**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**Form      10-Q**

**Quarterly      Report      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**

**for      the quarterly period ended September 30, 2007**

**Or**

**Transition      Report      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**

**HARLEYSVILLE      NATIONAL CORPORATION**

| **Pennsylvania**                                                                                    |   | **23-2210237**                                                         |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
| **(State                or other jurisdiction****of                incorporation or organization)** |   | **(IRS                Employer****Identification                No.)** |

**483      Main Street**

**Harleysville,      Pennsylvania  19438**

**(Address      of principal executive office and zip code)**

**(215)      256-8851**

**(Registrant’s      telephone number, including area code)**

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| **HARLEYSVILLE                NATIONAL CORPORATION**                                                                                                                                                                         |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                                                         |     |
|                                                                                                                                                                                                                         |     |
| **INDEX                TO FORM 10-Q REPORT**                                                                                                                                                                                 |     |
|                                                                                                                                                                                                                         |     |
|                                                                                                                                                                                                                         | PAGE     |
|                                                                                                                                                                                                                         |     |
| Part                I.  Financial Information                                                                                                                                                                      |     |
|                                                                                                                                                                                                                         |     |
|      Item                1. Financial Statements:                                                                                                                                                   |     |
|                                                                                                                                                                                                                         |     |
|            Consolidated                Balance Sheets at September 30, 2007 (unaudited) and December 31,                2006                                          |  3  |
|                                                                                                                                                                                                                         |     |
|            Consolidated                Statements of Income for the Three and Nine Months Ended September                30,                2007 and 2006 (unaudited) |  4  |
|                                                                                                                                                                                                                         |     |
|            Consolidated                Statements of Shareholders’ Equity for the Nine Months Ended September 30,                2007 and 2006 (unaudited)      |  5  |
|                                                                                                                                                                                                                         |     |
|            Consolidated                Statements of Cash Flows for the Nine Months Ended September, 2007                and                2006 (unaudited)          |  6  |
|                                                                                                                                                                                                                         |     |
|            Notes                to Consolidated Financial Statements                                                                                                  |  7  |
|                                                                                                                                                                                                                         |     |
|      Item                2.  Management's Discussion and Analysis of Financial Condition                and Results of Operations                                                         |  17 |
|                                                                                                                                                                                                                         |     |
|      Item                3. Quantitative and Qualitative Disclosures about Market                Risk                                                                                               |  31 |
|                                                                                                                                                                                                                         |     |
|      Item                4. Controls and Procedures                                                                                                                                                 |  32 |
|                                                                                                                                                                                                                         |     |
| Part                II.  Other Information                                                                                                                                                                         |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                1.  Legal Proceedings                                                                                                                                            |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                1A.  Risk Factors                                                                                                                                                |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                2.  Unregistered Sales of Equity Securities and Use of                Proceeds                                                                                   |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                3.  Defaults Upon Senior Securities                                                                                                                              |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                4. Submission of Matters to a Vote of Security Holders                                                                                                                     |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                5. Other Information                                                                                                                                                       |  33 |
|                                                                                                                                                                                                                         |     |
|      Item                6.  Exhibits                                                                                                                                                     |  33 |
|                                                                                                                                                                                                                         |     |
| Signatures                                                                                                                                                                                                                   |  34 |

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| PART                1. FINANCIAL INFORMATION                                                                                                  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| HARLEYSVILLE                NATIONAL CORPORATION AND SUBSIDIARIES                                                                                  |   |
| CONSOLIDATED                BALANCE SHEETS                                                                                                         |   |
|                                                                                                                                               |   |
| (Dollars                in thousands)                                                                                                              |   | September                30, 2007 |   |   | December                31, 2006 |   |
|                                                                                                                                               |   | (Unaudited) |   |   |   |   |
| **Assets**                                                                                                                                         |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                             |   | $ | 60,952 |   |   | $ | 61,895 |   |
| Federal                funds sold and securities purchased under agreements to                resell                                               |   |   | 89,300 |   |   |   | 59,000 |   |
| Interest-bearing                deposits in banks                                                                                                  |   |   | 28,816 |   |   |   | 3,975 |   |
|     Total                cash and cash equivalents                                                                             |   |   | 179,068 |   |   |   | 124,870 |   |
| Residential                mortgage loans held for sale                                                                                            |   |   | 1,933 |   |   |   | 1,857 |   |
| Investment                securities available for sale                                                                                            |   |   | 870,254 |   |   |   | 853,010 |   |
| Investment                securities held to maturity (market value $58,931                and $59,297,                respectively)               |   |   | 58,849 |   |   |   | 58,879 |   |
| Loans                and leases                                                                                                                    |   |   | 2,093,867 |   |   |   | 2,045,498 |   |
| Less:                Allowance for loan losses                                                                                                     |   |   | (22,622 | ) |   |   | (21,154 | ) |
|              Net                loans                                             |   |   | 2,071,245 |   |   |   | 2,024,344 |   |
| Premises                and equipment, net                                                                                                         |   |   | 40,345 |   |   |   | 33,785 |   |
| Accrued                interest receivable                                                                                                         |   |   | 15,717 |   |   |   | 14,950 |   |
| Goodwill                                                                                                                                           |   |   | 45,081 |   |   |   | 43,956 |   |
| Intangible                assets, net                                                                                                              |   |   | 7,156 |   |   |   | 7,282 |   |
| Bank-owned                life insurance                                                                                                           |   |   | 63,553 |   |   |   | 61,720 |   |
| Other                assets                                                                                                                        |   |   | 27,318 |   |   |   | 25,175 |   |
|          Total                assets                                                                  |   | $ | 3,380,519 |   |   | $ | 3,249,828 |   |
| **Liabilities                and Shareholders' Equity**                                                                                            |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                          |   |   |   |   |   |   |   |   |
|    Noninterest-bearing                                                                                                              |   | $ | 309,489 |   |   | $ | 327,973 |   |
|    Interest-bearing:                                                                                                                |   |   |   |   |   |   |   |   |
|      Checking                                                                                                             |   |   | 494,653 |   |   |   | 539,974 |   |
|      Money                market                                                                                          |   |   | 727,486 |   |   |   | 662,966 |   |
|      Savings                                                                                                              |   |   | 106,890 |   |   |   | 133,370 |   |
|      Time                deposits                                                                                         |   |   | 905,822 |   |   |   | 852,572 |   |
|           Total                deposits                                                          |   |   | 2,544,340 |   |   |   | 2,516,855 |   |
| Federal                funds purchased and short-term securities sold under agreements                to                 repurchase           |   |   | 115,828 |   |   |   | 96,840 |   |
| Other                short-term borrowings                                                                                                         |   |   | 1,906 |   |   |   | 1,357 |   |
| Long-term                borrowings                                                                                                                |   |   | 309,750 |   |   |   | 239,750 |   |
| Accrued                interest payable                                                                                                            |   |   | 21,947 |   |   |   | 31,358 |   |
| Subordinated                debt                                                                                                                   |   |   | 74,744 |   |   |   | 51,548 |   |
| Other                liabilities                                                                                                                   |   |   | 17,610 |   |   |   | 17,369 |   |
|           Total                liabilities                                                       |   |   | 3,086,125 |   |   |   | 2,955,077 |   |
| Shareholders'                Equity:                                                                                                               |   |   |   |   |   |   |   |   |
|     Series                preferred stock,  par value $1 per share;                                                  |   |   |   |   |   |   |   |   |
|        Authorized                8,000,000 shares, none issued                                                  |   |   | — |   |   |   | — |   |
|     Common                stock, par value $1 per share; authorized 75,000,000                shares,                          |   |   |   |   |   |   |   |   |
|         issued                29,074,250 shares at September 30, 2007 and December 31,                2006 |   |   | 29,074 |   |   |   | 29,074 |   |
|     Additional                paid in capital                                                                                  |   |   | 194,647 |   |   |   | 194,713 |   |
|     Retained                earnings                                                                                           |   |   | 82,393 |   |   |   | 79,339 |   |
|     Accumulated                other comprehensive loss                                                                        |   |   | (8,317 | ) |   |   | (6,103 | ) |
|     Treasury                stock, at cost: 193,413 shares at September 30, 2007 and                                           |   |   |   |   |   |   |   |   |
|        109,767                shares at December 31, 2006                                                       |   |   | (3,403 | ) |   |   | (2,272 | ) |
|           Total                shareholders' equity                                              |   |   | 294,394 |   |   |   | 294,751 |   |
|           Total                liabilities and shareholders' equity                              |   | $ | 3,380,519 |   |   | $ | 3,249,828 |   |

