##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED
    DECEMBER 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD
    FROM          TO   COMMISSION FILE NUMBER :
    000-51525
  LEGACY BANCORP, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-3135053(State or other jurisdiction
    of
    incorporation or organization)

(IRS Employer
    Identification No.)99 NORTH STREET
    PITTSFIELD, MASSACHUSETTS

01201(Zip Code)(Address of principal executive
    offices)   (413) 443-4421
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to section 12(b) of the
    Act:
 Common Stock ($0.01 par value per share)
 NASDAQ Stock Market, LLC
  Securities registered pursuant to section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12(b)-2 o þ
    9,168,260.
  Documents
    Incorporated By Reference:
  Form 10-K.




---



##### 





TABLE OF
    CONTENTS
   
 PagePart IItem 1.


Business


2Item 1a.


Risk Factors


29Item 1b.


Unresolved Staff Comments


31Item 2.


Properties


31Item 3.


Legal proceedings


32Item 4.


Submission of matters to a vote of security
    holders


32Part IIItem 5.


Market for registrants common equity,
    related stockholder matters and issuer purchases of equity
    securities


32Item 6.


Selected financial data


34Item 7.


Managements discussion and analysis of
    financial condition and results of operations


35Item 7a.


Quantitative and qualitative disclosures about
    market risk


44Item 8.


Financial statements and supplementary data


49Item 9.


Changes in and disagreements with accountants on
    accounting and financial disclosure


88Item 9a.


Controls and procedures


88Item 9b.


Other information


89Part IIIItem 10.


Directors, executive officers and corporate
    governance


89Item 11.


Executive compensation


89Item 12.


Security ownership of certain beneficial owners
    and management and related stockholder matters


89Item 13.


Certain relationships and related transactions,
    and director independence


89Item 14.


Principal accountant fees and services


89Part IVItem 15.


Exhibits and financial statement schedules


89Signatures





90EX-14.0 Code of EthicsEX-21.0 List of all subsidiaries of the RegistrantEX-23.0 Consent of Independent Registered Public Accounting FirmEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32 Section 906 Certification of CEO & CFO   1




---



##### Table of Contents



Part I  Item 1.
    Business  Forward-Looking Statements:
  Financial Statements:
  General:
  Market Area and Competition:
 2




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##### Table of Contents



3




---



##### Table of Contents



Lending
    Activities
    At December 31,2007


2006


2005Amount


Percent


Amount


Percent


Amount


Percent(Dollars in thousands)Mortgage loans on real estate:Residential

$
349,772



53.17
%

$
325,407



55.85
%

$
308,008



55.86
%Commercial


212,191



32.26



170,971



29.35



160,675



29.14Home equity


56,752



8.63



56,856



9.76



58,640



10.64618,715



94.06



553,234



94.96



527,323



95.64Other loans:Commercial


27,664



4.20



22,903



3.93



20,579



3.73Consumer and other


11,421



1.74



6,451



1.11



3,457



0.6339,085



5.94



29,354



5.04



24,036



4.36Total loans


657,800



100.00
%


582,588



100.00
%


551,359



100.00
%Other Items:Net deferred loan costs


1,397







891







361Unamortized premiums


















Allowance for loan losses


(5,568
)






(4,677
)






(4,220
)Total Loans, net

$
653,629






$
578,802






$
547,500   At December 31,2004


2003Amount


Percent


Amount


Percent(Dollars in thousands)Mortgage loans on real estate:Residential

$
284,114



55.89
%

$
254,166



54.15
%Commercial


141,540



27.84



139,708



29.77Home equity


53,508



10.53



44,506



9.48479,162



94.26



438,380



93.40Other loans:Commercial


24,856



4.89



22,087



4.70Consumer and other


4,332



0.85



8,897



1.9029,188



5.74



30,984



6.60Total loans


508,350



100.00
%


469,364



100.00
%Other Items:Net deferred loan costs


224







275Unamortized premiums










36Allowance for loan losses


(3,846
)






(4,420
)Total Loans, net

$
504,728






$
465,255   General:
 4




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##### Table of Contents



Residential Real Estate Loans:
         5




---



##### Table of Contents



Commercial Real Estate Loans:
          Home Equity Lines-of-Credit and Loans:
  Wall Street Journal
  Commercial Loans:
   6




---



##### Table of Contents



Wall Street
    Journal
    Consumer and Other Loan:
  Loan Origination and Underwriting:
     7




---



##### Table of Contents



For the Years Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Loans at beginning of year

$
582,588


$
551,359


$
508,350


$
469,364


$
373,480Originations:Mortgage loans on real estate:Residential


75,047



55,223



86,247



92,944



138,305Commercial


69,375



50,239



52,321



45,191



81,875Home Equity


28,928



28,997



35,429



39,416



41,059173,350



134,459



173,997



177,551



261,239Other Loans:Commercial Business


18,932



17,330



10,832



13,170



543Consumer and other


3,037



2,183



1,617



3,783



5,98221,969



19,513



12,449



16,953



6,525Total loans originated


195,319



153,972



186,446



194,504



267,764Loans purchased


4,042



3,106



5,000







Deduct:Principal loan repayments and prepayments


105,703



114,281



125,481



138,968



150,836Loan sales


18,170



11,405



22,342



15,611



20,794Charge-offs


276



163



614



939



250Total deductions


124,149



125,849



148,437



155,518



171,880Net increase (decrease) in loans


75,212



31,229



43,009



38,986



95,884Loans at end of year

$
657,800


$
582,588


$
551,359


$
508,350


$
469,364        8




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##### Table of Contents



Maturity and Sensitivity of Loan
    Portfolio:
  Contractual MaturityDue Less Than


Due After One


Due AfterOne Year


To Five Years


Five Years


Total(Dollars in thousands)Commercial Real Estate Loans

$
19,689


$
66,164


$
111,753


$
197,606Commercial Construction loans


9,788



2,235



2,562



14,585Sub-total: Total Commercial Real Estate Loans

$
29,477


$
68,399


$
114,315


$
212,191Residential Construction Loans


1,022



9,550







10,572Total

$
30,499


$
77,949


$
114,315


$
222,763     Asset
    Quality
  General:
  Delinquent Loans.: th th
  Other Real Estate Owned:
 9




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##### Table of Contents



Classification of Assets and Loan
    Review:
    Non-Performing Loans:
    10




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##### Table of Contents



At December 31,2007


2006


2005


2004


2003(Dollars in thousands)Non-accrual loans:Residential mortgage

$
499


$
483


$
479


$
123


$
875Commercial mortgage


539



179



96



1,229



662Commercial


386



132



250



388



316Home equity, consumer and other


108



85



78



29



Total non-accrual loans


1,532



879



903



1,769



1,853Loans greater than 90 days delinquent and still
    accruing:Residential mortgage


















Commercial mortgage


















Commercial


















Home equity, consumer and other


















Total loans 90 days delinquent and still accruing


















Total non-performing loans

$
1,532


$
879


$
903


$
1,769


$
1,853Troubled debt restructurings

$



$
943


$



$
891


$
779Ratios:Non-performing loans to total loans


0.23
%


0.15
%


0.16
%


0.35
%


0.39
%Non-performing assets to total assets


0.17
%


0.11
%


0.12
%


0.26
%


0.29
%   and/or
  Allowance for Loan Losses.
   11




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##### Table of Contents



loan-by-loan
   12




---



##### Table of Contents



At or For the Years Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands)Balance at beginning of period

$
4,677


$
4,220


$
3,846


$
4,420


$
3,633Charge-offs:Mortgage loans on real estate:






(50
)






(621
)


Other loans:Commercial


(104
)


(19
)


(506
)


(258
)


(184
)Consumer and other


(114
)


(94
)


(108
)


(60
)


(66
)Total other loans


(218
)


(113
)


(614
)


(318
)


(250
)Total charge-offs


(218
)


(163
)


(614
)


(939
)


(250
)Recoveries:Mortgage loans on real estate






10











Other loans:Commercial


15



316



66



128



31Consumer and other


43



61



81



25



27Total other loans


58



377



147



153



58Total recoveries


58



387



147



153



58Net recoveries (charge-offs)


(160
)


224



(467
)


(786
)


(192
)Provision for loan losses


1,051



233



841



212



979Balance at end of period

$
5,568


$
4,677


$
4,220


$
3,846


$
4,420Ratios:Net recoveries (charge-offs) to average loans
    outstanding  annualized


