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 - April 20, 2007

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 8-K 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))

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Item 2.02Results of Operations and Financial Condition

Harleysville National Corporation announced the unaudited, consolidated financial results for Harleysville National Corporation and subsidiaries for the quarter ending March 31, 2007. On April 20, 2007, Harleysville National Corporation issued a press release titled “Harleysville National Corporation Reports First Quarter Earnings of $6.1 Million,” 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 9.01Financial Statements and Exhibits

(a)   Not applicable.

(b)   Not applicable.

(c)   Not applicable.

(d)   Exhibits.

Exhibit 99.1: Press Release issued by Harleysville National Corporation dated April 20, 2007 titled “Harleysville National Corporation Reports First Quarter Earnings of $6.1 Million.”

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SIGNATURES

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

          HARLEYSVILLE NATIONAL CORPORATION

Dated: April 20, 2007            /s/ George S. Rapp      

       George S. Rapp, EVP and Chief Financial Officer

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EXHIBIT INDEX

	Page
Exhibit 99.1Press Release, dated April 20, 2007, of Harleysville National Corporation (filed pursuant to Item 2.02 hereof).	5

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EX-99.1 PRESRELEASE

FOR IMMEDIATE RELEASE

CONTACT:Deb M. Takes, Interim President and CEO

PHONE:215-513-2304

HARLEYSVILLE NATIONAL CORPORATION REPORTS

FIRST QUARTER EARNINGS OF $6.1 MILLION

HARLEYSVILLE, PA (April 20, 2007) - Harleysville National Corporation (NASDAQ: HNBC), today announced first quarter 2007 diluted and basic earnings per share of $.21 compared to $.30 and $.31, respectively, for the first quarter of 2006. Net income was $6.1 million for the first quarter of 2007 compared to $9.0 million during the same period in 2006.

“Despite a challenging environment, we are pleased to report loan and deposit growth of 3.1% and 4.2%, respectively from the comparable period in 2006. Additionally, although we continue to experience net interest margin compression, we were able to increase our net interest margin from 2.75% for the fourth quarter 2006, to 2.82% in the first quarter of this year. Management recognizes the increased level of nonperforming assets and charge-offs and has dedicated more resources to resolve troubled credits,” said Deb M. Takes, Interim President and Chief Executive Officer.

The Corporation’s consolidated total assets were $3.3 billion at March 31, 2007, an increase of 3.9% or $123.3 million over $3.2 billion in total assets reported at March 31, 2006. This rise was primarily attributable to loan growth of $62.3 million and an increase in cash and investments of $50.4 million. The growth in loans took place mainly in the Bank’s real estate portfolio.

The financial results for 2007 reflect the issuance of 1,310,000 shares of the Corporation’s common stock for a 5% stock dividend payable September 15, 2006. All share and per share information has been restated to reflect this stock dividend.

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DETAILED REVIEW OF FINANCIAL RESULTS

Net interest income on a tax equivalent basis in the first quarter of 2007 decreased $1.6 million or 7.1% from the same period in 2006. The decrease during the first quarter of 2007 was mainly attributable to higher deposit costs offset in part by increased loan and investment rates. The net interest margin for the first quarter of 2007 was 2.82%, compared to 2.75% for the fourth quarter of 2006 and 3.15% for the first quarter of 2006. Due to market conditions, deposit rates increased faster than loan rates, resulting in a lower net interest margin compared to the first quarter of 2006. Average earning assets increased $103.8 million or 3.5% during the first quarter of 2007 versus the comparable period in 2006. Average loans grew by $71.1 million or 3.6%, during the same period with average federal funds sold to correspondent banks increasing $27.0 million. Average interest-bearing deposits were up $192.9 million or 9.6%, primarily as a result of growth in interest-bearing checking accounts and time deposits. Average borrowings declined $67.2 million or 13.7%, primarily from FHLB maturities as well as a reduced level of overnight funding replaced by deposit growth.

