Item 1. History and Business
Harleysville National Corporation, a Pennsylvania corporation (the Corporation), was incorporated in June, 1982. On January 1, 1983, the Corporation became the parent bank holding company of Harleysville National Bank and Trust Company (HNB), established in 1909, a wholly owned subsidiary of the Corporation. On February 13, 1991, the Corporation acquired all of the outstanding common stock of Citizens National Bank (CNB), established in 1903. On June 1, 1992, the Corporation acquired all of the outstanding stock of Summit Hill Trust Company (Summit Hill). On September 25, 1992, Summit Hill merged into CNB and is now operating as a branch office of CNB. On July 1, 1994 the Corporation acquired all of the outstanding stock of Security National Bank (SNB), established in 1988. On March 1, 1996, the Corporation acquired all of the outstanding common stock of Farmers & Merchants Bank (F & M). F & M was merged into CNB and is now operating as a branch office of CNB. On March 17, 1997, the HNC Financial Company was incorporated as a Delaware Corporation. HNC Financial Company's principal business function is to expand the investment opportunities of the Corporation. On January 20, 1999, the Corporation acquired all of the outstanding stock of Northern Lehigh Bancorp, Inc., parent company of Citizens National Bank of Slatington. Citizens National Bank of Slatington was merged into CNB. On April 28, 2000, the Corporation acquired all of the outstanding common stock of Citizens Bank and Trust Company of Palmerton (CB & T). CB & T was merged into CNB. On March 30, 2001, HNC Reinsurance Company was incorporated as an Arizona Corporation. HNC Reinsurance Company functions as a reinsurer of consumer loan credit life and accident and health insurance. The Corporation is primarily a bank holding company that provides financial services through its three bank subsidiaries. Since commencing operations, the Corporation's business has consisted primarily of managing HNB, CNB and SNB (collectively the Banks), and its principal source of income has been dividends paid by the Banks. The Corporation is registered as a bank holding company under the Bank Holding Company Act of 1956.
The Banks are national banking associations under the supervision of the Office of the Comptroller of the Currency. The Corporation's and HNB's legal headquarters are located at 483 Main Street, Harleysville, Pennsylvania 19438. CNB's legal headquarters is located at 13-15 West Ridge Street, Lansford, Pennsylvania 18232. SNB's legal headquarters is located at One Security Plaza, Pottstown, Pennsylvania 19464. HNC Financial Company's legal headquarters is located at 2751 Centerville Road, Suite 3164, Wilmington, Delaware 19808. HNC Reinsurance Company's legal headquarters is located at 101 North First Avenue, Suite 2460, Phoenix, AZ 85003.
On October 15, 2003, the Corporation and HNB entered into an agreement and plan of merger with Millennium Bank whereby Millennium Bank will be merged into and with HNB. The transaction is expected to be consummated in the second quarter of 2004 providing all necessary shareholder and regulatory approvals are met.
As of December 31, 2003, the Corporation had total assets of $2,510,939,000, total shareholders' equity of $227,053,000 and total deposits of $1,979,081,000.
The Banks engage in the full-service commercial banking and trust business, including accepting time and demand deposits, making secured and unsecured commercial and consumer loans, financing commercial transactions, making construction and mortgage loans and performing corporate pension and personal investment and trust services. Their deposits are insured by the Federal Deposit Insurance Corporation to the extent provided by law. The Banks have 40 branch offices located in Montgomery, Bucks, Chester, Berks, Carbon, Wayne, Monroe, Lehigh, Northampton and Schuylkill counties, Pennsylvania, 22 of which are owned by the Banks and 18 of which are leased from third parties.
The Banks enjoy a stable base of core deposits and are leading community banks in their service areas. The Banks believe they have gained their position as a result of a customer-oriented philosophy and a strong commitment to service. Senior management has made the development of a sales orientation throughout the Banks one of their highest priorities and emphasizes this objective with
extensive training and sales incentive programs. The Banks maintain close contact with the local business community to monitor commercial lending needs and believe they respond to customer requests quickly and with flexibility. Management believes these competitive strengths are reflected in the Corporation's results of operations.
