Exhibit 13.0

                              HARLEYSVILLE SAVINGS
               --------------------------------------------------
                    F I N A N C I A L  C O R P O R A T I O N
               --------------------------------------------------
                     [PHOTO]                        [PHOTO]


                       2 0 0 5   A N N U A L   R E P O R T


                     [PHOTO]                        [PHOTO]


<PAGE>

BOARD OF DIRECTORS
<TABLE>
<CAPTION>

                           [PHOTO BOARD OF DIRECTORS]
<S>     <C>
Seated (L to R): Charlotte A. Hunsberger, Ronald B. Geib, Edward J. Molnar, Philip A. Clemens, David J. Friesen,
Standing (L to R): Mark R. Cummins, James L. Rittenhouse, Sanford L. Alderfer, George W. Meschter
</TABLE>


SENIOR OFFICERS

<TABLE>
<CAPTION>
     [PHOTO]                        [PHOTO]                           [PHOTO]                         [PHOTO]
<S>                         <C>                               <C>                             <C>
   EDWARD J. MOLNAR             RONALD B. GEIB                    MARIAN BICKERSTAFF               BRENDAN J. MCGILL
     Chairman and                President and                  Senior Vice President            Senior Vice President
Chief Executive Officer     Chief Operating Officer           and Chief Lending Officer       and Chief Financial Officer
</TABLE>



<PAGE>
Selected Consolidated Financial and Other Data

Selected Balance Sheet Data:

<TABLE>
<CAPTION>
                                                                   As of September 30,
(in thousands, except per share data)              2005       2004         2003        2002        2001
---------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>         <C>         <C>
Total Assets                                    $ 766,990   $ 718,232   $ 653,288   $ 620,264   $ 558,388
Mortgage-backed securities held to maturity       263,964     261,292     223,592     163,815     167,727
Mortgage-backed securities available-for-sale       1,045       3,795       6,656      29,515           -
Loans receivable - net                            366,007     338,584     297,346     295,354     290,213
Investment securities held to maturity             87,364      68,162      83,327      55,665      62,202
Investment securities available-for-sale            2,835       7,715       4,923      12,000       3,294
Other investments (1)                              23,971      19,903      18,618      45,369      16,538
Deposits                                          418,980     405,231     380,687     371,947     350,147
FHLB advances and other borrowings                297,268     265,953     228,817     207,502     171,309
Total stockholders' equity                         47,576      44,313      40,816      37,868      34,264
Book value per share (3)                            12.20       11.56       10.81       10.05        9.19
</TABLE>

Selected Operations Data:

<TABLE>
<CAPTION>
                                                                 Year Ended September 30,
                                                   2005        2004        2003        2002        2001
---------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>         <C>         <C>
Interest income                                 $  35,902   $  32,636   $  33,123   $  35,218   $  36,303
Interest expense                                   22,747      20,391      21,673      24,226      26,583
                                                ---------   ---------   ---------   ---------   ---------

Net interest income                                13,155      12,245      11,450      10,992       9,720
Provision for loan losses                             (40)          -           -           -           -
                                                ---------   ---------   ---------   ---------   ---------
Net interest income after provision
   for loan losses                                 13,195      12,245      11,450      10,992       9,720

Gain on sales of loans and securities                 115         326         247           7         191
Other income                                        1,351       1,282       1,270       1,068       1,055
Other expense                                       7,965       7,399       6,897       6,434       5,832
                                                ---------   ---------   ---------   ---------   ---------

Income before taxes                                 6,696       6,454       6,070       5,633       5,134
Income tax expense                                  1,693       1,604       1,476       1,218       1,219
                                                ---------   ---------   ---------   ---------   ---------

Net income                                      $   5,003   $   4,850   $   4,594   $   4,415   $   3,915
                                                =========   =========   =========   =========   =========

Earnings per share - basic (3)                  $    1.29   $    1.28   $    1.21   $    1.18   $    1.06
Earnings per share - diluted (3)                     1.27        1.25        1.19        1.16        1.04
Dividends per share (3)                              0.58        0.48        0.40        0.32        0.29
</TABLE>

Selected Other Data:

<TABLE>
<CAPTION>
                                                                Year Ended September 30,
                                                     2005        2004       2003         2002        2001
---------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>        <C>          <C>         <C>
Return on average assets (2)                         0.67%       0.70%      0.72%        0.75%       0.74%
Return on average equity (2)                        10.91%      11.44%     11.68%       12.31%      12.00%
Dividend payout ratio                               44.96%      37.56%     32.67%       27.55%      27.27%
Average equity to average assets (2)                 6.15%       6.17%      6.14%        6.10%       6.15%
Interest rate spread (2)                             1.65%       1.64%      1.64%        1.71%       1.63%
Net yield on interest-earning assets (2)             1.82%       1.80%      1.84%        1.92%       1.90%
Ratio of non-performing assets to total
   assets at end of period                           0.03%       0.04%      0.04%        0.03%       0.05%
Ratio of interest-earning assets to
   interest-bearing liabilities at end
   of period                                        105.4%      105.6%     105.6%       105.2%      105.1%
Full service banking offices at end of period           5           5          5            5           5
</TABLE>

(1)   Includes interest-bearing deposits at other depository institutions &
      stock of the Federal Home Loan Bank of Pittsburgh.

(2)   All ratios are based on average monthly balances during the indicated
      periods.

(3)   The number of shares and per share information for all periods presented
      has been restated to reflect the five for three stock split as of February
      24, 2005.

                                                           2005 ANNUAL REPORT  1

<PAGE>

Chairman's Report to the Stockholders

To our Stockholders:

We are pleased to report to you, that the Company experienced a ninth
consecutive year of record earnings results. Net income amounted to $5,004,000,
which is the most that Harleysville Savings has earned in any year in its
90-year history.

Net income for the year amounted to $1.27 per share on a diluted basis compared
to $1.25 per diluted share for the past fiscal year. Return on average equity
was 10.91% and return on average assets was .67% for the year. Stockholders'
equity increased to $12.20 per share compared to $11.56 per share a year ago.
During fiscal year 2005 assets increased 6.8% to $767 million.

Providing a fair and reasonable return for our stockholders is very important,
and is one of the four cornerstone principles in the Company's Mission
Statement. The Company's Board of Directors increased the cash dividend twice
during this past fiscal year, from $.132 per share to $.16 per share. This was
an increase of 21% and was the 73rd consecutive quarter that the Company has
paid a cash dividend and the 18th consecutive year that the cash dividend has
been increased. Stockholders also received a five-for-three stock split in
February. In a period of time when the market return for shares of banks and
thrifts overall was a negative 2.85% (SNL Financial Index), Harleysville
Savings' stockholders have experienced a total return of 3.7 % for the fiscal
year. Many of our stockholders are long-term investors who have enjoyed an
annual average return of 16.3% over the past five years and an average annual
return of 13.2% over the past ten years when taking into account market
appreciation and the payment of cash dividends.

                                    [PICTURE]

Turning to market conditions that have influenced the financial performance of
the Company, the Federal Reserve Board (FOMC) has continued to increase short
term interest rates over the past year. Since June 30, 2004, the FOMC has
increased the federal funds rate twelve times from 1.00% to 4.00%. The FOMC has
turned their attention to inflationary concerns and many economists expect them
to continue raising short term interest rates several more times. The interest
rate yield curve (the difference between short term rates and long term rates)
has flattened considerably over this past year and it has been a challenge to
maintain the Company's net interest rate spread. Despite these challenges, net
interest income increased 7.4% to $13,155,000 for the twelve month period
compared to $12,245,000 for the same period last year.

During this past year, management has been laying the foundation to expand
relationships with small business customers in our market area to complement the
Company's retail business. As has been our practice with any new activity that
we have pursued over the years, management has invested a considerable amount of
time to establish a strong base of policies and operating procedures to assure
that the Company's key principles remain intact as we expand our business
opportunities. Those key principles that have contributed so much to our success
are:

High asset quality

Exceptional operating efficiencies

Effective capital management

Genuine quality customer service

High asset quality has been a distinguishing characteristic of Harleysville
Savings throughout its history as a public company. The Company's non-performing
and 90-day delinquent loans amounted to only $260,000 or 0.03% of assets as of
September 30, 2005. Loan loss reserves are in place to protect against possible
losses. The Company has $1,968,000 or $7.30 of reserves in place for every $1.00
of assets that are either classified as non-performing or are 90 days or more
delinquent. As we begin to expand our boundaries and establish relationships
with small business customers, high asset quality will be a major focus of our
activities.

2  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

                                    [PICTURE]

Expanded small business relationships will enable the Company to leverage its
investment in new technology to implement the electronic processing of checks
for our customers. The Company's Information Systems Manager, Adrian Gordon, and
his team deserve credit for completing the task of installing the Company's
Check 21 Processing system by this past summer, which has enabled all of our
branches to process checks electronically for our customers. As more banks
throughout the country begin to exchange checks electronically, the cost of
producing substitute checks will drop and the efficiencies created by the
Company's new technology will result in even greater profitability for the
Company. Image technology brings check processing into the 21st century by
eliminating the need for hand delivery of checks. The Company will be well
positioned to take advantage of these opportunities as they develop because of
the technology advantages of electronic check image exchange.

On November 1st, construction was started for our newest branch location along
the rapidly expanding "Route 422 Corridor". Our Upper Providence Office will be
located at the intersection of Township Line Road and Ridge Pike in Upper
Providence Township. This strategically placed branch will be in the heart of an
expanded commercial area as new shopping centers are planned for each of the
other three corners of that busy intersection. We look forward to the Upper
Providence branch office to be doing business by the summer of 2006.

Customer expectations continue to motivate us to provide new products and
services. During this past year, we have expanded our product offerings to meet
those expectations in a number of ways: We offered a new Prime Money Market
Account with the interest rate tied to the prime rate; iSave checking and iSave
savings accounts for our teenage customers; a Rising Rate Certificate of Deposit
which offers our customers some protection against rising interest rates; Sage
Scholars which provides opportunity for our savings account customers to earn
Tuition Rewards; E-statement for our checking account customers; Bounce
Protection for our checking account customers; Live ATM card services; i-Pay for
our on-line banking system; and several new consumer loan products.

For many older Americans, it's difficult to keep up with the financial pressures
of the new economy and to live life to its fullest. We're dedicated to helping
seniors to continue living in the home where they're comfortable by turning the
equity they've built into extra cash. One of the ways that we are able to do
this is through the Reverse Mortgage product that is provided through our
relationship with Financial Freedom, the largest provider of reverse mortgages
in the USA.

                                                           2005 ANNUAL REPORT  3

<PAGE>

                                    [PICTURE]

Technology may continue to provide opportunity for efficiencies, but
Harleysville Savings would not enjoy the success it does without the outstanding
contribution from the Company's greatest asset, our talented and experienced
employees. Long-term employees bring stability and instill confidence that
develops strong customer relationships, which are paramount to building long
term success.

Fourteen of our employees were recognized this year for long-term service.
Receiving awards for five years were: Barbara Eyrich, Larry Fisher, Peggy
Keeley, Janine Losinno, Sonal Patel and Alicia Vaca. Receiving awards for ten
years were: Elaine Bergey, Janice Blair, Marie Fazekas, Ann Tomaselli, and
Sherry Williamson. Receiving an award for fifteen years was Sue Keeler.
Receiving an award for twenty years was Barbara Marcy and receiving an award for
30 years of service was Ron Geib.

The year 2005 was our 90th anniversary as a community financial institution and
we are proud of what our employees - both past and present - have accomplished
during those years. The old fashioned principles of honesty and integrity are
still important in what we do every day. That is why it has been and continues
to be our desire to follow a business philosophy that is consistent with the
Proverb that God has given us: "A good name is to be more desired than great
riches."

Looking ahead to the year 2006 and beyond, we are very optimistic about the new
opportunities that exist for Harleysville Savings. We live and work in a great
market area, which includes the county with the third highest population, and
has the second highest per capita income in the state of Pennsylvania.
Montgomery County's housing market and employment base are also among the
strongest in Pennsylvania.

We want to express our appreciation to you for the confidence that you have
expressed in the management of this Company. We hope to see you at our Annual
Stockholders' meeting in January.

    Sincerely,

    /s/ Edward J. Molnar
    Edward J. Molnar
    Chairman and Chief Executive Officer

4  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

Forward-Looking Statements

This report contains certain forward-looking statements and information relating
to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. In
addition, in those and other portions of this document, the words "anticipate,"
"believe," "estimate," "except," "intend," "should" and similar expressions, or
the negative thereof, as they relate to the Company or the Company's management,
are intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future-looking events and are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. The Company does not
intend to update these forward-looking statements.

Critical Accounting Policies and Judgments

The Company's consolidated financial statements are prepared based on the
application of certain accounting policies, the most significant of which are
described in Note 2, Summary of Significant Accounting Policies. Certain of
these policies require numerous estimates and strategic or economic assumptions
that may prove inaccurate or subject to variations and may significantly affect
the Company's reported results and financial position for the period or in
future periods. Changes in underlying factors, assumptions, or estimates in any
of these areas could have a material impact on the Company's future financial
condition and results of operations.

Analysis And Determination of the Allowance for Loan Losses - The allowance for
loan losses is a valuation allowance for probable losses inherent in the loan
portfolio. The Company evaluates the need to establish allowances against losses
on loans on a monthly basis. When additional allowances are necessary, a
provision for loan losses is charged to earnings.

Our methodology for assessing the appropriateness of the allowance for loan
losses consists of three key elements: (1) specific allowances for certain
impaired or collateral-dependent loans; (2) a general valuation allowance on
certain identified problem loans; and (3) a general valuation allowance on the
remainder of the loan portfolio. Although we determine the amount of each
element of the allowance separately, the entire allowance for loan losses is
available for the entire portfolio.

Specific Allowance Required for Certain Impaired or Collateral-Dependent Loans:
We establish an allowance for certain impaired loans for the amounts by which
the discounted cash flows (or collateral value or observable market price) are
lower than the carrying value of the loan. Under current accounting guidelines,
a loan is defined as impaired when, based on current information and events, it
is probable that a creditor will be unable to collect all amounts due under the
contractual terms of the loan agreement.

General Valuation Allowance on Certain Identified Problem Loans - We also
establish a general allowance for classified loans that do not have an
individual allowance. We segregate these loans by loan category and assign
allowance percentages to each category based on inherent losses associated with
each type of lending and consideration that these loans, in the aggregate,
represent an above-average credit risk and that more of these loans will prove
to be uncollectible compared to loans in the general portfolio.

General Valuation Allowance on the Remainder of the Loan Portfolio - We
establish another general allowance for loans that are not classified to
recognize the inherent losses associated with lending activities, but which,
unlike specific allowances, has not been allocated to particular problem assets.
This general valuation allowance is determined by segregating the loans by loan
category and assigning allowance percentages based on our historical loss
experience, delinquency trends and management's evaluation of the collectibility
of the loan portfolio. The allowance is adjusted for significant factors that,
in management's judgment, affect the collectibility of the portfolio as of the
evaluation date. These significant factors may include changes in lending
policies and procedures, changes in existing general economic and business
conditions affecting our primary lending areas, credit quality trends,
collateral value, loan volumes and concentrations, seasoning of the loan
portfolio, loss experience in particular segments of the portfolio, duration of
the current business cycle and bank regulatory examination results. The applied
loss factors are reevaluated monthly to ensure their relevance in the current
economic environment.