Nonperforming assets (including nonaccrual loans, net assets in foreclosure and loans 90 days or more past due) were .59% of total assets at March 31, 2007, compared to .54% at December 31, 2006, and .33% at March 31, 2006. The increase in nonperforming assets at March 31, 2007, in relation to December 31, 2006, of $1.9 million was mainly due to a construction loan for one borrower and real estate loans for two borrowers placed on nonaccrual of interest, partially offset by the payoff of nonaccrual real estate loans for another borrower. The increase in relation to March 31, 2006 was largely due to an increase in the level of real estate loans on non-accrual of interest as well as 90 days past due. The increase in the provision of $1.2 million for the three-month period ending March 31, 2007, as compared to the same period in 2006, was primarily a result of inherent risk related to loan growth, the increase in nonperforming loans, as well as a higher level of charge-offs.

Total deposits increased 4.2% or $101.2 million to $2.53 billion at March 31, 2007, up from $2.43 billion at March 31, 2006. This was principally attributable to growth in interest-bearing checking accounts. Core deposits (total deposits less time deposits) increased 6.4% or $102.3 million to $1.70 billion for the same periods.

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Noninterest income of $9.1 million for the first quarter of 2007 reflects an increase of $214,000 from the comparable period in 2006. Gains on sales of investment securities for the three months ended March 31, 2007 were $531,000. During the comparable period in 2006, there were no gains recognized. Additionally, the Bank experienced modest increases in deposit service charges and a slight decline in wealth management revenue of $297,000 due to a higher level of variable life insurance business booked in the first quarter of 2006.

Noninterest expense of $18.8 million for the first quarter of 2007 increased $1.7 million from the first quarter of 2006. Salaries and benefits expense rose $1.1 million during the first quarter of 2007 as compared to the same period in 2006 primarily due to higher staffing levels resulting from growth and increased cost of medical benefits. Other expense increased $502,000 during 2007 mainly as a result of increased computer software costs and professional and consulting expenses.

Harleysville National Corporation, with assets of $3.3 billion, is the holding company for Harleysville National Bank (HNB). Investment Management and Trust Services are provided through Millennium Wealth Management, a division of HNB, with assets under management of $3.0 billion. Harleysville National Corporation stock is traded under the symbol "HNBC" and is commonly quoted under NASDAQ Global Market Issues. For more information, visit the Harleysville National Corporation website at www.hncbank.com

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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.