(0.03
)%


0.04
%


(0.09
)%


(0.16
)%


(0.05
)%Allowance for loan losses to non  performing loans at
    end of period


363.45
%


532.08
%


467.33
%


217.41
%


238.53
%Allowance for loan losses to total loans at end of period


0.85
%


0.80
%


0.77
%


0.76
%


0.94
%    13




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##### Table of Contents



At December 31,2007


2006


2005Percent of








Percent of








Percent ofLoans in








Loans in








Loans inEach








Each








EachAllowance


Loan


Category to


Allowance


Loan


Category


Allowance


Loan


Category tofor Loan


Balances by


Total


for Loan


Balances by


to Total


for Loan


Balances by


TotalLosses


Category


Loans


Losses


Category


Loans


Losses


Category


Loans(Dollars in thousands)Mortgage loans on real estate:Residential

$
946


$
349,772



53.17
%

$
892


$
325,407



55.86
%

$
881


$
308,008



55.86
%Commercial


3,688



212,191



32.26



3,015



170,971



29.35



2,779



160,675



29.14Home equity


245



56,752



8.63



249



56,856



9.76



168



58,640



10.644,879



618,715



94.06



4,156



553,234



94.96



3,828



527,323



95.64Other loans:Commercial


507



27,664



4.20



426



22,903



3.93



353



20,579



3.73Consumer and other


182



11,421



1.74



95



6,451



1.11



39



3,457



0.63689



39,085



5.94



521



29,354



5.04



392



24,036



4.36Total

$
5,568


$
657,800



100.00
%

$
4,677


$
582,588



100.00
%

$
4,220


$
551,359



100.00
%   At December 31,2004


2003Percent of








Percent ofLoans in








Loans inEach








EachAllowance


Loan


Category to


Allowance


Loan


Category tofor Loan


Balances by


Total


for Loan


Balances by


TotalLosses


Category


Loans


Losses


Category


Loans(Dollars in thousands)Mortgage loans on real estate:Residential

$
785


$
284,114



55.89
%

$
713


$
254,166



54.15
%Commercial


2,363



141,540



27.84



3,113



139,708



29.77Home equity


156



53,508



10.53



124



44,506



9.483,304



479,162



94.26



3,950



438,380



93.40Other loans:Commercial


423



24,856



4.89



369



22,087



4.70Consumer and other


119



4,332



0.85



101



8,897



1.90542



29,188



5.74



470



30,984



6.60Total

$
3,846


$
508,350



100.00
%

$
4,420


$
469,364



100.00
%   Investment
    Activities
  General.
 14




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##### Table of Contents



Accounting for Certain Investments in Debt and
    Equity Securities
  Government Sponsored Enterprises.
  Municipal Bonds.
  Corporate Obligations.
  Mortgage-Backed Securities.
  Marketable Equity Securities.
  Restricted Equity Securities and Other
    investments.
 15




---



##### Table of Contents



At December 31, 2007


At December 31, 2006


At December 31, 2005Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


Value(Dollars in Thousands)Securities available for sale:Government-sponsored enterprises

$
48,041


$
48,262


$
91,181


$
90,906


$
95,613


$
94,369Municipal bonds


9,930



9,941



7,199



7,174



6,061



6,002Corporate bonds and other obligations


1,501



1,531



2,971



2,977



6,149



6,161Mortgage-backed securities


65,551



65,726



54,165



53,838



56,896



55,505Total debt securities


125,023



125,460



155,516



154,895



164,719



162,037Common stock


8,100



9,084



6,013



7,318



4,399



5,399Total securities available for sale


133,123



134,544



161,529



162,213



169,118



167,436Securities held to maturity:Other bonds and obligations


97



97



97



97



97



97Restricted equity securities and other investments:Federal Home Loan Bank of Boston stock


10,722



10,722



8,999



8,999



9,056



9,056Savings Bank Life Insurance


1,709



1,709



1,709



1,709



1,709



1,709Other investments


4,982



4,982



3,114



3,114



1,623



1,623Total restricted equity securities and other investments


17,413



17,413



13,822



13,822



12,388



12,388Total securities

$
150,633


$
152,054


$
175,448


$
176,132


$
181,603


$
179,921  16




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##### Table of Contents



More than One Year


More than Five YearsOne Year or Less


through Five Years


through Ten Years


More than Ten Years


Total SecuritiesWeighted





Weighted





Weighted





Weighted





WeightedAmortized


Average


Amortized


Average


Amortized


Average


Amortized


Average


Amortized


AverageCost


Yield


Cost


Yield


Cost


Yield


Cost


Yield


Cost


Yield(Dollars in thousands)Securities available for sale (AFS):Government-sponsored enterprises

$
29,205



4.55
%

$
15,847



5.02
%


2,989



5.58
%

$







$
48,041



4.77
%Municipal Bonds










445



3.55
%


3,306



3.70
%


6,179



4.10
%


9,930



3.94
%Corporate bonds and other obligations










1,501



5.22
%


















1,501



5.22
%Subtotal


29,205







17,793







6,295







6,179







59,472Mortgage-backed securities










1,639



5.47
%


4,528



5.46
%


59,384



5.52
%


65,551



5.51
%Total AFS debt securities


29,205







19,432







10,823







65,563







125,023Securities held to maturity (HTM):Corporate bonds and other obligations


30



2.79
%


52



3.00
%


15



3.00
%






3.00
%


97



3.00
%Total HTM debt securities


30







52







15















97Total debt securities

$
29,235






$
19,484






$
10,838






$
65,563






$
125,120   Sources
    of Funds
  General.
  Deposits.
     17




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##### Table of Contents



Years Ended December 31,2007


2006


2005Weighted








Weighted








WeightedAverage





Average


Average





Average


Average





AverageBalance


Percent


Rate


Balance


Percent


Rate


Balance


Percent


Rate(Dollars in thousands)Deposit type:Demand

$
50,465



9.5
%



%

$
49,971



10.2
%



%

$
55,996



11.9
%



%NOW deposits


35,333



6.7



0.65



37,633



7.7



0.34



39,507



8.3



0.21Money market deposits


53,523



10.1



3.66



52,911



10.8



2.94



59,016



12.5



1.61Regular savings


46,986



8.9



0.44



56,759



11.6



0.44



69,088



14.6



0.43Relationship Savings


101,798



19.3



3.88



78,628



16.1



3.88



71,188



15.1



2.37Total transaction accounts


288,105



54.5



2.20



275,902



56.4



1.82



294,795



62.4



1.04Certificates of deposit


240,571



45.5



4.78



213,448



43.6



4.13



177,613



37.6



2.94Total deposits

$
528,676



100.0
%


3.39
%

$
489,350



100.0
%


2.84
%

$
472,408



100.0
%


1.76
%     At December 31,2007


2006


2005(Dollars in thousands)Interest RateLess than 2%

$
220


$
328


$
4,4882.00%-2.99%


5,351



5,771



49,1753.00%-3.99%


38,748



47,688



103,0394.00%-4.99%


117,786



66,728



28,8755.00%-5.99%


111,251



107,374



2,6626.00%-6.99%










23Total

$
273,356


$
227,889


$
188,262     AfterYear Ending December 31,


December 31,2008


2009


2010


2011


2011


Total(Dollars in thousands)Interest RateLess than 2%

$
220


$



$



$



$



$
2202.00%-2.99%


5,240



111















5,3513.00%-3.99%


32,819



4,067



1,495



196



171



38,7484.00%-4.99%


104,052



9,904



1,940



251



1,639



117,7865.00%-5.99%


99,358



6,413



3,140



2,025



315



111,251Total

$
241,689


$
20,495


$
6,575


$
2,472


$
2,125


$
273,356  18




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##### Table of Contents



At December 31,2007(In thousands)Three months of less

$
40,399Over three months through six months


34,750Over six months through one year


29,861Over one year to three years


6,238Over three years


723Total

$
111,971   Borrowings.
  At or For the Years Ended December 31,2007


2006


2005(Dollars in thousands)Balance at end of period

$
167,382


$
127,438


$
145,923Average balance during year

$
158,784


$
142,061


$
157,674Maximum outstanding at any month end

$
203,446


$
151,979


$
174,023Weighted average interest rate at end of year


4.60
%


4.61
%


4.22
%Weighted average interest rate during year


4.75
%


4.50
%


4.26
%     Personnel.
  Segment Reporting:
  Subsidiary
    Activities and Portfolio Management Services
    LB Funding Corporation.
 19




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##### Table of Contents



Legacy Insurance Services of the
    Berkshires.
  Legacy Securities Corporation.
  CSB Service Corporation.
  Portfolio Management Services.
  Regulation And
    Supervision
  General: Form 10-K
  Massachusetts Banking Laws and
    Supervision:
   20




---



##### Table of Contents



Lending Activities:
  Insurance Sales:
  Investment Activities:
  Dividends:
  Parity Regulation:
  Federal
    Regulations
  Capital Requirements.
 21




---



##### Table of Contents



Standards for Safety and Soundness.
  Investment Activities.
 22




---



##### Table of Contents



Interstate Banking and Branching.
  Prompt Corrective Regulatory Action.
      Transaction with Affiliates and Regulation W of the
    Federal Reserve Regulations.
 23




---



##### Table of Contents



Enforcement.
  Insurance of Deposit Accounts.
     24




---



##### Table of Contents



Federal Deposit Insurance Reform Act of
    2005.
  Privacy Regulations.
  Community Reinvestment Act.
    Consumer Protection and Fair Lending
    Regulations.
 25




---



##### Table of Contents



The USA PATRIOT Act.
  Federal
    Reserve System
    Federal
    Home Loan Bank System
      Holding
    Company Regulation
  General:
   26




---



##### Table of Contents



Acquisition of the Company:
  Massachusetts Holding Company Regulation:
  Federal Securities Laws:
 27




---



##### Table of Contents



Taxation
  Federal taxes:
  Bad Debt Reserves:
  Distributions:
  Massachusetts Taxation:
    New York Taxation:
 28




---



##### Table of Contents



Delaware Taxation:
  Available Information: http://www.LegacyBanks.com. Form 10-K; Form 10-Q; Form 8-K;
  Item 1a.
    Risk
    Factors    Risks
    Related to Our Business
  Our
    Commercial Real Estate and Commercial Loans Expose Us to
    Increased Credit Risks, and These Risks Will Increase if We
    Succeed in Increasing These Types of Loans.
      Our
    Continuing Concentration of Loans in Our Primary Market Areas
    May Increase Our Risk.
    Changes
    in Market Interest Rates Could Adversely Affect Our Financial
    Condition and Results of Operations.
   29




---



##### Table of Contents



We May
    Have Difficulty Meeting Our Branch Expansion Goals, and Our
    Branch Expansion Strategy May Not Be Accretive to
    Earnings.
    Our
    Ability to Grow May Be Limited if We Cannot Make
    Acquisitions.
    Strong
    Competition Within Our Market Area May Limit Our Growth and
    Profitability.
   30




