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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ______________ .
Commission file number 0-15237
HARLEYSVILLE NATIONAL CORPORATION
(Exact name of registrant as specified in its
charter)
Pennsylvania 23-2210237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
483 Main Street, Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 256-8851
Securities registered pursuant to Section 12(b) of the Act: N/A
Name of each exchange
Title of each class on which registered
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
Title of Class
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X . No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)
Page 1
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the
date of filing.
$136,120,426 as of February 23, 1996
Indicate the number of shares outstanding of each class of
the registrant's classes of common stock, as of the latest
practicable date.
5,880,828 shares of Common Stock, $1 par value
per share, were outstanding as of February 23, 1996.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1995 are incorporated by
reference into Parts I, II and IV of this report.
2. Portions of the Registrant's Definitive Proxy Statement
relating to the Annual Meeting of Shareholders to be held
April 9, 1996 are incorporated by reference into Part III of
this report.
Page 2
HARLEYSVILLE NATIONAL CORPORATION
INDEX TO FORM 10-K REPORT
PAGE
I. PART I.
Item 1. Business . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of 11
Security Holders . . . . . . . . . . . .
II. PART II.
Item 5. Market for Registrant's Common Stock and 12
Related Shareholder Matters . . . . . .
Item 6. Selected Financial Data . . . . . . . . 12
Item 7. Management's Discussion and Analysis of 12
Financial Condition and Results of
Operations .
Item 8. Financial Statements and Supplementary 12
Data . .
Item 9. Changes in and Disagreements with 12
Accountants on Accounting and Financial
Disclosure . . . . . .
III PART. III.
Item 10. Directors and Executive Officers of the 13
Registrant . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial 14
Owners and Management . . . . . . . . .
Item 13. Certain Relationships and Related 15
Transactions .
IV. PART IV.
Item 14. Exhibits, Financial Statement Schedules 16
and Reports on Form 8-K . . . . . . . .
Signatures. . . . . . . . . . . . . . . . . . . . 18
Page 3
PART I
Item 1. Business.
History and Business
- --------------------
Harleysville National Corporation (the "Corporation"),
a Pennsylvania business corporation, was incorporated in
June 1982. On January 1, 1983, the Corporation acquired all
of the outstanding common stock of Harleysville National
Bank and Trust Company ("Harleysville") at which time
Harleysville became a wholly-owned subsidiary of the
Corporation. On February 13, 1991, the Corporation acquired
all of the outstanding common stock of The Citizens National
Bank of Lansford ("Citizens"). 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 Citizens and is now operating as a
branch office of Citizens. On September 7, 1995, the
Corporation, Citizens and Farmers and Merchants Bank
("Farmers") executed an Agreement and Plan of Reorganization
and an Agreement and Plan of Merger. On March 1, 1996, the
Corporation acquired all of the outstanding stock of Farmers
and merged it with and into Citizens. On July 1, 1994 the
Corporation acquired all of the outstanding stock of
Security National Bank ("Security"). The Corporation is a
three-bank holding company providing financial services
through its Bank subsidiaries. Since commencing operations,
the Corporation's business has consisted primarily of
managing Harleysville, Citizens and Security (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, as amended (the "Bank Holding Company Act"). As of
December 31, 1995, the Company had total consolidated
assets, deposits and shareholders' equity of $874,145,992,
$741,218,395 and $77,516,176 respectively.
Harleysville, which was established in 1909, Citizens,
which was established in 1903, and Security, which was
established in 1988, are national banking associations under
the supervision of the Comptroller of the Currency of the
United States of America. The Corporation's and
Harleysville's legal headquarters are located at 483 Main
Street, Harleysville, Pennsylvania 19438. Citizens' legal
headquarters is located at 13-15 West Ridge Street,
Lansford, Pennsylvania 18232. Security's legal headquarters
is located at One Security Plaza, Pottstown, Pennsylvania
19464.
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 trust services. Their deposits are
insured by the Federal Deposit Insurance Corporation (FDIC)
to the maximum extent provided by law.
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 that the Company
believes are unusual for community banks. The Banks
maintain close contact with the local business community to
monitor commercial lending needs and believes they respond
to customer requests quickly and with flexibility.
