8-K

UNITED STATES

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 - January 18, 2005

HARLEYSVILLE NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

___________________

Pennsylvania	0-15237	23-2210237
(State or other jurisdiction of incorporation or organization)	Commission File Number	(IRS Employer Identification No.)

483 Main Street

Harleysville, Pennsylvania 19438

(Address of principal executive office and zip code)

(215) 256-8851

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.133-4(c))

-1-

Item 2.02 Results of Operations and Financial Condition

Harleysville National Corporation announced the unaudited, consolidated financial results for Harleysville National Corporation and subsidiaries for the three-month and twelve-month periods ended December 31, 2004. On January 18, 2005 Harleysville National Bank issued a press release titled "Harleysville National Corporation Ends 2004 with Record Earnings," a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(a)   Not applicable.

(b)   Not applicable.

(c)   Exhibits.

Exhibit 99.1: Press Release issued by Harleysville National Corporation dated January 18, 2005 titled "Harleysville National Corporation Ends 2004 with Record Earnings."

-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

Dated: January 18, 2005 /s/ Michael B. High    

        Michael B. High, EVP and Chief Financial Officer

-3-

EXHIBIT INDEX

	Page
Exhibit 99.1 Press Release dated January 18, 2005, of Harleysville National Corporation (filed pursuant to Item 2.02 hereof).	5

-4-

EX-99.1 PRESSRELEASE

FOR IMMEDIATE RELEASE

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

PHONE:215-256-8851 ext. 2300, or

          Gregg J. Wagner, President

          215-256-8851 ext. 2391

HARLEYSVILLE NATIONAL CORPORATION

ENDS 2004 WITH RECORD EARNINGS

29 Consecutive Years of Record Earnings and 30 Consecutive Years of Dividend Increases

HARLEYSVILLE, PA (January 18, 2005) - Harleysville National Corporation (NASDAQ: HNBC), today announced fourth quarter 2004 earnings of $10.1 million, a 12.7% increase over fourth quarter 2003 earnings of $9.0 million. Earnings for the year ending December 31, 2004, were $38.6 million, a 9.2% increase over earnings of $35.3 million for the year ending December 31, 2003.

The corporation’s consolidated total assets were $3.02 billion at December 31, 2004, an increase of 20.5% or $513.6 million above the December 31, 2003, level of $2.51 billion. Of this increase 9.2% or $231.3 million, was attributable to the acquisition of Millennium Bank.

For the quarter ending December 31, 2004, diluted earnings per share of $.37 increased 5.7% over the $.35 earned during the fourth quarter of 2003, and basic earnings per share at $.38 increased 8.6% over $.35 earned in the fourth quarter of 2003. For the year ended December 31, 2004, diluted earnings per share of $1.44 were 5.1% higher than the $1.37 earned during 2003, and basic earnings per share of $1.49 for 2004 were up 5.7% from $1.41 in 2003. The financial results for 2004 include the impact of operations from the acquisition of Millennium Bank effective April 30, 2004, and the related issuance of 946,000 (993,000 restated for stock dividend) common shares, as well as the issuance of 1,295,000 common shares for a 5% stock dividend paid on September 15, 2004. All share and per share information has been rest ated to reflect this stock dividend.

Walter E. Daller, Jr., Chairman and Chief Executive Officer said, "We are extremely pleased to once again report record earnings for Harleysville National Corporation. This is the 29^th consecutive year we have been able to do so, and the 30^th consecutive year that we have

-5-

reported record dividends to our shareholders. We have done this while growing our assets to over $3 billion - another milestone for our company - and maintaining pristine credit quality in our loan portfolios."

Net interest income on a fully tax-equivalent basis in the fourth quarter of 2004 increased $307,000 or 1.3% over the same period in 2003 and increased $3.8 million or 4.3% for the year ending December 31, 2004, over the prior year. This increase was primarily the result of higher earning asset volumes partially offset by lower loan rates. The net interest margin for the fourth quarter of 2004 was 3.34%, compared to 3.82% for the fourth quarter of 2003, the decline being primarily due to lower loan yields and higher funding costs, particularly increased volumes in higher-rate money market accounts. Average earning assets increased $367.6 million or 15.3% during the fourth quarter of 2004 versus the comparable period in 2003, while average loans increased $404.3 million or 29.1% during the same period. Loans totaling $157.1 million were acquired in the acquisition of Millennium Bank which contributed to the increase in average loans.

