**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**Form        10-Q**

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

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

**Or**

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

**HARLEYSVILLE        NATIONAL CORPORATION**

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

**483        Main Street**

**Harleysville,        Pennsylvania  19438**

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

**(215)        256-8851**

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

----

| **HARLEYSVILLE                  NATIONAL CORPORATION**                                                                                                                                                                       |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                                                                         |   |   |   |
|                                                                                                                                                                                                                         |   |   |   |
| **INDEX                  TO FORM 10-Q REPORT**                                                                                                                                                                               |   |   |   |
|                                                                                                                                                                                                                         |   |   |   |
|                                                                                                                                                                                                                         |   | PAGE   |   |
|                                                                                                                                                                                                                         |   |   |   |
| Part                  I.  Financial Information                                                                                                                                                                    |   |   |   |
|                                                                                                                                                                                                                         |   |   |   |
|      Item                  1. Financial Statements:                                                                                                                                                 |   |   |   |
|                                                                                                                                                                                                                         |   |   |   |
|            Consolidated                  Balance Sheets at June 30, 2007 (unaudited) and December 31,                  2006                                           |   |   | 3      |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|            Consolidated                  Statements of Income for the Three and Six Months Ended June 30,                  2007 and                  2006 (unaudited) |   |   | 4      |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|            Consolidated                  Statements of Shareholders’ Equity for the Six Months Ended June 30, 2007                  and 2006 (unaudited)        |   |   | 5      |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|            Consolidated                  Statements of Cash Flows for the Six Months Ended June 30, 2007                  and 2006                  (unaudited)       |   |   | 6      |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|            Notes                  to Consolidated Financial Statements                                                                                                |   |   | 7      |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  2.  Management's Discussion and Analysis of Financial Condition                  and Results of Operations                                                     |   |   | 16     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  3. Quantitative and Qualitative Disclosures about Market                  Risk                                                                                           |   |   | 30     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  4. Controls and Procedures                                                                                                                                               |   |   | 31     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
| Part                  II.  Other Information                                                                                                                                                                       |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  1.  Legal Proceedings                                                                                                                                          |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  1A.  Risk Factors                                                                                                                                              |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  2.  Unregistered Sales of Equity Securities and Use of                  Proceeds                                                                               |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  3.  Defaults Upon Senior Securities                                                                                                                            |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  4. Submission of Matters to a Vote of Security Holders                                                                                                                   |   |   | 32     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  5. Other Information                                                                                                                                                     |   |   | 33     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
|      Item                  6.  Exhibits                                                                                                                                                   |   |   | 33     |   |
|                                                                                                                                                                                                                         |   |   |   |   |
| Signatures                                                                                                                                                                                                                   |   |   | 34     |   |

----

| PART                  1. FINANCIAL INFORMATION                                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| HARLEYSVILLE                  NATIONAL CORPORATION AND SUBSIDIARIES                                                                                 |   |
| CONSOLIDATED                  BALANCE SHEETS                                                                                                        |   |
|                                                                                                                                                |   |
| (Dollars                  in thousands)                                                                                                             |   | June                  30, 2007 |   |   | December                  31, 2006 |   |
|                                                                                                                                                |   | (Unaudited) |   |   |   |   |
| **Assets**                                                                                                                                          |   |   |   |   |   |   |
| Cash                  and due from banks                                                                                                            |   | $ | 62,915 |   |   | $ | 61,895 |   |
| Federal                  funds sold and securities purchased under agreements to                  resell                                            |   |   | 30,000 |   |   |   | 59,000 |   |
| Interest-bearing                  deposits in banks                                                                                                 |   |   | 5,385 |   |   |   | 3,975 |   |
|     Total                  cash and cash equivalents                                                                            |   |   | 98,300 |   |   |   | 124,870 |   |
| Residential                  mortgage loans held for sale                                                                                           |   |   | 1,555 |   |   |   | 1,857 |   |
| Investment                  securities available for sale                                                                                           |   |   | 885,067 |   |   |   | 853,010 |   |
| Investment                  securities held to maturity (market value $58,233                  and                  $59,297, respectively)          |   |   | 58,857 |   |   |   | 58,879 |   |
| Loans                  and leases                                                                                                                   |   |   | 2,080,436 |   |   |   | 2,045,498 |   |
| Less:                  Allowance for loan losses                                                                                                    |   |   | (21,646 | ) |   |   | (21,154 | ) |
|              Net                  loans                                            |   |   | 2,058,790 |   |   |   | 2,024,344 |   |
| Premises                  and equipment, net                                                                                                        |   |   | 39,404 |   |   |   | 33,785 |   |
| Accrued                  interest receivable                                                                                                        |   |   | 14,832 |   |   |   | 14,950 |   |
| Goodwill                                                                                                                                            |   |   | 45,081 |   |   |   | 43,956 |   |
| Intangible                  assets, net                                                                                                             |   |   | 7,359 |   |   |   | 7,282 |   |
| Bank-owned                  life insurance                                                                                                          |   |   | 62,905 |   |   |   | 61,720 |   |
| Other                  assets                                                                                                                       |   |   | 31,094 |   |   |   | 25,175 |   |
|          Total                  assets                                                                 |   | $ | 3,303,244 |   |   | $ | 3,249,828 |   |
| **Liabilities                  and Shareholders' Equity**                                                                                           |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                           |   |   |   |   |   |   |   |   |
|    Noninterest-bearing                                                                                                               |   | $ | 339,618 |   |   | $ | 327,973 |   |
|    Interest-bearing:                                                                                                                 |   |   |   |   |   |   |   |   |
|      Checking                  accounts                                                                                    |   |   | 516,600 |   |   |   | 539,974 |   |
|      Money                  market accounts                                                                                |   |   | 759,905 |   |   |   | 662,966 |   |
|      Savings                                                                                                               |   |   | 121,874 |   |   |   | 133,370 |   |
|      Time                  deposits                                                                                        |   |   | 765,557 |   |   |   | 852,572 |   |
|           Total                  deposits                                                         |   |   | 2,503,554 |   |   |   | 2,516,855 |   |
| Federal                  funds purchased and short-term securities sold under agreements                  to                   repurchase      |   |   | 123,275 |   |   |   | 96,840 |   |
| Other                  short-term borrowings                                                                                                        |   |   | 1,106 |   |   |   | 1,357 |   |
| Long-term                  borrowings                                                                                                               |   |   | 297,750 |   |   |   | 239,750 |   |
| Accrued                  interest payable                                                                                                           |   |   | 22,166 |   |   |   | 31,358 |   |
| Subordinated                  debt                                                                                                                  |   |   | 51,548 |   |   |   | 51,548 |   |
| Other                  liabilities                                                                                                                  |   |   | 16,939 |   |   |   | 17,369 |   |
|           Total                  liabilities                                                      |   |   | 3,016,338 |   |   |   | 2,955,077 |   |
| Shareholders'                  Equity:                                                                                                              |   |   |   |   |   |   |   |   |
|     Series                  preferred stock,  par value $1 per share;                                                 |   |   |   |   |   |   |   |   |
|        Authorized                  8,000,000 shares, none issued                                                 |   |   | — |   |   |   | — |   |
|     Common                  stock, par value $1 per share; authorized 75,000,000                                                |   |   |   |   |   |   |   |   |
|        shares;                  issued 29,074,250 shares at June 30, 2007 and December 31,                  2006 |   |   | 29,074 |   |   |   | 29,074 |   |
|     Additional                  paid in capital                                                                                 |   |   | 194,870 |   |   |   | 194,713 |   |
|     Retained                  earnings                                                                                          |   |   | 80,969 |   |   |   | 79,339 |   |
|     Accumulated                  other comprehensive loss                                                                       |   |   | (14,713 | ) |   |   | (6,103 | ) |
|     Treasury                  stock, at cost: 178,117 shares at June 30, 2007 and                                               |   |   |   |   |   |   |   |   |
|        109,767                  shares at December 31, 2006                                                      |   |   | (3,294 | ) |   |   | (2,272 | ) |
|           Total                  shareholders' equity                                             |   |   | 286,906 |   |   |   | 294,751 |   |
|           Total                  liabilities and shareholders' equity                             |   | $ | 3,303,244 |   |   | $ | 3,249,828 |   |

