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, 2003.
                                                --------------

                                       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 or 15(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.
       ---

Indicate  by  check  mark  whether  the  Registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).    Yes     X.   No.
                                                            ---

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the latest practicable date: 19,022,844 shares of Common
Stock,  $1.00  par  value,  outstanding  on  May  12,  2003.

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, 2003 and December 31, 2002 . . . . . . . . . . . . . .        3

           Consolidated Statements of Income - Three Months Ended March 31, 2003 and 2002 . . . . . . . .        4

           Consolidated Statements of Shareholders' Equity - Three Months Ended March 31, 2003 and Twelve        5
            Months Ended December 31, 2002

           Consolidated Statements of Cash Flows - Three Months Ended March 31, 2003 and 2002 . . . . . .        6

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

     Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations . . .       10

     Item 3. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . .       24

     Item 4. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       24

Part II.  Other Information

     Item 1.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25

     Item 2.  Change in Securities and Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . .       25

     Item 3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       25

     Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . .       25

     Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       26

     Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       26

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       28

Certifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29 & 30
</TABLE>

PAGE 2

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

                                                                   March 31, 2003    December 31, 2002
                                                                  ----------------  -------------------
<S>                                                               <C>               <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . . . . . . .  $        63,857   $           62,177
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . .           21,950               33,500
Interest-bearing deposits in banks . . . . . . . . . . . . . . .            6,336                8,410
                                                                  ----------------  -------------------
    Total cash and cash equivalents. . . . . . . . . . . . . . .           92,143              104,087
                                                                  ----------------  -------------------

Residential mortgage loans held for sale . . . . . . . . . . . .            4,844                    -
Investment securities available for sale . . . . . . . . . . . .          936,977              949,056
Investment securities held to maturity . . . . . . . . . . . . .           22,118               22,411
 (fair value $23,947 and $23,650, respectively)
Total loans and leases . . . . . . . . . . . . . . . . . . . . .        1,332,286            1,333,292
Less: Allowance for loan losses. . . . . . . . . . . . . . . . .          (16,902)             (17,190)
                                                                  ----------------  -------------------
             Net loans . . . . . . . . . . . . . . . . . . . . .        1,315,384            1,316,102
                                                                  ----------------  -------------------
Bank premises and equipment, net . . . . . . . . . . . . . . . .           21,634               21,645
Accrued interest receivable. . . . . . . . . . . . . . . . . . .           12,554               13,140
Net assets in foreclosure. . . . . . . . . . . . . . . . . . . .              485                  390
Intangible assets, net . . . . . . . . . . . . . . . . . . . . .            1,962                1,798
Bank-owned life insurance. . . . . . . . . . . . . . . . . . . .           48,709               48,631
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . .           13,604               13,604
                                                                  ----------------  -------------------
         Total assets. . . . . . . . . . . . . . . . . . . . . .  $     2,470,414   $        2,490,864
                                                                  ================  ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Noninterest-bearing . . . . . . . . . . . . . . . . . . . . .  $       270,759   $          269,781
   Interest-bearing:
     Checking accounts . . . . . . . . . . . . . . . . . . . . .          234,660              249,646
     Money market accounts . . . . . . . . . . . . . . . . . . .          507,913              488,944
     Savings . . . . . . . . . . . . . . . . . . . . . . . . . .          212,967              202,003
     Time, under $100,000. . . . . . . . . . . . . . . . . . . .          516,994              526,885
     Time, $100,000 or greater . . . . . . . . . . . . . . . . .          210,173              242,563
                                                                  ----------------  -------------------
          Total deposits . . . . . . . . . . . . . . . . . . . .        1,953,466            1,979,822
Accrued interest payable . . . . . . . . . . . . . . . . . . . .           19,668               21,991
U.S. Treasury demand notes . . . . . . . . . . . . . . . . . . .            1,695                2,015
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . .          162,750              162,750
Securities sold under agreements to repurchase . . . . . . . . .           78,474               84,141
Guaranteed preferred beneficial interest in Corporation's
  subordinated debentures. . . . . . . . . . . . . . . . . . . .            5,000                5,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . .           34,252               28,939
                                                                  ----------------  -------------------
          Total liabilities. . . . . . . . . . . . . . . . . . .        2,255,305            2,284,658
                                                                  ----------------  -------------------
Shareholders' Equity:
    Series preferred stock,  par value $1 per share;
       authorized 8,000,000 shares, none issued. . . . . . . . .                -                    -
    Common stock, par value $1 per share; authorized 75,000,000
       shares; issued and outstanding 19,618,253 shares in 2003
       and 19,597,290 shares in 2002 . . . . . . . . . . . . . .           19,618               19,597
    Additional paid in capital . . . . . . . . . . . . . . . . .           96,847               96,585
    Retained earnings. . . . . . . . . . . . . . . . . . . . . .           99,531               94,677
    Treasury stock, at cost: 608,707 shares in 2003
       and 569,107 shares in 2002. . . . . . . . . . . . . . . .          (12,581)             (11,590)
    Accumulated other comprehensive income . . . . . . . . . . .           11,694                6,937
                                                                  ----------------  -------------------
          Total shareholders' equity . . . . . . . . . . . . . .          215,109              206,206
                                                                  ----------------  -------------------
          Total liabilities and shareholders' equity . . . . . .  $     2,470,414   $        2,490,864
                                                                  ================  ===================
<FN>
See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

 PAGE 3
               HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)

(Dollars  in  thousands  except  weighted  average  number
of  common  shares  and  per  share  information)
<TABLE>
<CAPTION>
                                                       Three  months ended March  31,

                                                              2003         2002
                                                           -----------  -----------
<S>                                                        <C>          <C>
INTEREST INCOME:
Loans, including fees . . . . . . . . . . . . . . . . . .  $    19,722  $    21,324
Lease financing . . . . . . . . . . . . . . . . . . . . .        1,849        2,182
Investment securities:
   Taxable. . . . . . . . . . . . . . . . . . . . . . . .        5,081        7,461
   Exempt from federal taxes. . . . . . . . . . . . . . .        3,861        2,635
Federal funds sold. . . . . . . . . . . . . . . . . . . .           45           39
Deposits in banks . . . . . . . . . . . . . . . . . . . .           27           48
                                                           -----------  -----------
      Total interest income . . . . . . . . . . . . . . .       30,585       33,689
                                                           -----------  -----------
INTEREST EXPENSE:
Savings deposits. . . . . . . . . . . . . . . . . . . . .        2,594        2,889
Time, under $100,000. . . . . . . . . . . . . . . . . . .        5,092        5,998
Time, $100,000 or greater . . . . . . . . . . . . . . . .        1,405        2,054
Borrowed funds. . . . . . . . . . . . . . . . . . . . . .        2,295        2,140
                                                           -----------  -----------
      Total interest expense. . . . . . . . . . . . . . .       11,386       13,081
                                                           -----------  -----------
      Net interest income . . . . . . . . . . . . . . . .       19,199       20,608
Provision for loan losses . . . . . . . . . . . . . . . .          609        1,351
                                                           -----------  -----------
      Net interest income after provision for loan losses       18,590       19,257
                                                           -----------  -----------
OTHER OPERATING INCOME:
Service charges . . . . . . . . . . . . . . . . . . . . .        1,830        1,521
Security gains, net . . . . . . . . . . . . . . . . . . .        1,316        1,231
Trust and investment services income . . . . . . . . . . .          888          883
Bank-owned life insurance income. . . . . . . . . . . . .          631          638
Income on life insurance. . . . . . . . . . . . . . . . .        1,119            -
Other Income. . . . . . . . . . . . . . . . . . . . . . .        1,427        1,250
                                                           -----------  -----------
      Total other operating income. . . . . . . . . . . .        7,211        5,523
                                                           -----------  -----------
      Net interest income after provision for loan losses
         and other operating income . . . . . . . . . . .       25,801       24,780
                                                           -----------  -----------
OTHER OPERATING EXPENSES:
Salaries, wages and employee benefits . . . . . . . . . .        7,841        7,685
Occupancy . . . . . . . . . . . . . . . . . . . . . . . .        1,023        1,237
Furniture and equipment . . . . . . . . . . . . . . . . .        1,305        1,288
Other expenses. . . . . . . . . . . . . . . . . . . . . .        5,344        4,269
                                                           -----------  -----------
      Total other operating expenses. . . . . . . . . . .       15,513       14,479
                                                           -----------  -----------
      Income before income tax expense. . . . . . . . . .       10,288       10,301
Income tax expense. . . . . . . . . . . . . . . . . . . .        1,823        2,488
                                                           -----------  -----------
Net income. . . . . . . . . . . . . . . . . . . . . . . .  $     8,465  $     7,813
                                                           ===========  ===========