---



##### Table of Contents



We
    Operate in a Highly Regulated Environment and May Be Adversely
    Affected by Changes in Law and Regulations.
    Item 1b.
    Unresolved
    Staff Comments    Item 2.
    Properties    Lease




Year


LeaseYear Opened


Expires




Opened


ExpiresOwned:Main Office:99 North Street


2000Pittsfield, MA 01201Branch Offices:76 Park Street


1996






409 Stockbridge Road


2007Lee, MA 01238









Great Barrington, MA 0123025 Main Street


1958






Route 30 & Mill Lane


2007



(1
)Lenox, MA 01240









Middleburgh, NY 121222 Holmes Road


1978






4 Elliott Place


2007



(1
)Lenox, MA 01240









East Durham, NY 1242330 East Otis Road


1996






184 Broadway


2007



(1
)Otis, MA 01253









Whitehall, NY 12887734 Williams Street (Land leased)


1997






Route 296


2007



(1
)Pittsfield, MA 01201









Windham, NY 12496331 State Road


2007North Adams, MA 01247Leased:609 Merrill Road


1971



2008


480 West Housatonic Street


2005



2010
(2)Pittsfield, MA 01201









Pittsfield, MA 01201700 Main Street


1975



2009


Route 32, Bryants Market


2007



2013
(1)Great Barrington, MA 01230









Greenville, NY 1208339 North Pearl Street


2008



2018
(4)Albany, NY 12207Loan Production Offices:116 Wolf Road


2006



2009
(3)Colonie, NY 12205ATM Location Only:Lee Outlet Village


1995



2011Lee, MA 01238     (1)
    
    Acquired from First Niagara Bank in December 2007 31




---



##### Table of Contents



(2)
    
    Legacy Banks has an option to renew for two additional
    5 year terms(3)
    
    Legacy Banks has an option to renew for 3 years(4)
    
    Scheduled to open in 2008. Legacy Banks has an option to renew
    for two additional 5 year terms  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    Of Matters To A Vote Of Security Holders   Part II  Item 5.
    Market
    For Registrants Common Equity, Related Stockholder Matters
    And Issuer Purchases Of Equity Securities  and/or
  For the Year Ended December 31, 20074th Quarter


3rd Quarter


2nd Quarter


1st QuarterHigh

$
14.68


$
14.96


$
15.71


$
16.30Low

$
12.51


$
12.56


$
14.74


$
15.38Dividend Declared

$
0.04


$
0.04


$
0.04


$
0.04   For the Year Ended December 31, 20064th Quarter


3rd Quarter


2nd Quarter


1st QuarterHigh

$
16.20


$
16.00


$
15.47


$
15.47Low

$
15.16


$
14.82


$
13.65


$
15.12Dividend Declared

$
0.03


$
0.03


$
0.03


$
0.03    32




---



##### Table of Contents



Stock Performance Graph:
  Comparison
    Of Cumulative Total Return Among Legacy Bancorp,
    Peer Group Index And Nasdaq Market Index
  
  10/26/05


12/31/07Legacy Bancorp



100.00




101.22Nasdaq Bank Index



100.00




88.02Nasdaq Market Index



100.00




126.30SNL Thrift $500M-$1B



100.00




95.84       10/26/05.
   33




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  At or for the Years Ended December 31,2007


2006


2005


2004


2003(Dollars in thousands, except per share data)Selected Financial Data:Total assets

$
924,541


$
808,318


$
778,330


$
681,287


$
634,978Loans, net(1)


654,024



578,802



547,626



505,344



465,903Securities and other investments:


152,054



176,132



179,921



131,894



120,779Deposits


610,447



518,248



474,464



450,868



422,521Federal Home Loan Bank advances


167,382



127,438



145,923



159,704



131,250Repurchase agreements


4,055



5,575



4,999



4,557



6,618Total stockholders equity


133,092



149,997



146,166



59,447



56,335Nonperforming loans


1,532



879



903



1,769



1,853Selected Operating Data:Total interest and dividend income


49,357



43,915



36,978



31,636



30,139Total interest expense


25,511



20,339



15,054



12,102



11,852Net interest income


23,846



23,576



21,924



19,534



18,287Provision for loan losses


1,051



233



841



212



979Net interest income after provision for loan losses


22,795



23,343



21,083



19,322



17,308Non-interest income:Service charges and fees


4,496



4,044



4,402



3,713



3,792Gain (loss) on sales and dispositions of securities, net


510



(1,736
)


(65
)


116



29Gain on sale of loans


270



210



236



278



331FHLB prepayment restructuring charge










(2,351
)






Gain on curtailment and termination of defined benefit plan






605



905Other


610



329



274



328



268Total non-interest income


5,886



3,452



3,401



4,435



4,420Total non-interest expense


27,187



21,336



26,398



17,949



17,007Income (loss)before income taxes


1,494



5,459



(1,914
)


5,808



4,721Provision for income taxes


249



2,653



297



2,254



1,731Net income (loss)


1,245



2,806



(2,211
)


3,554



2,990Earnings per share

$
0.14


$
0.29



n/a



n/a



n/aDividends per share

$
0.16


$
0.12



n/a



n/a



n/a   34




---



##### Table of Contents



At or for the Years Ended December 31,2007


2006


2005


2004


2003Selected Financial Ratios and Other Data:Performance Ratios:Return (loss) on average assets(2)


0.15
%


0.36
%


(0.31
)%


0.55
%


0.49
%Return (loss) on average equity(3)


0.88



1.92



(2.90
)


6.12



5.40Interest rate spread(4)


2.26



2.39



2.84



2.90



2.93Net interest margin(5)


3.01



3.15



3.22



3.18



3.22Efficiency ratio(6)


93.0



74.2



104.2



73.8



75.2Non-interest expense to average assets


3.23



2.70



3.56



2.70



2.81Average interest-bearing assets to interest-bearing liabilities


123.37



127.61



117.30



113.89



114.19Dividend payout ratio


113.82



40.88



n/a



n/a



n/aRegulatory Capital Ratios(7):Equity to total assets


14.4
%


18.6
%


18.8
%


8.7
%


8.9
%Average equity to average assets


16.9



18.5



10.7



8.9



9.2Total capital (bank only) to risk-weighted assets


13.9



18.9



20.0



12.6



12.8Asset Quality Ratios:Nonperforming assets to total assets


0.17
%


0.11
%


0.12
%


0.26
%


0.29
%Nonperforming loans to total loans


0.23



0.15



0.16



0.35



0.40Allowance for loan losses to nonperforming loans


363.45



532.08



467.33



217.41



238.53Allowance for loan losses to total loans


0.85



0.80



0.77



0.76



0.94Share Data:Book value per share  end of year

$
14.40


$
14.55


$
14.18



n/a



n/aTangible book value per share  end of year


13.01



14.25



13.88



n/a



n/aMarket price at year end


13.26



15.85



13.35



n/a



n/a     (1)
    
    Includes loans held for sale.(2)
    
    Net income divided by average total assets.(3)
    
    Net income divided by average total equity.(4)
    
    Net interest rate spread represents the difference between the
    weighted average yield on interest-earning assets and the
    weighted average cost of interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income as a
    percentage of average interest-earning assets for the year.(6)
    
    The efficiency ratio represents non-interest expense for the
    year less expenses related to the amortization of intangibles
    divided by the sum of net interest income (before loan loss
    provision) plus non-interest income.(7)
    
    All capital ratios are as of the end of the year.  Item 7.
    Managements
    Discussion And Analysis Of Financial Condition And Results Of
    Operation  General:
  Overview:
 35




---



##### Table of Contents



Dividend:
  Stock-based compensation:
    Options Granted in


Options Granted inNovember 2006


December 2007Fair Value

$
3.98


$
2.85Risk-free interest rate


4.54
%


3.88
%Expected dividend yield


0.75
%


1.24
%Expected volatility


13.53
%


15.90
%Expected life


6.5 years



6.5 years       Growth Strategy and Challenges:
 36




---



##### Table of Contents



Critical Accounting Policies:
  Allowance for Loan Losses:
  Income Taxes:
   37




---



##### Table of Contents



Other-Than-Temporary Impairment:
    Net Interest Income:
  Non-Interest Expense:
  Net income:
 38




---



##### Table of Contents



Comparison
    of Financial Condition at December 31, 2007 and
    December 31, 2006
  Total Assets:
  Cash and Short-term Investments:
  Securities:
  Net Loans:
  Deposits:
  Borrowed Funds:
  Stockholders Equity:
  Comparison
    of Operating Results For the Years Ended December 31, 2007
    and 2006
  Analysis of Net Interest Income:
 39




---



##### Table of Contents



Year Ended December 31, 2007


Year Ended December 31, 2006


Year Ended December 31, 2005Average








Average








AverageOutstanding





Yield/


Outstanding





Yield/


Outstanding





Yield/Balance


Interest


Rate(1)


Balance


Interest


Rate(1)


Balance


Interest


Rate(1)(Dollars in thousands)Interest-earning assets:Loans  Net(2)