As of December 31, 2003, the Corporation and the Banks employed approximately 623 full-time equivalent employees. The Corporation provides a variety of employment benefits and considers its relationships with its employees to be satisfactory.
Effective March 29, 2004, the charters of Citizens National Bank and Security National Bank will be combined into the charter of Harleysville National Bank. In combining the three banks, the Corporation reorganized internally to improve efficiencies and productivity, thus realizing cost savings. Streamlined operations will enable our employees to be more responsive to our customers. Our customers will be able to bank at any one of our 41 offices throughout 10 counties in Eastern Pennsylvania, no matter where they live or travel in the area.
Competition
The Banks compete actively with other eastern Pennsylvania financial institutions, many larger than the Banks, as well as with financial and non-financial institutions headquartered elsewhere. The Banks are generally competitive with all competing institutions in their service areas with respect to interest rates paid on time and savings deposits, service charges on deposit accounts, interest rates charged on loans, and fees and charges for trust services. At December 31, 2003, HNB's legal lending limit to a single customer was $22,295,000 and CNB's and SNB's legal lending limits to a single customer were $5,911,000 and $2,815,000, respectively. Many of the institutions with which the Banks compete are able to lend significantly more than these amounts to a single customer.
Supervision and Regulation-The Registrant
In November, 1999, the Gramm-Leach-Bliley Financial Modernization Act of 1999 (Modernization Act) became law. The Modernization Act allows bank holding companies meeting management, capital and Community Reinvestment Act standards to engage in a substantially broader range of nonbanking activities than was permissible before enactment, including underwriting insurance and making merchant banking investments in commercial and financial companies. It allows insurers and other financial services companies to acquire banks, removes various restrictions that currently apply to bank holding company ownership of securities firms and mutual fund advisory companies, and establishes the overall regulatory structure applicable to bank holding companies that also engage in insurance and securities operations. The Corporation currently believes it meets the requirements for the broader range of activities that will be permitted by the Modernization Act.
The Modernization Act also modified law related to financial privacy and community reinvestment. The privacy provisions generally prohibit financial institutions, including the Corporation, from disclosing nonpublic financial information to nonaffiliated third parties unless customers have the opportunity to "opt out" of the disclosure.
Pending Legislation
Management is not aware of any other current specific recommendations by regulatory authorities or proposed legislation which, if they were implemented, would have a material adverse effect upon the liquidity, capital resources, or results of operations, although the general cost of compliance with numerous and multiple federal and state laws and regulations does have, and in the future may have, a negative impact on the Corporation's results of operations.
Effects of Inflation
Inflation has some impact on the Corporation's and the Banks' operating costs. Unlike many industrial companies, however, substantially all of the Banks' assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on the Corporation's and the Banks' performance than the general level of inflation. Over short periods of time, interest rates may not necessarily move in the same direction or in the same magnitude as prices of goods and services.
Effect of Government Monetary Policies
The earnings of the Corporation are and will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. An important function of the Federal Reserve is to regulate the money supply and interest rates. Among the instruments used to implement those objectives are open market operations in United States government securities and changes in reserve requirements against member bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may also affect rates charged on loans or paid for deposits.
The Banks are members of the Federal Reserve and, therefore, the policies and regulations of the Federal Reserve have a significant effect on its deposits, loans and investment growth, as well as the rate of interest earned and paid, and are expected to affect the Banks' operations in the future. The effect of such policies and regulations upon the future business and earnings of the Corporation and the Banks cannot be predicted.
Environmental Regulations
There are several federal and state statutes which regulate the obligations and liabilities of financial institutions pertaining to environmental issues. In addition to the potential for attachment of liability resulting from its own actions, a bank may be held liable under certain circumstances for the actions of its borrowers, or third parties, when such actions result in environmental problems on properties that collateralize loans held by the bank. Further, the liability has the potential to far exceed the original amount of a loan issued by the bank. Currently, neither the Corporation nor the Banks are a party to any pending legal proceeding pursuant to any environmental statute, nor are the Corporation and the Banks aware of any circumstances that may give rise to liability under any such statute.