Weighted average number of common shares:
        Diluted . . . . . . . . . . . . . . . . . . . . .   19,575,609   19,690,686
                                                           ===========  ===========
        Basic . . . . . . . . . . . . . . . . . . . . . .   19,016,312   19,180,591
                                                           ===========  ===========
Net income per share information:
        Diluted . . . . . . . . . . . . . . . . . . . . .  $      0.43  $      0.40
                                                           ===========  ===========
        Basic . . . . . . . . . . . . . . . . . . . . . .  $      0.45  $      0.41
                                                           ===========  ===========
Cash dividends per share. . . . . . . . . . . . . . . . .  $     0.190  $     0.162
                                                           ===========  ===========
* Adjusted for 5% stock dividend effective 9/16/02.
<FN>
See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

PAGE 4

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
                               (Unaudited)

(Dollars  and  share  information  in  thousands)

                  THREE  MONTHS  ENDED  MARCH  31,  2003
<TABLE>
<CAPTION>
                                                                                        Accumulated
                                  Common Stock                                             Other
                                  -------------
                                    Number of      Par       Additional      Retained   Comprehensive    Treasury
<S>                               <C>            <C>      <C>               <C>         <C>             <C>
                                      Shares      Value    Paid in Capital   Earnings    Income          Stock
                                  -------------  -------  ----------------  ----------  --------------  ----------
Balance, January 1, 2003 . . . .         19,597  $19,597  $         96,585  $  94,677   $        6,937  $ (11,590)
Stock options. . . . . . . . . .             21       21               262          -                -          -
Net income . . . . . . . . . . .              -        -                 -      8,465                -          -
Other comprehensive income,
net of reclassifications and tax              -        -                 -          -            4,757          -
Purchases of Treasury stock. . .              -        -                 -          -                -       (991)
Cash dividends . . . . . . . . .              -        -                 -     (3,611)               -          -
                                  -------------  -------  ----------------  ----------  --------------  ----------
Balance, March 31, 2003. . . . .         19,618  $19,618  $         96,847  $  99,531   $       11,694  $ (12,581)
                                  =============  =======  ================  ==========  ==============  ==========

                                               Comprehensive
<S>                               <C>              <C>
                                  Total            Income
                                  ---------------  -------
Balance, January 1, 2003 . . . .  $      206,206
Stock options. . . . . . . . . .             283
Net income . . . . . . . . . . .           8,465   $ 8,465
Other comprehensive income,
net of reclassifications and tax           4,757     4,757
Purchases of Treasury stock. . .            (991)
Cash dividends . . . . . . . . .          (3,611)
                                  ---------------
Comprehensive income                               $13,222
                                                   =======
Balance, March 31, 2003. . . . .  $      215,109
                                  ===============
</TABLE>
                        FOR  THE  YEAR  ENDED  DECEMBER  31,  2002
<TABLE>
<CAPTION>
                                                                                        Accumulated
                                  Common Stock                                             Other
                                  -------------
<S>                               <C>            <C>      <C>               <C>         <C>             <C>
                                  Number of      Par      Additional        Retained    Comprehensive   Treasury
                                    Shares      Value    Paid in Capital    Earnings       Income         Stock
                                  -------------  -------  ----------------  ----------  --------------  ----------
Balance, January 1, 2002 . . . .         18,571  $18,571  $         71,419  $ 100,171   $        4,534  $  (5,346)
Stock options. . . . . . . . . .             94       94             1,166          -                -          -
Stock dividends. . . . . . . . .            932      932            23,994    (24,942)               -          -
Stock awards . . . . . . . . . .              -        -                 6          -                -          -
Net income . . . . . . . . . . .              -        -                 -     32,927                -          -
Other comprehensive income,
net of reclassifications and tax              -        -                 -          -            2,403          -
Purchases of Treasury stock. . .              -        -                 -          -                -     (6,244)
Cash dividends . . . . . . . . .              -        -                 -    (13,479)               -          -
                                  -------------  -------  ----------------  ----------  --------------  ----------
Balance, December 31, 2002 . . .         19,597  $19,597  $         96,585  $  94,677   $        6,937  $ (11,590)
                                  =============  =======  ================  ==========  ==============  ==========

<S>                               <C>              <C>
                                  Comprehensive
                                  Total            Income
                                  ---------------  -------
Balance, January 1, 2002 . . . .  $      189,349
Stock options. . . . . . . . . .           1,260
Stock dividends. . . . . . . . .             (16)
Stock awards . . . . . . . . . .               6
Net income . . . . . . . . . . .          32,927   $32,927
Other comprehensive income,
net of reclassifications and tax           2,403     2,403
Purchases of Treasury stock. . .          (6,244)
Cash dividends . . . . . . . . .         (13,479)
                                  ---------------
Comprehensive income                               $35,330
                                                   =======
Balance, December 31, 2002 . . .  $      206,206
                                  ===============
<FN>
See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

PAGE 5

               HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                (Unaudited)


<S>                                                                         <C>                             <C>
(Dollars in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . .     Three Months Ended March 31,
OPERATING ACTIVITIES:. . . . . . . . . . . . . . . . . . . . . . . . . . .           2003        2002
                                                                                 ----------  ----------
  Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $     8,465   $   7,813
  Adjustments to reconcile net income to net cash provided by operating activities:
    Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . .              609       1,351
    Depreciation and amortization. . . . . . . . . . . . . . . . . . . . .              678         587
    Net amortization of investment
      securities discount/premiums . . . . . . . . . . . . . . . . . . . .            2,685         690
    Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . .           (2,012)       (726)
    Net realized security gains. . . . . . . . . . . . . . . . . . . . . .           (1,316)     (1,231)
    Decrease (increase) in accrued income receivable . . . . . . . . . . .              586        (632)
    Net decrease in accrued interest payable . . . . . . . . . . . . . . .           (2,323)     (1,592)
    Net increase in intangible assets. . . . . . . . . . . . . . . . . . .             (164)       (328)
    Net Increase in other assets . . . . . . . . . . . . . . . . . . . . .                -        (588)
    Net increase in other liabilities. . . . . . . . . . . . . . . . . . .             4,621       4,279
    Decrease in deferred cost, net . . . . . . . . . . . . . . . . . . . .               409         384
    Write-down of other real estate owned. . . . . . . . . . . . . . . . .                 -           6
       Net cash provided by operating activities . . . . . . . . . . . . .     $      12,238   $  10,013
                                                                                ------------  ----------
INVESTING ACTIVITIES:
  Proceeds from sales of investment securities available for sale. . . . .     $     399,526   $ 117,295
  Proceeds, maturity or calls of investment securities held to maturity. .               301       1,295
  Proceeds, maturity or calls of investment securities available for sale.           189,276      64,481
  Purchases of investment securities available for sale. . . . . . . . . .          (570,638)   (153,767)
  Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . .            (5,558)    (13,827)
  Net increase in premises and equipment . . . . . . . . . . . . . . . . .              (667)       (212)
  Net increase in bank-owned life insurance. . . . . . . . . . . . . . . .               (78)       (638)
  Proceeds from sales of other real estate . . . . . . . . . . . . . . . .               318         342
                                                                               -------------  ----------
       Net cash provided by investing activities . . . . . . . . . . . . .      $     12,480   $  14,969
                                                                               -------------  ----------
FINANCING ACTIVITIES:
  Net decrease in deposits . . . . . . . . . . . . . . . . . . . . . . . .      $    (26,356)  $ (39,431)
  Net decrease in U.S. Treasury demand notes . . . . . . . . . . . . . . .              (320)       (940)
  Increase in FHLB borrowings. . . . . . . . . . . . . . . . . . . . . . .                 -      15,000
  Net decrease in securities sold under agreement. . . . . . . . . . . . .            (5,667)    (10,051)
  Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (3,611)     (3,107)
  Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . .              (991)     (1,814)
  Stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               283         519
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -           0
                                                                               -------------  ----------
    Net cash used by financing activities. . . . . . . . . . . . . . . . .      $    (36,662)  $ (39,824)
                                                                               -------------  ----------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . .      $    (11,944)  $ (14,842)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . .           104,087      82,624
                                                                                ------------  ----------
Cash and cash equivalents at end of the period . . . . . . . . . . . . . .      $     92,143   $  67,782
                                                                              ==============  ==========

  Cash paid during the period for:
     Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $     13,709   $  14,673
                                                                              ==============  ==========
     Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $          -   $     750
                                                                               =============  ==========
   Supplemental disclosure of noncash investing and financing activities:
       Transfer of assets from loans to other real estate owned. . . . . .      $        413   $     198
                                                                              ==============  ==========
<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, 2003, the results of its operations for
the three month periods ended March 31, 2003 and 2002 and the cash flows for the
three month periods ended March 31, 2003 and 2002.  This quarterly report refers
to  the  corporation's  subsidiary  banks,  collectively  as  "the  banks."  We
recommend  that  you  read  these unaudited consolidated financial statements in
conjunction  with  the  audited  consolidated  financial  statements  of  the
Corporation  and  the  notes  thereto in the corporation's 2002 Annual Report on
Form  10-K.