----

| HARLEYSVILLE                  NATIONAL CORPORATION AND SUBSIDIARIES                                               |   |
|-------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED                  STATEMENTS OF INCOME(Unaudited)                                                     |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |
|                                                                                                              |   | Three                  Months Ended |   |   | Six                  Months Ended |   |
|                                                                                                              |   | June                  30, |   |   | June                  30 |   |
|  (Dollars                  in thousands, except per share information)                                       |   | 2007 |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                              |   |   |   |   |   |   |
| **Interest                  Income:**                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                  and leases, including fees                                                                 |   | $ | 35,452 |   |   | $ | 33,170 |   |   | $ | 70,088 |   |   | $ | 64,966 |   |
| Investment                  securities:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Taxable                                                                                               |   |   | 8,488 |   |   |   | 7,552 |   |   |   | 17,052 |   |   |   | 14,874 |   |
|   Exempt                  from federal taxes                                                            |   |   | 2,685 |   |   |   | 2,646 |   |   |   | 5,374 |   |   |   | 5,199 |   |
| Federal                  funds sold and securities purchased under agreements to                  resell          |   |   | 1,017 |   |   |   | 807 |   |   |   | 1,768 |   |   |   | 1,181 |   |
| Deposits                  in banks                                                                                |   |   | 69 |   |   |   | 48 |   |   |   | 124 |   |   |   | 99 |   |
|      Total                  interest income                                              |   |   | 47,711 |   |   |   | 44,223 |   |   |   | 94,406 |   |   |   | 86,319 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Expense:**                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                  and money market deposits                                                                |   |   | 12,830 |   |   |   | 8,918 |   |   |   | 24,936 |   |   |   | 16,431 |   |
| Time                  deposits                                                                                    |   |   | 9,302 |   |   |   | 8,965 |   |   |   | 19,018 |   |   |   | 16,609 |   |
| Short-term                  borrowings                                                                            |   |   | 1,297 |   |   |   | 1,084 |   |   |   | 2,553 |   |   |   | 2,504 |   |
| Long-term                  borrowings                                                                             |   |   | 4,127 |   |   |   | 3,980 |   |   |   | 7,907 |   |   |   | 8,028 |   |
|      Total                  interest expense                                             |   |   | 27,556 |   |   |   | 22,947 |   |   |   | 54,414 |   |   |   | 43,572 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income                                                                              |   |   | 20,155 |   |   |   | 21,276 |   |   |   | 39,992 |   |   |   | 42,747 |   |
| Provision                  for loan losses                                                                        |   |   | 1,125 |   |   |   | 900 |   |   |   | 3,550 |   |   |   | 2,100 |   |
| Net                  interest income after provision for loan losses                                              |   |   | 19,030 |   |   |   | 20,376 |   |   |   | 36,442 |   |   |   | 40,647 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                  Income:**                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                  charges                                                                                  |   |   | 2,442 |   |   |   | 2,026 |   |   |   | 4,360 |   |   |   | 3,916 |   |
| Gain                  on sales of investment securities, net                                                      |   |   | 2 |   |   |   | — |   |   |   | 533 |   |   |   | — |   |
| Gain                  on sale of credit card portfolio                                                            |   |   | — |   |   |   | 1,444 |   |   |   | — |   |   |   | 1,444 |   |
| Wealth                  management                                                                                |   |   | 4,831 |   |   |   | 3,378 |   |   |   | 9,098 |   |   |   | 7,942 |   |
| Bank-owned                  life insurance                                                                        |   |   | 603 |   |   |   | 601 |   |   |   | 1,185 |   |   |   | 1,201 |   |
| Other                  income                                                                                     |   |   | 2,377 |   |   |   | 2,474 |   |   |   | 4,226 |   |   |   | 4,353 |   |
|      Total                  noninterest income                                           |   |   | 10,255 |   |   |   | 9,923 |   |   |   | 19,402 |   |   |   | 18,856 |   |
|      Net                  interest income after provision for loan losses and            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              noninterest                  income |   |   | 29,285 |   |   |   | 30,299 |   |   |   | 55,844 |   |   |   | 59,503 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                  Expense:**                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries,                  wages and employee benefits                                                            |   |   | 12,450 |   |   |   | 10,854 |   |   |   | 24,047 |   |   |   | 21,373 |   |
| Occupancy                                                                                                         |   |   | 1,688 |   |   |   | 1,401 |   |   |   | 3,234 |   |   |   | 2,899 |   |
| Furniture                  and equipment                                                                          |   |   | 1,076 |   |   |   | 900 |   |   |   | 1,993 |   |   |   | 1,791 |   |
| Marketing                                                                                                         |   |   | 409 |   |   |   | 523 |   |   |   | 816 |   |   |   | 929 |   |
| Other                  expense                                                                                    |   |   | 4,518 |   |   |   | 4,000 |   |   |   | 8,830 |   |   |   | 7,811 |   |
|      Total                  noninterest expense                                          |   |   | 20,141 |   |   |   | 17,678 |   |   |   | 38,920 |   |   |   | 34,803 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  before income tax expense                                                                 |   |   | 9,144 |   |   |   | 12,621 |   |   |   | 16,924 |   |   |   | 24,700 |   |
| Income                  tax expense                                                                               |   |   | 2,065 |   |   |   | 3,336 |   |   |   | 3,711 |   |   |   | 6,464 |   |
| Net                  income                                                                                       |   | $ | 7,079 |   |   | $ | 9,285 |   |   | $ | 13,213 |   |   | $ | 18,236 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income per share information:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                                                                                     |   | $ | 0.25 |   |   | $ | 0.32 |   |   | $ | 0.46 |   |   | $ | 0.63 |   |
|     Diluted                                                                                   |   | $ | 0.24 |   |   | $ | 0.32 |   |   | $ | 0.45 |   |   | $ | 0.62 |   |
| Cash                  dividends per share                                                                         |   | $ | 0.20 |   |   | $ | 0.18 |   |   | $ | 0.40 |   |   | $ | 0.36 |   |
| Weighted                  average number of common shares:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                                                                                     |   |   | 28,944,643 |   |   |   | 28,933,741 |   |   |   | 28,955,014 |   |   |   | 28,903,632 |   |
|     Diluted                                                                                   |   |   | 29,190,602 |   |   |   | 29,351,584 |   |   |   | 29,222,626 |   |   |   | 29,368,854 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Six                  Months Ended June 30, 2007                                                           |                          |
|-----------------------------------------------------------------------------------------------------------|-------------------------------|
|                                                                                                      |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      | Common                  Stock |   |   | Treasury                  Stock |   |   |   |   |   | Additional |   |   |   |   |   | AccumulatedOther |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      | Number                  of    |   |   | Number                  of |   |   | Par |   |   | Paid |   |   | Retained |   |   | Comprehensive |   |   | Treasury |   |   |   |   |   | Comprehensive |   |
|                                                                                                      | Shares                        |   |   | Shares |   |   | Value |   |   | In                  Capital |   |   | Earnings |   |   | Loss |   |   | Stock |   |   | Total |   |   | Income                  (Loss) |   |
|                                                                                                      |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  January 1, 2007                                                                 |                          | 29,074 |   |   |   | (109 | ) |   | $ | 29,074 |   |   | $ | 194,713 |   |   | $ | 79,339 |   |   | $ | (6,103 | ) |   | $ | (2,272 | ) |   | $ | 294,751 |   |   |   |   |
| Issuance                  of stock for stock options, net of tax and excess tax                  benefits |                          | - |   |   |   | 17 |   |   |   | - |   |   |   | 25 |   |   |   | - |   |   |   | - |   |   |   | 355 |   |   |   | 380 |   |   |   |   |
| Issuance  of stock                  awards                                                 |                          | - |   |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | 4 |   |   |   |   |
| Stock                  based                    compensation                    expense         |                          | - |   |   |   | - |   |   |   | - |   |   |   | 133 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 133 |   |   |   |   |
| Net                  income                                                                               |                          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 13,213 |   |   |   | - |   |   |   | - |   |   |   | 13,213 |   |   | $ | 13,213 |   |
| Other                  comprehensive loss, net of reclassifications and tax                               |                          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,610 | ) |   |   | - |   |   |   | (8,610 | ) |   |   | (8,610 | ) |
| Purchase                  of                    treasury stock                                  |                          | - |   |   |   | (86 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,382 | ) |   |   | (1,382 | ) |   |   |   |   |
| Cash                  dividends                                                                           |                          | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11,583 | ) |   |   | - |   |   |   | - |   |   |   | (11,583 | ) |   |   |   |   |
| Comprehensive                    income                                                         |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 4,603 |   |
| Balance,                  June 30, 2007                                                                   |                          | 29,074 |   |   |   | (178 | ) |   | $ | 29,074 |   |   | $ | 194,870 |   |   | $ | 80,969 |   |   | $ | (14,713 | ) |   | $ | (3,294 | ) |   | $ | 286,906 |   |   |   |   |   |
|                                                                                                      |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Six                  Months Ended June 30, 2006                                                                                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   | Common                  Stock |   |   | Treasury                  Stock |   |   |   |   |   | Additional |   |   |   |   |   | AccumulatedOther |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   | Number                  of |   |   | Number                  of |   |   | Par |   |   | Paid |   |   | Retained |   |   | Comprehensive |   |   | Treasury |   |   |   |   |   | Comprehensive |   |
|                                                                                                                                                                                      |   | Shares |   |   | Shares |   |   | Value |   |   | In                  Capital |   |   | Earnings |   |   | Income                  (Loss) |   |   | Stock |   |   | Total |   |   | Income                  (Loss) |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  January 1, 2006                                                                                                                                                 |   |   | 27,500 |   |   |   | (64 | ) |   | $ | 27,500 |   |   | $ | 167,418 |   |   | $ | 88,285 |   |   | $ | (8,618 | ) |   | $ | (1,353 | ) |   | $ | 273,232 |   |   |   |   |
| Issuance                  of                    stock for stock                    options, net of                    excess                  tax  benefits |   |   | 146 |   |   |   | 130 |   |   |   | 146 |   |   |   | 1,835 |   |   |   | - |   |   |   | - |   |   |   | 2,743 |   |   |   | 4,724 |   |   |   |   |
| Issuance                  of                    stock awards                                                                                                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   |   |
| Stock                  based                    compensation  expense                                                                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 249 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 249 |   |   |   |   |
| Net                  income                                                                                                                                                               |   |   | -- |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 18,236 |   |   |   | - |   |   |   | - |   |   |   | 18,236 |   |   | $ | 18,236 |   |
| Other                  comprehensive loss, net of reclassifications and tax                                                                                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,336 | ) |   |   | - |   |   |   | (6,336 | ) |   |   | (6,336 | ) |
| Purchases                  of                    treasury stock                                                                                                                      |   |   | - |   |   |   | (91 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,916 | ) |   |   | (1,916 | ) |   |   |   |   |
| Cash                  dividends                                                                                                                                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,457 | ) |   |   | - |   |   |   | - |   |   |   | (10,457 | ) |   |   |   |   |
| Comprehensive                    income                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 11,900 |   |
| Balance,                  June 30, 2006                                                                                                                                                   |   |   | 27,646 |   |   |   | (25 | ) |   | $ | 27,646 |   |   | $ | 169,507 |   |   | $ | 96,064 |   |   | $ | (14,954 | ) |   | $ | (526 | ) |   | $ | 277,737 |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  accompanying notes to consolidated financial statements.                                                                                                             |   |

