##### 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, 2008oro

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(State or other jurisdiction
    of
    incorporation or organization)

20-3135053(IRS Employer
    Identification No.)99 NORTH STREET
    PITTSFIELD, MASSACHUSETTS(Address of principal
    executive offices)

01201(Zip Code)   (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
  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 12b-2 o þ
    8,781,912.
  Documents
    Incorporated By Reference:
  Form 10-K.




---



##### 





TABLE OF
    CONTENTS
   
 PagePart IItem 1.


Business


2Item 1a.


Risk Factors


28Item 1b.


Unresolved Staff Comments


33Item 2.


Properties


33Item 3.


Legal proceedings


34Item 4.


Submission of matters to a vote of security
    holders


34Part IIItem 5.


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


34Item 6.


Selected financial data


37Item 7.


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


38Item 7a.


Quantitative and qualitative disclosures about
    market risk


47Item 8.


Financial statements and supplementary data


52Item 9.


Changes in and disagreements with accountants on
    accounting and financial disclosure


94Item 9a.


Controls and procedures


94Item 9b.


Other information


94Part IIIItem 10.


Directors, executive officers and corporate
    governance


95Item 11.


Executive compensation


95Item 12.


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


95Item 13.


Certain relationships and related transactions,
    and director independence


95Item 14.


Principal accountant fees and services


95Part IVItem 15.


Exhibits and financial statement schedules


96Signatures


97EX-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 PAUL H. BRUCEEX-32 SECTION 906 CERT OF CEO AND CFO   1




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##### 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




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##### Table of Contents



Lending
    Activities
    At December 31,2008


2007


2006Amount


Percent


Amount


Percent


Amount


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

$
344,235



49.15
%

$
349,772



53.17
%

$
325,407



55.85
%Commercial


246,374



35.18



212,191



32.26



170,971



29.35Home equity


63,138



9.01



56,752



8.63



56,856



9.76653,747



93.34



618,715



94.06



553,234



94.96Other loans:Commercial


34,242



4.89



27,664



4.20



22,903



3.93Consumer and other


12,386



1.77



11,421



1.74



6,451



1.1146,628



6.66



39,085



5.94



29,354



5.04Total loans


700,375



100.00
%


657,800



100.00
%


582,588



100.00
%Other Items:Net deferred loan costs


1,531







1,397







891Allowance for loan losses


(6,642
)






(5,568
)






(4,677
)Total Loans, net

$
695,264






$
653,629






$
578,802   At December 31,2005


2004Amount


Percent


Amount


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

$
308,008



55.86
%

$
284,114



55.89
%Commercial


160,675



29.14



141,540



27.84Home equity


58,640



10.64



53,508



10.53527,323



95.64



479,162



94.26Other loans:Commercial


20,579



3.73



24,856



4.89Consumer and other


3,457



0.63



4,332



0.8524,036



4.36



29,188



5.74Total loans


551,359



100.00
%


508,350



100.00
%Other Items:Net deferred loan costs


361







224Allowance for loan losses


(4,220
)






(3,846
)Total Loans, net

$
547,500






$
504,728   General:
 4




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##### Table of Contents



Residential Real Estate Loans:
          Commercial Real Estate Loans:
 5




---



##### Table of Contents



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




---



##### Table of Contents



Consumer and Other Loans:
  Loan Origination and Underwriting:
     7




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##### Table of Contents



For the Years Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Loans at beginning of year

$
657,800


$
582,588


$
551,359


$
508,350


$
469,364Originations:Mortgage loans on real estate:Residential


73,660



75,047



55,223



86,247



92,944Commercial


69,618



69,375



50,239



52,321



45,191Home Equity


18,820



28,928



28,997



35,429



39,416162,098



173,350



134,459



173,997



177,551Other Loans:Commercial Business


17,365



18,932



17,330



10,832



13,170Consumer and other


1,496



3,037



2,183



1,617



3,78318,861



21,969



19,513



12,449



16,953Total loans originated


180,959



195,319



153,972



186,446



194,504Loans purchased


2,421



4,042



3,106



5,000



Deduct:Principal loan repayments and prepayments


112,810



105,703



114,281



125,481



138,968Loan sales


27,416



18,170



11,405



22,342



15,611Charge-offs


579



276



163



614



939Total deductions


140,805



124,149



125,849



148,437



155,518Net increase (decrease) in loans


42,575



75,212



31,229



43,009



38,986Loans at end of year

$
700,375


$
657,800


$
582,588


$
551,359


$
508,350          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

$
50,326


$
133,964


$
41,905


$
226,195Commercial Construction loans


7,485



3,644



9,050



20,179Sub-total: Total Commercial Real Estate Loans

$
57,811


$
137,608


$
50,955


$
246,374Residential Construction Loans


3,889



1,274



429



5,592Total

$
61,700


$
138,882


$
51,384


$
251,966     Loan
    Quality
  General:
  Delinquent Loans:
  Other Real Estate Owned:
 9