Nonperforming assets, including nonaccrual loans, net assets in foreclosure and loans 90 days or more past due was .20% of total assets at December 31, 2004, compared to .22% at December 31, 2003. The ratio of the allowance for loan losses to nonperforming loans (nonaccruing loans and loans 90 days or more past due) was 317.7% at December 31, 2004, compared to 371.7% at December 31, 2003. The lower provision for loan losses for the twelve-month period ending December 31, 2004, compared to the same period in 2003, is reflective of improved loan quality during the early part of the year and management’s ongoing analysis of the loan portfolio. The increase in the provision for the fourth quarter of 2004 compared to the fourth quarter of 2003 was primarily due to loan growth and an increase in nonperforming loans of $1.3 million.

Core deposits increased 20.6% or $269.2 million, to $1.58 billion at December 31, 2004, from $1.31 billion at December 31, 2003. Of this increase, 4.6% or $59.8 million was due to the acquisition of Millennium Bank. Total deposits increased $233.5 million for the same period, of which $151.2 million was attributable to the acquisition of Millennium Bank. Average borrowings increased $122.7 million or 41.4%, primarily to support loan growth and the Millennium Bank acquisition.

-6-

Total noninterest income of $9.4 million for the fourth quarter of 2004 reflects an increase of $4.2 million from the comparable period in 2003, primarily due to increases of $1.9 million in the gain on sales of investment securities, $982,000 in trust and investment advisory fees, $586,000 in life insurance income and $785,000 in gains related to the auto leasing portfolio, partially offset by a $440,000 loss on the sale of equipment lease receivables. For the year ended December 31, 2004, total noninterest income of $28.2 million increased $520,000, or 1.9% from $27.6 million for 2003. This was mainly due to an increase of $2.7 million in trust and investment advisory fees and an increase of $1.4 million in the gains related to the auto leasing portfolio, partially offset by a decrease of $2.9 million in the gai n on sales of investment securities and a decrease of $868,000 in gains related to the sale of residential mortgages, due to lower origination volume.

Noninterest expense of $16.7 million increased $2.8 million or 20.0% from $13.9 million in the fourth quarter of 2003. The increase in noninterest expense was due to a $2.7 million increase in salaries and benefits, primarily related to the acquisition of Millennium Bank, higher pension and healthcare costs and an increase in bonus expense related to the corporation’s improved financial performance. In addition, deferred compensation expense for directors and employees was $874,000 higher during the fourth quarter of 2004 over the comparable period in 2003 while deferred loan origination expenses increased $1.3 million. Deferred compensation expense includes a one-time after tax expense amounting to $819,000 associated with the retirement announcement of the Chief Executive Officer under the terms of his empl oyment agreement. For the year ended December 31, 2004, noninterest expense remained level at $59.6 million compared to 2003. Salary and employee benefit expense increased $5.9 million in 2004 primarily due to the Millennium acquisition and higher pension and medical costs. Occupancy expense increased $787,000 during 2004 mostly due to the Millennium acquisition and a new branch opening. Partially offsetting these variances was Federal Home Loan Bank borrowings prepayment fees which decreased $2.6 million and other expenses which decreased $4.1 million in 2004. The decrease in other expenses was primarily due to lower off-lease vehicle residual reserve of $2.6 million, higher loan origination expense deferrals amounting to $3.8 million,

partially offset by an increase in deferred compensation expense for directors and employees of $717,000.

-7-

Harleysville National Corporation, with assets of $3.02 billion, is the holding company for Harleysville National Bank (HNB). Investment Management and Trust Services are provided through Millennium Wealth Management & Private Banking, a division of HNB, with assets under management exceeding $1.5 billion. Cumberland Advisors, Inc., a registered investment advisor specializing in fixed-income money management and equities, using exchange-traded funds, is also a part of Millennium Wealth Management & Private Banking. 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 Corporation’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 Corporation’s filings with the Securities and Exchange Commission.