----

| HARLEYSVILLE                  NATIONAL CORPORATION AND SUBSIDIARIES                                                                                              |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED                  STATEMENTS OF CASH FLOWS                                                                                                           |   |
| (Unaudited)                                                                                                                                                      |   |
|                                                                                                                                                             |   | Six                  Months Ended |   |
| (Dollars                  in thousands)                                                                                                                          |   | June                  30, |   |
|                                                                                                                                                             |   | 2007 |   |   | 2006 |   |
| **Operating                  Activities:**                                                                                                                       |   |   |   |   |   |   |
|   Net                  income                                                                                                                          |   | $ | 13,213 |   |   | $ | 18,236 |   |
|   Adjustments                  to reconcile net income to net cash provided by operating                  activities:                                  |   |   |   |   |   |   |   |   |
|     Provision                  for loan losses                                                                                               |   |   | 3,550 |   |   |   | 2,100 |   |
|     Depreciation                  and amortization                                                                                           |   |   | 2,498 |   |   |   | 2,156 |   |
|     Net                  amortization of investment securities discounts/premiums                                                            |   |   | 971 |   |   |   | 1,876 |   |
|     Deferred                  income tax benefit                                                                                             |   |   | (179 | ) |   |   | (2,163 | ) |
|    Gain                  on sales of investment securities, net                                                                                   |   |   | (533 | ) |   |   | — |   |
|    Gain                  on sale of credit card portfolio                                                                                         |   |   | — |   |   |   | (1,444 | ) |
|     Bank-owned                  life insurance income                                                                                        |   |   | (1,185 | ) |   |   | (1,201 | ) |
|     Stock                  based compensation expense                                                                                        |   |   | 133 |   |   |   | 249 |   |
|     Net                  decrease (increase) in accrued interest receivable                                                                  |   |   | 118 |   |   |   | (844 | ) |
|     Net                  (decrease) increase in accrued interest payable                                                                     |   |   | (9,192 | ) |   |   | 1,922 |   |
|     Net                  (increase) decrease in other assets                                                                                 |   |   | (1,529 | ) |   |   | 1,410 |   |
|     Net                  increase (decrease) in other liabilities                                                                            |   |   | 698 |   |   |   | (5,368 | ) |
|     Other,                  net                                                                                                              |   |   | 4 |   |   |   | (2 | ) |
|        Net                  cash provided by operating activities                                                             |   |   | 8,567 |   |   |   | 16,927 |   |
| **Investing                  Activities:**                                                                                                                       |   |   |   |   |   |   |   |   |
|     Proceeds                  from sales of investment securities available for sale                                                         |   |   | 67,116 |   |   |   | — |   |
|     Proceeds                  from maturity or calls of investment securities available for                  sale                            |   |   | 81,279 |   |   |   | 81,754 |   |
|     Purchases                  of investment securities available for sale                                                                   |   |   | (193,966 | ) |   |   | (118,189 | ) |
|     Net                  increase in loans                                                                                                   |   |   | (37,812 | ) |   |   | (63,808 | ) |
|     Net                  cash paid due to acquisitions, net of cash acquired                                                                 |   |   | (2,500 | ) |   |   | (14,525 | ) |
| Net                  proceeds from sale of credit                  card portfolio                                                                                |   |   | — |   |   |   | 16,705 |   |
|     Purchases                  of premises and equipment                                                                                     |   |   | (7,560 | ) |   |   | (5,512 | ) |
|     Proceeds                  from sales of premises and equipment                                                                           |   |   | 2 |   |   |   | 16 |   |
|     Proceeds                  from sales of other real estate                                                                                |   |   | 6 |   |   |   | 32 |   |
|        Net                  cash used in investing activities                                                                 |   |   | (93,435 | ) |   |   | (103,527 | ) |
| **Financing                  Activities:**                                                                                                                       |   |   |   |   |   |   |   |   |
|   Net                  (decrease) increase in deposits                                                                                                 |   |   | (13,301 | ) |   |   | 114,201 |   |
|   Increase                  in federal funds purchased and short-term securities sold under                  agreements                  to repurchase |   |   | 26,435 |   |   |   | 18,667 |   |
|   (Decrease)                  increase  in other short-term borrowings                                                                       |   |   | (251 | ) |   |   | 263 |   |
|   Advances                  of long-term borrowings                                                                                                    |   |   | 105,000 |   |   |   | 10,000 |   |
|   Repayments                  of long-term borrowings                                                                                                  |   |   | (47,000 | ) |   |   | (50,000 | ) |
|   Cash                  dividends                                                                                                                      |   |   | (11,583 | ) |   |   | (10,457 | ) |
|   Repurchase                  of common stock                                                                                                          |   |   | (1,382 | ) |   |   | (1,916 | ) |
|   Proceeds                  from the exercise of stock options                                                                                         |   |   | 380 |   |   |   | 4,121 |   |
|   Excess                  tax benefits from stock based compensation                                                                                   |   |   | — |   |   |   | 603 |   |
|     Net                  cash provided by financing activities                                                                               |   |   | 58,298 |   |   |   | 85,482 |   |
| Net                  (decrease) increase in cash and cash equivalents                                                                                            |   |   | (26,570 | ) |   |   | (1,118 | ) |
| Cash                  and cash equivalents at beginning of period                                                                                                |   |   | 124,870 |   |   |   | 95,211 |   |
| Cash                  and cash equivalents at end of the period                                                                                                  |   | $ | 98,300 |   |   | $ | 94,093 |   |
|                                                                                                                                                             |   |   |   |   |   |   |   |   |
|   Cash                  paid during the period for:                                                                                                    |   |   |   |   |   |   |   |   |
|      Interest                                                                                                                           |   | $ | 63,625 |   |   | $ | 41,697 |   |
|      Income                  taxes                                                                                                      |   | $ | 1,980 |   |   | $ | 8,421 |   |
|   Supplemental                  disclosure of noncash investing and financing activities:                                                              |   |   |   |   |   |   |   |   |
|      Transfer                  of assets from loans to net assets in foreclosure                                                        |   | $ | 51 |   |   | $ | 91 |   |
|                                                                                                                                                             |   |
| See                  accompanying notes to consolidated financial statements.                                                                                    |   |   |   |   |   |   |   |   |

----

**HARLEYSVILLE        NATIONAL CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

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

*Principles        of Consolidation and Basis of Presentation*

**Note        2 – Acquisitions/Disposition**

----

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

**Note        3 – Goodwill and Other Intangibles**

|                                            | **June 30,**                          |       | **December 31,**                         |
|-------------------------------------------------|--------------------------------------------|------------|-----------------------------------------------|
|                                            | **2007**                                   |       |                                          |  **2006** |
|                                            | **Gross                  Carrying Amount** |       | **Accumulated                  Amortization** |   |                  **Gross                  Carrying Amount** |   |   |                  **Accumulated                  Amortization** |   |
|                                            | **(Dollars in thousands)**       |
| Core                  deposit intangibles       |                                       | **$**      | **1,929**                                     |   |   | **$** | **852** |   |   | **$** | **1,929** |   |   | **$** | **733** |   |
| Other                  identifiable intangibles |                                       | ** ** | **4,288**                                     |   |   | ** ** | **685** |   |   | ** ** | **3,913** |   |   | ** ** | **448** |   |
| Total                                           |                                       | **$**      | **6,217**                                     |   |   | **$** | **1,537** |   |   | **$** | **5,842** |   |   | **$** | **1,181** |   |

**Note        4 - Pension Plan**

| (Dollars                  in thousands)             |   | Six                  Months Ended June 30, |   |
|-----------------------------------------------------|--------|--------------------------------------------|--------|
|                                                |   | 2007                                       |   |   | 2006 |   |
| Net                  periodic benefit cost          |   |                                       |   |   |   |   |
| Service                  cost                       |   | $                                          | 583    |   |   | $ | 521 |   |
| Interest                  cost                      |   |                                       | 342    |   |   |   | 327 |   |
| Expected                  return on plan assets     |   |                                       | (300   | ) |   |   | (276 | ) |
| Amortization                  of net actuarial loss |   |                                       | 38     |   |   |   | 59 |   |
| Net                  periodic benefit expense       |   | $                                          | 663    |   |   | $ | 631 |   |

----

**Note        5 - Stock Dividend/Split**

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

** **

*pro        forma*

| **Options**                                     |   | **Shares** |      |   | **Weighted-Average                  Exercise Price** |   |   | **Weighted-Average                  Remaining Contractual Term**** (in                  years)** |   |   | **Aggregate**** Intrinsic                  Value****(in                  thousands)** |   |
|-------------------------------------------------|--------|------------|-----------|--------|------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------|--------|
| Outstanding                  at January 1, 2007 |   |       | 1,157,484 |   |                                                 | $      | 15.60  |                                                                                                  |   |   |                                                                                       |   |   |   |
| Granted                                         |   |       | -         |   |                                                 |   | -      |                                                                                                  |   |   |                                                                                       |   |   |   |
| Exercised                                       |   |       | (17,431   | )      |                                                 |   | 9.44   |                                                                                                  |   |   |                                                                                       |   |   |   |
| Forfeited                  (unvested)           |   |       | (1,680    | )      |                                                 |   | 20.10  |                                                                                                  |   |   |                                                                                       |   |   |   |
| Cancelled                  (vested)             |   |       | (4,505    | )      |                                                 |   | 18.61  |                                                                                                  |   |   |                                                                                       |   |   |   |
|                                            |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |
| Outstanding                  at June 30, 2007   |   |       | 1,133,868 |   |                                                 | $      | 15.67  |                                                                                                  |   |   | 4.92                                                                                       |   |   | $ | 4,107 |   |
|                                            |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |   |   |
| Exercisable                  at June 30, 2007   |   |       | 1,007,136 |   |                                                 | $      | 14.85  |                                                                                                  |   |   | 4.55                                                                                       |   |   | $ | 4,107 |   |
|                                            |   |       |      |   |                                                 |   |   |                                                                                                  |   |   |                                                                                       |   |   |   |   |   |