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##### Table of Contents



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




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##### Table of Contents



At December 31,2008


2007


2006


2005


2004(Dollars in thousands)Non-accrual loans:Residential mortgage

$
1,190


$
499


$
483


$
479


$
123Commercial mortgage


5,777



539



179



96



1,229Commercial


410



386



132



250



388Home equity, consumer and other


172



108



85



78



29Total non-accrual loans


7,549



1,532



879



903



1,769Loans 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

$
7,549


$
1,532


$
879


$
903


$
1,769Troubled debt restructurings

$



$



$
943


$



$
891Ratios:Non-performing loans to total loans


1.08
%


0.23
%


0.15
%


0.16
%


0.35
%Non-performing assets to total assets


0.80
%


0.17
%


0.11
%


0.12
%


0.26
%   and/or
  Allowance for Loan Losses.
   11




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##### Table of Contents



At or for the Years Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Balance at beginning of period

$
5,568


$
4,677


$
4,220


$
3,846


$
4,420Charge-offs:Mortgage loans on real estate:


(121
)






(50
)






(621
)Other loans:Commercial


(198
)


(104
)


(19
)


(506
)


(258
)Consumer and other


(260
)


(114
)


(94
)


(108
)


(60
)Total other loans


(458
)


(218
)


(113
)


(614
)


(318
)Total charge-offs


(579
)


(218
)


(163
)


(614
)


(939
)Recoveries:Mortgage loans on real estate


89







10







Other loans:Commercial


15



15



316



66



128Consumer and other


84



43



61



81



25Total other loans


99



58



377



147



153Total recoveries


188



58



387



147



153Net recoveries (charge-offs)


(391
)


(160
)


224



(467
)


(786
)Provision for loan losses


1,465



1,051



233



841



212Balance at end of period

$
6,642


$
5,568


$
4,677


$
4,220


$
3,846Ratios:Net recoveries (charge-offs) to average loans outstanding -
    annualized


(0.06
)%


(0.03
)%


0.04
%


(0.09
)%


(0.16
)%Allowance for loan losses to non-performing loans at end of
    period


87.99
%


363.45
%


532.08
%


467.33
%


217.41
%Allowance for loan losses to total loans at end of period


0.95
%


0.85
%


0.80
%


0.77
%


0.76
%  12




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##### Table of Contents



At December 31,2008


2007


2006Percent of








Percent of








Percent ofLoans in








Loans in








Loans inEach








Each








EachAllowance


Loan


Category to


Allowance


Loan


Category to


Allowance


Loan


Category tofor Loan


Balances by


Total


for Loan


Balances by


Total


for Loan


Balances by


TotalLosses


Category


Loans


Losses


Category


Loans


Losses


Category


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

$
980


$
344,235



49.15
%

$
946


$
349,772



53.17
%

$
892


$
325,407



55.86
%Commercial


4,550



246,374



35.18



3,688



212,191



32.26



3,015



170,971



29.35Home equity


286



63,138



9.01



245



56,752



8.63



249



56,856



9.765,816



653,747



93.34



4,879



618,715



94.06



4,156



553,234



94.96Other loans:Commercial


632



34,242



4.89



507



27,664



4.20



426



22,903



3.93Consumer and other


194



12,386



1.77



182



11,421



1.74



95



6,451



1.11826



46,628



6.66



689



39,085



5.94



521



29,354



5.04Total

$
6,642


$
700,375



100.00
%

$
5,568


$
657,800



100.00
%

$
4,677


$
582,588



100.00
%   At December 31,2005


2004Percent 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

$
881


$
308,008



55.86
%

$
785


$
284,114



55.89
%Commercial


2,779



160,675



29.14



2,363



141,540



27.84Home equity


168



58,640



10.64



156



53,508



10.533,828



527,323



95.64



3,304



479,162



94.26Other loans:Commercial


353



20,579



3.73



423



24,856



4.89Consumer and other


39



3,457



0.63



119



4,332



0.85392



24,036



4.36



542



29,188



5.74Total

$
4,220


$
551,359



100.00
%

$
3,846


$
508,350



100.00
%  13




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##### Table of Contents



Investment
    Activities
  General.
  Accounting for Certain Investments in Debt and
    Equity Securities,
    Government Sponsored Enterprises (GSE).
  Municipal Bonds.
  Corporate Bonds and Other Obligations.
  Mortgage-Backed Securities.
  Marketable Equity Securities.
 14




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##### Table of Contents



Other Equity Securities and Investments.
    At December 31, 2008


At December 31, 2007


At December 31, 2006Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


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

$
36,459


$
36,832


$
48,041


$
48,262


$
91,181


$
90,906Municipal bonds


15,876



15,632



9,930



9,941



7,199



7,174Corporate bonds and other obligations


363



363



1,501



1,531



2,971



2,977Mortgage-backed securities


80,267



73,986



65,551



65,726



54,165



53,838Total debt securities


132,965



126,813



125,023



125,460



155,516



154,895Common stock


6,314



5,544



8,100



9,084



6,013



7,318Total securities available for sale


139,279



132,357



133,123



134,544



161,529



162,213Securities 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


10,932



10,932



10,722



10,722



8,999



8,999Savings Bank Life Insurance


1,709



1,709



1,709



1,709



1,709



1,709Other investments


7,544



7,544



4,982



4,982



3,114



3,114Total restricted equity securities and other investments


20,185



20,185



17,413



17,413



13,822



13,822Total securities

$
159,561


$
152,639


$
150,633


$
152,054


$
175,448


$
176,132  15




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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