The  results  of operations for the three-month periods ended March 31, 2003 and
2002  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 as a result of the Corporation's 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>
Comprehensive  Income
--------------------

(Dollars in thousands)              BEFORE TAX        TAX        NET OF TAX
March 31, 2003                        AMOUNT        EXPENSE        AMOUNT
---------------------------------  -------------  ------------  ------------
<S>                                <C>            <C>           <C>
Unrealized gains on securities:
 Unrealized holding gains
 arising during period. . . . . .  $      8,635   $    (3,022)  $     5,613
 Less reclassification for
 adjustment for gains
 realized in net income . . . . .         1,316          (460)          856
                                   -------------  ------------  ------------
Other comprehensive income, net .  $      7,319   $    (2,562)  $     4,757
                                   =============  ============  ============

                                    BEFORE TAX     TAX BENEFIT    NET OF TAX
March 31, 2002                        AMOUNT        (EXPENSE)      AMOUNT
---------------------------------  -------------  ------------  ------------
Unrealized losses on securities:
 Unrealized holding losses
 arising during period. . . . . .  $     (4,755)  $     1,664   $    (3,091)
 Less reclassification for
 adjustment for gains
 realized in net income . . . . .         1,231          (431)          800
                                   -------------  ------------  ------------
Other comprehensive income, net .  $     (5,986)  $     2,095   $    (3,891)
                                   =============  ============  ============
</TABLE>
PAGE 7

NOTE  4  -  The  Corporation  adopted  SFAS No. 123, "Accounting for Stock-Based
Compensation,"  which contains a fair value-based method for valuing stock-based
compensation  that  entities  may  use,  which measures compensation cost at the
grant  date  based  on  the  fair  value  of  the  award.  Compensation  is then
recognized  over  the  service period, which is usually the vesting period.  The
Corporation  has  chosen  an  alternative  permitted by the standard to continue
accounting  for  employee stock options and similar instruments under Accounting
Principles  Board  (APB)  Opinion  No.  25,  "Accounting  for  Stock  Issued  to
Employees."

Entities  that  continue  to  account for stock options using APB Opinion 25 are
required  to make pro forma disclosures of net income and earnings per share, as
if  the  fair  value-based method of accounting defined in SFAS No. 123 has been
applied.

The  Corporation  has  four  shareholder  approved fixed stock option plans that
allow the Corporation to grant options up to an aggregate of 1,783,745 shares of
common stock to key employees and directors.  At March 31, 2003, 1,519,689 stock
options  had been granted under the stock option plans.  The options have a term
of ten years when issued and are completely vested over a five-year period.  The
exercise price of each option equals the market price of the Corporation's stock
on  the  date  of  grant.

The  fair value of each option grant is estimated on the date of grant using the
Black-Scholes  option-pricing  model  with  the  following  weighted-average
assumptions  used for grants at March 31, 2003 and March 31, 2002, respectively:
dividend  yield  of  2.79%  and  2.93%;  expected volatility of 1.78% and 1.69%;
risk-free  interest  rate of 3.34% and 4.57%; and an expected life of 7.45 years
and  7.32  years.

The Corporation has adopted and is providing interim period disclosures per SFAS
No.  148,  "Accounting  for Stock-Based Compensation-Transition and Disclosure."
The  following table illustrates the effect on net income and earnings per share
if the Corporation had applied the fair value recognition provisions of SFAS No.
123,  to  stock-based  employee  compensation  (in  thousands,  except per share
amounts).
<TABLE>
<CAPTION>
                                                          Three Months Ended
<S>                                               <C>                  <C>
                                                  March 31, 2003       March 31, 2002
                                                 -------------------  ---------------
Net Income
 As reported . . . . . . . . . . . . . . . . . .  $             8,465  $         7,813
 Less: Stock-based compensation cost determined
under fair value method for all awards . . . . .                  150              338
                                                  -------------------  ---------------
 Proforma. . . . . . . . . . . . . . . . . . . .  $             8,315  $         7,475
                                                  ===================  ===============
Earnings per share (Diluted)
As reported. . . . . . . . . . . . . . . . . . .  $              0.43  $          0.40
Proforma . . . . . . . . . . . . . . . . . . . .  $              0.42  $          0.38

Earnings per share (Basic)
As reported. . . . . . . . . . . . . . . . . . .  $              0.45  $          0.41
Proforma . . . . . . . . . . . . . . . . . . . .  $              0.44  $          0.39
</TABLE>

NOTE  5  -  The Corporation adopted FIN 45 Guarantor's Accounting and Disclosure
Requirements  for  Guarantees,  including Indirect Guarantees of Indebtedness of
Others  on  January  1,  2003.   FIN  45  requires  a  guarantor  entity, at the
inception  of  a  guarantee  covered  by  the  measurement  provisions  of  the
interpretation,  to  record  a  liability  for  the fair value of the obligation
undertaken in issuing the guarantee.  The Corporation has performance letters of
credit.  Performance  letters of credit require the Corporation to make payments
if  the customer fails to perform certain non-financial contractual obligations.
The  Corporation  previously  did  not  record  a  liability  when  guaranteeing
obligations unless it became probable that the Corporation would have to perform
under the guarantee.  FIN 45 applies prospectively to guarantees the Corporation

PAGE 8

issues  or  modifies  subsequent  to  December  31, 2002.  The maximum potential
undiscounted  amount  of  future payments of these letters of credit as of March
31,  2003  are  $10,593,000  and they expire through December 2006.  Amounts due
under  these  letters  of  credit  would  be  reduced  by  any proceeds that the
Corporation would be able to obtain in liquidating the collateral for the loans,
which  varies  depending  on  the  customer.

NOTE 6 - In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation  No.  46, Consolidation of Variable Interest Entities ("FIN 46").
FIN  46  requires a variable interest entity to be consolidated by a company, if
that  company  is  subject  to  a majority of the risk of loss from the variable
interest  entity's  activities  or  is  entitled  to  receive  a majority of the
entity's  residual  returns,  or  both.  FIN  46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in
which  it has a significant variable interest. The consolidation requirements of
FIN 46 apply immediately to variable interest entities created after January 31,
2003.  The  consolidation  requirements  apply to existing entities in the first
fiscal  year  or  interim  period  beginning after June 15, 2003. Certain of the
disclosure  requirements  apply in all financial statements issued after January
31,  2003,  regardless of when the variable interest entity was established. The
Corporation  is  currently  evaluating  the  impact that FIN 46 will have on its
consolidated  financial  position  and  results  of  operations.

NOTE  7 - On September 16, 2002, the Corporation paid a 5% stock dividend on its
common  stock  to  shareholders  of  record as of September 3, 2002.   All prior
period  amounts  were  restated  to  reflect  these  stock  dividends.

NOTE  8 - Certain prior period numbers have been changed to conform with current
year  presentation.

PAGE 9

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:


  * 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.

OVERVIEW
--------

       The Corporation recorded an 8.3% increase in first quarter 2003 earnings,
compared to the first quarter of 2002.  The improved first quarter earnings were
the  result of higher other income partially offset by lower net interest income
and  higher  other  operating  expenses.  Loan  quality also improved during the
first  quarter  of 2003, compared to both the fourth and first quarters of 2002.

       First quarter 2003 diluted earnings per share of $.43 increased 7.5% over
the  first quarter 2002 diluted earnings per share of $.40.  First quarter basic
earnings  per share in 2003 of $.45 exceed the first quarter 2002 basic earnings
per  share  of  $.41  by  9.8%. The Corporation's consolidated total assets were
$2,470,414,000  at  March  31,  2003,  13.7%  above  the March 31, 2002 level of
$2,172,935,000.