----

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

| **Nonvested                  Shares**         |   | **Shares** |    |   | **Weighted-Average****Grant-Date                  Fair Value** |   |
|-----------------------------------------------|--------|------------|---------|--------|----------------------------------------------------------------|--------|
|                                          |   |       |    |   |                                                           |   |
| Nonvested                  at January 1, 2007 |   |       | 131,610 |   |                                                           | $      | 6.15 |   |
|                                          |   |       |    |   |                                                           |   |   |   |
| Granted                                       |   |       | -       |   |                                                           |   | - |   |
|                                          |   |       |    |   |                                                           |   |   |   |
| Vested                                        |   |       | (3,197  | )      |                                                           |   | 5.10 |   |
|                                          |   |       |    |   |                                                           |   |   |   |
| Forfeited                                     |   |       | (1,680  | )      |                                                           |   | 5.61 |   |
|                                          |   |       |    |   |                                                           |   |   |   |
| Nonvested                  at June 30, 2007   |   |       | 126,733 |   |                                                           | $      | 6.15 |   |

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

|                                                                                                                               |   |    Three                  Months Ended |  Six                  Months Ended     |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|---------------------------------------------|--------|
|                                                                                                                               |   |    June                  30,           |    June                  30, |   |
| (Dollars                  in thousands, except per share data)                                                                     |   | 2007                                                  |                                        |   | 2006 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                               |   |                                                  |                                        |   |   |   |   |   |   |   |   |   |
| **Basic                  earnings per share**                                                                                      |   |                                                  |                                        |   |   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders                                                                       |   | $                                                     | 7,079                                       |   |   | $ | 9,285 |   |   | $ | 13,213 |   |   | $ | 18,236 |   |
| Weighted                  average common shares outstanding                                                                        |   |                                                  | 28,944,643                                  |   |   |   | 28,933,741 |   |   |   | 28,955,014 |   |   |   | 28,903,632 |   |
| Basic                  earnings per share                                                                                          |   | $                                                     | .25                                         |   |   | $ | .32 |   |   | $ | .46 |   |   | $ | .63 |   |
|                                                                                                                               |   |                                                  |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Diluted                  earnings per share**                                                                                    |   |                                                  |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                  income available to common shareholders    and                  assumed conversions |   | $                                                     | 7,079                                       |   |   | $ | 9,285 |   |   | $ | 13,213 |   |   | $ | 18,236 |   |
| Weighted                  average common shares outstanding                                                                        |   |                                                  | 28,944,643                                  |   |   |   | 28,933,741 |   |   |   | 28,955,014 |   |   |   | 28,903,632 |   |
| Dilutive                  potential common shares (1),                  (2)                                                        |   |                                                  | 245,959                                     |   |   |   | 417,843 |   |   |   | 267,612 |   |   |   | 465,222 |   |
| Total                  diluted weighted average common shares outstanding                                                          |   |                                                  | 29,190,602                                  |   |   |   | 29,351,584 |   |   |   | 29,222,626 |   |   |   | 29,368,854 |   |
|  Diluted                  earnings per share                                                                                  |   | $                                                     | .24                                         |   |   | $ | .32 |   |   | $ | .45 |   |   | $ | .62 |   |
|                                                                                                                               |   |                                                  |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |

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

| (2)   | Antidilutive                  options have been excluded in the computation of diluted earnings                  per                  share because the options’ exercise prices were greater than the average                  market price of the common stock. For the three months ended June                  30, 2007                  and 2006, there were 490,114 antidilutive options at an average                  price of                  $23.47 and 488,338 antidilutive options at an average price of                  $24.31,                  respectively. For the six months ended June 30, 2007 and 2006,                  there were                  475,643 antidilutive options at an average price of $23.67 and                  486,133                  antidilutive options at an average price of $24.34,                  respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Note        8 – Comprehensive Income**

| Comprehensive                  Income                                                                                     |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                      |   |   |   |   |   |   |   |   |   |
| (Dollars                  in thousands)                                                                                   |   | Before                  tax |   |   | Tax                  Benefit |   |   | Net                  of tax |   |
| Six                  months ended June 30, 2007                                                                           |   | Amount |   |   | (Expense) |   |   | amount |   |
| Net                  unrealized gains on available for sale securities:                                                   |   |   |   |   |   |   |   |   |   |
|    Net                  unrealized holding gains arising during period                                     |   | $ | (12,565 | ) |   | $ | 4,398 |   |   | $ | (8,167 | ) |
|    Less                  reclassification adjustment for net gains realized in net                  income |   |   | 533 |   |   |   | (187 | ) |   |   | 346 |   |
|    Net                  unrealized gains                                                                   |   |   | (13,098 | ) |   |   | 4,585 |   |   |   | (8,513 | ) |
|   Change                  in fair value of derivatives used for cash flow hedges                                |   |   | (206 | ) |   |   | 72 |   |   |   | (134 | ) |
|   Other                                                                                                         |   |   | 57 |   |   |   | (20 | ) |   |   | 37 |   |
|   Other                  comprehensive loss, net                                                                |   | $ | (13,247 | ) |   | $ | 4,637 |   |   | $ | (8,610 | ) |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| (Dollars                  in thousands)                                                                                   |   | Before                  tax |   |   | Tax                  Benefit |   |   | Net                  of tax |   |
| Six                  months ended June 30, 2006                                                                           |   | Amount |   |   | (Expense) |   |   | Amount |   |
| Net                  unrealized losses on available for sale securities:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net                  unrealized holding losses arising during period                                    |   | $ | (10,223 | ) |   | $ | 3,578 |   |   | $ | (6,645 | ) |
|    Less                  reclassification adjustment for net gains realized in net                  income |   |   | – |   |   |   | – |   |   |   | – |   |
|    Net                  unrealized losses                                                                  |   |   | (10,223 | ) |   |   | 3,578 |   |   |   | (6,645 | ) |
|    Change                  in fair value of derivatives used for cash flow hedges                          |   |   | 384 |   |   |   | (134 | ) |   |   | 250 |   |
|    Amortization                  of unrealized loss on termination of cash flow hedge                      |   |   | 91 |   |   |   | (32 | ) |   |   | 59 |   |
|   Other                  comprehensive loss, net                                                                |   | $ | (9,748 | ) |   | $ | 3,412 |   |   | $ | (6,336 | ) |

**Note        9 – Segment Information**

----

**Note        9 – Segment Information – Continued**

| **(Dollars                  in thousands)**                  |   | **Community                  Banking** |   |   | **Wealth Management** |   |   | **All                  Other** |   |   | **Consolidated                  Totals** |   |
|--------------------------------------------------------------|--------|----------------------------------------|--------|--------|----------------------------|--------|--------|--------------------------------|--------|--------|------------------------------------------|--------|
| Three                  Months Ended June 30, 2007            |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |
|                                                         |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |
| Net                  interest income (expense)               |   | $                                      | 20,584 |   |                       | $      | 105    |                           |   | $      | (534                                     | )      |   | $ | 20,155 |   |
| Provision                  for loan losses                   |   |                                   | 1,125  |   |                       |   | -      |                           |   |   | -                                        |   |   |   | 1,125 |   |
| Noninterest                  income                          |   |                                   | 5,247  |   |                       |   | 4,834  |                           |   |   | 174                                      |   |   |   | 10,255 |   |
| Noninterest                  expense                         |   |                                   | 15,960 |   |                       |   | 3,867  |                           |   |   | 314                                      |   |   |   | 20,141 |   |
| Income                  (loss) before income taxes (benefit) |   |                                   | 8,746  |   |                       |   | 1,072  |                           |   |   | (674                                     | )      |   |   | 9,144 |   |
| Income                  taxes (benefit)                      |   |                                   | 1,908  |   |                       |   | 426    |                           |   |   | (269                                     | )      |   |   | 2,065 |   |
| Net                  income (loss)                           |   | $                                      | 6,838  |   |                       | $      | 646    |                           |   | $      | (405                                     | )      |   | $ | 7,079 |   |
|                                                         |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
|                                                         |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Three                  Months Ended June 30, 2006            |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
|                                                         |   |                                   |   |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Net                  interest income                         |   | $                                      | 21,666 |   |                       | $      | 125    |                           |   | $      | (515                                     | )      |   | $ | 21,276 |   |
| Provision                  for loan losses                   |   |                                   | 900    |   |                       |   | -      |                           |   |   | -                                        |   |   |   | 900 |   |
| Noninterest                  income                          |   |                                   | 6,299  |   |                       |   | 3,410  |                           |   |   | 214                                      |   |   |   | 9,923 |   |
| Noninterest                  expense                         |   |                                   | 14,217 |   |                       |   | 3,079  |                           |   |   | 382                                      |   |   |   | 17,678 |   |
| Income                  (loss) before income taxes (benefit) |   |                                   | 12,848 |   |                       |   | 456    |                           |   |   | (683                                     | )      |   |   | 12,621 |   |
| Income                  taxes (benefit)                      |   |                                   | 3,365  |   |                       |   | 194    |                           |   |   | (223                                     | )      |   |   | 3,336 |   |
| Net                  income (loss)                           |   | $                                      | 9,483  |   |                       | $      | 262    |                           |   | $      | (460                                     | )      |   | $ | 9,285 |   |