-8-

Harleysville National Corporation
Consolidated Selected Financial Data
(Dollars in thousands, except per share data)
December 31, 2004
(unaudited)
For the period:		Three Months Ended
		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
		2004		2004		2004		2004		2003
Interest Income	$	34,196	$	33,366	$	30,994	$	29,173	$	30,287
Interest Expense		12,735		11,286		9,674		8,943		9,393
Net Interest Income		21,461		22,080		21,320		20,230		20,894
Provision for Loan Losses		1,070		499		497		489		641
Net Interest Income after
Provision for Loan Losses		20,391		21,581		20,823		19,741		20,253
Service Charges		1,953		2,000		1,929		1,925		2,081
Gains on Sales of Investment Securities, Net		2,036		112		641		900		164
Trust, Investment Services and Advisory Income		1,999		1,878		1,588		1,121		1,017
Bank-Owned Life Insurance Income		627		647		521		611		680
Income on Life Insurance		586		-		-		-		-
Other Income		2,194		2,056		1,608		1,226		1,274
Total Noninterest Income		9,395		6,693		6,287		5,783		5,216
Salaries, Wages and Employee Benefits		10,215		9,754		8,834		8,277		7,518
Occupancy		1,218		1,135		1,120		1,084		924
Furniture and Equipment		1,454		1,414		1,510		1,258		1,637
Other Expenses		3,787		2,174		3,129		3,198		3,812
Total Noninterest Expense		16,674		14,477		14,593		13,817		13,891
Income Before Income Taxes		13,112		13,797		12,517		11,707		11,578
Income Tax Expense		2,999		3,632		3,135		2,800		2,606
Net Income	$	10,113	$	10,165	$	9,382	$	8,907	$	8,972
Per Common Share Data:
Weighted Average Common Shares - Basic		26,182,888		26,240,616		25,861,549		25,128,032		25,029,504
Weighted Average Common Shares - Diluted		27,057,756		27,055,603		26,722,932		26,033,205		26,007,148
Net Income Per Share - Basic	$	0.38	$	0.39	$	0.37	$	0.35	$	0.35
Net Income Per Share - Diluted	$	0.37	$	0.38	$	0.35	$	0.34	$	0.35
Cash Dividend Per Share	$	0.22	$	0.18	$	0.16	$	0.16	$	0.18
Book Value	$	10.30	$	10.19	$	9.58	$	9.45	$	9.07
Market Value	$	26.60	$	24.51	$	24.38	$	26.50	$	28.67
For the period:		Twelve Months Ended
		December 31,
		2004		2003
Interest Income	$	127,729	$	119,200
Interest Expense		42,638		40,079
Net Interest Income		85,091		79,121
Provision for Loan Losses		2,555		3,200
Net Interest Income after
Provision for Loan Losses		82,536		75,921
Service Charges		7,807		7,855
Gains on Sales of Investment Securities, Net		3,689		6,613
Trust, Investment Services and Advisory Income		6,586		3,837
Bank-Owned Life Insurance Income		2,406		2,615
Income on Life Insurance		586		1,119
Other Income		7,084		5,599
Total Noninterest Income		28,158		27,638
Salaries, Wages and Employee Benefits		37,080		31,173
Occupancy		4,557		3,770
Furniture and Equipment		5,636		5,843
Prepayment Fee		-		2,594
Other Expenses		12,288		16,249
Total Noninterest Expense		59,561		59,629
Income Before Income Taxes		51,133		43,930
Income Tax Expense		12,566		8,597
Net Income	$	38,567	$	35,333