----

| HARLEYSVILLE                NATIONAL CORPORATION AND SUBSIDIARIES                                               |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED                STATEMENTS OF INCOME(Unaudited)                                                     |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | Three                Months Ended |   |   | Nine                Months Ended |   |
|                                                                                                            |   | September                30, |   |   | September                30, |   |
|  (Dollars                in thousands, except per share information)                                       |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                            |   |   |   |   |   |   |
| **Interest                Income:**                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                and leases, including fees                                                                 |   | $ | 36,853 |   |   | $ | 34,553 |   |   | $ | 106,941 |   |   | $ | 99,519 |   |
| Investment                securities:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Taxable                                                                                             |   |   | 8,769 |   |   |   | 7,538 |   |   |   | 25,821 |   |   |   | 22,412 |   |
|   Exempt                from federal taxes                                                            |   |   | 2,739 |   |   |   | 2,643 |   |   |   | 8,113 |   |   |   | 7,842 |   |
| Federal                funds sold and securities purchased under agreements to                resell            |   |   | 557 |   |   |   | 1,182 |   |   |   | 2,325 |   |   |   | 2,363 |   |
| Deposits                in banks                                                                                |   |   | 104 |   |   |   | 45 |   |   |   | 228 |   |   |   | 144 |   |
|      Total                interest income                                              |   |   | 49,022 |   |   |   | 45,961 |   |   |   | 143,428 |   |   |   | 132,280 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                Expense:**                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                and money market deposits                                                                |   |   | 12,276 |   |   |   | 10,630 |   |   |   | 37,212 |   |   |   | 27,061 |   |
| Time                deposits                                                                                    |   |   | 9,652 |   |   |   | 9,732 |   |   |   | 28,670 |   |   |   | 26,341 |   |
| Short-term                borrowings                                                                            |   |   | 1,735 |   |   |   | 1,385 |   |   |   | 4,288 |   |   |   | 3,889 |   |
| Long-term                borrowings                                                                             |   |   | 4,495 |   |   |   | 3,600 |   |   |   | 12,402 |   |   |   | 11,628 |   |
|      Total                interest expense                                             |   |   | 28,158 |   |   |   | 25,347 |   |   |   | 82,572 |   |   |   | 68,919 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income                                                                              |   |   | 20,864 |   |   |   | 20,614 |   |   |   | 60,856 |   |   |   | 63,361 |   |
| Provision                for loan losses                                                                        |   |   | 2,525 |   |   |   | 900 |   |   |   | 6,075 |   |   |   | 3,000 |   |
| Net                interest income after provision for loan losses                                              |   |   | 18,339 |   |   |   | 19,714 |   |   |   | 54,781 |   |   |   | 60,361 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                Income:**                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges                                                                                  |   |   | 2,460 |   |   |   | 2,092 |   |   |   | 6,820 |   |   |   | 6,008 |   |
| (Loss)/gain                on sales of investment securities, net                                               |   |   | (58 | ) |   |   | — |   |   |   | 475 |   |   |   | — |   |
| Gain                on sale of credit card portfolio                                                            |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,444 |   |
| Wealth                management                                                                                |   |   | 4,525 |   |   |   | 3,372 |   |   |   | 13,623 |   |   |   | 11,314 |   |
| Bank-owned                life insurance                                                                        |   |   | 648 |   |   |   | 591 |   |   |   | 1,833 |   |   |   | 1,792 |   |
| Other                income                                                                                     |   |   | 2,190 |   |   |   | 2,231 |   |   |   | 6,416 |   |   |   | 6,584 |   |
|      Total                noninterest income                                           |   |   | 9,765 |   |   |   | 8,286 |   |   |   | 29,167 |   |   |   | 27,142 |   |
|      Net                interest income after provision for loan losses and            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              noninterest                income |   |   | 28,104 |   |   |   | 28,000 |   |   |   | 83,948 |   |   |   | 87,503 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                Expense:**                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                wages and employee benefits                                                            |   |   | 11,735 |   |   |   | 11,487 |   |   |   | 35,782 |   |   |   | 32,860 |   |
| Occupancy                                                                                                       |   |   | 1,731 |   |   |   | 1,379 |   |   |   | 4,965 |   |   |   | 4,278 |   |
| Furniture                and equipment                                                                          |   |   | 897 |   |   |   | 917 |   |   |   | 2,890 |   |   |   | 2,708 |   |
| Marketing                                                                                                       |   |   | 466 |   |   |   | 493 |   |   |   | 1,282 |   |   |   | 1,422 |   |
| Other                expense                                                                                    |   |   | 4,027 |   |   |   | 3,284 |   |   |   | 12,857 |   |   |   | 11,095 |   |
|      Total                noninterest expense                                          |   |   | 18,856 |   |   |   | 17,560 |   |   |   | 57,776 |   |   |   | 52,363 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                before income tax expense                                                                 |   |   | 9,248 |   |   |   | 10,440 |   |   |   | 26,172 |   |   |   | 35,140 |   |
| Income                tax expense                                                                               |   |   | 2,047 |   |   |   | 2,533 |   |   |   | 5,758 |   |   |   | 8,997 |   |
| Net                income                                                                                       |   | $ | 7,201 |   |   | $ | 7,907 |   |   | $ | 20,414 |   |   | $ | 26,143 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per share information:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                                                                                   |   | $ | 0.25 |   |   | $ | 0.27 |   |   | $ | 0.71 |   |   | $ | 0.90 |   |
|     Diluted                                                                                 |   | $ | 0.25 |   |   | $ | 0.27 |   |   | $ | 0.70 |   |   | $ | 0.89 |   |
| Cash                dividends per share                                                                         |   | $ | 0.20 |   |   | $ | 0.19 |   |   | $ | 0.60 |   |   | $ | 0.55 |   |
| Weighted                average number of common shares:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                                                                                   |   |   | 28,881,006 |   |   |   | 29,011,903 |   |   |   | 28,930,073 |   |   |   | 28,940,119 |   |
|     Diluted                                                                                 |   |   | 29,107,274 |   |   |   | 29,384,310 |   |   |   | 29,183,811 |   |   |   | 29,373,646 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Nine                  Months Ended September 30, 2007                                                          |   |
|----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   | Common                  Stock |   |   | Treasury                  Stock |   |   |   |   |   | Additional |   |   |   |   |   | AccumulatedOther |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   | Number                  of |   |   | Number                  of |   |   | Par |   |   | Paid |   |   | Retained |   |   | Comprehensive |   |   | Treasury |   |   |   |   |   | Comprehensive |   |
|                                                                                                           |   | Shares |   |   | Shares |   |   | Value |   |   | In                  Capital |   |   | Earnings |   |   | Loss |   |   | Stock |   |   | Total |   |   | Income                  (Loss) |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  January 1, 2007                                                                      |   |   | 29,074 |   |   |   | (109 | ) |   | $ | 29,074 |   |   | $ | 194,713 |   |   | $ | 79,339 |   |   | $ | (6,103 | ) |   | $ | (2,272 | ) |   | $ | 294,751 |   |   |   |   |
| Issuance                  of stock for stock options, net of tax and excess tax                  benefits |   |   | - |   |   |   | 57 |   |   |   | - |   |   |   | (266 | ) |   |   | - |   |   |   | - |   |   |   | 1,060 |   |   |   | 794 |   |   |   |   |
| Issuance                  of stock awards                                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | 4 |   |   |   |   |
| Stock                  based compensation expense                                                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 201 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 201 |   |   |   |   |
| Net                  income                                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 20,414 |   |   |   | - |   |   |   | - |   |   |   | 20,414 |   |   | $ | 20,414 |   |
| Other                  comprehensive loss, net of reclassifications and tax                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,214 | ) |   |   | - |   |   |   | (2,214 | ) |   |   | (2,214 | ) |
| Purchase                  of treasury stock                                                                    |   |   | - |   |   |   | (141 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,196 | ) |   |   | (2,196 | ) |   |   |   |   |
| Cash                  dividends                                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (17,360 | ) |   |   | - |   |   |   | - |   |   |   | (17,360 | ) |   |   |   |   |
| Comprehensive                  income                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 18,200 |   |
| Balance,                  September 30, 2007                                                                   |   |   | 29,074 |   |   |   | (193 | ) |   | $ | 29,074 |   |   | $ | 194,647 |   |   | $ | 82,393 |   |   | $ | (8,317 | ) |   | $ | (3,403 | ) |   | $ | 294,394 |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Nine                Months Ended September 30, 2006                                           |   |
|-----------------------------------------------------------------------------------------------|--------|
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   | Common                Stock |   |   | Treasury                Stock |   |   |   |   |   | Additional |   |   |   |   |   | AccumulatedOther |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   | Number                of |   |   | Number                of |   |   | Par |   |   | Paid |   |   | Retained |   |   | Comprehensive |   |   | Treasury |   |   |   |   |   | Comprehensive |   |
|                                                                                          |   | Shares |   |   | Shares |   |   | Value |   |   | In                Capital |   |   | Earnings |   |   | Income                (Loss) |   |   | Stock |   |   | Total |   |   | Income |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                January 1, 2006                                                       |   |   | 27,500 |   |   |   | (64 | ) |   | $ | 27,500 |   |   | $ | 167,418 |   |   | $ | 88,285 |   |   | $ | (8,618 | ) |   | $ | (1,353 | ) |   | $ | 273,232 |   |   |   |   |
| Issuance                of stock for stock options, net of                excess tax benefits |   |   | 192 |   |   |   | 193 |   |   |   | 192 |   |   |   | 1,862 |   |   |   | - |   |   |   | - |   |   |   | 4,020 |   |   |   | 6,074 |   |   |   |   |
| Issuance                of stock awards                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   |   |
| Stock                based compensation expense                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 345 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 345 |   |   |   |   |
| Stock                dividend                                                                 |   |   | 1,382 |   |   |   |   |   |   |   | 1,382 |   |   |   | 25,188 |   |   |   | (26,582 | ) |   |   |   |   |   |   |   |   |   |   | (12 | ) |   |   |   |
| Net                income                                                                     |   |   | -- |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,143 |   |   |   | - |   |   |   | - |   |   |   | 26,143 |   |   | $ | 26,143 |   |
| Other                comprehensive income, net of reclassifications and tax                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,318 |   |   |   | - |   |   |   | 1,318 |   |   |   | 1,318 |   |
| Purchases                of treasury stock                                                    |   |   | - |   |   |   | (219 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (4,514 | ) |   |   | (4,514 | ) |   |   |   |   |
| Cash                dividends                                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (15,986 | ) |   |   | - |   |   |   | - |   |   |   | (15,986 | ) |   |   |   |   |
| Comprehensive                income                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 27,461 |   |
| Balance,                September 30, 2006                                                    |   |   | 29,074 |   |   |   | (90 | ) |   | $ | 29,074 |   |   | $ | 194,818 |   |   | $ | 71,860 |   |   | $ | (7,300 | ) |   | $ | (1,847 | ) |   | $ | 286,605 |   |   |   |   |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to consolidated financial statements.                   |   |