| **(Dollars                  in thousands)**                  |   | **Community                  Banking** |      |   | **Wealth Management** |   |   | **All                  Other** |   |   | **Consolidated                  Totals** |   |
|--------------------------------------------------------------|--------|----------------------------------------|-----------|--------|----------------------------|--------|--------|--------------------------------|--------|--------|------------------------------------------|--------|
| Six                  Months Ended June 30, 2007              |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |
|                                                         |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |
| Net                  interest income (expense)               |   | $                                      | 40,840    |   |                       | $      | 217    |                           |   | $      | (1,065                                   | )      |   | $ | 39,992 |   |
| Provision                  for loan losses                   |   |                                   | 3,550     |   |                       |   | -      |                           |   |   | -                                        |   |   |   | 3,550 |   |
| Noninterest                  income                          |   |                                   | 9,910     |   |                       |   | 9,101  |                           |   |   | 391                                      |   |   |   | 19,402 |   |
| Noninterest                  expense                         |   |                                   | 31,045    |   |                       |   | 7,254  |                           |   |   | 621                                      |   |   |   | 38,920 |   |
| Income                  (loss) before income taxes (benefit) |   |                                   | 16,155    |   |                       |   | 2,064  |                           |   |   | (1,295                                   | )      |   |   | 16,924 |   |
| Income                  taxes (benefit)                      |   |                                   | 3,435     |   |                       |   | 822    |                           |   |   | (546                                     | )      |   |   | 3,711 |   |
| Net                  income (loss)                           |   | $                                      | 12,720    |   |                       | $      | 1,242  |                           |   | $      | (749                                     | )      |   | $ | 13,213 |   |
|                                                         |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Assets                                                       |   | $                                      | 3,245,654 |   |                       | $      | 22,325 |                           |   | $      | 35,265                                   |   |   | $ | 3,303,244 |   |
|                                                         |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Six                  Months Ended June 30, 2006              |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
|                                                         |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Net                  interest income                         |   | $                                      | 43,435    |   |                       | $      | 265    |                           |   | $      | (953                                     | )      |   | $ | 42,747 |   |
| Provision                  for loan losses                   |   |                                   | 2,100     |   |                       |   | -      |                           |   |   | -                                        |   |   |   | 2,100 |   |
| Noninterest                  income                          |   |                                   | 10,470    |   |                       |   | 7,997  |                           |   |   | 389                                      |   |   |   | 18,856 |   |
| Noninterest                  expense                         |   |                                   | 27,897    |   |                       |   | 6,328  |                           |   |   | 578                                      |   |   |   | 34,803 |   |
| Income                  (loss) before income taxes (benefit) |   |                                   | 23,908    |   |                       |   | 1,934  |                           |   |   | (1,142                                   | )      |   |   | 24,700 |   |
| Income                  taxes (benefit)                      |   |                                   | 6,123     |   |                       |   | 810    |                           |   |   | (469                                     | )      |   |   | 6,464 |   |
| Net                  income (loss)                           |   | $                                      | 17,785    |   |                       | $      | 1,124  |                           |   | $      | (673                                     | )      |   | $ | 18,236 |   |
|                                                         |   |                                   |      |   |                       |   |   |                           |   |   |                                     |   |   |   |   |   |
| Assets                                                       |   | $                                      | 3,180,459 |   |                       | $      | 3,143  |                           |   | $      | 33,416                                   |   |   | $ | 3,217,018 |   |

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

----

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

|                                                                                                                                          |                                |                                    |
|-----------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|-----------------------------------------|
|                  **Commitments**                                                                                                         |  June                  30,2007 |  December                  31,2006 |
|                  (Dollars                  in thousands)                                                                                 |                                |                                    |
|                                                                                                                                          |                                |                                    |
| Financial                  instruments whose contract amounts represent credit risk:                                                          |                                |                                    |
| Commitments                  to extend                  credit                                                                                | $728,101                            | $753,825                                |
| Standby                  letters of credit and                  financial guarantees written                                                  | 20,981                              | 25,960                                  |
| Financial                  instruments whose notional or contract amounts exceed the amount                  of credit                  risk: |                                |                                    |
| Interest                  rate swap                  agreements                                                                               | 59,530                              | 59,750                                  |
| Interest                  rate cap                  agreements                                                                                | 200,000                             | —                                 |

----

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

**Note        11 – Contingent Liabilities**

**Note        12 – Recent Accounting Pronouncements**

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

----

**Note        12 – Recent Accounting Pronouncements– Continued**

----

**Item        2.                                                                                                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF**

**RESULTS        OF OPERATIONS AND FINANCIAL CONDITION**

**Critical        Accounting Estimates**

----

**Financial        Overview**

----

**Results        of Operations**

**Net        Interest Income**

----

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

|                                                                      |   | Three                  Months EndedJune                  30, 2007 compared toJune                  30, 2006 |   |   | Six                  Month EndedJune                  30, 2007 compared toJune                  30, 2006 |   |
|---------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------|--------|
|                                                                      |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Dollars                  in thousands)                                   |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                      |   | Total                                                                                                       |   |   | Due                  to change in:                                                                       |   |   | Total |   |   | Due                  to change in: |   |
|                                                                      |   | Change                                                                                                      |   |   | Volume                                                                                                   |   |   | Rate |   |   | Change |   |   | Volume |   |   | Rate |   |
|                                                                      |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                  in interest income:                             |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                  securities *                                  |   | $                                                                                                           | 940    |   |                                                                                                     | $      | 94 |   |   | $ | 846 |   |   |   | 2,342 |   |   |   | 187 |   |   |   | 2,155 |   |
| Federal                  funds sold and deposits in banks                 |   |                                                                                                        | 231    |   |                                                                                                     |   | 154 |   |   |   | 77 |   |   |   | 612 |   |   |   | 469 |   |   |   | 143 |   |
| Loans                  *                                                  |   |                                                                                                        | 2,283  |   |                                                                                                     |   | 927 |   |   |   | 1,356 |   |   |   | 5,104 |   |   |   | 2,097 |   |   |   | 3,007 |   |
| Total                                                                     |   |                                                                                                        | 3,454  |   |                                                                                                     |   | 1,175 |   |   |   | 2,279 |   |   |   | 8,058 |   |   |   | 2,753 |   |   |   | 5,305 |   |
|                                                                      |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                  in interest expense:                            |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Savings                  and money market deposits            |   |                                                                                                        | 3,912  |   |                                                                                                     |   | 1,205 |   |   |   | 2,707 |   |   |   | 8,505 |   |   |   | 2,188 |   |   |   | 6,317 |   |
|   Time                  deposits                                |   |                                                                                                        | 337    |   |                                                                                                     |   | (783 | ) |   |   | 1,120 |   |   |   | 2,409 |   |   |   | (267 | ) |   |   | 2,676 |   |
|   Borrowed                  funds                               |   |                                                                                                        | 360    |   |                                                                                                     |   | 138 |   |   |   | 222 |   |   |   | (72 | ) |   |   | (636 | ) |   |   | 564 |   |
|       Total                                 |   |                                                                                                        | 4,609  |   |                                                                                                     |   | 560 |   |   |   | 4,049 |   |   |   | 10,842 |   |   |   | 1,285 |   |   |   | 9,557 |   |
|                                                                      |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  (decrease) increase in net interest income           |   | $                                                                                                           | (1,155 | )      |                                                                                                     | $      | 615 |   |   | $ | (1,770 | ) |   | $ | (2,784 | ) |   | $ | 1,468 |   |   | $ | (4,252 | ) |
|  *Tax                  equivalent basis using a tax rate of 35%, net |   |                                                                                                        |   |   |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

