       14
<PAGE>

interest income and margin for the three months ended June 30, 1999 and 2000.

NON-INTEREST INCOME

Non-interest income consists of bankcard merchant fees, automatic teller machine
("ATM") transactions, and other fees, service charges, and gains on other real
estate owned. Non-interest income for the SIX MONTHS ended June 30, 2000 was
$2,763,821 compared to $2,640,907 for the same period in 1999. That represents
an increase of $122,914 or 4.7%. Service charge income increased from $354,591
during the first six months of 1999 to $500,385 for the six months ended June
30, 2000. This increase in service charges is a result of the Bank's growth in
the number of branches and deposit accounts. ATM transaction fees and
interchange income were $1,808,659 during the six months ended June 30, 2000
compared to $1,580,843 during the same period for 1999. The increase is the
result of increased number of sites in non-gaming facilities. At June 30, 2000,
approximately 17% of the ATMs are located at gaming sites on Native American
lands compared to 20% during the same period in 1999. The competition related to
the installation of ATM machines has increased and has reduced profit margins
per site. The sponsorship revenue for the SIX MONTHS ended June 30, 2000 was
$12,159 compared to $44,117 for the same period during 1999.

For the SIX MONTHS ended June 30, 2000 Income from bankcard merchant fees
decreased to $105,267 compared to $370,812 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 six months of
1999, gross revenues of $370,812 were offset by gross expense of $378,379 for
a net loss of $7,567.

Non-interest income for the THREE MONTHS ended June 30, 2000 was $1,429,034
compared to $1,440,019 for the same period in 1999. That represents a
decrease of $10,985 or 0.8%. Service charge income was $267,767 for the THREE
MONTHS ended June 30, 2000 compared to $181,143 for the same period in 1999.
ATM transaction fees and interchange income were $915,729 during the THREE
MONTHS ended June 30, 2000 compared to $885,300 during the same period for
1999. The sponsorship revenue for the THREE MONTHS ended June 30, 2000 was
$5,911 compared to $29,275 for the same period during 1999.

For the THREE MONTHS ended June 30, 2000 Income from bankcard merchant fees
decreased to $55,333 compared to $192,724 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. For the THREE MONTHS ended June
30,1999, gross revenues of $192,724 were offset by gross expense of $199,095
for a net loss of

                                       15
<PAGE>

$6,371.

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 $5,663,245 and $5,140,043 for the SIX
MONTHS ended June 30, 2000 and the same period in 1999, respectively.
Salaries and employee benefits expense were $2,042,872 and $1,754,977 for the
SIX MONTHS ended June 30, 2000 and 1999, respectively. Full time equivalent
employees were 93 at June 30, 2000 compared to 86 at June 30, 1999. Occupancy
and equipment costs increased slightly to $793,868 for the SIX MONTHS ended
June 30, 2000 from $747,255 for the same period of 1999. Expense associated
with the ATM network was $1,276,758 and $1,122,862 for the SIX MONTHS ended
June 30, 2000 and 1999, respectively. Expense associated with the Merchant
Bankcard program was $278,379 for the SIX MONTHS ended June 30, 1999, however,
there was no expense for the same period in 2000. As indicated in the section
above, the Bank divested itself of the liability of the portfolio and now
receives a monthly check for the NET earnings on this activity. Expense
associated with all other non-interest expense categories was $1,549,747 and
$1,136,570 for the SIX MONTHS ended June 30, 2000 and 1999, respectively. The
increase in other expense reflects increases associated with the growth as a
result of the two new branches and the overall growth of the Bank.

Non-interest expense was $2,995,076 and $2,697,343 for the THREE MONTHS ended
June 30, 2000 and the same period in 1999, respectively. Salaries and
employee benefits expense were $1,040,958 and $884,259 for the THREE MONTHS
ended June 30, 2000 and 1999, respectively. Occupancy and equipment costs
decreased to $377,832 for the THREE MONTHS ended June 30, 2000 from $404,845
for the same period of 1999. Expense associated with the ATM network was
$671,189 and $605,897 for the THREE MONTHS ended June 30, 2000 and 1999,
respectively. Expense associated with the Merchant Bankcard program was
$199,095 for the THREE MONTHS ended June 30, 1999. There was no expense
associated with activity for the same period of 2000. Expense associated with
all other non-interest expense categories was $905,097 and $603,247 for the
THREE MONTHS ended June 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.

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.

                                       16
<PAGE>

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 Banks 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.

Capital

The Company's total stockholders equity was $11,715,504 at June 30, 2000
compared to $10,542,162 at December 31, 1999. The increase in capital was
from net income of $1,039,573, ($3,923) in fractional shares as a result of a
5% stock dividend paid on April 17, 2000, $72,755 from stock options
exercised, and $64,937 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.


                                       17
<PAGE>

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.

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

<TABLE>
<CAPTION>

                                   ADEQUATELY CAPITALIZED          HERITAGE            HERITAGE
                                    REGULATORY STANDARD           OAKS BANK          OAKS BANCORP
                                   ----------------------         ---------          ------------
<S>                                <C>                            <C>                <C>
Leverage Ratio                             4.00%                     6.95%               7.43%

Tier One Risk Based Capital Ratio          4.00%                     8.46%               9.04%

Total Risk Based Capital Ratio             8.00%                     9.41%               9.98%
</TABLE>

It is the intent of Management to achieve "Well Capitalized" capital ratios
by December 31, 2000.

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 $5,500,000 and additionally can
borrow money through repurchase agreements with a brokerage firm. During the
first six months of 2000, the average funds borrowed from correspondent banks
and through repurchase agreements was $560,027 and $631,714, respectively.

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


                                       18
<PAGE>

six months of 2000 was $4,359,231. 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.

The Bank manages its liquidity by maintaining a majority of its investment
portfolio in federal funds sold and other liquid investments. At June 30,
2000, the ratio of liquid assets to deposits and other liabilities was 13.8%.
The ratio of gross loans to deposits, another key liquidity ratio, was 79.3%
at June 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 June 30, 2000 has not been
significant to the Bank's financial position or result of operations.

Outstanding Risks With the Year 2000

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.


                                       19
<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 Bank is not aware of any legal proceeding against it that will have a
material effect on the Company's financial statements.

                                       20
<PAGE>

SIGNATURES

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

HERITAGE OAKS BANCORP

DATE: July 21, 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


                                       21