----

| HARLEYSVILLE                NATIONAL CORPORATION AND SUBSIDIARIES                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED                STATEMENTS OF CASH FLOWS                                                                                        |   |
| (Unaudited)                                                                                                                                 |   |
|                                                                                                                                        |   | Nine                Months Ended |   |
| (Dollars                in thousands)                                                                                                       |   | September                30, |   |
|                                                                                                                                        |   | 2007 |   |   | 2006 |   |
| **Operating                Activities:**                                                                                                    |   |   |   |   |   |   |
|   Net                income                                                                                                       |   | $ | 20,414 |   |   | $ | 26,143 |   |
|   Adjustments                to reconcile net income to net cash provided by operating                activities:                 |   |   |   |   |   |   |   |   |
|     Provision                for loan losses                                                                            |   |   | 6,075 |   |   |   | 3,000 |   |
|     Depreciation                and amortization                                                                        |   |   | 3,728 |   |   |   | 3,324 |   |
|     Net                amortization of investment securities discounts/premiums                                         |   |   | 1,394 |   |   |   | 2,711 |   |
|     Deferred                income tax benefit                                                                          |   |   | (1,513 | ) |   |   | (2,120 | ) |
|    Gain                on sales of investment securities, net                                                                |   |   | (475 | ) |   |   | — |   |
|    Gain                on sale of credit card portfolio                                                                      |   |   | — |   |   |   | (1,444 | ) |
|     Bank-owned                life insurance income                                                                     |   |   | (1,833 | ) |   |   | (1,792 | ) |
|     Stock                based compensation expense                                                                     |   |   | 201 |   |   |   | 345 |   |
|     Net                increase in accrued interest receivable                                                          |   |   | (767 | ) |   |   | (1,612 | ) |
|     Net                (decrease) increase in accrued interest payable                                                  |   |   | (9,411 | ) |   |   | 847 |   |
|     Net                decrease in other assets                                                                         |   |   | 1,339 |   |   |   | 372 |   |
|     Net                increase (decrease) in other liabilities                                                         |   |   | 1,263 |   |   |   | (3,631 | ) |
|     Other,                net                                                                                           |   |   | 5 |   |   |   | (88 | ) |
|        Net                cash provided by operating activities                                          |   |   | 20,420 |   |   |   | 26,055 |   |
| **Investing                Activities:**                                                                                                    |   |   |   |   |   |   |   |   |
|     Proceeds                from sales of investment securities available for sale                                      |   |   | 90,529 |   |   |   | — |   |
| Proceeds                from maturity or calls                of investment securities held to maturity                                     |   |   | — |   |   |   | 617 |   |
|     Proceeds                from maturity or calls of investment securities available for                sale           |   |   | 117,484 |   |   |   | 121,486 |   |
|     Purchases                of investment securities available for sale                                                |   |   | (228,941 | ) |   |   | (143,821 | ) |
|     Net                increase in loans                                                                                |   |   | (54,776 | ) |   |   | (65,693 | ) |
|     Net                cash paid due to acquisitions, net of cash acquired                                              |   |   | (2,500 | ) |   |   | (14,525 | ) |
| Net                proceeds from sale of credit                card portfolio                                                               |   |   | — |   |   |   | 16,705 |   |
|     Purchases                of premises and equipment                                                                  |   |   | (9,451 | ) |   |   | (8,241 | ) |
|     Proceeds                from sales of premises and equipment                                                        |   |   | 2 |   |   |   | 216 |   |
|     Proceeds                from sales of other real estate                                                             |   |   | 13 |   |   |   | 32 |   |
|        Net                cash used in investing activities                                              |   |   | (87,640 | ) |   |   | (93,224 | ) |
| **Financing                Activities:**                                                                                                    |   |   |   |   |   |   |   |   |
|   Net                increase in deposits                                                                                         |   |   | 27,485 |   |   |   | 262,789 |   |
|   Increase                in federal funds purchased and short-term securities sold under agreements                to repurchase |   |   | 18,988 |   |   |   | 24,968 |   |
|   Increase                (decrease) in other short-term borrowings                                                               |   |   | 549 |   |   |   | (314 | ) |
|   Advances                of long-term borrowings                                                                                 |   |   | 125,000 |   |   |   | 10,000 |   |
|   Repayments                of long-term borrowings                                                                               |   |   | (55,000 | ) |   |   | (68,000 | ) |
|   Proceeds                from subordinated debt issuance                                                                         |   |   | 23,196 |   |   |   | — |   |
|   Cash                dividends                                                                                                   |   |   | (17,360 | ) |   |   | (15,986 | ) |
|   Repurchase                of common stock                                                                                       |   |   | (2,196 | ) |   |   | (4,514 | ) |
|   Proceeds                from the exercise of stock options                                                                      |   |   | 753 |   |   |   | 5,032 |   |
|   Excess                tax benefits from stock based compensation                                                                |   |   | 3 |   |   |   | 867 |   |
|   Other,                net                                                                                                       |   |   | — |   |   |   | (12 | ) |
|     Net                cash provided by financing activities                                                            |   |   | 121,418 |   |   |   | 214,830 |   |
| Net                increase in cash and cash equivalents                                                                                    |   |   | 54,198 |   |   |   | 147,661 |   |
| Cash                and cash equivalents at beginning of period                                                                             |   |   | 124,870 |   |   |   | 95,211 |   |
| Cash                and cash equivalents at end of the period                                                                               |   | $ | 179,068 |   |   | $ | 242,872 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |   |
|   Cash                paid during the period for:                                                                                 |   |   |   |   |   |   |   |   |
|      Interest                                                                                                      |   | $ | 92,005 |   |   | $ | 68,137 |   |
|      Income                taxes                                                                                   |   | $ | 4,061 |   |   | $ | 12,184 |   |
|   Supplemental                disclosure of noncash investing and financing activities:                                           |   |   |   |   |   |   |   |   |
|      Transfer                of assets from loans to net assets in foreclosure                                     |   | $ | 51 |   |   | $ | 114 |   |
|                                                                                                                                        |   |
| See                accompanying notes to consolidated financial statements.                                                                 |   |   |   |   |   |   |   |   |

----

**HARLEYSVILLE      NATIONAL CORPORATION AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note      1**
**– Summary of Significant Accounting      Policies**

*Principles      of Consolidation and Basis of Presentation*

**Note      2 – Acquisitions/Disposition**

----

**Note      2 – Acquisitions/Disposition –Continued**

**Note      3 – Goodwill and Other Intangibles**

|                                          | **September 30,**                   |       | **December 31,**                       |
|-----------------------------------------------|------------------------------------------|------------|---------------------------------------------|
|                                          | **2007**                                 |       |  **2006**                         |
|                                          | **Gross                Carrying Amount** |       | **Accumulated                Amortization** |   |                **Gross                Carrying Amount** |   |   |                **Accumulated                Amortization** |   |
|                                          | **(Dollars in thousands)**     |
| Core                deposit intangibles       |                                     | **$**      | **1,929**                                   |   |   | **$** | **908** |   |   | **$** | **1,929** |   |   | **$** | **733** |   |
| Other                identifiable intangibles |                                     | ** ** | **4,288**                                   |   |   | ** ** | **806** |   |   | ** ** | **3,913** |   |   | ** ** | **448** |   |
| Total                                         |                                     | **$**      | **6,217**                                   |   |   | **$** | **1,714** |   |   | **$** | **5,842** |   |   | **$** | **1,181** |   |

**Note      4 – Trust Preferred Subordinated Debentures**

----

**Note      5 - Pension Plan**

| (Dollars                in thousands)             |   | Nine                Months Ended September 30, |   |
|---------------------------------------------------|--------|------------------------------------------------|--------|
|                                              |   | 2007                                           |   |   | 2006 |   |
| Net                periodic benefit cost          |   |                                           |   |   |   |   |
| Service                cost                       |   | $                                              | 875    |   |   | $ | 780 |   |
| Interest                cost                      |   |                                           | 512    |   |   |   | 491 |   |
| Expected                return on plan assets     |   |                                           | (450   | ) |   |   | (413 | ) |
| Amortization                of net actuarial loss |   |                                           | 57     |   |   |   | 88 |   |
| Net                periodic benefit expense       |   | $                                              | 994    |   |   | $ | 946 |   |

**Note      6 **
**Stock-Based Compensation**

** **

*pro      forma*

----

**Note      6 **
**Stock-Based Compensation **
**–Continued**

| **Options**                                        |   | **Shares** |      |   | **Weighted-Average                  Exercise Price** |   |   | **Weighted-Average                  Remaining Contractual Term**** (in                  years)** |   |   | **Aggregate**** Intrinsic                  Value****(in                  thousands)** |   |
|----------------------------------------------------|--------|------------|-----------|--------|------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------|--------|
| Outstanding                  at January 1, 2007    |   |       | 1,157,484 |   |                                                 | $      | 15.60  |                                                                                                  |   |   |                                                                                       |   |   |   |
| Granted                                            |   |       | 25,000    |   |                                                 |   | 14.49  |                                                                                                  |   |   |                                                                                       |   |   |   |
| Exercised                                          |   |       | (57,135   | )      |                                                 |   | 9.34   |                                                                                                  |   |   |                                                                                       |   |   |   |
| Forfeited                  (unvested)              |   |       | (7,264    | )      |                                                 |   | 22.27  |                                                                                                  |   |   |                                                                                       |   |   |   |
| Cancelled                  (vested)                |   |       | (7,315    | )      |                                                 |   | 24.98  |                                                                                                  |   |   |                                                                                       |   |   |   |
|                                               |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |
| Outstanding                  at September 30, 2007 |   |       | 1,110,770 |   |                                                 | $      | 15.79  |                                                                                                  |   |   | 4.82                                                                                       |   |   | $ | 3,744 |   |
|                                               |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |   |   |
| Exercisable                  at September 30, 2007 |   |       | 967,040   |   |                                                 | $      | 15.03  |                                                                                                  |   |   | 4.34                                                                                       |   |   | $ | 3,709 |   |
|                                               |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |   |   |

| **Nonvested                  Shares**            |   | **Shares** |    |   | **Weighted-Average****Grant-Date                  Fair Value** |   |
|--------------------------------------------------|--------|------------|---------|--------|----------------------------------------------------------------|--------|
|                                             |   |       |    |   |                                                           |   |
| Nonvested                  at January 1, 2007    |   |       | 131,610 |   |                                                           | $      | 6.15 |   |
|                                             |   |       |    |   |                                                           |   |   |   |
| Granted                                          |   |       | 25,000  |   |                                                           |   | 3.08 |   |
|                                             |   |       |    |   |                                                           |   |   |   |
| Vested                                           |   |       | (5,615  | )      |                                                           |   | 6.07 |   |
|                                             |   |       |    |   |                                                           |   |   |   |
| Forfeited                                        |   |       | (7,264  | )      |                                                           |   | 6.16 |   |
|                                             |   |       |    |   |                                                           |   |   |   |
| Nonvested                  at September 30, 2007 |   |       | 143,731 |   |                                                           | $      | 5.70 |   |

----

**Note      7 **
**Earnings Per Share**

|                                                                                                                           |   | Three                Months EndedSeptember                30,      |       |   Nine              Months EndedSeptember                30, |
|--------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------|
|                                                                                                                           |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |
| (Dollars                in thousands, except per share data)                                                                   |   | 2007                                                                                        |       |                                                                   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                           |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |
| **Basic                earnings per share**                                                                                    |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |
| Net                income available to common shareholders                                                                     |   | $                                                                                           | 7,201      |                                                                   |   | $ | 7,907 |   |   | $ | 20,414 |   |   | $ | 26,143 |   |
| Weighted                average common shares outstanding                                                                      |   |                                                                                        | 28,881,006 |                                                                   |   |   | 29,011,903 |   |   |   | 28,930,073 |   |   |   | 28,940,119 |   |
| Basic                earnings per share                                                                                        |   | $                                                                                           | .25        |                                                                   |   | $ | .27 |   |   | $ | .71 |   |   | $ | .90 |   |
|                                                                                                                           |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Diluted                earnings per share**                                                                                  |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                income available to common shareholders    and                assumed conversions |   | $                                                                                           | 7,201      |                                                                   |   | $ | 7,907 |   |   | $ | 20,414 |   |   | $ | 26,143 |   |
| Weighted                average common shares outstanding                                                                      |   |                                                                                        | 28,881,006 |                                                                   |   |   | 29,011,903 |   |   |   | 28,930,073 |   |   |   | 28,940,119 |   |
| Dilutive                potential common shares (1),                (2)                                                        |   |                                                                                        | 226,268    |                                                                   |   |   | 372,407 |   |   |   | 253,738 |   |   |   | 433,527 |   |
| Total                diluted weighted average common shares outstanding                                                        |   |                                                                                        | 29,107,274 |                                                                   |   |   | 29,384,310 |   |   |   | 29,183,811 |   |   |   | 29,373,646 |   |
|  Diluted                earnings per share                                                                                |   | $                                                                                           | .25        |                                                                   |   | $ | .27 |   |   | $ | .70 |   |   | $ | .89 |   |
|                                                                                                                           |   |                                                                                        |       |                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Includes                incremental shares from assumed conversions of stock                options. |
|-----------------|------------------------------------------------------------------------------------------------------|

