SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-Q
                                   (Mark One)

         [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 2002.
                                                --------------

                                       OR

          [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     For the transition period from__________________to____________________.

                         Commission file number 0-15237
                                                -------

                        HARLEYSVILLE NATIONAL CORPORATION
                        ---------------------------------
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                                  <C>
Pennsylvania. . . . . . . . . . . . . . . . . . . .          23-2210237
---------------------------------------------------  -------------------
(State or other jurisdiction of . . . . . . . . . .   (I.R.S.  Employer
incorporation or organization). . . . . . . . . . .  Identification No.)

483 Main Street, Harleysville, Pennsylvania . . . .               19438
---------------------------------------------------  -------------------
(Address of principal executive offices). . . . . .           (Zip Code)

Registrant's telephone number, including area code:      (215) 256-8851)
</TABLE>

Indicate by check mark whether the Registrant (1) has filed all reports required
to  be  filed  by  Section  13  or15(d)  of the Securities Exchange Act of 1934
during the preceding 12 months (or for  such  shorter period that the Registrant
was required to file such reports) and  (2)  has  been  subject  to  such filing
requirements for the past 90 days.
Yes     X.   No.
      ---

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by  check  mark  whether  the  registrant  has filed all documents and
reports  required  to  be  filed  by Sections 12, 13, or 15(d) of the Securities
Exchange  Act  of 1934 subsequent to the distribution of securities under a plan
confirmed  by  a  court.   Yes  ___.  No  ___.

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the latest practicable date: 18,233,107 shares of Common
Stock,  $1.00  par  value,  outstanding  on  April  30,  2002.

PAGE 1
<TABLE>
<CAPTION>
                                    HARLEYSVILLE NATIONAL CORPORATION

                                        INDEX TO FORM 10-Q REPORT
<S>                                                                                                  <C>
                                                                                                     PAGE
                                                                                                     ----
Part I.  Financial Information

     Item 1. Financial Statements:

Consolidated Balance Sheets - March 31, 2002 and December 31, 2001. . . . . . . . . . . . . . . . .     3

Consolidated Statements of Income - Three Months Ended March 31, 2002 and 2001. . . . . . . . . . .     4

Consolidated Statements of Shareholders' Equity - Three Months Ended March 31, 2002 and 2001. . . .     5

Consolidated Statements of Cash Flows - Three Months Ended  March 31, 2001 and 2000 . . . . . . . .     6

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .     7

     Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations     9

     Item 3. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . .    22

Part II.  Other Information

     Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23

     Item 2.  Change in Securities and Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . .    23

     Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .    23

     Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . .    23

     Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    24

     Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . .    24

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    26
</TABLE>

PAGE 2

<TABLE>
<CAPTION>

                                     PART  1.  FINANCIAL  INFORMATION
                             HARLEYSVILLE  NATIONAL  CORPORATION  AND  SUBSIDIARIES
                                       CONSOLIDATED  BALANCE  SHEETS
  (Dollars  in  thousands)                    (Unaudited)

                                                                   March 31, 2002    December 31, 2001
                                                                  ----------------  -------------------
<S>                                                               <C>               <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . . . . . . .  $        51,943   $           62,974
Fed funds sold . . . . . . . . . . . . . . . . . . . . . . . . .           12,000               12,500
Interest-bearing deposits in banks . . . . . . . . . . . . . . .            3,839                7,150
                                                                  ----------------  -------------------
    Total cash and cash equivalents. . . . . . . . . . . . . . .           67,782               82,624
                                                                  ----------------  -------------------

Investment securities available for sale . . . . . . . . . . . .          672,907              706,371
Investment securities held to maturity
 (fair value $25,718 and $26,782, respectively). . . . . . . . .           24,813               26,099
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,326,780            1,313,934
Less: Deferred costs, net. . . . . . . . . . . . . . . . . . . .            2,291                2,675
         Allowance for loan losses . . . . . . . . . . . . . . .          (16,125)             (15,558)
                                                                  ----------------  -------------------
             Net loans . . . . . . . . . . . . . . . . . . . . .        1,312,946            1,301,051
                                                                  ----------------  -------------------
Bank premises and equipment, net . . . . . . . . . . . . . . . .           21,064               21,439
Accrued income receivable. . . . . . . . . . . . . . . . . . . .           12,539               11,907
Net assets in foreclosure. . . . . . . . . . . . . . . . . . . .              459                  609
Intangible assets, net . . . . . . . . . . . . . . . . . . . . .            1,688                1,360
Bank-owned life insurance. . . . . . . . . . . . . . . . . . . .           46,580               45,942
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . .           12,157               11,569
                                                                  ----------------  -------------------
         Total assets. . . . . . . . . . . . . . . . . . . . . .  $     2,172,935   $        2,208,971
                                                                  ================  ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Noninterest-bearing . . . . . . . . . . . . . . . . . . . . .  $       241,285   $          254,638
   Interest-bearing:
     Checking accounts . . . . . . . . . . . . . . . . . . . . .          175,527              169,156
     Money market accounts . . . . . . . . . . . . . . . . . . .          404,572              419,890
     Savings . . . . . . . . . . . . . . . . . . . . . . . . . .          192,152              179,284
     Time, under $100,000. . . . . . . . . . . . . . . . . . . .          495,432              489,345
     Time, $100,000 or greater . . . . . . . . . . . . . . . . .          198,463              234,549
                                                                  ----------------  -------------------
          Total deposits . . . . . . . . . . . . . . . . . . . .        1,707,431            1,746,862
Accrued interest payable . . . . . . . . . . . . . . . . . . . .           25,522               27,114
U.S. Treasury demand notes . . . . . . . . . . . . . . . . . . .            1,737                2,677
Federal Home Loan Bank (FHLB) borrowings . . . . . . . . . . . .          142,750              127,750
Securities sold under agreements to repurchase . . . . . . . . .           70,342               80,393
Guaranteed preferred beneficial interest in Corporation's
  subordinated debentures. . . . . . . . . . . . . . . . . . . .            5,000                5,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . .           31,285               29,826
                                                                  ----------------  -------------------
          Total liabilities. . . . . . . . . . . . . . . . . . .        1,984,067            2,019,622
                                                                  ----------------  -------------------
Shareholders' Equity:
    Series preferred stock,  par value $1 per share;
       authorized 3,000,000 shares, none issued. . . . . . . . .                -                    -
    Common stock, par value $1 per share; authorized 30,000,000
       shares; issued and outstanding 18,607,160 shares in 2002
       and 18,570,971 shares in 2001 . . . . . . . . . . . . . .           18,607               18,571
    Additional paid in capital . . . . . . . . . . . . . . . . .           71,902               71,419
    Retained earnings. . . . . . . . . . . . . . . . . . . . . .          104,876              100,171
    Treasury stock, at cost: 365,155 shares in 2002
       and 287,440 shares in 2001. . . . . . . . . . . . . . . .           (7,160)              (5,346)
    Accumulated other comprehensive income . . . . . . . . . . .              643                4,534
                                                                  ----------------  -------------------
          Total shareholders' equity . . . . . . . . . . . . . .          188,868              189,349
                                                                  ----------------  -------------------
          Total liabilities and shareholders' equity . . . . . .  $     2,172,935   $        2,208,971
                                                                  ================  ===================
<FN>
See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

PAGE 3

<TABLE>
<CAPTION>

         HARLEYSVILLE  NATIONAL  CORPORATION  AND  SUBSIDIARIES
               CONSOLIDATED  STATEMENTS  OF  INCOME
                              (Unaudited)                    Three months ended
                                                                    March 31,
 (Dollars in thousands except weighted average number               ---------
 of common  shares  and  per  share  information)

                                                              2002         2001
                                                           -----------  -----------
<S>                                                        <C>          <C>
INTEREST INCOME:
Loans, including fees . . . . . . . . . . . . . . . . . .  $    21,324  $    22,570
Lease financing . . . . . . . . . . . . . . . . . . . . .        2,182        2,504
Investment securities:
   Taxable. . . . . . . . . . . . . . . . . . . . . . . .        7,461        6,532
   Exempt from federal taxes. . . . . . . . . . . . . . .        2,635        2,818
Federal funds sold. . . . . . . . . . . . . . . . . . . .           39           24
Deposits in banks . . . . . . . . . . . . . . . . . . . .           48           61
                                                           -----------  -----------
      Total interest income . . . . . . . . . . . . . . .       33,689       34,509
                                                           -----------  -----------
INTEREST EXPENSE:
Savings deposits. . . . . . . . . . . . . . . . . . . . .        2,889        5,160
Time, under $100,000. . . . . . . . . . . . . . . . . . .        5,998        6,321
Time, $100,000 or greater . . . . . . . . . . . . . . . .        2,054        2,821
Borrowed funds. . . . . . . . . . . . . . . . . . . . . .        2,140        3,056
                                                           -----------  -----------
      Total interest expense. . . . . . . . . . . . . . .       13,081       17,358
                                                           -----------  -----------
      Net interest income . . . . . . . . . . . . . . . .       20,608       17,151
Provision for loan losses . . . . . . . . . . . . . . . .        1,351          647
                                                           -----------  -----------
      Net interest income after provision for loan losses       19,257       16,504
                                                           -----------  -----------
OTHER OPERATING INCOME:
Service charges . . . . . . . . . . . . . . . . . . . . .        1,521        1,027
Security gains, net . . . . . . . . . . . . . . . . . . .        1,231          721
Trust income. . . . . . . . . . . . . . . . . . . . . . .          744          827
Bank-owned life insurance income. . . . . . . . . . . . .          638          691
Other Income. . . . . . . . . . . . . . . . . . . . . . .        1,389          926
                                                           -----------  -----------
      Total other operating income. . . . . . . . . . . .        5,523        4,192
                                                           -----------  -----------
      Net interest income after provision for loan losses
         and other operating income . . . . . . . . . . .       24,780       20,696
                                                           -----------  -----------
OTHER OPERATING EXPENSES:
Salaries, wages and employee benefits . . . . . . . . . .        7,685        6,300
Occupancy . . . . . . . . . . . . . . . . . . . . . . . .        1,237          902
Furniture and equipment . . . . . . . . . . . . . . . . .        1,288        1,207
Other expenses. . . . . . . . . . . . . . . . . . . . . .        4,270        4,056
                                                           -----------  -----------
      Total other operating expenses. . . . . . . . . . .       14,480       12,465
                                                           -----------  -----------
      Income before income tax expense. . . . . . . . . .       10,300        8,231
Income tax expense. . . . . . . . . . . . . . . . . . . .        2,488        1,700
                                                           -----------  -----------
Net income. . . . . . . . . . . . . . . . . . . . . . . .  $     7,812  $     6,531
                                                           ===========  ===========