Supervision and Regulation-Banks
The operations of the Banks are subject to federal and state statutes applicable to banks chartered under the banking laws of the United States, to members of the Federal Reserve and to banks whose deposits are insured by the FDIC. The Banks' operations are also subject to regulations of the OCC, the Federal Reserve and the FDIC. The primary supervisory authority of the Banks is the OCC, who regularly examines the Banks. The OCC has authority to prevent a national bank from engaging in unsafe or unsound practices in conducting its business.
Federal and state banking laws and regulations govern, among other things, the scope of a bank's business, the investments a bank may make, the reserves against deposits a bank must maintain, loans a bank makes and collateral it takes, the activities of a bank with respect to mergers and consolidations and the establishment of branches.
As a subsidiary bank of a bank holding company, the Banks are subject to certain restrictions imposed by the Federal Reserve Act on any extensions of credit to the bank holding company or its subsidiaries, or investments in the stock or other securities as collateral for loans. The Federal Reserve Act and Federal Reserve regulations also place certain limitations and reporting requirements on extensions of credit by a bank to principal shareholders of its parent holding company, among others,
and to related interests of such principal shareholders. In addition, such legislation and regulations may affect the terms upon which any person becoming a principal shareholder of a holding company may obtain credit from banks with which the subsidiary bank maintains a correspondent relationship.
Under the Federal Deposit Insurance Act, the OCC possesses the power to prohibit institutions regulated by it (such as the Banks) from engaging in any activity that would be an unsafe and unsound banking practice or would otherwise be in violation of the law.
Under the Community Reinvestment Act of 1977, the OCC is required to assess the record of all financial institutions regulated by it to determine if these institutions are meeting the credit needs of the community, including low and moderate income neighborhoods, which they serve and to take this record into account in its evaluation of any application made by any of such institutions for, among other things, approval of a branch or other deposit facility, office relocation, a merger or an acquisition of bank shares. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 amended the CRA to require, among other things, that the OCC make publicly available the evaluation of a bank's record of meeting the credit needs of its entire community, including low and moderate income neighborhoods. This evaluation will include a descriptive rating like "outstanding," "satisfactory," "needs to improve" or "substantial noncompliance" and a statement describing the basis for the rating. These ratings are publicly disclosed.
Under the Bank Secrecy Act, banks and other financial institutions are required to report to the Internal Revenue Service currency transactions of more than $10,000 or multiple transactions of which a bank is aware in any one day that aggregate in excess of $10,000. Civil and criminal penalties are provided under the Bank Secrecy Act for failure to file a required report, for failure to supply information required by the Bank Secrecy Act or for filing a false or fraudulent report.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires that institutions be classified, based on their risk-based capital ratios into one of five defined categories, as illustrated below: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
* 3.0 for those banks having the highest available regulatory rating.
In the event an institution's capital deteriorates to the undercapitalized category or below, FDICIA prescribes an increasing amount of regulatory intervention, including: the institution of a capital restoration plan and a guarantee of the plan by a parent institution; and the placement of a hold on increases in assets, number of branches or lines of business. If capital has reached the significantly or critically undercapitalized levels, further material restrictions can be imposed, including restrictions on interest payable on accounts, dismissal of management and, in critically undercapitalized situations, appointment of a receiver. For well capitalized institutions, FDICIA provides authority for regulatory intervention where the institution is deemed to be engaging in unsafe or unsound practices or receives a less than satisfactory examination report rating for asset quality, management, earnings or liquidity. All but well capitalized institutions are prohibited from accepting brokered deposits without prior
regulatory approval. Under FDICIA, financial institutions are subject to increased regulatory scrutiny and must comply with certain operational, managerial and compensation standards to be developed by Federal Reserve Board regulations. FDICIA also requires the regulators to issue new rules establishing certain minimum standards to which an institution must adhere including standards requiring a minimum ratio of classified assets to capital, minimum earnings necessary to absorb losses and minimum ratio of market value to book value for publicly held institutions. Additional regulations are required to be developed relating to internal controls, loan documentation, credit underwriting, interest rate exposure, asset growth and excessive compensation, fees and benefits.