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

| (Dollars                  in thousands)                                                               |   | Three                  Months Ended June 30, |      |   | Three                  Months Ended June 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|-----------|--------|----------------------------------------------|--------|
|                                                                                                  |   | 2007                                         |      |   | 2006                                         |   |
|                                                                                                  |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | Average                                      |      |   |                                         |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| **Assets**                                                                                            |   | Balance                                      |      |   | Interest                                     |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Earning                  assets:                                                                      |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Investment                  securities:                                                   |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Taxable                  investments                                                |   | $                                            | 676,830   |   |                                         | $      | 8,488 |   |   |   | 5.03 | % |   | $ | 673,545 |   |   | $ | 7,552 |   |   |   | 4.50 | % |
|    Nontaxable                  investments (1)                                         |   |                                         | 259,696   |   |                                         |   | 3,908 |   |   |   | 6.04 |   |   |   | 255,457 |   |   |   | 3,904 |   |   |   | 6.13 |   |
|       Total                  investment securities                      |   |                                         | 936,526   |   |                                         |   | 12,396 |   |   |   | 5.31 |   |   |   | 929,002 |   |   |   | 11,456 |   |   |   | 4.95 |   |
|   Federal                  funds sold and deposits in banks                                 |   |                                         | 82,021    |   |                                         |   | 1,086 |   |   |   | 5.31 |   |   |   | 70,163 |   |   |   | 855 |   |   |   | 4.89 |   |
|   Loans                  (1)                  (2)                                           |   |                                         | 2,062,144 |   |                                         |   | 35,709 |   |   |   | 6.95 |   |   |   | 2,006,723 |   |   |   | 33,426 |   |   |   | 6.68 |   |
|        Total                  earning assets                       |   |                                         | 3,080,691 |   |                                         |   | 49,191 |   |   |   | 6.40 |   |   |   | 3,005,888 |   |   |   | 45,737 |   |   |   | 6.10 |   |
| Noninterest-earning                  assets                                                           |   |                                         | 222,329   |   |                                         |   |   |   |   |   |   |   |   |   | 212,593 |   |   |   |   |   |   |   |   |   |
|          Total                  assets                   |   | $                                            | 3,303,020 |   |                                         |   |   |   |   |   |   |   |   | $ | 3,218,481 |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Shareholders' Equity**                                             |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                                                        |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                  deposits:                                               |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                  and money market                                           |   | $                                            | 1,415,657 |   |                                         |   | 12,830 |   |   |   | 3.64 |   |   | $ | 1,257,838 |   |   |   | 8,918 |   |   |   | 2.84 |   |
|    Time                                                                                |   |                                         | 787,419   |   |                                         |   | 9,302 |   |   |   | 4.74 |   |   |   | 858,961 |   |   |   | 8,965 |   |   |   | 4.19 |   |
|     Total                  interest-bearing deposits                              |   |                                         | 2,203,076 |   |                                         |   | 22,132 |   |   |   | 4.03 |   |   |   | 2,116,799 |   |   |   | 17,883 |   |   |   | 3.39 |   |
|   Borrowed                  funds                                                           |   |                                         | 450,529   |   |                                         |   | 5,424 |   |   |   | 4.83 |   |   |   | 438,745 |   |   |   | 5,064 |   |   |   | 4.63 |   |
|      Total                  interest bearing liabilities                     |   |                                         | 2,653,605 |   |                                         |   | 27,556 |   |   |   | 4.17 |   |   |   | 2,555,544 |   |   |   | 22,947 |   |   |   | 3.60 |   |
| Noninterest-bearing                  liabilities:                                                     |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand                  deposits                                                          |   |                                         | 314,215   |   |                                         |   |   |   |   |   |   |   |   |   | 342,654 |   |   |   |   |   |   |   |   |   |
|   Other                  liabilities                                                        |   |                                         | 42,168    |   |                                         |   |   |   |   |   |   |   |   |   | 43,219 |   |   |   |   |   |   |   |   |   |
|     Total                  noninterest-bearing liabilities                        |   |                                         | 356,383   |   |                                         |   |   |   |   |   |   |   |   |   | 385,873 |   |   |   |   |   |   |   |   |   |
|        Total                  liabilities                          |   |                                         | 3,009,988 |   |                                         |   |   |   |   |   |   |   |   |   | 2,941,417 |   |   |   |   |   |   |   |   |   |
| Shareholders'                  equity                                                                 |   |                                         | 293,032   |   |                                         |   |   |   |   |   |   |   |   |   | 277,064 |   |   |   |   |   |   |   |   |   |
|        Total                  liabilities and shareholders' equity |   | $                                            | 3,303,020 |   |                                         |   |   |   |   |   |   |   |   | $ | 3,218,481 |   |   |   |   |   |   |   |   |   |
| Net                  interest spread                                                                  |   |                                         |      |   |                                         |   |   |   |   |   | 2.23 |   |   |   |   |   |   |   |   |   |   |   | 2.50 |   |
| Effect                  of noninterest-bearing sources                                                |   |                                         |      |   |                                         |   |   |   |   |   | 0.59 |   |   |   |   |   |   |   |   |   |   |   | .54 |   |
| Net                  interest income/margin on earning assets                                         |   |                                         |      |   |                                         | $      | 21,635 |   |   |   | 2.82 | % |   |   |   |   |   | $ | 22,790 |   |   |   | 3.04 | % |
|                                                                                                  |   |                                         |      |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                  tax equivalent adjustment                                                       |   |                                         |      |   |                                         |   | 1,480 |   |   |   |   |   |   |   |   |   |   |   | 1,514 |   |   |   |   |   |
| Net                  interest income                                                                  |   |                                         |      |   |                                         | $      | 20,155 |   |   |   |   |   |   |   |   |   |   | $ | 21,276 |   |   |   |   |   |

----

| (Dollars                  in thousands)                                                               |   | Six                  Months Ended June 30, |      |   | Six                  Months Ended June 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|--------|--------------------------------------------|--------|
|                                                                                                  |   | 2007                                       |      |   | 2006                                       |   |
|                                                                                                  |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | Average                                    |      |   |                                       |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| **Assets**                                                                                            |   | Balance                                    |      |   | Interest                                   |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Earning                  assets:                                                                      |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Investment                  securities:                                                   |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Taxable                  investments                                                |   | $                                          | 680,719   |   |                                       | $      | 17,052 |   |   |   | 5.05 | % |   | $ | 681,829 |   |   | $ | 14,874 |   |   |   | 4.40 | % |
|    Nontaxable                  investments (1)                                         |   |                                       | 259,851   |   |                                       |   | 7,845 |   |   |   | 6.09 |   |   |   | 251,084 |   |   |   | 7,681 |   |   |   | 6.17 |   |
|       Total                  investment securities                      |   |                                       | 940,570   |   |                                       |   | 24,897 |   |   |   | 5.34 |   |   |   | 932,913 |   |   |   | 22,555 |   |   |   | 4.88 |   |
|   Federal                  funds sold and deposits in banks                                 |   |                                       | 72,482    |   |                                       |   | 1,892 |   |   |   | 5.26 |   |   |   | 54,119 |   |   |   | 1,280 |   |   |   | 4.77 |   |
|   Loans                  (1)                  (2)                                           |   |                                       | 2,061,014 |   |                                       |   | 70,614 |   |   |   | 6.91 |   |   |   | 1,997,801 |   |   |   | 65,510 |   |   |   | 6.61 |   |
|        Total                  earning assets                       |   |                                       | 3,074,066 |   |                                       |   | 97,403 |   |   |   | 6.39 |   |   |   | 2,984,833 |   |   |   | 89,345 |   |   |   | 6.04 |   |
| Noninterest-earning                  assets                                                           |   |                                       | 217,922   |   |                                       |   |   |   |   |   |   |   |   |   | 206,561 |   |   |   |   |   |   |   |   |   |
|          Total                  assets                   |   | $                                          | 3,291,988 |   |                                       |   |   |   |   |   |   |   |   | $ | 3,191,394 |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Shareholders' Equity**                                             |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                                                        |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest-bearing                  deposits:                                               |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                  and money market                                           |   | $                                          | 1,395,976 |   |                                       |   | 24,936 |   |   |   | 3.60 |   |   | $ | 1,243,715 |   |   |   | 16,431 |   |   |   | 2.66 |   |
|    Time                                                                                |   |                                       | 809,334   |   |                                       |   | 19,018 |   |   |   | 4.74 |   |   |   | 822,309 |   |   |   | 16,609 |   |   |   | 4.07 |   |
|     Total                  interest-bearing deposits                              |   |                                       | 2,205,310 |   |                                       |   | 43,954 |   |   |   | 4.02 |   |   |   | 2,066,024 |   |   |   | 33,040 |   |   |   | 3.22 |   |
|   Borrowed                  funds                                                           |   |                                       | 436,550   |   |                                       |   | 10,460 |   |   |   | 4.83 |   |   |   | 464,039 |   |   |   | 10,532 |   |   |   | 4.58 |   |
|      Total                  interest bearing liabilities                     |   |                                       | 2,641,860 |   |                                       |   | 54,414 |   |   |   | 4.15 |   |   |   | 2,530,063 |   |   |   | 43,572 |   |   |   | 3.47 |   |
| Noninterest-bearing                  liabilities:                                                     |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Demand                  deposits                                                          |   |                                       | 311,169   |   |                                       |   |   |   |   |   |   |   |   |   | 340,672 |   |   |   |   |   |   |   |   |   |
|   Other                  liabilities                                                        |   |                                       | 45,558    |   |                                       |   |   |   |   |   |   |   |   |   | 43,183 |   |   |   |   |   |   |   |   |   |
|     Total                  noninterest-bearing liabilities                        |   |                                       | 356,727   |   |                                       |   |   |   |   |   |   |   |   |   | 383,855 |   |   |   |   |   |   |   |   |   |
|        Total                  liabilities                          |   |                                       | 2,998,587 |   |                                       |   |   |   |   |   |   |   |   |   | 2,913,918 |   |   |   |   |   |   |   |   |   |
| Shareholders'                  equity                                                                 |   |                                       | 293,401   |   |                                       |   |   |   |   |   |   |   |   |   | 277,476 |   |   |   |   |   |   |   |   |   |
|        Total                  liabilities and shareholders' equity |   | $                                          | 3,291,988 |   |                                       |   |   |   |   |   |   |   |   | $ | 3,191,394 |   |   |   |   |   |   |   |   |   |
| Net                  interest spread                                                                  |   |                                       |      |   |                                       |   |   |   |   |   | 2.24 |   |   |   |   |   |   |   |   |   |   |   | 2.57 |   |
| Effect                  of noninterest-bearing sources                                                |   |                                       |      |   |                                       |   |   |   |   |   | 0.58 |   |   |   |   |   |   |   |   |   |   |   | .52 |   |
| Net                  interest income/margin on earning assets                                         |   |                                       |      |   |                                       | $      | 42,989 |   |   |   | 2.82 | % |   |   |   |   |   | $ | 45,773 |   |   |   | 3.09 | % |
|                                                                                                  |   |                                       |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less                  tax equivalent adjustment                                                       |   |                                       |      |   |                                       |   | 2,997 |   |   |   |   |   |   |   |   |   |   |   | 3,026 |   |   |   |   |   |
| Net                  interest income                                                                  |   |                                       |      |   |                                       | $      | 39,992 |   |   |   |   |   |   |   |   |   |   | $ | 42,747 |   |   |   |   |   |

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

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

----

**Net        Interest Margin**

**Interest        Rate Sensitivity Analysis**

----

**Table        3—Market Value of Equity**

|                                    |   |                          |    |   | Change                  in    |   |     |       |   |   | Asset/Liability                 |   |
|-----------------------------------------|--------|-------------------------------|---------|--------|-------------------------------|--------|----------|------------|--------|--------|---------------------------------|--------|
|                                    |   | Market                  Value |    |   | Market                  Value |   |     | Percentage |   |   | Approved                        |   |
| (Dollars                  in thousands) |   | of                  Equity    |    |   | Of                  Equity    |   |     | Change     |   |   | Percent                  Change |   |
|                                    |   |                          |    |   |                          |   |     |       |   |   |                            |   |
| +300                  Basis Points      |   | $                             | 346,650 |   |                          | $      | (120,107 | )          |   |   | -25.73                          | %      |   |   | +/-35 | % |
| +200                  Basis Points      |   |                          | 387,175 |   |                          |   | (79,582  | )          |   |   | -17.05                          | %      |   |   | +/-                  25 |   |
| +100                  Basis Points      |   |                          | 426,874 |   |                          |   | (39,883  | )          |   |   | -8.54                           | %      |   |   | +/-                  15 |   |
| Flat                  Rate              |   |                          | 466,757 |   |                          |   | -        |       |   |   | 0.00                            | %      |   |   |   |   |
| -100                  Basis Points      |   |                          | 484,150 |   |                          |   | 17,393   |       |   |   | 3.73                            | %      |   |   | +/-                  15 |   |
| -200                  Basis Points      |   |                          | 479,398 |   |                          |   | 12,641   |       |   |   | 2.71                            | %      |   |   | +/-                  25 |   |
| -300                  Basis Points      |   |                          | 471,003 |   |                          |   | 4,246    |       |   |   | .91                             | %      |   |   | +/-                  35 |   |