Weighted average number of common shares:
        Basic . . . . . . . . . . . . . . . . . . . . . .   18,270,983   18,411,604
                                                           ===========  ===========
        Diluted . . . . . . . . . . . . . . . . . . . . .   18,781,078   18,866,566
                                                           ===========  ===========
Net income per share information:
        Basic . . . . . . . . . . . . . . . . . . . . . .  $      0.43  $      0.35
                                                           ===========  ===========
        Diluted . . . . . . . . . . . . . . . . . . . . .  $      0.42  $      0.35
                                                           ===========  ===========
Cash dividends per share. . . . . . . . . . . . . . . . .  $      0.17  $      0.15
                                                           ===========  ===========

* Adjusted for 100% stock dividend effective 8/10/01.
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

PAGE 4
<TABLE>
<CAPTION>

                                              CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
                                            HARLEYSVILLE  NATIONAL  CORPORATION  AND  SUBSIDIARIES

THREE  MONTHS  ENDED  MARCH  31,  2002

                                                                                                           Accumulated
                                        Common Stock                                                          Other
                                       --------------
(Dollars in thousands)                   Number of            Par            Additional       Retained    Comprehensive
<S>                                    <C>             <C>                <C>                <C>         <C>
                                          Shares             Value        Paid in Capital    Earnings        Income
                                       --------------  -----------------  -----------------  ----------  ---------------
Balance, December 31, 2001. . . . . .         18,571   $         18,571   $         71,419   $ 100,171   $        4,534
Stock options . . . . . . . . . . . .             36                 36                483           -                -
Net income. . . . . . . . . . . . . .              -                  -                  -       7,812                -
Other comprehensive income,
  net of reclassifications and tax. .              -                  -                  -           -           (3,891)
Purchases of Treasury stock . . . . .         (1,814)            (1,814)
Cash dividends. . . . . . . . . . . .              -                  -                  -      (3,107)               -
                                       --------------  -----------------  -----------------  ----------  ---------------
Comprehensive income. . . . . . . . .
Balance, March 31, 2002 . . . . . . .         18,607   $         18,607   $         71,902   $ 104,876   $          643
                                       ==============  =================  =================  ==========  ===============

FOR THE YEAR ENDED DECEMBER 31, 2001
                                                                                                          Accumulated
                                      Common Stock                                                           Other
                                      ------------
Dollars in thousands). . . . . . . .   Number of       Par                Additional         Retained    Comprehensive
                                        Shares        Value            Paid in Capital       Earnings        Income
-------------------------------------  --------------  -----------------  -----------------  ----------  ---------------
Balance, December 31, 2000. . . . . .          9,254   $          9,254   $         79,869   $  83,244   $        1,422
Stock options . . . . . . . . . . . .             44                 44                812           -                -
Stock dividends . . . . . . . . . . .          9,273              9,273             (9,273)          -
Stock awards. . . . . . . . . . . . .             11                 11
Net income. . . . . . . . . . . . . .              -                  -                  -      28,820                -
Other comprehensive income,
  net of reclassifications and tax. .              -                  -                  -           -            3,112
Purchases of Treasury stock . . . . .         (5,093)            (5,093)
Cash dividends. . . . . . . . . . . .              -                  -                  -     (11,893)               -
                                       --------------  -----------------  -----------------  ----------  ---------------
Comprehensive income. . . . . . . . .
Balance, December 31, 2001. . . . . .         18,571   $         18,571   $         71,419   $ 100,171   $        4,534
                                       ==============  =================  =================  ==========  ===============


(Dollars in thousands)                  Treasury                    Comprehensive
<S>                                    <C>         <C>              <C>
                                         Stock         Total            Income
                                       ----------  ---------------  --------
Balance, December 31, 2001. . . . . .  $  (5,346)  $      189,349
Stock options . . . . . . . . . . . .          -              519
Net income. . . . . . . . . . . . . .          -            7,812   $ 7,812
Other comprehensive income,
  net of reclassifications and tax. .          -           (3,891)   (3,891)
Purchases of Treasury stock
Cash dividends. . . . . . . . . . . .          -           (3,107)
                                       ----------  ---------------
Comprehensive income                                               $ 3,921
                                                                   ========

Balance, March 31, 2002 . . . . . . .  $  (7,160)  $      188,868
                                       ==========  ===============


FOR THE YEAR ENDED DECEMBER 31, 2001

-------------------------------------
(Dollars in thousands). . . . . . . .  Treasury                 Comprehensive
                                        Stock        Total         Income
-------------------------------------  ----------  ---------------
Balance, December 31, 2000. . . . . .  $    (253)  $      173,536
Stock options . . . . . . . . . . . .          -              856
Stock dividends
Stock awards
Net income. . . . . . . . . . . . . .          -           28,820   $28,820
Other comprehensive income,
  net of reclassifications and tax. .          -            3,112     3,112
Purchases of Treasury stock
Cash dividends. . . . . . . . . . . .          -          (11,893)
                                       ----------  ---------------
Comprehensive income                                                $31,932
                                                                    ========

Balance, December 31, 2001. . . . . .  $  (5,346)  $      189,349
                                       ==========  ===============
</TABLE>

PAGE 5

<TABLE>
<CAPTION>

                              HARLEYSVILLE  NATIONAL  CORPORATION  AND  SUBSIDIARIES
                                    CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                                                  (Unaudited)

<S>                                                                        <C>             <C>
(Dollars in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . .    Three Months Ended March 31,
OPERATING ACTIVITIES:. . . . . . . . . . . . . . . . . . . . . . . . . . .           2002        2001
                                                                            ------------------------------
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $        7,812   $   6,531
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . .           1,351         647
    Depreciation and amortization. . . . . . . . . . . . . . . . . . . . .             587         646
    Net amortization of investment
      securities discount/premiums . . . . . . . . . . . . . . . . . . . .             690          90
    Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . .            (725)      7,185
    Net realized security gains. . . . . . . . . . . . . . . . . . . . . .          (1,231)       (721)
    Increase in accrued income receivable. . . . . . . . . . . . . . . . .            (632)       (223)
    Increase in accrued interest payable . . . . . . . . . . . . . . . . .          (1,592)      2,140
    Increase in other assets . . . . . . . . . . . . . . . . . . . . . . .            (588)     (1,004)
    Net increase (decrease) in other liabilities . . . . . . . . . . . . .           4,279      (4,035)
    Increase (decrease) in unearned income . . . . . . . . . . . . . . . .             384         (74)
    Write-down of other real estate owned. . . . . . . . . . . . . . . . .               6           -
    (Increase) decrease in intangible assets . . . . . . . . . . . . . . .            (328)         69
                                                                                -----------  ----------
       Net cash provided by operating activities . . . . . . . . . . . . .  $       10,013   $  11,251
                                                                                -----------  ----------
INVESTING ACTIVITIES:
  Proceeds from sales of investment securities available for sale. . . . .  $      117,295   $  71,928
  Proceeds, maturity or calls of investment securities held to maturity. .           1,295         979
  Proceeds, maturity or calls of investment securities available for sale.          64,481      22,707
  Purchases of investment securities available for sale. . . . . . . . . .        (153,767)   (116,804)
  Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . .         (13,827)    (18,607)
  Net increase in premises and equipment . . . . . . . . . . . . . . . . .            (212)       (669)
  Purchase of bank-owned life insurance. . . . . . . . . . . . . . . . . .            (638)       (691)
  Proceeds from sales of other real estate . . . . . . . . . . . . . . . .             342         341
                                                                                -----------  ----------
       Net cash provided by (used in) investing activities . . . . . . . .  $       14,969   $ (40,816)
                                                                                -----------  ----------
FINANCING ACTIVITIES:
  Net (decrease) increase in deposits. . . . . . . . . . . . . . . . . . .  $      (39,431)  $  41,946
  Decrease in U.S. Treasury demand notes . . . . . . . . . . . . . . . . .            (940)        (40)
  Decrease in federal funds purchased. . . . . . . . . . . . . . . . . . .               -     (22,000)
   Increase in FHLB borrowings . . . . . . . . . . . . . . . . . . . . . .          15,000       5,000
  (Decrease) increase in securities sold under agreement . . . . . . . . .         (10,051)     10,301
  Proceeds from issuance of guaranteed preferred beneficial interest
    in Corporation's subordinated debentures . . . . . . . . . . . . . . .               -       5,000
  Cash dividends & fractional shares . . . . . . . . . . . . . . . . . . .          (3,107)     (2,760)
  Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . .          (1,814)     (2,858)
  Stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             519           9
                                                                                ----------  ----------
    Net cash (used in) provided by financing activities. . . . . . . . . .  $      (39,824)  $  34,598
                                                                                ----------  ----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . .  $      (14,842)  $   5,033
Cash and cash equivalents at beginning of period . . . . . . . . . . . . .          82,624      55,525
                                                                               -----------  ----------
Cash and cash equivalents at end of the period . . . . . . . . . . . . . .  $       67,782   $  60,558
                                                                               ===========  ==========

  Cash paid during the period for:
     Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       14,673   $  15,219
                                                                               ===========  ==========
     Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $          750   $       -
                                                                               ===========  ==========
   Supplemental disclosure of noncash investing and financing activities:
       Transfer of assets from loans to other real estate owned. . . . . .  $          198   $     580
                                                                               ===========  ==========
<FN>
See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

PAGE 6
               HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1  - In the opinion of management, the accompanying unaudited consolidated
financial  statements  contain  all  adjustments,  consisting  only  of  normal
recurring  adjustments,  necessary  to present fairly the consolidated financial
position of Harleysville National Corporation (the "Corporation") and its wholly
owned  subsidiaries  -  Harleysville  National  Bank  and  Trust  Company
("Harleysville"),  Citizens  National  Bank ("Citizens"), Security National Bank
("Security")  (collectively,  the  "Banks"),  HNC  Financial  Company  and  HNC
Reinsurance  Company  -  as of March 31, 2002, the results of its operations for
three  month  periods  ended  March 31, 2002 and 2001 and the cash flows for the
three month periods ended March 31, 2002 and 2001.  This quarterly report refers
to  the corporation's subsidiary banks, collectively as "the banks."  We suggest
that  these  unaudited  consolidated financial statements be read in conjunction
with  the  audited  consolidated financial statements of the corporation and the
notes  thereto  set  forth  in  the  corporation's  2001  annual  report.