Annual full-scope, on site regulatory examinations are required for all the FDIC-insured institutions except institutions with assets under $100 million which are well capitalized, well-managed and not subject to a recent change in control, in which case, the examination period is every 18 months. Banks with total assets of $500 million or more, as of the beginning of fiscal year 1993, are required to submit to their supervising federal and state banking agencies a publicly available annual audit report. The independent accountants of such banks are required to attest to the accuracy of management's report regarding the internal control structure of the bank. In addition, such banks also are required to have an independent audit committee composed of outside directors who are independent of management, to review with management and the independent accountants, the reports that must be submitted to the bank regulatory agencies. If the independent accountants resign or are dismissed, written notification must be given to the Banks' supervising government banking agencies. These accounting and reporting reforms do not apply to an institution such as a bank with total assets at the beginning of its fiscal year of less than $500 million, such as CNB or SNB.
FDICIA also requires that banking agencies reintroduce loan-to-value ratio regulations which were previously repealed by the 1982 Act. Loan-to-values limit the amount of money a financial institution may lend to a borrower, when the loan is secured by real estate, to no more than a percentage, set by regulation, of the value of the real estate.
A separate subtitle within FDICIA, called the "Bank Enterprise Act of 1991," requires "truth-in-savings" on consumer deposit accounts so that consumers can make meaningful comparisons between the competing claims of banks with regard to deposit accounts and products. Under this provision, a bank is required to provide information to depositors concerning the terms of their deposit accounts, and in particular, to disclose the annual percentage yield. The operational cost of complying with the Truth-In-Savings law had no material impact on liquidity, capital resources or reported results of operations.
While the overall impact of fully implementing all provisions of the FDICIA cannot be accurately calculated, Management believes that full implementation of the FDICIA had no material impact on liquidity, capital resources or reported results of operation in future periods.
From time to time, various types of federal and state legislation have been proposed that could result in additional regulation of, and restriction on, the business of the Banks. It cannot be predicted whether any such legislation will be adopted or, if adopted, how such legislation would affect the business of the Banks. As a consequence of the extensive regulation of commercial banking activities in the United States, the Banks' business is particularly susceptible to being affected by federal legislation and regulations that may increase the costs of doing business.
Item 2.
Item 2. Properties
The principal executive offices of the Corporation and of HNB are located in Harleysville, Pennsylvania in a two-story office building owned by HNB, built in 1929. HNB also owns the buildings in which twelve of its branches are located and leases space for the other eleven branches from unaffiliated third parties under leases expiring at various times through 2036. The principal executive offices of CNB are located in Lansford, Pennsylvania in a two-story office building owned by CNB.
Citizens owns nine of the buildings where its branches are located and leases two branches. The principal executive offices of SNB are located in Pottstown, Pennsylvania, in a building leased by SNB. SNB leases five branches, and owns its Pottstown Center branch. HNC Investment Company leases an office in Wilmington, Delaware. HNC Reinsurance Company leases an office in Phoenix, Arizona.
Office
Office Location
Owned/Leased
Harleysville
483 Main Street, Harleysville, PA
Owned
Skippack
Route 73, Skippack, PA
Owned
Limerick
Ridge Pike, Limerick, PA
Owned
North Penn
Welsh & North Wales Rd., North Wales, PA
Owned
Gilbertsville
Gilbertsville Shopping Center, Gilbertsville, PA
Leased
Hatfield
Snyder Square, Hatfield, PA
Leased
North Broad
North Broad Street, Lansdale, PA
Owned
Marketplace
Marketplace Shopping Center, Lansdale, PA
Leased
Normandy Farms
Morris Road, Blue Bell, PA
Leased
Horsham
Babylon Business Center, Horsham, PA
Leased
Meadowood
Route 73, Worcester, PA
Leased
Collegeville
364 Main Street, Collegeville, PA
Owned
