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(FRONT COVER)





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FINANCIAL RATIOS AND

SUMMARY OF KEY INFORMATION


Harleysville National Corporation and Subsidiaries


|                                                                             |                        |      |                         |       |   |      |            |       |   |   |            |       |  
|---------------------------------------------------------------------------- | ---------------------- | ---- | ----------------------- | ----- | - | ---- | ---------- | ----- | - | - | ---------- | ----- | -
|                                                                             |                        |      | YEAR ENDED DECEMBER 31,
|                                                                             |                        |      |                        
|(Dollars in thousands, except per share data and average shares outstanding) |                        | 2002 |                         | 2001  |   | 2000
|                                                                             |                        |      |                         |       |   |     
|PER SHARE INFORMATION                                                        |                        |      |                         |       |   |      |            |       |   |   |            |      
|Diluted*                                                                     |                        | $    | 1.67                    |       |   | $    | 1.46       |       |   | $ | 1.31       |      
|Basic*                                                                       |                        |      | 1.72                    |       |   |      | 1.50       |       |   |   | 1.31       |      
|Cash dividends paid*                                                         |                        |      | 0.71                    |       |   |      | 0.62       |       |   |   | 0.54       |      
|Book value (at year-end)                                                     |                        |      | 10.84                   |       |   |      | 9.71       |       |   |   | 8.93       |      
|MARKET VALUE                                                                 |                        |      |                         |       |   |      |            |       |   |   |            |      
|Bid price of common stock (high)*                                            |                        | $    | 27.25                   |       |   | $    | 25.42      |       |   | $ | 16.52      |      
|Bid price of common stock (low)*                                             |                        |      | 20.95                   |       |   |      | 16.13      |       |   |   | 10.77      |      
|Weighted average diluted shares outstanding*                                 |                        |      | 19,700,487              |       |   |      | 19,698,964 |       |   |   | 19,486,473 |      
|Weighted average basic shares outstanding*                                   |                        |      | 19,121,778              |       |   |      | 19,221,254 |       |   |   | 19,464,230 |      
|AVERAGE BALANCE SHEET                                                        |                        |      |                         |       |   |      |            |       |   |   |            |      
|Loans                                                                        |                        | $    | 1,333,300               |       |   | $    | 1,264,750  |       |   | $ | 1,166,684  |      
|Earning assets                                                               |                        |      | 2,181,715               |       |   |      | 1,944,961  |       |   |   | 1,739,068  |      
|Total assets                                                                 |                        |      | 2,309,422               |       |   |      | 2,058,738  |       |   |   | 1,843,525  |      
|Deposits                                                                     |                        |      | 1,808,390               |       |   |      | 1,599,515  |       |   |   | 1,436,781  |      
|Interest-bearing liabilities and demand deposits                             |                        |      | 2,055,611               |       |   |      | 1,825,762  |       |   |   | 1,655,592  |      
|Shareholders equity                                                         |                        |      | 198,373                 |       |   |      | 182,178    |       |   |   | 154,547    |      
|SELECTED OPERATING RATIOS                                                    |                        |      |                         |       |   |      |            |       |   |   |            |      
|Return on average assets                                                     |                        |      | 1.43                    | %     |   |      | 1.40       | %     |   |   | 1.39       | %    
|Return on average shareholders equity                                       |                        |      | 16.60                   | %     |   |      | 15.82      | %     |   |   | 16.57      | %    
|Leverage (assets divided by shareholders equity)                            |                        |      | 12.08                   |       |   |      | 11.67      |       |   |   | 11.15      |      
|Average shareholders equity as a percentage of:                             |                        |      |                         |       |   |      |            |       |   |   |            |      
|                                                                             | Average loans          |      |                         | 14.88 | % |      |            | 14.40 | % |   |            | 13.25 | %
|                                                                             | Average deposits       |      |                         | 10.97 |   |      |            | 11.39 |   |   |            | 10.76 |  
|                                                                             | Average assets         |      |                         | 8.59  |   |      |            | 8.85  |   |   |            | 8.38  |  
|                                                                             | Average earning assets |      |                         | 9.09  |   |      |            | 9.37  |   |   |            | 8.89  |  
|Dividend payout ratio                                                        |                        |      | 40.94                   |       |   |      | 41.27      |       |   |   | 40.74      |      
|Average total loans as a percentage
of average deposits and borrowed funds   |                        |      | 64.86                   |       |   |      | 69.27      |       |   |   | 70.47      |      
|Net interest margin on average earning assets:                               |                        |      |                         |       |   |      |            |       |   |   |            |      
|                                                                             | Interest income**      |      |                         | 6.41  | % |      |            | 7.43  | % |   |            | 7.92  | %
|                                                                             | Interest expense       |      |                         | (2.41 | ) |      |            | (3.34 | ) |   |            | (3.78 | )
|                                                                             | Net interest margin**  |      |                         | 4.00  |   |      |            | 4.09  |   |   |            | 4.14  |  
|                                                                             | Noninterest margin     |      |                         | (1.55 | ) |      |            | (1.87 | ) |   |            | (1.87 | )

