##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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, 2006oro

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 12(b)-2
  o þ o
  Rule 12(b)-2 o þ
     10,308,600.
  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


87Item 9a.


Controls and
    procedures


87Item 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


90Item 14.


Principal
    accountant fees and services


90Part IVItem 15.


Exhibits and
    financial statement schedules


90Signatures


91EX-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 J. Williar DunlaevyEX-31.2 Section 302 Certification of Stephen M. ConleyEX-32 Section 906 Certification of J. Williar Dunlaevy and Stephen M. Conley   1




---



##### Table of Contents



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




---



##### Table of Contents



Lending
    Activities
  General: one-to-four-family lines-of-credit,
 3




---



##### Table of Contents



At December 31,2006


2005


2004Amount


Percent


Amount


Percent


Amount


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

$
325,407



55.85
%

$
308,008



55.86
%

$
284,114



55.89
%Commercial


170,971



29.35



160,675



29.14



141,540



27.84Home equity


56,856



9.76



58,640



10.64



53,508



10.53553,234



94.96



527,323



95.64



479,162



94.26Other loans:Commercial


22,903



3.93



20,579



3.73



24,856



4.89Consumer and other


6,451



1.11



3,457



0.63



4,332



0.8529,354



5.04



24,036



4.36



29,188



5.74Total loans


582,588



100.00
%


551,359



100.00
%


508,350



100.00
%Other Items:Net deferred loan costs


891







361







224Unamortized premiums


















Allowance for loan losses


(4,677
)






(4,220
)






(3,846
)Total Loans, net

$
578,802






$
547,500






$
504,728   4




---



##### Table of Contents



At December 31,2003


2002Amount


Percent


Amount


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

$
254,166



54.15
%

$
216,092



57.86
%Commercial


139,708



29.77



95,919



25.68Home equity


44,506



9.48



30,484



8.16438,380



93.40



342,495



91.70Other loans:Commercial


22,087



4.70



22,158



5.94Consumer and other


8,897



1.90



8,827



2.3630,984



6.60



30,985



8.30Total loans


469,364



100.00
%


373,480



100.00
%Other Items:Net deferred loan costs


275







585Unamortized premiums


36







118Allowance for loan losses


(4,420
)






(3,633
)Total Loans, net

$
465,255






$
370,550   Residential Real Estate Loans:
     5




---



##### Table of Contents



loan-to-value loan-to-value
    Commercial Real Estate Loans:
          Home Equity
    Lines-of-Credit
    and Loans: lines-of-credit lines-of-credit lines-of-credit
  lines-of-credit one-to-four lines-of-credit Wall Street
    Journal. lines-of-credit
 6




---



##### Table of Contents



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




---



##### Table of Contents



For the Years Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands)Loans at beginning of year

$
551,359


$
508,350


$
469,364


$
373,480


$
382,745Originations:Mortgage loans on real estate:Residential


55,223



86,247



92,944



138,305



101,468Commercial


50,239



52,321



45,191



81,875



41,509Home Equity


28,997



35,429



39,416



41,059



26,250134,459



173,997



177,551



261,239



169,227Other Loans:Commercial Business


17,330



10,832



13,170



543



17,544Consumer and other


2,183



1,617



3,783



5,982



3,78519,513



12,449



16,953



6,525



21,329Total loans originated


153,972



186,446



194,504



267,764



190,556Purchases of mortgage loans


3,106



5,000











Deduct:Principal loan repayments and
    prepayments


114,281



125,481



138,968



150,836



163,761Loan sales


11,405



22,342



15,611



20,794



35,953Charge-offs


163



614



939



250



107Total deductions


125,849



148,437



155,518



171,880



199,821Net increase (decrease) in loans


31,229



43,009



38,986



95,884



(9,265
)Loans at end of year

$
582,588


$
551,359


$
508,350


$
469,364


$
373,480        8




---



##### Table of Contents



Loan Maturity.
  Residential Mortgage


Commercial Mortgage


CommercialWeighted





Weighted





WeightedAverage





Average





AverageAmount


Rate


Amount


Rate


Amount


Rate(Dollars in thousands)Due less than one year

$
58,925



5.42
%

$
16,372



7.14
%

$
12,901



8.75
%Due after one year to five years


146,661



5.79



51,430



7.31



7,360



8.54Due after five years


119,821



5.80



103,169



7.25



2,642



7.89Total

$
325,407



5.72
%

$
170,971



7.20
%

$
22,903



8.56
%   Home Equity, Consumer and Other


TotalWeighted





WeightedAverage





AverageAmount


Rate


Amount


Rate(Dollars in thousands)Due less than one year

$
58,774



8.07
%

$
146,972



6.70
%Due after one year to five years


2,446



8.69



207,897



5.69Due after five years


2,087



8.83



227,719



6.14Total

$
63,307



8.19
%

$
582,588



6.17
%     Due After December 31, 2007Fixed


Adjustable


Total(Dollars in thousands)Residential mortgage

$
155,694


$
110,788


$
266,482Commercial mortgage


91,524



63,075



154,599Commercial business


4,512



5,490



10,002Home equity, consumer and other


4,533







4,533Total Loans

$
256,263


$
179,353


$
435,616  9




---



##### Table of Contents



Asset
    Quality
  General:
  Delinquent Loans.:
  Other Real Estate Owned:
  Classification of Assets and Loan
    Review:
      Non-Performing Assets.
 10




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##### Table of Contents



At December 31,2006


2005


2004


2003


2002(Dollars in thousands)Non-accrual loans:Residential mortgage

$
483


$
479


$
123


$
875


$
971Commercial mortgage


179



96



1,229



662



1,209Commercial


132



250



388



316



866Home equity, consumer and other


85



78



29







30Total non-accrual loans


879



903



1,769



1,853



3,076Loans 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 assets

$
879


$
903


$
1,769


$
1,853


$
3,076Troubled debt restructurings

$
943


$



$
891


$
779


$
1,127Ratios:Non-performing loans to total loans


0.15
%


0.16
%


0.35
%


0.39
%


0.82
%Non-performing assets to total
    assets


0.11
%


0.12
%


0.26
%


0.29
%


0.52
%   and/or
  Allowance for Loan Losses.
  sub-category:
 11




---



##### Table of Contents



non-classified
  loan-by-loan
   12




---



##### Table of Contents



At or for the Years Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands)Balance at beginning of
    period

$
4,220


$
3,846


$
4,420


$
3,633


$
3,540Charge-offs:Mortgage loans on real estate:


(50
)






(621
)






(20
)Other loans:Commercial


(19
)


(506
)


(258
)


(184
)


(19
)Consumer and other


(94
)


(108
)


(60
)


(66
)


(68
)Total other loans


(113
)


(614
)


(318
)


(250
)


(87
)Total charge-offs


(163
)


(614
)


(939
)


(250
)


(107
)Recoveries:Mortgage loans on real estate


10















Other loans:Commercial


316



66



128



31



49Consumer and other


61



81



25



27



11Total other loans


377



147



153



58



60Total recoveries


387



147



153



58



60Net recoveries (charge-offs)


224



(467
)


(786
)


(192
)


(47
)Provision for loan losses


233



841



212



979



140Balance at end of
    period

$
4,677


$
4,220


$
3,846


$
4,420


$
3,633Ratios:Net recoveries (charge-offs) to
    average loans outstanding  annualized