Sellersville
209 North Main Street, Sellersville, PA
Owned
Trainers Corner
Trainers Corner Center, Quakertown, PA
Leased
Quakertown Main
224 West Broad Street, Quakertown, PA
Owned
Spring House
1017-1031 N. Bethlehem Pike, Spring House, PA
Owned
Red Hill
400 Main Street, Red Hill, PA
Owned
Doylestown
500 East State Road, Doylestown, PA
Leased
Audubon
2624 Egypt Road, Audubon, PA
Owned*
Chalfont
251 West Butler Avenue, Chalfont, PA
Leased
Royersford
440 W. Linfield-Trappe Road, Royersford, PA
Owned*
Souderton
702 Route 113, Souderton, PA
Leased
Foulkeways
1120 Meetinghouse Road, Gwynedd, PA
Leased
Lansford
13-15 West Ridge Street, Lansford, PA
Owned
Summit Hill
2 East Ludlow Street, Summit Hill, PA
Owned
Lehighton
904 Blakeslee Blvd, Lehighton, PA
Owned
Honesdale
1001 Main Street, Honesdale, PA
Owned
McAdoo
25 North Kennedy Drive, McAdoo, PA
Owned
Slatington
502 Main Street, Slatington, PA
Owned
Slatington Handi-Bank
705 Main Street, Slatington, PA
Owned
Lehigh Township
4421 Lehigh Drive, Walnutport, PA
Owned
Palmerton
372 Delaware Avenue, Palmerton, PA
Owned
Kresgeville
Route 209, Kresgeville, PA
Leased
Allentown
1602-1604 Allen Street, Allenton, PA
Leased
Pottstown
One Security Plaza, Pottstown, PA
Leased
Pottstown
1450 East High Street, Pottstown, PA
Leased
Pottstown
930 North Charlotte Street, Pottstown, PA
Leased
Pottstown
Rt. 100 and Shoemaker Road, Pottstown, PA
Owned*
Boyertown
Rt. 100 and Baus Road, Boyertown, PA
Leased
Douglassville
1191 Ben Franklin Parkway, Douglassville, PA
Leased
* Branch buildings are owned by the Banks and the land is leased.
In management's opinion, all of the above properties are in good condition and are adequate for the Registrant's and the Banks' purposes.
Item 3.
Item 3. Legal Proceedings
Management, based on consultation with the Corporation's legal counsel, is not aware of any litigation that would have a material adverse effect on the consolidated financial position of the Corporation. There are no proceedings pending other than the ordinary routine litigation incident to the business of the Corporation and its subsidiaries-HNB, CNB, SNB, HNC Financial Company and HNC Reinsurance Company. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Corporation and the Banks by government authorities.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of 2003 to a vote of holders of the Corporation's Common Stock.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Within the ninety days prior to the filing of this report, the Corporation's management, under the supervision and with the participation of the Corporation's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Corporation's disclosure controls and procedures, as defined in Rule 13a-14c under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were adequate. There were no significant changes (including corrective actions with regard to significant or material weaknesses) in the Corporation's internal controls or in other factors subsequent to the date of the evaluation that could significantly affect those controls.
Item 10. Executive Officers of Registrant
The following listing sets forth the name, age (as of February 12, 2004) and principal position regarding the Executive Officers of the Corporation
The rules of the Securities and Exchange Commission require that the corporation disclose late filings of reports of stock ownership (and changes in stock ownership) by its directors and executive officers. To the best of the Corporation's knowledge, there were no late filings of reports of stock ownership by its directors and executive officers.
Exhibits
Exhibit
No.
Description of Exhibits
(3.1)
Harleysville National Corporation Articles of Incorporation, as amended. (Incorporated by reference to Exhibit 3(a) to the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(3.2)
Harleysville National Corporation By-laws. (Incorporated by reference to Exhibit 3(b) to the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.1)
Harleysville National Corporation 1993 Stock Incentive Plan. (Incorporated by Reference to Exhibit 4.3 of Registrant's Registration Statement No. 33-57790 on Form S-8, filed with the Commission on October 1, 1993.)
(10.2)
Harleysville National Corporation Stock Bonus Plan. (Incorporated by Reference to Exhibit 99A of Registrant's Registration Statement No. 33-17813 on Form S-8, filed with the Commission on December 13, 1996.)
(10.3)
Supplemental Executive Retirement Plan. (Incorporated by Reference to Exhibit 10.3 of Registrant's Annual Report in Form 10-K for the year ended December 31, 1997, filed with the Commission on March 27, 1998.)