* Adjusted for 5% stock dividends effective 9/16/02 and 11/9/00 and a 100% stock dividend effective 8/10/01.

* * Tax Equivalent Basis

Graphs reflect actual year-end balances.

(BAR CHARTS)





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DEAR HNC SHAREHOLDERS:



| |  | For the 27th consecutive year, Harleysville National Corporation achieved
record earnings!                                                                                                                                                                                                                                                                                                                    
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | For the 28th consecutive year, we paid record dividends to you, our
shareholders, including a special cash dividend of $.03 per share paid in
December 2002.                                                                                                                                                                                                                                                  
| 
| |  | Harleysville National Corporation moved up four places to #8 on the Super 50
Team in Americas Finest Companies.* Only 20 companies out of more than 19,000
(less than one tenth of 1%) publicly traded firms in the entire United States
made the Super 50 Team. This elite group has achieved the remarkable combined
total of at least 50 consecutive years of higher earnings and dividends per
share.
| 
|  |  | *Americas Finest Companies is a publication that tracks high performing
companies and is produced by Bill Staton, Chairman of Staton Investment
Management in Charlotte, N.C.                                                                                                                                                                                                                                
| 
| |  | HNC was also recognized in Americas Finest Companiesas one of Americas
Smartest Companies and placed on the Earnings All Star list for the 11th
straight year, moving from 13th to 11th place in 2002.                                                                                                                                                                                                  
| 
| |  | U.S. Bankerfeatured HNC in the top 30 performance rankings of U.S.
mid-size banks.                                                                                                                                                                                                                                                                                                                            
| 
| |  | The ABA Banking Journalfeatured Harleysville National Corporation in the top
100 of Bankings Top Performers.                                                                                                                                                                                                                                                                                               
| 
| |  | HNCs lead bank, Harleysville National Bank and Trust Company (HNB), ranked
third nationwide in the Independent Bankermagazines prestigious member list
that compares banks over $1 billion in assets based on Return on Equity (ROE).
HNB was also rated #11 based on Return on Assets (ROA).                                                                                                               
| 
| |  | Harleysville National Corporation was listed by Wall-Street.com as one of
Americas Top Growth Companies. Nearly every
actively traded corporation in America was analyzed for
exceptional long-term sales growth, recent growth trends, size and stock price.
Only 15% are selected.                                                                                                                       

(BAR CHARTS)

2002

WHAT A YEAR!




| |  | Interest rates reached the lowest levels we have seen in 40 years.
|- |  | ------------------------------------------------------------------
| 
| |  | The stock market finished down for the third consecutive year.    
| 
| |  | The economy continued its painfully slow recovery.                
| 
| |  | Unemployment was up and consumer confidence was down.             

Harleysville National Corporation (HNC) fortunately was able to buck the
trends, stay on course and finish among the best of our peers.





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The goal of Harleysville National Corporation is to provide Real Life
Financial SolutionsSMto families and businesses in Eastern Pennsylvania while
providing financial rewards to our shareholders.

|  |  |                                                
|- |  | -----------------------------------------------
| |  | Walter E. Daller, Jr.                          
|  |  | Chairman, President and Chief Executive Officer

HNCs Strong Financial Performance Continues

27 Years of Record Earnings


Net income for 2002 was $32,927,000, an increase of 14.3% over the
$28,820,000 earned in 2001, and a new earnings record. Diluted earnings per
share of $1.67 in 2002 increased 14.4% from $1.46 in 2001. Basic earnings per
share in 2002 were $1.72, up 14.7% compared to $1.50 in 2001. Fourth quarter
diluted earnings per share of $.42 increased from $.38 in the fourth quarter of
2001, a 10.5% rise. Basic earnings per share were $.43, up 10.3% from $.39 in
the fourth quarter of 2001.