      For  the  three  months  ended  March  31,  2003, the annualized return on
average  shareholders'  equity  and the annualized return on average assets were
16.18%  and  1.38%,  respectively.  For  the same period in 2002, the annualized
return  on  average shareholder's equity was 16.24% and the annualized return on
average  assets was 1.43%. Excluding accumulated other comprehensive income, the
annualized  return  on average realized shareholders' equity for the first three
months  of  2003  and  2002  were  16.78%  and  16.62%,  respectively.

PAGE 10

       The  Corporation  experienced  an  improvement in loan quality during the
first quarter of 2003. Nonperforming loans (nonaccruing loans and loans past due
90  days  or more and still accruing interest) were .44% of total loans at March
31,  2003,  compared  to  .47%  at December 31, 2002 and .45% at March 31, 2002.

       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 inherent 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
 -------------------------------------------------------------

       Net interest income for the first three months of 2003 of $19,199,000 was
$1,409,000  or  6.8%  lower  than the same period in 2002 net interest income of
$20,608,000.  As  illustrated  in the table below, this decrease in net interest
income  was  primarily  the  result  of the lower net interest margin, partially
offset  by  higher  earning  asset  volumes.  Interest  income was lower in 2003
compared  to  2002  as  a  result  of the impact of lower interest rates and the
impact  of  the  investment  portfolio growth outpacing the increase in the loan
portfolio during this period.  The lower interest income was partially offset by
the  decrease  in interest expense related to the reduction in deposit and other
borrowing  rates.

       The  rate-volume  variance analysis 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, 2003 over March 31, 2002 by their
rate  and  volume  components.

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                         March 31, 2003
                                                           Over/Under
                                                         March 31, 2002
<S>                                         <C>                   <C>           <C>
(In thousands) . . . . . . . . . . . . . .      Total                   Caused by:
                                                                      ------------
                                               Variance              Rate          Volume
                                            --------------------  ------------  -------
Interest Income:
Securities * . . . . . . . . . . . . . . .  $              (518)  $    (3,275)  $ 2,757
Money market instruments . . . . . . . . .                  (15)          (43)       28
Loans *. . . . . . . . . . . . . . . . . .               (1,917)       (2,141)      224
                                            --------------------  ------------  -------
 Total . . . . . . . . . . . . . . . . . .               (2,450)       (5,459)    3,009
                                            --------------------  ------------  -------

Interest Expense:
Savings deposits . . . . . . . . . . . . .                 (295)         (783)      488
Time deposits and certificates of deposit.               (1,555)       (1,948)      393
Other borrowings . . . . . . . . . . . . .                  155           (62)      217
                                            --------------------  ------------  -------
Total. . . . . . . . . . . . . . . . . . .               (1,695)       (2,793)    1,098
                                            --------------------  ------------  -------

Net Interest Income. . . . . . . . . . . .  $              (755)  $    (2,666)  $ 1,911
                                            ====================  ============  =======
*Tax Equivalent Basis
</TABLE>
PAGE 11

BALANCE  SHEET  ANALYSIS

    The  table  below  presents  the  major asset and liability categories on an
average  daily  basis  for the periods presented, along with interest income and
expense,  and  key  rates  and  yields.

<TABLE>
<CAPTION>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY, INTEREST RATES AND
                             INTEREST DIFFERENTIAL:

(Dollars  in  thousands)                 Three Months Ended March 31, 2003   Three Months Ended March 31, 2002
                                         ---------------------------------   ---------------------------------
<S>                                           <C>          <C>       <C>        <C>         <C>    <C>
                                              Average     Average               Average    Average
ASSETS . . . . . . . . . . . . . . . . . . .  Balance      Rate      Interest   Balance     Rate   Interest
                                              -----------  --------  ---------  ----------  -----  ---------
Investment securities:
Taxable investments. . . . . . . . . . . . .  $  642,481      3.60%  $   5,776  $  516,715  5.78%  $   7,461
Nontaxable investments (1) . . . . . . . . .     327,855      6.20       5,081     207,187  7.56       3,914
                                              -----------  --------  ---------  ----------  -----  ---------
Total investment securities. . . . . . . . .     970,336      4.48      10,857     723,902  6.29      11,375


Loans (1) (2). . . . . . . . . . . . . . . .   1,329,093      6.57      21,840   1,315,458  7.22      23,757
Other rate-sensitive assets. . . . . . . . .      22,183      1.30          72      13,578  2.56          87
                                              -----------  --------  ---------  ----------  -----  ---------
 Total earning assets. . . . . . . . . . . .   2,321,612      5.65      32,769   2,052,938  6.86      35,219

Noninterest-earning assets . . . . . . . . .     128,785         -           -     125,521     -           -
                                              -----------  --------  ---------  ----------  -----  ---------
Total assets . . . . . . . . . . . . . . . .  $2,450,397      5.35%  $  32,769  $2,178,459  6.47%  $  35,219
                                              ===========  ========  =========  ==========  =====  =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Demand. . . . . . . . . . . . . . . . . . .  $  242,793        - %  $       -  $  227,123    - %  $       -
 Savings . . . . . . . . . . . . . . . . . .     941,342      1.10       2,594     764,366  1.51       2,889
 Time. . . . . . . . . . . . . . . . . . . .     754,631      3.44       6,497     709,027  4.54       8,052
                                              -----------  --------  ---------  ----------  -----  ---------
 Total . . . . . . . . . . . . . . . . . . .   1,938,766      1.88       9,091   1,700,516  2.57      10,941
Borrowings and other
 interest-bearing liabilities. . . . . . . .     252,411      3.64       2,295     228,578  3.74       2,140
Other liabilities. . . . . . . . . . . . . .      49,979         -           -      56,958     -           -
                                              -----------  --------  ---------  ----------  -----  ---------
Total liabilities. . . . . . . . . . . . . .   2,241,156      2.03      11,386   1,986,052  2.63      13,081

Shareholders' equity . . . . . . . . . . . .     209,241         -           -     192,407     -           -
                                              -----------  --------  ---------  ----------  -----  ---------
 Total liabilities and shareholders' equity.  $2,450,397      1.86%  $  11,386  $2,178,459  2.40%  $  13,081
                                              ===========  ========  =========  ==========  =====  =========
Average effective rate on
 interest-bearing liabilities. . . . . . . .  $1,948,384      2.34%  $  11,386  $1,701,971  3.07%  $  13,081
                                              ===========  ========  =========  ==========  =====  =========

Interest Income/Earning Assets . . . . . . .  $2,321,612      5.65%  $  32,769  $2,052,938  6.86%  $  35,219
Interest Expense/Earning Assets. . . . . . .  $2,321,612      1.96   $  11,386  $2,052,938  2.55   $  13,081
                                                           --------                         -----
Effective Interest Differential. . . . . . .                  3.68%                         4.31%
                                                          ===========                    ========
</TABLE>

(1)  The  interest earned on nontaxable investment securities and loans is shown
on  a  tax  equivalent  basis.
(2)  Nonaccrual loans have been included in the appropriate average loan balance
category, but interest on nonaccrual loans has not been included for purposes of
determining  interest  income.

PAGE 12

        Taxable-equivalent  net  interest  income  was $21,383,000 for the first
three  months  of  2003,  compared to $22,138,000 for the same period in 2002, a
3.4% or $755,000 decrease.  The reduction in the taxable-equivalent net interest
income  was the result of the lower interest rate environment experienced during
this  time period and the higher growth in the investment portfolio, compared to
loans.  During  the  first  quarter  of  2003,  the average investment portfolio
represented  41.8%  of  total  earning assets compared to 35.3% during the first
quarter  of  2002.  Average  total  loans  grew  $13,635,000  compared  to  a
$246,434,000  rise in average investments in the first quarter of 2003, compared
to  the first quarter of 2002.  The low growth in loans was primarily the result
of the decline in both the indirect vehicle and vehicle leasing portfolios.  The
reduction  in these portfolios was primarily related to the financing incentives
offered  by  the  vehicle manufacturers and the overall increased competition in
this  market  segment.  Net  of  these  two  products,  average loans grew 8.4%.

         This  decrease  in taxable-equivalent net interest income was primarily
due  to a $2,450,000 reduction in interest income, which was partially offset by
a  decrease in interest expense of $1,695,000.   The taxable-equivalent interest
income  decrease was the result of lower earning asset yields, in part offset by
the  higher volumes of earnings assets. Average year-to-date earning assets grew
$268,674,000,  or  13.1% at March 31, 2003, compared to the same period in 2002.
The  yield earned on earning assets decreased 121 basis points from 6.86% in the
first  three  months  of  2002  to  5.65%  during  the  same  period  in  2003.