**Provision        for Loan Losses**

----

----

**Table        4—Allowance for Loans Losses**

|                                                                                                                   |   | Six                  Months Ended |      |
|------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                                                                   |   | June                  30,         |      |
| (Dollars                  in thousands)                                                                                |   | 2007                              |      |   | 2006 |   |
|                                                                                                                   |   |                              |      |   |   |   |
| Average                  loans                                                                                         |   | $                                 | 2,061,014 |   |   | $ | 1,997,801 |   |
|                                                                                                                   |   |                              |      |   |   |   |   |   |
| Allowance,                  beginning of period                                                                        |   |                              | 21,154    |   |   |   | 19,865 |   |
| Loans                  charged off:                                                                                    |   |                              |      |   |   |   |   |   |
|        Real                  estate                                                 |   |                              | 1,809     |   |   |   | 482 |   |
|        Commercial                  and industrial                                   |   |                              | 803       |   |   |   | 451 |   |
|        Consumer                                                                     |   |                              | 649       |   |   |   | 920 |   |
|        Lease                  financing                                             |   |                              | 35        |   |   |   | 18 |   |
|              Total                  loans charged off |   |                              | 3,296     |   |   |   | 1,871 |   |
| Recoveries:                                                                                                            |   |                              |      |   |   |   |   |   |
|        Real                  estate                                                 |   |                              | 25        |   |   |   | 82 |   |
|        Commercial                  and industrial                                   |   |                              | 69        |   |   |   | 46 |   |
|        Consumer                                                                     |   |                              | 127       |   |   |   | 314 |   |
|        Lease                  financing                                             |   |                              | 17        |   |   |   | 81 |   |
|              Total                  recoveries        |   |                              | 238       |   |   |   | 523 |   |
| Net                  loans charged off                                                                                 |   |                              | 3,058     |   |   |   | 1,348 |   |
| Provision                  for loan losses                                                                             |   |                              | 3,550     |   |   |   | 2,100 |   |
| Allowance,                  end of period                                                                              |   | $                                 | 21,646    |   |   | $ | 20,617 |   |
| Ratio                  of net charge offs to average                                                                   |   |                              |      |   |   |   |   |   |
|         loans                  outstanding (annualized)                        |   |                              | 0.30      | % |   |   | 0.14 | % |
|                                                                                                                   |   |                              |      |   |   |   |   |   |

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

----

|                                            |   | June                  30, 2007 |   |   | December                  31, 2006 |   |
|-------------------------------------------------|--------|--------------------------------|--------|--------|------------------------------------|--------|
|                                            |   |                           |   |   | Percent                  of        |   |   |   |   |   | Percent                  of |   |
| (Dollars                  in thousands)         |   | Amount                         |   |   | Allowance                          |   |   | Amount |   |   | Allowance |   |
|                                            |   |                           |   |   |                               |   |   |   |   |   |   |   |
| Real                  estate                    |   | $                              | 8,982  |   |                               |   | 41 | % |   | $ | 7,918 |   |   |   | 38 | % |
| Commercial                                      |   |                           |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   and                  industrial     |   |                           | 8,616  |   |                               |   | 40 | % |   |   | 9,119 |   |   |   | 43 | % |
| Consumer                                        |   |                           | 4,024  |   |                               |   | 19 | % |   |   | 4,041 |   |   |   | 19 | % |
| Lease                  financing                |   |                           | 24     |   |                               |   | - | % |   |   | 76 |   |   |   | - | % |
|        Total |   | $                              | 21,646 |   |                               |   | 100 | % |   | $ | 21,154 |   |   |   | 100 | % |

**Nonperforming        Assets**

**Table        6—Nonperforming Assets**

| (Dollars                  in thousands)                             |   | June                  30, 2007 |   |   | December                  31, 2006 |   |    | June                  30, 2006 |   |
|---------------------------------------------------------------------|--------|--------------------------------|--------|--------|------------------------------------|--------|---------|--------------------------------|--------|
|                                                                |   |                           |   |   |                               |   |    |                           |   |
| Nonaccrual                  loans                                   |   | $                              | 17,389 |   |                               | $      | 15,201  |                           |   | $ | 10,164 |   |
| Loans                  90 days or more past due                     |   |                           | 1,283  |   |                               |   | 2,444   |                           |   |   | 1,279 |   |
| Total                  nonperforming                  loans         |   |                           | 18,672 |   |                               |   | 17,645  |                           |   |   | 11,443 |   |
| Net                  assets in foreclosure                          |   |                           | 41     |   |                               |   | – |                           |   |   | 64 |   |
| Total                  nonperforming                  assets        |   | $                              | 18,713 |   |                               | $      | 17,645  |                           |   | $ | 11,507 |   |
|                                                                |   |                           |   |   |                               |   |    |                           |   |   |   |   |
| Allowance                  for loan losses to nonperforming loans   |   |                           | 115.9  | %      |                               |   | 119.9   | %                              |   |   | 180.2 | % |
| Nonperforming                  loans to total net loans             |   |                           | 0.91   | %      |                               |   | 0.87    | %                              |   |   | 0.57 | % |
| Allowance                  for loan and lease losses to total loans |   |                           | 1.04   | %      |                               |   | 1.03    | %                              |   |   | 1.02 | % |
| Nonperforming                  assets to total assets               |   |                           | 0.57   | %      |                               |   | 0.54    | %                              |   |   | 0.36 | % |

----

**Table        7—Impaired Loans**

| (Dollars                  in thousands)                                 |   | June                  30, 2007 |   |   | December                  31, 2006 |   |   | June                  30, 2006 |   |
|-------------------------------------------------------------------------|--------|--------------------------------|--------|--------|------------------------------------|--------|--------|--------------------------------|--------|
|                                                                    |   |                           |   |   |                               |   |   |                           |   |
|  Impaired                  Loans                                   |   | $                              | 8,199  |   |                               | $      | 3,946  |                           |   | $ | 2,907 |   |
|                                                                    |   |                           |   |   |                               |   |   |                           |   |   |   |   |
|  Average                  year-to-date impaired loans              |   | $                              | 7,169  |   |                               | $      | 3,222  |                           |   | $ | 3,112 |   |
|                                                                    |   |                           |   |   |                               |   |   |                           |   |   |   |   |
|  Impaired                  loans with specific loss allowances     |   | $                              | 8,199  |   |                               | $      | 3,946  |                           |   | $ | 2,907 |   |
|                                                                    |   |                           |   |   |                               |   |   |                           |   |   |   |   |
|  Loss                  allowances reserved on impaired loans       |   | $                              | 1,409  |   |                               | $      | 678    |                           |   | $ | 335 |   |
|                                                                    |   |                           |   |   |                               |   |   |                           |   |   |   |   |
|  Year-to-date                  income recognized on impaired loans |   | $                              | 8      |   |                               | $      | 60     |                           |   | $ | 27 |   |

**Noninterest        Income**

**Noninterest        Expense**

----

**Income        Taxes**

**Balance        Sheet Analysis**

**Capital**

**Table        8—Regulatory Capital**

|   (Dollars                  in thousands)        |   |         |    |   |   |   |   | For                  CapitalAdequacy                  Purposes |   |   | To                  Be Well CapitalizedUnder                  Prompt CorrectiveAction                  Program |   |
|------------------------------------------------------------|--------|--------------|---------|--------|--------|--------|--------|----------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------|--------|
|  As                  of June 30, 2007                 |   | ActualAmount |    |   | Ratio  |   |   | Amount                                                         |   |   | Ratio                                                                                                          |   |   | Amount |   |   | Ratio |   |
|                                                       |   |         |    |   |   |   |   |                                                           |   |   |                                                                                                           |   |   |   |   |   |   |   |
| Total                  Capital (to risk weighted assets):  |   |         |    |   |   |   |   |                                                           |   |   |                                                                                                           |   |   |   |   |   |   |   |
| Corporation                                                |   | $            | 323,339 |   |   |   | 12.15  | %                                                              |   | $      | 212,219                                                                                                        |   |   |   | 8.00 | % |   | $ | 266,149 |   |   |   | - |   |
| Harleysville                  National Bank                |   |         | 281,241 |   |   |   | 10.63  | %                                                              |   |   | 211,683                                                                                                        |   |   |   | 8.00 | % |   |   | 264,604 |   |   |   | 10 | % |
| Tier                  1 Capital (to risk weighted assets): |   |         |    |   |   |   |   |                                                           |   |   |                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                                |   |         | 301,593 |   |   |   | 11.33  | %                                                              |   |   | 106,460                                                                                                        |   |   |   | 4.00 | % |   |   | 159,690 |   |   |   | - |   |
| Harleysville                  National Bank                |   |         | 259,495 |   |   |   | 9.81   | %                                                              |   |   | 105,842                                                                                                        |   |   |   | 4.00 | % |   |   | 158,763 |   |   |   | 6 | % |
| Tier                  1 Capital (to average assets):       |   |         |    |   |   |   |   |                                                           |   |   |                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                                                |   |         | 301,593 |   |   |   | 9.27   | %                                                              |   |   | 130,145                                                                                                        |   |   |   | 4.00 | % |   |   | 162,682 |   |   |   | - |   |
| Harleysville                  National Bank                |   |         | 259,495 |   |   |   | 8.06   | %                                                              |   |   | 128,731                                                                                                        |   |   |   | 4.00 | % |   |   | 160,913 |   |   |   | 5 | % |