$
614,567


$
40,460



6.58
%

$
564,446


$
35,905



6.36
%

$
523,696


$
30,988



5.92
%Investment securities


163,860



8,261



5.04
%


175,006



7,547



4.31
%


137,180



5,324



3.88
%Short-term investments


13,558



636



4.69
%


9,386



463



4.93
%


19,139



666



3.48
%Total interest-earning assets


791,985



49,357



6.23
%


748,838



43,915



5.86
%


680,015



36,978



5.44
%Non-interest-earning assets


50,212











41,187











37,740Total assets

$
842,197










$
790,025










$
717,755Interest-bearing liabilities:Savings deposits

$
46,986


$
206



0.44
%

$
56,759


$
248



0.44
%

$
69,088



299



0.43
%Relationship Savings


101,798



3,949



3.88
%


78,628



3,049



3.88
%


71,188



1,686



2.37
%Money market


53,523



1,961



3.66
%


52,911



1,556



2.94
%


59,016



952



1.61
%NOW accounts


35,333



230



0.65
%


37,633



130



0.35
%


39,507



85



0.22
%Certificates of deposits


240,571



11,500



4.78
%


213,448



8,825



4.13
%


177,613



5,230



2.94
%Total interest-bearing deposits


478,211



17,846



3.73
%


439,379



13,808



3.14
%


416,412



8,252



1.98
%Borrowed Funds


163,750



7,665



4.68
%


147,421



6,531



4.43
%


163,328



6,802



4.16
%Total interest-bearing liabilities


641,961



25,511



3.97
%


586,800



20,339



3.47
%


579,740



15,054



2.60
%Non-interest-bearing liabilities


58,024











57,185











61,049Total liabilities


699,985











643,985











640,789Equity


142,212











146,040











76,966Total liabilities and equity

$
842,197










$
790,025










$
717,755Net interest income





$
23,846










$
23,576










$
21,924Net interest rate spread(3)










2.26
%










2.39
%










2.84
%Net interest-earning assets(4)

$
150,024










$
162,038










$
100,275Net interest margin(5)










3.01
%










3.15
%










3.22
%Average interest-earning assets to interest-bearing liabilities










123.37
%










127.61
%










117.30
%     (1)
    
    Yields and rates for the twelve months ended December 31,
    2007, 2006 and 2005 are actual.(2)
    
    Includes loans held for sale.(3)
    
    Net interest rate spread represents the difference between the
    yield on total average interest-earning assets and the cost of
    total average interest-bearing liabilities for the twelve months
    ended December 31, 2007, 2006 and 2005.(4)
    
    Net interest-earning assets represents total interest-earning
    assets less total interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by
    average total interest-earning assets. 40




---



##### Table of Contents



Year Ended


Year EndedDecember 31, 2007 vs. 2006


December 31, 2006 vs. 2005Increase


Total


Increase


Total(Decrease) Due to


Increase


(Decrease) Due to


IncreaseVolume


Rate


(Decrease)


Volume


Rate


(Decrease)(Dollars in thousands)Interest-earning assets:Loans  Net

$
3,278


$
1,277


$
4,555


$
2,515


$
2,402


$
4,917Investment securities


(429
)


1,143



714



1,586



637



2,223Short-term investments


195



(22
)


173



(1,113
)


910



(203
)Total interest-earning assets


3,044



2,398



5,442



2,988



3,949



6,937Interest-bearing liabilities:Savings deposits


(42
)






(42
)


(57
)


6



(51
)Relationship Savings


900







900



192



1,171



1,363Money market


18



387



405



(86
)


690



604NOW accounts


(8
)


108



100



(4
)


49



45Certificates of deposits


1,195



1,480



2,675



1,196



2,399



3,595Total deposits


2,063



1,975



4,038



1,241



4,315



5,556Borrowed Funds


751



383



1,134



(399
)


128



(271
)Total interest-bearing liabilities


2,814



2,358



5,172



842



4,443



5,285Change in net interest income

$
230


$
40


$
270


$
2,146


$
(494
)

$
1,652   Net Income:
  Net Interest Income:
  Interest Income:
  Interest Expense:
 41




---



##### Table of Contents



Provision for Loan Losses:
  Non-interest Income:
  Non-interest Expense:
  Income Taxes:
  Comparison
    of Operating Results For the Years Ended December 31, 2006
    and December 31, 2005
  Net Income:
  Net Interest Income:
 42




---



##### Table of Contents



Interest Income:
  Interest Expense:
  Provision for Loan Losses:
  Non-interest Income:
  Non-interest Expense:
   43




---



##### Table of Contents



Income Taxes:
  Item 7A:
    Quantitative
    and Qualitative Disclosures About Market Risk      Management of Credit Risk:
  Management of Market Risk:
     44




---



##### Table of Contents




    Emphasizing the origination and retention of adjustable-rate
    mortgage loans, variable rate commercial loans and variable rate
    home equity lines-of-credit;
    Investing in securities with relatively short maturities
    and/or
    expected average lives;
    Classifying nearly all of the investment portfolio as
    available for sale in order to provide for
    flexibility in liquidity management; and
    Lengthening liabilities such as certificates of deposits and
    Federal Home Loan Bank of Boston borrowings when appropriate.        Percentage Change inEstimated Net InterestIncome Over 12 Months asCompared to Flat Rates400 basis point parallel increase in rates


(4.62
)%200 basis point parallel increase in rates


(2.01
)%Flat interest rates


200 basis point parallel decrease in rates


(0.59
)%200 basis point steepening decrease in rates


2.54
%   12-month 12-month
  steepening
 45




---



##### Table of Contents



12-month
      Liquidity Risk Management:
       46




---



##### Table of Contents



Contractual Obligations:
  December 31, 2007More thanOne Year


Three YearsOne Year


through


through


Over FiveTotal


or Less


Three Years


Five Years


Years(Dollars in Thousands)Federal Home Loan Bank of Boston advances

$
167,382


$
53,200


$
68,953


$
20,000


$
25,229Securities sold under agreements to repurchase


4,055



4,055











Operating leases


1,099



234



315



164



386Total contractual obligations

$
172,536


$
57,489


$
69,268


$
20,164


$
25,615   Loan Commitments :
  December 31, 2007More than


More thanOne Year


Three YearsOne Year


through


Through


Over FiveTotal


or Less


Three Years


Five Years


years(Dollars in Thousands)Commitments to grant loans(1)

$
27,070


$
27,070


$



$



$
Commercial loan lines-of-credit


20,139



20,139











Unused portion of home equity loans(2)


68,721



522



2,433



9,283



56,483Unused portion of construction loans(3)


9,498



7,057



546



395



1,500Unused portion of overdraft lines-of-credit(4)


5,539















5,539Unused portion of personal lines-of-credit(5)


990















990Standby letters of credit(6)


631



631











Other commitments and contingencies(7)


11,227



11,227











Total loan & other commitments

$
143,815


$
66,646


$
2,979


$
9,678


$
64,512     (1)
    
    Commitments for loans are extended to customers for up to
    60 days after which they expire.(2)
    
    Unused portions of home equity loans are available to the
    borrower for up to 10 years.(3)
    
    Unused portions of residential construction loans are available
    to the borrower for up to one year. Commercial construction
    loans maturities may be longer than one year.(4)
    
    Unused portion of checking overdraft lines-of-credit are
    available to customers in good standing indefinitely.(5)
    
    Unused portion of personal lines-of-credit are available to
    customers in good standing indefinitely. 47




---



##### Table of Contents



(6)
    
    Standby letters of credit are generally available for less than
    one year.(7)
    
    Other commitments relate primarily to potential additional
    capital calls the Company is committed to contribute as part of
    its investment in certain limited partnerships.  Management of Other Risks:
    Off-Balance
    Sheet Arrangements
    Impact of
    Inflation and Changing Prices
    Impact of
    Recent Accounting Pronouncements
   48




---



##### 



Item 8:
    Financial
    Statements And Supplemental Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
  PageReport of Independent Registered Public
    Accounting Firm


50Consolidated Balance Sheets as of December 31,
    2007 and December 31, 2006


51Consolidated Statements of Operations for the
    Years Ended December 31, 2007, 2006 and 2005


52Consolidated Statements of Changes in
    Stockholders Equity for the Years Ended December 31, 2007,
    2006 and 2005


53Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2006 and 2005


54Notes to Consolidated Financial Statements


55-87   49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control  Integrated Framework
        Internal Control 
    Integrated Framework )
      50




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
  December 31,2007


2006ASSETSCash and due from banks

$
13,931


$
10,442Short-term investments


48,294



11,202Cash and cash equivalents


62,225



21,644Securities and other investments


152,054



176,132Loans held for sale


395



Loans, net of allowance for loan losses of $5,568 in 2007 and
    $4,677 in 2006


653,629



578,802Premises and equipment, net


18,866



15,416Accrued interest receivable


3,404



3,552Goodwill, net


9,687



3,085Net deferred tax asset


5,580



4,474Bank-owned life insurance


14,788



4,424Other assets


3,913



789$
924,541


$
808,318LIABILITIES AND STOCKHOLDERS EQUITYDeposits

$
610,447


$
518,248Securities sold under agreements to repurchase


4,055



5,575Federal Home Loan Bank advances


167,382



127,438Mortgagors escrow accounts


1,034



944Accrued expenses and other liabilities


8,531



6,116Total liabilities


791,449



658,321Commitments and contingenciesStockholders EquityPreferred Stock ($.01 par value, 10,000,000 shares
    authorized, none issued or outstanding)






Common Stock ($.01 par value, 40,000,000 shares
    authorized and 10,308,600 issued at December 31, 2007 and
    2006; 9,240,960 outstanding at December 31, 2007 and
    10,308,600 outstanding at December 31, 2006)


103



103Additional
    paid-in-capital


101,720



106,094Unearned Compensation  ESOP


(8,787
)


(9,519
)Unearned Compensation  Equity Incentive Plan


(3,525
)


(5,375
)Retained earnings


58,709



58,863Accumulated other comprehensive income (loss)


270



(169
)Treasury stock, at cost (1,067,640 shares at
    December 31, 2007)


(15,398
)