          The  $1,695,000  reduction  in  interest  expense  is  the result of a
$2,793,000  decrease  related to lower rates, partially offset by an increase of
$1,098,000  associated with the higher deposit and other borrowing volumes.  The
average  rate  paid  on  interest bearing deposits and other borrowings of 2.34%
during  the  first three months of 2003 was 73 basis points lower than the 3.07%
rate  paid  during  the  same  period  in 2002.  The average balance of interest
bearing  deposits  and  other borrowings grew $246,413,000 or 14.5% in the first
three  months  of 2003, compared to the first three months of 2002.  The average
year-to-date  growth  in time deposits and other borrowings were $45,604,000 and
$23,833,000,  respectively.  The  lower  rate  savings  deposits,  which include
interest  bearing checking accounts, savings accounts and money market accounts,
were $176,976,000 or 23.2% higher in the first three months of 2003, compared to
the  same period in 2002. 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 for the three-month periods ending March 31,
2003  and  March  31, 2002 were 3.68% and 4.31%, respectively.  During the first
three  months  of  2003,  the  yield on earning assets dropped 121 basis points,
compared  to a 73 basis point drop in the rate paid on interest-bearing deposits
and  other  borrowings.  The  yield on earning assets of 5.65% earned during the
first  three  months  of  2003  was lower than the 6.86% earned during the first
three  months  of  2002.  The  rate  paid on deposits was 2.34% during the first
three  months  of  2003,  compared  to 3.07% during the same period in 2002. The
decrease  in  the  yield earned and rate paid are due to the lower interest rate
environment  experienced  during the first three months of 2003, compared to the
same  period  in  2002.  The reduction in the yield earned on earning assets was
also  impacted  by  the lower yield earned on mortgage backed securities and the
slower pace of growth in the overall loan portfolio.   The lower yield earned on
mortgage  backed  securities  was related to the acceleration of the residential
mortgage  refinancing

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 Board of
Directors,  is  responsible  for  managing  the  rate  sensitivity position. The
Corporation  manages interest rate sensitivity by changing the mix and repricing
characteristics  of  its  assets  and  liabilities through the management of its
investment  securities  portfolios,  its  offering of loan and deposit terms and
through  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.

PAGE 13

           The  Corporation  only  utilizes  derivative  instruments  for
asset/liability  management,  specifically, to convert a variable rate debt to a
fixed  rate.  These  transactions  involve  both  credit  and  market risk.  The
notional  amounts are amounts on which calculations and payments are based.  The
notional  amounts  do  not  represent  direct  credit  exposures.  Direct credit
exposure  is  limited to the net difference between the calculated amounts to be
received  and paid, if any.  Interest rate swaps are contracts in which a series
of  interest-rate  flows  (fixed  and  floating) are exchanged over a prescribed
period.  The  notional  amounts on which the interest payments are based are not
exchanged.

           The  Corporation entered into two interest-rate swaps with a notional
value  totaling  $20.0  million and a negative fair value of $143,000 during the
first  quarter of 2003.  The purpose of these transactions is to fix the rate on
variable  rate  money  market accounts in an effort to reduce interest rate risk
within a rising rate environment.  At March 31, 2003, the Corporation was paying
a  fixed rate of 2.88% and was receiving a variable rate of 1.14% based upon the
three  month  United  States  Treasury  Bill.

           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 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,
2003  rate  shock simulations show that the Corporation is within all guidelines
set  by  the  Corporation's  Asset/Liability  Policy.
<TABLE>
<CAPTION>
                                    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       314,533           24,092         8.29%          +/- 45%

+200 Basis Points       322,415           31,974        11.01%          +/- 30%
+100 Basis Points       312,786           22,345         7.69%          +/- 15%
Flat Rate . . . .       290,441                -         0.00%
-100 Basis Points       250,140          (40,301)      -13.88%          +/- 15%
-200 Basis Points       229,709          (60,732)      -20.91%          +/- 30%
-300 Basis Points       201,717          (88,724)      -30.55%          +/- 45%
</TABLE>

In  the  event  the  Corporation should experience a mismatch in its desired gap
ranges  or  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 growth in loan products with appropriate
maturities  or  repricing  attributes,  or attract deposits or obtain borrowings
with  desired  maturities.

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

 The  Banks  use 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 loan losses.
Credit  exposures  deemed  to be uncollectible are charged against the allowance
for  loan  losses.  Recoveries of previously charged-off amounts are credited to
the  allowance  for  loan  losses.

 While  management  considers the allowance for loan 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. In addition, the OCC, as an integral part of

PAGE 14

their  examination  process,  periodically reviews the Banks' allowance for loan
losses.  The  OCC  may require the Banks to recognize additions to the allowance
for  loan losses based on their judgments about information available to them at
the  time  of  their  examination.

 The  Banks'  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 loan 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 loan 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  losses.  The  Banks  allowance  for loan 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 Banks historical loss component
is  the  most  significant  component  of the allowance for loan 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.

 The  historical  loss  components  of  the  allowance  represent 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.  Criticized assets are further assessed based on trends, expressed as
percentages,  relative  to delinquency, risk rating and non-accrual, by segment.

 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.
The  Banks  analyze  all  commercial  loans  that have been identified as having
potential  risk.  The  review  is  accomplished  via  Watchlist  Memorandum, and
designed  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  loan  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 includes an imprecision component (soft factors and
unallocated  portion)  that  reflects  management's  belief  that  there  were
additional  inherent  credit  losses  based  on  loss  attributes not adequately
captured  in  the  lagging indicators.  Furthermore, given that past-performance
indicators  may  not  adequately  capture  current  risk  levels, allowing for a
real-time  adjustment  enhances  the  validity  of the loss recognition process.
There  are  many  credit  risk management reports that are synthesized by credit
management  staff  to assess the direction of credit risk and its instant affect
on  losses.  These  reports  include  the exception tracking reports, the credit
bureau  score distribution report, the debt to income summary, etc.  These are a
few of the many reports that drive the judgmental component.  It is important to
continue  to  use  experiential  data  to confirm risk as measurable losses will
continue  to  manifest  themselves  at  higher than normal levels even after the
economic  cycle  has  begun an upward swing and lagging indicators begin to show
improvement.

   For  the  first  three  months  of  2003  the  provision  for loan losses was
$609,000, compared to $1,351,000 for the same period in 2002.  This reduction in
the provision for loan losses is reflective of the improvement in the quality of
the  loan portfolio. The ratio of the allowance for loan losses to nonperforming
loans  and  leases for March 31, 2003 of 286.6% was higher than the December 31,
2002,  and  the  March 31, 2002, ratios of 272.8% and 268.5%, respectively.  Net
loans  charged  off  was  $897,000  for  the  three months ended March 31, 2003,

PAGE 15

compared to $784,000 for the three months ended March 31, 2002.  The increase in
net  charged off loans is attributed to the increase in commercial loans charged
off  in  the  first  quarter  of  2003,  compared  to  the  same period in 2002.
<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>
                                            2003         2002
                                      -----------  -----------
Average loans. . . . . . . . . . . .  $1,329,093   $1,315,458
                                      -----------  -----------

Allowance, beginning of period . . .  $   17,190   $   15,558
                                      -----------  -----------
Loans charged off:
 Commercial and industrial . . . . .         438            8
 Consumer. . . . . . . . . . . . . .         554          803
 Real estate . . . . . . . . . . . .         152          264
 Lease financing . . . . . . . . . .          74           62
                                      -----------  -----------
 Total loans charged off . . . . . .       1,218        1,137
                                      -----------  -----------
Recoveries:
 Commercial and industrial . . . . .           -            8
 Consumer. . . . . . . . . . . . . .         285          279
 Real estate . . . . . . . . . . . .          10           29
 Lease financing . . . . . . . . . .          26           37
                                      -----------  -----------
 Total recoveries. . . . . . . . . .         321          353
                                      -----------  -----------
Net loans charged off. . . . . . . .         897          784
                                      -----------  -----------
Provision for loan losses. . . . . .         609        1,351
                                      -----------  -----------
Allowance, end of period . . . . . .  $   16,902   $   16,125
                                      ===========  ===========
Ratio of net charge offs to average
loans outstanding (annualized) . . .        0.27%        0.24%
                                      ===========  ===========
</TABLE>
<TABLE>
<CAPTION>
      ANALYSIS OF CREDIT RISK            MARCH 31,   DECEMBER 31,   MARCH 31,
      -----------------------