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Harleysville National Corporation
Consolidated Selected Financial Data (1)
(Dollars in thousands, except per share data)
March 31, 2007
(unaudited)
For the period:					Three Months Ended
		Mar. 31,			Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,
		2007			2006			2006			2006			2006
Interest Income	$	46,695		$	46,661		$	45,961		$	44,223		$	42,096
Interest Expense		26,858			26,849			25,347			22,947			20,625
Net Interest Income		19,837			19,812			20,614			21,276			21,471
Provision for Loan Losses		2,425			1,200			900			900			1,200
Net Interest Income after
Provision for Loan Losses		17,412			18,612			19,714			20,376			20,271
Service Charges		1,918			1,994			2,092			2,026			1,890
Gains/(Losses) on Sales of Investment Securities, Net		531			(674	)		-			-			-
Gain on Sale of Credit Card Portfolio		-			-			-			1,444			-
Gain on Sale of Branch		-			10,650			-			-			-
Wealth Management Income		4,267			3,474			3,372			3,378			4,564
Bank-Owned Life Insurance Income		582			594			591			601			600
Other Income		1,849			2,168			2,231			2,474			1,879
Total Noninterest Income		9,147			18,206			8,286			9,923			8,933
Salaries, Wages and Employee Benefits		11,597			11,787			11,487			10,854			10,519
Occupancy		1,546			1,392			1,379			1,401			1,498
Furniture and Equipment		917			956			917			900			891
Other Expenses		4,719			4,332			3,777			4,523			4,217
Total Noninterest Expense		18,779			18,467			17,560			17,678			17,125
Income Before Income Taxes		7,780			18,351			10,440			12,621			12,079
Income Tax Expense		1,646			5,079			2,533			3,336			3,128
Net Income	$	6,134		$	13,272		$	7,907		$	9,285		$	8,951
Per Common Share Data:
Weighted Average Common Shares - Basic		28,965,500			28,966,810			29,011,903			28,933,741			28,873,187
Weighted Average Common Shares - Diluted		29,255,820			29,291,521			29,384,310			29,351,584			29,379,870
Net Income Per Share - Basic	$	0.21		$	0.46		$	0.27		$	0.32		$	0.31
Net Income Per Share - Diluted	$	0.21		$	0.45		$	0.27		$	0.32		$	0.30
Cash Dividend Per Share	$	0.20		$	0.20		$	0.19		$	0.18		$	0.18
Book Value	$	10.23		$	10.18		$	9.89		$	9.58		$	9.67
Market Value	$	17.82		$	19.31		$	20.10		$	20.20		$	21.66
		2007			2006			2006			2006			2006
Asset Quality Data:		1Q			4Q			3Q			2Q			1Q
Nonaccrual Loans	$	17,519		$	15,201		$	10,806		$	10,164		$	9,430
90 + Days Past Due Loans		2,001			2,444			2,262			1,279			1,093
Nonperforming Loans		19,520			17,645			13,068			11,443			10,523
Net Assets in Foreclosure		10			-			87			64			78
Nonperforming Assets	$	19,530		$	17,645		$	13,155		$	11,507		$	10,601
Loan Loss Reserve	$	20,929		$	21,154		$	21,303		$	20,617		$	19,895
Loan Loss Reserve / Loans		1.01	%		1.03	%		1.05	%		1.02	%		0.99	%
Loan Loss Reserve / Nonperforming Loans		107.2	%		119.9	%		163.0	%		180.2	%		189.1	%
Nonperforming Assets / Total Assets		0.59	%		0.54	%		0.39	%		0.36	%		0.33	%
Net Loan Charge-offs	$	2,650		$	1,349		$	214		$	178		$	1,170
Net Loan Charge-offs (annualized)
/ Average Loans		0.52	%		0.26	%		0.04	%		0.04	%		0.24	%
		2007			2006			2006			2006			2006
Selected Ratios (annualized):		1Q			4Q			3Q			2Q			1Q
Return on Average Assets		0.76	%		1.61	%		0.96	%		1.16	%		1.15	%
Return on Average Shareholders' Equity		8.47	%		18.18	%		11.10	%		13.44	%		13.06	%
Yield on Earning Assets (FTE)		6.37	%		6.22	%		6.20	%		6.10	%		5.97	%
Cost of Interest Bearing Funds		4.14	%		4.05	%		3.88	%		3.60	%		3.34	%
Net Interest Margin (FTE)		2.82	%		2.75	%		2.89	%		3.04	%		3.15	%
Leverage Ratio		9.32	%		9.36	%		9.24	%		9.31	%		9.33	%