0.04
%


(0.09
)%


(0.16
)%


(0.05
)%


(0.01
)%Allowance for loan losses to
    non-performing loans at end of period


532.08
%


467.33
%


217.41
%


238.53
%


118.11
%Allowance for loan losses to total
    loans at end of period


0.80
%


0.77
%


0.76
%


0.94
%


0.97
%    13




---



##### Table of Contents



At December 31,2006


2005


2004Percent 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

$
892


$
325,407



55.86
%

$
881


$
308,008



55.86
%

$
785


$
284,114



55.89
%Commercial


3,015



170,971



29.35



2,779



160,675



29.14



2,363



141,540



27.84Home equity


249



56,856



9.76



168



58,640



10.64



156



53,508



10.534,156



553,234



94.96



3,828



527,323



95.64



3,304



479,162



94.26Other loans:Commercial


426



22,903



3.93



353



20,579



3.73



423



24,856



4.89Consumer and other


95



6,451



1.11



39



3,457



0.63



119



4,332



0.85521



29,354



5.04



392



24,036



4.36



542



29,188



5.74Total

$
4,677


$
582,588



100.00
%

$
4,220


$
551,359



100.00
%

$
3,846


$
508,350



100.00
%   At December 31,2003


2002Percent 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

$
713


$
254,166



54.15
%

$
627


$
216,092



57.86
%Commercial


3,113



139,708



29.77



2,426



95,919



25.68Home equity


124



44,506



9.48



88



30,484



8.163,950



438,380



93.40



3,141



342,495



91.70Other loans:Commercial


369



22,087



4.70



383



22,158



5.94Consumer and other


101



8,897



1.90



109



8,827



2.36470



30,984



6.60



492



30,985



8.30Total

$
4,420


$
469,364



100.00
%

$
3,633


$
373,480



100.00
%   Investment
    Activities
  General.
 14




---



##### 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, 2006


At December 31, 2005


At December 31, 2004Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


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

$
91,181


$
90,906


$
95,613


$
94,369


$
42,504


$
42,263Municipal bonds


7,199



7,174



6,061



6,002



3,575



3,565Corporate bonds and other
    obligations


2,971



2,977



6,149



6,161



12,448



12,696Mortgage-backed securities


54,165



53,838



56,896



55,505



58,657



58,253Total debt securities


155,516



154,895



164,719



162,037



117,184



116,777Marketable equity
    securities:Common stock


6,013



7,318



4,399



5,399



3,076



3,545Total securities available for sale


161,529



162,213



169,118



167,436



120,260



120,322Securities held to
    maturity:Other bonds


97



97



97



97



161



161Mortgage-backed securities


















2



2Total securities held to maturity


97



97



97



97



163



163Restricted equity securities
    and other investments:Federal Home Loan Bank of
    Boston stock


8,999



8,999



9,056



9,056



8,830



8,830Savings Bank Life Insurance and
    DIF stock


1,709



1,709



1,709



1,709



1,709



1,709Other investments


3,114



3,114



1,623



1,623



870



870Total restricted equity securities
    and other investments


13,822



13,822



12,388



12,388



11,409



11,409Total securities

$
175,448


$
176,132


$
181,603


$
179,921


$
131,832


$
131,894  16




---



##### Table of Contents



One Year of Less


More Than One Year Through Five Years


More Than 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

$
50,969



4.81
%

$
19,220



5.30
%


20,992



5.66
%

$







$
91,181



5.11
%Municipal Bonds


505



4.22
%


448



3.55
%


2,711



3.66
%


3,535



4.10
%


7,199



3.91
%Corporate bonds and other
    obligations


2,004



5.33
%


967



5.31
%


















2,971



5.33
%Subtotal


53,478







20,635







23,703







3,535







101,351Mortgage-backed securities


577



3.52
%


3,454



5.53
%


4,630



5.33
%


45,504



5.42
%


54,165



5.36
%Total AFS debt securities


54,055







24,089







28,333







49,039







155,516Securities held to maturity
    (HTM):Corporate bonds and other
    obligations










30



3.00
%


52



3.00
%


15



3.00
%


97



3.00
%Total HTM debt securities










30







52







15







97Total debt securities

$
54,055






$
24,119






$
28,385






$
49,054






$
155,613   Sources
    of Funds
  General.
  Deposits.
     17




---



##### Table of Contents



Years Ended December 31,2006


2005


2004Weighted








Weighted








WeightedAverage





Average


Average





Average


Average





AverageBalance


Percent


Rate


Balance


Percent


Rate


Balance


Percent


Rate(Dollars in thousands)Deposit type:Demand

$
49,971



10.2
%



%

$
55,996



11.9
%



%

$
48,123



11.1
%



%NOW deposits


37,633



7.7



0.34



39,507



8.3



0.21



36,431



8.4



0.15Money market deposits


52,911



10.8



2.94



59,016



12.5



1.61



72,107



16.6



0.94Regular savings


56,759



11.6



0.44



69,088



14.6



0.43



81,352



18.8



0.41Life Path Savings


78,628



16.1



3.88



71,188



15.1



2.37



40,338



9.3



1.85Total transaction accounts


275,902



56.4



1.82



294,795



62.4



1.04



278,351



64.2



0.65Certificates of deposit


213,448



43.6



4.13



177,613



37.6



2.94



155,024



35.8



2.45Total deposits

$
489,350



100.0
%


2.84
%

$
472,408



100.0
%


1.76
%

$
433,375



100.0
%


1.29
%     At December 31,2006


2005


2004(Dollars in thousands)Interest RateLess than 2%

$
328


$
4,488


$
53,7312.00%-2.99%


5,771



49,175



71,4733.00%-3.99%


47,688



103,039



30,6384.00%-4.99%


66,728



28,875



5,3005.00%-5.99%


107,374



2,662



3,4106.00%-6.99%






23



895Total

$
227,889


$
188,262


$
165,447     AfterYear Ending December 31


December 31,2007


2008


2009


2010


2010


Total(Dollars in thousands)Interest RateLess than 2%

$
328


$



$



$



$



$
3282.00%-2.99%


5,674



97















5,7713.00%-3.99%


36,943



9,140



1,023



582







47,6884.00%-4.99%


56,886



6,086



2,766



744



246



66,7285.00%-5.99%


91,890



11,899



1,290



21



2,274



107,3746.00%-6.99%






















Total

$
191,721


$
27,222


$
5,079


$
1,347


$
2,520


$
227,889  18




---



##### Table of Contents



At December 31,2006(In thousands)Three months of less

$
34,269Over three months through six
    months


10,792Over six months through one year


37,803Over one year to three years


6,761Over three years


1,686Total

$
91,311   Borrowings.
  At or For the Years Ended December 31,2006


2005


2004(Dollars in thousands)Balance at end of period

$
127,438


$
145,923


$
159,704Average balance during year

$
142,061


$
157,674


$
136,896Maximum outstanding at any month
    end

$
151,979


$
174,023


$
159,704Weighted average interest rate at
    end of year


4.61
%


4.22
%


3.94
%Weighted average interest rate
    during year


4.50
%


4.26
%


4.12
%     Personnel.
  Segment Reporting:
  Subsidiary
    Activities and Portfolio Management Services
    Legacy Insurance Services of the
    Berkshires.
 19




---



##### Table of Contents



Legacy Securities Corporation.
  Portfolio Management Services.
    LB Funding Corporation.
  Discontinued Operations:
  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: out-of-state
  Federal
    Regulations
  Capital Requirements.
 21