$
1,000



3.67
%

$
4,492



4.37
%


11,830



5.39
%

$
19,138



5.71
%

$
36,459



5.38
%Municipal Bonds


















3,257



4.11
%


12,619



4.21
%


15,876



4.19
%Corporate bonds and other obligations










363



5.88
%


















363



5.88
%Subtotal


1,000







4,855







15,087







31,757







52,698Mortgage-backed securities


















1,624



4.55
%


78,643



5.68
%


80,267



5.66
%Total AFS debt securities


1,000







4,855







16,711







110,400







132,965Securities held to maturity (HTM):Corporate bonds and other obligations










82



3.00
%


15



3.00
%










97



3.00
%Total HTM debt securities










82







15















97Total debt securities

$
1,000






$
4,937






$
16,726






$
110,400






$
133,062   Sources
    of Funds
  General.
  Deposits.
     16




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##### Table of Contents



Years Ended December 31,2008


2007


2006Weighted








Weighted








WeightedAverage





Average


Average





Average


Average





AverageBalance


Percent


Rate


Balance


Percent


Rate


Balance


Percent


Rate(Dollars in thousands)Deposit type:Demand

$
60,444



10.2
%



%

$
50,465



9.5
%



%

$
49,971



10.2
%



%NOW deposits


41,378



7.0



0.53



35,333



6.7



0.65



37,633



7.7



0.34Money market deposits


58,052



9.8



2.36



53,523



10.1



3.66



52,911



10.8



2.94Regular savings


49,936



8.5



0.41



46,986



8.9



0.44



56,759



11.6



0.44Relationship Savings


121,990



20.6



2.10



101,798



19.3



3.88



78,628



16.1



3.88Total transaction accounts


331,800



56.1



1.30



288,105



54.5



2.20



275,902



56.4



1.82Certificates of deposit


259,439



43.9



3.88



240,571



45.5



4.78



213,448



43.6



4.13Total deposits

$
591,239



100.0
%


2.44
%

$
528,676



100.0
%


3.39
%

$
489,350



100.0
%


2.84
%     At December 31,2008


2007


2006(Dollars in thousands)Interest RateLess than 2%

$
25,591


$
220


$
3282.00%-2.99%


85,226



5,351



5,7713.00%-3.99%


106,784



38,748



47,6884.00%-4.99%


40,304



117,786



66,7285.00%-5.99%


11,936



111,251



107,374Total

$
269,841


$
273,356


$
227,889     Year Ending December 31,


After December 31,2009


2010


2011


2012


2012


Total(Dollars in thousands)Interest RateLess than 2%

$
25,262


$
329


$



$



$



$
25,5912.00%-2.99%


74,430



9,034



1,625



2



135



85,2263.00%-3.99%


54,840



37,192



13,009



508



1,235



106,7844.00%-4.99%


10,483



19,297



6,547



2,971



1,006



40,3045.00%-5.99%


6,525



3,141



1,954



316







11,936Total

$
171,540


$
68,993


$
23,135


$
3,797


$
2,376


$
269,841  17




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##### Table of Contents



At December 31,2008(In thousands)Three months of less

$
27,363Over three months through six months


28,856Over six months through one year


12,631Over one year to three years


34,985Over three years


3,267Total

$
107,102   Borrowings.
  At or for the YearsEnded December 31,2008


2007


2006(Dollars in thousands)Balance at end of period

$
197,898


$
167,382


$
127,438Average balance during year

$
186,170


$
158,784


$
142,061Maximum outstanding at any month end

$
211,531


$
203,446


$
151,979Weighted average interest rate at end of year


4.07
%


4.60
%


4.61
%Weighted average interest rate during year


4.27
%


4.75
%


4.50
%     Personnel.
  Segment Reporting:
  Subsidiary
    Activities and Portfolio Management Services
   18




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##### Table of Contents



LB Funding Corporation.
  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:
 19




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##### Table of Contents



Lending Activities:
  Insurance Sales:
  Investment Activities:
  Dividends:
  Parity Regulation:
  Federal
    Regulations
  Capital Requirements.
 20




---



##### Table of Contents



Standards for Safety and Soundness.
  Investment Activities.
 21




---



##### Table of Contents



Interstate Banking and Branching.
  Prompt Corrective Regulatory Action.
      Transaction with Affiliates and Regulation W of the
    Federal Reserve Regulations.
 22




---



##### Table of Contents



Enforcement.
  Insurance of Deposit Accounts.
   23




---



##### Table of Contents



Temporary Liquidity Guarantee Program.
    U.S. Treasurys Troubled Asset Relief Program
    Capital Purchase Program.
  Privacy Regulations.
 24




---



##### Table of Contents



Community Reinvestment Act.
    Consumer Protection and Fair Lending
    Regulations.
  The USA PATRIOT Act.
  Federal
    Reserve System
   25




---



##### Table of Contents



Federal
    Home Loan Bank System
      Holding
    Company Regulation
  General:
       26




---



##### Table of Contents



Acquisition of the Company:
  Massachusetts Holding Company Regulation:
  Federal Securities Laws:
  Taxation
  Federal taxes:
  Bad Debt Reserves:
 27




---



##### Table of Contents



Distributions:
  Massachusetts Taxation:
    New York Taxation:
  Delaware Taxation:
  Available Information: http://www.LegacyBanks.com Form 10-K; Form 10-Q; Form 8-K;
  Item 1a.
    Risk
    Factors   28