                                            2003         2002         2002
                                         -----------  -----------  -----------
<S>                                      <C>          <C>          <C>
Non-accrual loan and leases . . . . . .  $4,492,000   $5,109,000   $5,357,000
Loans and leases 90 days past due . . .   1,406,000    1,193,000      649,000
                                         -----------  -----------  -----------
   Total nonperforming loans and leases   5,898,000    6,302,000    6,006,000
Net assets in foreclosure . . . . . . .     485,000      390,000      459,000
                                         -----------  -----------  -----------
   Total nonperforming assets . . . . .  $6,383,000   $6,692,000   $6,465,000
                                         -----------  -----------  -----------
Allowance for loan and lease losses to
   nonperforming loans and leases . . .       286.6%       272.8%       268.5%
Nonperforming loans and leases to total
   total loans and leases . . . . . . .        0.44%        0.47%        0.45%
Allowance for loan and lease losses
   to total loans and leases. . . . . .        1.26%        1.29%        1.21%
Nonperforming assets
   to total assets. . . . . . . . . . .        0.26%        0.27%        0.30%
</TABLE>

PAGE 16

The following table sets forth an allocation of the allowance for loan losses by
loan  category:
<TABLE>
<CAPTION>
                                    March 31, 2003
                                   ---------------
<S>                         <C>              <C>
                                              Percent
(Dollars in thousands) . .     Amount        of Loans
                               ------------  ---------

Commercial and industrial.  $         6,147        29%
Consumer loans . . . . . .            6,604        33%
Real estate. . . . . . . .            3,092        32%
Lease financing. . . . . .            1,059         6%
                            ---------------  ---------
  Total. . . . . . . . . .  $        16,902       100%
                            ===============  =========
</TABLE>

Nonperforming  assets  (nonaccruing loans, loans 90 days past due and net assets
in  foreclosure) were 0.26% of total assets at March 31, 2003, compared to 0.27%
at  December  31,  2002 and 0.30% at March 31, 2002.  The ratio of the allowance
for  loan  losses  to  loans at March 31, 2003 of 1.26% was lower than the 1.29%
ratio  at  December  31,  2002  and  higher  than  the  1.21% at March 31, 2002.

Nonaccruing  loans  at March 31, 2003 of $4,492,000, decreased $617,000 from the
December 31, 2002 level of $5,109,000, and decreased $865,000 from the March 31,
2002  level of $5,357,000.  The decrease in nonaccruing loans at March 31, 2003,
compared  to  both December 31, 2002 and March 31, 2002 was primarily the result
of  a  decrease  in  commercial  real  estate  and  consumer  nonaccruing loans.

 Net  assets  in  foreclosure were $485,000 as of March 31, 2003, an increase of
$95,000  from the December 31, 2002 balance of $390,000.  During the first three
months  of  2003,  transfers  from loans to assets in foreclosure were $413,000,
payments  on  foreclosed properties were $318,000.  There were no write-downs of
assets  in  foreclosure  during this period.  The loans transferred to assets in
foreclosure included vehicle leases of $217,000, equipment leases of $66,000 and
$130,000 of consumer related loans.  The balance of net assets in foreclosure at
March  31,  2002  was  $459,000.  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, 2003, loans past due 90 days or more and still
accruing interest were $1,406,000 compared to $1,193,000 as of December 31, 2002
and  $649,000  as  of March 31, 2002.  The increase in loans past due 90 days at
March  31,  2003, compared to December 31, 2002 and March 31, 2002 was primarily
the  result  of  an  increase  in  real  estate  loans  past  due  90  days.

PAGE 17

<TABLE>
<CAPTION>
The  following  information  concerns  impaired  loans:
<S>                                                <C>              <C>             <C>
                                                   March 31, 2003   Dec. 31, 2002   March 31, 2002
                                                   ---------------  --------------  ---------------
 Impaired Loans . . . . . . . . . . . . . . . . .  $     2,643,000  $    3,153,000  $     2,835,000
                                                   ===============  ==============  ===============

 Average year-to-date impaired loans. . . . . . .  $     2,707,000  $    2,836,000  $     3,401,000
                                                   ===============  ==============  ===============

 Impaired loans with specific loss allowances . .  $     2,643,000  $    3,153,000  $     2,835,000
                                                   ===============  ==============  ===============

 Loss allowances reserved on impaired loans . . .  $       333,000  $      329,000  $       311,000
                                                   ===============  ==============  ===============

 Year-to-date income recognized on impaired loans  $        33,000  $      186,000  $         8,000
                                                   ===============  ==============  ===============
</TABLE>

 The  Banks'  policy  for  interest income recognition on nonaccrual loans is to
recognize  income  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,
                                   -----------------------------
                                            2003       2002
                                          --------    ------
                                         (Dollars in thousands)
<S>                                    <C>        <C>
Service charges . . . . . . . . . . .     $ 1,830  $1,521
Security gains, net . . . . . . . . .       1,316   1,231
Trust and investment services income.         888     883
Bank-owned life insurance income. . .         631     638
Income on Life Insurance. . . . . . .       1,119       -
Other income. . . . . . . . . . . . .       1,427   1,250
                                         -------- -------
      Total other operating income. .     $ 7,211  $5,523
                                         ========  ======
</TABLE>

The  three  months  ending  March  31, 2003 other operating income of $7,211,000
increased  $1,688,000,  or  30.6%,  from $5,523,000 for the same period in 2002.
This  rise  in  other  operating  income is primarily the result of increases in
income  on  life  insurance,  service  charges  and  other income of $1,119,000,
$309,000  and  $177,000,  respectively.  The  rise in other operating income was
10.3%,  not  inclusive  of  the  income  on  life  insurance.

 Service  charges  grew  $309,000  or  20.3%  in the first three months of 2003,
compared  to  the  same period in 2002.  This rise is the result of management's
continued  effort  to  institute  equitable  fees  for services performed and to
closely manage the collection of these fees. The growth in overdraft fees during
the  first  three  months  of  2003  contributed  $250,000 of this increase. The
remaining  increase is related to the fees associated with the growth in average
transaction  deposits  balances.

 The Corporation recorded net security gains on the sale of securities available
for sale of $1,316,000 in the first three months of 2003, compared to $1,231,000
during  the same period in 2002.  The Corporation sold the investment securities
available  for  sale  to  fund  the purchase of other securities in an effort to
reduce  the  interest  rate  risk and market risk within different interest rate
environments.

 Income  from the Investment Management and Trust Services Division increased to
$888,000  at March 31, 2003, from $883,000 at March 31, 2002.  The Corporation's
bank  owned  life  insurance  (BOLI)  income decreased $7,000 or 1.1% during the
first  three  months  of 2003, compared to the same period in 2002. This reduced

PAGE 18

income  level  was  related  to  the  lower rates experienced during 2003.  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 2003 increased $177,000 or 14.2%,
compared  to  the  same  period in 2002.  This increase was primarily associated
with higher gains on the sale of residential mortgage loans in the first quarter
of  2003,  compared  to  the  same  period  in  2002.
<TABLE>
<CAPTION>

OTHER  OPERATING  EXPENSES
--------------------------
                                   Three Months Ended March 31,
                                  -----------------------------
                                        2003       2002
                                      --------  -------
(Dollars in thousands)
<S>                                    <C>      <C>
Salaries. . . . . . . . . . . . . . .  $ 6,385  $ 5,946
Employee benefits . . . . . . . . . .    1,456    1,739
Occupancy . . . . . . . . . . . . . .    1,023    1,237
Furniture and equipment . . . . . . .    1,305    1,288
Other expenses. . . . . . . . . . . .    5,344    4,269
                                       ------- --------
    Total other operating expenses     $15,513  $14,479
                                       =======  =======
</TABLE>

 The  first  three  months  of  2003  other  operating  expenses  of $15,513,000
increased  $1,034,000,  or  7.1%  from  $14,479,000 for the same period in 2002.
This  rise  was  the  result of higher salary, furniture and equipment and other
expenses,  partially  offset  by lower employee benefits and occupancy expenses.

 Employee  salaries  increased  $439,000  or  7.4% from $5,946,000 for the first
three  months  of 2002 to $6,385,000 for the same period in 2003.  This increase
reflects  cost  of  living  increases,  merit  increases  and  additional  staff
necessitated  by  the  growth  of  the  Banks.  Employee  benefits of $1,456,000
expensed  in  the  first three months of 2003, were $283,000 or 16.3% lower than
the $1,739,000 of employee benefits expensed during the same period in 2002. The
decrease in employee benefits is the result of lower pension expense experienced
during  the  first  quarter  of  2003,  compared  to  the first quarter of 2002.