---



##### Table of Contents



Standards for Safety and Soundness.
  Investment Activities. less.
 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.
      Federal Deposit Insurance Reform Act of
    2005.
 24




---



##### Table of Contents



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:
  Financial Privacy:
 27




---



##### Table of Contents



Taxation
  Federal taxes:
  Bad Debt Reserves:
  Distributions:
  Massachusetts 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 Area 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.
    We
    Operate in a Highly Regulated Environment and May Be Adversely
    Affected by Changes in Law and Regulations.
   30




---



##### Table of Contents



Item 1b.
    Unresolved
    Staff Comments  None
  Item 2.
    Properties    Year


LeaseLocation

Opened


ExpiresOwned:Main Office:

99 North Street


2000Pittsfield, MA 01201Branch Offices:

76 Park Street


1996Lee, MA 0123825 Main Street


1958Lenox, MA 012402 Holmes Road


1978Lenox, MA 0124030 East Otis Road


1996Otis, MA 01253734 Williams Street (Land leased)


1997Pittsfield, MA 01201Leased:

609 Merrill Road


1971



2008Pittsfield, MA 01201700 Main Street


1975



2009Great Barrington, MA 01230102 Main Street


1996



2008
(1)North Adams, MA 01247480 West Housatonic Street


2005



2010
(2)Pittsfield, MA 01201116 Wolf Road (Loan Production
    Office)


2006



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


1995



2011Lee, MA 01238     (1)
    
    Legacy bank has an option to renew for 5 years(2)
    
    Legacy bank has an option to renew for two additional
    5 year terms(3)
    
    Legacy bank has an option to renew for 3 years 31




---



##### Table of Contents



Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    Of Matters To A Vote Of Security Holders    FOR

AGAINST


ABSTAIN5,851,932


936,164



80,492  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, 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     Stock Performance Graph:
 32




---



##### Table of Contents



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



12/31/06Legacy Bancorp



100.00




121.64Nasdaq Bank Index



100.00




112.95Nasdaq Market Index



100.00




115.01SNL Thrift $500M-$1B



100.00




123.56       10/26/05.
   33




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  At or for the Years Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands, except per share data)Selected Financial
    Data:Total assets

$
808,318


$
778,330


$
681,287


$
634,978


$
592,942Loans, net(1)


578,802



547,626



505,344



465,903



372,121Securities and other investments:


176,132



179,921



131,894



120,779



161,124Deposits


518,248



474,464



450,868



422,521



419,175Federal Home Loan Bank
    advances


127,438



145,923



159,704



131,250



97,617Repurchase agreements


5,575



4,999



4,557



6,618



8,055Total stockholders equity


149,997



146,166



59,447



56,335



54,276Nonperforming loans


879



903



1,769



1,853



3,076Selected Operating
    Data:Total interest and dividend income


43,915



36,978



31,636



30,139



32,346Total interest expense


20,339



15,054



12,102



11,852



15,266Net interest income


23,576



21,924



19,534



18,287



17,080Provision for loan losses


233



841



212



979



140Net interest income after
    provision for loan losses


23,343



21,083



19,322



17,308



16,940Non-interest income:Service charges and fees


4,044



4,402



3,713



3,792



3,485Gain (loss) on sales and
    dispositions of securities, net


(1,736
)


(65
)


116



29



(992
)Gain on sale of loans


210



236



278



331



484FHLB prepayment restructuring
    charge






(2,351
)










Gain on curtailment and
    termination of defined benefit plan


605



905Other


329



274



328



268



154Total non-interest income


3,452



3,401



4,435



4,420



3,131Total non-interest expense


21,336



26,398



17,949



17,007



17,428Income (loss)before income taxes


5,459



(1,914
)


5,808



4,721



2,643Provision for income taxes


2,653



297



2,254



1,731



890Net income (loss)


2,806



(2,211
)


3,554



2,990



1,753Earnings per share

$
0.29



n/a



n/a



n/a



n/aDividends per share

$
0.12



n/a



n/a



n/a



n/a   34




---



##### Table of Contents



At or for the Years Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands, except per share data)Selected Financial Ratios and
    Other Data:Performance Ratios:Return (loss) on average assets(2)


0.36
%


(0.31
)%


0.55
%


0.49
%


0.30
%Return (loss) on average equity(3)


1.92



(2.90
)


6.12



5.40



3.34Interest rate spread(4)


2.39



2.84



2.90



2.93



2.77Net interest margin(5)


3.15



3.22



3.18



3.22



3.11Efficiency ratio(6)


74.2



104.2



73.8



75.2



84.5Non-interest expense to average
    assets


2.70



3.56



2.70



2.81



2.95Average interest-bearing assets to
    interest-bearing liabilities


127.61



117.30



113.89



114.19



112.02Dividend payout ratio


40.88



n/a



n/a



n/a



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


18.6
%


18.8
%


8.7
%


8.9
%


9.2
%Average equity to average assets


18.5



10.7



8.9



9.2



8.9Total capital (bank only) to
    risk-weighted assets


18.9



20.0



12.6



12.8



14.5Asset Quality Ratios:Nonperforming assets to total
    assets


0.11
%


0.12
%


0.26
%


0.29
%


0.52
%Nonperforming loans to total loans


0.15



0.16



0.35



0.40



0.83Allowance for loan losses to
    nonperforming loans


532.08



467.33



217.41



238.53



118.11Allowance for loan losses to total
    loans


0.80



0.77



0.76



0.94



0.98Share Data:Book value per share 
    end of year

$
14.55


$
14.18



n/a



n/a



n/aTangible book value per
    share  end of year


14.25



13.88



n/a



n/a



n/aMarket price at year end


15.85



13.35



n/a



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:
    Fair Value

$
3.98Risk-free interest rate


4.54
%Expected dividend yield


0.75
%Expected volatility


13.53
%Expected life


6.5 years       2006


2007


2008


2009


2010


2011


Total(In thousands)Stock Options

$
238


$
1,428


$
827


$
507


$
291


$
129


$
3,420Restricted Stock Awards


179



1,075



1,075



1,075



1,075



1,075



5,554$
417


$
2,503


$
1,902


$
1,582


$
1,366


$
1,204


$
8,974  36




---



##### Table of Contents



Growth Strategy and Challenges:
      Critical Accounting Policies:
  Allowance for Loan Losses:
  Income Taxes:
 37




---



##### Table of Contents



Net Interest Income:
  Non-Interest Expense:
  Net income:
  Comparison
    of Financial Condition at December 31, 2006 and
    December 31, 2005
  Total Assets:
  Cash and Short-term Investments:
  Securities:
 38




---



##### Table of Contents



Net Loans:
  Deposits:
  Borrowed Funds:
  Retained Earnings:
  Comparison
    of Operating Results For the Years Ended December 31, 2006
    and 2005
  Analysis of Net Interest Income:
 39




---



##### Table of Contents



Year Ended December 31,


Year Ended December 31,


Year Ended December 31,2006


2005


2004Average








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)