Management believes these competitive strengths are
reflected in the Corporation's results of operations.
The Banks have twenty-two (22) offices located in
Montgomery, Bucks and Carbon Counties, 12 of which are owned
by the Banks and 10 of which are leased from third parties.
As of December 31, 1995, the Corporation and the Banks
employed approximately 350 full-time and full-time equivalent
persons. The Corporation provides a variety of employment
benefits and considers its relationships with its employees
to be satisfactory.
Page 4
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 institutions in their service
areas with respect to interest rates paid on time and
savings deposits, service charges on deposit accounts and
interest rates charged on loans. At December 31, 1995,
Harleysville's legal lending limit to a single customer was
$9,650,000 and Citizens' and Security's legal lending limits
to a single customer were $1,815,000 and $590,000,
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
- -------------------------------------------
The Registrant is subject to the provisions of the
Bank Holding Company Act of 1956, as amended (the "Bank
Holding Company Act"), and to supervision by the Federal
Reserve Board. The Bank Holding Company Act requires the
Registrant to secure the prior approval of the Federal
Reserve Board before it owns or controls, directly or
indirectly, more than five percent (5%) of the voting shares
or substantially all of the assets of any institution,
including another bank. In addition, the Bank Holding
Company Act has been amended by the Riegle-Neal Interstate
Banking and Branching Efficiency Act which permits bank
holding companies to acquire a bank located in any state
subject to certain limitation and restrictions which are
more fully described below.
A bank holding company is prohibited from engaging in
or acquiring direct or indirect control of more than five
percent (5%) of the voting shares of any company engaged in
non-banking activities unless the Federal Reserve Board, by
order or regulation, has found such activities to be so
closely related to banking or managing or controlling banks
as to be a proper incident thereto. In making this
determination, the Federal Reserve Board considers whether
the performance of these activities by a bank holding
company would offer benefits to the public that outweigh
possible adverse effects.
Federal law also prohibits acquisitions of control of
a bank holding company without prior notice to certain
federal bank regulators. Control is defined for this
purpose as the power, directly or indirectly, to direct the
management or policies of the bank or bank holding company
or to vote twenty-five percent (25%) or more of any class of
voting securities.
Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act
on any extensions of credit to the bank holding company or
any of its subsidiaries, on investments in the stock or
other securities of the bank holding company and on taking
of such stock or securities of the bank holding company and
on taking of such stock or securities as collateral for
loans to any borrower.
Permitted Activities
- --------------------
The Federal Reserve Board permits bank holding
companies to engage in certain activities so closely related
to banking or managing or controlling banks as to be proper
incident thereto. Other than making an equity investment in
a low to moderate income housing limited partnership, the
Registrant does not at this time engage in any other
permissible activities, nor does the Registrant have any
current plans to engage in any other permissible activities
in the foreseeable future.
Legislation and Regulatory Changes
- ----------------------------------
From time to time, legislation is enacted which has the
effect of increasing the cost of doing business, limiting or
expanding permissible activities or affecting the
competitive balance between banks and other financial
institutions. Proposals to change the laws and regulations
governing the operations and taxation of banks, bank holding
companies and other financial institutions are frequently
made in Congress, and before various bank regulatory
agencies. No prediction can be made as to the likelihood of
any major changes or the impact such changes might have on
the Registrant and its subsidiaries. Certain changes of
potential significance to the Registrant which have been
enacted recently and others which are currently under
consideration by Congress or various regulatory or
professional agencies are discussed below.
Page 5
The passage of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 and the Riegle Community
Development and Regulatory Improvement Act may have a
significant impact upon the Corporation. The key provisions
pertain to interstate banking and interstate branching as
well as a reduction in the regulatory burden on the banking
industry. Since September 1995, bank holding companies may
acquire banks in other states without regard to state law.