Overview

Harleysville Savings Financial Corporation (the "Company"), a bank holding
company, of which Harleysville Savings Bank (the "Bank"), is a wholly owned
subsidiary, was formed in February 2000. For purposes of this discussion, the
Company, including its wholly owned subsidiary, will be referred to as the
"Company." The Company's earnings are primarily dependent upon its net interest
income, which is determined by (i) the difference between yields earned on
interest-earning assets and rates paid on interest-bearing liabilities
("interest rate spread") and (ii) the relative amounts of interest-earning
assets and interest-bearing liabilities outstanding. The Company's interest rate
spread is affected by regulatory, economic and competitive factors that
influence interest rates, loan demand and deposit flows. The Company, like other
thrift institutions, is vulnerable to an increase in interest rates to the
extent that interest-bearing liabilities mature or reprice more rapidly than
interest-earning assets. To reduce the effect of adverse changes in interest
rates on its operations, the Company has adopted certain asset and liability
management strategies, described below.

                                                           2005 ANNUAL REPORT  5

<PAGE>

The Company's earnings are also affected by, among other factors, other
non-interest income, other expenses and income taxes.

The Company's total assets at September 30, 2005, amounted to $767.0 million,
compared to $718.2 million as of September 30, 2004. Deposits as of September
30, 2005, totaled $419.0 million, compared to $405.2 million at September 30,
2004. Stockholders' equity totaled $47.6 million as of September 30, 2005,
compared to $44.3 million at September 30, 2004.

During fiscal 2005, net interest income after provision for loan losses
increased $951,000 or 7.8% from the prior fiscal year. This increase was the
result of 6.4% growth in the average interest-earning assets, which was offset
by a 6.7% growth in average interest-bearing liabilities, and a slight increase
in the interest rate spread from 1.64% in fiscal 2004 to 1.65% in fiscal 2005.
Earnings for fiscal 2005 were $5.0 million compared to $4.9 million and $4.6
million for the years ended September 30, 2004 and 2003, respectively. The
Company's return on average assets (net income divided by average total assets)
was 0.67% during fiscal 2005 compared to 0.70% and 0.72% during fiscal 2004 and
2003, respectively. Return on average equity (net income divided by average
equity) was 10.91% during fiscal 2005 compared to 11.44% during fiscal 2004 and
11.68% during fiscal 2003. This decline in return on average assets and return
on average equity during the three-year period was a direct result of increased
prepayments of higher yielding assets and the Company reinvesting those funds
into a shorter-term asset with a lower yield. The repositioning of the portfolio
into short-term assets will allow the Company to have more cash flow to reinvest
in a rising rate environment.

Recent Accounting Pronouncements - In December 2004, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 123R (revised 2004), "Share-Based Payment", which revises SFAS No.
123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No.
25, "Accounting for Stock Issued to Employees". This Statement requires an
entity to recognize the cost of employee services received in exchange for an
award of equity investment based on grant-date fair value of the award. That
cost will be recognized over the period during which an employee is required to
provide service in exchange for the award. Effective October 1, 2005 the Company
will be required to recognize compensation expense for the fair value of stock
options that are granted or vest after that date. Management determined based on
current option levels, the impact is not expected to be material on the
Company's consolidated financial statements.

In March 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 107 which expressed the views of the SEC regarding
the interaction between SFAS No. 123R and certain SEC rules and regulations. SAB
No. 107 provides guidance related to the valuation of share-based payment
arrangements for public companies, including assumptions such as expected
volatility and expected term.

Results of Operations

The table on the next page sets forth for and as of the periods indicated,
information regarding: (i) the total dollar amounts of interest income from
interest-earning assets and the resulting average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resulting
average costs; (iii) net interest income; (iv) interest rate spread; (v) net
interest-earning assets; (vi) the net yield earned on interest-earning assets;
and (vii) the ratio of total interest-earning assets to total interest-bearing
liabilities. Average balances are calculated on a monthly basis.

Net Interest Income

Net interest income after provision for loan losses increased by $951,000 or
7.77% in fiscal 2005, and increased by $798,000 or 6.99% in fiscal 2004 over the
respective prior periods. The increase in the net interest income after
provision for loan losses in 2005 and 2004 was due to a higher amount of
interest-earning assets and an increase in the interest rate spread. The driving
factors will be discussed below in Interest Income and Interest Expense.

Interest Income

Interest income on mortgage loans increased by $413,000 or 2.8% in fiscal 2005
and decreased by $2.0 million or 11.9% in fiscal 2004 from the respective prior
years. During fiscal 2005, the average balance of mortgage loans increased $16.0
million or 6.5% and the yield decreased by 21 basis points. The decrease in the
yield of mortgage loans reflects the lower interest rate environment and the
increase in refinancing of existing loans at lower rates. During fiscal 2004,
the average balance of mortgage loans increased $17.6 million or 7.7% and the
yield decreased by 134 basis points. The majority of loans originated during the
2005 year were fixed rate mortgages. The increase in interest income on
mortgage-backed securities reflected an increase of $13.2 million or 5.1% in the
average balance, which was also benefited by a 28 basis point increase in yield
earned during fiscal 2005. During fiscal 2004, the increase in interest income
on mortgage-backed securities reflected an increase of $26.0 million or 11.2% in
the average balance, which was also benefited by a 5 basis point increase in
yield. The increase in the balance of mortgage-backed securities reflects the
need the Company had for mortgage-related products that the Company was not able
to originate in the local market area. The Company needed a higher volume of
mortgage-backed securities during fiscal 2004 and 2005 to offset the flat
interest rate spread. In 2005, the increase in interest income on consumer and
other loans reflected an increase in the average balance due to growth in home
equity loans of $13.2 million or 18.0%, and an increase in the yield to 5.35%.
In 2004, the increase in interest income on consumer and other loans reflected
an increase in the average balance due to growth in home equity loans of $10.9
million or 17.5%, which was partially offset by a decrease in the yield to
4.97%.

Interest and dividends on investments increased by $604,000 or 16.4% in fiscal
2005 over the respective prior years. During fiscal 2005, the increase resulted
from the average balance on investments increasing $1.3 million or 1.3% and a 55
basis point increase. The increase in the average balance in 2005 reflects funds
that were redeployed from normal cash flows. Interest and dividends on
investments increased by $178,000 or 5.1% in fiscal 2004 over the respective
prior years. During fiscal 2004, the increase resulted from an increase of 11
basis points and an increase in the average balance of $1.9 million or 1.9%.

Interest Expense

Interest expense on deposits increased $1.2 million or 13.6% in fiscal 2005 and
decreased by $1.5 million or 14.3% in fiscal 2004 as compared to the respective
prior years. In fiscal 2005, the average balance increased $14.7 million or 3.8%
with a

6  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

<TABLE>
<CAPTION>
                                 As of
                               Sept 30,                                For The Year Ended September 30,
                               ---------------------------------------------------------------------------------------------------
                                 2005                 2005                          2004                          2003
                               --------   ---------------------------   ---------------------------   ----------------------------
                                           Average             Yield/    Average             Yield/     Average             Yield/
                                 Rate      Balance   Interest   Rate     Balance   Interest   Rate      Balance   Interest   Rate
                               --------   ---------------------------   ---------------------------   ----------------------------
<S>                            <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>         <C>       <C>
Interest-earning assets:
   Mortgage loans (2) (3)          5.69%  $ 263,400  $ 15,331    5.82%  $ 247,358  $ 14,918    6.03%  $  229,772  $ 16,937    7.37%
   Mortgage-backed securities      4.54%    271,554    11,666    4.30%    258,347    10,398    4.02%     232,383     9,230    3.97%
   Consumer and other
   loans (3)                       5.68%     86,257     4,614    5.35%     73,098     3,633    4.97%      62,207     3,447    5.54%
   Investments                     4.14%    100,915     4,291    4.25%     99,652     3,687    3.70%      97,747     3,509    3.59%
                               --------   ---------  --------  ------   ---------  --------  ------   ----------  --------  ------
Total interest-earning
   assets                          5.04%    722,126    35,902    4.97%    678,455    32,636    4.81%     622,109    33,123    5.32%
                               --------   ---------  --------  ------   ---------  --------  ------   ----------  --------  ------

Interest-bearing liabilities:
   Deposits                        2.92%    401,920    10,337    2.57%    387,203     9,100    2.35%     370,823    10,624    2.87%
   Borrowings                      4.38%    283,522    12,410    4.38%    255,159    11,291    4.43%     218,415    11,048    5.06%
                               --------   ---------  --------  ------   ---------  --------  ------   ----------  --------  ------

Total interest-bearing
   liabilities                     3.53%    685,442    22,747    3.32%    642,362    20,391    3.17%     589,238    21,672    3.68%
                               --------   ---------  --------  ------   ---------  --------  ------   ----------  --------  ------

Net interest income/interest
   rate spread                     1.51%             $ 13,155    1.65%             $ 12,245    1.64%              $ 11,451    1.64%
                               ========              ========  ======              ========  ======               ========  ======

Net interest-earning assets/
   net yield on interest-
   earning assets (1)                     $  36,684              1.82%  $  36,093              1.80%  $   32,871              1.84%
                                          =========            ======   =========            ======   ==========            ======

Ratio of interest-earning
   assets to interest-
   bearing liabilities                                          105.4%                        105.6%                         105.6%
                                                               ======                        ======                         ======
</TABLE>

(1)   Net interest income divided by average interest-earning assets.

(2)   Loan fee income is immaterial to this analysis.

(3)   There were no non-accruing loans at September 30, 2005, 2004 and 2003.

The following table shows, for the periods indicated, the changes in interest
income and interest expense attributable to changes in volume (changes in volume
multiplied by prior year rate) and changes in rate (changes in rate multiplied
by prior year volume). Changes in rate/volume (determined by multiplying the
change in rate by the change in volume) have been allocated to the change in
rate or the change in volume based upon the respective percentages of their
combined totals.

<TABLE>
<CAPTION>
                                                        Fiscal 2005 Compared           Fiscal 2004 Compared
                                                           to Fiscal 2004                 to Fiscal 2003
                                                         Increase (Decrease)            Increase (Decrease)
                                                    -----------------------------------------------------------
                                                     Volume     Rate      Total     Volume     Rate      Total
                                                    -------   -------    -------   -------   -------    -------
<S>                                                 <C>       <C>        <C>       <C>       <C>        <C>
Interest income on interest-earning assets:
   Mortgage loans (1)                               $   946   $  (533)   $   413   $ 1,224   $(3,208)   $(1,984)
   Mortgage-backed securities                           547       721      1,268     1,044       124      1,168
   Consumer and other loans (1)                         689       292        981       564      (379)       185
   Investments                                           47       557        604        69       109        178
                                                    -------   -------    -------   -------   -------    -------

      Total                                           2,229     1,037      3,266     2,901    (3,354)      (453)
                                                    -------   -------    -------   -------   -------    -------

Interest expense on interest-bearing liabilities:
   Deposits                                             355       882      1,237       453    (1,977)    (1,524)
   Borrowings                                         1,243      (124)     1,119     1,725    (1,482)       243
                                                    -------   -------    -------   -------   -------    -------

      Total                                           1,598       758      2,356     2,178    (3,459)    (1,281)
                                                    -------   -------    -------   -------   -------    -------

Net change in net interest income                   $   631   $   279    $   910   $   723   $   105    $   828
                                                    =======   =======    =======   =======   =======    =======
</TABLE>

(1)   There were no non-accruing loans at September 30, 2005 and 2004.

                                                           2005 ANNUAL REPORT  7

<PAGE>

22 basis point increase in the average rate paid. The increase in the average
balance reflects normal savings activity for the Company. In fiscal 2004, the
average balance increased $16.4 million or 4.4% with a 51 basis point decrease
in the average rate paid. The average rate paid on deposits was 2.6% for the
year ended September 30, 2005, compared to 2.4% for the year ended September 30,
2004 and 2.9% for 2003. The average rate paid on deposits, is a direct
reflection of the interest rate environment.

Interest expense on borrowings increased by $1.1 million or 7.2% in fiscal 2005
and increased by $243,000 or 2.2% in fiscal 2004 as compared to the respective
prior years. The increase in interest expense during fiscal 2005 was the result
of a $28.4 million or 11.1% increase in the average balance of borrowings
partially offset by a decrease of 5 basis points in the average rate paid.
Borrowings were primarily obtained during fiscal 2005 and 2004 to fund the
purchase of mortgage-backed securities and long-term fixed-rate mortgages.
Long-term FHLB advances were used to match the expected maturity terms of these
mortgage products.

Provision for Loan Losses

Management establishes reserves for losses on loans when it determines that
losses are probable. The adequacy of loan loss reserves is based upon a regular
monthly review of loan delinquencies and "classified assets", as well as local
and national economic trends. Although management has currently established no
specific reserves for losses, no assurance can be given as to whether future
provision may be required. The allowance for loan losses totaled $2.0 million at
September 30, 2005 and 2004 or 0.5% and 0.6% of total loans at September 30,
2005 and 2004, respectively. Due to the Company's loan portfolio status and its
analysis of quantitative and qualitative factors, no provision was made in 2005,
2004 and 2003.

Other Income

The Company's total other operating income decreased to $1.5 million in fiscal
2005 and increased to $1.6 million in fiscal 2004. The increase from 2003 to
2004 is attributed to a gain on the sale of an investment available for sale of
$266,000 in fiscal 2004 as compared to a gain of $230,000 in fiscal 2003.

Other income, which consists primarily of income from fees on demand accounts,
loan servicing fees, the sale of non-deposit products, insurance commissions,
and BOLI income, decreased by $27,000 or 2.9% during fiscal year 2005. During
fiscal 2004, other income increased by $31,000 or 3.5%. The fees, which comprise
other income, are set by the Company at a level, which is intended to cover the
cost of providing the related services and expenses to customers and employees.
Components of other income in 2005 remained relatively consistent with the
results of 2004. Based on the current services offered by the Company, we
anticipate other income to remain consistent in fiscal year 2006.

Other Expenses

Salaries and employee benefits increased by $265,000 or 7.3% in fiscal 2004 and
by $251,000 or 6.5% in fiscal 2005 as compared to prior respective fiscal years.
The increased expenses of salaries and employee benefits during the periods are
attributable to increased staffing needs due to normal growth; normal salary
increases and increased employee benefit expenses. The Company anticipates
normal increase in salaries and employee benefits in fiscal year 2006 due to
additional staffing needs, inflationary effects and stock option expense.

Occupancy and equipment expense increased by $73,000 or 8.4% in fiscal 2005 and
decreased by $36,000 or 4.0% in fiscal 2004 as compared to the prior respective
fiscal years. The increase in 2005 and 2004 were attributable to the normal
activity of the Company.

The Company anticipates occupancy and equipment expense to increase in fiscal
year 2006 due to normal asset growth and the opening of a new branch.