Our Return on Equity (ROE) for 2002 was 16.60%, compared to 15.82% in
2001. The ratio of overhead expense to average assets of 2.44% as of December
31, 2002, improved from 2.67% at December 31, 2001. The 2002 ratio was well
below our peer ratio of 3.06% at September 30, 2002. These ratios, critical
from a shareholders perspective, place us near the top of our class.

Stock Performance and Dividends

HNCs common stock closed at $26.53 at year-end 2002, up 18.3% over last
years closing price of $22.43. Because of our strong performance, a 5% stock
dividend was paid in September and a $.03 special cash dividend was paid in
December. Cash dividends for 2002 totaled $.71, a 14.5% increase from the $.62
per share paid in 2001.

By the end of 2002, HNC had purchased 569,107 shares in our ongoing stock
repurchase program. Since launching the stock repurchase program in late 2000,
we have purchased nearly 60% of the number of shares originally targeted.

Board Changes

Several changes on our Boards of Directors occurred during 2002.

Walter R. Bateman II, Chairman of the Board, President, and Chief Executive Officer of
Harleysville Group Inc. (insurance) was appointed to the boards of both
Harleysville National Corporation and Harleysville National Bank and Trust
Company.

Stephanie S. Mitchell, Corporate Secretary of R.C. Smith Industries, Inc.
and Corporate Secretary and Treasurer of Cole Candy & Tobacco Co., Inc., was
appointed to the board of HNC and Security National Bank.

(BAR CHART)

Gregg J. Wagner, Executive Vice President and Chief Financial Officer of
Harleysville National Bank and Trust Company was appointed to the
Board of
Directors of Security National Bank and also appointed Treasurer of HNC.
Mikkalya W. Murray, Executive Vice President and Chief Credit Officer of
Harleysville National Bank and Trust Company was appointed to the Board of
Directors of Citizens National Bank. I welcome Walter, Stephanie, Gregg and Mik
as Directors. They bring a wealth of experience in business and finance and I
look forward to working with each of them.

Thomas S. McCready retired in December. He had served on the Harleysville
National Corporation board since 1996 and on the Citizens National Bank board
since 1959, holding the position of Chairman for the last 17 years. We truly
appreciate the contributions he has made to our organization throughout his
years of service. Tom will continue as Director Emeritus on the HNC board.

We
regret to report that Walter F. Vilsmeier, Director Emeritus, who had served on
the HNC and HNB boards since 1987, passed away in November. During his career,
he formed several companies that auctioned construction equipment and belonged
to numerous organizations in Montgomery County. He was a good friend, a staunch
supporter of HNC, and will be missed and remembered for being a special person.

Low Interest Rates and a Challenging Economy

During 2002, the U.S. economy remained sluggish as accounting scandals, a
big drop in stock prices and the potential for war shook consumer and business
confidence. The Federal Reserve Bank reduced its target rate for overnight bank
loans by half a point on November 6th to 1.25 percent, the lowest level in over
40 years. Despite the magnitude of this latest reduction, and the many smaller
ones preceding it, we saw little demand for loans by year-end, except for
residential mortgage lending, refinancing and





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home equity loans, where all our banks showed marked increases. While our
company benefited from this activity, consumers certainly did also,
consolidating and refinancing with lower rates, shorter terms, and smaller
payments.

But, commercial and industrial loan demand remained soft in the
Philadelphia area, and nationally, as businesses were reluctant to spend on
capital goods or inventory accumulation. HNC was able to attain modest loan
growth of 1.3% as our people worked diligently through our decentralized
lending structure to quickly approve and process loans.