In addition, banks can merge with other banks in another
state beginning in June 1997. States may adopt laws
preventing interstate branching but, if so, no out-of-state
bank can establish a branch in such state and no banks in
such state may branch outside the state. Pennsylvania
recently amended the provisions of its banking code to
authorize full interstate banking and branching under
Pennsylvania law and to facilitate the operations of
interstate banks in Pennsylvania. As a result of legal and
industry changes, management predicts that consolidation
will continue as the financial services industry strives for
greater cost efficiencies and market share. Management
believes that such consolidation may enhance its competitive
position as a community bank.
The Interstate Banking and Branching Act also amends the
International Banking Act to allow a foreign bank to
establish and operate a federal branch or agency upon
approval of the appropriate federal and state banking
regulator. As a national bank, the Bank currently can
relocate its main office across state lines by utilizing a
provision in the National Bank Act which permits such
relocation to a location not more than thirty miles from its
existing main office. In effect, a national bank can
thereby move across state lines as long as the relocation
does not exceed thirty miles and also retain as branches the
offices located in the original state.
The Federal Reserve Board, the FDIC, and the
Comptroller of the Currency ("Comptroller") have issued
certain risk-based capital guidelines. See pages 34 and 35
of Registrant's 1995 Annual Report, which is incorporated by
reference herein, for information concerning the
Registrant's capital.
Pending Legislation
- -------------------
Various congressional bills and other proposals have
proposed a sweeping overhaul of the banking system,
including provisions for: limitations on deposit insurance
coverage; changing the timing and method financial
institutions use to pay for deposit insurance; expanding the
power of banks by removing the restrictions on bank
underwriting activities; tightening the regulation of bank
derivatives activities; allowing commercial enterprises to
own banks; and permitting bank holding companies to own
affiliates that engage in securities, mutual funds and
insurance activities.
There are numerous proposals before Congress to modify
the financial services industry and the way commercial banks
operate. However, it is difficult to determine at this time
what effect such provisions may have until they are enacted
into law. Except as specifically described on page 35 of
the 1995 Annual Report to Shareholders, management believes
that the effect of the provisions of the aforementioned
legislation on the liquidity, capital resources, and results
of operations of the Corporation will be immaterial.
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.
Page 6
Effect of Government Monetary Policies
- --------------------------------------
The earnings of the Registrant 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 System 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 System
and, therefore, the policies and regulations of the Federal
Reserve Board 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 the 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 is the
Corporation and the Banks aware of any circumstances which
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 System and to banks whose deposits are insured by
the Federal Deposit Insurance Corporation. The Banks'
operations are also subject to regulations of the
Comptroller of the Currency (Comptroller), the Federal
Reserve Board and the FDIC.
The primary supervisory authority of the Banks is the
Comptroller, who regularly examines the Banks. The
Comptroller 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 maximum interest rates a bank may pay on
deposits, 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 Board 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.
FDIC
- ----
Under the Federal Deposit Insurance Act, the
Comptroller 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.
Page 7
CRA
- ---
Under the Community Reinvestment Act of 1977, as
amended ("CRA"), the Comptroller 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
Comptroller 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
("outstanding", "satisfactory", "needs to improve" or
"substantial noncompliance") and a statement describing the
basis for the rating. These ratings are publicly disclosed.
BSA
- ---
Under the Bank Secrecy Act ("BSA"), 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 the bank is aware
in any one day that aggregate in excess of $10,000. Civil
and criminal penalties are provided under the BSA for
failure to file a required report, for failure to supply
information required by the BSA or for filing a false or
fraudulent report.
FDICIA
- ------
Capital Categories: On December 19, 1991, the Federal
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") became law. Under FDICIA, institutions must 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).
Total Tier 1 Under a
Risk- Risk- Tier 1 Capital
Based Based Leverage Order or
Ratio Ratio Ratio Directive
CAPITAL CATEGORY
Well capitalized >10.0 >6.0 >5.0 NO
Adequately capitalized > 8.0 >4.0 >4.0*
Undercapitalized < 8.0 <4.0 <4.0*
Significantly Under-
capitalized < 6.0 <3.0 <3.0
Critically Under-
capitalized <2.0
*3.0 for those banks having the highest available regulatory
rating.