Other expenses, which consist primarily of advertising expenses, directors'
fees, ATM network fees, professional fees, checking account costs, stockholders
expense, and insurance premiums, increased by $282,000 or 16.4% in fiscal 2004,
and increased by $264,000 or 13.2% in fiscal 2005 over the prior respective
fiscal years.

Income Taxes

The Company recorded income tax provisions of $1.7 million, $1.6 million and
$1.5 million for fiscal years 2005, 2004 and 2003, respectively. The primary
reason for the increase in the income tax provision in fiscal 2005 was an
increase in income. See Note 12 of the "Notes to Financial Statements" which
provides an analysis of the provision for income taxes.

Asset and Liability Management

The Company has instituted programs designed to decrease the sensitivity of its
earnings to material and prolonged increases or decreases in interest rates. The
principal determinant of the exposure of the Company's earnings to interest rate
risk is the timing difference between the repricing or maturity of the Company's
interest-earning assets and the repricing or maturity of its interest-bearing
liabilities. If the maturities of such assets and liabilities were perfectly
matched, and if the interest rates borne by its assets and liabilities were
equally flexible and moved concurrently, neither of which is the case, the
impact on net interest income of rapid increases or decreases in interest rates
would be minimized. The Company's asset and liability management policies seek
to increase the interest rate sensitivity by shortening the repricing intervals
and the maturities of the Company's interest-earning assets. Although management
of the Company believes that the steps taken have reduced the Company's overall
vulnerability to increases and decreases in interest rates, the Company remains
vulnerable to material and prolonged increases and decreases in interest rates
during periods in which its interest rate sensitive liabilities exceed its
interest rate sensitive assets and interest rate sensitive assets exceed
interest rate sensitive liabilities, respectively.

The authority and responsibility for interest rate management is vested in the
Company's Board of Directors. The Chief Financial Officer implements the Board
of Directors' policies during the day-to-day operations of the Company. Each
month, the Chief Financial Officer presents the Board of Directors with a
report, which outlines the Company's asset and liability "gap" position in
various time periods. The "gap" is the difference between interest-earning
assets and interest-bearing liabilities which mature or reprice over a given
time period. The Chief Financial Officer also meets weekly with the Company's
other senior officers to review and establish policies and strategies

8  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

<TABLE>
<CAPTION>
                                                   1 Year      1 to 3       3 to 5        Over 5
                                                  or Less      Years        Years         Years        Total
--------------------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>          <C>           <C>          <C>
Interest-earning assets:
   Mortgage loans                                $  36,500   $  56,208    $  42,584     $ 135,649    $ 270,941
   Mortgage-backed securities                       90,034      89,236       43,727        42,012      265,009
   Consumer and other loans                         60,557      23,859        8,257         9,966      102,639
   Investment securities and other investments      31,118       3,907       20,313        70,328      125,666
                                                 ---------   ---------    ---------     ---------    ---------

Total interest-earning assets                      218,209     173,210      114,881       257,955      764,255
                                                 ---------   ---------    ---------     ---------    ---------

Interest-bearing liabilities:
   Passbook and Club accounts                            -           -            -         3,807        3,807
   NOW accounts                                          -           -            -        27,366       27,366
   Money Market Deposit accounts                    24,663           -            -        51,918       76,581
   Certificate accounts                            101,502     167,141       32,945             -      301,588
   Borrowed money                                   60,857      96,123       24,926       115,362      297,268
                                                 ---------   ---------    ---------     ---------    ---------

Total interest-bearing liabilities                 187,022     263,264       57,871       198,453      706,610
                                                 ---------   ---------    ---------     ---------    ---------

Repricing GAP during the period                  $  31,187   $ (90,054)   $  57,010     $  59,502    $  57,645
                                                 =========   =========    =========     =========    =========

Cumulative GAP                                   $  31,187   $ (58,867)   $  (1,857)    $  57,645
                                                 =========   =========    =========     =========

Ratio of GAP during the period to total assets        4.07%    (-11.74)%       7.43%         7.76%
                                                 =========   =========    =========     =========

Ratio of cumulative GAP to total assets               4.07%     (-7.68)%     (-0.24)%        7.52%
                                                 =========   =========    =========     =========
</TABLE>

designed to regulate the Company's flow of funds and coordinate the sources,
uses and pricing of such funds. The first priority in structuring and pricing
the Company's assets and liabilities is to maintain an acceptable interest rate
spread while reducing the effects of changes in interest rates and maintaining
the quality of the Company's assets.

The above table summarizes the amount of interest-earning assets and
interest-bearing liabilities outstanding as of September 30, 2005, which are
expected to mature, prepay or reprice in each of the future time periods shown.
Except as stated below, the amounts of assets or liabilities shown which mature
or reprice during a particular period were determined in accordance with the
contractual terms of the asset or liability. Adjustable and floating-rate assets
are included in the period in which interest rates are next scheduled to adjust
rather than in the period in which they are due, and fixed-rate loans and
mortgage-backed securities are included in the periods in which they are
anticipated to be repaid. However, many of our assets can prepay at any time
without a penalty unlike many of our liabilities that have a contractual
maturity.

The passbook accounts, negotiable order of withdrawal ("NOW") accounts and a
potion of the money market deposit accounts, are included in the "Over 5 Years"
categories based on management's beliefs that these funds are core deposits
having significantly longer effective maturities based on the Company's
retention of such deposits in changing interest rate environments.

Generally, during a period of rising interest rates, a positive gap would result
in an increase in net interest income while a negative gap would adversely
affect net interest income. Conversely, during a period of falling interest
rates, a positive gap would result in a decrease in net interest income while a
negative gap would positively affect net interest income. However, the above
table does not necessarily indicate the impact of general interest rate
movements on the Company's net interest income because the repricing of certain
categories of assets and liabilities is discretionary and is subject to
competitive and other pressures. As a result, certain assets and liabilities
indicated as repricing within a stated period may in fact reprice at different
rate levels in a different period.

Liquidity and Capital Resources

The Company's assets increased to $767.0 million as of September 30, 2005, from
$718.2 million as of September 30, 2004. Stockholders' equity increased to $47.6
million as of September 30, 2005, from $44.3 million as of September 30, 2004.
As of September 30, 2005, stockholders' equity amounted to 6.2% of the Banks
total assets under accounting principles generally accepted in the United States
of America ("GAAP").

For a financial institution, liquidity is a measure of the ability to fund
customers' needs for loans, deposit withdrawals and repayment of borrowings.
Harleysville Savings regularly evaluates economic conditions in order to
maintain a strong liquidity position. One of the most significant factors
considered by management when evaluating liquidity requirements is the stability
of the Company's core deposit base. In addition to cash, the Company maintains a
portfolio of cash flows generating investments to meet its liquidity
requirements. The Company also relies upon cash flow from operations and other
financing activities, generally short-term and long-term debt. Liquidity is also
provided by investing activities including the repayment and maturity of loans
and investment securities as well as the management of asset sales when
considered necessary. The Company also has access to and sufficient assets to
secure lines of credit and other borrowings in amounts adequate to fund any
unexpected cash requirements.

                                                           2005 ANNUAL REPORT  9

<PAGE>

As of September 30, 2005, the Company had a remaining borrowing capacity with
the Federal Home Loan Bank of Pittsburgh of approximately $265,548,000. To the
extent that the Company cannot meet its liquidity needs with normal cash flows
and deposit growth, the Company will be able to utilize the available borrowing
capacity provided by the Federal Home Loan Bank of Pittsburgh to fund asset
growth and loan commitments. Management believes that the opening of our sixth
branch in the spring of 2006 will have not have a material impact on our
liquidity. At September 30, 2005 the Company had exposures to limited recourse
arrangements with respect to the Company's sale of whole loans. At September 30
2005, the exposure, which represents a portion of credit risk associated with
the sold interests, amounted to $83,000. The exposure is for the life of the
related loans and payable, on our proportional share, as losses are incurred.

The Company's contractual cash obligations at September 30, 2005 were as
follows:

<TABLE>
<CAPTION>
                                         Less Than       1 to 3         4 to 5          After
                           Total          1 Year         Years           Years         5 Years
-------------------------------------------------------------------------------------------------
<S>                    <C>             <C>            <C>            <C>            <C>
Lease Agreements       $     498,065   $     94,174   $    192,581   $    104,332   $     106,978
FHLB Debt                297,268,488     36,043,911     94,560,309     40,787,297     125,876,971
Funding Commitments       55,757,387     55,757,387
Purchase Obligations         106,174        106,174
                       -------------   ------------   ------------   ------------   -------------

                       $ 353,630,114   $ 92,001,646   $ 94,752,890   $ 40,891,629   $ 125,983,949
                       =============   ============   ============   ============   =============
</TABLE>

Impact of Inflation and Changing Prices

The consolidated financial statements and related data presented herein have
been prepared in accordance with GAAP which require the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.

Unlike most industrial companies, virtually all of the assets and liabilities of
a financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or in the same magnitude as the prices of goods and
services, since prices are affected by inflation to a larger extent than
interest rates.

10  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Harleysville Savings Financial
Corporation and Subsidiary - Harleysville, Pennsylvania:

We have audited the accompanying consolidated statements of financial condition
of Harleysville Savings Financial Corporation and Subsidiary (the "Company") as
of September 30, 2005 and 2004, and the related consolidated statements of
income, comprehensive income, stockholders' equity, and cash flows for each of
the three years in the period ended September 30, 2005. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of their internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Harleysville Savings Financial
Corporation and Subsidiary as of September 30, 2005 and 2004, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 2005, in conformity with accounting principles generally
accepted in the United States of America.

DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
December 12, 2005

                                                          2005 ANNUAL REPORT  11

<PAGE>

Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                                 September 30,
                                                                            2005               2004
-------------------------------------------------------------------------------------------------------
<S>                                                                     <C>               <C>
Assets

Cash and amounts due from depository institutions                       $   1,193,285     $   1,679,171
Interest bearing deposits in other banks                                    6,741,695         3,039,613
                                                                        -------------     -------------

   Total cash and cash equivalents                                          7,934,980         4,718,784

Investment securities held to maturity
   (fair value - 2005, $88,404,000; 2004, $69,439,000)                     87,364,445        68,161,572
Investment securities available-for-sale at fair value                      2,835,244         7,714,840
Mortgage-backed securities held to maturity
   (fair value - 2005, $259,994,000; 2004, $262,560,000)                  263,963,765       261,291,730
Mortgage-backed securities available-for-sale at fair value                 1,045,087         3,795,274
Loans receivable (net of allowance for loan losses -
   2005, $1,968,000; 2004, $1,977,000)                                    366,006,917       338,584,205
Accrued interest receivable                                                 3,432,054         3,069,038
Federal Home Loan Bank stock - at cost                                     16,035,900        15,184,100
Office properties and equipment, net                                        5,829,694         5,748,975
Deferred income taxes                                                         339,587           385,545
Prepaid expenses and other assets                                          12,202,792         9,577,465
                                                                        -------------     -------------

Total Assets                                                            $ 766,990,465     $ 718,231,528
                                                                        =============     =============

-------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Liabilities:
   Deposits                                                             $ 418,979,655     $ 405,230,639
   Advances from Federal Home Loan Bank                                   297,268,488       265,952,993
   Accrued interest payable                                                 1,358,953         1,126,113
   Advances from borrowers for taxes and insurance                          1,135,429         1,058,007
   Accounts payable and accrued expenses                                      672,124           550,864
                                                                        -------------     -------------

   Total liabilities                                                      719,414,649       673,918,616
                                                                        -------------     -------------

Commitments and contingencies (Note 16 & 17)
Stockholders' Equity:
   Preferred Stock: $.01 par value;
     12,500,000 shares authorized; none issued
   Common stock: $.01 par value; 25,000,000
     shares authorized; issued and outstanding,
     2005, 3,904,136 shares and 2004, 3,860,817 shares                         39,041            23,165
   Additional Paid-in capital                                               7,610,511         7,426,853
   Treasury stock, at cost (2005, 3,255 shares; 2004, 28,938 shares)          (60,107)         (414,430)
   Retained earnings - partially restricted                                39,995,584        37,244,200
   Accumulated other comprehensive (loss) income                               (9,213)           33,124
                                                                        -------------     -------------

   Total stockholders' equity                                              47,575,816        44,312,912
                                                                        -------------     -------------

Total Liabilities And Stockholders' Equity                              $ 766,990,465     $ 718,231,528
                                                                        =============     =============
</TABLE>

See notes to consolidated financial statements.

12  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                    Year Ended September 30,
                                                              2005             2004            2003
-------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>             <C>
Interest Income:
Interest and fees on mortgage loans                       $ 15,331,323     $ 14,918,198    $ 16,935,926
Interest on mortgage-backed securities                      11,665,529       10,397,548       9,230,294
Interest on consumer and other loans                         4,614,316        3,633,483       3,446,943
Interest on taxable investments                              1,993,697        2,308,680       2,022,455
Interest on tax-exempt investments                           2,285,188        1,363,650       1,468,170
Dividends on investment securities                              12,387           14,550          18,790
                                                          ------------     ------------    ------------

Total interest and dividend income                          35,902,440       32,636,109      33,122,578
                                                          ------------     ------------    ------------

Interest Expense:
Interest on deposits                                        10,336,704        9,100,454      10,624,397
Interest on borrowings                                      12,410,032       11,290,735      11,048,328
                                                          ------------     ------------    ------------

Total interest expense                                      22,746,736       20,391,189      21,672,725
                                                          ------------     ------------    ------------

Net Interest Income                                         13,155,704       12,244,920      11,449,853
Provision for Loan Losses                                      (40,407)               -               -
                                                          ------------     ------------    ------------

Net Interest Income, after Provision for Loan Losses        13,196,111       12,244,920      11,449,853
                                                          ------------     ------------    ------------

Other Income:
Gain on sales of loans                                          16,672           61,024          15,581
Gain on sales of investments and
   mortgage-backed securities                                   97,905          265,602         230,270
Increase in cash surrender value                               450,500          354,000         375,000
Other income                                                   900,304          927,558         896,116
                                                          ------------     ------------    ------------

Total other income                                           1,465,381        1,608,184       1,516,967
                                                          ------------     ------------    ------------

Other Expenses:
Salaries and employee benefits                               4,146,584        3,895,117       3,630,175
Occupancy and equipment                                        937,228          864,469         900,054
Deposit insurance premiums                                      57,263           58,643          60,722
Data processing                                                562,932          583,591         590,409
Other                                                        2,261,238        1,997,363       1,715,672
                                                          ------------     ------------    ------------

Total other expenses                                         7,965,245        7,399,183       6,897,032
                                                          ------------     ------------    ------------

Income before Income Taxes:                                  6,696,247        6,453,921       6,069,788

Income tax expenses                                          1,692,527        1,603,824       1,475,885
                                                          ------------     ------------    ------------

Net Income                                                $  5,003,720     $  4,850,097    $  4,593,903
                                                          ============     ============    ============

Earnings Per Share:
   Basic                                                  $       1.29     $       1.28    $       1.21
                                                          ============     ============    ============

   Diluted                                                $       1.27     $       1.25    $       1.19
                                                          ============     ============    ============

Weighted Average Shares Outstanding:
   Basic                                                     3,871,255        3,802,937       3,783,693
                                                          ============     ============    ============

   Diluted                                                   3,940,701        3,890,212       3,868,838
                                                          ============     ============    ============
</TABLE>

See notes to consolidated financial statements.