Total stockholder s equity


133,092



149,997$
924,541


$
808,318    51




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES



CONSOLIDATED
    STATEMENTS OF OPERATIONS

(Dollars
    in thousands)  Years Ended December 31,2007


2006


2005Interest and dividend income:Loans

$
40,460


$
35,905


$
30,988Securities:Taxable


7,193



6,647



4,631Tax-Exempt


282



239



178Dividends


786



661



515Short-term investments


636



463



666Total interest and dividend income


49,357



43,915



36,978Interest expense:Deposits


17,846



13,808



8,252Federal Home Loan Bank advances


7,539



6,395



6,713Other borrowed funds


126



136



89Total interest expense


25,511



20,339



15,054Net interest income


23,846



23,576



21,924Provision for loan losses


1,051



233



841Net interest income after provision for loan losses


22,795



23,343



21,083Non-interest income:Customer service fees


3,059



2,832



3,344Portfolio management fees


1,183



1,001



890Income from bank-owned life insurance


500



222



218Insurance, annuities and mutual fund fees


254



211



168Gain (loss) on sales/impairment of securities, net


510



(1,736
)


(65
)Loss on impairment of other investments










(24
)Gain on sales of loans, net


270



210



236Gain on curtailment and settlement of defined benefit plan






605



905FHLB prepayment restructuring charge










(2,351
)Miscellaneous


110



107



56Total non-interest income


5,886



3,452



3,377Non-interest expenses:Salaries and employee benefits


16,812



11,897



10,964Occupancy and equipment


2,924



2,482



2,211Data processing


2,314



1,987



1,876Professional fees


1,008



1,564



652Advertising


884



747



694Charitable contributions


27



10



7,846Other general and administrative


3,218



2,649



2,155Total non-interest expenses


27,187



21,336



26,398Income (loss) before income taxes


1,494



5,459



(1,938
)Provision for income taxes


249



2,653



297Net income (loss)

$
1,245


$
2,806


$
(2,235
)Earnings per shareBasic

$
0.14


$
0.29



n/aDiluted

$
0.14


$
0.29



n/aWeighted average shares outstandingBasic


8,856,372



9,559,791



n/aDiluted


8,873,180



9,559,791



n/a    52




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
    EQUITY
    YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
    (Dollars in thousands)  AccumulatedUnearned





OtherAdditional


Unearned


Compensation 





Comprehensive





TotalCommon Stock


Paid-in


Compensation 


Equity


Retained


Income


Treasury


StockholdersShares


Amount


Capital


ESOP


Incentive Plan


Earnings


(Loss)


Stock


EquityBalance at December 31, 2004





$



$



$



$



$
59,437


$
10


$



$
59,447Comprehensive income:Net Loss






















(2,235
)










(2,235
)Net unrealized loss on securities available for sale, net of
    reclassification adjustment and tax effects


























(1,099
)






(1,099
)Total comprehensive loss


































(3,334
)Issuance of common stock for initial public offering, net of
    expense of $2.8 million


9,545,000



95



92,570























92,665Issuance of common stock to Legacy Banks Foundation


763,600



8



7,628























7,636Stock purchased by ESOP














(10,984
)


















(10,984
)Release of ESOP stock










4



732



















736Balance at December 31, 2005


10,308,600


$
103


$
100,202


$
(10,252
)

$



$
57,202


$
(1,089
)

$



$
146,166Comprehensive income:Net Income






















2,806











2,806Net unrealized gain on securities available for sale, net of
    reclassification adjustment and tax effects


























1,471







1,471Total comprehensive income


































4,277Cash dividends declared ($0.12 per share)






















(1,145
)










(1,145
)Establishment of stock incentive plan  restricted
    stock










5,554







(5,554
)














Restricted stock expense


















179















179Stock option expense










238























238Release of ESOP stock










100



733



















833Adjustment to initially apply FASB Statement No. 158, net
    of tax effect


























(551
)






(551
)Balance at December 31, 2006


10,308,600


$
103


$
106,094


$
(9,519
)

$
(5,375
)

$
58,863


$
(169
)

$



$
149,997Comprehensive income:Net income






















1,245











1,245Net unrealized gain on securities available for sale, net of
    reclassification adjustment and tax effects


























473







473Amortization of benefit plan gains (losses) and prior service
    costs


























(34
)






(34
)Total comprehensive income


































1,684Cash dividends declared ($0.16 per share)






















(1,399
)










(1,399
)Common stock repurchased  Restricted stock portion of
    2006 Equity Incentive Plan (412,344 shares)


(65,844
)






(5,579
)


















(1,080
)


(6,659
)Common stock repurchased  5% Stock Repurchase Program
    announced April 2007


(515,430
)


























(7,534
)


(7,534
)Common stock repurchased  5% Stock Repurchase Program
    announced August 2007


(486,366
)


























(6,784
)


(6,784
)Stock option expense










1,121























1,121Restricted stock expense


















1,863















1,863Restricted stock granted










13







(13
)














Release of ESOP stock










71



732



















803Balance at December 31, 2007


9,240,960


$
103


$
101,720


$
(8,787
)

$
(3,525
)

$
58,709


$
270


$
(15,398
)

$
133,092    53




---



##### Table of Contents



LEGACY
    BANCORP, INC.



CONSOLIDATED
    STATEMENTS OF CASH FLOWS

(Dollars
    in thousands)  Years Ended December 31,2007


2006


2005Cash flows from operating activities:Net income (loss)

$
1,245


$
2,806


$
(2,235
)Adjustments to reconcile net income (loss) to netcash provided by operating activities:Provision for loan losses


1,051



233



841Net (accretion) amortization of securities


(794
)


(1,058
)


171Amortization of core deposit intangible


39







Depreciation expense


1,191



1,014



966(Gain) loss on sales/impairment of securities, net


(510
)


1,736



89Gain on sales of loans, net


(270
)


(210
)


(236
)Loans originated for sale


(18,170
)


(11,279
)


(14,739
)Proceeds from sales of loans


18,045



11,615



22,578Share-based compensation expense


2,984



417



Deferred tax (benefit) provision


(1,348
)


279



(1,830
)Contribution of common stock to Charitable Foundation










7,636Employee Stock Ownership Plan expense


803



833



736Net change in:Bank-owned life insurance


(550
)


(271
)


(465
)Accrued interest receivable


148



(317
)


(446
)Other assets


84



794



(719
)Accrued expenses and other liabilities


2,358



(671
)


239Net cash provided by operating activities


6,306



5,921



12,586Cash flows from investing activities:Activity in available-for-sale securities:Sales


7,139



69,414



4,551Maturities, prepayments and calls


115,003



93,823



25,003Purchases


(92,431
)


(156,326
)


(78,648
)Activity in held-to-maturity securities:Maturities, prepayments and calls










66(Purchase) redemption of Federal Home Loan Bank stock


(1,723
)


57



(226
)Purchase of other investments


(1,908
)


(1,500
)


(827
)Maturities, prepayments and call of other investments


40



9



116Loan originations and purchases, net of principal payments


(75,313
)


(31,535
)


(50,726
)Purchases of bank-owned life insurance


(9,814
)






Redemption of bank-owned life insurance










198Additions to premises and equipment


(3,245
)


(2,194
)


(1,425
)Net cash received in branch acquisition


64,819







Net cash used in investing activities


2,567



(28,252
)


(101,918
)Cash flows from financing activities:Net increase in deposits


15,570



43,784



23,513Net (decrease) increase in securities sold under agreements to
    repurchase


(1,520
)


576



442Repayment of Federal Home Loan Bank advances


(287,517
)


(159,974
)


(174,534
)Proceeds from Federal Home Loan Bank advances


327,461



141,489



160,753Net change in other secured borrowings










Net increase (decrease) in mortgagors escrow accounts


90



13



(89
)Repurchase of common stock


(20,977
)






Net proceeds from Initial Public Offering (IPO)










92,665Purchase of Common Stock in connection with Employee Stock
    Ownership Plan










(10,984
)Payment of dividends on common stock


(1,399
)


(1,145
)


Net cash provided by financing activities


31,708



24,743



91,766Net change in cash and cash equivalents


40,581



2,412



2,434Cash and cash equivalents at beginning of period


21,644



19,232



16,798Cash and cash equivalents at end of period

$
62,225


$
21,644


$
19,232Supplemental cash flow information:Interest paid on deposits

$
17,912


$
14,360


$
8,216Interest paid on Federal Home Loan Bank advances


7,382



7,397



6,757Interest paid on other borrowed funds


126



136



89Income taxes paid


1,750



2,025



2,460Transfers from loans to loans held for sale






(126
)


7,113    54




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
 Years Ended December 31, 2007, 2006 and 2005
 (Dollars in Thousands)
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis
    of presentation
    Stock
    conversion
      Branch
    Acquisition
    Use of
    estimates
    Business
   55




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    Significant
    Group Concentrations of Credit Risk
    Operating
    segments
    Cash
    and cash equivalents
    Securities
       56




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    Loans
    held for sale
    Loans
          Allowance
    for loan losses
         57




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)      Other
    real estate owned
    Premises
    and equipment
    Goodwill
    and other intangible assets
      Year Ended December 31,2007


2006Balance at beginning of the year


3,085



3,085Acquired goodwill


6,602



Impairment






Balance at end of year


9,687



3,085     December 31, 2007Gross Carrying


AccumulatedValue


AmortizationCore deposit intangible


3,247



39  58




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    Years Ended December 31,2008

$
6492009


6492010


6492011


6492012


612   Bank-owned
    Life Insurance
    Transfers
    of financial assets
    Income
    Taxes
    Pension
    plan
    Postretirement
    benefits other than pensions
    Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
 59




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    Advertising
    costs
    Portfolio
    management assets
    Earnings
    per share
      Year Ended December 31,2007