Prompt Corrective Action: In the event an
institution's capital deteriorates to the undercapitalized
category or below, FDICIA prescribes an increasing amount of
regulatory intervention, including: (1) the institution of a
capital restoration plan and a guarantee of the plan by a
parent institution; and (2) 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.
Page 8
Operational Controls: 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.
Examinations and Audits: 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 eighteen (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 bank are required to attest to the
accuracy of management's report. The accountants also are
required to monitor management's compliance with governing
laws and regulations. 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 bank's
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 Citizens or Security.
Real Estate Loans: FDICIA also requires that banking
agencies reintroduce loan-to-value ("LTV") ratio regulations
which were previously repealed by the 1982 Act. LTVs 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.
Truth-In-Savings: 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, the 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.
Other: 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.
Statistical Data
- ----------------
The information for this Item is incorporated by
reference to pages 23 through 37 of the Company's Annual
Report to Shareholders for the year ended December 31, 1995,
which is included as Exhibit (13) to this Form 10-K Report.
Page 9
Item 2. Properties.
- -------------------
The principal executive offices of the Company and of
Harleysville are located in Harleysville, Pennsylvania in a
two-story office building owned by Harleysville which was
built in 1929. Harleysville also owns the buildings in
which nine of its branches are located and leases space for
the other seven branches from unaffiliated third parties
under leases expiring at various times through 2012. The
principal executive offices of Citizens are located in
Lansford, Pennsylvania in a two-story office building owned
by Citizens. Citizens also owns the buildings where the
Summit Hill and Lehighton branches are located. The
principal executive offices of Security are located in
Pottstown, Pennsylvania in a building leased by Security.
Security also leases its East End and North End Branches.
Office Office Location Owned/Leased
Harleysville 483 Main Street Owned
Harleysville Pa
Skippack Route 73 Owned
Skippack Pa
Limerick Ridge Pike Owned
Limerick Pa
North Penn Welsh & North Wales Rd Owned
North Wales Pa
Gilbertsville Gilbertsville Shopping Leased
Gilbertsville Pa
Hatfield Snyder Square Leased
Hatfield Pa
North Broad North Broad Street Owned
Lansdale Pa
Marketplace Marketplace Shopping Leased
Lansdale Pa
Normandy Farms Morris Road Leased
Blue Bell Pa
Horsham Babylon Business Center Leased
Horsham Pa
Meadowood Route 73 Leased
Worcester Pa
Collegeville 364 Main Street Owned
Collegeville Pa
Sellersville 209 North Main St Owned
Sellersville Pa
Trainers Corner Trainers Corner Center Leased
Quakertown Pa
Page 10
Quakertown Main 224 West Broad St Owned
Quakertown PA
Red Hill 400 Main Street Owned
Red Hill PA
Citizens 13-15 West Ridge Street Owned
Lansford PA
Summit Hill 2 East Ludlow Street Owned
Summit Hill PA
Lehighton 904 Blakeslee Blvd Owned
Lehighton PA
Pottstown One Security Plaza Leased
Pottstown PA
Pottstown 1450 East High Street Leased
Pottstown PA
Pottstown Charlotte & Mervine Sts. Leased
Pottstown PA
All of the above properties are in good condition and
are adequate for the Registrant's and the Banks' purposes.
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 Company. There are
no proceedings pending other than the ordinary routine
litigation incident to the business of the Corporation and
its subsidiaries - Harleysville National Bank and Trust
Company, The Citizens National Bank of Lansford and Security
National Bank. 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. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
No matter was submitted during the fourth quarter of
1995 to a vote of holders of the Company's Common Stock.
Page 11
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters.
- -------------------------------------------------------------
The information for this Item is incorporated by
reference to pages 8 and 18 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1995,
which is included as Exhibit (13) to this Form 10-K Report.
Item 6. Selected Financial Data.
- --------------------------------
The information for this Item is incorporated by
reference to pages 23 and 37 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1995,
which is included as Exhibit (13) to this Form 10-K Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
- ------------------------------------------------------------------------
The information for this Item is incorporated by
reference to pages 23 through 36 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1995,
which is included as Exhibit (13) to this Form 10-K Report.
Item 8. Financial Statements and Supplementary Data.