                                                          2005 ANNUAL REPORT  13

<PAGE>

Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>
                                                                             2005            2004           2003
-------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>             <C>            <C>
Net Income                                                               $ 5,003,720     $ 4,850,097    $ 4,593,903
Other Comprehensive (Loss) Income
   Unrealized (loss) gain on securities net of tax (benefit) or
     expense -- 2005, $(25,930); 2004, $10,909; 2003, ($21,529)              (42,337)(1)      17,150(1)     (33,840)(1)
                                                                         -----------     -----------    -----------

Total Comprehensive Income                                               $ 4,961,383     $ 4,867,247    $ 4,560,063
                                                                         ===========     ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                             2005            2004           2003
                                                                         -----------     -----------    -----------
<S>                                                                      <C>             <C>            <C>
(1) Disclosure of reclassification amount, net of tax for the years
    ended:
    Net unrealized gain arising during the year                          $    22,280     $   192,447    $   118,138
    Less: Reclassification adjustment for net gains included in net
       income
    Net of tax expense -- 2005,$33,288; 2004,$90,305; 2003, $78,292           64,617         175,297        151,978
                                                                         -----------     -----------    -----------

    Net unrealized (loss) gain on securities                             $   (42,337)    $    17,150    $   (33,840)
                                                                         ===========     ===========    ===========
</TABLE>

Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                           Retained     Accumulated
                                         Common             Additional     Earnings-       Other                        Total
                                         Stock     Common     Paid-in      Partially   Comprehensive    Treasury    Stockholders'
                                         Shares     Stock     Capital     Restricted   Income (Loss)      Stock         Equity
---------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>       <C>          <C>           <C>            <C>           <C>
Balance at October 1, 2002             2,316,500  $ 23,165  $ 7,551,849  $ 31,124,031  $      49,814  $   (881,227) $  37,867,632

Net Income                                                                  4,593,903                                   4,593,903
Dividends - $.40 per share                                                 (1,497,528)                                 (1,497,528)
Treasury stock purchased                                                                                  (808,842)      (808,842)
Treasury stock delivered under
   employee stock plans                                        (116,581)                                   327,978        211,397
Treasury stock delivered under
   Dividend Reinvestment Plan                                   149,681                                    333,319        483,000
Change in unrealized holding gain
   on available-for-sale securities,
   net of tax                                                                                (33,840)                     (33,840)
                                                  --------  -----------  ------------  -------------  ------------  -------------
Balance at September 30, 2003          2,316,500    23,165    7,584,949    34,220,406         15,974    (1,028,772)    40,815,722

Net Income                                                                  4,850,097                                   4,850,097
Dividends - $.48 per share                                                 (1,826,303)                                 (1,826,303)
Treasury stock purchased                                                                                  (251,580)      (251,580)
Treasury stock delivered under
   employee stock plans                                        (296,533)                                   490,384        193,851
Treasury stock delivered under
   Dividend Reinvestment Plan                                   138,437                                    375,538        513,975
Change in unrealized holding gain
   on available-for-sale securities,
   net of tax                                                                                 17,150                       17,150
                                                  --------  -----------  ------------  -------------  ------------  -------------
Balance at September 30, 2004          2,316,500    23,165    7,426,853    37,244,200         33,124      (414,430)    44,312,912

Net Income                                                                  5,003,720                                   5,003,720
Issuance of Common Stock                               436      459,995                                                   460,431
Stock split                                         15,440      (15,440)
Dividends - $.58 per share                                                 (2,252,336)                                 (2,252,336)
Treasury stock purchased                                                                                  (328,280)      (328,280)
Treasury stock delivered under
   employee stock plans                                        (272,586)                                   578,247        305,661
Treasury stock delivered under
   Dividend Reinvestment Plan                                    11,689                                    104,356        116,045
Change in unrealized holding gain
   on available-for-sale securities,
   net of tax                                                                                (42,337)                     (42,337)
                                                  --------  -----------  ------------  -------------  ------------  -------------
Balance at September 30, 2005          3,904,136  $ 39,041  $ 7,610,511  $ 39,995,584  $      (9,213) $    (60,107) $  47,575,816
                                                  ========  ===========  ============  =============  ============  =============
</TABLE>

See notes to consolidated financial statements.

14  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                        Year Ended September 30,
                                                                                  2005            2004            2003
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>             <C>
Operating Activities:
Net Income                                                                   $   5,003,720   $   4,850,097   $   4,593,903
Adjustments to reconcile net income to net cash provided by operating
   activities:
   Depreciation                                                                    436,400         483,864         534,657
   Deferred income taxes                                                            67,768         (24,745)       (217,709)
   Realized gain on sales of loans                                                 (16,672)        (61,024)        (15,581)
   Realized gain on sales of mortgage-backed securities                                  -               -        (158,735)
   Realized gain on sale of investment securities                                  (97,905)       (265,602)        (71,535)
   Realized loss on disposal of fixed assets                                        49,233           4,293          15,772
   Origination of loans held for sale                                             (908,522)     (2,517,314)     (1,386,196)
   Proceeds from the sale of loans held for sale                                   921,129       2,578,338       1,401,777
   Amortization of deferred loan fees                                             (138,102)       (459,366)     (1,892,505)
   Net amortization of premiums and discounts                                      675,869         922,291      (2,160,770)
   Increase in cash surrender value                                               (450,500)       (354,000)       (375,000)
Changes in assets and liabilities which provided (used) cash:
   Increase (decrease) in accounts payable and accrued expenses                    121,260        (252,795)       (118,863)
   (Increase) decrease in prepaid expenses and other assets                     (2,131,804)        (86,150)        345,263
   (Increase) decrease in accrued interest receivable                             (363,016)       (267,698)         35,108
   Increase in accrued interest payable                                            232,840          55,144          29,077
                                                                             -------------   -------------   -------------

Net cash provided by operating activities                                        3,401,698       4,605,333         558,663
                                                                             -------------   -------------   -------------
Investing Activities:
Purchase of mortgage-backed securities held to maturity                        (62,026,532)   (116,190,554)   (244,183,784)
Purchase of mortgage-backed securities available-for-sale                                -      (5,010,238)    (33,701,343)
Purchase of investment securities held to maturity                             (35,852,191)     (5,989,750)    (47,301,420)
Purchase of investment securities available-for-sale                              (770,525)     (2,792,039)     (1,412,139)
Purchase of FHLB stock                                                            (851,800)     (1,402,000)     (3,285,600)
Proceeds from the sale of mortgage-backed securities available-for-sale                                         13,015,313
Proceeds from the sale of investment securities available-for-sale               5,650,121       2,600,639         422,447
Proceeds from maturities of investment securities                               16,239,738      18,554,405      19,605,284
Principal collected on long-term loans & mortgage-backed securities            147,947,065     182,398,317     399,483,983
Long-term loans originated or acquired                                        (113,398,481)   (137,421,587)   (161,190,721)
Purchases of premises and equipment                                               (566,351)     (1,309,061)       (465,470)
                                                                             -------------   -------------   -------------

Net cash used in investing activities                                          (43,628,956)    (66,561,868)    (59,013,450)
                                                                             -------------   -------------   -------------
Financing Activities:
Net (decrease) increase in demand deposits, NOW accounts and savings
   accounts                                                                    (18,710,587)      7,717,536      18,969,196
Net increase (decrease) in certificates of deposit                              32,459,603      16,826,549     (10,229,620)
Cash dividends                                                                  (2,252,336)     (1,826,303)     (1,497,528)
Net increase in FHLB advances                                                   31,315,495      37,135,555      21,315,092
Purchase of treasury stock                                                        (328,280)       (251,580)       (808,842)
Treasury stock delivered under Dividend Reinvestment and employee stock
   plan                                                                            421,706         707,826         694,397
Net proceeds from issuance of stock                                                460,431               -               -
Net increase (decrease) in advances from borrowers for taxes and insurance          77,422         (35,862)        110,786
                                                                             -------------   -------------   -------------

Net cash provided by financing activities                                       43,443,454      60,273,721      28,553,481
                                                                             -------------   -------------   -------------

Increase (Decrease) in cash and cash equivalents                                 3,216,196      (1,682,814)    (29,901,306)

Cash and cash equivalents at beginning of year                                   4,718,784       6,401,598      36,302,904
                                                                             -------------   -------------   -------------

Cash and cash equivalents at end of year                                     $   7,934,980   $   4,718,784   $   6,401,598
                                                                             =============   =============   =============
Supplemental Disclosure of Cash Flow Information-
Cash paid during the period for:
   Interest (credited and paid)                                              $  22,513,896   $  20,446,333   $  21,701,802
   Income Tax                                                                    1,527,721       1,553,000       1,461,000
</TABLE>

See notes to consolidated financial statements.

                                                          2005 ANNUAL REPORT  15

<PAGE>

Notes to Consolidated Financial Statements

1. Nature of Operations and Organizational Structure

On February 25, 2000, Harleysville Savings Bank (the "Bank") completed its
Agreement and Plan of Reorganization ("Agreement") pursuant to which the Bank
was reorganized into a holding company form of ownership. The Agreement was
subject to approval by the Pennsylvania Department of Banking, the Board of
Governors of the Federal Reserve System and approved by the stockholders of the
Bank. Harleysville Savings Financial Corporation (the "Company") was
incorporated under the laws of the Commonwealth of Pennsylvania. It was formed
for the purpose of becoming the bank holding company of the Bank through the
issuance and exchange of its stock pursuant to the Agreement and the concurrent
acquisition of 100% of the common stock of the Bank. In connection with the
Reorganization, each share of the Bank's common stock, ("Bank Common Stock"),
was converted into one share of the Company's common stock, ("Company Common
Stock"). The result of the Reorganization of the Bank was that the Company
became the owner of all of the outstanding shares of Bank Common Stock and each
stockholder of the Bank became the owner of one share of the Company Common
Stock for each share of bank Common Stock held by him or her immediately prior
thereto.

The Company is a bank holding company that is regulated by the Federal Reserve
Bank of Philadelphia. The Bank is a wholly owned subsidiary and is regulated by
the FDIC and the Pennsylvania Department of Banking. The Bank is principally in
the business of attracting deposits through its branch offices and investing
those deposits, together with funds from borrowings and operations, primarily in
single family residential and consumer loans.

2. Summary of Significant Accounting Policies

Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of the Company, the Bank, and the Bank's wholly owned
subsidiary, HSB Inc., a Delaware subsidiary which was formed in order to
accommodate the transfer of certain assets, Freedom Financial LLC that allows
the Company to offer non deposit products and HARL LLC that allows the Bank to
invest in equity investments. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates in Preparation of the Consolidated Financial Statements - The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statement and the reported amounts of
income and expenses during the reporting period. The most significant of these
estimates and assumptions in the Company's consolidated financial statements is
the allowance for loan losses. Actual results could differ from those estimates.

Cash and Cash Equivalents - For purposes of the consolidated statements of cash
flows, cash and cash equivalents include cash and balances due from banks.

Interest-Bearing Deposits in Banks - Interest-bearing deposits in banks are
carried at cost.

Investments and Mortgage-Backed Securities - The Company classifies and accounts
for debt and equity securities as follows:

Held to Maturity - Debt securities that management has the positive intent and
ability to hold until maturity are classified as held to maturity and are
carried at their remaining unpaid principal balance, net of unamortized premiums
or unaccreted discounts. Premiums are amortized and discounts are accreted using
the interest method over the estimated remaining term of the underlying
security.

Available for Sale - Debt and equity securities that will be held for indefinite
periods of time, including securities that may be sold in response to changes in
market interest or prepayment rates, needs for liquidity and changes in the
availability of and the yield of alternative investments are classified as
available for sale. These assets are carried at fair value. Fair value is
determined using published quotes as of the close of business. Unrealized gains
and losses are excluded from earnings and are reported net of tax in other
comprehensive income until realized. Realized gains and losses on the sale of
investment securities are recorded as of trade date, reported in the
consolidated statement of income and determined using the adjusted cost of the
specific security sold.

In March 2004, the Financial Accounting Standards Board ("FASB") Emerging Issues
Task Force ("EITF") reached consensus on several issues being addressed in EITF
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments". The consensus provides guidance for
evaluating whether an investment is other-than-temporarily impaired and was
effective for other-than-temporary impairment evaluations made in reporting
periods beginning after June 15, 2004. The disclosure provisions of EITF 03-1
continue to be effective for the Company's consolidated financial statements for
the year ended September 30, 2005.

On November 3, 2005, the FASB issued FASB Staff Position ("FSP") Nos. FAS 115-1
and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments". This FSP addresses the determination as to
when an investment is considered impaired, whether that impairment is other than
temporary, and the measurement of an impairment loss. This FSP also includes
accounting considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures about
unrealized losses that have not been recognized as other-than-temporary
impairments. This FSP nullifies certain requirements of EITF Issue 03-1, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments", and supersedes EITF Topic No. D-44, "Recognition of
Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost
Exceeds Fair Value". The guidance in this FSP amends FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". The FSP is
effective for reporting periods beginning after December 15, 2005. Management is
in the process of evaluating the impact of the adoption of this guidance.

16  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

For all securities that are in an unrealized loss position for an extended
period of time and for all securities whose fair value is significantly below
amortized cost, the Company performs an evaluation of the specific events
attributable to the market decline of the security. The Company considers the
length of time and extent to which the security's market value has been below
cost as well as the general market conditions, industry characteristics, and the
fundamental operating results of the issuer to determine if the decline is
other-than-temporary. The Company also considers as part of the evaluation its
intent and ability to hold the security until its market value has recovered to
a level at least equal to the amortized cost. When the Company determines that a
security's unrealized loss is other-than-temporary, a realized loss is
recognized in the period in which the decline in value is determined to be
other-than-temporary. The write-downs are measured based on public market
prices of the security at the time the Company determines the decline in value
was other-than-temporary.

Loans - The Company grants mortgage and consumer loans to customers. A
substantial portion of the loan portfolio is represented by mortgage loans
throughout Pennsylvania. The ability of the Company's debtors to honor their
contracts is dependent upon the real estate and general economic conditions in
this area.

Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or pay-off are reported at their outstanding unpaid
principal balances adjusted for charge-offs, the allowance for loan losses, and
any deferred fees or costs on originated loans. Interest income is accrued on
the unpaid principal balance.

Interest Income on Loans - Interest on loans is recognized as income when
earned. The accrual of interest on mortgage loans is discontinued at the time
the loan is 90 days delinquent unless the credit is well-secured and in process
of collection. Other personal loans are typically charged off no later than 180
days past due. In all cases, loans are placed on nonaccrual or charged-off at an
earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual
or charged off is reversed against interest income. The interest on these loans
is accounted for on the cash-basis or cost-recovery method, until qualifying for
return to accrual. Loans are returned to accrual status when all the principal
and interest amounts contractually due are brought current and future payments
are reasonably assured.