| (2)   | Antidilutive                options have been excluded in the computation of diluted earnings                per                share because the options’ exercise prices were greater than the average                market price of the common stock. For the three months ended September                30,                2007 and 2006, there were 479,896 antidilutive options at an average                price                of $23.46 and 417,456 antidilutive options at an average price of                $24.50,                respectively. For the nine months ended September 30, 2007 and 2006,                there                were 465,425 antidilutive options at an average price of $23.66 and                417,456 antidilutive options at an average price of $24.50,                respectively. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note      8 – Comprehensive Income**

| Comprehensive                Income                                                                                   |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                  |   |   |   |   |   |   |   |   |   |
| (Dollars                in thousands)                                                                                 |   | Before                tax |   |   | Tax                Benefit |   |   | Net                of tax |   |
| Nine                months ended September 30, 2007                                                                   |   | Amount |   |   | (Expense) |   |   | Amount |   |
| Net                unrealized losses on available for sale securities:                                                |   |   |   |   |   |   |   |   |   |
|    Net                unrealized holding losses arising during period                                  |   | $ | (2,320 | ) |   | $ | 812 |   |   | $ | (1,508 | ) |
|    Less                reclassification adjustment for net gains realized in net                income |   |   | 475 |   |   |   | (166 | ) |   |   | 309 |   |
|    Net                unrealized losses                                                                |   |   | (2,795 | ) |   |   | 978 |   |   |   | (1,817 | ) |
|   Change                in fair value of derivatives used for cash flow hedges                              |   |   | (611 | ) |   |   | 214 |   |   |   | (397 | ) |
|   Other                comprehensive loss, net                                                              |   | $ | (3,406 | ) |   | $ | 1,192 |   |   | $ | (2,214 | ) |
|                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| (Dollars                in thousands)                                                                                 |   | Before                tax |   |   | Tax                Benefit |   |   | Net                of tax |   |
| Nine                months ended September 30, 2006                                                                   |   | Amount |   |   | (Expense) |   |   | Amount |   |
| Net                unrealized gains on available for sale securities:                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                unrealized holding gains arising during period                                   |   | $ | 2,035 |   |   | $ | (712 | ) |   | $ | 1,323 |   |
|    Less                reclassification adjustment for net gains realized in net                income |   |   | – |   |   |   | – |   |   |   | – |   |
|    Net                unrealized gains                                                                 |   |   | 2,035 |   |   |   | (712 | ) |   |   | 1,323 |   |
|    Change                in fair value of derivatives used for cash flow hedges                        |   |   | (144 | ) |   |   | 50 |   |   |   | (94 | ) |
|    Amortization                of unrealized loss on termination of cash flow hedge                    |   |   | 137 |   |   |   | (48 | ) |   |   | 89 |   |
|   Other                comprehensive income, net                                                            |   | $ | 2,028 |   |   | $ | (710 | ) |   | $ | 1,318 |   |

----

**Note      9 – Segment Information**

| **(Dollars                in thousands)**                  |   | **Community                Banking** |   |   | **Wealth Management** |   |   | **All                Other** |   |   | **Consolidated                Totals** |   |
|------------------------------------------------------------|--------|--------------------------------------|--------|--------|----------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------|--------|
| Three                Months Ended September 30, 2007       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |
|                                                       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |
| Net                interest income (expense)               |   | $                                    | 21,348 |   |                       | $      | 117    |                         |   | $      | (601                                   | )      |   | $ | 20,864 |   |
| Provision                for loan losses                   |   |                                 | 2,525  |   |                       |   | -      |                         |   |   | -                                      |   |   |   | 2,525 |   |
| Noninterest                income                          |   |                                 | 5,111  |   |                       |   | 4,530  |                         |   |   | 124                                    |   |   |   | 9,765 |   |
| Noninterest                expense                         |   |                                 | 14,960 |   |                       |   | 3,747  |                         |   |   | 149                                    |   |   |   | 18,856 |   |
| Income                (loss) before income taxes (benefit) |   |                                 | 8,974  |   |                       |   | 900    |                         |   |   | (626                                   | )      |   |   | 9,248 |   |
| Income                taxes (benefit)                      |   |                                 | 1,974  |   |                       |   | 332    |                         |   |   | (259                                   | )      |   |   | 2,047 |   |
| Net                income (loss)                           |   | $                                    | 7,000  |   |                       | $      | 568    |                         |   | $      | (367                                   | )      |   | $ | 7,201 |   |
|                                                       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
|                                                       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Three                Months Ended September 30, 2006       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
|                                                       |   |                                 |   |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Net                interest income (expense)               |   | $                                    | 21,060 |   |                       | $      | 118    |                         |   | $      | (564                                   | )      |   | $ | 20,614 |   |
| Provision                for loan losses                   |   |                                 | 900    |   |                       |   | -      |                         |   |   | -                                      |   |   |   | 900 |   |
| Noninterest                income                          |   |                                 | 4,738  |   |                       |   | 3,377  |                         |   |   | 171                                    |   |   |   | 8,286 |   |
| Noninterest                expense                         |   |                                 | 14,108 |   |                       |   | 3,141  |                         |   |   | 311                                    |   |   |   | 17,560 |   |
| Income                (loss) before income taxes (benefit) |   |                                 | 10,790 |   |                       |   | 354    |                         |   |   | (704                                   | )      |   |   | 10,440 |   |
| Income                taxes (benefit)                      |   |                                 | 2,698  |   |                       |   | 132    |                         |   |   | (297                                   | )      |   |   | 2,533 |   |
| Net                income (loss)                           |   | $                                    | 8,092  |   |                       | $      | 222    |                         |   | $      | (407                                   | )      |   | $ | 7,907 |   |

----

**Note      9 – Segment Information – Continued**

| **(Dollars                in thousands)**                  |   | **Community                Banking** |      |   | **Wealth Management** |   |   | **All                Other** |   |   | **Consolidated                Totals** |   |
|------------------------------------------------------------|--------|--------------------------------------|-----------|--------|----------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------|--------|
| Nine                Months Ended September 30, 2007        |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |
|                                                       |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |
| Net                interest income (expense)               |   | $                                    | 62,188    |   |                       | $      | 334    |                         |   | $      | (1,666                                 | )      |   | $ | 60,856 |   |
| Provision                for loan losses                   |   |                                 | 6,075     |   |                       |   | -      |                         |   |   | -                                      |   |   |   | 6,075 |   |
| Noninterest                income                          |   |                                 | 15,021    |   |                       |   | 13,631 |                         |   |   | 515                                    |   |   |   | 29,167 |   |
| Noninterest                expense                         |   |                                 | 46,005    |   |                       |   | 11,001 |                         |   |   | 770                                    |   |   |   | 57,776 |   |
| Income                (loss) before income taxes (benefit) |   |                                 | 25,129    |   |                       |   | 2,964  |                         |   |   | (1,921                                 | )      |   |   | 26,172 |   |
| Income                taxes (benefit)                      |   |                                 | 5,409     |   |                       |   | 1,154  |                         |   |   | (805                                   | )      |   |   | 5,758 |   |
| Net                income (loss)                           |   | $                                    | 19,720    |   |                       | $      | 1,810  |                         |   | $      | (1,116                                 | )      |   | $ | 20,414 |   |
|                                                       |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Assets                                                     |   | $                                    | 3,321,817 |   |                       | $      | 22,341 |                         |   | $      | 36,361                                 |   |   | $ | 3,380,519 |   |
|                                                       |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Nine                Months Ended September 30, 2006        |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
|                                                       |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Net                interest income (expense)               |   | $                                    | 64,495    |   |                       | $      | 383    |                         |   | $      | (1,517                                 | )      |   | $ | 63,361 |   |
| Provision                for loan losses                   |   |                                 | 3,000     |   |                       |   | -      |                         |   |   | -                                      |   |   |   | 3,000 |   |
| Noninterest                income                          |   |                                 | 15,208    |   |                       |   | 11,374 |                         |   |   | 560                                    |   |   |   | 27,142 |   |
| Noninterest                expense                         |   |                                 | 41,783    |   |                       |   | 9,691  |                         |   |   | 889                                    |   |   |   | 52,363 |   |
| Income                (loss) before income taxes (benefit) |   |                                 | 34,920    |   |                       |   | 2,066  |                         |   |   | (1,846                                 | )      |   |   | 35,140 |   |
| Income                taxes (benefit)                      |   |                                 | 8,899     |   |                       |   | 864    |                         |   |   | (766                                   | )      |   |   | 8,997 |   |
| Net                income (loss)                           |   | $                                    | 26,021    |   |                       | $      | 1,202  |                         |   | $      | (1,080                                 | )      |   | $ | 26,143 |   |
|                                                       |   |                                 |      |   |                       |   |   |                         |   |   |                                   |   |   |   |   |   |
| Assets                                                     |   | $                                    | 3,310,306 |   |                       | $      | 18,706 |                         |   | $      | 33,991                                 |   |   | $ | 3,363,003 |   |

**Note      10 – Financial Instruments with Off-Balance Sheet Risk**

|                **Commitments**                                                                                                     |   |  *Total                Amount Committed at* |    |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                (Dollars                in thousands)                                                                               |   | September                  30,2007               |    |   | December                31, 2006 |   |
|                                                                                                                                    |   |                                             |    |   |   |   |
| Financial                instruments whose contract amounts represent credit risk:                                                      |   |                                             |    |   |   |   |
| Commitments                to extend                credit                                                                              |   | $                                                | 748,254 |   |   | $ | 753,825 |   |
| Standby                letters of credit and                financial guarantees written                                                |   |                                             | 22,864  |   |   |   | 25,960 |   |
| Financial                instruments whose notional or contract amounts exceed the amount                of credit                risk: |   |                                             |    |   |   |   |   |   |
| Interest                rate swap                agreements                                                                             |   |                                             | 58,928  |   |   |   | 59,750 |   |
| Interest                rate cap                agreements                                                                              |   |                                             | 200,000 |   |   |   | — |   |

----

**Note      10 – Financial Instruments with Off-Balance Sheet Risk –Continued**

**Note      11 – Contingent Liabilities**

----

**Note      12 – Recent Accounting Pronouncements**

,“Accounting for Uncertainty      in Income Taxes – an interpretation of FASB      Statement No. 109.” FIN 48 clarifies the accounting and reporting for income      taxes where interpretation of the tax law may be uncertain.
 FIN 48 prescribes a      recognition threshold and measurement      attribute for the financial statement recognition and measurement of a tax      position taken or expected to be taken in a tax return. FIN 48 also provides      guidance on de-recognition, classification, interest and penalties, accounting      in interim periods, disclosure, and transition. FIN 48 applies to fiscal years      beginning after December 15, 2006. The Corporation adopted the provisions of      FIN      48 on January 1, 2007. As required by Interpretation 48, which clarifies      Statement 109, “Accounting for Income Taxes,” the Corporation recognizes the      financial statement benefit of a tax position only after determining that the      relevant tax authority would more likely than not sustain the position following      an audit. For tax positions meeting the more-likely-than-notthreshold, the      amount recognized in the financial statements is the largest benefit that has      a      greater than 50 percent likelihood of being realized upon settlement with the      relevant tax authority. At the adoption date, the Corporation applied FIN 48      to      all tax positions for which the statute of limitations remained open. The      Corporation has analyzed filing positions in all of the federal and state      jurisdictions where it is required to file income tax returns, as well as all      open tax years in these jurisdictions.