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##### Table of Contents



Risks
    Related to Our Business
  The
    United States Economy Is In Recession. A Prolonged Economic
    Downturn, Especially One Affecting Our Geographic Market Area,
    Could Materially Affect our Business and Financial
    Results.
    Legislative
    or Regulatory Actions Responding to Financial and Market
    Weakness Could Affect Us Adversely. There Can Be No Assurance
    that Actions of the U.S. Government, Federal Reserve and Other
    Governmental and Regulatory Bodies For the Purpose of
    Stabilizing the Financial Markets Will Achieve the Intended
    Effect.
     29




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##### Table of Contents



The
    Federal Deposit Insurance Corporation is imposing an emergency
    assessment on financial institutions, which will decrease our
    earnings in 2009.
    Our
    Expenses Will Increase as a Result of Increases in FDIC
    Insurance Premiums.
    If our
    Investment in the Federal Home Loan Bank of Boston is Classified
    as Other-Than-Temporarily Impaired or as Permanently Impaired,
    our Earnings and Stockholders Equity Would
    Decrease.
    The
    Federal Home Loan Bank of Boston Suspended Dividends During the
    Fourth Quarter of 2008. This Will Negatively Affect our
    Earnings.
    Lack
    of consumer confidence in financial institutions may decrease
    our level of deposits.
    Economic
    Conditions May Adversely Affect Our Liquidity.
   30




---



##### Table of Contents



Future
    legislative or regulatory actions responding to perceived
    financial and market problems could impair our rights against
    borrowers.
      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.
    Financial
    Service Sector Concentration Within Our Investment
    Portfolio.
   31




---



##### Table of Contents



Changes
    in Market Interest Rates Could Adversely Affect Our Financial
    Condition and Results of Operations.
      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.
   32




---



##### 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


2007Lenox, MA 01240









Middleburgh, NY 121222 Holmes Road


1978






4 Elliott Place


2007Lenox, MA 01240









East Durham, NY 1242330 East Otis Road


1996






184 Broadway


2007Otis, MA 01253









Whitehall, NY 12887734 Williams Street (Landleased)


1997






Route 296


2007Pittsfield, MA 01201









Windham, NY 12496331 State Road


2007North Adams, MA 01247Leased:609 Merrill Road


1971



2023
(1)

480 West Housatonic Street


2005



2010
(2)Pittsfield, MA 01201









Pittsfield, MA 01201700 Main Street


1975



2009
(2)

Route 32, Bryants Market


2007



2013Great Barrington, MA 01230









Greenville, NY 1208339 North Pearl Street


2008



2018
(2)

545 Troy-Schenectady Road


2009



2019
(3)Albany, NY 12207









Latham, NY 12110ATM Location Only:Lee Outlet Village


1995



2011Lee, MA 01238  33




---



##### Table of Contents



(1)
    
    Legacy Banks has an option to renew for one additional
    5 year terms(2)
    
    Legacy Banks has an option to renew for two additional
    5 year terms(3)
    
    Opened January 2009  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, 20084th Quarter


3rd Quarter


2nd Quarter


1st QuarterHigh

$
13.37


$
13.95


$
14.01


$
14.27Low

$
10.60


$
10.51


$
11.53


$
12.65Dividend Declared

$
0.05


$
0.05


$
0.05


$
0.05   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   Repurchase of Our Equity Securities:
  (d) Maximum Numberor Approximate(c) Total Number of


Dollar Value ofShares Purchased as


Shares that May YetPart of Publicly


Be Purchased Under(a) Total Number of


(b) Average Price


announced Plans or


the Plans orPeriod

Shares Purchased


Paid per Share


Programs


ProgramsOctober 1  31


30,348


$
12.22



30,348



-0-November 1  30


-0-



-0-



-0-



-0-December 1  31


-0-



-0-



-0-



-0-  34




---



##### Table of Contents



Stock Repurchase Overview:
 35




---



##### Table of Contents



Stock Performance Graph: 10/25/05,
  Comparison
    Of Cumulative Return Among Legacy Bancorp,
    Peer Group Index and Broad Market Index
  
  10/25/05


12/31/05


12/31/06


12/31/07


12/31/08Legacy Bancorp



100.00




133.50




158.50




132.60




106.80S&P 500 Market Index



100.00




104.32




118.53




122.72




75.49SNL Thrifts



100.00




107.63




121.80




70.45




43.54    36




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  At or for the Years Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands, except per share data)Selected Financial Data:Total assets

$
944,657


$
924,541


$
808,318


$
778,330


$
681,287Loans, net(1)


695,264



654,024



578,802



547,626



505,344Securities and other investments:


132,357



152,054



176,132



179,921



131,894Deposits


608,088



610,447



518,248



474,464



450,868Federal Home Loan Bank advances


197,898



167,382



127,438



145,923



159,704Repurchase agreements


5,238



4,055



5,575



4,999



4,557Total stockholders equity


124,142



133,092



149,997



146,166



59,447Nonperforming loans


7,549



1,532



879



903



1,769Selected Operating Data:Total interest and dividend income


50,327



49,357



43,915



36,978



31,636Total interest expense


22,465



25,511



20,339



15,054



12,102Net interest income


27,862



23,846



23,576



21,924



19,534Provision for loan losses


1,465



1,051



233



841



212Net interest income after provision for loan losses


26,397



22,795



23,343



21,083



19,322Non-interest income:Service charges and fees


4,541



4,496



4,044



4,402



3,713Gain (loss) on sales or impairment of securities, net


(3,194
)


510



(1,736
)


(65
)