The  results  of operations for the three-month periods ended March 31, 2002 and
2001  are  not necessarily indicative of the results to be expected for the full
year.

NOTE  2  -  Income  tax  expense  is  less  than the amount calculated using the
statutory  tax rate, primarily the result of tax exempt income earned from state
and  municipal  securities  and  loans.

NOTE  3  -  The  Corporation  has adopted SFAS No. 130, "Reporting Comprehensive
Income"  which  establishes  standards  to  provide  prominent  disclosure  of
comprehensive  income  items.  Comprehensive income is the change in equity of a
business  enterprise  during  a  period  from  transactions and other events and
circumstances  from  non-owner  sources.  Other comprehensive income consists of
net  unrealized  gains (losses) on investment securities available for sale. The
adoption  of  SFAS  No.  130 did not have a material impact on the Corporation's
financial  position  or  results  of  operation.

      The  components  of  other  comprehensive  income  are  as  follows:
<TABLE>
<CAPTION>

(Dollars in thousands)               BEFORE TAX       TAX        NET OF TAX
March 31, 2002                         AMOUNT       EXPENSE        AMOUNT
----------------------------------  ------------  ------------  ------------
<S>                                 <C>           <C>           <C>
Unrealized losses on securities:
   Unrealized holding losses
       Arising during period . . .  $    (4,755)  $     1,664   $    (3,091)
   Less reclassification
       Adjustment for gains
       Realized in net income. . .        1,231          (431)          800
                                    ------------  ------------  ------------
  Other comprehensive loss, net. .  $    (5,986)  $     2,095   $    (3,891)
                                    ============  ============  ============

                                   BEFORE TAX       TAX        NET OF TAX
March 31, 2001 . . . . . . . . . .  AMOUNT        EXPENSE       AMOUNT
----------------------------------  ------------  ------------  ------------
Unrealized gains on securities:
   Unrealized holding gains
       Arising during period . . .  $     8,169   $    (2,859)  $     5,310
   Less reclassification
       Adjustment for gains
       Realized in net income. . .          721          (252)          469
                                    ------------  ------------  ------------
  Other comprehensive income, net.  $     7,448   $    (2,607)  $     4,841
                                    ============  ============  ============
</TABLE>

PAGE 7

NOTE  4  -  On  June  29,  2001, the Financial Accounting Standards Board (FASB)
issued  Statement  of  Financial  Accounting  Standards (SFAS) No. 141, Business
Combinations,  and  SFAS  No.  142, Goodwill and Intangible Assets. SFAS No. 141
requires  that  all  business combinations initiated after June 30, 2001 must be
accounted  for under the purchase method of accounting. A plan of combination is
considered  to  be initiated on the earlier of the date that a combining company
(a)  announces  publicly  or  formally makes known to its shareholders the major
terms  of the plan, or (b) notifies its shareholders, in writing, of an exchange
offer.  SFAS  No.  141  was  adopted  upon  issuance.  SFAS  No.  142 prescribes
accounting for all purchased goodwill and intangible assets. The SFAS supersedes
APB  Opinion  17,  Intangible  Assets,  but  carries  over  guidance  related to
internally  developed  intangible  assets.  SFAS  No.  142  states that acquired
goodwill  is  not  amortized, but is tested for impairment at the reporting unit
level annually and whenever an impairment indicator arises.  A reporting unit is
at the same level or one level below an operating segment as defined by SFAS No.
131,  Disclosures About Segments of an Enterprise and Related Information.  SFAS
No.  142  is effective for fiscal years beginning after December 15, 2001. Until
the  adoption  of  SFAS No. 142, existing goodwill continues to be amortized and
tested  for impairment under previously existing standards. The adoption of SFAS
No.  141  and  SFAS  No. 142 did not have a material impact on the Corporation's
financial  position,  or  results  of  operations.

NOTE  5  -  On July 6, 2001, the Securities and Exchange Commission (SEC) issued
Staff  Accounting  Bulletin  (SAB)  No.  102,  Selected  Loan  Loss  Allowance
Methodology  and  Documentation  Issues.  SAB  No.  102 provides guidance on the
development,  documentation,  and  application  of  a systematic methodology for
determining  allowances  for  loans  and  leases in accordance with US GAAP. The
adoption  of  SAB  No.  102  did not have a material impact on the Corporation's
financial  position,  or  results  of  operations.

NOTE  6- On January 1, 2002, the Corporation adopted Statement of Position (SOP)
01-6,  Accounting  by Certain Entities That Lend to or Finance the Activities of
Others, which reconciles and conforms existing differences in the accounting and
financial reporting guidance in the AICPA Audit and Accounting Guides, Banks and
Savings  Institutions, Audits of Credit Unions, and Audits of Finance Companies.
It also carries forward accounting guidance for practices deemed to be unique to
certain  financial  institutions.  The adoption of this SOP had no impact on the
Corporation's  financial  position  or  results  of  operations.

NOTE 7 - On February 22, 2001, the Corporation issued $5,000,000 of 10.2% junior
subordinate  deferrable  interest  debentures  (the  debentures) to Harleysville
Statutory  Trust  1  (the  Trust),  a  Connecticut  business trust, in which the
Corporation owns all of the common equity.  The debentures are the sole asset of
the  Trust.  The  Trust  issued $5,000,000 of preferred securities to investors.
The  Corporation's obligations under the debentures and related documents, taken
together,  constitute  a  full and unconditional guarantee by the Corporation of
the  Trust's  obligations  under  the  preferred  securities.  The  preferred
securities  must  be  redeemed  upon  maturity  of the subordinate debentures on
February  22,  2031.

NOTE 8 - The Corporation incorporated HNC Reinsurance Company during March 2001.
HNC Reinsurance Company is a reinsurer of consumer loan credit life and accident
and  health risks.  Through the reinsurance company, the Corporation will assume
a  portion  of  the  credit  insurance  risk in return for income from insurance
premiums.

NOTE  9  -  On  July  12,  2001, the Board of Directors of Harleysville National
Corporation  approved a 2-for-1 stock split of its Common Stock, effected in the
form  of  a  100%  stock  dividend,  payable August 10, 2001, to shareholders of
record  July  27,  2001.  All prior period amounts were restated to reflect this
100%  stock  dividend.

PAGE 8

ITEM  2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS  OF  OPERATIONS
-----------------------

       The  following is management's discussion and analysis of the significant
changes  in the results of operations, capital resources and liquidity presented
in  its  accompanying consolidated financial statements for the corporation, the
Banks,  HNC  Financial  Company  and HNC Reinsurance Company.  The corporation's
consolidated  financial  condition  and  results  of  operations  consist almost
entirely  of  the Banks' financial condition and results of operations.  Current
performance does not guarantee, and may not be indicative of similar performance
in  the  future.  These  are  unaudited  financial  statements and, as such, are
subject  to  year-end  audit  review.

       In  addition  to  historical  information,  this  Form  10-Q  contains
forward-looking  statements.  We  have  made  forward-looking statements in this
document, and in documents that we incorporate by reference, that are subject to
risks  and  uncertainties.  Forward-looking  statements  include the information
concerning  possible  or assumed future results of operations of the Corporation
and  its  subsidiaries.  When  we  use  words  such  as  "believes,"  "expects,"
"anticipates," or similar expressions, we are making forward-looking statements.

       Shareholders  should  note that many factors, some of which are discussed
elsewhere  in  this  document  and  in  the  documents  that  we  incorporate by
reference,  could affect the future financial results of the Corporation and its
subsidiaries  and  could  cause  those  results  to differ materially from those
expressed  in  our  forward-looking  statements  contained  or  incorporated  by
reference  in  this  document.  These  factors  include  the  following:

<TABLE>
<CAPTION>
<C>  <S>
  *    operating, legal and regulatory risks;
  *    economic, political and competitive forces affecting our banking,
       securities, asset management and credit services businesses; and
  *    the risk that our analyses of these risks and forces could be incorrect
       and/or that the strategies developed to address them could be unsuccessful
</TABLE>

OVERVIEW
--------

       The  Corporation  recorded a 20.0% increase in first quarter 2002 diluted
earnings  per  share,  compared  to  the  first  quarter  of  2001.  This strong
performance was the result of an increase in the net interest margin, the growth
in earning assets and a rise in other income.  Loan quality also improved during
the  first  quarter  of  2002.

       First quarter 2002 diluted earnings per share of $.42, increased 20% over
the  first quarter 2001 diluted earnings per share of $.35.  First quarter basic
earnings  per share in 2002 of $.43 exceed the first quarter 2001 basic earnings
per  share of  $.35 by 22.9%.  Net income of $7,812,000 increased 19.6% over the
first  quarter  2001  net  income of $6,531,000.  The Corporation's consolidated
total  assets  were  $2,172,935,000  at March 31, 2002, 9.2% above the March 31,
2001  level  of  $1,989,232,000.

       Contributing to the growth in net income during the first three months of
2002,  compared  to the same period in 2001, were higher net interest income and
other  operating  income,  which were partially offset by a higher provision for
loan  losses  and  an increase in other operating expenses.  Net interest income
grew  $3,457,000,  as  a  result of an increase in the net interest margin of 18
basis points and a 12.1% rise in average earning assets.  Other operating income
rose  $1,331,000,  due  to higher service charge fees, bank-owned life insurance
income,  gains on the sale of securities and other fee based income.  Offsetting
these  increases  was  a rise in other operating expenses related to the overall
growth  in  the  Corporation.

       For  the  three  months  ended  March  31, 2002, the annualized return on
average  shareholders'  equity  and the annualized return on average assets were

PAGE 9

16.24%  and  1.43%,  respectively.  For  the same period in 2001, the annualized
return  on  average  realized shareholders' equity was 14.89% and the annualized
return  on average assets was 1.35%. The average accumulated other comprehensive
income  at  March  31,  2002  was  a  gain  of $4,343,000, compared to a gain of
$2,615,000  at  March  31,  2001.  This  higher  accumulated other comprehensive
income  is  the  result  of the higher market value of investments available for
sale  at March 31, 2002, compared to March 31, 2001.  Excluding unrealized gains
and  losses  on  securities available for sale, the annualized return on average
realized  shareholder's  equity  for  March  31,  2002  and 2001 were 16.62% and
15.12%,  respectively.