(10.4)
Walter E. Daller, Jr., Chairman, President and Chief Executive Officer's employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.5)
Demetra M. Takes, President and Chief Executive Officer of Harleysville employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.6)
Vernon L. Hunsberger, Senior Vice President/CFO and Cashier's employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.7)
Harleysville National Corporation 1998 Stock Incentive Plan. (Incorporated by Reference to Registrant's Registration Statement No. 333-79971 on Form S-8 filed with the Commission on June 4, 1999.)
(10.8)
Harleysville National Corporation 1998 Independent Directors Stock Option Plan. (Incorporated by Reference to Registrant's Registration Statement No. 333-79973 on Form S-8 filed with the Commission on June 4, 1999.)
(10.9)
Agreement and Plan of Merger dated as of October 15, 2004, by and among Harleysville National Corporation, Harleysville National Bank and Trust Company and Millennium Bank, as amended February 2, 2004. (Incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.10)
Employment Agreement by and among Harleysville National Corporation, Harleysville National Bank and Trust Company and David E. Sparks, dated as of October 15, 2003 (incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.11)
Amendment to Employment Agreement by and among David R. Kotok, Millennium Bank, Cumberland Advisors, Inc., Harleysville National Corporation and Harleysville National Bank and Trust Company dated October 15, 2003 (incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(13)
Excerpts from the Corporation's 2003 Annual Report to Shareholders.
(14)
Code of Ethics
(21)
Subsidiaries of Registrant.
(23)
Consent of Grant Thornton LLP, Independent Certified Public Accountants.
(31.1)
Certification pursuant to Section 302. Walter E. Daller, Jr., Chairman, President and Chief Executive Officer.
(31.2)
Certification pursuant to Section 302. Gregg J. Wagner, Executive Vice President and Chief Financial Officer.
(32.1)
Certification pursuant to Section 906.
(32.2)
Certification pursuant to Section 906.
(b) Report on Form 8-K.
On October 14, 2003, the Registrant filed a Form 8-K containing the third quarter of 2003 earnings press release.
On October 16, 2003, the Registrant filed a Form 8-K announcing its definitive agreement to acquire Millennium Bank signed on October 15, 2003.
On November 20, 2003, the Registrant filed a Form 8-K announcing that on November 17, 2003 the Registrant declared a dividend of 16 cents per share and a special dividend of 3 cents per share, payable December 15, 2003.
On December 1, 2003, the Registrant filed a Form 8-K announcing that the Registrant's audit committee amended and restated its charter.
On December 24, 2003, the Registrant filed a Form 8-K announcing that the Registrant received approval of the OCC to combine the charters of its subsidiary banks, Security National Bank and Citizens National Bank into its largest subsidiary bank, Harleysville National Bank and Trust Company, as of March 26, 2004.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HARLEYSVILLE NATIONAL CORPORATION
By:
/s/ WALTER E. DALLER, JR. Walter E. Daller, Jr.
President
Date: February 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ WALTER R. BATEMAN II Walter R. Bateman II
Director
February 25, 2004
/s/ LEEANN BERGEY LeeAnn Bergey
Director
February 25, 2004
/s/ WALTER E. DALLER, JR. Walter E. Daller, Jr.
Chairman of the Board,
President and Chief Executive
Officer and Director
(Principal Executive Officer)
February 25, 2004
/s/ HAROLD A. HERR Harold A. Herr
Director
February 25, 2004
/s/ GREGG J. WAGNER Gregg J. Wagner
Treasurer (Principal Financial and Accounting Officer)
February 25, 2004
/s/ STEPHANIE S. MITCHELL Stephanie S. Mitchell
Director
February 25, 2004
/s/ THOMAS C. LEAMER Thomas C. Leamer
Director
February 25, 2004
/s/ JAMES A. WIMMER James A. Wimmer
Director
February 25, 2004
/s/ WILLIAM M. YOCUM William M. Yocum
Director
February 25, 2004
EXHIBIT INDEX
Exhibit
(13)
Excerpts from the Corporation's 2003 Annual Report to Shareholders
(14)
Code of Ethics
(21)
Subsidiaries of Registrant.
(23)
Consent of Grant Thornton LLP, Independent Certified Public Accountants.