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Balance Sheet (Period End):		2007		2006		2006			2006		2006
		1Q		4Q		3Q			2Q		1Q
Assets	$	3,324,967	$	3,249,828	$	3,363,003		$	3,217,018	$	3,201,693
Earning Assets		3,100,047		3,022,219		3,136,487			2,991,628		2,979,595
Investment Securities		928,547		911,889		922,251			925,545		936,665
Loans		2,065,777		2,047,355		2,034,273			2,032,625		2,003,450
Other Earning Assets		105,723		62,975		179,963			33,458		39,480
Interest-Bearing Liabilities		2,654,182		2,578,377		2,707,217			2,541,713		2,534,165
Total Deposits		2,526,841		2,516,855		2,628,246			2,479,658		2,425,673
Noninterest-Bearing Deposits		328,096		327,973		326,851			356,043		345,118
Interest-Bearing Checking		524,429		539,974		571,444			419,312		382,199
Money Market		711,969		662,966		675,904			664,392		678,276
Savings		130,981		133,370		150,889			175,071		187,534
Time Deposits		831,366		852,572		903,158			864,840		832,546
Total Borrowed Funds		455,437		389,495		405,822			418,098		453,610
Federal Home Loan Bank		224,750		239,750		239,750			257,750		297,750
Other Borrowings		230,687		149,745		166,072			160,348		155,860
Shareholders' Equity		296,246		294,751		286,605			277,737		279,989
Balance Sheet (Average):		2007		2006		2006			2006		2006
		1Q		4Q		3Q			2Q		1Q
Assets	$	3,280,854	$	3,279,260	$	3,253,616		$	3,218,481	$	3,164,007
Earning Assets		3,067,366		3,071,093		3,037,009			3,005,888		2,963,541
Investment Securities		944,658		919,848		917,103			929,002		936,867
Loans		2,059,871		2,034,515		2,027,028			2,006,723		1,988,778
Other Earning Assets		62,837		116,730		92,878			70,163		37,896
Interest-Bearing Liabilities		2,629,978		2,629,023		2,593,694			2,555,544		2,504,301
Total Deposits		2,515,658		2,543,658		2,518,958			2,459,453		2,353,353
Noninterest-Bearing Deposits		308,095		317,673		334,847			342,654		338,666
Interest-Bearing Checking		528,874		541,676		466,447			415,426		375,470
Money Market		716,266		672,458		676,035			661,444		666,722
Savings		130,934		140,181		163,136			180,968		187,245
Time Deposits		831,489		871,670		878,493			858,961		785,250
Total Borrowed Funds		422,415		403,038		409,583			438,745		489,614
Federal Home Loan Bank		228,750		239,750		241,685			285,904		297,750
Other Borrowings		193,665		163,288		167,898			152,841		191,864
Shareholders' Equity		293,795		289,618		282,678			277,064		277,892
Average Balance Sheets and Interest Rates - Fully-Taxable Equivalent Basis
		Three Months Ended March 31, 2007							Three Months Ended March 31, 2006
		Average				Average			Average			Average
		Balance		Interest		Rate			Balance		Interest	Rate
Assets
Earning assets:
Investment securities
Taxable investments	$	684,651	$	8,564		5.07	%	$	690,204	$	7,322	4.30	%
Non-taxable investments (2)		260,007		3,937		6.14	%		246,663		3,777	6.21	%
Total investment securities		944,658		12,501		5.37	%		936,867		11,099	4.80	%
Federal funds sold and deposits in banks		62,837		806		5.20	%		37,896		425	4.55	%
Loans(2) (3)		2,059,871		34,905		6.87	%		1,988,778		32,084	6.54	%
Total earning assets		3,067,366		48,212		6.37	%		2,963,541		43,608	5.97	%
Noninterest-earning assets		213,488							200,466
Total assets	$	3,280,854						$	3,164,007
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits:
Savings and money market	$	1,376,074		12,106		3.57	%	$	1,229,437		7,513	2.48	%
Time		831,489		9,716		4.74	%		785,250		7,644	3.95	%
Total interest-bearing deposits		2,207,563		21,822		4.01	%		2,014,687		15,157	3.05	%
Borrowed funds		422,415		5,036		4.84	%		489,614		5,468	4.53	%
Total interest-bearing liabilities		2,629,978		26,858		4.14	%		2,504,301		20,625	3.34	%
Noninterest-bearing liabilities:
Demand deposits		308,095							338,666
Other liabilities		48,986							43,148
Total noninterest-bearing liabilities		357,081							381,814
Total liabilities		2,987,059							2,886,115
Shareholders' equity		293,795							277,892
Total liabilities and shareholders' equity	$	3,280,854						$	3,164,007
Net interest spread						2.23	%					2.63	%
Effect of noninterest-bearing sources						0.59	%					0.52	%
Net interest income/margin on earning assets			$	21,354		2.82	%			$	22,983	3.15	%
Less tax equivalent adjustment				1,517							1,512
Net interest income			$	19,837						$	21,471
(1) Certain prior period amounts have been reclassified to conform to current period presentation.
(2) The interest earned on nontaxable investment securities and loans is shown on a tax equivalent basis (tax rate of 35%).
(3) Nonaccrual loans have been included in the appropriate average loan balance category, but interest on nonaccrual loans has not been
included for purposes of determining interest income.

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