Deferred Loan Fees - Loan origination fees, net of certain direct origination
costs, are deferred and the balance is amortized to income as an adjustment over
the life of the loan using the interest method.

Allowance for Loan Losses - The allowance for loan losses is established as
losses are estimated to have occurred through a provision for loan losses
charged to earnings. Loan losses are charged against the allowance when
management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance. An allowance for
loan losses is maintained at a level that management considers adequate to
provide for losses based upon evaluation of known and inherent risks in the loan
portfolio. The loan loss reserves are established as an allowance for estimated
losses based on the probable losses of the loan portfolio. In assessing risk,
management considers historical experience, volume and composition of lending
conducted by the Company, industry standards, status of nonperforming loans,
general economic conditions as they relate to the Company's market area, and
other factors related to the collectibility of the Company's loan portfolio.

The allowance for loan losses consists of three elements: (1) specific
allowances for impaired loans; (2) a general valuation allowance on all
classified loans which are not impaired; and (3) a general valuation allowance
on the remainder of the loan portfolio. This is consistent with the regulatory
method of classifying reserves. Although the amount of each element of the
allowance is determined separately, the entire allowance for loan losses is
available for the entire portfolio. An allowance for impaired loans is
established in the amounts by which the discounted cash flows (or collateral
value or observable market price) are lower than the carrying value of the loan.
A general allowance is established for classified loans that are not impaired.
These loans are segregated by loan category, and allowance percentages are
assigned to each category based on inherent losses associated with each type of
lending and consideration that these loans, in the aggregate, represent an
above-average credit risk and that more of these loans will prove to be
uncollectible compared to loans in the general portfolio.

The general allowance for loans that are not classified is established to
recognize the inherent losses associated with lending activities, but which,
unlike specific allowances, has not been allocated to particular problem assets.
This general valuation allowance is determined by segregating non-classified
loans by loan category and assigning allowance percentages to each category. The
allowance percentages have been derived using percentages commonly applied under
the regulatory framework for the Company and similarly sized institutions. The
percentages are adjusted for significant factors that, in management's judgment,
could affect the collectibility of the portfolio as of the evaluation date.
These significant factors may include changes in lending policies and
procedures, changes in existing general economic and business conditions
affecting our primary lending areas, credit quality trends, collateral value,
loan volumes and concentrations, seasoning of the loan portfolio, loss
experience in particular segments of the portfolio, duration of the current
business cycle, and bank regulatory examination results. The applied loss
factors are reevaluated monthly to ensure their relevance in the current
economic environment.

Real Estate Owned - Real estate owned is carried at the lower of carrying value
of the loan or fair value of the property based on an appraisal. Costs relating
to the development and improvement of the property are capitalized, and those
relating to holding the property are charged to expense.

Office Properties and Equipment - Land is carried at cost. Office properties and
equipment are recorded at cost, less accumulated depreciation. Depreciation is
computed using the straight-line method over the expected useful lives of the
assets that range from four to fifty years. The costs of maintenance and repairs
are expensed as they are incurred, and renewals and betterments are capitalized.

FHLB Stock - The Company reports its investment in FHLB stock at cost in the
consolidated statements of financial condition as the Company does not have the
ability to influence the FHLB.

Cash Surrender Value Of Life Insurance - The Bank funded the purchase of
insurance policies on the lives of officers and employees of the Bank. The
Company has recognized any increase in cash surrender value of life insurance,
net of

                                                          2005 ANNUAL REPORT  17

<PAGE>

insurance costs, in the consolidated statements of income as other income. The
cash surrender value of the insurance policies is recorded as an asset in other
assets in the consolidated statements of financial condition.

Long-Lived Assets - Management evaluates the carrying amount of long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Measurement of an
impaired loss for long-lived assets would be based the fair value of the asset.
For the years ended September 30, 2005, 2004 and 2003, the Company did not
recognize an impairment.

Income Taxes - Deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. The effect on deferred taxes
of a change in tax rates is recognized in income in the period that includes the
enactment date.

Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -
The Company accounts for transfers and servicing of financial assets in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" (a replacement of FASB Statement No. 125). This Statement
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but it carries
over most of SFAS No. 125 provisions without reconsideration.

The Statement requires an entity to recognize the financial and servicing assets
it controls and the liabilities it has incurred, derecognize financial assets
when control has been surrendered, and derecognize liabilities when
extinguished. It requires that servicing assets and other retained interests in
the transferred assets be measured by allocating the previous carrying amount
between the asset sold, if any, and retained interest, if any, based on their
relative fair values at the date of transfer. It also provides implementation
guidance for servicing of financial assets, securitizations, loan syndications
and participations and transfers of loan receivables with recourse.

Accounting for Derivative Instruments and Hedging Activities - The Company
adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" as amended by SFAS Nos. 137 and 138, and as interpreted
by the FASB and the Derivatives Implementation Group through "Statement 133
Implementation Issues", as of October 1, 2000. In April 2003, the FASB issued
SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities". This Statement amended and clarified accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. This Statement was
effective for contracts entered into or modified after June 30, 2003, except for
the provision of this statement that relate to SFAS 133 Implementation Issues
that had been effective for fiscal quarters that began prior to June 15, 2003
and for hedging relationships designated after June 30, 2003. All provisions
were to be applied prospectively except for the provision of this Statement that
relate to SFAS 133 Implementation Issues that had been effective for fiscal
quarters that began prior to June 15, 2003. These provisions are to be applied
in accordance with their respective effective dates. Currently, no embedded
derivatives require bifurcation. The Company currently does not employ hedging
activities that require designation as either fair value or cash flow hedges, or
hedges of a net investment in a foreign operation.

Treasury Stock - The Company records treasury stock purchases at cost. Gains and
losses on subsequent reissuance of shares are credited or charged to capital in
excess of par value using the average-cost method.

In March, July and September of 2005, the Company repurchased 10,000, 5,000 and
2,000 shares of common stock respectively at $20.41, $17.90 and $17.34 per
share, respectively, for its treasury at a total cost of $328,280.

Accounting for Stock Options - The Company accounts for stock-based compensation
in accordance with the Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees." This method calculates compensation
expense using the intrinsic value method, which recognizes as expense the
difference between the market value of the stock and the exercise price at grant
date. The Company has not recognized any compensation expense under this method.
The Company adopted the reporting disclosure requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation", which requires the Company to
disclose the pro forma effects of accounting for stock-based compensation using
the fair value method as described in the accounting requirements of SFAS No.
123. As permitted by SFAS No. 123, the Company continues to account for
stock-based compensation under the intrinsic value method described in APB
Opinion No. 25. In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation --Transition and Disclosure", an amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123 to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The Company has elected to continue application of
Accounting Principals Board Opinion No. 25 Accounting for Stock Issued to
Employees and related interpretations for stock options and, accordingly no
compensation expense has been recorded in the consolidated financial statements.
The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS No.
123, using Binomial Option Pricing Model, to stock-based employee compensation.

18  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

                                                Year Ended September 30,
                                            2005          2004          2003
-------------------------------------------------------------------------------
Net income: As reported                 $ 5,003,720   $ 4,850,097   $ 4,593,903
Deduct: Stock-based employee
compensation expense determined
under the fair value based method
for all awards, net of related tax
effects                                      42,594        37,773        30,531
                                        -----------   -----------   -----------
Pro forma net income                    $ 4,961,126   $ 4,812,324   $ 4,563,372
Earnings per share:
   Basic-as reported                    $      1.29   $      1.28   $      1.21
   Basic-pro forma                             1.28          1.27          1.21
   Diluted-as reported                  $      1.27   $      1.25   $      1.19
   Diluted-pro forma                           1.26          1.24          1.18
Significant assumptions used to
calculate the above are as follows:
   Risk free interest rate of return              1%            1%         1.25%
   Expected option life                   84 months     84 months     84 months
   Expected volatility                           10%           10%           10%
   Expected dividends                             3%            3%            3%

Stock Split - On January 26, 2005, the Board of Directors declared a declared a
cash dividend of $.25 ($.15 post split) per share and a five for three stock
split payable on February 23, 2005 to the stockholders of record at the close of
business on February 9, 2005. The number of shares and per share information has
been restated to reflect the five for three stock split. The shares of
Harleysville Savings Financial Corporation traded on February 24, 2005 on a post
split basis.

Earnings Per Share - Basic earnings per common share is computed based on the
weighted average number of shares outstanding. Diluted earnings per share is
computed based on the weighted average number of shares outstanding, increased
by the number of common shares that are assumed to have been purchased with the
proceeds from the exercise of stock options (treasury stock method). These
purchases were assumed to have been made at the average market price of the
common stock. The weighted average shares outstanding used to calculate earnings
per share were as follows:

                                                  Year Ended September 30,
                                                2005        2004        2003
------------------------------------------------------------------------------
Average shares outstanding - basic           3,871,255   3,802,937   3,783,693

Increase in shares due to dilutive options      69,446      87,275      85,145
                                             ---------   ---------   ---------
Average shares outstanding - diluted         3,940,701    3,890,21   3,868,838
                                             =========   =========   =========

Other Comprehensive Income - The Company presents, as a component of
comprehensive income, amounts from transactions and other events, which are
currently excluded from the statement of income and are recorded directly to
stockholders' equity. The Company's other comprehensive income consists of net
unrealized holding gains or losses on securities available-for-sale, net of
income taxes.

Interest Rate Risk - The Company is engaged principally in providing first
mortgage loans to individuals and commercial enterprises. At September 30, 2005,
the Company's assets that earned interest at fixed and variable interest rates
were funded primarily with long-term liabilities that have interest rates that
are fixed.

The Company is vulnerable to a decrease in interest rates to the extent that
interest-earning assets mature or reprice more rapidly than interest-bearing
liabilities. In the current market, the Company primarily originates long-term
fixed rate loans secured by single-family residences and purchases short-term
investments. The source of these funds has been long-term advances.

At September 30, 2005, the Company had interest-earning assets of approximately
$722,126,000 having a weighted average effective yield of 4.97% and
interest-bearing liabilities of approximately $685,422,000 having a weighted
average effective interest rate of 3.32%.

Recent Accounting Pronouncements - In December 2004, FASB issued SFAS No. 123R
(revised 2004), "Share-Based Payment", which revises SFAS No. 123, "Accounting
for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting
for Stock Issued to Employees". This Statement requires an entity to recognize
the cost of employee services received in exchange for an award of equity
investment based on grant-date fair value of the award. That cost will be
recognized over the period during which an employee is required to provide
service in exchange for the award. Effective October 1, 2005 the Company will be
required to recognize compensation expense for the fair value of stock options
that are granted or vest after that date. Management determined based on current
option levels, the impact is not expected to be material on the Company's
consolidated financial statements.

In March 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 107 which expressed the views of the SEC regarding
the interaction between SFAS No. 123R and certain SEC rules and regulations. SAB
No. 107 provides guidance related to the valuation of share-based payment
arrangements for public companies, including assumptions such as expected
volatility and expected term.

Reclassification - Certain items in the 2004 and 2003 financial statements have
been reclassified to conform with the presentation in the 2005 consolidated
financial statements.

                                                          2005 ANNUAL REPORT  19

<PAGE>

3. Investment Securities Held to Maturity

A comparison of amortized cost and approximate fair value of investment
securities with gross unrealized gains and losses, by maturities, is as follows:

<TABLE>
<CAPTION>
                                                           September 30, 2005
                                                           Gross        Gross
                                          Amortized      Unrealized   Unrealized    Approximate
                                            Cost           Gains        Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
U.S. Government Agencies
   Due after 1 years through 5 years     $ 12,000,000                 $ (197,000)  $ 11,803,000
   Due after 5 years through 10 years      25,703,340   $    77,445     (207,785)    25,573,000
   Due after 10 years through 15 years     24,862,533         5,200     (497,733)    24,370,000

Tax Exempt Obligations
   Due after 10 years through 15 years     13,050,956       949,044            -     14,000,000
   Due after 15 years                      11,747,616       910,384            -     12,658,000
                                         ------------   -----------   ----------   ------------
  Total Investment Securities            $ 87,364,445   $ 1,942,073   $ (902,518)  $ 88,404,000
                                         ============   ===========   ==========   ============
</TABLE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2005 is as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months                 12 Months or Longer             Total            Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
US Government agencies   $ 31,567,124   $        (284,269)   $ 21,339,331   $        (618,249)  $ 52,906,455   $        (902,518)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $ 31,567,124   $        (284,269)   $ 21,339,331   $        (618,249)  $ 52,906,455   $        (902,518)
                         ============   =================    ============   =================   ============   =================
</TABLE>

At September 30, 2005, investment securities in a gross unrealized loss position
for twelve months or longer consisted of 8 US Government Agency Securities that
at such date had an aggregate depreciation of 2.8% from the Company's amortized
cost basis. Management believes that the estimated fair value of the securities
disclosed above is primarily dependent upon the movement in market interest
rates. Management evaluated the length of time and the extent to which the
market value has been less than cost; the financial condition and near term
prospects of the issuer, including any specific events which may influence the
operations of the issuer such as changes in technology that may impair the
earnings potential of the investment or the discontinuance of a segment of the
business that may effect the future earnings potential. The Company has the
ability and intent to hold these securities until the anticipated recovery of
fair value occurs. Management does not believe any individual unrealized loss as
of September 30, 2005 represents an other-than-temporary impairment.

<TABLE>
<CAPTION>
                                                           September 30, 2004
                                                           Gross         Gross
                                           Amortized     Unrealized   Unrealized    Approximate
                                             Cost          Gains        Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
U.S. Government Agencies
   Due after 1 years through 5 years     $    999,347                 $     (347)  $    999,000
   Due after 5 years through 10 years      15,278,032   $   186,208      (21,240)    15,443,000
   Due after 10 years through 15 years     26,918,369        22,286     (402,655)    26,538,000

Tax Exempt Obligations
   Due after 10 years through 15 years      6,932,105       453,895            -      7,386,000
   Due after 15 years                      18,033,719     1,039,281            -     19,073,000
                                         ------------   -----------   ----------   ------------
Total Investment Securities              $ 68,161,572   $ 1,701,670   $ (424,242)  $ 69,439,000
                                         ============   ===========   ==========   ============
</TABLE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2004 is as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months                 12 Months or Longer             Total            Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
US Government agencies   $ 22,509,680   $        (424,242)   $          -   $               -   $ 22,509,680   $        (424,242)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $ 22,509,680   $        (424,242)   $          -   $               -   $ 22,509,680   $        (424,242)
                         ============   =================    ============   =================   ============   =================
</TABLE>

There were no securities in a loss position greater then twelve months.
Management evaluated the length of time and the extent to which the market value
has been less than cost; the financial condition and near term prospects of the
issuer, including any specific events which may influence the operations of the
issuer such as changes in technology that may impair the earnings potential of
the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to
hold these securities until the anticipated recovery of fair value occurs.
Management does not believe any individual unrealized loss as of September 30,
2004 represents an other-than-temporary impairment.