2006Net income applicable to common stock

$
1,245


$
2,806Average number of shares issued


10,308,600



10,308,600Less: average unallocated ESOP shares


(693,830
)


(748,809
)Less: average treasury shares


(411,851
)


Less: average unvested restricted stock awards


(346,547
)


Average number of basic shares outstanding


8,856,372



9,559,791Plus: dilutive unvested restricted stock awards


16,808



Plus: dilutive stock option shares






Average number of diluted shares outstanding


8,873,180



9,559,791Basic earnings per share

$
0.14


$
0.29Diluted earnings per share

$
0.14


$
0.29  60




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)  Comprehensive
    income/loss
      Years Ended December 31,2007


2006


2005Net unrealized holding gains (losses) on available for sale
    securities

$
1,247


$
630


$
(1,809
)Reclassification adjustment for (gains) losses realized in income


(510
)


1,736



(160
)Reclassification adjustment for impairmant losses recognized in
    income










225737



2,366



(1,744
)Tax effect


(264
)


(895
)


645Net-of-tax amount


473



1,471



(1,099
)Amortization of benefit plan gains (losses) and prior service
    costs


(57
)






Tax effect


23







Net-of-tax amount


(34
)






$
439


$
1,471


$
(1,099
)   Comprehensive
    income/loss (concluded)
    December 31,2007


2006Net unrealized holding gains on available for sale securities

$
1,421


$
684Tax effects


(566
)


(302
)Net-of-tax amount


855



382Unrecognized net actuarial loss and prior service costs
    pertaining to Directors fee plan


(990
)


(933
)Tax effect


405



382Net-of-tax amount


(585
)


(551
)$
270


$
(169
)     Actuarial loss

$
19Prior service cost or credit

$
145  61




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)  Recent
    accounting pronouncements
  Business Combinations.
  
    Acquisition costs will be generally expensed as incurred,
    Noncontrolling interests (formerly known as minority
    interests  see Statement 160 discussion below)
    will be valued at fair value at the acquisition date,
    Acquired contingent liabilities will be recorded at fair value
    at the acquisition date and subsequently measured at either the
    higher of such amount or the amount determined under existing
    guidance for non-acquired contingencies,
    Restructuring costs associated with a business combination will
    be generally expensed subsequent to the acquisition date,
    Changes in deferred tax asset valuation allowances and income
    tax uncertainties after the acquisition date generally will
    affect income tax expense, and      Noncontrolling Interests in Consolidated
    Financial Statements  An Amendment of ARB No. 51.
  Accounting for Servicing of Financial Assets,
 62




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  
 Recent
    accounting
    pronouncements  (Continued)
        EITF 06-4, EITF 06-4,
  , The Fair Value Option for Financial Assets and
    Financial Liabilities
  2.
    RESTRICTIONS
    ON CASH AND AMOUNTS DUE FROM BANKS     63




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  3.
    SHORT-TERM
    INVESTMENTS    December 31,2007


2006Federal funds sold

$
22,199


$
8,296FHLB overnight deposits


15,277



1,756Money market funds


10,818



1,150$
48,294


$
11,202   4.
    SECURITIES    December 31,2007


2006Securities available for sale, at fair value

$
134,544


$
162,213Securities held to maturity, at amortized cost


97



97Other equity securities, at cost:Federal Home Loan Bank of Boston stock


10,722



8,999Savings Bank Life Insurance Company of Massachusetts stock


1,709



1,709Non-marketable equity securities and other investments


4,982



3,114$
152,054


$
176,132     December 31, 2007Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises

$
48,041


$
234


$
(13
)

$
48,262Municipal


9,930



48



(37
)


9,941Corporate


1,501



30







1,531Mortgage-backed


65,551



358



(183
)


65,726Total debt securities


125,023



670



(233
)


125,460Marketable equity securities


8,100



1,435



(451
)


9,084Total securities available for sale

$
133,123


$
2,105


$
(684
)

$
134,544Securities Held to MaturityOther bonds and obligations

$
97


$



$



$
97   64




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Continued)  December 31, 2006Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises

$
91,181


$
33


$
(308
)

$
90,906Municipal


7,199



12



(37
)


7,174Corporate


2,971



8



(2
)


2,977Mortgage-backed


54,165



18



(345
)


53,838Total debt securities


155,516



71



(692
)


154,895Marketable equity securities


6,013



1,370



(65
)


7,318Total securities available for sale

$
161,529


$
1,441


$
(757
)

$
162,213Securities Held to MaturityOther bonds and obligations

$
97


$



$



$
97     Available for Sale


Held to MaturityAmortized


Fair


Amortized


FairCost


Value


Cost


ValueWithin 1 year

$
29,205


$
29,216


$
30


$
30Over 1 year to 5 years


17,793



18,004



52



52Over 5 years to 10 years


6,295



6,332



15



15Over 10 years


6,179



6,182







Total bonds and obligations


59,472



59,734



97



97Mortgage-backed


65,551



65,726







Total debt securities

$
125,023


$
125,460


$
97


$
97      65




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Concluded)    Less Than Twelve Months


Over Twelve MonthsGross





GrossUnrealized


Fair


Unrealized


FairLosses


Value


Losses


ValueDecember 31, 2007:Debt securities:Government-sponsored enterprises

$
13


$
13,481


$



$
Municipal


27



2,960



10



1,621Mortgage-backed


15



10,502



168



9,466Total debt securities


55



26,943



178



11,087Marketable equity securities


411



2,489



40



393Total temporarily impaired securities

$
466


$
29,432


$
218


$
11,480December 31, 2006:Debt securities:Government-sponsored enterprises

$
208


$
42,548


$
100


$
16,156Municipal


4



1,013



33



4,238Corporate










2



1,001Mortgage-backed


166



33,835



179



14,147Total debt securities


378



77,396



314



35,542Marketable equity securities


65



970







Total temporarily impaired securities

$
443


$
78,366


$
314


$
35,542        66




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  5.
    LOANS    December 31,2007


2006Mortgage loans on real estate:Residential

$
349,772


$
325,407Commercial


212,191



170,971Home equity


56,752



56,856618,715



553,234Other loans:Commercial


27,664



22,903Consumer and other


11,421



6,45139,085



29,354Total loans


657,800



582,588Net deferred loan costs


1,397



891Allowance for loan losses


(5,568
)


(4,677
)Loans, net

$
653,629


$
578,802     Years Ended December 31,2007


2006


2005Balance at beginning of year

$
4,677


$
4,220


$
3,846Provision for loan losses


1,051



233



841Recoveries


58



387



147Loans charged-off


(218
)


(163
)


(614
)Balance at end of year

$
5,568


$
4,677


$
4,220     December 31,2007


2006


2005Impaired loans with no valuation allowance

$
810


$
277


$
1,060Impaired loans with a valuation allowance


1,982



2,042



Total impaired loans

$
2,792


$
2,319


$
1,060Valuation allowance allocated to impaired loans

$
440


$
374


$
Average investment in impaired loans

$
3,293


$
2,253


$
2,162Interest income recognized on impaired loans

$



$



$
Non-accrual loans

$
1,532


$
879


$
903  67




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   5.
    LOANS  (Continued)        6.
    PREMISES
    AND EQUIPMENT    December 31,


Estimated2007


2006


Useful LivesPremises:Land

$
1,414


$
1,252Buildings and improvements


19,294



14,926



5 - 39 YearsFurniture and equipment


7,745



6,357



3 - 10 YearsConstruction in process






1,27828,453



23,813Accumulated depreciation and amortization


(9,587
)


(8,397
)$
18,866


$
15,416      68




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  7.
    DEPOSITS    December 31,2007


2006Demand

$
64,348


$
50,753Regular savings


53,684



50,939Relationship Savings


112,705



93,017Money market deposits


64,373



58,097NOW deposits


41,981



37,553Total non-certificate accounts


337,091



290,359Term certificates less than $100,000


161,385



136,578Term certificates of $100,000 or more


111,971



91,311Total certificate accounts


273,356



227,889Total deposits

$
610,447


$
518,248     AmountMaturing During the Year Ending December 31,

2007


20062007

$



$
191,8502008


241,542



27,1802009


20,633



4,9922010


6,583



1,3472011


2,472



2,5202012


2,040



Therafter


86



$
273,356


$
227,889     8.
    SECURITIES
    SOLD UNDER AGREEMENTS TO REPURCHASE      December 31,2007


2006Repurchase agreements with customers

$
4,055


$
5,575Fair value of securities underlying the agreements

$
8,251


$
6,916Weighted average interest rate


2.95
%


2.92
%  69




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  9.
    FEDERAL
    HOME LOAN BANK ADVANCES    Weighted AverageAmount


Interest RateMaturing During the Year Ending December 31,

2007


2006


2007


20062007

$



$
33,500




%


4.62
%2008


53,200



51,200



4.88



4.922009


38,303
*


29,545
*


4.50



4.292010


30,650



7,450



4.79



4.732011






500







4.812012


20,000



5,000



4.24



3.35Thereafter


25,229
*


243
*


4.23



$
167,382


$
127,438



4.60
%


4.61
%     *
    
    Includes amortizing advances requiring $64 in combined monthly
    principal and interest payments at December 31, 2007.      10.
    INCOME
    TAXES    Years Ended December 31,2007


2006


2005Current tax provision:Federal

$
1,395


$
1,927


$
1,665State


202



447



4621,597



2,374



2,127Deferred tax benefit:Federal


(950
)


(372
)


(2,551
)State


(438
)


(8
)


(109
)(1,388
)


(380
)


(2,660
)Change in valuation reserve


40



659



830$
249


$
2,653


$
297  70




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   10.
    INCOME
    TAXES  (Continued)    Years Ended December 31,2007