----

**Note      13 – Subsequent Event**

----

**Item      2.**

**MANAGEMENT'S      DISCUSSION AND ANALYSIS OF**

**RESULTS      OF OPERATIONS AND FINANCIAL CONDITION**

**Critical      Accounting Estimates**

----

**Financial      Overview**

----

**Results      of Operations**

**Net      Interest Income**

----

**Table      1—Analysis of Changes in Net Interest Income—Fully Taxable-Equivalent      Basis**

|                                                                    |   | Three                Months EndedSeptember                30, 2007 compared toSeptember                30, 2006 |   |   | Nine                Month EndedSeptember                30, 2007 compared toSeptember                30, 2006 |   |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                    |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Dollars                in thousands)                                   |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | Total                                                                                                           |   |   | Due                to change in:                                                                              |   |   | Total |   |   | Due                to change in: |   |
|                                                                    |   | Change                                                                                                          |   |   | Volume                                                                                                        |   |   | Rate |   |   | Change |   |   | Volume |   |   | Rate |   |
|                                                                    |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest income:                  |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities *                                  |   | $                                                                                                               | 1,343  |   |                                                                                                          | $      | 207 |   |   | $ | 1,136 |   |   | $ | 3,685 |   |   | $ | 393 |   |   | $ | 3,292 |   |
| Federal                funds sold and deposits in banks                 |   |                                                                                                            | (566   | )      |                                                                                                          |   | (417 | ) |   |   | (149 | ) |   |   | 46 |   |   |   | 14 |   |   |   | 32 |   |
| Loans                *                                                  |   |                                                                                                            | 2,271  |   |                                                                                                          |   | 1,118 |   |   |   | 1,153 |   |   |   | 7,375 |   |   |   | 3,243 |   |   |   | 4,132 |   |
| Total                                                                   |   |                                                                                                            | 3,048  |   |                                                                                                          |   | 908 |   |   |   | 2,140 |   |   |   | 11,106 |   |   |   | 3,650 |   |   |   | 7,456 |   |
|                                                                    |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest expense:                 |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Savings                and money market deposits            |   |                                                                                                            | 1,646  |   |                                                                                                          |   | 490 |   |   |   | 1,156 |   |   |   | 10,151 |   |   |   | 2,764 |   |   |   | 7,387 |   |
|   Time                deposits                                |   |                                                                                                            | (80    | )      |                                                                                                          |   | (889 | ) |   |   | 809 |   |   |   | 2,329 |   |   |   | (1,115 | ) |   |   | 3,444 |   |
|   Borrowed                funds                               |   |                                                                                                            | 1,245  |   |                                                                                                          |   | 1,140 |   |   |   | 105 |   |   |   | 1,173 |   |   |   | 450 |   |   |   | 723 |   |
|       Total                               |   |                                                                                                            | 2,811  |   |                                                                                                          |   | 741 |   |   |   | 2,070 |   |   |   | 13,653 |   |   |   | 2,099 |   |   |   | 11,554 |   |
|                                                                    |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                increase (decrease) in net interest income           |   | $                                                                                                               | 237    |   |                                                                                                          | $      | 167 |   |   | $ | 70 |   |   | $ | (2,547 | ) |   | $ | 1,551 |   |   | $ | (4,098 | ) |
|  *Tax                equivalent basis using a tax rate of 35%, net |   |                                                                                                            |   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Table      2—Average Balance Sheets and Interest Rates¾Fully      Taxable-Equivalent Basis**

| (Dollars                in thousands)                                                               |   | Three                Months Ended September 30, |      |   | Three                Months Ended September 30, |   |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|-------------------------------------------------|--------|
|                                                                                                |   | 2007                                            |      |   | 2006                                            |   |
|                                                                                                |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                |   | Average                                         |      |   |                                            |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| **Assets**                                                                                          |   | Balance                                         |      |   | Interest                                        |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Earning                assets:                                                                      |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Investment                securities:                                                   |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Taxable                investments                                                |   | $                                               | 669,051   |   |                                            | $      | 8,769 |   |   |   | 5.20 | % |   | $ | 661,976 |   |   | $ | 7,538 |   |   |   | 4.52 | % |
|    Nontaxable                investments (1)                                         |   |                                            | 264,621   |   |                                            |   | 4,004 |   |   |   | 6.00 |   |   |   | 255,127 |   |   |   | 3,892 |   |   |   | 6.05 |   |
|       Total                investment securities                      |   |                                            | 933,672   |   |                                            |   | 12,773 |   |   |   | 5.43 |   |   |   | 917,103 |   |   |   | 11,430 |   |   |   | 4.94 |   |
|   Federal                funds sold and deposits in banks                                 |   |                                            | 57,841    |   |                                            |   | 661 |   |   |   | 4.53 |   |   |   | 92,878 |   |   |   | 1,227 |   |   |   | 5.24 |   |
|   Loans                (1)                (2)                                             |   |                                            | 2,090,440 |   |                                            |   | 37,094 |   |   |   | 7.04 |   |   |   | 2,027,028 |   |   |   | 34,823 |   |   |   | 6.82 |   |
|        Total                earning assets                       |   |                                            | 3,081,953 |   |                                            |   | 50,528 |   |   |   | 6.50 |   |   |   | 3,037,009 |   |   |   | 47,480 |   |   |   | 6.20 |   |
| Noninterest-earning                assets                                                           |   |                                            | 227,563   |   |                                            |   |   |   |   |   |   |   |   |   | 216,607 |   |   |   |   |   |   |   |   |   |
|          Total                assets                   |   | $                                               | 3,309,516 |   |                                            |   |   |   |   |   |   |   |   | $ | 3,253,616 |   |   |   |   |   |   |   |   |   |
|                                                                                                |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                and Shareholders' Equity**                                             |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                        |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                deposits:                                               |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                and money market                                           |   | $                                               | 1,363,803 |   |                                            |   | 12,276 |   |   |   | 3.57 |   |   | $ | 1,305,618 |   |   |   | 10,630 |   |   |   | 3.23 |   |
|    Time                                                                              |   |                                            | 801,334   |   |                                            |   | 9,652 |   |   |   | 4.78 |   |   |   | 878,493 |   |   |   | 9,732 |   |   |   | 4.40 |   |
|     Total                interest-bearing deposits                              |   |                                            | 2,165,137 |   |                                            |   | 21,928 |   |   |   | 4.02 |   |   |   | 2,184,111 |   |   |   | 20,362 |   |   |   | 3.70 |   |
|   Borrowed                funds                                                           |   |                                            | 501,752   |   |                                            |   | 6,230 |   |   |   | 4.93 |   |   |   | 409,583 |   |   |   | 4,985 |   |   |   | 4.83 |   |
|      Total                interest bearing liabilities                     |   |                                            | 2,666,889 |   |                                            |   | 28,158 |   |   |   | 4.19 |   |   |   | 2,593,694 |   |   |   | 25,347 |   |   |   | 3.88 |   |
| Noninterest-bearing                liabilities:                                                     |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand                deposits                                                          |   |                                            | 312,123   |   |                                            |   |   |   |   |   |   |   |   |   | 334,847 |   |   |   |   |   |   |   |   |   |
|   Other                liabilities                                                        |   |                                            | 40,676    |   |                                            |   |   |   |   |   |   |   |   |   | 42,397 |   |   |   |   |   |   |   |   |   |
|     Total                noninterest-bearing liabilities                        |   |                                            | 352,799   |   |                                            |   |   |   |   |   |   |   |   |   | 377,244 |   |   |   |   |   |   |   |   |   |
|        Total                liabilities                          |   |                                            | 3,019,688 |   |                                            |   |   |   |   |   |   |   |   |   | 2,970,938 |   |   |   |   |   |   |   |   |   |
| Shareholders'                equity                                                                 |   |                                            | 289,828   |   |                                            |   |   |   |   |   |   |   |   |   | 282,678 |   |   |   |   |   |   |   |   |   |
|        Total                liabilities and shareholders' equity |   | $                                               | 3,309,516 |   |                                            |   |   |   |   |   |   |   |   | $ | 3,253,616 |   |   |   |   |   |   |   |   |   |
| Net                interest spread                                                                  |   |                                            |      |   |                                            |   |   |   |   |   | 2.31 |   |   |   |   |   |   |   |   |   |   |   | 2.32 |   |
| Effect                of noninterest-bearing sources                                                |   |                                            |      |   |                                            |   |   |   |   |   | 0.57 |   |   |   |   |   |   |   |   |   |   |   | 0.57 |   |
| Net                interest income/margin on earning assets                                         |   |                                            |      |   |                                            | $      | 22,370 |   |   |   | 2.88 | % |   |   |   |   |   | $ | 22,133 |   |   |   | 2.89 | % |
|                                                                                                |   |                                            |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                tax equivalent adjustment                                                       |   |                                            |      |   |                                            |   | 1,506 |   |   |   |   |   |   |   |   |   |   |   | 1,519 |   |   |   |   |   |
| Net                interest income                                                                  |   |                                            |      |   |                                            | $      | 20,864 |   |   |   |   |   |   |   |   |   |   | $ | 20,614 |   |   |   |   |   |