 Net  occupancy  expense  decreased  $214,000,  or 17.3%, from $1,237,000 in the
first  three  months  of  2002  to $1,023,000 in the first three months of 2003.
This  decrease  was due to a $365,000 expense related to a branch closure during
the  first  quarter  of  2002.  Net  of  the  branch  closure expense, occupancy
expenses  grew  $151,000  or 17.3% during the first quarter of 2003, compared to
the  third  quarter  of  2002.  This  increase  was  primarily the result of the
increase  in  snow  removal  expenses  associated with the harsh winter of 2003.
Furniture  and  equipment  expense  increased  $17,000 or 1.3%, during the first
three  months  of  2003,  compared  to  the  same  period  in  2002.

 Other  expenses  increased  $1,075,000,  or 25.2%, from $4,269,000 in the first
three  months  of 2002, compared to $5,344,000 in other expenses recorded during
the same period in 2003. This increase was largely due to the $1,300,000 rise in
expenses  related  to  the  off-lease vehicle residual reserve.  The Corporation
reviews the off-lease vehicle residual reserve expense on a quarterly basis. The
total  2002  off-lease  vehicle residual reserve expense was $2,737,000.  Net of
the  residual reserve expense, other expenses decreased $225,000, or 6.0%.  This
reduction  is  primarily  due  to  both lower loan related expenses and deferred
compensation  expenses.

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.

PAGE 19

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

 Total  assets  decreased  $20,450,000, or 0.8%, from $2,490,864,000 at December
31, 2002 to $2,470,414,000 at March 31, 2003.  During the first quarter of 2003,
the  banks implemented a strategy to reduce high costing certificates of deposit
balances  due  to  the  current  high level of liquidity.  Total certificates of
deposits were reduced $42,281,000 during this period.  Total assets at March 31,
2003  grew 13.7%, compared to March 31, 2002.  This gain was primarily due to an
increase  in  deposits that was used to fund investment securities available for
sale  and  loans.

 The  balance of securities available for sale at March 31, 2003 of $936,977,000
decreased $12,079,000 compared to the December 31, 2002 balance of $949,056,000.
During  the first quarter of 2003, $399,526,000 of securities available for sale
were  sold  which  generated  a  pretax  gain  of  $1,316,000.  In  comparison,
$117,295,000 securities available for sale were sold during the first quarter of
2002  to  generate a pretax gain of $1,231,000. The Corporation sells investment
securities  available  for  sale  to fund the purchase of other securities in an
effort  to  reduce  the  interest  rate  risk  and  market risk within different
interest  rate  environments.  The  balance  of  investment  securities  held to
maturity  decreased $293,000 during the first three months of 2003.  Total loans
and  residential  mortgage  loans  held for sale grew $3,838,000 or 0.3% through
March  31,  2003.  This growth was primarily due to increases in both commercial
loans  and  home  equity  loans,  partially  offset  by  lower  indirect vehicle
financing  and vehicle leases.  The loan growth net of both the indirect vehicle
and  vehicle  leasing  portfolios  was  7.7%  during  this  period.

 Total  deposits  decreased $26,356,000, or 1.3% from $1,979,822,000 at December
31,  2002 to $1,953,466,000 at March 31, 2003.  This reduction was primarily due
to  planned  run-off  of higher costing certificates of deposits which decreased
$42,281,000  during  this  time  period.  Lower  rate  core  deposits
(noninterest-bearing  checking, interest-bearing checking, money market accounts
and  savings  accounts)  grew a net $15,925,000, or 1.3% during this period. The
March  31, 2003 total deposit balance grew 14.4%, compared to the March 31, 2002
total  deposits.

 Other  borrowings  experienced  a decrease of $5,987,000 during the first three
months  of  2003.  This  decrease  was  the  result of a $5,667,000 reduction in
securities  sold  under agreement to repurchase and a $320,000 decrease 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, 2003 was $215,109,000, an
increase  of $8,903,000 over the end of 2002.  The increase is the result of the
retention  of the Corporation's earnings and the accumulated other comprehensive
income,  partially  offset  by  the  purchase of treasury stock during the first
three  months  of  2003. The accumulated other comprehensive income at March 31,
2003 was a gain of $11,694,000, compared to a gain of $6,937,000 at December 31,
2002.  The  corporation  purchased  $991,000  of treasury stock during the first
three  months  of  2003.  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 20
<TABLE>
<CAPTION>
(Dollars in thousands)
                                                                               For Capital
As of March 31, 2003                            Actual                      Adequacy Purposes
-----------------------------------------
<S>                                        <C>           <C>                 <C>       <C>
                                                Amount           Ratio        Amount    Ratio
                                           ------------  ------------------  --------  ------
Total Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    226,294              13.59%  $133,176   8.00%
Harleysville National Bank. . . . . . . .       137,502              11.36%    96,795   8.00%
Citizens National Bank. . . . . . . . . .        37,729              12.29%    24,561   8.00%
Security National Bank. . . . . . . . . .        17,401              13.00%    10,710   8.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    208,133              12.50%  $ 66,588   4.00%
Harleysville National Bank. . . . . . . .       126,533              10.46%    48,397   4.00%
Citizens National Bank. . . . . . . . . .        33,889              11.04%    12,280   4.00%
Security National Bank. . . . . . . . . .        15,723              11.74%     5,355   4.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    208,133               8.49%  $ 98,005   4.00%
Harleysville National Bank. . . . . . . .       126,533               7.18%    70,507   4.00%
Citizens National Bank. . . . . . . . . .        33,889               7.17%    18,902   4.00%
Security National Bank. . . . . . . . . .        15,723               7.99%     7,872   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. . . . . . . .                   120,993  10.00%
Citizens National Bank. . . . . . . . . .                    30,701  10.00%
Security National Bank. . . . . . . . . .                    13,387  10.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $                      -      -
Harleysville National Bank. . . . . . . .                    72,596   6.00%
Citizens National Bank. . . . . . . . . .                    18,420   6.00%
Security National Bank. . . . . . . . . .                     8,032   6.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $                      -      -
Harleysville National Bank. . . . . . . .                    88,134   5.00%
Citizens National Bank. . . . . . . . . .                    23,628   5.00%
Security National Bank. . . . . . . . . .                     9,840   5.00%
</TABLE>
<TABLE>
<CAPTION>
(Dollars  in  thousands)

                                                                              For Capital
As of December 31, 2002                       Actual                      Adequacy Purposes
-----------------------------------------
<S>                                        <C>           <C>                 <C>       <C>
                                               Amount          Ratio          Amount    Ratio
                                           ------------  ------------------  --------  ------
Total Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    222,217              13.38%  $132,866   8.00%
Harleysville National Bank. . . . . . . .       133,945              11.16%    96,034   8.00%
Citizens National Bank. . . . . . . . . .        37,125              12.01%    24,722   8.00%
Security National Bank. . . . . . . . . .        17,033              12.60%    10,814   8.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    203,896              12.28%  $ 66,433   4.00%
Harleysville National Bank. . . . . . . .       122,990              10.25%    48,017   4.00%
Citizens National Bank. . . . . . . . . .        33,258              10.76%    12,361   4.00%
Security National Bank. . . . . . . . . .        15,338              11.35%     5,407   4.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $    203,896               8.19%  $ 99,640   4.00%
Harleysville National Bank. . . . . . . .       122,990               6.88%    71,493   4.00%
Citizens National Bank. . . . . . . . . .        33,258               6.91%    19,255   4.00%
Security National Bank. . . . . . . . . .        15,338               7.77%     7,896   4.00%
</TABLE>
PAGE 21

<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. . . . . . . .   120,043  10.00%
Citizens National Bank. . . . . . . . . .    30,903  10.00%
Security National Bank. . . . . . . . . .    13,517  10.00%
Tier 1 Capital (to risk weighted assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $      -      -
Harleysville National Bank. . . . . . . .    72,026   6.00%
Citizens National Bank. . . . . . . . . .    18,542   6.00%
Security National Bank. . . . . . . . . .     8,110   6.00%
Tier 1 Capital (to average assets):
-----------------------------------------
Corporation . . . . . . . . . . . . . . .  $      -      -
Harleysville National Bank. . . . . . . .    89,366   5.00%
Citizens National Bank. . . . . . . . . .    24,069   5.00%
Security National Bank. . . . . . . . . .     9,869   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,  2003, the Corporation's Tier 1 risk-adjusted
capital  ratio was 12.50%, and the total risk-adjusted capital ratio was 13.59%,
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,  2003.

 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 8.49% at March 31, 2003 and 8.19% at December
31,  2002.