$
564,446


$
35,905



6.36
%

$
523,696


$
30,988



5.92
%

$
487,501


$
27,405



5.62
%Investment securities


175,006



7,547



4.31
%


137,180



5,324



3.88
%


121,310



4,156



3.43
%Short-term investments


9,386



463



4.93
%


19,139



666



3.48
%


6,271



75



1.20
%Total interest-earning assets


748,838



43,915



5.86
%


680,015



36,978



5.44
%


615,082



31,636



5.14
%Non-interest-earning assets


41,187











37,740











36,159Total assets

$
790,025










$
717,755










$
651,241Interest-bearing
    liabilities:Savings deposits

$
56,759



248



0.44
%

$
69,088



299



0.43
%

$
80,545



334



0.41
%LifePath Savings


78,628



3,049



3.88
%


71,188



1,686



2.37
%


40,338



748



1.85
%Money market


52,911



1,556



2.94
%


59,016



952



1.61
%


72,107



681



0.94
%NOW accounts


37,633



130



0.35
%


39,507



85



0.22
%


36,431



56



0.15
%Certificates of deposits


213,448



8,825



4.13
%


177,613



5,230



2.94
%


155,024



3,795



2.45
%Total interest-bearing deposits


439,379



13,808



3.14
%


416,412



8,252



1.98
%


384,445



5,614



1.46
%Borrowed Funds


147,421



6,531



4.43
%


163,328



6,802



4.16
%


155,602



6,488



4.17
%Total interest-bearing liabilities


586,800



20,339



3.47
%


579,740



15,054



2.60
%


540,047



12,102



2.24
%Non-interest-bearing liabilities


57,185











61,049











53,158Total liabilities


643,985











640,789











593,205Equity


146,040











76,966











58,036Total liabilities and equity

$
790,025










$
717,755










$
651,241Net interest income





$
23,576










$
21,924










$
19,534Net interest rate spread(3)










2.39
%










2.84
%










2.90
%Net interest-earning assets(4)

$
162,038










$
100,275










$
75,035Net interest margin(5)










3.15
%










3.22
%










3.18
%Average interest-earning assets to
    interest-bearing liabilities










127.61
%










117.30
%










113.89
%     (1)
    
    Yields and rates for the years ended December 31, 2006,
    2005 and 2004 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, 2006, 2005 and 2004.(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, 2006 Vs. 2005


December 31, 2005 Vs. 2004Increase


Total


Increase


Total(Decrease) Due to


Increase


(Decrease) Due to


IncreaseVolume


Rate


(Decrease)


Volume


Rate


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

$
2,515


$
2,402


$
4,917


$
2,085


$
1,498


$
3,583Investment securities


1,586



637



2,223



583



585



1,168Short-term investments


(1,113
)


910



(203
)


307



284



591Total interest-earning assets


2,988



3,949



6,937



2,975



2,367



5,342Interest-bearing
    liabilities:Savings deposits


(57
)


6



(51
)


(54
)


19



(35
)Life Path


192



1,171



1,363



685



253



938Money market


(86
)


690



604



(93
)


364



271NOW accounts


(4
)


49



45



4



25



29Certificates of deposits


1,196



2,399



3,595



605



830



1,435Total deposits


1,241



4,315



5,556



1,147



1,491



2,638Borrowed Funds


(399
)


128



(271
)


202



112



314Total interest-bearing liabilities


842



4,443



5,285



1,349



1,603



2,952Change in net interest income

$
2,146


$
(494
)

$
1,652


$
1,626


$
764


$
2,390   Net Income:
  Net Interest Income: mutual-to-stock
  Interest Income:
 41




---



##### Table of Contents



Interest Expense:
  Provision for Loan Losses:
  Non-interest Income:
  Non-interest Expense:
    Income Taxes:
 42




---



##### Table of Contents



Comparison
    of Operating Results For the Years Ended December 31, 2005
    and December 31, 2004
  Net Income:
  Net Interest Income: mutual-to-stock
  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


(8.36
)%200 basis point parallel
    increase in rates


(4.30
)%Flat interest rates


200 basis point parallel
    decrease in rates


3.71
%200 basis point steepening
    decrease in rates


5.01
%   12-month 12-month
  steepening
 45




---



##### Table of Contents



12-month
      Liquidity Risk Management:
       46




---



##### Table of Contents



Contractual Obligations:
  December 31, 2006More Than


More 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

$
127,438


$
33,500


$
80,745


$
7,950


$
5,243Securities sold under agreements
    to repurchase


5,575



5,575











Operating leases


814



200



317



87



210Purchase commitments


1,695



1,695











Total contractual obligations

$
135,522


$
40,970


$
81,062


$
8,037


$
5,453  Loan Commitments:
  December 31, 2006More Than


More ThanOne


One Year


Three YearsYear


through


through


Over FiveTotal


or Less


Three Years


Five Years


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

$
30,579


$
30,579


$



$



$
Commercial loan
    lines-of-credit


13,652



13,652











Unused portion of home equity
    loans(2)


67,236



533



1,461



7,215



58,027Unused portion of construction
    loans(3)


4,317



4,317











Unused portion of overdraft
    lines-of-credit(4)


4,068















4,068Unused portion of personal
    lines-of-credit(5)


383















383Standby letters of credit(6)


606



606











Other commitments and contingencies


8,135



8,135











Total loan commitments

$
128,976


$
57,822


$
1,461


$
7,215


$
62,478     (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 construction loans are available to the
    borrower for up to one year for development loans and up to one
    year for other construction loans.(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.(6)
    
    Standby letters of credit are generally available for less than
    one year. 47




---



##### Table of Contents



Management of Other Risks:
    Off-Balance
    Sheet Arrangements
    Impact of
    Inflation and Changing Prices
    Impact of
    Recent Accounting Pronouncements
   48




---



##### Table of Contents



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

50Consolidated
    Balance Sheets as of December 31, 2006 and
    December 31, 2005

51Consolidated
    Statements of Operations for the Years Ended December 31,
    2006, 2005 and 2004

52Consolidated
    Statements of Changes in Stockholders Equity for the Years
    Ended December 31, 2006, 2005 and 2004

53Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004

54Notes to
    Consolidated Financial Statements

55-86  49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
    ON

CONSOLIDATED FINANCIAL STATEMENTS           Internal Control 
    Integrated Framework
  /s/  Wolf &
    Company, P.C.    50




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS
 (Dollars in Thousands)
  December 31,2006


2005ASSETSCash and due from banks

$
10,442


$
12,281Short-term investments


11,202



6,951Cash and cash equivalents


21,644



19,232Securities and other investments


176,132



179,921Loans held for sale






126Loans, net of allowance for loan
    losses of $4,677 in 2006 and $4,220 in 2005


578,802



547,500Premises and equipment, net


15,416



14,236Accrued interest receivable


3,552



3,235Goodwill, net


3,085



3,085Net deferred tax asset


4,474



5,258Bank-owned life insurance


4,424



4,153Other assets


789



1,584$
808,318


$
778,330LIABILITIES AND
    STOCKHOLDERS EQUITYDeposits

$
518,248


$
474,464Securities sold under agreements to
    repurchase


5,575



4,999Federal Home Loan Bank advances


127,438



145,923Mortgagors escrow accounts


944



931Accrued expenses and other
    liabilities


6,116



5,847Total liabilities


658,321



632,164Commitments and contingencies
    (Notes 6 and 11)Stockholders EquityPreferred Stock ($.01 par
    value, 10,000,000 shares authorized, none issued or
    outstanding)






Common Stock ($.01 par value,
    40,000,000 shares authorized, 10,308,600 issued and
    outstanding at December 31, 2006 and 2005)


103



103Additional
    paid-in-capital


106,094



100,202Unearned Compensation 
    ESOP


(9,519
)


(10,252
)Unearned Compensation 
    Equity Incentive Plan


(5,375
)