----

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

**,**

**Liquidity**

----

**Other        Information**

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

----

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

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

**(ii)  Changes        in Internal Controls**

----

**PART        II. OTHER INFORMATION**

**Item        1.                 Legal        Proceedings**

**Item        1A.                 Risk        Factors**

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

|                                            | Total                  Number of Common Shares Purchased                                                                                    | Weighted                  Average Price Paid Per Share                                                               | Total                  Number of Shares Purchased as Part of Publicly Announced                  Plans(1)                                   | Maximum                  Number of Shares that may yet be Purchased under the Plans(1) |
|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                                            |                                                                                                                                        |                                                                                                                 |                                                                                                                                        |                                                                                   |
| April                  1-30, 2007               |                        - |               $     - |                        - | 872,761                                                                                |
| May                  1-31, 2007                 |                 57,500                                      |                16.09                      |                   57,500                          | 815,261                                                                                |
| June                  1-30, 2007                |                 28,500                                      |                16.04                      |                   28,500                          | 786,761                                                                                |
|        Total |                                  86,000                          |              $16.07                                 |                                    86,000              |                                                                                   |

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

**Item        3.                 Defaults        Upon Senior Securities**

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

| (a)   | The                  2007 Annual Meeting of Shareholders was held at 9:30 a.m., on Tuesday,                  April 24, 2007 at Presidential Caterers, 2910 DeKalb Pike, Norristown,                  Pennsylvania 19401. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.   | Two                  directors were elected, as below: |
|----------------|--------------------------------------------------------|

----

**Item        5.                 Other        Information**

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

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

**Item        6.                 Exhibits**

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

----

**SIGNATURES**

**HARLEYSVILLE        NATIONAL CORPORATION**

| Date:  August                  8, 2007 |  /s/                  Demetra M. Takes                         |   |
|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |  Demetra                  M. Takes, Interim President, Chief Executive Officer andDirector(Principal executive officer) |   |
|--------|------------------------------------------------------------------------------------------------------------------------------|--------|

----

**EXHIBIT        INDEX**

**Exhibit        No                      Description        of Exhibits**

|     (2.1) | Purchase                  Agreement, dated as of November 15, 2005, by and among Harleysville                  National Bank and Trust Company, Cornerstone Financial Consultants,                  Ltd.,                  Cornerstone Advisors Asset Management, Inc., Cornerstone Institutional                  Investors, Inc., Cornerstone Management Resources, Inc., John R.                  Yaissle,                  Malcolm L. Cowen, II, and Thomas J. Scalici. (Incorporated by reference                  to                  Exhibit 2.1 of the Registrant’s Annual Report on Form 10-K for the year                  ended December 31, 2005, filed with the Commission on March 15,                  2006.  The schedules and exhibits to the Purchase Agreement are                  listed at the end of the Purchase Agreement but have been omitted                  from the                  exhibit to Form 10-K. The Registrant agrees to supplementally furnish                  a                  copy of any omitted schedule or exhibit to the Securities and Exchange                  Commission upon request.) |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     (2.2) | Branch                  Purchase Agreement and Deposit Assumption Agreement, dated as of                  July 26,                  2006, by and among First National Community Bank as Buyer and Harleysville                  National Bank and Trust Company as Seller. (Incorporated by reference                  to                  Exhibit 2.1 to the Registrant’s Quarterly Report filed on Form 10-Q, filed                  with the Commission on November 8, 2006. The attachments, schedules                  and                  exhibits to the Branch Purchase and Deposit Assumption Agreement                  are                  listed at the end of the Branch Purchase and Deposit Assumption                  Agreement                  but have been omitted from the exhibit to Form 10-Q. The Registrant                  agrees                  to supplementally furnish a copy of any omitted attachment, schedule                  or                  exhibit to the Securities and Exchange Commission upon                  request.)                                                                              |
|     (2.3) | Merger                  Agreement, dated as of May 15, 2007, by and among Harleysville                  National                  Corporation, East Penn Financial Corporation and East Penn Bank.                  (Incorporated by reference to Exhibit 99.1 to the Registrant’s Current                  Report on Form 8-K, filed with the Commission on May 21, 2007.                  The                  schedules and exhibits to the Merger Agreement are listed at the                  end of                  the Merger Agreement but have been omitted from the exhibit to                  Form 8-K.                  The Registrant agrees to supplementally furnish a copy of any omitted                  schedule or exhibit to the Securities and Exchange Commission upon                  request.)                                                                                                                                                                                                                                                                                                                                |
|     (3.1) | Harleysville                  National Corporation Amended and Restated Articles of Incorporation.                  (Incorporated by reference to Exhibit 3.1 to the Corporation’s                  Registration Statement No. 333-111709 on Form S-4, as filed on                  January 5, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|     (3.2) | Harleysville                  National Corporation Amended and Restated                  By-laws.  (Incorporated by reference to Exhibit 3.1 to the                  Corporation’s Current Report on Form 8-K, filed with the Commission on                  February 14, 2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   (10.1)            | Harleysville                  National Corporation 1993 Stock Incentive Plan.** (Incorporated                  by                  reference to Exhibit 4.3 of Registrant’s Registration Statement                  No. 33-69784 on Form S-8, filed with the Commission on                  October 1, 1993.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   (10.2)            | Harleysville                  National Corporation Stock Bonus Plan.*** (Incorporated by reference                  to                  Exhibit 99A of Registrant’s Registration Statement No. 333-17813                  on Form S-8, filed with the Commission on December 13,                  1996.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   (10.3)            | Supplemental                  Executive Retirement Plan.* (Incorporated by reference to                  Exhibit 10.3 of Registrant’s Annual Report in Form 10-K for the                  year ended December 31, 1997, filed with the Commission on                  March 27, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   (10.4)            | Walter E.                  Daller, Jr., Chairman and former President and Chief Executive                  Officer’s Employment Agreement dated October 26, 1998.* (Incorporated by                  reference to Registrant’s Current Report on Form 8-K, filed with the                  Commission on March 25, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   (10.5)            | Consulting                  Agreement and General Release dated November 12, 2004 between                  Walter E. Daller, Jr., Harleysville National Corporation and                  Harleysville National Bank and Trust Company.* (Incorporated by                  reference                  to Registrant’s Current Report on Form 8-K, filed with the Commission                  on November 16, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   (10.6)            | Amendment                  to Supplemental Executive Retirement Benefit Agreement dated March                  14,                  2005 by and among Harleysville Management Services, LLC and Walter                  E.                  Daller, Jr.*  (Incorporated by reference to Registrant’s Current                  Report on Form 8-K, filed with the Commission on March 14,                  2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   (10.7)            | Employment                  Agreement dated October 26, 1998 by and among Harleysville National                  Corporation, Harleysville National Bank and Trust Company and                  Demetra M. Takes, President and Chief Executive Officer of                  Harleysville National Bank and Trust Company.* (Incorporated by                  reference                  to Registrant’s Current Report on Form 8-K, filed with the Commission                  on March 25, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   (10.8)            | Amendment                  to Supplemental Executive Retirement Benefit Agreement dated March                  14,                  2005 by and among Harleysville Management Services, LLC and Demetra                  M.                  Takes, President and Chief Executive Officer of Harleysville National                  Bank                  and Trust Company.*  (Incorporated by reference to Registrant’s                  Current Report on Form 8-K, filed with the Commission on March                  14,                  2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   (10.9)            | Harleysville                  National Corporation 1998 Stock Incentive Plan.** (Incorporated                  by                  reference to Registrant’s Registration Statement No. 333-79971 on                  Form S-8, filed with the Commission on June 4,                  1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (10.10)                       | Harleysville                  National Corporation 1998 Independent Directors Stock Option Plan,                  as                  amended and restated effective February 8, 2001.** (Incorporated                  by                  reference to Appendix “A” of Registrant’s Definitive Proxy Statement,                  filed with the Commission on March 9, 2001.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (10.11)                       | Supplemental                  Executive Retirement Benefit Agreement dated February 23, 2004                  between Michael B. High, Executive Vice President and former Chief                  Financial Officer, and Harleysville Management Services, LLC.*                  (Incorporated by reference to Registrant’s Quarterly Report on                  Form 10-Q, filed with the Commission on May 10,                  2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

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

----

| (10.30)                      | Guarantee                  Agreement between Harleysville National Corporation and Wilmington                  Trust                  Company, dated as of September 28, 2005. (Incorporated by reference                  to                  Registrant’s Quarterly Report on Form 10-Q/A, filed with the Commission on                  November, 9, 2005.)              |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (10.31)                      | Employment                  Agreement effective July 12, 2006 between Lewis C. Cyr, Chief Lending                  Officer of the Corporation, and Harleysville Management                  Services, LLC.* (Incorporated by reference to Registrant’s Current                  Report on Form 8-K, filed with the Commission on July 12,                  2006.) |
|     (11) | Computation                  of Earnings per Common Share, incorporated by reference to Note                  7 of the                  Consolidated Financial Statements of this  Report on Form                  10-Q.                                                                                                                                                |
|  (31.1)                 | Certification                  of the Chief Executive Officer pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                               |
|  (31.2)                 | Certification                  of the Chief Financial Officer pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                               |
|  (32.1)                 | Certification                  of the Chief Executive Officer pursuant to 18 U.S.C.                  Section 1350, as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002, furnished herewith.                                                                                                                                 |
|  (32.2)                 | Certification                  of the Chief Financial Officer pursuant to 18 U.S.C.                  Section 1350, as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002, furnished                  herewith.                                                                                                                |

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

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

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