----

| (Dollars                in thousands)                                                               |   | Nine                Months Ended September 30, |      |   | Nine                Months Ended September 30, |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------|------------------------------------------------|--------|
|                                                                                                |   | 2007                                           |      |   | 2006                                           |   |
|                                                                                                |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                |   | Average                                        |      |   |                                           |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| **Assets**                                                                                          |   | Balance                                        |      |   | Interest                                       |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Earning                assets:                                                                      |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Investment                securities:                                                   |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Taxable                investments                                                |   | $                                              | 676,787   |   |                                           | $      | 25,821 |   |   |   | 5.10 | % |   | $ | 675,138 |   |   | $ | 22,412 |   |   |   | 4.44 | % |
|    Nontaxable                investments (1)                                         |   |                                           | 261,458   |   |                                           |   | 11,849 |   |   |   | 6.06 |   |   |   | 252,447 |   |   |   | 11,573 |   |   |   | 6.13 |   |
|       Total                investment securities                      |   |                                           | 938,245   |   |                                           |   | 37,670 |   |   |   | 5.37 |   |   |   | 927,585 |   |   |   | 33,985 |   |   |   | 4.90 |   |
|   Federal                funds sold and deposits in banks                                 |   |                                           | 67,548    |   |                                           |   | 2,553 |   |   |   | 5.05 |   |   |   | 67,181 |   |   |   | 2,507 |   |   |   | 4.99 |   |
|   Loans                (1)                (2)                                             |   |                                           | 2,070,931 |   |                                           |   | 107,708 |   |   |   | 6.95 |   |   |   | 2,007,650 |   |   |   | 100,333 |   |   |   | 6.68 |   |
|        Total                earning assets                       |   |                                           | 3,076,724 |   |                                           |   | 147,931 |   |   |   | 6.43 |   |   |   | 3,002,416 |   |   |   | 136,825 |   |   |   | 6.09 |   |
| Noninterest-earning                assets                                                           |   |                                           | 221,173   |   |                                           |   |   |   |   |   |   |   |   |   | 209,946 |   |   |   |   |   |   |   |   |   |
|          Total                assets                   |   | $                                              | 3,297,897 |   |                                           |   |   |   |   |   |   |   |   | $ | 3,212,362 |   |   |   |   |   |   |   |   |   |
|                                                                                                |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                and Shareholders' Equity**                                             |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                        |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                deposits:                                               |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                and money market                                           |   | $                                              | 1,385,133 |   |                                           |   | 37,212 |   |   |   | 3.59 |   |   | $ | 1,264,577 |   |   |   | 27,061 |   |   |   | 2.86 |   |
|    Time                                                                              |   |                                           | 806,638   |   |                                           |   | 28,670 |   |   |   | 4.75 |   |   |   | 841,242 |   |   |   | 26,341 |   |   |   | 4.19 |   |
|     Total                interest-bearing deposits                              |   |                                           | 2,191,771 |   |                                           |   | 65,882 |   |   |   | 4.02 |   |   |   | 2,105,819 |   |   |   | 53,402 |   |   |   | 3.39 |   |
|   Borrowed                funds                                                           |   |                                           | 458,523   |   |                                           |   | 16,690 |   |   |   | 4.87 |   |   |   | 445,688 |   |   |   | 15,517 |   |   |   | 4.65 |   |
|      Total                interest bearing liabilities                     |   |                                           | 2,650,294 |   |                                           |   | 82,572 |   |   |   | 4.17 |   |   |   | 2,551,507 |   |   |   | 68,919 |   |   |   | 3.61 |   |
| Noninterest-bearing                liabilities:                                                     |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand                deposits                                                          |   |                                           | 311,491   |   |                                           |   |   |   |   |   |   |   |   |   | 338,709 |   |   |   |   |   |   |   |   |   |
|   Other                liabilities                                                        |   |                                           | 43,915    |   |                                           |   |   |   |   |   |   |   |   |   | 42,918 |   |   |   |   |   |   |   |   |   |
|     Total                noninterest-bearing liabilities                        |   |                                           | 355,406   |   |                                           |   |   |   |   |   |   |   |   |   | 381,627 |   |   |   |   |   |   |   |   |   |
|        Total                liabilities                          |   |                                           | 3,005,700 |   |                                           |   |   |   |   |   |   |   |   |   | 2,933,134 |   |   |   |   |   |   |   |   |   |
| Shareholders'                equity                                                                 |   |                                           | 292,197   |   |                                           |   |   |   |   |   |   |   |   |   | 279,228 |   |   |   |   |   |   |   |   |   |
|        Total                liabilities and shareholders' equity |   | $                                              | 3,297,897 |   |                                           |   |   |   |   |   |   |   |   | $ | 3,212,362 |   |   |   |   |   |   |   |   |   |
| Net                interest spread                                                                  |   |                                           |      |   |                                           |   |   |   |   |   | 2.26 |   |   |   |   |   |   |   |   |   |   |   | 2.48 |   |
| Effect                of noninterest-bearing sources                                                |   |                                           |      |   |                                           |   |   |   |   |   | 0.58 |   |   |   |   |   |   |   |   |   |   |   | 0.54 |   |
| Net                interest income/margin on earning assets                                         |   |                                           |      |   |                                           | $      | 65,359 |   |   |   | 2.84 | % |   |   |   |   |   | $ | 67,906 |   |   |   | 3.02 | % |
|                                                                                                |   |                                           |      |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                tax equivalent adjustment                                                       |   |                                           |      |   |                                           |   | 4,503 |   |   |   |   |   |   |   |   |   |   |   | 4,545 |   |   |   |   |   |
| Net                interest income                                                                  |   |                                           |      |   |                                           | $      | 60,856 |   |   |   |   |   |   |   |   |   |   | $ | 63,361 |   |   |   |   |   |

| (1)   | The                interest earned on nontaxable investment securities and loans is                shown on                a tax equivalent basis, net of deductions (tax rate of                35%). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Nonaccrual                loans have been included in the appropriate average loan balance                category,                but interest on nonaccrual loans has not been included for purposes                of                determining interest income. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Net      Interest Margin**

**Interest      Rate Sensitivity Analysis**

----

**Table      3—Market Value of Equity**

|                                  |   |                        |    |   | Change                in    |   |    |       |   |   | Asset/Liability               |   |
|---------------------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|---------|------------|--------|--------|-------------------------------|--------|
|                                  |   | Market                Value |    |   | Market                Value |   |    | Percentage |   |   | Approved                      |   |
| (Dollars                in thousands) |   | of                Equity    |    |   | Of                Equity    |   |    | Change     |   |   | Percent                Change |   |
|                                  |   |                        |    |   |                        |   |    |       |   |   |                          |   |
| +300                Basis Points      |   | $                           | 385,843 |   |                        | $      | (95,415 | )          |   |   | -19.83                        | %      |   |   | +/-35 | % |
| +200                Basis Points      |   |                        | 418,445 |   |                        |   | (62,813 | )          |   |   | -13.05                        | %      |   |   | +/-                25 |   |
| +100                Basis Points      |   |                        | 451,359 |   |                        |   | (29,899 | )          |   |   | -6.21                         | %      |   |   | +/-                15 |   |
| Flat                Rate              |   |                        | 481,258 |   |                        |   | -       |       |   |   | 0.00                          | %      |   |   |   |   |
| -100                Basis Points      |   |                        | 487,681 |   |                        |   | 6,423   |       |   |   | 1.33                          | %      |   |   | +/-                15 |   |
| -200                Basis Points      |   |                        | 474,521 |   |                        |   | (6,737  | )          |   |   | -1.40                         | %      |   |   | +/-                25 |   |
| -300                Basis Points      |   |                        | 460,311 |   |                        |   | (20,947 | )          |   |   | -4.35                         | %      |   |   | +/-                35 |   |

**Provision      for Loan Losses**

----

----

**Table      4—Allowance for Loans Losses**

|                                                                                                                 |   | Nine                Months Ended |      |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-----------|
|                                                                                                                 |   | September                30,     |      |
| (Dollars                in thousands)                                                                                |   | 2007                             |      |   | 2006 |   |
|                                                                                                                 |   |                             |      |   |   |   |
| Average                loans                                                                                         |   | $                                | 2,070,931 |   |   | $ | 2,007,650 |   |
|                                                                                                                 |   |                             |      |   |   |   |   |   |
| Allowance,                beginning of period                                                                        |   |                             | 21,154    |   |   |   | 19,865 |   |
| Loans                charged off:                                                                                    |   |                             |      |   |   |   |   |   |
|        Real                estate                                                 |   |                             | 2,987     |   |   |   | 483 |   |
|        Commercial                and industrial                                   |   |                             | 819       |   |   |   | 469 |   |
|        Consumer                                                                   |   |                             | 1,178     |   |   |   | 1,253 |   |
|        Lease                financing                                             |   |                             | 51        |   |   |   | 18 |   |
|              Total                loans charged off |   |                             | 5,035     |   |   |   | 2,223 |   |
| Recoveries:                                                                                                          |   |                             |      |   |   |   |   |   |
|        Real                estate                                                 |   |                             | 67        |   |   |   | 114 |   |
|        Commercial                and industrial                                   |   |                             | 136       |   |   |   | 48 |   |
|        Consumer                                                                   |   |                             | 207       |   |   |   | 412 |   |
|        Lease                financing                                             |   |                             | 18        |   |   |   | 87 |   |
|              Total                recoveries        |   |                             | 428       |   |   |   | 661 |   |
| Net                loans charged off                                                                                 |   |                             | 4,607     |   |   |   | 1,562 |   |
| Provision                for loan losses                                                                             |   |                             | 6,075     |   |   |   | 3,000 |   |
| Allowance,                end of period                                                                              |   | $                                | 22,622    |   |   | $ | 21,303 |   |
| Ratio                of net charge offs to average                                                                   |   |                             |      |   |   |   |   |   |
|         loans                outstanding (annualized)                        |   |                             | 0.30      | % |   |   | 0.10 | % |
|                                                                                                                 |   |                             |      |   |   |   |   |   |

**Table      5—Allocation of the Allowance for Loan Losses by Loan Type**

----

|                                            |   | September                30, 2007 |   |   | December                31, 2006 |   |
|-------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|
|                                            |   |                              |   |   | Percent                of        |   |   |   |   |   | Percent                of |   |
| (Dollars                in thousands)           |   | Amount                            |   |   | Allowance                        |   |   | Amount |   |   | Allowance |   |
|                                            |   |                              |   |   |                             |   |   |   |   |   |   |   |
| Real                estate                      |   | $                                 | 9,298  |   |                             |   | 41 | % |   | $ | 7,918 |   |   |   | 38 | % |
| Commercial                                      |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|   and                industrial       |   |                              | 9,227  |   |                             |   | 41 | % |   |   | 9,119 |   |   |   | 43 | % |
| Consumer                                        |   |                              | 4,060  |   |                             |   | 18 | % |   |   | 4,041 |   |   |   | 19 | % |
| Lease                financing                  |   |                              | 37     |   |                             |   | - | % |   |   | 76 |   |   |   | - | % |
|        Total |   | $                                 | 22,622 |   |                             |   | 100 | % |   | $ | 21,154 |   |   |   | 100 | % |

**Nonperforming      Assets**

**Table      6—Nonperforming Assets**

| (Dollars                in thousands)                             |   | September                30, 2007 |   |   | December                31, 2006 |   |    | September                30, 2006 |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|---------|-----------------------------------|--------|
|                                                              |   |                              |   |   |                             |   |    |                              |   |
| Nonaccrual                loans                                   |   | $                                 | 14,507 |   |                             | $      | 15,201  |                              |   | $ | 10,806 |   |
| Loans                90 days or more past due                     |   |                              | 1,119  |   |                             |   | 2,444   |                              |   |   | 2,262 |   |
| Total                nonperforming                loans           |   |                              | 15,626 |   |                             |   | 17,645  |                              |   |   | 13,068 |   |
| Net                assets in foreclosure                          |   |                              | 28     |   |                             |   | – |                              |   |   | 87 |   |
| Total                nonperforming                assets          |   | $                                 | 15,654 |   |                             | $      | 17,645  |                              |   | $ | 13,155 |   |
|                                                              |   |                              |   |   |                             |   |    |                              |   |   |   |   |
| Allowance                for loan losses to nonperforming loans   |   |                              | 144.8  | %      |                             |   | 119.9   | %                                 |   |   | 163.0 | % |
| Nonperforming                loans to total net loans             |   |                              | 0.75   | %      |                             |   | 0.87    | %                                 |   |   | 0.65 | % |
| Allowance                for loan and lease losses to total loans |   |                              | 1.08   | %      |                             |   | 1.03    | %                                 |   |   | 1.05 | % |
| Nonperforming                assets to total assets               |   |                              | 0.46   | %      |                             |   | 0.54    | %                                 |   |   | 0.39 | % |