       The  quality  of  the  loan  portfolios  is a primary focus of the banks.
Nonperforming assets (nonaccruing loans and net assets in foreclosure) were .27%
of total assets at March 31, 2002, compared to .32% at December 31, 2001and .30%
at  March  31,  2001.  As of March 31, 2002, aggregate loans past due 90 or more
and still accruing interest were $649,000 compared to $1,926,000 at December 31,
2001  and  $167,0000  at  March  31,  2001.

       Net  income  is  affected by five major elements: net interest income, or
the  difference  between  interest  income  earned  on loans and investments and
interest  expense  paid  on  deposits and borrowed funds; the provision for loan
losses, or the amount added to the allowance for loan losses to provide reserves
for  future  losses on loans; other operating income, which is made up primarily
of  certain  fees,  trust  income and gains and losses from sales of securities;
other operating expenses, which consist primarily of salaries, employee benefits
and  other  operating  expenses; and income taxes.  Each of these major elements
will  be  reviewed  in  more  detail  in  the  following  discussion.

 NET  INTEREST  INCOME  AND  RELATED  ASSETS  AND  LIABILITIES
 -------------------------------------------------------------
       The  first  quarter  of 2002 net interest income of $20,608,000 increased
$3,457,000,  or 20.2%, over the same period in 2001, which produced net interest
income of $17,151,000.  As illustrated in the table below, the primary source of
the  increase  in  net interest income was the reduction in funding costs in the
first  quarter  of 2002, compared to the same period in 2001.  The lower deposit
and other borrowing rates outpaced the reduction in earning asset yields related
to  the  lower rate environment in the first quarter of 2002. The lower interest
income  level  related  to  the  reduction in earning asset yields was partially
offset  by  higher  earning  asset  levels.

       The  rate-volume variance analysis set forth in the table below, which is
computed  on  a  tax-equivalent basis (tax rate of 35%), analyzes changes in net
interest income for the three months ended March 31, 2002 over March 31, 2001 by
their  rate  and  volume  components.

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                           March 31, 2002
                                                            Over/Under
                                                           March 31, 2001
<S>                                          <C>                   <C>           <C>
                                             Total                      Caused by:
                                                                       ------------
                                             Variance              Rate          Volume
                                             --------------------  ------------  -------
Interest Income:
  Securities *. . . . . . . . . . . . . . .  $               508   $    (1,310)  $ 1,818
  Money market instruments. . . . . . . . .                    2           (55)       57
  Loans * . . . . . . . . . . . . . . . . .               (1,574)       (3,327)    1,753
                                             --------------------  ------------  -------
  Total . . . . . . . . . . . . . . . . . .               (1,064)       (4,692)    3,628
                                             --------------------  ------------  -------

Interest Expense:
  Savings deposits. . . . . . . . . . . . .               (2,271)       (2,619)      348
  Time deposits and certificates of deposit               (1,090)       (2,126)    1,036
  Other borrowings. . . . . . . . . . . . .                 (916)         (945)       29
                                             --------------------  ------------  -------
Total . . . . . . . . . . . . . . . . . . .               (4,277)       (5,690)    1,413
                                             --------------------  ------------  -------

Net Interest Income . . . . . . . . . . . .  $             3,213   $       998   $ 2,215
                                             ====================  ============  =======
 *Tax Equivalent Basis
</TABLE>

PAGE 10

 Taxable-equivalent  net  interest  income  was  $22,138,000 for the first three
months  of 2002, compared to $18,925,000 for the same period in 2001, a 17.0% or
$3,213,000  increase.  This  rise  in taxable-equivalent net interest income was
primarily  due  to a $4,277,000 reduction in interest expense, which was in part
offset  by  a  decrease  in  interest  income,  related  to  rate.  Total
taxable-equivalent interest income decreased $1,064,000, primarily the result of
lower  earning  asset yields, partially offset by the higher volumes in both the
security  and  loan  earning  asset  categories.  Average  year-to-date loan and
security  volumes  grew  $97,054,000 and $115,686,000, respectively at March 31,
2002,  compared  to the same period in 2001.  The yield earned on earning assets
decreased  107  basis  points  from  7.93% in the first quarter of 2001 to 6.86%
during  the  first  quarter  of  2002.

 Total  interest  expense  decreased $4,277,000 during the first three months of
2002,  compared  to  the  same period in 2001.  This reduction was the result of
lower  rates  paid  on  deposits, partially offset by the added interest expense
related  to  the  higher  deposit  and other borrowing volumes. The rate paid on
interest  bearing  deposits and other borrowings decreased 151 basis points from
4.58% during the first quarter of 2001 to 3.07% recorded in the first quarter of
2002.  Average interest bearing deposits and other borrowings grew $186,339,000,
or  12.3%  during  this  period.  The  average  year-to-date  savings  deposits
increased $92,051,000 or 13.7%, primarily due to a $59,387,000 increase in money
market  accounts.  This  increase  in  money  market  accounts was due to higher
average  volumes  in  our  higher  rate public money market and treasury indexed
accounts.  Average  year-to-date  time  deposits  and  other  borrowings  grew
$91,234,000  and  $3,054,000, respectively during this period.  Other borrowings
include  federal  funds  purchased,  FHLB  borrowings,  securities  sold  under
agreements  to  repurchase,  U.  S. Treasury demand notes and junior subordinate
deferrable  interest  debentures.

NET  INTEREST  MARGIN
---------------------

 The  net  interest  margin  of 4.31% for the three-month period ended March 31,
2002, increased 18 basis points from the 4.13% net interest margin for the first
three  months  of  2001.  The  higher net interest margin experienced in 2002 is
related to the lower funding costs and the increase in earning asset levels. The
yield  on  earning  assets of 6.86% earned during the first three months of 2002
was  lower  than  the  7.93%  earned  during the first three months of 2001. The
decrease  in  the  yield  is  due to lower interest environment during the first
quarter  of  2002,  compared  to the same period in 2001.  This reduction in the
yield  earned  on earning assets was more than offset by a reduction in the rate
paid  on deposits and other borrowings.  The first quarter 2002 average interest
rate  paid  on interest-bearing deposits and other borrowings of 3.07% was lower
than  the  first  three  months  of  2001  rate  of  4.58%.

INTEREST  RATE  SENSITIVITY  ANALYSIS
-------------------------------------

 The  Corporation actively manages its interest rate sensitivity positions.  The
objectives  of  interest  rate  risk  management  are to control exposure of net
interest  income to risks associated with interest rate movements and to achieve
consistent  growth in net interest income.  The Asset/Liability Committee, using
policies  and  procedures  approved by the Corporation's Boards of Directors, is
responsible  for managing the rate sensitivity position. The Corporation manages
interest  rate  sensitivity by changing mix and repricing characteristics of its
assets  and  liabilities  through  their  investment  securities portfolios, its
offering  of  loan and deposit terms and borrowings from the FHLB. The nature of
the  Corporation's  current operations is such that it is not subject to foreign
currency exchange or commodity price risk.  The Corporation does not own trading
assets  and  does  not  have any hedging transactions in place, such as interest
rate  swaps,  caps  or  floors.

 The  Corporation  uses  three  principal reports to measure interest rate risk:
asset/liability  simulation  reports;  gap  analysis  reports;  and net interest
margin  reports.  Management  also  simulates  possible  economic conditions and
interest  rate scenarios in order to quantify the impact on net interest income.
The  effect  that changing interest rates have on the Corporation's net interest
income  is  simulated  by  increasing  and  decreasing  interest  rates.  This
simulation  is  known as rate shocks.  The March 31, 2002 report below forecasts
changes  in  the Corporation's market value of equity under alternative interest
rate  environments.  The  market  value  of equity is defined as the net present
value  of the Corporation's existing assets and liabilities.  The results of the
March  31,  2002  rate shock simulations show that the Corporation is within all
guidelines  set  by  the  Corporation's  Asset/Liability  policy.

PAGE 11

<TABLE>
<CAPTION>
(Dollars  in  thousands)

                                    CHANGE IN                   ASSET/LIABILITY
                   MARKET VALUE    MARKET VALUE    PERCENTAGE      APPROVED
                     OF EQUITY      OF EQUITY        CHANGE      PERCENT CHANGE
                   ------------  ----------------  -----------  ---------------
<S>                <C>           <C>               <C>          <C>
+300 Basis Points       173,504          (51,890)      -23.02%          +/- 45%
+200 Basis Points       196,754          (28,640)      -12.71%          +/- 30%
+100 Basis Points       217,937           (7,457)       -3.31%          +/- 15%
Flat Rate . . . .       225,394                -         0.00%
-100 Basis Points       198,128          (27,266)      -12.10%          +/- 15%
-200 Basis Points       170,113          (55,281)      -24.53%          +/- 30%
-300 Basis Points       191,555          (33,839)      -15.01%          +/- 45%
</TABLE>

In  the  event  the  Corporation should experience an excessive decline in their
market value of equity resulting from changes in interest rates, it has a number
of  options  that it could use to remedy such a mismatch.  The Corporation could
restructure  its  investment  portfolios  through sale or purchase of securities
with more favorable repricing attributes.  It could also emphasize loan products
with  appropriate  maturities  or  repricing  attributes, or attract deposits or
obtain  borrowings  with  desired  maturities.


PROVISION  FOR  LOAN  LOSSES
----------------------------

 The  Bank  uses the reserve method of accounting for credit losses. The balance
in  the  allowance for loan and lease losses is determined based on management's
review and evaluation of the loan portfolio in relation to past loss experience,
the  size  and  composition  of  the  portfolio,  current  economic  events  and
conditions,  and  other pertinent factors, including management's assumptions as
to  future  delinquencies, recoveries and losses. Increases to the allowance for
loan  and  lease  losses are made by charges to the provision for credit losses.
Credit  exposures  deemed  to be uncollectible are charged against the allowance
for  credit losses. Recoveries of previously charged-off amounts are credited to
the  allowance  for  credit  losses.

