8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report - July 13, 2004

HARLEYSVILLE NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

___________________

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

483 Main Street

Harleysville, Pennsylvania

(Address of principal executive office and zip code)

(215) 256-8851

(Registrant’s telephone number, including area code)

___________________

Page 1

Item 7.  Financial Statements and Exhibits.

(c) Exhibits

99.1 Press Release, dated July 13, 2004

Item 12.  Results of Operations and Financial Condition.

On July 13, 2004, Harleysville National Corporation issued a press release announcing second quarter 2004 earnings. This press release is furnished in this report, pursuant to Item 7 hereof, as Exhibit 99.1.

Page 2

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

       HARLEYSVILLE NATIONAL CORPORATION

        /s/ Michael B. High

       Michael B. High, EVP and Chief Financial Officer

Dated: July 13, 2004

Page 3

EXHIBIT INDEX

	Page
Exhibit 99.1   Press Release dated July 13, 2004, of Harleysville National Corporation	4
(furnished pursuant to Item 7 hereof).

EX-99.1

 

FOR IMMEDIATE RELEASE

CONTACT: Walter E. Daller Jr., President and CEO

PHONE:215-256-8851 ext. 2300

SECOND QUARTER EARNINGS UP 3.1%

AT HARLEYSVILLE NATIONAL CORPORATION

HARLEYSVILLE, PA (July 13, 2004) - Harleysville National Corporation (HNC) (Nasdaq:HNBC), today announced second quarter 2004 earnings of $9.4 million, a 3.1% increase over second quarter 2003 earnings of $9.1 million. Earnings for the six months ended June 30, 2004, were $18.3 million, a 4.1% increase over earnings of $17.6 million for the six months ended June 30, 2003.

 The current quarter results include the impact of operations from the acquisition of Millennium Bank effective April 30, 2004, and the related issuance by Harleysville National Corporation of 946,000 common shares. The Company’s consolidated total assets were $2.87 billion at June 30, 2004, an increase of 19.1% or $459.8 million above the June 30, 2003, level of $2.41 billion. Of this increase, 9.6% or $230.1 million was attributable to the acquisition of Millennium Bank.

 For the quarter ending June 30, 2004, diluted earnings per share of $.37 were equal to the $.37 earned during the second quarter of 2003, and basic earnings per share at $.38 were equal to $.38 in the second quarter of 2003.  For the six months ended June 30, 2004, diluted earnings per share of $.73 were 2.8% higher than the $.71 earned during the six months of 2003, and basic earnings per share of $.75 were up 1.4% from $.74 during the six months of 2003.

 “We are pleased to announce yet another increase in earnings. We are also happy to report that our acquisition of Millennium Bank and its wholly-owned subsidiary, Cumberland Advisors, Inc., was successfully completed this quarter,” said Walter E. Daller, Jr., Chairman, President and CEO of HNC.

 Net interest income on a fully tax-equivalent basis in the second quarter of 2004 increased $1.3 million or 5.9% over the same period in 2003 and increased $2.0 million or 4.6% from the six months ended June 30, 2003. This increase was primarily the result of the rise in higher earning asset volumes. The net interest margin for the second quarter of 2004 was 3.62%, compared to 3.73% for the first quarter of 2004 and 3.82% for the second quarter of 2003. Average earning assets increased $287.5 million or 12.5% during the second quarter of 2004 versus the comparable period in 2003. The lower net interest margin is primarily due to the continuing decline in loan yields. During this period, average loans increased $230.1 million or 17.1%. Loans totaling $157.1 million were acquired from Millennium Bank.

 The company also experienced an improvement in loan quality during the second quarter of 2004, compared to the second and fourth quarters of 2003. Nonperforming assets decreased in the second quarter of 2004 by $2.0 million and $889,000 from the second and fourth quarters of 2003, respectively. The ratio of the allowance for loan losses to nonperforming loans (nonaccruing loans and loans 90 days or more past due) was 430.8% at June 30, 2004, compared to 371.7% at December 31, 2003, and 301.0% at June 30, 2003.  Nonperforming assets, including nonaccrual loans, net assets in foreclosure and loans 90 days or more past due was .16% of total assets at June 30, 2004, an improvement from .22% at December 31, 2003, and .27% at June 30, 2003. The lower provision for loan losses for the three and six months ended June 30, 2004, compared to the same periods in 2003, is reflective of the improved loan quality.