Retained earnings


58,863



57,202Accumulated other comprehensive loss


(169
)


(1,089
)Total stockholders equity


149,997



146,166$
808,318


$
778,330    51




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Dollars
    in Thousands)
  Years Ended December 31,2006


2005


2004Interest and dividend income:Loans

$
35,905


$
30,988


$
27,405Securities and other investments:Taxable


6,647



4,631



3,792Tax-exempt


239



178



49Dividends


661



515



315Short-term investments


463



666



75Total interest and dividend income


43,915



36,978



31,636Interest expense:Deposits


13,808



8,252



5,614Federal Home Loan Bank advances


6,395



6,713



5,639Other borrowed funds


136



89



849Total interest expense


20,339



15,054



12,102Net interest income


23,576



21,924



19,534Provision for loan losses


233



841



212Net interest income after provision
    for loan losses


23,343



21,083



19,322Non-interest income:Customer service fees


2,832



3,344



2,649Portfolio management fees


1,001



890



839Income from bank-owned life
    insurance


222



218



17Insurance, annuities and mutual
    fund fees


211



168



225(Loss) gain on sales/impairment of
    securities, net


(1,736
)


(65
)


129Loss on sales/impairment of other
    investments, net






(24
)


(13
)Gain on sales of loans, net


210



236



278Gain on curtailment and settlement
    of defined benefit plan


605



905



FHLB prepayment restructuring charge






(2,351
)


Miscellaneous


107



56



311Total non-interest income


3,452



3,377



4,435Non-interest expenses:Salaries and employee benefits


11,897



10,964



10,164Occupancy and equipment


2,482



2,211



2,122Data processing


1,987



1,876



1,856Professional fees


1,564



652



547Advertising


747



694



598Charitable contributions


10



7,846



168Other general and administrative


2,649



2,155



2,494Total non-interest expenses


21,336



26,398



17,949Income (loss) before income taxes


5,459



(1,938
)


5,808Provision for income taxes


2,653



297



2,254Net income (loss)

$
2,806


$
(2,235
)

$
3,554Earnings per shareBasic

$
0.29



n/a



n/aDiluted

$
0.29



n/a



n/aWeighted average shares outstandingBasic


9,559,791



n/a



n/aDiluted


9,559,791



n/a



n/a    52




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
    Years Ended December 31, 2006, 2005 AND 2004
    (Dollars in Thousands)
  Unearned





AccumulatedAdditional


Unearned


Compensation -





Other


TotalCommon Stock


Paid-in


Compensation -


Equity


Retained


Comprehensive


StockholdersShares


Amount


Capital


ESOP


Incentive Plan


Earnings


Income (Loss)


EquityBalance at December 31, 2003





$



$



$



$



$
55,883


$
452


$
56,335Comprehensive income:Net income






















3,554







3,554Net unrealized loss on securities
    available for sale, net of reclassification adjustment and tax
    effects


























(442
)


(442
)Total comprehensive income






























3,112Balance at December 31, 2004





$



$



$



$



$
59,437


$
10


$
59,447Comprehensive loss: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 expenses 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 loss 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
)

$
149,997    53




---



##### Table of Contents



LEGACY
    BANCORP, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Dollars
    in Thousands)
  Years ended December 31,2006


2005


2004Cash flows from operating
    activities:Net income (loss)

$
2,806


$
(2,235
)

$
3,554Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Provision for loan losses


233



841



212Net amortization (accretion) of
    securities


(1,058
)


171



466Depreciation and amortization
    expense


1,014



966



922Loss (gain) on sales/impairment of
    securities, net


1,736



89



(116
)Gain on sales of foreclosed real
    estate, net










(86
)Gain on sales of loans, net


(210
)


(236
)


(278
)Loans originated for sale


(11,279
)


(14,739
)


(15,579
)Proceeds from sale of loans


11,615



22,578



15,889Share-based compensation expense


417







Deferred tax provision (benefit)


271



(1,830
)


(76
)Contribution of common stock to
    Charitable Foundation






7,636



Employee Stock Ownership Plan
    expense


833



736



Net change in:Bank-owned life insurance


(271
)


(465
)


51Accrued interest receivable


(317
)


(446
)


(96
)Other assets


795



(719
)


(629
)Accrued expenses and other
    liabilities


(664
)


239



1,267Net cash provided by operating
    activities


5,921



12,586



5,501Cash flows from investing
    activities:Activity in
    available-for-sale
    securities:Sales


69,414



4,551



2,323Maturities, prepayments and calls


93,823



25,003



45,837Purchases


(156,326
)


(78,648
)


(57,690
)Activity in
    held-to-maturity
    securities:Maturities, prepayments and calls






66



Redemption (purchase) of Federal
    Home Loan Bank stock


57



(226
)


(1,959
)Purchase of other investments


(1,500
)


(827
)


Maturities, prepayments and call of
    other investments


9



116



Loan originations and purchases,
    net of principal payments


(31,535
)


(50,726
)


(53,246
)Purchases of bank-owned life
    insurance










(3,000
)Redemption of bank-owned life
    insurance






198



789Additions to premises and equipment


(2,194
)


(1,425
)


(376
)Proceeds from sales of foreclosed
    assets










1,275Net cash used in investing
    activities


(28,252
)


(101,918
)


(66,047
)Cash flows from financing
    activities:Net increase in deposits


43,784



23,513



28,347Net decrease in securities sold
    under agreements to repurchase


576



442



(2,061
)Repayment of Federal Home
    Loan Bank advances


(159,974
)


(174,534
)


(117,097
)Proceeds from Federal Home
    Loan Bank advances


141,489



160,753



145,551Net change in other secured
    borrowings










(806
)Net increase (decrease) in
    mortgagors escrow accounts


13



(89
)


368Net proceeds from Initial Public
    Offering (IPO)






92,665



Purchase of Common Stock in
    connection with Employee Stock Ownership Plan






(10,984
)


Payment of dividends on common stock


(1,145
)






Net cash provided by financing
    activities


24,743



91,766



54,302Net change in cash and cash
    equivalents


2,412



2,434



(6,244
)Cash and cash equivalents at
    beginning of period


19,232



16,798



23,042Cash and cash equivalents at end of
    period

$
21,644


$
19,232


$
16,798Supplemental cash flow information:Interest paid on deposits

$
14,360


$
8,216


$
5,535Interest paid on Federal Home
    Loan Bank advances


7,397



6,757



5,568Interest paid on other borrowed
    funds


136



89



849Income taxes paid


2,025



2,460



2,385Transfers from loans to foreclosed
    real estate










(1,189
)Non-cash reduction in other secured
    borrowings










12,372Transfers 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, 2006, 2005 and 2004
 (Dollars in Thousands)
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis
    of presentation
    Stock
    conversion
      Use of
    estimates
  other-than-temporary
  Business
    Significant
    Group Concentrations of Credit Risk
   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)    Operating
    segments
  Disclosures about Segments of an Enterprise and
    Related Information,
  Reclassifications
    Cash
    and cash equivalents
    Securities
      held-to-maturity available-for-sale other-than-temporary
 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
      non-classified
   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
    Bank-owned
    Life Insurance
    Transfers
    of financial assets
    Income
    Taxes
   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)  Pension
    plan
    Postretirement
    benefits other than pensions
    Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans
    Before





AfterApplication of





Application ofSFAS 158


Adjustments


SFAS 158Prepaid pension benefit

$
729


$
(729
)