 While  management  considers  the  allowance  for  loan  and lease losses to be
adequate  based  on  information  currently  available,  future additions to the
allowance may be necessary due to changes in economic conditions or management's
assumptions  as  to future delinquencies, recoveries and losses and management's
intent  with regard to the disposition of loans and leases. In addition, the OCC
as an integral part of their examination process, periodically review the Bank's
allowance  for  loan losses. The OCC may require the Bank to recognize additions
to  the  allowance for credit losses based on their judgements about information
available  to  them  at  the  time  of  their  examination.

 The  Bank's  allowance for loan and lease losses is the accumulation of various
components  that  are calculated based on various independent methodologies. All
components  of  the  allowance  for  credit losses are an estimation. Management
bases  its  recognition  and  estimation  of each allowance component on certain
observable data that it believes is the most reflective of the underlying credit
losses  being  estimated.  The  observable  data  and  accompanying  analysis is
directionally consistent, based upon trends, with the resulting component amount
for  the  allowance for loan and lease losses. The Bank's allowance for loan and
lease  losses  components  include  the following: historical loss estimation by
loan  product  type  and  by risk rating within each product type, payment (past
due)  status,  industry  concentrations, internal and external variables such as
economic  conditions,  credit policy and underwriting changes, competence of the
loan  review  process  and  other  historical loss model imprecision. The Bank's
historical loss component is the most significant component of the allowance for
loan  and  lease  losses,  and  all  other allowance components are based on the
inherent  loss  attributes  that  management  believes  exist  within  the total
portfolio  that  are  not  captured  in  the  historical  loss  component.

PAGE 12

 The  historical  loss  components  of  the  allowance represents the results of
analyses  of  historical  charge-offs and recoveries within pools of homogeneous
loans,  within  each  risk rating and broken down further by segment, within the
portfolio.

 The  historical  loss components of the allowance for commercial loans is based
principally  on  current  risk  ratings,  historical  loss  rates  adjusted,  by
adjusting  the risk window, to reflect current events and conditions, as well as
analyses  of other factors that may have affected the collectibility of loans in
the  commercial portfolio. The Bank analyzes all commercial loans that are being
monitored  as  potential credit problems, via Watchlist Memorandum, to determine
whether  such  loans  are  individually  impaired,  with  impairment measured by
reference  to  the  collateral  coverage  and  /  or  debt service coverage. The
historical  loss  component  of  the  allowance  for  consumer  loans  is  based
principally  on  loan  payment status, retail classification and historical loss
rates  adjusted,  by  adjusting  the  risk window, to reflect current events and
conditions.

 The  industry concentration component is recognized as a possible factor in the
estimation  of  credit losses. Two industries represent possible concentrations:
commercial  real  estate  and  automobile  dealers.  No  specific  loss-related
observable  data  is  recognized  by management currently, therefore no specific
factor  is  calculated  in  the  reserve  solely  for  the  impact  of  these
concentrations,  although  management  continues  to carefully consider relevant
data  for  possible  future  sources  of  observable  data.

 The  historic  loss  model  imprecision component (soft factors and unallocated
portion)  reflects management's belief that there are additional inherent credit
losses  based  on  loss  attributes not adequately captured in the statistical /
historical  loss  component  and  is  an assessment of information delay and its
impact  on  the  timeliness of the risk rating process and loss recognition. The
principal  observable  data  utilized  by  management  as the driver of the loss
recognition  and measurement of this component is an internal management measure
of  the age of financial information used in the borrower debt service analysis.
This  is  also  a  key  judgmental component, as experiential data confirms that
measurable  losses  lag  the  empirical model as a downward credit cycle begins.

 For  the  first  three  months  of  2002  the  provision  for  loan  losses was
$1,351,000,  compared  to  $647,000  for  the  same  period in 2001.  The higher
provision for loan losses during the first quarter of 2002, compared to the same
period  in  2001  is  attributed to the higher net charge offs and the growth in
loans  during  this  period.  Net  loans  charged off was $784,000 for the three
months  ended  March  31,  2002, compared to $562,000 for the three months ended
March  31,  2001.  The increase in net charged off loans is attributed to a rise
in  charged  off  indirect consumer loans and commercial real estate loans.  The
ratio  of  the  allowance  for loan losses to nonperforming assets for March 31,
2002  of  277.2%  was  higher  than the December 31, 2001 and the March 31, 2001
ratios  of  223.4%  and  253.8%,  respectively.

PAGE 13

<TABLE>
<CAPTION>
ALLOWANCE FOR LOAN LOSSES
   A summary of the allowance for loan losses is as follows:

(Dollars in thousands)                                               MARCH 31,
                                                                    -----------
<S>                                                         <C>          <C>
                                                                  2002         2001
                                                            -----------  -----------
Average loans. . . . . . . . . . . . . . . . . . . . . . .  $1,315,458   $1,217,005
                                                            -----------  -----------

Allowance, beginning of period . . . . . . . . . . . . . .  $   15,558   $   15,210
                                                            -----------  -----------
Loans charged off:
 Commercial and industrial . . . . . . . . . . . . . . . .           8           24
 Consumer. . . . . . . . . . . . . . . . . . . . . . . . .         803          449
 Real estate . . . . . . . . . . . . . . . . . . . . . . .         264           37
 Lease financing . . . . . . . . . . . . . . . . . . . . .          62          175
                                                            -----------  -----------
 Total loans charged off . . . . . . . . . . . . . . . . .       1,137          685
                                                            -----------  -----------
Recoveries:
 Commercial and industrial . . . . . . . . . . . . . . . .           8            2
 Consumer. . . . . . . . . . . . . . . . . . . . . . . . .         279           31
 Real estate . . . . . . . . . . . . . . . . . . . . . . .          29           66
 Lease financing . . . . . . . . . . . . . . . . . . . . .          37           24
                                                            -----------  -----------
 Total recoveries. . . . . . . . . . . . . . . . . . . . .         353          123
                                                            -----------  -----------
Net loans charged off. . . . . . . . . . . . . . . . . . .         784          562
                                                            -----------  -----------
Provision for loan losses. . . . . . . . . . . . . . . . .       1,351          647
                                                            -----------  -----------
Allowance, end of period . . . . . . . . . . . . . . . . .  $   16,125   $   15,295
                                                            ===========  ===========
Ratio of net charge offs to
  average loans outstanding. . . . . . . . . . . . . . . .        0.06%        0.05%
                                                            ===========  ===========
</TABLE>

<TABLE>
<CAPTION>
                                 3/31/02     12/31/01      3/31/01
                               -----------  -----------  -----------
<S>                            <C>          <C>          <C>
Nonperforming Assets. . . . .  $5,817,000   $6,963,000   $6,027,000
90 + days past due. . . . . .  $  649,000   $1,926,000   $  167,000
Allowance for loan losses to
Nonperforming assets. . . . .       277.2%       223.4%       253.8%
Nonperforming assets to total
Loans and net assets acquired
In foreclosure. . . . . . . .        0.44%        0.53%        0.49%
Allowance for loan losses
To total loans. . . . . . . .        1.21%        1.18%        1.24%
Nonperforming assets
To total assets . . . . . . .        0.27%        0.32%        0.30%
</TABLE>

PAGE 14

The following table sets forth an allocation of the allowance for loan losses by
loan  category:
<TABLE>
<CAPTION>
                              March 31, 2002
                              --------------
                           Percent
<S>                        <C>       <C>
                           Amount    of Loans
                           --------  ---------
Commercial and industrial  $  5,177        32%
Consumer loans. . . . . .     6,376        39%
Real estate . . . . . . .     2,991        19%
Lease financing . . . . .     1,581        10%
                           --------  ---------
  Total . . . . . . . . .  $ 16,125       100%
                           ========  =========
</TABLE>

 Nonperforming  assets  (nonaccruing  loans  and net assets in foreclosure) were
0.44%  of  total loans and net assets acquired in foreclosure at March 31, 2002,
compared  to  0.53% at December 31, 2001 and 0.49% at March 31, 2001.  The ratio
of  the allowance for loan losses to loans at March 31, 2002 of 1.21% was higher
than  the  December  31,  2001  ratio of 1.18% and lower than the March 31, 2000
ratio  of  1.24%.

 Nonaccruing  loans  at  March 31, 2002 of $5,817,000, decreased $1,146,000 from
the December 31, 2001 level of $6,963,000, and decreased $210,000 from the March
31,  2001  level  of  $6,027,000.The  decrease in nonaccruing loans at March 31,
2002,  compared  to  both December 31, 2001 and March 31, 2000 was primarily the
result  of  a  decrease  in  commercial  nonaccruing  loans.

 Net  assets  in  foreclosure  were $459,000 as of March 31, 2002, a decrease of
$150,000 from the December 31, 2001 balance of $609,000.  During the first three
months  of  2002,  transfers  from loans to assets in foreclosure were $198,000,
payments on foreclosed properties were $342,000 and the write-downs of assets in
foreclosure  were $6,000 during this period.  The loans transferred to assets in
foreclosure included vehicle leases of $136,000 and equipment leases of $62,000.
The  balance  of  net  assets  in  foreclosure  at  March 31, 2001 was $527,000.
Efforts to liquidate assets acquired in foreclosure are proceeding as quickly as
potential  buyers  can  be  located  and  legal  constraints  permit.  Generally
accepted  accounting  principles  require foreclosed assets to be carried at the
lower  of  cost  (lesser  of  carrying  value  of asset or fair value at date of
acquisition)  or  estimated  fair  value.

 Loans  past  due 90 days or more and still accruing interest are loans that are
generally  well  secured  and expected to be restored to a current status in the
near  future.  As  of  March  31, 2002, loans past due 90 days or more and still
accruing  interest  were $649,000 compared to $1,926,000 as of December 31, 2001
and  $167,000  as  of  March  31, 2001.The decrease in loans past due 90 days at
March  31,  2002,  compared  December  31,  2001  was  primarily the result of a
decrease  in  commercial  real  estate  loans  past  due  90  days.