116Gain on sale of loans


255



270



210



236



278FHLB prepayment restructuring charge














(2,351
)


Gain on curtailment and termination of defined benefit plan










605



905Other


805



610



329



274



328Total non-interest income


2,407



5,886



3,452



3,401



4,435Total non-interest expense


26,584



27,187



21,336



26,398



17,949Income (loss) before income taxes


2,220



1,494



5,459



(1,914
)


5,808Provision for income taxes


776



249



2,653



297



2,254Net income (loss)


1,444



1,245



2,806



(2,211
)


3,554Earnings per share

$
0.18


$
0.14


$
0.29



n/a



n/aDividends per share

$
0.20


$
0.16


$
0.12



n/a



n/a   37




---



##### Table of Contents



At or for the Years Ended December 31,2008


2007


2006


2005


2004Selected Financial Ratios and Other Data:Performance Ratios:Return (loss) on average assets(2)


0.16
%


0.15
%


0.36
%


(0.31
)%


0.55
%Return (loss) on average equity(3)


1.11



0.88



1.92



(2.90
)


6.12Interest rate spread(4)


2.80



2.26



2.39



2.84



2.90Net interest margin(5)


3.27



3.01



3.15



3.22



3.18Efficiency ratio(6)


77.5



93.0



74.2



104.2



73.8Non-interest expense to average assets


2.89



3.23



2.70



3.56



2.70Average interest-bearing assets to interest-bearing liabilities


117.89



123.37



127.61



117.30



113.89Dividend payout ratio


111.61



113.82



40.88



n/a



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


13.1
%


14.4
%


18.6
%


18.8
%


8.7
%Average equity to average assets


14.1



16.9



18.5



10.7



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


13.0



13.9



18.9



20.0



12.6Asset Quality Ratios:Nonperforming assets to total assets


0.80
%


0.17
%


0.11
%


0.12
%


0.26
%Nonperforming loans to total loans


1.08



0.23



0.15



0.16



0.35Allowance for loan losses to nonperforming loans


87.99



363.45



532.08



467.33



217.41Allowance for loan losses to total loans


0.95



0.85



0.80



0.77



0.76Share Data:Book value per share  end of year

$
14.14


$
14.40


$
14.55


$
14.18



n/aTangible book value per share  end of year


12.74



13.01



14.25



13.88



n/aMarket price at year end


10.68



13.26



15.85



13.35



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:
  Dividend and stock repurchase plan:
 38




---



##### Table of Contents



Stock-based compensation:
    Options Granted in


Options Granted in


Options Granted inNovember 2006


December 2007


March 2008Fair Value

$
3.98


$
2.85


$
2.90Risk-free interest rate


4.54
%


3.88
%


3.02
%Expected dividend yield


0.75
%


1.24
%


1.13
%Expected volatility


13.53
%


15.90
%


16.44
%Expected life


6.5 years



6.5 years



6.5 years       Growth Strategy and Challenges:
 39




---



##### Table of Contents



Critical
    Accounting Policies
    Allowance for Loan Losses:
  Income Taxes:
     40




---



##### Table of Contents



Other-Than-Temporary Impairment:
  Fair Values of Assets and Liabilities: Fair Value
    Measurements
    Comparison
    of Financial Condition at December 31, 2008 and
    December 31, 2007
  Total Assets:
  Cash and Short-term Investments:
  Securities:
  Net Loans:
  Deposits:
 41




---



##### Table of Contents



Borrowed Funds:
  Stockholders Equity:
  Operating
    Results Overview
    Net Interest Income:
  Non-Interest Expense:
 42




---



##### Table of Contents



Net income:
  Comparison
    of Operating Results For the Years Ended December 31, 2008
    and 2007
  Analysis of Net Interest Income:
    Year Ended December 31, 2008


Year Ended December 31, 2007


Year Ended December 31, 2006Average








Average








AverageOutstanding





Yield/


Outstanding





Yield/


Outstanding





Yield/Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


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

$
676,222


$
41,944



6.20
%

$
614,567


$
40,460



6.58
%

$
564,446


$
35,905



6.36
%Investment securities


164,242



8,141



4.96
%


163,860



8,261



5.04
%


175,006



7,547



4.31
%Short-term investments


11,265



242



2.15
%


13,558



636



4.69
%


9,386



463



4.93
%Total interest-earning assets


851,729



50,327



5.91
%


791,985



49,357



6.23
%


748,838



43,915



5.86
%Non-interest-earning assets


67,973











50,212











41,187Total assets

$
919,702










$
842,197










$
790,025Interest-bearing liabilities:Savings deposits

$
49,936


$
203



0.41
%

$
46,986


$
206



0.44
%

$
56,759



248



0.44
%Relationship Savings


121,990



2,557



2.10
%


101,798



3,949



3.88
%


78,628



3,049



3.88
%Money market


58,052



1,371



2.36
%


53,523



1,961



3.66
%


52,911



1,556



2.94
%NOW accounts


41,378



218



0.53
%


35,333



230



0.65
%


37,633



130



0.35
%Certificates of deposits


259,439



10,072



3.88
%


240,571



11,500



4.78
%


213,448



8,825



4.13
%Total interest-bearing deposits


530,795



14,421



2.72
%


478,211



17,846



3.73
%


439,379



13,808



3.14
%Borrowed Funds


191,708



8,044



4.20
%


163,750



7,665



4.68
%


147,421



6,531



4.43
%Total interest-bearing liabilities


722,503



22,465



3.11
%


641,961



25,511



3.97
%


586,800



20,339



3.47
%Non-interest-bearing liabilities


67,643











58,024











57,185Total liabilities


790,146











699,985











643,985Equity


129,556











142,212











146,040Total liabilities and equity

$
919,702










$
842,197










$
790,025Net interest income





$
27,862










$
23,846










$
23,576Net interest rate spread(2)