 The  year-to-date  March  31,  2003  cash  dividend per share of $.19 was 17.3%
higher  than  the  cash  dividend  for  the  same  period in 2002 of $.162.  The
dividend  payout ratio for the first three months of 2003 was 42.7%, compared to
40.9% for the twelve month period ended December 31, 2002.  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
2003.

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  uses  of  funds  for  the next 120 days.  The resulting
projections  as  of March 31, 2003 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 $305,974,000, as of March 31,
2003.  The  Banks  also have unused federal funds lines of credit of $50,000,000

PAGE 22

and  non-pledged  investment securities available for sale of $458,820,000 as of
March  31,  2003.

OTHER  INFORMATION
------------------

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 holding 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.

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.

PAGE 23

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  fourth  quarter  of  2003,  Security  National Bank plans to open a
location  in  North  Coventry  Township,  Chester County, Pennsylvania. This new
branch  site  is contiguous to our current service area and was chosen to expand
the  Bank's  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 on page 12 of this Form 10-Q
and  in  SEC  Form  10-K  for  the  period  ended  December  31,  2002.

ITEM  4  -  Controls  and  Procedures

We  maintain  a system of controls and procedures designed to provide reasonable
assurance  as  to  the  reliability  of  the  financial  statements  and  other
disclosures  included  in  this  report,  as  well  as  to safeguard assets from
unauthorized  use  or  disposition. We evaluated the effectiveness of the design
and  operation  of  our disclosure controls and procedures under the supervision
and  with the participation of management, including our Chief Executive Officer
and  Chief  Financial  Officer,  within 90 days prior to the filing date of this
report.  Based  upon  that  evaluation,  our  Chief  Executive Officer and Chief
Financial  Officer  concluded  that  our  disclosure controls and procedures are
effective  in  timely  alerting  them  to  material  information  required to be
included  in  our  periodic  Securities  and  Exchange  Commission  filings.  No
significant  changes  were  made  to our internal controls or other factors that
could  significantly  affect  these  controls  subsequent  to  the date of their
evaluation.

PAGE 24
                           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  2003  Annual  Meeting  of  Shareholders  was  held at 9:30 a.m., on
Tuesday,  April  8, 2003 at Presidential Caterers, 2910 DeKalb Pike, Norristown,
Pennsylvania  19401.

     (b),  (c)  Two  matters  were  voted  upon  as  follows:
     1.  Three  directors  were  elected,  as  below:

     Elected                        Term  Expires
     -------                        -------------
     Harold  A.  Herr                   2007
     Henry  M.  Pollak                  2007
     Stephanie  S.  Mitchell            2007

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

     Harold  A.  Herr                   For     14,514,507
                                        Against    251,446
                                        Abstain          0

     Henry  M.  Pollak                  For     14,450,749
                                        Against    315,204
                                        Abstain          0

     Stephanie  S.  Mitchell            For     14,506,718
                                        Against    259,235
                                        Abstain          0

PAGE 25

     Directors whose term continued after the meeting:     Term Expires
                                                           ------------
     Walter  R.  Bateman,  II                                  2004
     LeeAnn  B.  Bergey                                        2004
     Walter  E.  Daller,  Jr.                                  2006
     Thomas  C.  Leamer                                        2006
     Palmer  E.  Retzlaff                                      2004
     James  A.  Wimmer                                         2005
     William  M.  Yocum                                        2005


     2.  Proposal to consider and act upon a shareholder proposal.  Shareholders
request  that  our  Board  of  Directors  vote  to  eliminate  all anti-takeover
provisions  including  the  Corporation's classified board from the Harleysville
National  Corporation  Articles  of  Incorporation  and Amended Bylaws, and seek
shareholders'  approval  prior  to adopting any future anti-takeover provisions.

     The  result  of  the  voting  is  as  follows:
                                                   For         2,727,642
                                                   Against    10,058,548
                                                   Abstain       173,925

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

Item  6.     Exhibits  and  Reports  on  Form  8-K
--------     -------------------------------------
<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.)

PAGE 26

      (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>
  (b)  Reports  on  Form  8-K

During  the  quarter  ended  March  31,  2003,  the  Registrant filed a Form 8-K
containing  the  fourth  quarter  of  2002  earnings  press  release.

(99.1)     Certification.  Walter  E.  Daller, Jr. Chairman, President and Chief
                           Executive  Officer.
(99.2)     Certification.  Gregg  J.  Wagner, Executive Vice President and Chief
                           Financial  Officer.

PAGE 27
                                   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., Chairman, President and Chief Executive Officer
  (Principal executive officer)



   /s/  Gregg J. Wagner
-------------------------------------------------------------------------
  Gregg J. Wagner, Executive Vice President and Chief Financial Officer
  (Principal financial and accounting officer)





PAGE 28

Date:  May  12,  2002

                                  CERTIFICATION


I,  Walter  E.  Daller,  Jr.,  Chairman,  President and Chief Executive Officer,
certify,  that:

       1.       I  have  reviewed  this  quarterly  report  on  Form  10-Q  of
Harleysville  National  Corporation.

       2.       Based on my knowledge, the quarterly report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made, in light of the circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
quarterly  report.

       3.       Based  on  my  knowledge,  the  financial  statements, and other
financial  information  included in this quarterly report, fairly present in all
material  respects the financial condition, results of operations and cash flows
of  the  registrant  as  of,  and  for,  the periods presented in this quarterly
report.

       4.       The  registrant's other certifying officer and I are responsible
for  establishing and maintaining disclosure controls and procedures (as defined
in  Exchange  Act  Rules  13a-14  and  15d-14)  for  the registrant and we have:

(a)       designed  such  disclosure  controls  and  procedures  to  ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  is  being  prepared;

(b)       evaluated  the  effectiveness  of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

(c)       presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date.

       5.       The  registrant's other certifying officer and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors:

(a)        all  significant  deficiencies  in  the  design  or  operation of the
internal  controls  which  could  adversely  affect  the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

(b)       any  fraud, whether or not material, that involves management or other
employees  who  have  a  significant role in the registrant's internal controls.

       6.       The  registrant's  other certifying officer and I have indicated
in  this  quarterly  report  whether  or  not  there were significant changes in
internal  controls  or  in  other  factors  that  could significantly affect the
internal  controls  subsequent  to  the  date  of  our  most  recent evaluation,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.


Date:   May  12,  2003

By:  /s/  Walter  E.  Daller,  Jr.
----------------------------------
Chairman,  President  and  Chief
Executive  Officer
Harleysville  National  Corporation


PAGE 29
                                  CERTIFICATION


I,  Gregg  J.  Wagner,  Executive  Vice  President  and  Chief Financial Officer
certify,  that:

       1.       I  have  reviewed  this  quarterly  report  on  Form  10-Q  of
Harleysville  National  Corporation.

       2.       Based on my knowledge, the quarterly report does not contain any
untrue  statement  of a material fact or omit to state a material fact necessary
to  make  the  statements  made, in light of the circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
quarterly  report.

       3.       Based  on  my  knowledge,  the  financial  statements, and other
financial  information  included in this quarterly report, fairly present in all
material  respects the financial condition, results of operations and cash flows
of  the  registrant  as  of,  and  for,  the periods presented in this quarterly
report.

       4.       The  registrant's other certifying officer and I are responsible
for  establishing and maintaining disclosure controls and procedures (as defined
in  Exchange  Act  Rules  13a-14  and  15d-14)  for  the registrant and we have:

(a)       designed  such  disclosure  controls  and  procedures  to  ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  quarterly  report  is  being  prepared;

(b)       evaluated  the  effectiveness  of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

(c)       presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date.

       5.       The  registrant's other certifying officer and I have disclosed,
based  on our most recent evaluation, to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors:

(a)        all  significant  deficiencies  in  the  design  or  operation of the
internal  controls  which  could  adversely  affect  the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

(b)       any  fraud, whether or not material, that involves management or other
employees  who  have  a  significant role in the registrant's internal controls.

       6.       The  registrant's  other certifying officer and I have indicated
in  this  quarterly  report  whether  or  not  there were significant changes in
internal  controls  or  in  other  factors  that  could significantly affect the
internal  controls  subsequent  to  the  date  of  our  most  recent evaluation,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.

Date:  May  12,  2003

By:  /s/  Gregg  J.  Wagner
---------------------------
Executive  Vice  President  and
Chief  Financial  Officer
Harleysville  National  Corporation




PAGE 30
                                  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>

(99.1)     Certification.  Walter  E.  Daller, Jr. Chairman, President and Chief
           Executive  Officer.
(99.2)     Certification.  Gregg  J.  Wagner, Executive Vice President and Chief
           Financial  Officer.

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