----

**Table      7—Impaired Loans**

| (Dollars                in thousands)                                 |   | September                30, 2007 |   |   | December                31, 2006 |   |   | September                30, 2006 |
|-----------------------------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------|
|                                                                  |   |                              |   |   |                             |   |   |                              |
|  Impaired                Loans                                   |   | $                                 | 5,604  |   |                             | $      | 3,946  |                              |   | $ | 3,260 |
|                                                                  |   |                              |   |   |                             |   |   |                              |   |   |   |
|  Average                year-to-date impaired loans              |   | $                                 | 7,613  |   |                             | $      | 3,222  |                              |   | $ | 3,027 |
|                                                                  |   |                              |   |   |                             |   |   |                              |   |   |   |
|  Impaired                loans with specific loss allowances     |   | $                                 | 5,604  |   |                             | $      | 3,946  |                              |   | $ | 3,260 |
|                                                                  |   |                              |   |   |                             |   |   |                              |   |   |   |
|  Loss                allowances reserved on impaired loans       |   | $                                 | 1,320  |   |                             | $      | 678    |                              |   | $ | 483 |
|                                                                  |   |                              |   |   |                             |   |   |                              |   |   |   |
|  Year-to-date                income recognized on impaired loans |   | $                                 | 31     |   |                             | $      | 60     |                              |   | $ | 50 |

**Noninterest      Income**

**Noninterest      Expense**

----

**Income      Taxes**

**Balance      Sheet Analysis**

**Capital**

**Table      8—Regulatory Capital**

|   (Dollars                in thousands)        |   |         |    |   |   |   |   | For                CapitalAdequacy                Purposes |   |   | To                Be Well CapitalizedUnder                Prompt CorrectiveAction                Program |   |
|----------------------------------------------------------|--------|--------------|---------|--------|--------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------|--------|
|  As                of September 30, 2007            |   | ActualAmount |    |   | Ratio  |   |   | Amount                                                     |   |   | Ratio                                                                                                    |   |   | Amount |   |   | Ratio |   |
|                                                     |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |
| Total                Capital (to risk weighted assets):  |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |
| Corporation                                              |   | $            | 348,156 |   |   |   | 13.04  | %                                                          |   | $      | 213,578                                                                                                  |   |   |   | 8.00 | % |   | $ | 266,973 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 284,066 |   |   |   | 10.70  | %                                                          |   |   | 212,467                                                                                                  |   |   |   | 8.00 | % |   |   | 265,584 |   |   |   | 10 | % |
| Tier                1 Capital (to risk weighted assets): |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                              |   |         | 325,434 |   |   |   | 12.19  | %                                                          |   |   | 106,789                                                                                                  |   |   |   | 4.00 | % |   |   | 160,184 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 261,344 |   |   |   | 9.84   | %                                                          |   |   | 106,233                                                                                                  |   |   |   | 4.00 | % |   |   | 159,350 |   |   |   | 6 | % |
| Tier                1 Capital (to average assets):       |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                              |   |         | 325,434 |   |   |   | 9.98   | %                                                          |   |   | 130,412                                                                                                  |   |   |   | 4.00 | % |   |   | 163,014 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 261,344 |   |   |   | 8.10   | %                                                          |   |   | 128,982                                                                                                  |   |   |   | 4.00 | % |   |   | 161,227 |   |   |   | 5 | % |

----

|   (Dollars                in thousands)        |   |         |    |   |   |   |   | For                CapitalAdequacy                Purposes |   |   | To                Be Well CapitalizedUnder                Prompt CorrectiveAction                Program |   |
|----------------------------------------------------------|--------|--------------|---------|--------|--------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------|--------|
|  As                of December 31, 2006             |   | ActualAmount |    |   | Ratio  |   |   | Amount                                                     |   |   | Ratio                                                                                                    |   |   | Amount |   |   | Ratio |   |
|                                                     |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |
| Total                Capital (to risk weighted assets):  |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |
| Corporation                                              |   | $            | 323,622 |   |   |   | 12.58  | %                                                          |   | $      | 205,814                                                                                                  |   |   |   | 8.00 | % |   | $ | 257,268 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 279,513 |   |   |   | 10.93  | %                                                          |   |   | 204,529                                                                                                  |   |   |   | 8.00 | % |   |   | 255,661 |   |   |   | 10 | % |
| Tier                1 Capital (to risk weighted assets): |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                              |   |         | 302,368 |   |   |   | 11.75  | %                                                          |   |   | 102,907                                                                                                  |   |   |   | 4.00 | % |   |   | 154,361 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 258,259 |   |   |   | 10.10  | %                                                          |   |   | 102,264                                                                                                  |   |   |   | 4.00 | % |   |   | 153,397 |   |   |   | 6 | % |
| Tier                1 Capital (to average assets):       |   |         |    |   |   |   |   |                                                       |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                              |   |         | 302,368 |   |   |   | 9.36   | %                                                          |   |   | 129,242                                                                                                  |   |   |   | 4.00 | % |   |   | 161,553 |   |   |   | - |   |
| Harleysville                National Bank                |   |         | 258,259 |   |   |   | 8.08   | %                                                          |   |   | 127,877                                                                                                  |   |   |   | 4.00 | % |   |   | 159,846 |   |   |   | 5 | % |

**,**

**Liquidity**

----

**Other      Information**

**Item      3**
**Qualitative and Quantitative Disclosures About Market      Risk**

----

**Item      4**
**Controls and Procedures**

**(i)  Management’s      Report on Disclosure Controls**

**(ii)  Changes      in Internal Controls**

----

**PART      II. OTHER INFORMATION**

**Item      1.                 Legal      Proceedings**

**Item      1A.                 Risk      Factors**

**Item      2.                      Unregistered      Sales of Equity Securities and Use of Proceeds**

|                                            |   | Total                Number of Common Shares Purchased |   |   | Weighted                Average Price Paid Per Share |   |   | Total                Number of Shares Purchased as Part of Publicly Announced                Plans(1) |   |   | Maximum                Number of Shares that may yet be Purchased under the Plans(1) |   |
|-------------------------------------------------|--------|--------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|
|                                            |   |                                                   |   |   |                                                 |   |   |                                                                                                  |   |   |                                                                                 |   |
| July                1-31, 2007                  |   |                                                   | 35,000 |   |                                                 | $      | 14.46  |                                                                                                  |   |   | 35,000                                                                               |   |   |   | 751,761 |   |
| August                1-31, 2007                |   |                                                   | 15,000 |   |                                                 |   | 15.34  |                                                                                                  |   |   | 15,000                                                                               |   |   |   | 736,761 |   |
| September                1-30, 2007             |   |                                                   | 5,000  |   |                                                 |   | 15.56  |                                                                                                  |   |   | 5,000                                                                                |   |   |   | 731,761 |   |
|        Total |   |                                                   | 55,000 |   |                                                 | $      | 14.80  |                                                                                                  |   |   | 55,000                                                                               |   |   |   |   |   |

| (1)   | On                May 12, 2005, the Board of Directors authorized a plan to purchase up                to 1,416,712 shares (restated for five percent stock dividend paid                on                September 15, 2006 and September 15, 2005) or 4.9%, of its                outstanding common stock. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      3.                 Defaults      Upon Senior Securities**

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

**Item      5.                 Other      Information**

| (a)   | None                to report. |
|-----------------|--------------------------------|

| (b)   | There                were no material changes in the manner shareholders may recommend                nominees                to the Registrant’s Board of                Directors. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      6.                 Exhibits**

|   | The                exhibits listed on the Exhibit Index at the end of this Report are                filed                with or incorporated as part of this Report (as indicated in connection                with each Exhibit). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

**HARLEYSVILLE      NATIONAL CORPORATION**

|   |    |
|--------|--------------|

----

**EXHIBIT      INDEX**

**Exhibit      No                      Description      of Exhibits**

|     (2.1) | Purchase                Agreement, dated as of November 15, 2005, by and among Harleysville                National Bank and Trust Company, Cornerstone Financial Consultants,                Ltd.,                Cornerstone Advisors Asset Management, Inc., Cornerstone Institutional                Investors, Inc., Cornerstone Management Resources, Inc., John R.                Yaissle,                Malcolm L. Cowen, II, and Thomas J. Scalici. (Incorporated by reference                to                Exhibit 2.1 of the Registrant’s Annual Report on Form 10-K for the year                ended December 31, 2005, filed with the Commission on March 15,                2006.  The schedules and exhibits to the Purchase Agreement are                listed at the end of the Purchase Agreement but have been omitted                from the                exhibit to Form 10-K. The Registrant agrees to supplementally furnish                a                copy of any omitted schedule or exhibit to the Securities and Exchange                Commission upon request.) |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     (2.2) | Branch                Purchase Agreement and Deposit Assumption Agreement, dated as of                July 26,                2006, by and among First National Community Bank as Buyer and Harleysville                National Bank and Trust Company as Seller. (Incorporated by reference                to                Exhibit 2.1 to the Registrant’s Quarterly Report filed on Form 10-Q, filed                with the Commission on November 8, 2006. The attachments, schedules                and                exhibits to the Branch Purchase and Deposit Assumption Agreement                are                listed at the end of the Branch Purchase and Deposit Assumption Agreement                but have been omitted from the exhibit to Form 10-Q. The Registrant                agrees                to supplementally furnish a copy of any omitted attachment, schedule                or                exhibit to the Securities and Exchange Commission upon                request.)                                                                                               |
|     (2.3) | Merger                Agreement, dated as of May 15, 2007, by and among Harleysville National                Corporation, East Penn Financial Corporation, East Penn Bank and                HNC-EPF,                LLC, as amended. (Incorporated by reference to Annex A of the                Corporation’s Registration Statement No. 333-145820 on Form S-4/A, filed                with the Commission on September 27, 2007. The schedules and exhibits                to                the Merger Agreement are listed at the end of the Merger Agreement                but                have been omitted from the Annex to Form S-4. The Registrant agrees                to                supplementally furnish a copy of any omitted schedule or exhibit                to the                Securities and Exchange Commission upon request.)                                                                                                                                                                                                                                                      |
|     (3.1) | Harleysville                National Corporation Amended and Restated Articles of Incorporation.                (Incorporated by reference to Exhibit 3.1 to the Corporation’s                Registration Statement No. 333-111709 on Form S-4, as filed on                January 5, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|     (3.2) | Harleysville                National Corporation Amended and Restated                By-laws.  (Incorporated by reference to Exhibit 3.1 to the                Corporation’s Current Report on Form 8-K/A, filed with the Commission on                August 16, 2007.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   (10.1)            | Harleysville                National Corporation 1993 Stock Incentive Plan.** (Incorporated by                reference to Exhibit 4.3 of Registrant’s Registration Statement                No. 33-69784 on Form S-8, filed with the Commission on                October 1, 1993.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   (10.2)            | Harleysville                National Corporation Stock Bonus Plan.*** (Incorporated by reference                to                Exhibit 99A of Registrant’s Registration Statement No. 333-17813                on Form S-8, filed with the Commission on December 13,                1996.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   (10.3)            | Supplemental                Executive Retirement Plan.* (Incorporated by reference to                Exhibit 10.3 of Registrant’s Annual Report in Form 10-K for the                year ended December 31, 1997, filed with the Commission on                March 27, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   (10.4)            | Walter E.                Daller, Jr., Chairman and former President and Chief Executive                Officer’s Employment Agreement dated October 26, 1998.* (Incorporated by                reference to Registrant’s Current Report on Form 8-K, filed with the                Commission on March 25, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   (10.5)            | Consulting                Agreement and General Release dated November 12, 2004 between                Walter E. Daller, Jr., Harleysville National Corporation and                Harleysville National Bank and Trust Company.* (Incorporated by reference                to Registrant’s Current Report on Form 8-K, filed with the Commission                on November 16, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   (10.6)            | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and Walter                E.                Daller, Jr.*  (Incorporated by reference to Registrant’s Current                Report on Form 8-K, filed with the Commission on March 14,                2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   (10.7)            | Employment                Agreement dated October 26, 1998 by and among Harleysville National                Corporation, Harleysville National Bank and Trust Company and                Demetra M. Takes, President and Chief Executive Officer of                Harleysville National Bank and Trust Company.* (Incorporated by reference                to Registrant’s Current Report on Form 8-K, filed with the Commission                on March 25, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   (10.8)            | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and Demetra                M.                Takes, President and Chief Executive Officer of Harleysville National                Bank                and Trust Company.*  (Incorporated by reference to Registrant’s                Current Report on Form 8-K, filed with the Commission on March 14,                2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   (10.9)            | Harleysville                National Corporation 1998 Stock Incentive Plan.** (Incorporated by                reference to Registrant’s Registration Statement No. 333-79971 on                Form S-8, filed with the Commission on June 4,                1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (10.10)                       | Harleysville                National Corporation 1998 Independent Directors Stock Option Plan,                as                amended and restated effective February 8, 2001.** (Incorporated                by                reference to Appendix “A” of Registrant’s Definitive Proxy Statement,                filed with the Commission on March 9, 2001.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (10.11)                       | Supplemental                Executive Retirement Benefit Agreement dated February 23, 2004                between Michael B. High, Executive Vice President and former Chief                Financial Officer, and Harleysville Management Services, LLC.*                (Incorporated by reference to Registrant’s Quarterly Report on                Form 10-Q, filed with the Commission on May 10,                2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