2.80
%










2.26
%










2.39
%Net interest-earning assets(3)

$
129,226










$
150,024










$
162,038Net interest margin(4)










3.27
%










3.01
%










3.15
%Average interest-earning assets to interest-bearing liabilities










117.89
%










123.37
%










127.61
%  43




---



##### Table of Contents



(1)
    
    Includes loans held for sale.(2)
    
    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, 2008, 2007 and 2006.(3)
    
    Net interest-earning assets represents total interest-earning
    assets less total interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income divided by
    average total interest-earning assets.    Year Ended December 31, 2008 vs. 2007


Year Ended December 31, 2007 vs. 2006Increase


Total


Increase


Total(Decrease) Due to


Increase


(Decrease) Due to


IncreaseVolume


Rate


(Decrease)


Volume


Rate


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

$
3,496


$
(2,012
)

$
1,484


$
3,278


$
1,277


$
4,555Investment securities


20



(140
)


(120
)


(429
)


1,143



714Short-term investments


(94
)


(300
)


(394
)


195



(22
)


173Total interest-earning assets


3,422



(2,452
)


970



3,044



2,398



5,442Interest-bearing liabilities:Savings deposits


39



(42
)


(3
)


(42
)






(42
)Relationship Savings


1,059



(2,451
)


(1,392
)


900







900Money market


185



(775
)


(590
)


18



387



405NOW accounts


156



(168
)


(12
)


(8
)


108



100Certificates of deposits


1,020



(2,448
)


(1,428
)


1,195



1,480



2,675Total deposits


2,459



(5,884
)


(3,425
)


2,063



1,975



4,038Borrowed Funds


950



(571
)


379



751



383



1,134Total interest-bearing liabilities


3,409



(6,455
)


(3,046
)


2,814



2,358



5,172Change in net interest income

$
13


$
4,003


$
4,016


$
230


$
40


$
270   Net Income:
  Net Interest Income:
  Interest Income:
 44




---



##### Table of Contents



Interest Expense:
  Provision for Loan Losses:
  Non-interest Income:
  Non-interest Expense:
  Income Taxes:
  Comparison
    of Operating Results For the Years Ended December 31, 2007
    and December 31, 2006
  Net Income:
 45




---



##### Table of Contents



Net Interest Income:
  Interest Income:
  Interest Expense:
  Provision for Loan Losses:
  Non-interest Income:
  Non-interest Expense:
  Income Taxes:
 46




---



##### Table of Contents



Item 7A:
    Quantitative
    and Qualitative Disclosures About Market Risk      Management of Credit Risk:
  Management of Market Risk:
        
    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; 47




---



##### Table of Contents




    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 flattening increase in rates


3.4
%200 basis point flattening increase in rates


2.3
%200 basis point parallel increase in rates


3.9
%Flat interest rates


100 basis point parallel decrease in rates


(1.1
)%   12-month 12-month
   48




---



##### Table of Contents



Liquidity Risk Management:
       49




---



##### Table of Contents



Management of Other Risks:
    Off-Balance
    Sheet Arrangements
    Contractual Obligations:
  December 31, 2008More 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

$
197,898


$
37,532


$
57,650


$
39,500


$
63,216Securities sold under agreements to repurchase


5,238



5,238











Operating leases


2,633



339



486



435



1,373Total contractual obligations

$
205,769


$
43,109


$
58,136


$
39,935


$
64,589  50




---



##### Table of Contents



Loan Commitments :
  December 31, 2008More 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)

$
17,474


$
17,474


$



$



$
Commercial loan lines-of-credit


19,749



19,749











Unused portion of home equity loans(2)


67,037



790



4,901



13,895



47,451Unused portion of construction loans(3)


15,479



15,479











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


5,194















5,194Unused portion of personal lines-of-credit(5)


826















826Standby letters of credit(6)


742



742











Other commitments and contingencies(7)


8,640



8,640











Total loan & other commitments

$
135,141


$
62,874


$
4,901


$
13,895


$
53,471     (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.(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.  Impact of
    Inflation and Changing Prices
    Impact of
    Recent Accounting Pronouncements
   51




---



##### Table of Contents



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


53Consolidated Balance Sheets as of
    December 31, 2008 and December 31, 2007


54Consolidated Statements of Income for the Years
    Ended December 31, 2008, 2007 and 2006


55Consolidated Statements of Changes in
    Stockholders Equity for the Years Ended December 31,
    2008, 2007 and 2006


56Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


57Notes to Consolidated Financial Statements


58-93  52




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control  Integrated Framework
        Internal Control 
    Integrated Framework )
      53




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (Dollars
    in thousands)
  December 31,2008


2007ASSETSCash and due from banks

$
13,245


$
13,931Short-term investments


20,350



48,294Cash and cash equivalents


33,595



62,225Securities  Available for sale


132,357



134,544Securities  Held to maturity


97



97Other equity securities  at cost


20,185



17,413Loans held for sale






395Loans, net of allowance for loan losses of $6,642 in 2008 and
    $5,568 in 2007