PAGE 15

<TABLE>
<CAPTION>
The  following  information  concerns  impaired  loans:
<S>                                                <C>              <C>             <C>
                                                   March 31, 2002   Dec. 31, 2001   March 31, 2001
                                                   ---------------  --------------  ---------------
 Impaired Loans . . . . . . . . . . . . . . . . .  $     2,835,000  $    3,721,000  $     3,269,000
                                                   ===============  ==============  ===============

 Average year-to-date impaired loans. . . . . . .  $     3,401,000  $    3,505,000  $     3,133,000
                                                   ===============  ==============  ===============

 Impaired loans with specific loss allowances . .  $     2,835,000  $    3,721,000  $     3,269,000
                                                   ===============  ==============  ===============

 Loss allowances reserved on impaired loans . . .  $       311,000  $      429,000  $       366,000
                                                   ===============  ==============  ===============

 Year-to-date income recognized on impaired loans  $         8,000  $       78,000  $        46,000
                                                   ===============  ==============  ===============
</TABLE>

 The  banks'  policy  for  interest  income  recognition on impaired loans is to
recognize  income  on  restructured  loans  under the accrual method.  The banks
recognize  income  on  nonaccrual  loans under the cash basis when the loans are
both  current  and  the  collateral  on  the  loan  is  sufficient  to cover the
outstanding  obligation  to  the  banks.  The banks will not recognize income if
these  factors  do  not  exist.
<TABLE>
<CAPTION>

OTHER  OPERATING  INCOME
------------------------
                               Three Months Ended March 31,
                               ---------------------------
<S>                            <C>              <C>
                                        2002    2001
                               ---------------  ------
  (Dollars in thousands)

Service charges . . . . . . .  $         1,521  $1,027
Security (losses) gains, net.            1,231     721
Trust income. . . . . . . . .              744     827
Bank-owned life insurance . .              638     691
Other income. . . . . . . . .            1,389     926
                               ---------------  ------
Total other operating income.  $         5,523  $4,192
                               ===============  ======
</TABLE>

 Other operating income for the first three months of 2002 increased $1,331,000,
or 31.8%, from $4,192,000 at March 31, 2001 to $5,523,000 at March 31, 2002.This
rise  in  other  operating income is the result of increases in service charges,
other  income  and  security  gains  of  $494,000,  $463,000  and  $510,000,
respectively.  Offsetting  these  gains  were  reductions  in  bank-owned  life
insurance  (BOLI)  income  and trust income.  The rise in other operating income
was  23.7%,  not  inclusive  of  the  securities  gains  and  losses.

 Service  charges  grew  $494,000  or  48.1%  in the first three months of 2002,
compared  to the same period in 2001.  This rise is the result of an increase in
fees  charged  on  transaction  deposit  accounts, attributed to the increase in
average deposit transaction accounts and through the Corporation's strategies to
enhance  fee  income.  The  driving force behind the increase in service charges
was  the  introduction  of a new overdraft product in March 2001.  The growth in
overdraft  fees  during  the first quarter of 2002 was $386,000, compared to the
same period in 2001.  The remaining increase is related to the growth in average
transaction  deposits  and  enhanced  fee  structures.

 The Corporation recorded net security gains on the sale of securities available
for sale of $1,231,000 in the first quarter of 2002, compared to $721,000 during
the  first  quarter  of  2001.  The  Corporation  sold the investment securities
available  for  sale  to  fund  the purchase of other securities in an effort to
enhance  the  overall  return  of  the  portfolio  and to reduce the risk within
different  interest  rate  environments.

PAGE 16

 Income  from  the  Investment  Management and Trust Services Division decreased
$83,000, or 10.0% in the first three months of 2002, compared to the same period
in  2001.This  decrease  was  the result of lower estate fees earned during this
period.

 The  Corporation's  bank  owned  life  insurance  (BOLI)  income decreased from
$691,000  during  the  first quarter of 2001 to $638,000 in the first quarter of
2002.  The lower income level during the first quarter of 2002 is related to the
lower rate environment during this period.  BOLI involves the purchasing of life
insurance by the Corporation on a chosen group of employees.  The corporation is
the  owner  and beneficiary of the policies.  This pool of insurance, due to tax
advantages  to  the Banks, is profitable to the Corporation.  This profitability
is  used  to  offset  a portion of future employee benefit cost increases.  Bank
deposits  fund  BOLI  and the earnings from BOLI are recognized as other income.

 Other  income  for the first three months of 2002 increased $463,000, or 50.0%,
compared  to  the same period in 2001.  Contributing to this rise were increases
related  to fees earned on the sale of alternative investment products including
mutual  funds and annuities, gains on the sale of residential mortgage loans and
loan  servicing  fees.
<TABLE>
<CAPTION>

OTHER  OPERATING  EXPENSES
--------------------------

                                  Three Months Ended March 31,
                                  ---------------------------
<S>                               <C>                <C>
                                            2002     2001
                                  ---------------  -------
    (Dollars in thousands)

Salaries . . . . . . . . . . . .  $        5,946  $ 5,215
Employee benefits. . . . . . . .           1,739    1,085
Occupancy expense. . . . . . . .           1,237      902
Furniture and equipment expense.           1,288    1,207
Other expenses . . . . . . . . .           4,270    4,056
                                   -------------   ------
Total other operating expenses .  $       14,480  $12,465
                                   =============  =======
</TABLE>

 The  first  quarter  2002  other  operating  expenses  of $14,480,000 increased
$2,015,000,  or 16.2% from $12,465,000 for the same period in 2001.  The rise in
operating  expenses was the result of both employee benefit costs and a one-time
occupancy  expense  related  to  a  closed  branch.

 Employee  salaries  increased  $731,000  or 14.0% from $5,215,000 for the first
three  months  of 2001 to $5,946,000 for the same period in 2002.  This increase
reflects cost of living increases, merit increases, salaries related to the rise
in the sale of alternative investment products and additional staff necessitated
by  the  growth  of  the Banks.  Employee benefits of $1,739,000 expensed in the
first three months of 2002, were $654,000 higher than the $1,085,000 of employee
benefits  expensed  during  the  same  period in 2001.  The increase in employee
benefits is the result of higher pension expenses and employee medical insurance
coverage.

 Net  occupancy expense increased $335,000, or 37.1%, from $902,000 in the first
three  months  of  2001  to  $1,237,000 in the first three months of 2002.  This
increase  was  due  to a $365,000 expense related to a branch closure, partially
offset by a reduction in snow removal expenses.  Furniture and equipment expense
increased  $81,000,  or 6.7%, during the first three months of 2002, compared to
the  same  period in 2001.  This increase is due to higher equipment maintenance
and  rental  expenses,  partially  offset  by  lower  depreciation  cost.

 Other  expenses increased $214,000, or 5.3%, from $4,056,000 in the first three
months  of  2001,  compared  to $4,270,000 in other expenses recorded during the
same  period in 2002. This increase was primarily due to higher expenses related
to costs associated with the addition of employees to the supplemental executive
retirement  plan.

PAGE 17

INCOME  TAXES
-------------

 Income  tax  expense is less than the amount calculated using the statutory tax
rate  primarily as a result of tax exempt income earned from state and municipal
securities  and  loans.

BALANCE  SHEET  ANALYSIS
------------------------

 Total  assets  decreased  $36,036,000, or 1.6%, from $2,208,971,000 at December
31,  2001  to $2,172,935,000 at March 31, 2002.  This decrease was the result of
lower  investment  securities  available  for sale, interest-bearing deposits in
banks and cash and due from banks, partially offset by higher loan volumes.  The
higher year end 2001asset levels were funded by a large spike in deposit volumes
at the end of 2001.  Total assets at March 31, 2002 grew 9.2%, compared to March
31,  2001.

 The  balance of securities available for sale at March 31, 2001 of $672,907,000
decreased $33,464,000 compared to the December 31, 2001 balance of $706,371,000.
During  the  current quarter, $117,295,000 of securities available for sale were
sold  which  generated  a pretax gain of $1,231,000.  In comparison, $71,928,000
securities  available  for  sale  were  sold during the first quarter of 2001 to
generate  a pretax gain of $721,000. The Corporation sells investment securities
available  for  sale  to  fund  the purchase of other securities in an effort to
enhance  the  overall return of the portfolio, and to reduce the risk associated
within  different  interest  rate  environments.  The  balance  of  investment
securities  held  to  maturity  decreased $1,286,000 during the first quarter of
2002.  Total  loans  grew  $12,462,000  or  0.9% during the first quarter.  This
growth  was  primarily due to increases in both commercial loans and home equity
loans,  partially  offset  by  lower indirect auto financing and vehicle leases.
Total  loans  grew  8.1%  at  March  31,  2002,  compared  to  March  31,  2001.

 Total  deposits  decreased $39,431,000, or 2.2% from $1,746,862,000 at December
31,  2001  to  $1,707,431,000  at  March 31, 2002.  This decrease was related to
lower time deposits over $100,000, noninterest-bearing deposits and money market
deposits.  The  lower  time deposits over $100,000 is due to the normal seasonal
fluctuations  of  municipal  deposits.  The  decrease  in  non-interest  bearing
deposits  was  also  associated  with  normal  fluctuations in business checking
accounts during this period.  The lower money market volumes is due to one large
account deposited during December 2001and withdrawn during January of 2002.  The
March  31, 2002 total deposit balance grew 11.5%, compared to the March 31, 2001
total  deposits.

 Savings  accounts,  interest  bearing checking accounts and time deposits under
$100,000 grew $12,868,000, $6,371,000 and $6,087,000, respectively.Time deposits
over  $100,000, money market accounts and non-interest bearing checking accounts
decreased  $36,086,000,  $15,318,000  and  $13,353,000,  respectively.

 Other borrowings experienced an increase of $4,009,000 during the first quarter
of  2002.  An  increase  of $15,000,000 in Federal Home Loan Bank Borrowings was
offset  by  a  $10,051,000  decrease  in  securities  sold  under  agreements to
repurchase  and  a  $940,000  reduction  in  U.S.  Treasury  demand  notes.

CAPITAL
-------

 Capital  formation  is  important  to  the  Corporation's well being and future
growth.  Capital  for  the  period  ending  March  31,  2002 was $188,868,000, a
decrease  of  $481,000  over the end of 2001.  The decrease is the result of the
retention  of  the  Corporation's earnings, offset by the adjustment for the net
unrealized  gains  on  the  investments  securities  available  for sale and the
purchase  of  treasury  stock  during  the first quarter of 2001. Net unrealized
gains  and  losses  on  available for sale investment securities are recorded as
accumulated  other  comprehensive  income  in  the equity section of the balance
sheet.  The  accumulated other comprehensive income at March 31, 2002 was a gain
of  $643,000,  compared  to  a  gain  of  $4,534,000  at December 31, 2001.  The
corporation  purchased  $1,814,000 of treasury stock during the first quarter of
2002.Management  believes  that  the Corporation's current capital and liquidity
positions  are  adequate  to support its operations.  Management is not aware of
any  recommendations  by  any  regulatory  authority,  which,  if  it were to be
implemented,  would  have  a  material  effect  on  the  Corporation's  capital.