(31.1)
Certification pursuant to Section 302. Walter E. Daller, Jr., Chairman, President and Chief Executive Officer.
(31.2)
Certification pursuant to Section 302. Gregg J. Wagner, Executive Vice President and Chief Financial Officer.
(32.1)
Certification pursuant to Section 906.
(32.2)
Certification pursuant to Section 906.
DOCUMENTS INCORPORATED BY REFERENCE
HARLEYSVILLE NATIONAL CORPORATION Index
Form 10-K Cross Reference Sheet of Material Incorporated by Reference
Forward-Looking Statements
Management's Discussion and Analysis of Financial Condition and Results of Operations
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS
HARLEYSVILLE NATIONAL CORPORATION
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
CONDENSED STATEMENTS OF INCOME
CONDENSED STATEMENTS OF CASH FLOWS
Report of Independent Certified Public Accountants
Exhibits
SIGNATURES
EXHIBIT INDEX
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
Within the ninety days prior to the filing of this report, the Corporation's management, under the supervision and with the participation of the Corporation's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Corporation's disclosure controls and procedures, as defined in Rule 13a-14c under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Corporation's disclosure controls and procedures were adequate. There were no significant changes (including corrective actions with regard to significant or material weaknesses) in the Corporation's internal controls or in other factors subsequent to the date of the evaluation that could significantly affect those controls.
Item 10.
Item 10. Executive Officers of Registrant
The following listing sets forth the name, age (as of February 12, 2004) and principal position regarding the Executive Officers of the Corporation
The rules of the Securities and Exchange Commission require that the corporation disclose late filings of reports of stock ownership (and changes in stock ownership) by its directors and executive officers. To the best of the Corporation's knowledge, there were no late filings of reports of stock ownership by its directors and executive officers.
Exhibits
Exhibit
No.
Description of Exhibits
(3.1)
Harleysville National Corporation Articles of Incorporation, as amended. (Incorporated by reference to Exhibit 3(a) to the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(3.2)
Harleysville National Corporation By-laws. (Incorporated by reference to Exhibit 3(b) to the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.1)
Harleysville National Corporation 1993 Stock Incentive Plan. (Incorporated by Reference to Exhibit 4.3 of Registrant's Registration Statement No. 33-57790 on Form S-8, filed with the Commission on October 1, 1993.)
(10.2)
Harleysville National Corporation Stock Bonus Plan. (Incorporated by Reference to Exhibit 99A of Registrant's Registration Statement No. 33-17813 on Form S-8, filed with the Commission on December 13, 1996.)
(10.3)
Supplemental Executive Retirement Plan. (Incorporated by Reference to Exhibit 10.3 of Registrant's Annual Report in Form 10-K for the year ended December 31, 1997, filed with the Commission on March 27, 1998.)
(10.4)
Walter E. Daller, Jr., Chairman, President and Chief Executive Officer's employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.5)
Demetra M. Takes, President and Chief Executive Officer of Harleysville employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.6)
Vernon L. Hunsberger, Senior Vice President/CFO and Cashier's employment agreement. (Incorporated by Reference to Registrant's Registration Statement on Form 8-K, filed with the Commission on March 25, 1999.)
(10.7)
Harleysville National Corporation 1998 Stock Incentive Plan. (Incorporated by Reference to Registrant's Registration Statement No. 333-79971 on Form S-8 filed with the Commission on June 4, 1999.)
(10.8)
Harleysville National Corporation 1998 Independent Directors Stock Option Plan. (Incorporated by Reference to Registrant's Registration Statement No. 333-79973 on Form S-8 filed with the Commission on June 4, 1999.)
(10.9)
Agreement and Plan of Merger dated as of October 15, 2004, by and among Harleysville National Corporation, Harleysville National Bank and Trust Company and Millennium Bank, as amended February 2, 2004. (Incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.10)
Employment Agreement by and among Harleysville National Corporation, Harleysville National Bank and Trust Company and David E. Sparks, dated as of October 15, 2003 (incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(10.11)
Amendment to Employment Agreement by and among David R. Kotok, Millennium Bank, Cumberland Advisors, Inc., Harleysville National Corporation and Harleysville National Bank and Trust Company dated October 15, 2003 (incorporated by reference to Appendix A to the proxy statement/prospectus on the Corporation's Registration Statement No. 333-111709 on Form S-4, as filed on January 5, 2004.)