695,264



653,629Premises and equipment, net


19,770



18,866Accrued interest receivable


3,633



3,404Goodwill, net


9,687



9,687Net deferred tax asset


10,023



5,580Bank-owned life insurance


15,551



14,788Other assets


4,495



3,913$
944,657


$
924,541LIABILITIES AND STOCKHOLDERS EQUITYDeposits :Noninterest-bearing

$
66,545


$
64,348Interest-bearing


541,543



546,099Total deposits


608,088



610,447Securities sold under agreements to repurchase


5,238



4,055Federal Home Loan Bank advances


197,898



167,382Mortgagors escrow accounts


1,015



1,034Accrued expenses and other liabilities


8,276



8,531Total liabilities


820,515



791,449Commitments 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, 2008 and
    2007; 8,781,912 outstanding at December 31, 2008 and
    9,240,960 outstanding at December 31, 2007)


103



103Additional
    paid-in-capital


102,475



101,720Unearned Compensation  ESOP


(8,055
)


(8,787
)Unearned Compensation  Equity Incentive Plan


(2,727
)


(3,525
)Retained earnings


58,534



58,709Accumulated other comprehensive income (loss)


(4,722
)


270Treasury stock, at cost (1,526,688 shares at
    December 31, 2008 and 1,067,640 shares at
    December 31, 2007)


(21,466
)


(15,398
)Total stockholders equity


124,142



133,092$
944,657


$
924,541    54




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 (Dollars
    in thousands)
  Years Ended December 31,2008


2007


2006Interest and dividend income:Loans

$
41,944


$
40,460


$
35,905Securities:Taxable


6,964



7,193



6,647Tax-Exempt


526



282



239Dividends


651



786



661Short-term investments


242



636



463Total interest and dividend income


50,327



49,357



43,915Interest expense:Deposits


14,421



17,846



13,808Federal Home Loan Bank advances


7,945



7,539



6,395Other borrowed funds


99



126



136Total interest expense


22,465



25,511



20,339Net interest income


27,862



23,846



23,576Provision for loan losses


1,465



1,051



233Net interest income after provision for loan losses


26,397



22,795



23,343Non-interest income:Customer service fees


3,202



3,059



2,832Portfolio management fees


1,141



1,183



1,001Income from bank-owned life insurance


714



500



222Insurance, annuities and mutual fund fees


198



254



211Gain (loss) on sales/impairment of securities, net


(3,194
)


510



(1,736
)Gain on sales of loans, net


255



270



210Gain on curtailment and settlement of defined benefit plan










605Miscellaneous


91



110



107Total non-interest income


2,407



5,886



3,452Non-interest expenses:Salaries and employee benefits


14,027



16,812



11,897Occupancy and equipment


3,625



2,924



2,482Data processing


2,627



2,314



1,987Professional fees


842



1,008



1,564Advertising


1,121



884



747Other general and administrative


4,342



3,245



2,659Total non-interest expenses


26,584



27,187



21,336Income before income taxes


2,220



1,494



5,459Provision for income taxes


776



249



2,653Net income

$
1,444


$
1,245


$
2,806Earnings per shareBasic

$
0.18


$
0.14


$
0.29Diluted

$
0.18


$
0.14


$
0.29Weighted average shares outstandingBasic


8,058,594



8,856,372



9,559,791Diluted


8,082,498



8,873,180



9,559,791    55




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
    YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
    (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, 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
)

$
133,092Comprehensive income:Net income






















1,444











1,444Net unrealized loss on securities available for sale, net of
    reclassification adjustment and tax effects


























(5,079
)






(5,079
)Amortization of benefit plan gains (losses) and prior service
    costs


























87







87Total comprehensive income


































(3,548
)Cash dividends declared ($0.20 per share)






















(1,612
)










(1,612
)Common stock repurchased  5% Stock Repurchase Program
    announced December 2007


(462,048
)


























(6,117
)


(6,117
)Stock option expense










784























784Restricted stock expense


















840















840Restricted stock granted


3,000















(42
)


(7
)






49



Release of ESOP stock










(29
)


732



















703Balance at December 31, 2008


8,781,912


$
103


$
102,475


$
(8,055
)

$
(2,727
)

$
58,534


$
(4,722
)

$
(21,466
)

$
124,142    56




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##### Table of Contents



LEGACY
    BANCORP, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Dollars
    in thousands)
  Years Ended December 31,2008


2007


2006Cash flows from operating activities:Net income

$
1,444


$
1,245


$
2,806Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


1,465



1,051



233Net (accretion) amortization of securities


(53
)


(794
)


(1,058
)Amortization of core deposit intangible


653



39



Depreciation and amortization expense


1,482



1,191



1,014(Gain) loss on sales/impairment of securities, net


3,194



(510
)


1,736Gain on sales of loans, net


(255
)


(270
)


(210
)Loans originated for sale


(10,345
)


(18,170
)


(11,279
)Proceeds from sales of loans


23,730



18,045



11,615Share-based compensation expense


1,624



2,984



417Deferred tax (benefit) provision


(1,237
)


(1,348
)


279Employee Stock Ownership Plan expense


703



803



833Net change in:Bank-owned life insurance


(763
)


(550
)


(271
)Accrued interest receivable


(229
)


148



(317
)Other assets


(1,235
)


84



794Accrued expenses and other liabilities


(110
)