2006


2005Statutory tax rate


34.0
%


34.0
%


(34.0
)%Increase (decrease) resulting from:State taxes, net of federal tax benefit


(10.4
)


5.3



12.0Bank owned life insurance


(11.4
)


(1.4
)


Dividends received deduction


(3.4
)


(0.7
)


(1.6
)Change in valuation reserve


2.7



12.1



42.8Tax-exempt income


(5.1
)


(1.2
)


Stock based compensation


7.9



0.5



Other, net


2.4







(3.9
)Effective tax rates


16.7
%


48.6
%


15.3
%      December 31,2007


2006Deferred tax assets:Federal

$
6,855


$
5,727State


1,522



1,0228,377



6,749Valuation reserve


(1,529
)


(1,489
)6,848



5,260Deferred tax liabilities:Federal


(960
)


(556
)State


(308
)


(230
)(1,268
)


(786
)Net deferred tax asset

$
5,580


$
4,474  71




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   10.
    INCOME
    TAXES  (Concluded)    December 31,2007


2006Net unrealized gain on securities available for sale

$
(566
)

$
(302
)Depreciation and amortization


67



44Deferred income


(572
)


(365
)Allowance for loan losses


2,277



1,913Employee benefit plans


3,036



1,435Capital loss carryforward


326



488Charitable contribution carryforward


2,119



2,278Projected benefit obligation  Directors fee plan


405



382Other


17



90Valuation reserve


(1,529
)


(1,489
)Net deferred tax asset

$
5,580


$
4,474     December 31,2007


2006


2005Balance at beginning of year

$
1,489


$
830


$
Reserve for charitable contribution carryforward


40



659



830Balance at end of year

$
1,529


$
1,489


$
830       11.
    COMMITMENTS
    AND CONTINGENCIES    Loan
    and other financial commitments
   72




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   11.
    COMMITMENTS
    AND CONTINGENCIES  (Continued)    December 31,2007


2006Commitments to grant loans

$
27,070


$
30,579Unused funds on commercial lines-of-credit


20,139



13,652Unadvanced funds on home equity lines-of-credit


68,721



67,236Unadvanced funds on construction loans


9,498



4,317Standby letters-of-credit and other commitments


18,387



13,192   case-by-case
    Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  Operating
    lease commitments
    Years Ending December 31,

Amount2008

$
2342009


1972010


1182011


832012


81Thereafter


386$
1,099  73




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   11.
    COMMITMENTS
    AND CONTINGENCIES  (Concluded)    Legal
    claims
    Employment
    and change of control agreements
      12.
    MINIMUM
    REGULATORY CAPITAL REQUIREMENTS     74




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   12.
    MINIMUM
    REGULATORY CAPITAL
    REQUIREMENTS  (Concluded)    Minimum To Be WellMinimum


Capitalized UnderCapital


Prompt CorrectiveActual


Requirement


Action ProvisionsAmount


Ratio


Amount


Ratio


Amount


RatioDecember 31, 2007:Total capital to risk weighted assets

$
89,183



13.9
%

$
51,265



8.0
%

$
64,081



10.0
%Tier 1 capital to risk weighted assets:


82,937



12.9



25,632



4.0



38,449



6.0Tier 1 capital to average assets:


82,937



9.9



25,161



3.0



41,935



5.0December 31, 2006:Total capital to risk weighted assets:

$
101,280



18.9
%

$
42,808



8.0
%

$
53,510



10.0
%Tier 1 capital to risk weighted assets:


95,825



17.9



21,404



4.0



32,106



6.0Tier 1 capital to average assets:


95,825



12.5



22,906



3.0



38,177



5.0     12/31/2007


12/31/2006Total stockholders equity per consolidated financial
    statements

$
133,092


$
149,997Adjustments for Bank Tier 1 capital:Holding company equity adjustment


(37,002
)


(51,259
)Net unrealized gains on available for sale securities


(841
)


(376
)Impact of adoption of FAS No. 158


585



551Disallowed goodwill and intangible assets and other adjustments


(12,897
)


(3,088
)Total Bank Tier 1 capital


82,937



95,825Adjustments for total capital:Allowed unrealized gains on equity securities


440



581Includable allowances for loan and commitment losses


5,806



4,874Total Bank capital per regulatory reporting

$
89,183


$
101,280     13.
    EMPLOYEE
    BENEFIT PLANS  Defined
    Benefit plan
   75




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   13.
    EMPLOYEE
    BENEFIT PLANS  (Continued)    Plan Year EndedOctober 31, 2006Change in plan assets:Fair value of plan assets at beginning of year

$
9,992Actual gain on plan assets


1,036Employer contribution


Benefits paid


(10,990
)Plan expenses paid


(38
)Fair value of plan assets at end of year

$
Change in benefit obligation:Benefit obligation at beginning of year


10,450Service cost


Interest cost


Plan amendment


540Actuarial (loss)/gain


Benefits paid


(10,990
)Benefit obligation at end of year

$
   Defined
    benefit plan (continued)
    Plan Year EndedOctober 31, 2005Service cost  benefits earned during year

$
648Interest cost on projected benefits


644Expected return on plan assets


(754
)Net amortization of transition obligation and prior service cost


(30
)Recognized net actuarial (gain) loss


40$
548    76




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   13.
    EMPLOYEE
    BENEFIT PLANS  (Continued)      Plan Year EndedOctober 31, 2005Discount rate on benefit obligations


5.75
%Rates of increase in compensation levels


4.50
%Expected long-term rates of return on plan assets


8.00
%     Defined
    contribution plan
    Supplemental
    executive plans
    Split
    dollar life insurance
    Employee
    Stock Ownership plan
   77




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   13.
    EMPLOYEE
    BENEFIT PLANS  (Continued)  15-year
    Year Ending December 31,

Amount2008


5082009


5452010


5822011


6232012


664Thereafter


6,144$
9,066       December 31,2007


2006Allocated


156,697



109,958Unallocated


659,751



714,730816,448



824,688    78




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   13.
    EMPLOYEE
    BENEFIT PLANS  (Concluded)  Director
    fee continuation plan
    December 31,2007


2006Change in projected benefit obligation:Benefit obligation at beginning of year

$
1,206


$
1,121Interest cost


78



65Service cost


78



59Actuarial gain


216



Benefits paid


(39
)


(39
)Benefit obligation accrued at end of year


1,539



1,206Accumulated benefit obligation

$
1,373


$
831     December 31,2007


2006Discount rate


6.00
%


5.75
%Rates of fee increase


5.00
%


5.00
%     Years Ended December 31,2007


2006


2005Service Cost

$
78


$
59


$
9Interest Cost


78



65



10Amortization of prior service cost


145



145



24Actuarial loss


14







$
315


$
269


$
43     Years Ended December 31,2007


2006


2005Discount rate


5.75
%


5.75
%


5.75
%Rates of fee increase


5.00
%


5.00
%


5.00
%  79




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  14.
    POSTRETIREMENT
    HEALTH AND LIFE INSURANCE BENEFITS    Years Ended December 31,2007


2006


2005Interest cost on projected benefits

$
36


$
36


$
52Recognized net actuarial loss










12Net amortization of transition obligation and prior service cost


(1
)


(1
)


4$
35


$
35


$
68     December 31,2007


2006Change in benefit obligation:Benefit obligation at beginning of year

$
627


$
624Interest cost


36



36Actuarial gain (loss)


55



24Benefits paid


(62
)


(57
)Benefit obligation at end of year

$
656


$
627     1% Decrease


1% IncreaseEffect on total of service and interest cost components for 2007

$
(3
)

$
3Effect on the postretirement benefit obligation as of
    December 31, 2007


(42
)


47     2008


632009


632010


622011


612012


602013-2017


283  80




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  15.
    EQUITY
    INCENTIVE PLAN  Stock
    options
    For Options Granted inYears Ended December 31,2007


2006Fair Value

$
2.85


$
3.98Expected dividends


1.24
%


0.75
%Expected term (years)


6.50



6.50Expected volatility


15.90
%


13.53
%Risk-free interest rate


3.88
%


4.54
%         Weighted


Weighted AverageAverage


Remaining


AggregateExercise Price


Contractual Term


IntrinsicShares


per Share


(in Years)


ValueOutstanding at January 1, 2007


892,200


$
16.03



9.9Granted


22,500



12.91



9.9Forfeited or expired


(10,400
)


16.03



0Outstanding at December 31, 2007


904,300


$
15.95



8.9


$
8Exercisable at December 31, 2007













$
    81




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   15.
    EQUITY
    INCENTIVE PLAN  (Concluded)  Stock
    awards
      Weighted-AverageGrant-DateNonvested Shares

Shares


Fair ValueBalance at beginning of year


346,500


$
16.03Granted


1,000



12.91Vested






Cancelled






Forfeited






Balance at end of year


347,500


$
16.02     16.
    RELATED
    PARTY TRANSACTIONS      Years Ended December 31,2007


2006Balance at beginning of year

$
3,237


$
3,693Additions/change in status


101



392Repayments


(546
)


(848
)Balance at end of year

$
2,792


$
3,237  82




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  17.
    RESTRICTIONS
    ON DIVIDENDS, LOANS AND ADVANCES        18.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS      Cash and cash equivalents
  Securities and other investments
  Loans, net and loans held for sale
  Deposits
  Securities sold under agreements to
    repurchase
 83




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   18.
    FAIR
    VALUE OF FINANCIAL
    INSTRUMENTS  (Concluded)  Federal Home Loan Bank advances
  Accrued interest and mortgagors escrow
    accounts
  Off-balance-sheet instruments
    December 31,2007


2006Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial assets:Cash and cash equivalents

$
62,225


$
62,225


$
21,644


$
21,644Securities available for sale


134,544



134,544



162,213



162,213Securities held to maturity


97



97



97



97Federal Home Loan Bank of Boston stock


10,722



10,722



8,999



8,999Savings Bank Life Insurance stock


1,709



1,709



1,709



1,709Other investments


4,982



4,982



3,114



3,114Loans and loans held for sale


654,024



658,526



578,802



578,568Accrued interest receivable


3,404



3,404



3,552



3,552Financial liabilities:Deposits


610,447



611,339



518,248



517,688Repurchase agreements


4,055



4,055



5,575



5,575FHLB advances


167,382



169,791



127,438



126,685Mortgagors escrow accounts


1,034



1,034



944



944   84




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  19.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL STATEMENTS    BALANCE
    SHEETS
  December 31,2007


2006Cash and short-term investments

$
3,169


$
6,502Securities at fair value


24,044



34,310Investment in common stock of Legacy Banks


96,090



98,738Investment in common stock of LB Funding Corp.