PAGE 18

<TABLE>
<CAPTION>

(Dollars  in  thousands)
                                                                For  Capital
As  of  March  31,  2002                    Actual           Adequacy  Purposes
------------------------
                                            Amount   Ratio    Amount   Ratio
                                           --------  ------  --------  ------
<S>                                        <C>       <C>     <C>       <C>
Total Capital (to risk weighted assets):
Corporation . . . . . . . . . . . . . . .  $209,882  13.61%  $123,311   8.00%
Harleysville National Bank. . . . . . . .   122,964  10.97%    89,698   8.00%
Citizens National Bank. . . . . . . . . .    40,232  14.09%    22,843   8.00%
Security National Bank. . . . . . . . . .    15,567  12.77%     9,752   8.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $192,833  12.50%  $ 61,655   4.00%
Harleysville National Bank. . . . . . . .   112,558  10.04%    44,849   4.00%
Citizens National Bank. . . . . . . . . .    36,658  12.84%    11,421   4.00%
Security National Bank. . . . . . . . . .    14,040  11.52%     4,876   4.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $192,833   8.85%  $ 87,123   4.00%
Harleysville National Bank. . . . . . . .   112,558   7.18%    62,737   4.00%
Citizens National Bank. . . . . . . . . .    36,658   8.35%    17,567   4.00%
Security National Bank. . . . . . . . . .    14,040   8.23%     6,826   4.00%
</TABLE>

<TABLE>
<CAPTION>
                                            To Be Well Capitalized
                                           Under Prompt Corrective
                                               Action Provision
<S>                                        <C>                       <C>
                                           Amount                    Ratio
                                           ------------------------  ------
Total Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $                      -      -
Harleysville National Bank. . . . . . . .                   112,122  10.00%
Citizens National Bank. . . . . . . . . .                    28,554  10.00%
Security National Bank. . . . . . . . . .                    12,190  10.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $                      -      -
Harleysville National Bank. . . . . . . .                    67,273   6.00%
Citizens National Bank. . . . . . . . . .                    17,132   6.00%
Security National Bank. . . . . . . . . .                     7,314   6.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $                      -      -
Harleysville National Bank. . . . . . . .                    78,421   5.00%
Citizens National Bank. . . . . . . . . .                    21,958   5.00%
Security National Bank. . . . . . . . . .                     8,533   5.00%
</TABLE>

PAGE 19

<TABLE>
<CAPTION>

(Dollars  in  thousands)
                                                                       For Capital
As of December 31, 2001                    Actual                    Adequacy Purposes
-----------------------------------------
<S>                                        <C>           <C>        <C>       <C>
                                           Amount        Ratio       Amount    Ratio
                                           ------------  ---------- --------  ------
Total Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    205,743       13.23%  $124,445   8.00%
Harleysville National Bank. . . . . . . .       118,782       10.46%    90,862   8.00%
Citizens National Bank. . . . . . . . . .        39,888       13.91%    22,936   8.00%
Security National Bank. . . . . . . . . .        15,132       12.53%     9,661   8.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    189,423       12.18%  $ 62,222   4.00%
Harleysville National Bank. . . . . . . .       108,939        9.59%    45,431   4.00%
Citizens National Bank. . . . . . . . . .        36,297       12.66%    11,468   4.00%
Security National Bank. . . . . . . . . .        13,622       11.28%     4,830   4.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    189,423        8.71%  $ 87,040   4.00%
Harleysville National Bank. . . . . . . .       108,939        6.91%    63,024   4.00%
Citizens National Bank. . . . . . . . . .        36,297        8.45%    17,182   4.00%
Security National Bank. . . . . . . . . .        13,622        8.44%     6,455   4.00%
</TABLE>

<TABLE>
<CAPTION>

                                         To Be Well Capitalized
                                         Under Prompt Corrective
                                            Action Provision

                                            Amount   Ratio
                                           --------  ------
Total Capital (to risk weighted assets):
-----------------------------------------
<S>                                        <C>       <C>
Corporation . . . . . . . . . . . . . . .  $      -      -
Harleysville National Bank. . . . . . . .   113,578  10.00%
Citizens National Bank. . . . . . . . . .    28,669  10.00%
Security National Bank. . . . . . . . . .    12,076  10.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $      -      -
Harleysville National Bank. . . . . . . .    68,147   6.00%
Citizens National Bank. . . . . . . . . .    17,202   6.00%
Security National Bank. . . . . . . . . .     7,246   6.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $      -      -
Harleysville National Bank. . . . . . . .    78,780   5.00%
Citizens National Bank. . . . . . . . . .    21,477   5.00%
Security National Bank. . . . . . . . . .     8,069   5.00%
</TABLE>

 Pursuant to the federal regulators' risk-based capital adequacy guidelines, the
components  of  capital  are  called  Tier  1  and  Tier  2  capital.  For  the
Corporation,  Tier  1 capital is the shareholders' equity, and Tier 2 capital is
the allowance for loan losses.  The minimum for the Tier 1 ratio is 4.0% and the
total capital ratio (Tier 1 plus Tier 2 capital divided by risk-adjusted assets)
minimum  is  8.0%.  At  March  31,  2002, the Corporation's Tier 1 risk-adjusted
capital  ratio was 12.50%, and the total risk-adjusted capital ratio was 13.61%,
both  well  above the regulatory requirements.  The risk-based capital ratios of
each of the Corporation's commercial banks also exceeded regulatory requirements
at  March  31,  2002.

PAGE 20

 The  leverage  ratio  consists  of  Tier 1 capital divided by quarterly average
total  assets,  excluding intangible assets.  Banking organizations are expected
to  have ratios of at least 4% and 5%, depending upon their particular condition
and  growth  plans.  Higher  leverage ratios could be required by the particular
circumstances  or  risk  profile  of  a  given  banking  organization.  The
Corporation's leverage ratios were 8.85% at March 31, 2002 and 8.71% at December
31,  2001.

 The  year-to-date  March  31,  2002  cash  dividend per share of $.17 was 13.3%
higher than the cash dividend for the same period in 2001 of $.15.  The dividend
payout ratio for the first three months of 2002 was 39.8%, compared to 41.3% for
the  twelve  month  period  ended  December  31,  2001.  Activity  in  both  the
Corporation's dividend reinvestment and stock purchase plan and the stock option
plan  did not have a material impact on capital during the first three months of
2002.

LIQUIDITY
---------

 Liquidity  is  a  measure  of  the ability of the Banks to meet their needs and
obligations on a timely basis.  For a bank, liquidity provides the means to meet
the  day-to-day  demands  of  deposit  customers  and  the  needs  of  borrowing
customers.  Generally,  the  Banks  arrange  their  mix  of  cash,  money market
investments,  investment  securities and loans in order to match the volatility,
seasonality,  interest  sensitivity and growth trends of its deposit funds.  The
liquidity  measurement  is  based  on  the asset/liability model's projection of
potential  sources  and  used  of  funds  for  the next 120 days.  The resulting
projections  as  of March 31, 2002 show the potential sources of funds exceeding
the  potential  uses  of  funds.  The Corporation has external sources of funds,
which can be drawn upon when funds are required.  The primary source of external
liquidity  is  an  available line of credit with the FHLB of Pittsburgh.  Unused
lines  of  credit  at  the FHLB of Pittsburgh were $141,927,000, as of March 31,
2002.  The  Banks  also have unused federal funds lines of credit of $50,000,000
and  non-pledged  investment securities available for sale of $296,258,000 as of
March  31,  2002.

OTHER  ITEMS
------------

Legislative  &  Regulatory
--------------------------

 In  November  1999,  the Gramm-Leach-Bliley Financial Modernization Act of 1999
(Modernization  Act)  became  law.  The  Modernization  Act  allows bank holding
companies  meeting  management, capital and Community Reinvestment Act standards
to  engage  in  a  substantially broader range of nonbanking activities than was
permissible  before  enactment,  including  underwriting  insurance  and  making
merchant  banking  investments in commercial and financial companies.  It allows
insurers  and  other  financial  services  companies  to  acquire banks; removes
various  restrictions  that  currently apply to bank holing company ownership of
securities firms and mutual fund advisory companies; and establishes the overall
regulatory  structure  applicable  to bank holding companies that also engage in
insurance  and  securities  operations.  The  Corporation  currently believes it
meets  the  requirements  for  the  broader  range  of  activities  that will be
permitted  by  the  Modernization  Act.

  The  Modernization  Act also modifies current law related to financial privacy
and  community reinvestment.  The new privacy provisions will generally prohibit
financial  institutions,  including  the  Corporation, from disclosing nonpublic
financial  information  to nonaffiliated third parties unless customers have the
opportunity  to  "opt  out"  of  the  disclosure.


Pending  Legislation
--------------------

 Management  is  not  aware  of  any  other  current specific recommendations by
regulatory  authorities or proposed legislation which, if they were implemented,
would  have  a material adverse effect upon the liquidity, capital resources, or
results of operations, although the general cost of compliance with numerous and
multiple federal and state laws and regulations does have, and in the future may
have,  a  negative  impact  on  the  Corporation's  results  of  operations.

PAGE 21

Effects  of  Inflation
----------------------

 Inflation  has  some  impact on the Corporation and the Banks' operating costs.
Unlike  many  industrial  companies,  however,  substantially  all of the Banks'
assets and liabilities are monetary in nature.  As a result, interest rates have
a  more  significant impact on the Corporation's and the Banks' performance than
the  general level of inflation.  Over short periods of time, interest rates may
not necessarily move in the same direction or in the same magnitude as prices of
goods  and  services.

Effect  of  Government  Monetary  Policies
------------------------------------------

 The  earnings  of the Corporation are and will be affected by domestic economic
conditions  and the monetary and fiscal policies of the United States government
and  its  agencies.  An important function of the Federal Reserve is to regulate
the  money  supply  and interest rates.  Among the instruments used to implement
those  objectives  are  open  market  operations  in  United  States  government
securities  and  changes  in  reserve requirements against member bank deposits.
These  instruments  are used in varying combinations to influence overall growth
and distribution of bank loans, investments and deposits, and their use may also
affect  rates  charged  on  loans  or  paid  for  deposits.