-9-

Per Common Share Data:
Weighted Average Common Shares - Basic		25,855,230			24,995,054
Weighted Average Common Shares - Diluted		26,726,180			25,855,266
Net Income Per Share - Basic	$	1.49		$	1.41
Net Income Per Share - Diluted	$	1.44		$	1.37
Cash Dividend Per Share	$	0.72		$	0.62
		2004			2004			2004			2004			2003
Asset Quality Data:		4Q			3Q			2Q			1Q			4Q
Nonaccrual Loans	$	4,797		$	3,350		$	3,245		$	3,645		$	3,343
90 + Days Past Due Loans		1,012			948			919			1,178			1,164
Nonperforming Loans		5,809			4,298			4,164			4,823			4,507
Net Assets in Foreclosure		370			347			389			423			935
Nonperforming Assets	$	6,179		$	4,645		$	4,553		$	5,246		$	5,442
Loan Loss Reserve	$	18,455		$	17,795		$	17,940		$	16,464		$	16,753
Loan Loss Reserve / Loans		1.00	%		1.00	%		1.07	%		1.15	%		1.19	%
Loan Loss Reserve / Nonperforming Loans		317.7	%		414.0	%		430.8	%		341.3	%		371.7	%
Nonperforming Assets / Total Assets		0.20	%		0.16	%		0.16	%		0.21	%		0.22	%
Net Loan Charge-offs	$	410		$	644		$	698		$	778		$	742
Net Loan Charge-offs (annualized)
/ Average Loans		0.09	%		0.15	%		0.18	%		0.22	%		0.21	%
		2004			2004			2004			2004			2003
Selected Ratios (annualized):		4Q			3Q			2Q			1Q			4Q
Return on Average Assets		1.36	%		1.40	%		1.37	%		1.43	%		1.41	%
Return on Average Shareholders' Equity		15.00	%		15.61	%		15.06	%		15.33	%		16.22	%
Yield on Earning Assets (FTE)		5.16	%		5.18	%		5.12	%		5.25	%		5.38	%
Cost of Interest Bearing Funds		2.19	%		2.01	%		1.82	%		1.86	%		1.88	%
Net Interest Margin (FTE)		3.34	%		3.51	%		3.62	%		3.73	%		3.82	%
Leverage Ratio		8.91	%		8.99	%		9.28	%		10.04	%		8.77	%
		2004			2003
Selected Ratios (annualized):		Year-to-date			Year-to-date
Return on Average Assets		1.39	%		1.43	%
Return on Average Shareholders' Equity		15.31	%		16.29	%
Yield on Earning Assets (FTE)		5.18	%		5.52	%
Cost of Interest Bearing Funds		1.98	%		2.07	%
Net Interest Margin (FTE)		3.55	%		3.80	%
Balance Sheet (Period End):		2004			2004			2004			2004			2003
		4Q			3Q			2Q			1Q			4Q
Assets	$	3,024,515		$	2,976,173		$	2,865,949		$	2,542,328		$	2,510,939
Earning Assets		2,845,656			2,791,891			2,678,772			2,406,068			2,371,816
Investment Securities		943,563			975,750			957,398			948,749			924,874
Loans, Net of Unearned Fees		1,845,802			1,774,189			1,683,528			1,428,145			1,408,391
Other Earning Assets		56,291			41,952			37,846			29,174			38,551
Interest-Bearing Liabilities		2,367,229			2,332,102			2,218,687			1,930,052			1,940,016
Total Deposits		2,212,563			2,209,753			2,093,101			1,968,521			1,979,081
Noninterest-Bearing Deposits		333,516			325,132			345,191			317,566			294,121
Interest-Bearing Checking		305,584			320,276			258,739			268,110			283,607
Money Market		713,039			661,480			561,823			521,085			506,516
Savings		223,039			229,992			245,768			225,981			221,778
Time, under $100,000		508,117			527,971			523,587			481,400			491,740
Time, $100,000 or greater		129,268			144,902			157,993			154,379			181,319
Total Borrowed Funds		488,182			447,481			470,777			279,097			255,056
Federal Home Loan Bank		317,750			257,750			241,750			172,750			172,750
Other Borrowings		170,432			189,731			229,027			106,347			82,306
Shareholders' Equity		270,532			266,966			251,877			237,964			227,053

-10-

Balance Sheet (Average):		2004		2004		2004		2004		2003
		4Q		3Q		2Q		1Q		4Q
Assets	$	2,957,559	$	2,878,769	$	2,759,563	$	2,497,085	$	2,543,616
Earning Assets		2,776,599		2,695,579		2,593,105		2,365,497		2,408,967
Investment Securities		941,704		932,330		983,420		910,314		983,318
Loans, Net of Unearned Fees		1,793,935		1,717,245		1,572,830		1,414,802		1,389,595
Other Earning Assets		40,960		46,004		36,855		40,381		36,054
Interest-Bearing Liabilities		2,308,446		2,237,681		2,136,010		1,931,950		1,993,653
Total Deposits		2,213,829		2,154,443		2,048,279		1,961,481		1,976,616
Noninterest-Bearing Deposits		324,466		329,559		316,715		280,809		279,307
Interest-Bearing Checking		317,328		285,735		274,978		280,142		280,076
Money Market		692,703		620,420		537,614		517,846		501,127
Savings		226,251		237,463		239,971		222,807		221,116
Time, under $100,000		517,167		525,701		508,275		487,379		497,281
Time, $100,000 or greater		135,914		155,565		170,726		172,498		197,709
Total Borrowed Funds		419,083		412,797		404,446		251,278		296,344
Federal Home Loan Bank		263,566		255,837		187,608		172,750		172,750
Other Borrowings		155,517		156,960		216,838		78,528		123,594
Shareholders' Equity		268,211		259,035		250,504		232,386		221,236

-11-