(13)
Excerpts from the Corporation's 2003 Annual Report to Shareholders.
(14)
Code of Ethics
(21)
Subsidiaries of Registrant.
(23)
Consent of Grant Thornton LLP, Independent Certified Public Accountants.
(31.1)
Certification pursuant to Section 302. Walter E. Daller, Jr., Chairman, President and Chief Executive Officer.
(31.2)
Certification pursuant to Section 302. Gregg J. Wagner, Executive Vice President and Chief Financial Officer.
(32.1)
Certification pursuant to Section 906.
(32.2)
Certification pursuant to Section 906.
(b) Report on Form 8-K.
On October 14, 2003, the Registrant filed a Form 8-K containing the third quarter of 2003 earnings press release.
On October 16, 2003, the Registrant filed a Form 8-K announcing its definitive agreement to acquire Millennium Bank signed on October 15, 2003.
On November 20, 2003, the Registrant filed a Form 8-K announcing that on November 17, 2003 the Registrant declared a dividend of 16 cents per share and a special dividend of 3 cents per share, payable December 15, 2003.
On December 1, 2003, the Registrant filed a Form 8-K announcing that the Registrant's audit committee amended and restated its charter.
On December 24, 2003, the Registrant filed a Form 8-K announcing that the Registrant received approval of the OCC to combine the charters of its subsidiary banks, Security National Bank and Citizens National Bank into its largest subsidiary bank, Harleysville National Bank and Trust Company, as of March 26, 2004.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HARLEYSVILLE NATIONAL CORPORATION
By:
/s/ WALTER E. DALLER, JR. Walter E. Daller, Jr.
President
Date: February 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ WALTER R. BATEMAN II Walter R. Bateman II
Director
February 25, 2004
/s/ LEEANN BERGEY LeeAnn Bergey
Director
February 25, 2004
/s/ WALTER E. DALLER, JR. Walter E. Daller, Jr.
Chairman of the Board,
President and Chief Executive
Officer and Director
(Principal Executive Officer)
February 25, 2004
/s/ HAROLD A. HERR Harold A. Herr
Director
February 25, 2004
/s/ GREGG J. WAGNER Gregg J. Wagner
Treasurer (Principal Financial and Accounting Officer)
February 25, 2004
/s/ STEPHANIE S. MITCHELL Stephanie S. Mitchell
Director
February 25, 2004
/s/ THOMAS C. LEAMER Thomas C. Leamer
Director
February 25, 2004
/s/ JAMES A. WIMMER James A. Wimmer
Director
February 25, 2004
/s/ WILLIAM M. YOCUM William M. Yocum
Director
February 25, 2004
EXHIBIT INDEX
Exhibit
(13)
Excerpts from the Corporation's 2003 Annual Report to Shareholders
(14)
Code of Ethics
(21)
Subsidiaries of Registrant.
(23)
Consent of Grant Thornton LLP, Independent Certified Public Accountants.
(31.1)
Certification pursuant to Section 302. Walter E. Daller, Jr., Chairman, President and Chief Executive Officer.
(31.2)
Certification pursuant to Section 302. Gregg J. Wagner, Executive Vice President and Chief Financial Officer.
(32.1)
Certification pursuant to Section 906.
(32.2)
Certification pursuant to Section 906.
DOCUMENTS INCORPORATED BY REFERENCE
HARLEYSVILLE NATIONAL CORPORATION Index
Form 10-K Cross Reference Sheet of Material Incorporated by Reference
Forward-Looking Statements
Management's Discussion and Analysis of Financial Condition and Results of Operations
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS
HARLEYSVILLE NATIONAL CORPORATION
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HARLEYSVILLE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
CONDENSED STATEMENTS OF INCOME
CONDENSED STATEMENTS OF CASH FLOWS
Report of Independent Certified Public Accountants
Exhibits
SIGNATURES
EXHIBIT INDEX