8,536



9,271Accrued interest receivable


219



317Deferred tax asset


387



868Other assets


704



2Total Assets

$
133,149


$
150,008Liabilities and Stockholders EquityAccrued expenses

$
57


$
11Stockholders equity


133,092



149,997Total Liabilities and Stockholders Equity

$
133,149


$
150,008   CONDENSED
    STATEMENT OF OPERATIONS
  Year Ended December 31,2007


2006Income:Dividends from Legacy Banks

$
4,000


$
4,000Interest on securities


1,370



1,622Interest on cash and short-term investments


252



168Total Income


5,622



5,790Operating expenses


1,024



1,129Income before income taxes and equity in undistributed net
    income of subsidiaries


4,598



4,661Income tax provision


261



919Income before equity in income (loss) of subsidiaries


4,337



3,742Equity in undistributed loss of Legacy Banks


(3,465
)


(1,327
)Equity in undistributed income of LB Funding


373



391Net income

$
1,245


$
2,806   85




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  19.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL
    STATEMENTS  (Concluded)  CONDENSED
    STATEMENT OF CASH FLOWS
  Year Ended December 31,2007


2006Cash flows from operating activities:Net income

$
1,245


$
2,806Adjustments to reconcile net income to net cash provided by
    operating activities:Net accretion of securities


(472
)


Equity in undistributed loss of Legacy Banks


3,465



1,327Equity in undistributed income of LB Funding Corp.


(373
)


(391
)Share-based compensation expense


2,984



417Deferred tax provision


476



860Net change in:Accrued interest receivable


98



(317
)Other assets


(702
)


(2
)Accrued expenses and other liabilities


46



(18
)Net cash provided by operating activities:


6,767



4,682Cash flows from investing activities:Activities in available-for-sale securities:Maturities, prepayments and calls


49,500



69,000Purchases


(38,748
)


(70,622
)Net cash provided (used) by investing activities:


10,752



(1,622
)Cash flows from financing activities:Payment of dividends on common stock


(1,399
)


(1,145
)Payment of loan from LB Funding


1,108



1,109Repurchase of common stock


(20,977
)


Other, net


416



(418
)Net cash used by financing activities:


(20,852
)


(454
)Net change in cash and cash equivalents


(3,333
)


2,606Cash and cash equivalents at beginning of year


6,502



3,896Cash and cash equivalents at end of year

$
3,169


$
6,502  86




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Concluded)
 (Dollars in Thousands)
  20.
    QUARTERLY
    DATA (UNAUDITED)    2007


2006Fourth


Third


Second


First


Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


QuarterInterest and dividend income

$
12,778


$
12,544


$
12,237


$
11,798


$
11,409


$
11,247


$
10,848


$
10,411Interest expense


6,829



6,585



6,354



5,742



5,722



5,397



4,908



4,312Net interest income


5,949



5,959



5,883



6,056



5,687



5,850



5,940



6,099Provision (credit) for loan losses


453



160



193



245



(12
)


(95
)


176



164Non-interest income


1,437



1,497



1,753



1,198



147



1,128



1,138



1,038Non-interest expenses


8,160



6,506



6,343



6,180



5,782



5,011



5,298



5,244Provision (benefit) for income taxes


(733
)


270



385



327



655



759



591



648Net income (loss)

$
(494
)

$
520


$
715


$
502


$
(591
)

$
1,303


$
1,013


$
1,081Basic earnings (loss) per share

$
(0.06
)

$
0.06


$
0.08


$
0.05



(0.06
)


0.14



0.11



0.11Diluted earnings (loss) per share

$
(0.06
)

$
0.06


$
0.08


$
0.05



(0.06
)


0.14



0.11



0.11        87




---



##### Table of Contents



Item 9.
    Changes
    In And Disagreements With Accountants On Accounting And
    Financial Disclosure    Item 9a.
    Controls
    And Procedures  Rule 13a-15(e)
  CHANGES
    IN INTERNAL CONTROL OVER FINANCIAL REPORTING
    MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    Internal Control  Integrated Framework
       88




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##### Table of Contents



Item 9b.
    Other
    Information    PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership Of Certain Beneficial Owners And Management And
    Related Stockholder Matters                  Number of SecuritiesRemaining Available forFuture Issuance UnderNumber of Securities to


Weighted-Average


Equity Compensation Plansbe Issued Upon Exercise


Exercise Price of


(Excluding Securitiesof Outstanding Options,


Outstanding Options,


Reflected in the FirstPlan Category

Warrants and Rights


Warrants and Rights


Column)Equity compensation plans approved by security holders


904,300


$
15.95



126,560Equity compensation plans not approved by security holders










Total


904,300


$
15.95



126,560   Item 13.
    Certain
    Relationships And Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees And Services   PART IV  Item 15.
    Exhibits And
    Financial Statement Schedules 89




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##### Table of Contents



SIGNATURES      /s/  J.
    Williar Dunlaevy        /s/  Paul
    H. Bruce         /s/  Eugene
    A. Dellea        /s/  David
    L. Klausmeyer        /s/  Gary
    A. Lopenzina      90




---



##### Table of Contents



/s/  Robert
    B. Trask        /s/  Dorothy
    B. Winsor      91




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##### Table of Contents



INDEX TO
    EXHIBITS
  3
.1

Certificate of Incorporation of Legacy Bancorp, Inc.(1)3
.2

Bylaws of Legacy Bancorp, Inc. (as amended)(1)10
.1

Legacy Banks ESOP Trust Agreement(2)10
.2

ESOP Plan Document(2)10
.3

ESOP Loan Documents(2)10
.4.1

Employment Agreement between Legacy Banks and J. Williar
    Dunlaevy(2)10
.4.2

Employment Agreement between Legacy Banks and Michael A.
    Christopher(2)10
.4.3

Employment Agreement between Legacy Banks and Steven F. Pierce(2)10
.4.4

Employment Agreement between Legacy Banks and Stephen M.
    Conley(2)10
.4.5

Employment Agreement between Legacy Banks and Richard M.
    Sullivan(2)10
.5.1

Employment Agreement between Legacy Bancorp, Inc. and J. Williar
    Dunlaevy(2)10
.5.2

Employment Agreement between Legacy Bancorp, Inc. and Michael A.
    Christopher(2)10
.5.3

Employment Agreement between Legacy Bancorp, Inc. and Steven F.
    Pierce(2)10
.5.4

Employment Agreement between Legacy Bancorp, Inc. and Stephen M.
    Conley(2)10
.5.5

Employment Agreement between Legacy Bancorp, Inc. and Richard M.
    Sullivan(2)10
.5.6

Separation Agreement and General Release dated as of
    November 5, 2007 between Legacy Bancorp, Inc., Legacy Banks
    and Michael A. Christopher(3)10
.5.7

Separation Agreement and General Release dated as of
    December 21, 2007 between Legacy Bancorp, Inc., Legacy
    Banks and Stephen M. Conley(4)10
.5.8

Consulting Agreement dated as of November 5, 2007 between
    Legacy Bancorp, Inc., Legacy Banks and Michael A. Christopher(3)10
.5.9

Purchase Agreement by and between First Niagara Bank and Legacy
    Banks dated as of July 25, 2007.(5)10
.8

Legacy Banks Employee Severance Compensation Plan(2)10
.9.1

Legacy Banks Supplemental Executive Retirement Plan with J.
    Williar Dunlaevy(2)10
.9.2

Legacy Banks Supplemental Executive Retirement Plan with Michael
    A. Christopher(2)10
.10

Director Fee Continuation Plan(2)11
.0

Statement re: Computation of Per Share Earnings is incorporated
    herein by reference to Part II, Item 8,
    Financial Statements and Supplementary Data14
.0

Code of Ethics21
.0

List of all subsidiaries of the Registrant23
.0

Consent of Independent Registered Public Accounting Firm31
.1

Certification pursuant to
    Rule 13a-14(a)/15d-14(a)
    of J. Williar Dunlaevy31
.2

Certification pursuant to
    Rule 13a-14(a)/15d-14(a)
    of Stephen M. Conley32


Certification pursuant to 18 U.S.C. Section 1350     (1)
    
    Incorporated by reference from the Registrants Quarterly Report
    on
    Form 10-Q
    for the Quarter Ended June 30, 2005 filed October 27,
    2005.(2)
    
    Incorporated by reference from the Registration Statement on
    Form S-1
    (No. 333-126481)
    filed July 8, 2005, as amended.(3)
    
    Incorporated by reference from the Registrants Current Report on
    Form 8-K
    filed November 5, 2007.(4)
    
    Incorporated by reference from the Registrants Current Report on
    Form 8-K
    filed December 21, 2007.(5)
    
    Incorporated by reference from the Registrants Current Report on
    Form 8-K filed July 25, 2007. 92