20  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

At September 2005 and 2004, U.S. Government Agencies include structured note
securities with periodic interest rate adjustments and are callable periodically
by the issuing agency. These structured notes were comprised of step-up bonds
with par values of $31.7 million and $38.7 million respectively, at September
30, 2005 and 2004. The Company has the positive intent and the ability to hold
these securities to maturity. At September 30, 2005, neither a disposal, nor
conditions that could lead to a decision not to hold these securities to
maturity were reasonably foreseen.

4. Investment Securities Available-For-Sale

A comparison of amortized cost and approximate fair value of investment
securities with gross unrealized gains and losses, by maturities, is as follows:

<TABLE>
<CAPTION>
                                                           September 30, 2005
                                                           Gross        Gross
                                           Amortized     Unrealized   Unrealized
                                             Cost          Gain         Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
Equity Securities                        $    906,113   $     9,830   $  (56,723)  $    859,220
Money Market Mutual Funds                   1,976,024             -            -      1,976,024
                                         ------------   -----------   ----------   ------------

Total Investment Securities              $  2,882,137   $     9,830   $  (56,723)  $  2,835,244
                                         ============   ===========   ==========   ============
</TABLE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2005 is as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months                12 Months or Longer              Total            Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
Unrealized Losses
Equity Securities        $    751,220   $         (56,723)   $          -   $               -   $    751,220   $         (56,723)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $    751,220   $         (56,723)   $          -   $               -   $    751,220   $         (56,723)
                         ============   =================    ============   =================   ============   =================
</TABLE>

There were no securities in a loss position greater then twelve months.
Management evaluated the length of time and the extent to which the market value
has been less than cost; the financial condition and near term prospects of the
issuer, including any specific events which may influence the operations of the
issuer such as changes in technology that may impair the earnings potential of
the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to
hold these securities until the anticipated recovery of fair value occurs.
Management does not believe any individual unrealized loss as of September 30,
2005 represents an other-than-temporary impairment.

<TABLE>
<CAPTION>
                                                           September 30, 2004
                                                           Gross        Gross
                                           Amortized     Unrealized   Unrealized
                                             Cost          Gain         Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
Equity Securities                        $    971,110   $    58,377   $        -   $  1,029,487
Money Market Mutual Funds                   6,685,353             -            -      6,685,353
                                         ------------   -----------   ----------   ------------

Total Investment Securities              $  7,656,463   $    58,377   $        -   $  7,714,840
                                         ============   ===========   ==========   ============
</TABLE>

Proceeds from the sale of investments available for sale during the year ended
September 30, 2005 were $5,650,000 resulting in a gross gain of $98,000 and a
net tax gain of $65,000. Proceeds from the sale of investments available for
sale during the year ended September 30, 2004 were $2,601,000 resulting in a
gross gain of $266,000 and a net tax gain of $176,000. Proceeds from the sale of
investments available for sale during the year ended September 30, 2003 were
$422,000 resulting in a gross gain of $71,000 and a net tax gain of $47,000.

5. Mortgage-Backed Securities Held to Maturity

A comparison of amortized cost and approximate fair value of mortgage-backed
securities with gross unrealized gains and losses, by maturities, is as follows:

<TABLE>
<CAPTION>
                                                           September 30, 2005
                                                           Gross         Gross
                                          Amortized      Unrealized   Unrealized    Approximate
                                             Cost          Gains        Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>          <C>           <C>
Collateralized mortgage obligations      $ 17,089,874   $    36,738  $  (278,612)  $ 16,848,000
FHLMC pass-through certificates           118,663,486       128,502   (2,047,988)   116,744,000
FNMA pass-through certificates            121,596,729       161,648   (2,216,377)   119,542,000
GNMA pass-through certificates              6,613,676       246,324                   6,860,000
                                         ------------   -----------  -----------   ------------
Total Mortgage-Backed Securities         $263,963,765   $   573,212  $(4,542,977)  $259,994,000
                                         ============   ===========  ===========   ============
</TABLE>

                                                          2005 ANNUAL REPORT  21

<PAGE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2005 is as follows:

<TABLE>
<CAPTION>
                                 Less than 12 Months               12 Months or Longer             Total             Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
Mortgage-backed
   securities held to
   maturity              $178,406,095   $      (2,751,178)   $ 58,493,074   $      (1,791,799)  $236,899,169   $      (4,542,977)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $178,406,095   $      (2,751,178)   $ 58,493,074   $      (1,791,799)  $236,899,169   $      (4,542,977)
                         ============   =================    ============   =================   ============   =================
</TABLE>

At September 30, 2005, mortgage-related securities in a gross unrealized loss
position for twelve months or longer consisted of 27 securities that at such
date had an aggregate depreciation of 3.0% from the Company's amortized cost
basis. Management evaluated the length of time and the extent to which the
market value has been less than cost; the financial condition and near term
prospects of the issuer, including any specific events which may influence the
operations of the issuer such as changes in technology that may impair the
earnings potential of the investment or the discontinuance of a segment of the
business that may effect the future earnings potential. The Company has the
ability and intent to hold these securities until the anticipated recovery of
fair value occurs. Management does not believe any individual unrealized loss as
of September 30, 2005 represents an other-than-temporary impairment.

<TABLE>
<CAPTION>
                                                          September 30, 2004
                                                           Gross        Gross
                                           Amortized     Unrealized   Unrealized    Approximate
                                             Cost          Gains        Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
Collateralized mortgage obligations      $  8,733,300   $    42,446   $  (71,746)  $  8,704,000
FHLMC pass-through certificates           118,448,507       717,032     (189,539)   118,976,000
FNMA pass-through certificates            123,234,413       831,713     (641,126)   123,425,000
GNMA pass-through certificates             10,875,510       579,490            -     11,455,000
                                         ------------   -----------   ----------   ------------
Total Mortgage-Backed Securities         $261,291,730   $ 2,170,681   $ (902,411)  $262,560,000
                                         ============   ===========   ==========   ============
</TABLE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2004 is as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months                 12 Months or Longer             Total            Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
Mortgage-backed
   securities held to
   maturity              $107,763,021   $        (902,411)   $          -   $               -   $107,763,021   $        (902,411)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $107,763,021   $        (902,411)   $          -   $               -   $107,763,021   $        (902,411)
                         ============   =================    ============   =================   ============   =================
</TABLE>

There were no securities in a loss position greater then twelve months.
Management evaluated the length of time and the extent to which the market value
has been less than cost; the financial condition and near term prospects of the
issuer, including any specific events which may influence the operations of the
issuer such as changes in technology that may impair the earnings potential of
the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to
hold these securities until the anticipated recovery of fair value occurs.
Management does not believe any individual unrealized loss as of September 30,
2004 represents an other-than-temporary impairment.

6. Mortgage-Backed Securities Available-For-Sale

A comparison of amortized cost and approximate fair value of mortgage-backed
securities with gross unrealized gains and losses, by maturities, is as follows:

<TABLE>
<CAPTION>
                                                           September 30, 2005
                                                           Gross         Gross
                                           Amortized     Unrealized   Unrealized    Approximate
                                              Cost         Gains        Losses       Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
FNMA pass-through certificates           $  1,012,154   $    32,933   $        -   $  1,045,087
                                         ------------   -----------   ----------   ------------
Total Mortgage-Backed Securities         $  1,012,154   $    32,933   $        -   $  1,045,087
                                         ============   ===========   ==========   ============
</TABLE>

<TABLE>
<CAPTION>
                                                           September 30, 2004
                                                           Gross         Gross
                                           Amortized     Unrealized   Unrealized    Approximate
                                             Cost          Gains        Losses      Fair Value
-----------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>          <C>
FNMA pass-through certificates           $  3,803,463   $     2,518   $  (10,707)  $  3,795,274
                                         ------------   -----------   ----------   ------------
Total Mortgage-Backed Securities         $  3,803,463   $     2,518   $  (10,707)  $  3,795,274
                                         ============   ===========   ==========   ============
</TABLE>

A summary of investment with unrealized losses, aggregated by category, at
September 30, 2004 is as follows:

<TABLE>
<CAPTION>
                                Less than 12 Months                 12 Months or Longer             Total            Total
                          Fair Value    Unrealized Losses     Fair Value    Unrealized Losses    Fair Value    Unrealized Losses
                         --------------------------------    --------------------------------   --------------------------------
<S>                      <C>            <C>                  <C>            <C>                 <C>            <C>
Mortgage-backed
  securities available
  for sale               $  2,350,371   $         (10,707)   $          -   $               -   $  2,339,664   $         (10,707)
                         ------------   -----------------    ------------   -----------------   ------------   -----------------
Total                    $  2,350,371   $         (10,707)   $          -   $               -   $  2,339,664   $         (10,707)
                         ============   =================    ============   =================   ============   =================
</TABLE>

22  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

There were no securities in a loss position greater then twelve months.
Management evaluated the length of time and the extent to which the market value
has been less than cost; the financial condition and near term prospects of the
issuer, including any specific events which may influence the operations of the
issuer such as changes in technology that may impair the earnings potential of
the investment or the discontinuance of a segment of the business that may
effect the future earnings potential. The Company has the ability and intent to
hold these securities until the anticipated recovery of fair value occurs.
Management does not believe any individual unrealized loss as of September 30,
2004 represents an other-than-temporary impairment.

7. Loans Receivable

Loans receivable consist of the following:

                                                         September 30,
                                                     2005              2004
-------------------------------------------------------------------------------
Residential Mortgages                            $ 270,940,562    $ 256,512,743
Commercial Mortgages                                 2,003,219        2,141,481
Construction                                         7,639,300        7,970,663
Savings Account                                        921,400          811,032
Home Equity                                         59,724,004       46,256,556
Automobile and other                                   771,538          732,062
Line of Credit                                      31,579,680       32,329,416
                                                 -------------    -------------
Total                                              373,579,703      346,753,953

Undisbursed portion of loans in process             (4,933,753)      (5,237,847)
Deferred loan fees                                    (671,426)        (955,052)
Allowance for loan losses                           (1,967,607)      (1,976,849)
                                                 -------------    -------------
Loans Receivable - net                           $ 366,006,917    $ 338,584,205
                                                 =============    =============

The Company originates both adjustable and fixed interest rate loans and
purchases both adjustable and fixed interest rate mortgage-backed securities. At
September 30, 2005, the composition of these loans and mortgage-backed
securities, in thousands, is as follows:

                        Fixed-Rate                     Adjustable-Rate
              Term to Maturity   Book Value   Term to Maturity      Book Value
              -----------------------------------------------------------------
              1 year or less     $   13,237   1 year or less      $      45,047
              1-3 years              18,722   1-3 years                   3,988
              3-5 years              30,234   3-5 years                   2,878
              5-15 years            288,790                                   -
              over 15 years         230,759                                   -
                                 ----------                       -------------
                                 $  581,742                       $      51,913
                                 ==========                       =============

The adjustable rate loans have interest rate adjustment limitations and are
generally indexed to the 1-year U.S. Treasury Securities rate. Future market
factors may affect the correlation of the interest rate adjustment with the
rates the Company pays on the short-term deposits that have been primarily
utilized to fund these loans. At September 30, 2005 and 2004, the Company was
servicing loans for others amounting to approximately $4,730,000 and $2,582,000,
respectively. Servicing loans for others generally consists of collecting
mortgage payments, maintaining escrow accounts, disbursing payments to investors
and foreclosure processing. Loan servicing income is recognized over the life of
the loan. In connection with the loans serviced for others, the Company held
borrowers' escrow balances of approximately $36,000, $37,000, and $19,000 at
September 30, 2005, 2004, and 2003, respectively. Loans to officers and
directors at September 30, 2005 and 2004, were approximately $459,000 and
$455,000, respectively. Additional loans and repayments for the year ended
September 30, 2005, were $70,000 and $127,000, respectively, and for the year
ended September 30, 2004, were approximately $114,000 and $85,000, respectively.
The Company provides loans primarily in its local market area to borrowers that
share similar attributes. This concentration of credit exposes the Company to a
higher degree of risk in this regard.

The following schedule summarizes the changes in the allowance for loan losses:

                                             Year Ended September 30,
                                        2005            2004            2003
-------------------------------------------------------------------------------
Balance, beginning of year          $  1,976,849    $  1,990,672    $ 2,034,832
   Recoveries                             83,707           1,571              -
   Charged off                           (92,949)        (15,394)       (44,160)
                                    ------------    ------------    -----------

Balance, end of year                $  1,967,607    $  1,976,849    $ 1,990,672
                                    ============    ============    ===========

The activity in the recoveries and charge off accounts was primarily the result
of the Company's Bounce protection program. This program extends credit
automatically to our depositors. If the account is not brought current by the
depositor the loan is charged off. If the customer subsequently brings the
account current, a recovery is recognized.

                                                          2005 ANNUAL REPORT  23

<PAGE>

The provision for loan losses charged to expense is based upon past loss
experiences and an evaluation of potential losses in the current loan portfolio,
including the evaluation of impaired loans under SFAS No. 114. A loan is
considered to be impaired when, based upon current information and events, it is
probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan. An insignificant delay or insignificant
shortfall in amount of payments does not necessarily result in the loan being
identified as impaired. For this purpose, delays less than 90 days are
considered to be insignificant. As of September 30, 2005, 100% of the impaired
loan balance was measured for impairment based on the fair value of the loans'
collateral. Impairment losses are included in the provision for loan losses.
SFAS No. 114 does not apply to large groups of smaller balance homogeneous loans
that are collectively evaluated for impairment, except for those loans
restructured under a troubled debt restructuring. Loans collectively evaluated
for impairment include consumer loans and residential real estate loans. At
September 30, 2005 and 2004, the Company's impaired loans consisted of smaller
balance residential mortgage loans collectively evaluated for impairment.
Non-performing loans (which include loans in excess of 90 days delinquent) at
September 30, 2005 and 2004, amounted to approximately $260,000 and $291,000,
respectively. The non-performing loans are still accruing interest. The loans
were collectively evaluated for impairment.

8. Accrued Interest Receivable

Accrued interest receivable consists of the following:

                                                            September 30,
                                                          2005         2004
-------------------------------------------------------------------------------
Investments and interest-bearing deposits             $ 1,022,126   $   763,024
Mortgage-backed securities                              1,036,830     1,020,426
Loans receivable                                        1,373,098     1,285,588
                                                      -----------   -----------
Total                                                 $ 3,432,054   $ 3,069,038
                                                      ===========   ===========
9. Office Properties and Equipment

Office properties and equipment are summarized by major classifications as
follows:

                                                            September 30,
                                                         2005          2004
-------------------------------------------------------------------------------
Land                                                  $   184,788   $   184,788
Buildings                                               6,383,356     6,304,262
Furniture, fixtures and equipment                       3,433,247     3,102,835
Automobiles                                                24,896        24,896
                                                      -----------   -----------
Total                                                  10,026,287     9,616,781
Less accumulated depreciation                          (4,196,593)   (3,867,806)
                                                      -----------   -----------
Net                                                   $ 5,829,694   $ 5,748,975
                                                      ===========   ===========

Depreciation expense for the years ended September 30, 2005, 2004, and 2003
amounted to approximately $436,000, $484,000, and $535,000, respectively.