 Core deposits increased 16.4% or $198.5 million, to $1.41 billion at June 30, 2004, from $1.21 billion at June 30, 2003. Of this increase, 4.9% or $59.8 million was due to the acquisition of Millennium Bank. Total deposits increased $219.9 million for the same period of which $151.2 million was due to the acquisition of Millennium Bank.  Borrowings increased $216.2 million or 84.9% primarily due to loan growth and the Millennium Bank acquisition.

 Trust and investment advisory services income for the quarter ended June 30, 2004 increased $598,000 or 61.1% from the same period a year ago. Of this amount, $442,000 or 45.2% was attributable to the acquisition of Millennium Bank. Total non-interest income of $6.3 million for the current quarter reflects a decrease of $3.7 million from the comparable period in 2003, primarily due to a $4.1 million decrease in the gain on the sale of investment securities during the second quarter of 2003.  For the first six months of 2004, total non-interest income of $12.1 million decreased $5.1 million, or 29.7% from $17.2 million in the comparable period last year.  This was mainly due to a decrease of $4.5 million in the gain on sale of investment securities and a $1.1 million decrease in life insurance income, partially offset by an increase of $831,000 in trust and investment advisory income.

 Noninterest expense of $14.6 million decreased $2.5 million or 14.8% from $17.1 million in the second quarter of 2003.  The reduction in noninterest expense was primarily due to a $2.6 million decrease in prepayment fees related to the early retirement of Federal Home Loan Bank borrowings during the second quarter of 2003 along with reduced off-lease vehicle residual reserve expense amounting to $800,000 in the second quarter of 2003, compared to the second quarter of 2004. The company reviews and adjusts, if necessary, the off-lease vehicle residual reserve on a quarterly basis.  Net of these reductions, noninterest expenses increased $900,000 or 6.3% in the second quarter of 2004, compared to the second quarter of 2003.  Contributing to this growth were increases in salaries and employee benefits and occupancy expense of $958,000 and $238,000, respectively.  For the first six months of 2004, noninterest expense decreased $4.2 million, or 13.0%, to $28.4 million from $32.6 million in 2003. This decrease was mainly due to reduced off-lease vehicle residual reserve of $2.6 million, and a decrease of $2.6 million in Federal Home Loan Bank borrowings prepayment fees, partially offset by an increase of $1.4 million in salary and employee benefit expense and $299,000 in occupancy expense of which $711,000 and $114,000, respectively was attributable to the Millennium acquisition.

 Harleysville National Corporation, with assets in excess of $2.8 billion, is the holding company for its major subsidiary, Harleysville National Bank and Trust Company (HNB).  Providing Real Life Financial Solutions, HNB operates 45 offices in 10 counties throughout eastern Pennsylvania.  Individuals, families and businesses can apply for banking, trust and investment services at any HNB office, by calling 1-888-HNB-2100 or online at www.harleysvillebank.com. Harleysville National Corporation stock is traded under the symbol "HNBC" and is commonly quoted under Nasdaq National Market Issues. For more information, visit the HNC Web site at www.hncbank.com.

This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility that increased demand or prices for the Company’s financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the company’s filings with the Securities and Exchange Commission.