$
Net deferred tax asset


4,092



382



4,474Total assets


808,665



(347
)


808,318Accrued pension benefit


1,002



204



1,206Total liabilities


658,117



204



658,321Accumulated other comprehensive
    income


382



(551
)


(169
)Total stockholders equity


150,548



(551
)


149,997   Advertising
    costs
    Portfolio
    management assets
   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)   Earnings
    per share
      Year EndedDecember 31,2006Net income applicable to common
    stock

$
2,806Average number of shares
    outstanding


10,308,600Less: average number of
    unallocated ESOP shares


(748,809
)Less: average number of unvested
    stock award shares


Average number of basic shares
    outstanding


9,559,791Plus: average number of unvested
    stock award shares


Plus: average number of diluted
    shares based on stock options


Average number of diluted shares
    outstanding


9,559,791Basic earnings per share

$
0.29Diluted earnings per share

$
0.29   Comprehensive
    income/loss
  available-for-sale
 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 (concluded)
    Years Ended December 31,2006


2005


2004Change in net unrealized holding
    gains/losses on available for sale securities

$
630


$
(1,809
)

$
(574
)Reclassification adjustment for
    losses (gains) realized in income


1,736



(160
)


(136
)Reclassification adjustment for
    impairmentlosses recognized income






225



72,366



(1,744
)


(703
)Tax effect


(895
)


645



261Net-of-tax
    amount


1,471



(1,099
)


(442
)Adjustment to initially apply
    SFAS No. 158


(933
)






Tax effect


382







Net-of-tax
    amount


(551
)






$
920


$
(1,099
)

$
(442
)     December 31,2006


2005


2004Net unrealized holding
    gains/losses on available for sale securities

$
684


$
(1,682
)

$
62Tax effects


(302
)


593



(52
)Net-of-tax
    amount


382



(1,089
)


10Unrecognized net actuarial loss
    pertaining to Directors fee plan










(933
)Tax effect


382







Net-of-tax
    amount


(551
)






$
(169
)

$
(1,089
)

$
10      Actuarial loss

$
Prior service cost or credit

$
(5
)Transition asset or obligation

$
4   Recent
    accounting pronouncements
  Accounting for Servicing of Financial Assets,
 61




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Concluded)    Accounting for Uncertainty in
    Income Taxes
  Fair Value Measurements
    , The Fair Value Option for Financial Assets and
    Financial Liabilities
  2.
    RESTRICTIONS
    ON CASH AND AMOUNTS DUE FROM BANKS     62




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   3.
    SHORT-TERM
    INVESTMENTS    December 31,2006


2005Federal funds sold

$
8,296


$
2,798FHLB overnight deposits


1,756



2,153Asset management fund


1,150



2,000$
11,202


$
6,951    4.
    SECURITIES    December 31,2006


2005Securities available for sale, at
    fair value

$
162,213


$
167,436Securities held to maturity, at
    amortized cost


97



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


8,999



9,056Savings Bank Life Insurance
    Company of Massachusetts stock


1,709



1,709Other investments


3,114



1,623$
176,132


$
179,921     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  63




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Continued)  December 31, 2005Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises

$
95,613


$
11


$
(1,255
)

$
94,369Municipal


6,061



7



(66
)


6,002Corporate


6,149



26



(14
)


6,161Mortgage-backed


56,896



12



(1,403
)


55,505Total debt securities


164,719



56



(2,738
)


162,037Marketable equity securities


4,399



1,004



(4
)


5,399Total securities available for sale

$
169,118


$
1,060


$
(2,742
)

$
167,436Securities Held to MaturityOther bonds and obligations

$
97


$



$



$
97     Available for Sale


Held to MaturityAmortized


Fair


Amortized


FairCost


Value


Cost


ValueWithin 1 year

$
53,478


$
53,389


$



$
Over 1 year to 5 years


20,635



20,586



30



30Over 5 years to 10 years


23,703



23,548



52



52Over 10 years


3,535



3,534



15



15Total bonds and obligations


101,351



101,057



97



97Mortgage-backed


54,165



53,838







Total debt securities

$
155,516


$
154,895


$
97


$
97      64




---



##### 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,
    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


$
35,542December 31,
    2005:Debt securities:Government-sponsored enterprises

$
552


$
35,105


$
703


$
23,578Municipal


26



2,003



40



2,056Corporate


14



1,522







Mortgage-backed


552



27,531



851



24,423Total debt securities


1,144



66,161



1,594



50,057Marketable equity securities


1



166



3



158Total temporarily impaired
    securities

$
1,145


$
66,327


$
1,597


$
50,215   other-than-temporary
     65




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   5.
    LOANS    December 31,2006


2005Mortgage loans on real estate:Residential

$
325,407


$
308,008Commercial


170,971



160,675Home equity


56,856



58,640553,234



527,323Other loans:Commercial


22,903



20,579Consumer and other


6,451



3,45729,354



24,036Total loans


582,588



551,359Net deferred loan costs


891



361Allowance for loan losses


(4,677
)


(4,220
)Loans, net

$
578,802


$
547,500     Years Ended December 31,2006


2005


2004Balance at beginning of year

$
4,220


$
3,846


$
4,420Provision for loan losses


233



841



212Recoveries


387



147



153Loans charged-off


(163
)


(614
)


(939
)Balance at end of year

$
4,677


$
4,220


$
3,846     December 31,2006


2005


2004Impaired loans with no valuation
    allowance

$



$
1,060


$
2,254Impaired loans with a valuation
    allowance


2,319







891Total impaired loans

$
2,319


$
1,060


$
3,145Valuation allowance allocated to
    impaired loans

$
374


$



$
179Average investment in impaired
    loans

$
2,253


$
2,162


$
2,364Interest income recognized on
    impaired loans on a cash basis

$



$



$
Non-accrual loans

$
879


$
903


$
1,769     66




---



##### Table of Contents



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


Estimated2006


2005


Useful LivesPremises:Land

$
1,252


$
818Buildings and improvements


14,926



14,821



5 - 39 YearsFurniture and equipment


6,357



5,926



3 - 10 YearsConstruction in process


1,278



23,813



21,565Accumulated depreciation and
    amortization


(8,397
)


(7,329
)$
15,416


$
14,236      67




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   7.
    DEPOSITS    December 31,2006


2005Demand

$
50,753


$
53,109Regular savings


50,939



63,335LifePath Savings


93,017



73,151Money market deposits


58,097



55,168NOW deposits


37,553



41,439Total non-certificate accounts


290,359



286,202Term certificates less than
    $100,000


136,578



121,732Term certificates of $100,000 or
    more


91,311



66,530Total certificate accounts


227,889



188,262Total deposits

$
518,248


$
474,464     December 31, 2006


December 31, 2005Weighted





WeightedAverage





AverageAmount


Rate


Amount


RateWithin 1 year

$
191,721



4.62
%

$
142,883



3.32
%Over 1 year to 3 years


32,301



4.55



42,822



3.63Over 3 years to 5 years


3,867



4.72



2,557



4.14$
227,889



4.61
%

$
188,262



3.40
%     8.
    SECURITIES
    SOLD UNDER AGREEMENTS TO REPURCHASE      December 31,2006


2005Repurchase agreements with
    customers

$
5,575


$
4,999Fair value of securities
    underlying the agreements

$
6,916


$
7,592Weighted average interest rate


2.92
%


1.80
%   68




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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,