10. Deposits

Deposits are summarized as follows:

                                               September 30,
                                      2005                       2004
                                            Weighted                   Weighted
                                            Interest                   Interest
                                Amount        Rate         Amount        Rate
-------------------------------------------------------------------------------
NOW accounts                $  18,282,489     0.25%    $  19,838,879     0.15%
Non-interest
   Checking accounts            9,618,764     0.00%        8,335,991     0.00%
Interest Checking
   accounts                     9,102,649     2.47%        3,431,273     0.75%
Money Market
   Deposit accounts            76,581,019     1.32%      100,448,760     1.03%
Passbook and Club
   accounts                     3,806,599     0.78%        4,047,204     0.67%
Certificate accounts          301,588,135     3.52%      269,128,532     3.09%
                            -------------     ----     -------------     ----

Total Deposits              $ 418,979,655     2.85%    $ 405,230,639     2.33%
                            =============     ====     =============     ====

At September 30, 2005, the amounts of scheduled maturities of certificate
accounts were as follows:

For the year ended September 30:                2006   $ 101,561,820
                                                2007     106,179,890
                                                2008      60,900,378
                                                2009      30,955,488
                                                2010       1,990,559
                                                       -------------
                                               Total   $ 301,588,135
                                                       =============

24  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

The aggregate amount of certificate accounts in denominations of $100,000 or
more at September 30, 2005 and 2004 amounted to approximately $39.7 million and
$28.1 million, respectively. Deposits in excess of $100,000 are not federally
insured.

The following table sets forth the maturity of certificate deposits in excess of
$100,000 as of September 30, 2005.

                                                          Amount
                                                      (In thousands)
                                     1 to 3 months    $        2,237
                                     4 to 6 months             4,907
                                     7 to 12 months            6,306
                                     Thereafter               26,257
                                                      --------------
                                     Total            $       39,707
                                                      ==============

Interest expense on savings deposits is composed of the following:

                                                   September 30,
                                        2005            2004            2003
-------------------------------------------------------------------------------
NOW accounts and MMDA accounts      $  1,245,110    $  1,093,438    $ 1,380,039
Passbook and Club accounts                26,325          22,734         36,472
Certificate accounts                   9,065,269       7,984,282      9,207,886
                                    ------------    ------------    -----------

Total                               $ 10,336,704    $  9,100,454    $10,624,397
                                    ============    ============    ===========

11. Advances from Federal Home Loan Bank

Advances from the Federal Home Loan Bank consist of the following:

                                               September 30,
                                      2005                       2004
                                            Weighted                   Weighted
                                            Interest                   Interest
Maturing Period                 Amount        Rate         Amount        Rate
-------------------------------------------------------------------------------
1 to 12 months              $  36,043,911     3.73%    $  40,428,147     3.40%
13 to 24 months                25,446,061     3.66%        9,545,900     3.55%
25 to 36 months                69,114,248     4.83%       28,476,845     3.59%
37 to 48 months                31,484,966     3.89%       54,582,988     5.08%
49 to 60 months                 9,302,331     3.97%       34,950,243     3.77%
61 to 72 months                40,208,732     5.35%       15,000,000     6.08%
73 to 84 months                60,668,239     4.47%       25,968,870     4.89%
85 to 120 months               25,000,000     3.80%       57,000,000     4.43%
                            -------------     ----     -------------     ----

Total                       $ 297,268,488     4.38%    $ 265,952,993     4.34%
                            =============     ====     =============     ====

The advances are collateralized by Federal Home Loan Bank stock and
substantially all first mortgage loans.

The Company has a line of credit of which $21.0 million and $19.1 million of the
available $40.0 million was used at September 30, 2005 and 2004, respectively.
The average balance outstanding on the line of credit for September 30, 2005 and
2004 was $29.4 million and $20.3 million, respectively. The maximum amount
outstanding at any time for 2005 and 2004 was $36.1 million and $25.6 million,
respectively. The weighted average interest rate during 2005 and 2004 was 2.98%
and 1.38%, respectively.

                                                          2005 ANNUAL REPORT  25

<PAGE>

12. Income Taxes

The Company computes its reserve for bad debts under the specific charge-off
method. The bad debt deduction allowable under this method is available to large
banks with assets greater than $500 million. Generally, this method allows the
Company to deduct an annual addition to the reserve for bad debts equal to its
net charge-offs. Retained earnings at September 30, 2005 and 2004 includes
approximately $1,325,000 representing bad debt deductions for which no deferred
income taxes have been provided.

The expense for income taxes differs from that computed at the statutory federal
corporate tax rate as follows:

<TABLE>
<CAPTION>
                                                         Year Ended September 30,
                                        2005                       2004                       2003
                                            Percentage                 Percentage                 Percentage
                                            of Pretax                  of Pretax                  of Pretax
                                 Amount       Income        Amount       Income       Amount        Income
------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>          <C>           <C>          <C>           <C>
At statutory rate             $ 2,276,724      34.0%     $ 2,184,643      34.0%     $ 2,063,728      34.0%
Adjustments resulting from:
Tax-exempt income                (595,428)     (8.9)        (572,457)     (8.9)        (596,865)     (9.8)
State tax-net of federal
   tax benefit                     69,588       1.0           29,057       0.5           27,654       0.5
Other                             (58,357)     (0.8)         (37,419)     (0.6)         (18,632)     (0.3)
                              -----------      ----      -----------      ----      -----------      ----
Expense per consolidated
   statements of income       $ 1,692,527      25.3%     $ 1,603,824      25.0%     $ 1,475,885      24.4%
                              ===========      ====      ===========      ====      ===========      ====
</TABLE>

Income tax expense is summarized as follows:

                                   Year Ended September 30,
                               2005          2004          2003
-------------------------------------------------------------------
Current                    $ 1,624,759   $ 1,628,569   $ 1,693,594
Deferred                        67,768       (24,745)     (217,709)
                           -----------   -----------   -----------
Total Income Tax Expense   $ 1,692,527   $ 1,603,824   $ 1,475,885
                           ===========   ===========   ===========

Items that gave rise to significant portions of the deferred tax accounts are as
follows:

                                                  September 30,
                                                 2005        2004
-------------------------------------------------------------------
Deferred Tax Assets:
   Deferred Loan Fees                         $  87,919   $  87,330
   Allowance for Loan Losses                    668,986     672,129
   Unrealized loss on investment securities       4,746           -
   Other                                          9,846           -
                                              ---------   ---------

      Sub-Total                                 771,497     759,459
                                              ---------   ---------

Deferred Tax Liabilities:
   Unrealized gain on investment securities           -     (17,064)
   Property                                    (431,910)   (352,645)
   Other                                              -      (4,205)
                                              ---------   ---------

      Sub-Total                                (431,910)   (373,914)
                                              ---------   ---------

      Total                                   $ 339,587   $ 385,545
                                              =========   =========

Income taxes paid were approximately $1,528,000, $1,533,000, and $1,461,000 for
the years ended September 30, 2005, 2004, and 2003, respectively.

26  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

13. Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by
the federal Banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary - actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors. Quantitative measures established by regulation
to ensure capital adequacy require the Bank to maintain minimum amounts and
ratios (set forth in the table below) of total Tier 1 capital (as defined in the
regulations) to risk weighted assets (as defined), and of Tier 1 capital (as
defined) to assets (as defined). Management believes, as of September 30, 2005,
that the Bank meets all capital adequacy requirements to which it is subject. As
of September 30, 2005, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based,
and Tier 1 leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.

The Bank's actual capital amounts and ratios are also presented in the table.

<TABLE>
<CAPTION>
                                                                                         To Be Considered Well
                                                                                           Capitalized Under
                                                                       For Capital         Prompt Corrective
                                                  Actual            Adequacy Purposes      Action Provisions
                                              Amount      Ratio      Amount      Ratio      Amount      Ratio
--------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>     <C>            <C>     <C>            <C>
As of September 30, 2005
Tier 1 Capital (to assets)                 $ 47,524,213    6.26%  $ 30,376,680    4.00%  $ 37,970,850     5.00%
Tier 1 Capital (to risk weighted assets)     47,524,213   13.31%    14,283,160    4.00%    21,424,740     6.00%
Total Capital (to risk weighted assets)      49,491,820   13.86%    28,566,320    8.00%    35,707,900    10.00%

As of September 30, 2004
Tier 1 Capital (to assets)                 $ 44,124,545    6.20%  $ 28,480,960    4.00%  $ 35,601,200     5.00%
Tier 1 Capital (to risk weighted assets)     44,124,545   13.69%    12,890,920    4.00%    19,336,380     6.00%
Total Capital (to risk weighted assets)      46,127,545   14.31%    25,781,840    8.00%    32,227,300    10.00%
</TABLE>

14. Retirement Savings Plan

The Company has an employee stock ownership pension plan and a qualified 401 (k)
retirement savings plan covering all full-time employees meeting certain
eligibility requirements. Contributions for both plans are at the discretion of
the Company's Board of Directors. Contributions expense related to the plans was
$260,528, $241,185 and $201,793 for the years ended September 30, 2005, 2004,
and 2003, respectively.

15. Stock Options

In 1987, the Company established a stock compensation program for executive
officers and other selected full-time employees and directors of the Company.
The 1987 program consists of four plans that are available for grant: Plan I -
incentive stock options; Plan II - compensatory stock options; Plan III - stock
appreciation rights; and Plan IV - performance share awards.

In January 1996, the stockholders approved the 1995 Stock Option Plan. This plan
consists of two parts: Plan I - incentive stock options and Plan II -
compensatory stock options.

In January 2001, the stockholders approved the 2000 Stock Option Plan. This plan
consists of two parts: Plan I - incentive stock options and Plan II -
compensatory stock options.

A summary of transactions under this plan follows:

<TABLE>
<CAPTION>
                                                      Year Ended September 30,
                                          2005                  2004                  2003
                                             Weighted              Weighted              Weighted
                                             Average               Average               Average
                                   Options    Price     Options     Price     Options     Price
-------------------------------------------------------------------------------------------------
<S>                                <C>       <C>        <C>        <C>        <C>        <C>
Outstanding, beginning of year     201,982   $  10.96    209,802   $   8.99    213,680   $   8.14
   Exercised                       (69,133)      9.16    (42,320)      6.73    (27,212)      7.12
   Canceled                         (2,917)     13.50     (2,500)     11.17    (13,833)     10.50
   Granted                          39,100      17.78     37,000      17.16     37,167      13.13
                                   -------   --------   --------   --------   --------   --------

   Outstanding, end of year        169,032   $  13.23    201,982   $  10.96    209,802   $   8.99
                                   =======   ========   ========   ========   ========   ========

Options exercisable, end of year    98,267   $  11.98    130,315   $   9.41    123,968   $   7.52
                                   =======   ========   ========   ========   ========   ========
</TABLE>

                                                          2005 ANNUAL REPORT  27

<PAGE>

A summary of the exercise price range at September 30, 2005 is as follows:

                              Exercise           Weighted       Weighted Average
            Number of          Price        Average Remaining    Exercise Price
          Option Shares        Range         Contractual Life       per Share
          -------------   ---------------   -----------------   ----------------
                 66,682   $  5.81 - 11.48       4.87 years      $           9.13
                102,350   $ 12.06 - 17.79       8.08 years                 15.90
          -------------   ---------------   -----------------   ----------------
                169,032   $  5.81 - 17.79       6.81 years      $          13.23
          =============   ===============   =================   ================

The Company also has established an Employee Stock Purchase Plan (the "Purchase
Plan") whereby employees may elect to make contributions to the Purchase Plan in
an aggregate amount not less than 2% no more than 10% of such employee's total
compensation. These contributions would then be used to purchase stock during an
offering period determined by the Company's Salary and Benefits Committee. The
purchase price of the stock would be the lesser of 85% of the market price on
the first day or the last day of the offering period. The SFAS No. 123 impact of
the Purchase Plan on pro forma net income and income per share was deemed to be
immaterial. During 2005 and 2004, 3,729 and 6,927 shares were issued to
employees, respectively. At September 30, 2005 and 2004, there were 31,081 and
36,898 shares available for future purchase. The Company suspended participation
in the Purchase Plan in March 2005 and the plan is not currently active.

16. Commitments

At September 30, 2005, the Company had approximately $10.8 million in
outstanding commitments to originate mortgage loans, of which $8.8 million were
at fixed rates ranging from 5.25% to 6.50% and adjustable rates of $2.0 million
ranging from 4.75 to 5.38%. The unfunded line of credit commitments at September
30, 2005 were $39.9 million. The amounts of undisbursed portions of loans in
process at September 30, 2005 were $4.9 million. At September 30, 2005 the
Company had exposures to limited recourse arrangements with respect to the
Company's sale of whole loans. At September 30, 2005, the exposure, which
represents a portion of credit risk associated with the sold interests, amounted
to $83,000. The exposure is for the life of the related loans and payable, on
our proportional share, as losses are incurred. Also, at September 30, 2005, the
Company had no outstanding futures or options positions.

The Company leases land for two of its branch offices. Minimum rental
commitments at September 30, 2005, are summarized below:

                                     Fiscal        Rental
                                      Year         Amount
                                     ------      ---------
                                      2006          94,174
                                      2007          94,174
                                      2008          98,407
                                      2009         104,332
                                      2010         106,978
                                                 ---------
                                      Total      $ 498,065
                                                 =========
17. Legal Contingencies

Various legal claims also arise from time to time in the normal course of
business which, in the opinion of management, will have no material effect on
the Company's consolidated financial statements.

18. Conversion To A Stock Savings Bank

At the time of conversion, in 1987, the Bank established a liquidation account
in an amount equal to the Bank's net worth as reflected in the latest
consolidated statement of financial condition of the Bank contained in the
offering circular utilized in the conversion. The function of the liquidation
account is to establish a priority on liquidation and, except with respect to
the payment of cash dividends on, or the re-purchase of, any of the common stock
by the Bank, the existence of the liquidation account will not operate to
restrict the use or application of any of the net worth accounts of the Bank. In
the event of a complete liquidation of the Bank (and only in such event), each
eligible account holder will be entitled to receive a pro rata distribution from
the liquidation account, based on such holder's proportionate amount of the
total current adjusted balances from deposit accounts then held by all eligible
account holders, before any liquidation distribution may be made with respect to
stockholders. The liquidation account was approximately $2,300,000 at September
30, 2005. Furthermore, the Company may not repurchase any of its stock if the
effect thereof would cause the Company's net worth to be reduced below (i) the
amount required for the liquidation account or (ii) the regulatory capital
requirements.