 The  Banks  are members of the Federal Reserve and, therefore, the policies and
regulations  of  the  Federal Reserve have a significant effect on its deposits,
loans  and  investment  growth, as well as the rate of interest earned and paid,
and  are  expected to affect the Banks' operations in the future.  The effect of
such  policies  and  regulations  upon  the  future business and earnings of the
Corporation  and  the  Banks  cannot  be  predicted.

Environmental  Regulations
--------------------------

 There  are  several  federal and state statutes, which regulate the obligations
and  liabilities  of  financial institutions pertaining to environmental issues.
In  addition to the potential for attachment of liability resulting from its own
actions,  a  bank may be held liable under certain circumstances for the actions
of  its  borrowers,  or third parties, when such actions result in environmental
problems  on properties that collateralize loans held by the bank.  Further, the
liability  has  the potential to far exceed the original amount of a loan issued
by  the  bank.  Currently,  neither the Corporation nor the Banks are a party to
any  pending legal proceeding pursuant to any environmental statute, nor are the
Corporation  and  the  Banks  aware  of  any circumstances that may give rise to
liability  under  any  such  statute.

Branching
---------

 The  Corporation's subsidiaries currently plan to open at least one new branch.
During  the  third  quarter  of  2002,  Security  National  Bank plans to open a
location  in  Douglassville.  This  new branch site is contiguous to our current
service area and was chosen to expand the Banks' market area and market share of
loans  and  deposits.


ITEM  3  -  Qualitative  and  Quantitative  Disclosures  About  Market  Risk

 In  the  normal  course  of  conducting business activities, the Corporation is
exposed to market risk, principally interest risk, through the operations of its
banking subsidiaries.  Interest rate risk arises from market driven fluctuations
in  interest  rates  that  affect  cash  flows,  income,  expense  and values of
financial  instruments.  The  Asset/Liability  Committee,  using  policies  and
procedures  approved  by  the  Banks'  Boards  of  Directors, is responsible for
managing  the  rate  sensitivity  position.

 No material changes in market risk strategy occurred during the current period.
A  detailed  discussion  of market risk is provided in the SEC Form 10-K for the
period  ended  December  31,  2001.

PAGE 22

                           PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
<S>      <C>
Item 1.  Legal Proceedings
-------  -----------------
</TABLE>

 Management, based upon discussions with the Corporation's legal counsel, is not
aware  of  any  litigation  that  would  have  a  material adverse effect on the
consolidated  financial  position  of the Corporation.  There are no proceedings
pending  other  than the ordinary routine litigation incident to the business of
the  Corporation  and  its  subsidiaries  - Harleysville National Bank and Trust
Company,  Citizens  National Bank, Security National Bank, HNC Financial Company
and  HNC  Reinsurance Company.  In addition, no material proceedings are pending
or  are  known  to be threatened or contemplated against the Corporation and its
subsidiaries  by  government  authorities.
<TABLE>
<CAPTION>

<S>               <C>

Item 2.. . . . .  Change in Securities and Use of Proceeds
----------------  ---------------------------------------------------
  Not applicable

Item 3.. . . . .  Defaults Upon Senior Securities
----------------  ---------------------------------------------------
  Not applicable

Item 4.. . . . .  Submission of Matters to a Vote of Security Holders
----------------  ---------------------------------------------------
</TABLE>

(a)  The  2002 Annual Meeting of Shareholders was held at 9:30 a.m., on Tuesday,
April  9,  2002,  at  Presidential  Caterers,  2910  DeKalb  Pike,  Norristown,
Pennsylvania  19401.
<TABLE>
<CAPTION>
<S>                                                          <C>           <C>
(b), (c) Two matters were voted upon as follows:
 1.  Two directors were elected, as below:

Elected . . . . . . . . . . . . . . . . . . . . . . . . . .  Term Expires
-----------------------------------------------------------  ------------
Walter E. Daller, Jr. . . . . . . . . . . . . . . . . . . .          2006
Thomas S. McCready. . . . . . . . . . . . . . . . . . . . .          2006

The results of the voting for the directors are as follows:

Walter E. Daller, Jr. . . . . . . . . . . . . . . . . . . .
  For     . . . . . . . . . . . . . . . . . . . . . . . . .    13,925,981
  Against . . . . . . . . . . . . . . . . . . . . . . . . .     1,023,266
  Abstain . . . . . . . . . . . . . . . . . . . . . . . . .             0

Thomas S. McCready. . . . . . . . . . . . . . . . . . . . .
  For     . . . . . . . . . . . . . . . . . . . . . . . . .    14,711,894
  Against . . . . . . . . . . . . . . . . . . . . . . . . .     1,023,266
  Abstain . . . . . . . . . . . . . . . . . . . . . . . . .             0

Directors whose term continued after the meeting: . . . . .  Term Expires
                                                             ------------
Harold A. Herr. . . . . . . . . . . . . . . . . . . . . . .          2003
Henry M. Pollak . . . . . . . . . . . . . . . . . . . . . .          2003
Palmer E. Retzlaff. . . . . . . . . . . . . . . . . . . . .          2004
LeeAnn Bergey . . . . . . . . . . . . . . . . . . . . . . .          2004
James A. Wimmer . . . . . . . . . . . . . . . . . . . . . .          2005
William M. Yocum. . . . . . . . . . . . . . . . . . . . . .          2005

</TABLE>

PAGE 23

 2.  Approval  and  adoption  of  amendments  to  Article  5 of the Harleysville
National  Corporation  Articles  of  Incorporation  to  increase  the  number of
authorized  shares  of  common stock from 30,000,000 shares to 75,000,000 shares
and  series  preferred  stock  from  3,000,000  shares  to  8,000,000  shares:

<TABLE>
<CAPTION>
The  result  of  the  voting  is  as  follows:
<S>        <C>

  For . .  11,000,183
  Against   2,276,641
  Abstain     105,270
</TABLE>

<TABLE>
<CAPTION>
<S>      <C>

Item 5.  Other Information
-------  --------------------------------
  None

Item 6.  Exhibits and Reports on Form 8-K
-------  --------------------------------
</TABLE>

<TABLE>
<CAPTION>
     (a)  Exhibits:
     --------------
     The  following  exhibits  are  being  filed  as  part  of  this  Report:

Exhibit No.   Description of Exhibits
------------  ------------------------------------------------------------------------------------------------------
<C>           <S>

       (3.1)    Harleysville National Corporation Articles of Incorporation, as amended. (Incorporated by reference
              to Exhibit 3(a) to the Corporation's Registration Statement No. 33-65021 on Form S-4, as filed on
              December 14, 1995.)

       (3.2)    Harleysville National Corporation By-laws. (Incorporated by reference to Exhibit 3(b) to the
              Corporation's Registration Statement No. 33-65021 on Form S-4, as filed on December 14, 1995.)

      (10.1)    Harleysville National Corporation 1993 Stock Incentive Plan. (Incorporated by Reference to Exhibit
              4.3 of Registrant's Registration Statement No. 33-57790 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. 33-17813 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, President and Chief Executive Officer's employment agreement.
              (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
              Commission on March 25, 1999.)

      (10.5)    Demetra M. Takes, President and Chief Operating Officer of Harleysville employment agreement.
              (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
              Commission on March 25, 1999.)

      (10.6)    Vernon L. Hunsberger, Senior Vice President/CFO and Cashier's employment agreement.
              (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
              Commission on March 25, 1999.)

PAGE 24

      (10.7)    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.)

      (10.8)    Harleysville National Corporation 1998 Independent Directors Stock Option Plan.  (Incorporated by
              Reference to Registrant's Registration Statement No. 333-79973 on Form S-8 filed with the
              Commission on June 4, 1999.)

        (11)    Computation of Earnings per Common Share.The information for this Exhibit is incorporated by
              reference to page 4 of this Form 10-Q.

</TABLE>
  (b)  Reports  on  Form  8-K

Current Report on Form 8-K, dated January 10, 2002, filed with the Commission on
February 15, 2002, reporting the Registrant's fourth quarter 2001 press release.

PAGE 25
                                   SIGNATURES

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


 HARLEYSVILLE  NATIONAL  CORPORATION


  /s/ Walter E. Daller, Jr.
  ________________________
  Walter E. Daller, Jr., President and Chief Executive Officer
  (Principal executive officer)


  /s/ Gregg J. Wagner
  ________________________
  Gregg J. Wagner, Treasurer
  (Principal financial and accounting officer)



Date:  May  4,  2002

PAGE26
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit  No.     Description  of  Exhibits
-----------      -------------------------
<C>        <S>

    (3.1)    Harleysville National Corporation Articles of Incorporation, as amended. (Incorporated by reference
           to Exhibit 3(a) to the Corporation's Registration Statement No. 33-65021 on Form S-4, as filed on
           December 14, 1995.)

    (3.2)    Harleysville National Corporation By-laws. (Incorporated by reference to Exhibit 3(b) to the
           Corporation's Registration Statement No. 33-65021 on Form S-4, as filed on December 14, 1995.)

   (10.1)    Harleysville National Corporation 1993 Stock Incentive Plan. (Incorporated by Reference to Exhibit
           4.3 of Registrant's Registration Statement No. 33-57790 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. 33-17813 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, President and Chief Executive Officer's employment agreement.
           (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
           Commission on March 25, 1999.)

   (10.5)    Demetra M. Takes, President and Chief Operating Officer of Harleysville employment agreement.
           (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
           Commission on March 25, 1999.)

   (10.6)    Vernon L. Hunsberger, Senior Vice President/CFO and Cashier's employment agreement.
           (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the
           Commission on March 25, 1999.)

   (10.7)    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.)

   (10.8)    Harleysville National Corporation 1998 Independent Directors Stock Option Plan.  (Incorporated by
           Reference to Registrant's Registration Statement No. 333-79973 on Form S-8 filed with the
           Commission on June 4, 1999.)

     (11)    Computation of Earnings per Common Share.The information for this Exhibit is incorporated by
           reference to page 4 of this Form 10-Q.

</TABLE>
PAGE 27