2006


2005


2006


20052006

$



$
29,257




%


3.88
%2007


33,500



23,500



4.62



4.232008


51,200



33,500



4.92



4.532009


29,545
*


28,459



4.29



3.862010


7,450



10,450



4.73



4.752011


500



15,500



4.81



4.83Thereafter


5,243
*


5,257



3.19



3.19$
127,438


$
145,923



4.61
%


4.22
%     *
    
    Includes amortizing advances requiring $69,000 in combined
    monthly principal and interest payments at December 31,
    2006.      10.
    INCOME
    TAXES    Years Ended December 31,2006


2005


2004Current tax provision:Federal

$
1,927


$
1,665


$
1,883State


447



462



4472,374



2,127



2,330Deferred tax benefit:Federal


(372
)


(2,551
)


(47
)State


(8
)


(109
)


(29
)(380
)


(2,660
)


(76
)Change in valuation reserve


659



830



$
2,653


$
297


$
2,254  69




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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 31,2006


2005


2004Statutory tax rate


34.0
%


(34.0
)%


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


5.3



12.0



4.7Dividends received deduction


(0.7
)


(1.6
)


(0.4
)Change in valuation reserve


12.1



42.8



Tax-exempt income


(1.2
)






Stock option amortization


0.5







Other, net


(1.4
)


(3.9
)


0.5Effective tax rates


48.6
%


15.3
%


38.8
%     December 31,2006


2005Deferred tax assets:Federal

$
5,727


$
5,548State


1,022



9226,749



6,470Valuation reserve


(1,489
)


(830
)5,260



5,640Deferred tax liabilities:Federal


(556
)


(284
)State


(230
)


(98
)(786
)


(382
)Net deferred tax asset

$
4,474


$
5,258  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  (Concluded)    December 31,2006


2005Net unrealized (gain) loss on
    securities available for sale

$
(302
)

$
593Depreciation and amortization


44



44Deferred income


(365
)


(152
)Allowance for loan losses


1,913



1,726Employee benefit plans


1,435



1,385Capital loss carryforward


488



169Charitable contribution
    carryforward


2,278



2,237Projected benefit
    obligation  Directors fee plan


382



Other


90



86Valuation reserve


(1,489
)


(830
)Net deferred tax asset

$
4,474


$
5,258     December 31,2006


2005


2004Balance at beginning of year

$
830


$



$
Reserve for charitable
    contribution carryforward


659



830



Balance at end of year

$
1,489


$
830


$
       11.
    COMMITMENTS
    AND CONTINGENCIES    Loan
    and other financial commitments
   71




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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 31,2006


2005Commitments to grant loans

$
30,579


$
11,914Unused funds on commercial
    lines-of-credit


13,652



15,251Unadvanced funds on home equity
    lines-of-credit


67,236



61,698Unadvanced funds on construction
    loans


4,317



7,305Standby
    letters-of-credit
    and other commitments


13,192



6,733   lines-of-credit case-by-case lines-of-credit lines-of-credit
  letters-of-credit letters-of-credit letters-of-credit
  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  Operating
    lease commitments
    Years Ending December 31,

Amount2007

$
2002008


1792009


1382010


632011


24Thereafter


210$
814     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  (Concluded)   Legal
    claims
    Employment
    and change of control agreements
      12.
    MINIMUM
    REGULATORY CAPITAL REQUIREMENTS       73




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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,
    2006Total 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



5.0December 31,
    2005:Total capital to risk weighted
    assets:

$
100,794



20.0
%

$
40,375



8.0
%

$
50,468



10.0
%Tier 1 capital to risk
    weighted assets:


95,859



19.0



20,187



4.0



30,281



6.0Tier 1 capital to average
    assets:


95,859



12.6



22,762



3.0



37,936



5.0     12/31/2006


12/31/2005Total stockholders equity
    per consolidated financial statements

$
149,997


$
146,166Adjustments for Bank Tier 1
    capital:Holding company equity adjustment


(51,259
)


(48,271
)Net unrealized (gains) losses on
    available for sale securities


(376
)


1,089Impact of adoption of
    FAS No. 158


551



Disallowed goodwill and intangible
    assets and other adjustments


(3,088
)


(3,125
)Total Bank Tier 1 capital


95,825



95,859Adjustments for total capital:Allowed unrealized gains on equity
    securities


581



450Includable allowances for loan and
    commitment losses


4,874



4,485Total Bank capital per regulatory
    reporting

$
101,280


$
100,794     13.
    EMPLOYEE
    BENEFIT PLANS  Defined
    Benefit plan
   74




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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 Years Ended October 31,2006


2005Change in plan assets:Fair value of plan assets at
    beginning of year

$
9,992


$
9,425Actual gain on plan assets


1,036



826Employer contribution






Benefits paid


(10,990
)


(259
)Plan expenses paid


(38
)


Fair value of plan assets at end
    of year






9,992Change in benefit obligation:Benefit obligation at beginning of
    year


10,450



11,205Service cost






649Interest cost






644Plan amendment


540



(1,290
)Actuarial (loss)/gain






(499
)Benefits paid


(10,990
)


(259
)Benefit obligation at end of year






10,450Funded status






(458
)Unrecognized net actuarial loss






(147
)Transition obligation






Accrued pension cost

$



$
(605
)Accumulated benefit obligation

$



$
10,450     Plan Years Ended October 31,2005


2004Service cost  benefits
    earned during year

$
648


$
553Interest cost on projected benefits


644



568Expected return on plan assets


(754
)


(684
)Net amortization of transition
    obligation and prior service cost


(30
)


(30
)Recognized net actuarial (gain)loss


40



(13
)$
548


$
394  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 Years Ended October 31,2005


2004Discount rate on benefit
    obligations


5.75
%


6.25
%Rates of increase in compensation
    levels


4.50
%


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


8.00
%


8.00
%       Percentage ofPlan Assets atAsset Category

October 31, 2005Equity securities


65
%Debt securities


35Total


100
%       Defined
    contribution plan
    Supplemental
    executive plans
   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)   Employee
    Stock Ownership plan
  15-year
    Year Ending December 31,

Amount2007

$
4772008


5082009


5452010


5822011


623Thereafter


6,807$
9,542       December 31,2006


2005Allocated


109,958



54,979Unallocated


714,730



769,709824,688



824,688     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  (Concluded)   Director
    fee continuation plan
    December 31,2006


2005Change in benefit obligation:Benefit obligation at beginning of
    period

$
1,121


$
Benefit obligation at inception
    for prior service cost






1,006Interest cost


65



9Service cost


59



10Actuarial gain (loss)






96Benefits paid


(39
)


Benefit obligation at end of period


1,206



1,121Funded value of plan assets at end
    of year






Funded status

$
(1,206
)

$
(1,121
)Unrecognized net actuarial loss






85Unrecognized prior service cost






993Accrued pension cost

$
(1,206
)

$
(43
)Accumulated benefit obligation

$
831


$
773     At or For the YearsEnded December 31,2006


2005Discount rate


5.75
%


5.75
%Rates of fee increase


5.00
%


5.00
%     Years Ended December 31,2006


2005Service Cost

$
59


$
9Interest Cost


65



10Amortization of prior service cost


145



24$
269


$
43    78




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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 31,2006


2005


2004Interest cost on projected benefits

$
36


$
52


$
57Recognized net actuarial loss






12



12Net amortization of transition
    obligation and prior service cost


(1
)