28  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

19. Fair Market Value of Financial Instruments

The estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret the market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

<TABLE>
<CAPTION>
                                                                                        September 30,
                                                                            2005                         2004
                                                                  Carrying    Estimated Fair    Carrying    Estimated Fair
                                                                   Amount         Value          Amount         Value
--------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>           <C>             <C>           <C>
Assets:
   Cash and cash equivalents                                    $  7,934,980  $    7,934,980  $  4,718,784  $    4,718,784
   Investment securities held to maturity                         87,364,445      88,404,000    68,161,572      69,439,000
   Investment securities available-for-sale at fair value          2,835,244       2,835,244     7,714,840       7,714,840
   Mortgage-backed securities held to maturity                   263,963,765     259,994,000   261,291,730     262,560,000
   Mortgage-backed securities available-for-sale at fair value     1,045,087       1,045,087     3,795,274       3,795,274
   Loans receivable - net                                        366,006,917     363,642,590   338,584,205     337,999,592
   Federal Home Loan Bank Stock                                   16,035,900      16,035,900    15,184,100      15,184,100

Liabilities:
   Passbook, Club and NOW accounts                                40,810,501      40,810,501    35,653,347      35,653,347
   Money Market Demand accounts                                   76,581,019      76,581,019   100,448,760     100,448,760
   Certificate accounts                                          301,588,135     299,156,071   269,128,532     259,853,072
   Advances from Federal Home Loan Bank                          297,268,488     298,554,899   265,952,993     256,177,581
</TABLE>

The carrying amounts of cash and short-term instruments approximate fair values.
The carrying amounts of interest-bearing deposits maturing within ninety days
approximate their fair values. The fair value of investment securities and
mortgage-backed securities is based on quoted market prices, dealer quotes, and
prices obtained from independent pricing services. For variable-rate loans that
reprice frequently and with no significant change in credit risk, fair values
are based on carrying values. Fair values for certain mortgage loans (e.g.,
one-to-four family residential) and other consumer loans are based on quoted
market prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics. Fair values for
non-performing loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable. Although Federal Home Loan Bank
Stock (FHLB) is an equity interest in FHLB, it is carried at cost because it
does not have a readily determinable fair value as its ownership is restricted
and it lacks a market. The estimated fair value approximates the carrying
amount.

The fair value of NOW and money market deposits and savings accounts is the
amount reported in the consolidated financial statements. The fair value of
savings certificates and advances from Federal Home Loan Bank are based on a
present value estimate using rates currently offered for instruments of similar
remaining maturity. Fair values for off-balance sheet lending commitments are
based on fees currently charged to enter similar agreements.

The fair value estimates presented herein are based on pertinent information
available to management as of September 30, 2005 and 2004. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date and, therefore, current estimates
of fair value may differ significantly from the amounts presented herein.

20. Parent Company Condensed Financial Information

Condensed financial statements of Harleysville Savings Financial Corporation
are as follows:

Condensed Statements of Financial Condition

                                                             September 30,
                                                          2005          2004
--------------------------------------------------------------------------------
Assets
   Cash                                               $     19,441  $    126,447
   Investment in subsidiary                             47,603,551    44,230,233
                                                      ------------  ------------
Total Assets                                          $ 47,622,992  $ 44,356,680
                                                      ============  ============

Liabilities & Stockholders' Equity
Liabilities
   Other Liabilities                                  $     47,176  $     43,768
   Stockholders' equity                                 47,575,816    44,312,912
                                                      ------------  ------------
Total liabilities & stockholders' equity              $ 47,622,992  $ 44,356,680
                                                      ============  ============

                                                          2005 ANNUAL REPORT  29

<PAGE>

Condensed Statement of Income

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                              2005          2004          2003
                                                          ------------  ------------  ------------
<S>                                                       <C>           <C>           <C>
Income:
Equity in undistributed income of subsidiary              $  5,375,655  $  5,150,997  $  4,832,221
Other expense                                                  371,935       300,900       238,318
                                                          ------------  ------------  ------------
Net income                                                $  5,003,720  $  4,850,097  $  4,593,903
                                                          ============  ============  ============
</TABLE>

Condensed Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                              2005          2004          2003
                                                          ------------  ------------  ------------
<S>                                                       <C>           <C>           <C>
Net income                                                $  5,003,720  $  4,850,097  $  4,593,903
Increase (decrease) in other Liabilities                         3,408         7,506        (3,916)
Undistributed income of Harleysville Savings Bank           (5,375,655)   (5,150,997)   (4,832,221)
                                                          ------------  ------------  ------------
Net cash used by operating activities                         (368,527)     (293,394)     (242,234)
                                                          ------------  ------------  ------------

Investing activities:
   Dividends received from subsidiaries                      1,960,000     1,696,000     1,905,100
                                                          ------------  ------------  ------------
Net cash provided by investing activities                    1,960,000     1,696,000     1,905,100
                                                          ------------  ------------  ------------

Financing activities:
   Acquisition of treasury stock                              (328,280)     (251,580)     (808,841)
   Use of treasury stock                                       571,223       707,826       694,397
   Proceeds from issuance of common stock                      310,914             -             -
   Dividends paid                                           (2,252,336)   (1,826,303)   (1,497,528)
                                                          ------------  ------------  ------------

Net cash used in financing activities                       (1,698,479)   (1,370,057)   (1,611,972)
                                                          ------------  ------------  ------------

Net (decrease) increase in cash and cash equivalents          (107,006)       32,549        50,894
Cash and cash equivalents at the beginning of the period       126,447        93,898        43,004
                                                          ------------  ------------  ------------
Cash and cash equivalents at the end of the period        $     19,441  $    126,447  $     93,898
                                                          ============  ============  ============
</TABLE>

21. Quarterly Financial Data (Unaudited)

Unaudited quarterly financial data for the years ended September 30, 2005 and
2004 is as follows:

<TABLE>
<CAPTION>
                                                 2005                                  2004
                                  ----------------------------------    ----------------------------------
                                    1st      2nd      3rd      4th        1st      2nd      3rd      4th
                                    QTR      QTR      QTR      QTR        QTR      QTR      QTR      QTR
                                  ----------------------------------    ----------------------------------
<S>                               <C>      <C>      <C>      <C>        <C>      <C>      <C>      <C>
Interest Income                   $ 8,586  $ 8,848  $ 9,167  $ 9,281    $ 8,064  $ 8,105  $ 8,087  $ 8,349
Interest Expense                    5,351    5,503    5,856    6,037      5,171    5,005    5,047    5,169
                                  ----------------------------------    ----------------------------------
Net Interest Income                 3,235    3,345    3,311    3,244      2,893    3,100    3,040    3,180
Provision for loan loss               (40)
                                  ----------------------------------    ----------------------------------
Net interest income after
   provision for loan losses        3,235    3,345    3,311    3,284      2,893    3,100    3,040    3,180
Non-interest income                   407      341      379      359        452      434      322      430
Non-interest expense                1,959    2,012    2,017    1,976      1,746    1,888    1,891    1,873
                                  ----------------------------------    ----------------------------------
Income before income taxes          1,683    1,674    1,673    1,667      1,599    1,646    1,471    1,737
Income tax expense                    428      432      429      405        391      411      350      452
                                  ----------------------------------    ----------------------------------
Net income                        $ 1,255  $ 1,242  $ 1,244  $ 1,262    $ 1,208  $ 1,235  $ 1,121  $ 1,285
                                  ==================================    ==================================
   Per Common Share:
    Earnings per share - basic    $  0.33  $  0.32  $  0.32  $  0.32    $  0.32  $  0.32  $  0.29  $  0.34
    Earnings per share - diluted  $  0.32  $  0.32  $  0.32  $  0.32    $  0.31  $  0.32  $  0.29  $  0.33
</TABLE>

Earnings per share is computed independently for each period presented.
Consequently, the sum of the quarters may not equal the total earnings per share
for the year.

The number of shares and per share information for all periods presented has
been restated to reflect the five for three stock split.

30  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>

Market and Corporate Information

Market Information

Harleysville Savings Financial Corporation's Common Stock is traded in the
Over-the-Counter Market and quoted on the NASDAQ National Market System under
the symbol "HARL". The Common Stock was issued at an adjusted price of $1.45 per
share in connection with the Company's conversion from mutual to stock form and
the Common Stock commenced trading on the NASDAQ National Market System on
September 3, 1987. Prices shown below reflect the prices reported by the NASDAQ
systems. The closing price on September 30, 2005, was $17.15 per share. There
were 3,900,881 shares outstanding as of September 30, 2005, held by
approximately 1,000 stockholders.

                                                                 Cash Dividends
For The Quarter Ended        High         Low         Close         Declared
-------------------------------------------------------------------------------

September 30, 2003         $ 16.55      $ 15.00      $ 15.83         $ 0.11
December 31, 2003            18.15        15.40        17.94           0.12
March 31, 2004               20.70        16.89        18.00           0.12
June 30, 2004                20.10        15.69        16.42           0.12
September 30, 2004           18.00        15.45        17.25           0.12
December 31, 2004            18.12        16.35        18.06           0.13
March 31, 2005               26.00        16.50        18.75           0.15
June 30, 2005                20.00        16.00        17.70           0.15
September 30, 2005           18.25        17.00        17.15           0.15

-------------------------------------------------------------------------------

Corporate Information

Auditors
Deloitte & Touche LLP
1700 Market Street
Philadelphia, PA 19103-3984
(215) 246-2300

Annual Meeting
Indian Valley Country Club
Telford, PA 18969
Wednesday, January 25, 2006
9:30 A.M.

Market Makers
Boenning & Scattergood, Inc.
Midwest Res. First Tennessee
Ryan Beck & Co., Inc.

Special Counsel
Elias, Matz, Tiernan & Herrick LLP.
734 15th Street, N.W.
Washington, DC 20005
(202) 347-0300

Dividend Reinvestment Plan
The Company has a Dividend Reinvestment and Stock
Purchase Plan. Interested stockholders can
obtain more information regarding the Plan by
contacting:

Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
(800) 525-7686, extension 2542

General Counsel
James J. Garrity
Wisler, Pearlstine, Talone, Craig, Garrity & Potash
Office Court at Walton Point
484 Norristown Road
Blue Bell, PA 19422
(610) 825-8400

Investor Information
Investors, Analysts and others seeking
financial information may contact:
Chief Financial Officer
Harleysville Savings Financial Corporation
271 Main Street
Harleysville, PA 19438
(215) 256-8828

Transfer Agent
Direct questions regarding dividend
checks, address and name changes or
lost certificates to:

Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
web site: www.rtco.com
email: invrel@rtco.com

Upon request, the Company's Annual Report or form 10-K for the year ended
September 30, 2005, and the exhibits thereto required to be filed with the
Securities and Exchange Commission under the Securities Act of 1934 will be
furnished without charge to any stockholder.

                                                          2005 ANNUAL REPORT  31

<PAGE>

BOARD OF DIRECTORS

   Sanford L. Alderfer
   President
   Sanford Alderfer
   Auction Co., Inc.
   Hatfield, PA

   Ronald B. Geib
   President/COO
   Harleysville Savings
   Financial Corporation
   Harleysville, PA

   James J. Rittenhouse, CPA
   Shareholder in the firm
   Detweiler, Hershey &
   Associates, P.C.
   Souderton, PA

   Philip A. Clemens
   Chairman/CEO
   Clemens Family Corporation
   Hatfield, PA

   Charlotte A. Hunsberger, Esq.
   Partner
   Bricker, Landis & Hunsberger
   Souderton, PA

   Mark R. Cummins, CPA, CFA
   Executive Vice President,
   CIO, and Treasurer
   Harleysville Insurance Companies
   Harleysville, PA

   George W. Meschter
   President
   Meschter Insurance Group
   Collegeville, PA

   David J. Friesen, CPA
   Director of Development
   Penn View Christian School
   Souderton, PA

   Edward J. Molnar
   Chairman/CEO
   Harleysville Savings
   Financial Corporation
   Harleysville, PA

OFFICERS

   Edward J. Molnar
   Chairman and
   Chief Executive Officer

   Ronald B. Geib
   President and
   Chief Operating Officer

   Marian Bickerstaff
   Senior Vice President
   Chief Lending Officer
   and Corporate Secretary

   Brendan J. McGill
   Senior Vice President,
   Chief Financial Officer
   and Treasurer

MANAGERS

   Helena C. Baron
   Assistant Vice President
   and Lansdale
   Office Manager

   Adrian D. Gordon
   Vice President
   and Information
   Systems Manager

   Denise L. Monaghan
   Assistant Vice President
   and Loan Administration
   Manager

   Sherry C. Williamson
   Assistant Vice President
   and Upper Providence
   Office Manager

   Michelle A. Beck
   Assistant Vice President
   and Security Officer

   Dawn L. Hufnagle
   Assistant Vice President
   and Sumneytown
   Office Manager

   Paul F. Pendrak
   Assistant Vice President
   and Hatfield
   Office Manager

   Diane M. Carlson
   Assistant Vice President and
   Human Resource Manager

   Kim A. Licata
   Assistant Vice President
   and Loan Customer
   Service Manager

   Anne J. Rostosky
   Assistant Vice President
   and Harleysville
   Office Manager

   Kathleen Clairmont
   Assistant Vice President
   and West Norriton
   Office Manager

   M. Shane Michalak
   Vice President, Controller
   and Accounting
   Department Manager

   Sheri Strouse
   Vice President and
   Branch Administrator

32  HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

<PAGE>



MANAGERS
<TABLE>
<CAPTION>

                         [PHOTO]                                                           [PHOTO]
<S>                         <C>                                 <C>                              <C>

    MICHELLE A. BECK               ADRIAN D. GORDON                  DENISE L. MONAGHAN                   KIM A. LICATA
Assistant Vice President    Vice President and Information        Assistant Vice President        Assistant Vice President and
   and Security Officer             System Manager              and Hatfield Office Manager      Loan Customer Service Manager
</TABLE>


[PHOTO]                     KATHLEEN CLAIRMONT
                            Assistant Vice President and
                            West Norriton Office Manager

                            SHERI STROUSE
                            Vice President and Branch Administrator

                            SHERRY L. WILLIAMSON
                            Assistant Vice President
                            and Upper Providence Office Manager

                            ANNE J. ROSTOSKY
                            Assistant Vice President and
                            and Harleysville Office Manager


[PHOTO]                     PAUL F. PENDRAK
                            Assistant Vice President
                            and Hatfield Office Manager

                            DAWN L. HUFNAGLE
                            Assistant Vice President
                            and Sumneytown Office Manager

                            HELENA C. BARON
                            Assistant Vice President
                            and Lansdale Office Manager

                            DIANE M. CARLSON
                            Assistant Vice President
                            and Human Resource Manager















<PAGE>


                        M I S S I O N  S T A T E M E N T

Harleysville Savings Financial Corporation's focus is to be your trusted
financial partner by providing quality financial products and services; by
providing a rewarding place for our employees to work; by being a responsible
corporate citizen of the community; and by achieving a fair and reasonable
return for our stockholders.

<TABLE>
<S>                       <C>                      <C>                        <C>                        <C>
HARLEYSVILLE OFFICE       HATFIELD OFFICE          LANSDALE OFFICE            SUMNEYTOWN OFFICE          WEST NORRITON OFFICE
271 Main Street           1550 Cowpath Road        640 East Main Street       3090 Main Street           2301 West Main Street
Harleysville, PA 19438    Hatfield, PA 19440       Lansdale, PA 19446         Sumneytown, PA 18084       Norristown, PA 19403
(215) 256-8828            (215) 362-0750           (215) 855-1011             (215) 234-8053             (610) 631-0887
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