There is hope, however,
that the recent monetary policy actions of the Fed and the just announced
fiscal policy initiatives of President Bushs economic stimulus plan will be
enough to offset the general feeling that economic growth remains quite
fragile. On the other hand, the potential for a war with Iraq (and
a growing concern with North Korea), could result in higher energy costs
and impact an already gloomy consumer spending picture. One of the largest
concerns on consumers minds continues to be the weak labor market and the loss
of jobs it has meant for many.

During 2002, the instability of the markets
reminded many consumers just how attractive our Banks FDIC-insured deposits
can be. Even as banks offered low interest rates on deposits, we saw an influx
of new money as customers were looking for a safe haven in which to invest
their funds.

Loan Quality Improves

Overall, 2002 was not noted for growth in loan volumes, but fortunately,
HNC was able to improve on loan quality. The ratio of the allowance for loan
losses to nonperforming loans of 272.8% at December 31, 2002, increased from
187.9% last year. Nonperforming assets as a percentage of total assets at
December 31, 2002, improved also, decreasing to .27% from .40% at December 31,
2001. Our allowance for loan losses is well positioned to protect shareholders
equity against inherent credit risk.

Fueling Fee Income

We continue to look to the Investment Management and Trust Division to
grow fee income. This division posted very modest growth in asset management
and trust revenues as a result of a decline in the market value of assets.
There was, however, stronger demand for fixed annuity products provided by the
retail investment group of this division, which was formed two years ago.

The Investment Management and Trust Division expanded during 2002 with the
launch of two new initiatives to support our efforts to grow fee income. In
June, Harleysville Wealth Management was formed serving the greater Lehigh
Valley region as both a division of Harleysville National Bank and Trust
Company and an affiliate of Citizens National Bank. Two managing directors,
already established in the Lehigh Valley area, were hired to provide a complete
menu of investment management solutions to individuals and businesses in that
region. Also added during 2002 was a new financial planning service that
delivers comprehensive and objective financial, estate, tax and retirement
planning for individuals and business owners with complex needs.

Building a Sales Culture Throughout HNC

We recognize that we compete in one of the richest market areas in
Pennsylvania. New businesses, housing developments, and yes, bank branches are
sprouting up throughout our market area.

In January 2002, HNC created a new
position of Retail Sales Director to focus our
company on the need to sharpen our sales skills to continue to thrive in
this rapidly changing environment. We believe that each employee can make a
difference in the continued success of our company by effectively selling more
products and services to the businesses and households in our communities. A
commitment to ongoing training and programs that measure and reward results,
supported by strategic marketing and product development, will bring about the
enhanced value we want to provide for our customers. We have already begun to
see results with increased referrals to our Investment Management and Trust
Division, including ICBA Financial Services.

Technology is integral to the
success of our sales culture. In December, each HNC bank installed new loan
processing software, and a deposit module will be added during mid-2003.
Enhanced automation and streamlined paperwork give our staff more time to
discover other financial needs of our clients, and Real Life Financial
SolutionsSM to meet them. With our historical reputation for great customer
service, we are sure it will bring solid results.

Providing Real Life Financial Solutions and Shareholder Value

Our goal is to provide Real Life Financial SolutionsSM to families and
businesses in Eastern Pennsylvania while providing financial rewards to our
shareholders. As always, we deeply appreciate your investment in Harleysville
National Corporation. We also appreciate the dedication of the more than 700
employees of HNC. Their commitment to our customers, to our banks, and our
shareholders is vital to Harleysville National Corporation continuing its
growth and prosperity well into the future.

(-s- WALTER E. DALLER, JR.)

Walter E. Daller, Jr.
Chairman, President and Chief Executive Officer





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(MAP OF SERVICE AREA)