- ----------------------------------------------------
The information for this Item is incorporated by
reference to pages 8 through 22 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1995,
which is included as Exhibit (13) to this Form 10-K Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ------------------------------------------------------------------------
The information for this Item is incorporated by
reference to pages 18 and 19 of the Registrant's Definitive
Proxy Statement relating to the Annual Meeting of
Shareholders to be held April 9, 1996.
Page 12
PART III
Item 10. Directors and Executive Officers of the Registrant.
- ------------------------------------------------------------
The information for this Item with respect to the
Corporation's directors is incorporated by reference to
pages 3 through 7 of the Corporation's Definitive Proxy
Statement relating to the Annual Meeting of Shareholders to
be held April 9, 1996.
Executive Officers of Registrant
- --------------------------------
Name Age Position
Walter E. Daller, Jr. 56 President and Chief
Executive Officer
of the Company and of Harleysville
James W. Hamilton 49 Senior Vice President and
Senior Trust Officer of
Harleysville
Demetra M. Takes 45 Executive Vice President
and Chief Operating
Officer of Harleysville
Frank J. Lochetto 48 Senior Vice President and
Senior Lending Officer of
Harleysville
Vernon L. Hunsberger 47 Treasurer of the Company,
Senior Vice President/CFO and
Cashier of Harleysville
Fred C. Reim, Jr. 52 Senior Vice President of
Harleysville since August 1993;
Senior Vice President
of First Valley Bank from
December 1990 to August 1993
Henry R. Gehman 60 Vice President of Harleysville
Jo Ann M. Bynon 44 Secretary of the Company
Dennis L. Detwiler 48 Vice President of Harleysville
Bruce D. Fellman 49 Vice President of Harleysville
Thomas L. Spence 49 Vice President of Harleysville
Robert L. Reilly 46 Vice President of Harleysville
David R. Crews 45 Vice President of Harleysville
Larry E. Nolt 50 Vice President and Trust Officer of
Harleysville since July 1993; Trust
Officer of Harleysville from August
1991 to July 1993; Trust Officer of
Union National Bank of Souderton for 4
years prior thereto
Mikkalya W. Walton 40 Vice President of Loan
Administration of Harleysville since
July 1994; Vice President Security
National Bank September 1991 to June
1994; Assistant Vice President Mellon
Bank January 1990 to August 1991
Gregg J. Wagner 35 Vice President and Comptroller of
Harleysville National Bank since
December 1994; Senior Vice President
Security National Bank March 1992 to
November 1994; Vice President and
Comptroller Bryn Mawr Trust Company
December 1989 to February 1992
Page 13
Harry T. Weierbach 51 Vice President of Investments of
Harleysville since December 1995;
Assistant Vice President of
Harleysville from June 1994 to
December 1995; Vice President of
Investments of Continental Bank from
1982
Thomas D. Oleksa 42 President and Chief Executive Officer
of Citizens
Martha A. Rex 47 Vice President and Cashier of Citizens
Maurice Infante 56 Vice President Consumer Lending of
Citizens since April 1994; Assistant
Vice President Consumer Lending of
Citizens December 1991 to March 1994;
Vice President Home Savings
Association of Pennsylvania January
1988 to November 1991
Raymond H. Melcher 44 President and Chief Executive Officer
of Security since November 1994;
Executive Vice President, Chief
Operating Officer Hi-Tech Connections
1990 to 1994; Executive Vice President
Keystone Financial 1988 to 1990
Allen R. Loeb 47 Vice President of Lending of Security
since April 1995; Vice President of
Lending National Penn Bank from April
1994 to April 1995
Item 11. Executive Compensation.
- --------------------------------
The information for this Item is incorporated by
reference to pages 7 through 13 of the Corporation's
Definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held April 9, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The information for this Item is incorporated by
reference to pages 3 through 4 of the Corporation's
Definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held April 9, 1996.
Page 14
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The information for this Item is incorporated by
reference to page 18 of the Corporation's Definitive Proxy
Statement relating to the Annual Meeting of Shareholders to
be held April 9, 1996, and to page 16 of the Corporation's
Annual Report to Shareholders for the year ended December
31, 1995, which is included as Exhibit (13) to this form 10-
K Report.