| (10.12) | Employment                Agreement effective April 1, 2005 between Michael B. High,                Executive Vice President and Chief Operating Officer of the Corporation,                and Harleysville Management Services, LLC.* (Incorporated by                reference to Registrant’s Current Report on Form 8-K, filed with the                Commission on November 16, 2004.)                                                                                                                                                                                              |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (10.13) | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and Michael                B.                High, Executive Vice President and Chief Operating Officer of the                Corporation.*  (Incorporated by reference to Registrant’s                Current Report on Form 8-K, filed with the Commission on March 14,                2005.)                                                                                                                     |
| (10.14) | Employment                Agreement dated March 9, 2004 between Mikkalya Murray, former                Executive Vice President and Harleysville Management Services, LLC.*                (Incorporated by reference to Registrant’s Quarterly Report on                Form 10-Q, filed with the Commission on May 10,                2004.)                                                                                                                                                                                                                                                  |
| (10.15) | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and Mikkalya                Murray, former Executive Vice President.*  (Incorporated by                reference to Registrant’s Current Report on Form 8-K, filed with the                Commission on March 14, 2005.)                                                                                                                                                                                           |
| (10.16) | Harleysville                National Corporation 2004 Omnibus Stock Incentive Plan, as amended                and                restated effective November 9, 2006.** (Incorporated by reference                to                Registrant’s Current Report on Form 8-K, filed with the Commission on                November 15, 2006).                                                                                                                                                                                                                                                                        |
| (10.17) | Employment                Agreement dated August 23, 2004 between James F.                McGowan, Jr., Executive Vice President & Chief Credit Officer and                Harleysville Management Services, LLC.* (Incorporated by reference to                Registrant’s Current Report on Form 8-K, filed with the Commission on                August 25, 2004.)                                                                                                                                                                                                            |
| (10.18) | Supplemental                Executive Retirement Benefit Agreement dated August 23, 2004 between                James F. McGowan, Jr., Executive Vice President & Chief                Credit Officer, and Harleysville Management Services, LLC.*                (Incorporated by reference to Registrant’s Current Report on                Form 8-K, filed with the Commission on August 25,                2004.)                                                                                                                                                             |
| (10.19) | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and James                F.                McGowan, Jr., Executive Vice President & Chief Credit                Officer.*  (Incorporated by reference to Registrant’s Current                Report on Form 8-K, filed with the Commission on March 14,                2005.)                                                                                                                                   |
| (10.20) | Employment                Agreement dated September 27, 2004 between John Eisele, former                Executive Vice President & President of Millennium Wealth Management                and Private Banking, and Harleysville Management Services, LLC.*                (Incorporated by reference to Registrant’s Current Report on                Form 8-K, filed with the Commission on September 29,                2004.)                                                                                                                                                          |
| (10.21) | Supplemental                Executive Retirement Benefit Agreement dated September 27, 2004                between John Eisele, former Executive Vice President & President of                Millennium Wealth Management and Private Banking, and Harleysville                Management Services, LLC.* (Incorporated by reference to Registrant’s                Current Report on Form 8-K, filed with the Commission on                September 29, 2004.)                                                                                                                           |
| (10.22) | Separation                Agreement and Mutual Release dated June 15, 2007 and effective July                19,                2007 between John Eisele, former Executive Vice President & President                of Millennium Wealth Management and Private Banking, Harleysville                Management Services, LLC., Harleysville National Bank and Trust                Company and Harleysville National Corporation.* (Incorporated by                reference                to Registrant’s Current Report on Form 8-K, filed with the Commission                on July 19, 2007.) |
| (10.23) | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and John                Eisele,                former Executive Vice President & President of Millennium Wealth                Management and Private Banking.*  (Incorporated by reference to                Registrant’s Current Report on Form 8-K, filed with the Commission on                March 14, 2005.)                                                                                             |
| (10.24) | Employment                Agreement effective January 1, 2005 between Gregg J. Wagner, the                former President and Chief Executive Officer of the Corporation,                and                Harleysville Management Services, LLC.* (Incorporated by reference to                Registrant’s Current Report on Form 8-K, filed with the Commission on                November 16, 2004.)                                                                                                                                                                                 |
| (10.25) | Amendment                to Supplemental Executive Retirement Benefit Agreement dated March                14,                2005 by and among Harleysville Management Services, LLC and Gregg                J.                Wagner, the former President and Chief Executive Officer of the                Corporation.*  (Incorporated by reference to Registrant’s                Current Report on Form 8-K, filed with the Commission on March 14,                2005.)                                                                                                                         |
| (10.26) | Complete                Settlement Agreement and General Release dated November 29, 2006                and                effective December 8, 2006 between Gregg J. Wagner and Harleysville                National Corporation, Harleysville National Bank and Trust Company                and                Harleysville Management Services, LLC .* (Incorporated by reference                to                Registrant’s Current Report on Form 8-K, filed with the Commission on                December 13, 2006.                                                                                     |
| (10.27) | Employment                Agreement dated May 18, 2005, between George S. Rapp, Senior Vice                President and Chief Financial Officer, and Harleysville Management                Services, LLC.* (Incorporated by reference to Registrant’s Current Report                on Form 8-K, filed with the Commission on May 20,                2005.)                                                                                                                                                                                                                                                       |
| (10.28) | Amended                and Restated Declaration of Trust for HNC Statutory Trust III by                and among                Wilmington Trust Company, as Institutional Trustee and Delaware Trustee,                Harleysville National Corporation, as Sponsor, and the Administrators                named therein, dated as of September 28, 2005. (Incorporated by reference                to Registrant’s Quarterly Report on Form 10-Q/A, filed with the Commission                on November, 9, 2005.)                                                                                              |
| (10.29) | Indenture                between Harleysville National Corporation, as Issuer, and Wilmington                Trust                Company, as Trustee, for Fixed/Floating Rate Junior Subordinated                Debt                Securities, dated as of September 28, 2005. (Incorporated by reference                to                Registrant’s Quarterly Report on Form 10-Q/A, filed with the Commission on                November, 9, 2005.)                                                                                                                                                         |

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| (10.30)                      | Guarantee                Agreement between Harleysville National Corporation and Wilmington                Trust                Company, dated as of September 28, 2005. (Incorporated by reference                to                Registrant’s Quarterly Report on Form 10-Q/A, filed with the Commission on                November, 9, 2005.)                                  |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (10.31)                      | Employment                Agreement effective July 12, 2006 between Lewis C. Cyr, Chief Lending                Officer of the Corporation, and Harleysville Management                Services, LLC.* (Incorporated by reference to Registrant’s Current                Report on Form 8-K, filed with the Commission on July 12,                2006.)                   |
| (10.32)                      | Employment                Agreement dated July 12, 2007 between Paul D. Geraghty, President                and                Chief Executive Officer of the Corporation and Harleysville Management                Services, LLC* (Incorporated by reference to Registrant’s Current Report                on Form 8-K filed with the Commission on July 12,                2007.) |
| (10.33)                      | Amended                and Restated Declaration of Trust for HNC Statutory Trust IV by and                among                Wilmington Trust Company, as Institutional Trustee and Delaware Trustee,                Harleysville National Corporation, as Depositor, and the Administrators                named therein, dated as of August 22, 2007, filed                herewith.  |
| (10.34)                      | Indenture                between Harleysville National Corporation, as Issuer, and Wilmington                Trust                Company, as Trustee, for Fixed/Floating Rate Junior Subordinated                Debt                Securities, dated as of August 22, 2007, filed                herewith.                                                                             |
| (10.35)                      | Guarantee                Agreement between Harleysville National Corporation and Wilmington                Trust                Company, dated as of August 22, 2007, filed herewith.                                                                                                                                                                                                     |
|     (11) | Computation                of Earnings per Common Share, incorporated by reference to Note 7                of the                Consolidated Financial Statements of this  Report on Form                10-Q.                                                                                                                                                                |
|  (31.1)                 | Certification                of the Chief Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                                           |
|  (31.2)                 | Certification                of the Chief Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                                           |
|  (32.1)                 | Certification                of the Chief Executive Officer pursuant to 18 U.S.C.                Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002, furnished herewith.                                                                                                                                               |
|  (32.2)                 | Certification                of the Chief Financial Officer pursuant to 18 U.S.C.                Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002, furnished                herewith.                                                                                                                                |

|   | *       Management                contract or compensatory plan                arrangement. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | **     Shareholder                approved compensatory plan pursuant to which the Registrant’s Common Stock                may be issued to employees of the                Corporation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ***   Non-shareholder                approved compensatory plan pursuant to which the Registrant’s Common Stock                may be issued to employees of the                Corporation. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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