CORPORATE DIRECTORY

|                       |  |                                                                                                                                                     
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|The Board of Directors |  | Executive Officers                                                                                                                                  
|Walter E. Daller, Jr.  |  | Walter E. Daller, Jr.                                                                                                                               
|Chairman               |  | Chairman, President and Chief Executive Officer of Harleysville National
Corporation; Chairman of Harleysville National Bank and Trust Company      
|William M. Yocum       |  | D. M. Takes                                                                                                                                         
|Harold A. Herr         |  | Vice President of Harleysville National Corporation; President and
Chief Executive Officer of Harleysville National Bank and Trust Company          
|Palmer E. Retzlaff     |  | Fred C. Reim, Jr.                                                                                                                                   
|Henry M. Pollak        |  | President and Chief Executive Officer of Security National Bank                                                                                     
|LeeAnn Bergey          |  | Thomas D. Oleksa                                                                                                                                    
|                       |  | President and Chief Executive Officer of Citizens National Bank                                                                                     
|James A. Wimmer        |  | Gregg J. Wagner                                                                                                                                     
|Walter R. Bateman, II  |  | Treasurer of Harleysville National Corporation; Executive Vice President
and Chief Financial Officer of Harleysville National Bank and Trust Company
|Stephanie S. Mitchell  |  | Mikkalya W. Murray                                                                                                                                  
|Thomas S. McCready     |  | Executive Vice President and Chief Credit Officer of Harleysville National
Bank and Trust Company                                                   
|Director Emeritus      |  | Jo Ann M. Bynon                                                                                                                                     
|                       |  | Secretary of Harleysville National Corporation; Secretary and Vice
President of Harleysville National Bank and Trust Company                        





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| |                              |                                 
| | ---------------------------- | --------------------------------
| | (HARLEYSVILLE NATIONAL LOGO)
| |                              | Harleysville NationalCorporation
| |                              | 483 Main Street                 
| |                              | PO Box 195                      
| |                              | Harleysville, PA 19438          
| |                              |                                 
| |                              | Shareholder Services            
| |                              | (800) 423-3955                  
| |                              |                                 
| |                              | www.hncbank.com                 

|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Corporate Information                                                                                                                                                                            |  | NASDAQ Market Makers                                                                                                                                                                                                                                                                                                                |  | Stock Listing                                                                                                                                                                                                                                              
|Copies of the Corporations
Annual Report to the
Securities and Exchange
Commission (Form 10-K)
are available, without charge
to shareholders, by going
online to www.hncbank.com
or by writing: |  | As of December 31, 2002,
the following firms made a
market in the Corporations
common stock:                                                                                                                                                                                                                                       |  | Harleysville National
Corporation common stock
is traded over-the-counter
under the symbol HNBC.
The stock is commonly
quoted under NASDAQ
National Market Systems.
At the close of business on
December 31, 2002, there
were 3,289 shareholders
of record.
|Jo Ann M. Bynon
     Corporate Secretary
     483 Main Street
     PO Box 195
     Harleysville, PA 19438                                                                                        |  | Janney Montgomery LLC
     Ferris, Baker, Watts, Inc.
     Legg Mason Wood Walker, Inc.
     Ryan Beck & Co., Inc.
     Boenning & Scattergood, Inc.                                                                                                                                                                                |  |                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                            
|Annual Meeting                                                                                                                                                                                   |  | Dividend Reinvestment Plan                                                                                                                                                                                                                                                                                                          |  | Auditors                                                                                                                                                                                                                                                   
|The 2003 Annual Meeting of
Shareholders of Harleysville
National Corporation will
be held at Presidential
Caterers, Norristown, PA on
April 8, 2003, at 9:30 A.M.                                |  | The Corporation has a
Dividend Reinvestment and
Stock Purchase Plan.
Interested shareholders can
obtain more information or
register for this service by
contacting American Stock
Transfer & Trust Company
at (800) 278-4353.                                                                                                      |  | Grant Thornton LLP
Two Commerce Square
2001 Market Street
Suite 3100
Philadelphia, PA 19103
(215) 561-4200                                                                                                                                                 
|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  | Registrar/Transfer Agent                                                                                                                                                                                                                                   
|                                                                                                                                                                                                 |  | Shareholders not participating
in the Dividend Reinvestment
Plan may opt to have their
dividends deposited directly
into their checking or savings
account at any financial
institution participating in the
Automated Clearing House
(ACH) System. To register,
contact American Stock
Transfer & Trust Company
at (800) 937-5449. |  | American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
(800) 937-5449                                                                                                                                                                   
|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  | Design                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                     |  | Paskill & Stapleton, Inc.                                                                                                                                                                                                                                  





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(HARLEYSVILLE NATIONAL LOGO)

HARLEYSVILLE NATIONAL CORPORATION
        AND ITS WHOLLY OWNED SUBSIDIARIES

www.hncbank.com