4



5$
35


$
68


$
74     December 31,2006


2005Change in benefit obligation:Benefit obligation at beginning of
    period

$
624


$
909Interest cost


36



52Actuarial gain (loss)


24



(261
)Benefits paid


(57
)


(76
)Benefit obligation at end of period

$
627


$
624Funded status

$
(627
)

$
(624
)Unrecognized transition obligation


30



34Unrecognized net actuarial loss


68



46Unrecognized prior service cost


(41
)


(46
)Accrued pension cost

$
(570
)

$
(590
)       2007

$
572008


562009


552010


542011


532012-2016


246    79




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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
      2006Expected dividends


0.75
%Expected term


6.5 yearsExpected volatility


13.53
%Risk-free interest rate


4.54
%       Weighted AverageRemaining


AggregateWeighted Average


Contractual Term


IntrinsicShares


Exercise Price


(in years)


ValueOutstanding at January 1, 2006





$







$
Granted


892,200



16.03



9.9



Exercised














Forfeited or expired














Outstanding at December 31,
    2006


892,200


$
16.03



9.9


$
Exercisable at December 31,
    2006













$
     Stock
    awards
   80




---



##### Table of Contents



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

Shares


Fair ValueBalance at beginning of year





$
Granted


346,500



16.03Vested






Cancelled






Forfeited






Balance at end of year


346,500


$
16.03     16.
    RELATED
    PARTY TRANSACTIONS      Years Ended December 31,2006


2005Balance at beginning of year

$
3,693


$
3,878Additions/change in status


392



495Repayments


(848
)


(680
)Balance at end of year

$
3,237


$
3,693    17.
    RESTRICTIONS
    ON DIVIDENDS, LOANS AND ADVANCES     81




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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  (Concluded)      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:
  Federal Home Loan Bank
    advances:
  Accrued interest and mortgagors escrow
    accounts:
 82




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   18.
    FAIR
    VALUE OF FINANCIAL
    INSTRUMENTS  (Concluded)   Off-balance-sheet instruments:
    December 31,2006


2005Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial assets:Cash and cash equivalents

$
21,644


$
21,644


$
19,232


$
19,232Securities available for sale


162,213



162,213



167,436



167,436Securities held to maturity


97



97



97



97Federal Home Loan Bank of
    Boston stock


8,999



8,999



9,056



9,056Savings Bank Life Insurance stock


1,709



1,709



1,709



1,709Other investments


3,114



3,114



1,623



1,623Loans and loans held for sale


578,802



578,568



547,626



551,076Accrued interest receivable


3,552



3,552



3,235



3,235Financial liabilities:Deposits


518,248



517,688



474,464



472,899Repurchase agreements


5,575



5,575



4,999



4,999FHLB advances


127,438



126,685



145,923



145,237Mortgagors escrow accounts


944



944



931



931    19.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL STATEMENTS    BALANCE
    SHEETS
  December 31,2006


2005Cash and short-term investments

$
6,502


$
3,896Securities at fair value


34,310



32,688Investment in common stock of
    Legacy Banks


98,738



98,007Investment in common stock of LB
    Funding Corp.


9,271



9,876Accrued interest receivable


317



Deferred tax asset


868



1,728Other assets


2



Total Assets

$
150,008


$
146,195Liabilities and Stockholders
    EquityAccrued expenses

$
11


$
29Stockholders equity


149,997



146,166Total Liabilities and
    Stockholders Equity

$
150,008


$
146,195  83




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   19.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL
    STATEMENTS  (Continued)  CONDENSED
    STATEMENT OF OPERATIONS
  Year EndedDecember 31, 2006Income:Dividends from Legacy Banks

$
4,000Interest on securities


1,622Interest on cash and short-term
    investments


168Total Income


5,790Operating expenses


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


4,661Income tax provision


919Loss before equity in income of
    subsidiaries


3,742Equity in undistributed loss of
    Legacy Banks


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


391Net income

$
2,806   84




---



##### 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 EndedDecember 31, 2006Cash flows from operating
    activities:Net income

$
2,806Adjustments to reconcile net
    income to net cash provided by operating activities:Equity in undistributed loss of
    Legacy Banks


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


(391
)Share-based compensation expense


417Deferred tax provision


860Net change in:Accrued interest receivable


(317
)Other assets


(2
)Accrued expenses and other
    liabilities


(18
)Net cash provided by operating
    activities:


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


69,000Purchases


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


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


(1,145
)Other, net


691Net cash provided by financing
    activities:


(454
)Net change in cash and cash
    equivalents


2,606Cash and cash equivalents at
    beginning of year


3,896Cash and cash equivalents at end
    of year

$
6,502   85




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Concluded)
 (Dollars in Thousands)
  20.
    QUARTERLY
    DATA (UNAUDITED)    2006


2005Fourth


Third


Second


First


Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


QuarterInterest and dividend income

$
11,409


$
11,247


$
10,848


$
10,411


$
10,304


$
9,294


$
8,870


$
8,510Interest expense


5,722



5,397



4,908



4,312



4,139



3,932



3,623



3,360Net interest income


5,687



5,850



5,940



6,099



6,165



5,362



5,247



5,150Provision (credit) for loan losses


(12
)


(95
)


176



164



365



99



130



247Non-interest income


147



1,128



1,138



1,038



105



1,254



1,013



1,005Non-interest expenses


5,782



5,011



5,298



5,244



13,097



4,405



4,510



4,386Provision (benefit) for income taxes


655



759



591



648



(1,739
)


832



622



582Net income (loss)

$
(591
)

$
1,303


$
1,013


$
1,081


$
(5,453
)

$
1,280


$
998


$
940Basic earnings (loss) per share

$
(0.06
)

$
0.14


$
0.11


$
0.11



n/a



n/a



n/a



n/aDiluted earnings (loss) per share

$
(0.06
)

$
0.14


$
0.11


$
0.11



n/a



n/a



n/a



n/a        86




---



##### 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
       87




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  ON
    INTERNAL CONTROL OVER FINANCIAL REPORTING
    Internal Control  Integrated Framework
        Internal Control  Integrated Framework Internal Control 
    Integrated Framework
     
     88




---



##### Table of Contents



Item 9b.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      J. Williar Dunlaevy
  Michael A. Christopher
  Steven F. Pierce
  Stephen M. Conley
  Richard M. Sullivan
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership Of Certain Beneficial Owners And Management And
    Related Stockholder Matters     89




---



##### Table of Contents



Number of SecuritiesRemaining Available forFuture Issuance UnderNumber of Securities to


Weighted-Average


Equity Compensationbe Issued Upon Exercise


Exercise Price of


Plans (Excludingof Outstanding Options,


Outstanding Options,


Securities Reflected inPlan Category

Warrants and Rights


Warrants and Rights


the First Column)Equity compensation plans approved
    by security holders


892,200


$
16.03



138,660Equity compensation plans not
    approved by security holders










Total


892,200


$
16.03



138,660   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 90




---



##### Table of Contents



SIGNATURES      /s/  J.
    Williar Dunlaevy        /s/  Michael
    A. Christopher        /s/  Stephen
    M. Conley         /s/  Eugene
    A. Dellea        /s/  David
    L. Klausmeyer      91




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##### Table of Contents



/s/  Gary
    A. Lopenzina        /s/  Anne
    W. Pasko        /s/  Robert
    B. Trask        /s/  Dorothy
    B. Winsor      92




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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
.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. 93