Harleysville National Corporation
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
June 30, 2004
(unaudited)
For the period:				Three Months Ended
		June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,
		2004			2004			2003			2003			2003
Interest Income	$	30,994		$	29,173		$	30,287		$	28,439		$	29,889
Interest Expense		9,674			8,943			9,393			9,216			10,084
Net Interest Income		21,320			20,230			20,894			19,223			19,805
Provision for Loan Losses		497			489			641			630			1,320
Net Interest Income after
Provision for Loan Losses		20,823			19,741			20,253			18,593			18,485
Service Charges		1,929			1,925			2,081			2,007			1,937
Gains on Sales of Investment Securities, Net		641			900			164			359			4,774
Trust, Investment Services and Advisory Income		1,576			1,121			1,017			954			978
Bank-Owned Life Insurance Income		521			611			680			673			631
Income on Life Insurance		-			-			-			-			-
Other Income		1,620			1,226			1,274			1,259			1,639
Total Noninterest Income		6,287			5,783			5,216			5,252			9,959
Salaries, Wages and Employee Benefits		8,834			8,277			7,518			7,938			7,876
Occupancy		1,120			1,084			924			941			882
Furniture and Equipment		1,510			1,258			1,637			1,525			1,376
Prepayment Fee		-			-			-			-			2,594
Other Expenses		3,129			3,198			3,812			2,694			4,399
Total Noninterest Expense		14,593			13,817			13,891			13,098			17,127
Income Before Income Taxes		12,517			11,707			11,578			10,747			11,317
Income Tax Expense		3,135			2,800			2,606			1,952			2,216
Net Income	$	9,382		$	8,907		$	8,972		$	8,795		$	9,101
Per Common Share Data:
Weighted Average Common Shares - Basic		24,630,047			23,931,459			23,837,623			23,812,431			23,779,235
Weighted Average Common Shares - Diluted		25,450,411			24,793,529			24,768,712			24,587,614			24,540,648
Net Income Per Share - Basic	$	0.38		$	0.37		$	0.37		$	0.37		$	0.38
Net Income Per Share - Diluted	$	0.37		$	0.36		$	0.37		$	0.36		$	0.37
Cash Dividend Per Share	$	0.17		$	0.17		$	0.19		$	0.16		$	0.15
Book Value	$	10.06		$	9.92		$	9.52		$	9.18		$	9.42
Market Value	$	25.60		$	27.83		$	30.10		$	23.39		$	21.55
For the period:	Six Months Ended
	June 30,
		2004			2003
Interest Income	$	60,167		$	60,474
Interest Expense		18,617			21,470
Net Interest Income		41,550			39,004
Provision for Loan Losses		986			1,929
Net Interest Income after
Provision for Loan Losses		40,564			37,075
Service Charges		3,854			3,767
Gains on Sales of Investment Securities, Net		1,541			6,090
Trust, Investment Services and Advisory Income		2,697			1,866
Bank-Owned Life Insurance Income		1,132			1,262
Income on Life Insurance		-			1,119
Other Income		2,846			3,066
Total Noninterest Income		12,070			17,170
Salaries, Wages and Employee Benefits		17,111			15,717
Occupancy		2,204			1,905
Furniture and Equipment		2,768			2,681
Prepayment Fee		-			2,594
Other Expenses		6,327			9,743
Total Noninterest Expense		28,410			32,640
Income Before Income Taxes		24,224			21,605
Income Tax Expense		5,935			4,039
Net Income	$	18,289		$	17,566
Per Common Share Data:
Weighted Average Common Shares - Basic		24,280,753			23,774,838
Weighted Average Common Shares - Diluted		25,167,508			24,531,029
Net Income Per Share - Basic	$	0.75		$	0.74
Net Income Per Share - Diluted	$	0.73		$	0.71
Cash Dividend Per Share	$	0.34		$	0.30
		2004			2004			2003			2003			2003
Asset Quality Data:		2Q			1Q			4Q			3Q			2Q
Nonaccrual Loans	$	3,245		$	3,645		$	3,343		$	3,962		$	4,146
90 + Days Past Due Loans		919			1,178			1,164			1,200			1,681
Nonperforming Loans		4,164			4,823			4,507			5,162			5,827
Net Assets in Foreclosure		389			423			935			893			729
Nonperforming Assets	$	4,553		$	5,246		$	5,442		$	6,055		$	6,556
Loan Loss Reserve	$	17,940		$	16,464		$	16,753		$	16,854		$	17,538
Loan Loss Reserve / Loans		1.07	%		1.15	%		1.19	%		1.22	%		1.31	%
Loan Loss Reserve / Nonperforming Loans		430.8	%		341.3	%		371.7	%		326.5	%		301.0	%
Nonperforming Assets / Total Assets		0.16	%		0.21	%		0.22	%		0.24	%		0.27	%
Net Loan Charge-offs	$	697		$	778		$	742		$	1,313		$	684
Net Loan Charge-offs (annualized)
/ Average Loans		0.18	%		0.22	%		0.21	%		0.39	%		0.20	%
		2004			2004			2003			2003			2003
Selected Ratios (annualized):		2Q			1Q			4Q			3Q			2Q
Return on Average Assets		1.37	%		1.43	%		1.41	%		1.44	%		1.49	%
Return on Average Shareholders' Equity		15.06	%		15.33	%		16.22	%		16.11	%		16.67	%
Return on Average Shareholders' Realized Equity *		15.17	%		15.97	%		16.56	%		16.65	%		17.53	%
Yield on Earning Assets (FTE)		5.12	%		5.25	%		5.38	%		5.31	%		5.57	%
Cost of Interest Bearing Funds		1.82	%		1.86	%		1.88	%		1.95	%		2.12	%
Net Interest Margin (FTE)		3.62	%		3.73	%		3.82	%		3.71	%		3.82	%
Leverage Ratio		8.52	%		10.04	%		8.77	%		8.97	%		8.73	%