Page 15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
- -------------------------------------------------------------------------
(a) Financial Statements, Financial Statement Schedules and Exhibits Filed:
(1) Consolidated Financial Statements Page
Harleysville National Corporation and Subsidiary:
Consolidated Balance Sheets as of
December 31, 1995 and 1994 9*
Consolidated Statements of Income for the
Years Ended December 31, 1995, 1994
and 1993 10*
Consolidated Statements of Shareholders'
Equity for the Years Ended
December 31, 1995, 1994 and 1993 11*
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1995,
1994 and 1993 12*
Notes to Consolidated Financial Statements 13-22*
Independent Auditors' Report 8*
(2) Financial Statement Schedules
None
All other schedules are omitted since they are not
required, not applicable or the information is included in
the consolidated financial statements or notes thereto.
- ----------------------------------------------------------------
*Refers to the respective page of Harleysville National
Corporation's 1995 Annual Report to Shareholders. The
Consolidated Financial Statements and Notes to Consolidated
Financial Statements and Auditor's Report thereon on pages 8
to 22 are incorporated by reference. With the exception of
the portions of such Annual Report specifically incorporated
by reference in this Item and in Items 1, 5, 6, 7 and 8,
such Annual Report shall not be deemed filed as part of this
Form 10-K Report or otherwise subject to the liabilities of
Section 18 of the Securities Exchange Act of 1934.
Page 16
(3) Exhibits
Exhibit No. Description of Exhibits
- ---------- -----------------------
(3.1) Articles of Incorporation as amended were previously
filed with the Commission on December 14, 1995 as Exhibit
3a to Registration Statement 33-65021 and is hereby
incorporated by reference
(3.2) Amended By-laws of the Registrant were previously filed
with the Commission on December 14, 1995 as Exhibit 3b to
registration statement 33-65021 and is hereby
incorporated by reference
(13) 1995 Annual Report to Shareholders (this document is
filed only to the extent of pages 8 through 37 which are
incorporated by reference herein.)
(21) Subsidiaries of Registrant
(23) (a) Consent of Grant Thornton LLP Independent Certified
Public Accountants
(b) Consent of KPMG Peat Marwick LLP Independent
Certified Public Accountants
(27) Financial Data Schedule.
(99) Additional Exhibits
(a) Report of Independent Certified Public Accountants -
Grant Thornton LLP
(b) Report of Independent Certified Public Accountants -
KPMG Peat Marwick LLP
(b) Reports on Form 8-K
During the quarter ended December 31, 1995, the Registrant did not
file any reports on Form 8-K.
Page 17
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
Date: March 14, 1996 By: /s/ Walter E. Daller, Jr.
Walter E. Daller, Jr.
President
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.
Signatures Title Date
---------- ----- -----
/s/ John W. Clemens Director March 14, 1996
John W. Clemens
/s/ Walter E. Daller, Jr. President, Chief March 14, 1996
Walter E. Daller, Jr. Executive Officer
and Director (Princi-
pal Executive Officer)
/s/ Martin E. Fossler Director March 14, 1996
Martin E. Fossler
/s/ Harold A. Herr Director March 14, 1996
Harold A. Herr
/s/ Vernon L. Hunsberger Treasurer (Princi- March 14, 1996
Vernon L. Hunsberger pal Financial and
Accounting Officer)
Page 18
/s/ Howard E. Kalis, III Director March 14, 1996
Howard E. Kalis, III
/s/ Bradford W. Mitchell Director March 14, 1996
Bradford W. Mitchell
/s/ Walter F. Vilsmeier Director March 14, 1996
Walter F. Vilsmeier
/s/ William M. Yocum Director March 14, 1996
William M. Yocum
Page 19
EXHIBIT INDEX
-------------
(13) 1995 Annual Report to Shareholders (this document is filed
only to the extent of pages 8 through 37 which are
incorporated by reference herein)
(21) Subsidiaries of Registrant
(23) Consent of Grant Thornton LLP Independent Certified
Public Accountants
(99) Additional Exhibits
Page 20
/TEXT>