* Excluding unrealized gain (loss) on investment securities available for sale.

	2004			2003
Selected Ratios (annualized):	Year-to-date			Year-to-date
Return on Average Assets		1.40	%		1.44	%
Return on Average Shareholders' Equity		15.23	%		16.43	%
Return on Average Shareholders' Realized Equity *		15.59	%		17.16	%
Yield on Earning Assets (FTE)		5.19	%		5.61	%
Cost of Interest Bearing Funds		1.84	%		2.23	%
Net Interest Margin (FTE)		3.68	%		3.75	%

* Excluding unrealized gain (loss) on investment securities available for sale.

Balance Sheet (Period End):	2004		2004		2003		2003		2003
		2Q		1Q		4Q		3Q		2Q
Assets	$	2,865,949	$	2,542,328	$	2,510,939	$	2,523,002	$	2,406,132
Earning Assets		2,678,772		2,406,068		2,371,816		2,386,477		2,244,720
Investment Securities		957,398		948,749		924,874		915,832		866,191
Loans, Net of Unearned Fees		1,683,528		1,428,145		1,408,391		1,377,682		1,335,919
Other Earning Assets		37,846		29,174		38,551		92,963		42,610
Interest-Bearing Liabilities		2,218,687		1,930,052		1,940,016		1,970,774		1,836,327
Total Deposits		2,093,101		1,968,521		1,979,081		1,990,832		1,873,218
Noninterest-Bearing Deposits		345,191		317,566		294,121		283,886		291,454
Interest-Bearing Checking		258,739		268,110		283,607		276,941		218,200
Money Market		561,823		521,085		506,516		490,341		483,326
Savings		245,768		225,981		221,778		217,969		220,001
Time, under $100,000		523,587		481,400		491,740		506,976		503,850
Time, $100,000 or greater		157,993		154,379		181,319		214,719		156,387
Total Borrowed Funds		470,777		279,097		255,056		263,828		254,563
Federal Home Loan Bank		241,750		172,750		172,750		168,750		153,750
Other Borrowings		229,027		106,347		82,306		95,078		100,813
Shareholders' Equity		251,877		237,964		227,053		218,878		223,849
Balance Sheet (Average):		2004		2004		2003		2003		2003
		2Q		1Q		4Q		3Q		2Q
Assets	$	2,759,563	$	2,497,085	$	2,543,616	$	2,436,763	$	2,435,580
Earning Assets		2,593,105		2,365,497		2,408,967		2,298,565		2,305,590
Investment Securities		983,420		910,314		983,318		898,886		948,782
Loans, Net of Unearned Fees		1,572,830		1,414,802		1,389,595		1,354,394		1,342,758
Other Earning Assets		36,855		40,381		36,054		45,285		14,050
Interest-Bearing Liabilities		2,136,010		1,931,950		1,993,653		1,888,489		1,903,542
Total Deposits		2,048,279		1,961,481		1,976,616		1,906,373		1,889,663
Noninterest-Bearing Deposits		316,715		280,809		279,307		278,267		260,688
Interest-Bearing Checking		274,978		280,142		280,076		241,283		223,152
Money Market		537,614		517,846		501,127		479,375		493,561
Savings		239,971		222,807		221,116		219,778		216,445
Time, under $100,000		508,275		487,379		497,281		508,256		510,703
Time, $100,000 or greater		170,726		172,498		197,709		179,414		185,114
Total Borrowed Funds		404,446		251,278		296,344		260,383		274,567
Federal Home Loan Bank		187,608		172,750		172,750		164,728		164,794
Other Borrowings		216,838		78,528		123,594		95,655		109,773
Shareholders' Equity		250,504		232,386		221,236		218,396		218,363