2,358



(671
)Net cash provided by operating activities


20,068



6,306



5,921Cash flows from investing activities:Activity in available-for-sale securities:Sales


56,456



7,139



69,414Maturities, prepayments and calls


43,166



115,003



93,823Purchases


(108,919
)


(92,431
)


(156,326
)(Purchase) redemption of Federal Home Loan Bank stock


(210
)


(1,723
)


57Purchase of other investments


(2,587
)


(1,908
)


(1,500
)Maturities, prepayments and call of other investments


25



40



9Loan originations and purchases, net of principal payments


(55,835
)


(75,313
)


(31,535
)Purchases of bank-owned life insurance






(9,814
)


Additions to premises and equipment


(2,386
)


(3,245
)


(2,194
)Net cash received in branch acquisition






64,819



Net cash (used) provided by investing activities


(70,290
)


2,567



(28,252
)Cash flows from financing activities:Net (decrease) increase in deposits


(2,359
)


15,570



43,784Net (decrease) increase in securities sold under agreements to
    repurchase


1,183



(1,520
)


576Repayment of Federal Home Loan Bank advances


(871,460
)


(287,517
)


(159,974
)Proceeds from Federal Home Loan Bank advances


901,976



327,461



141,489Net increase (decrease) in mortgagors escrow accounts


(19
)


90



13Repurchase of common stock


(6,117
)


(20,977
)


Payment of dividends on common stock


(1,612
)


(1,399
)


(1,145
)Net cash provided by financing activities


21,592



31,708



24,743Net change in cash and cash equivalents


(28,630
)


40,581



2,412Cash and cash equivalents at beginning of period


62,225



21,644



19,232Cash and cash equivalents at end of period

$
33,595


$
62,225


$
21,644Supplemental cash flow information:Interest paid on deposits

$
14,453


$
17,912


$
14,360Interest paid on Federal Home Loan Bank advances


7,933



7,382



7,397Interest paid on other borrowed funds


99



126



136Income taxes paid


1,375



1,750



2,025Transfers from loans to loans held for sale


12,735







126    57




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears Ended December 31, 2007, 2006 and 2005
    (Dollars in Thousands)
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Basis
    of presentation
    Business
    Stock
    conversion
      Use of
    estimates
    Branch
    Acquisition
   58




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##### 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
     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)      Loans
    held for sale
    Loans
          Allowance
    for loan losses
     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)          Other
    real estate owned
    Premises
    and equipment
    Goodwill
    and other intangible assets
    Bank-owned
    life insurance
   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)  Transfers
    of financial assets
    Income
    taxes
    Pension
    plan
    Postretirement
    benefits other than pensions
    Employee
    stock ownership plan
    Share-based
    compensation plans
   62




---



##### 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
    Treasury
    stock
    Earnings
    per common share
      Year Ended December 31,2008


2007


2006Net income applicable to common stock

$
1,444


$
1,245


$
2,806Average number of shares issued


10,308,600



10,308,600



10,308,600Less: average unallocated ESOP shares


(638,908
)


(693,830
)


(748,809
)Less: average treasury shares


(1,342,802
)


(411,851
)


Less: average unvested restricted stock awards


(268,296
)


(346,547
)


Average number of basic shares outstanding


8,058,594



8,856,372



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


23,551



16,808



Plus: dilutive stock option shares


353







Average number of diluted shares outstanding


8,082,498



8,873,180



9,559,791Basic earnings per share

$
0.18


$
0.14


$
0.29Diluted earnings per share

$
0.18


$
0.14


$
0.29   Comprehensive
    income/loss
   63




---



##### 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


2007


2006Net unrealized holding gains (losses) on available for sale
    securities

$
(11,537
)

$
1,247


$
630Reclassification adjustment for (gains) losses realized in income


(356
)


(510
)


1,736Reclassification adjustment for impairment losses recognized in
    income


3,550







(8,343
)


737



2,366Tax effect


3,264



(264
)


(895
)Net-of-tax amount


(5,079
)


473



1,471Amortization of benefit plan gains, (losses) and prior service
    costs


147



(57
)


Tax effect


(60
)


23



Net-of-tax amount


87



(34
)


$
(4,992
)

$
439


$
1,471     December 31,2008


2007Net unrealized holding gains (losses) on available for sale
    securities

$
(6,922
)

$
1,421Tax effects


2,698



(566
)Net-of-tax amount


(4,224
)


855Unrecognized net actuarial loss and prior service costs
    pertaining to Directors fee plan


(843
)


(990
)Tax effect


345



405Net-of-tax amount


(498
)


(585
)$
(4,722
)

$
270     Actuarial loss

$
19Prior service cost or credit

$
145   Recent
    accounting pronouncements
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FASB Statement No. 133.
 64




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    No. EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue
    No. 99-20 (FSP 99-20-1). FSP 99-20-1 99-20, Recognition of Interest Income and Impairment on Purchased
    Beneficial Interests and Beneficial Interests That Continue to
    Be Held by a Transferor in Securitized Financial Assets Accounting for Certain
    Investments in Debt and Equity Securities, FSP 99-20-1 FSP 99-20-1
  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
    Allowance for loan losses of an acquiree will not be permitted
    to be recognized by the acquirer    Noncontrolling Interests in Consolidated
    Financial Statements  An Amendment of ARB No. 51.
 65




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)    Fair Value Measurements
  No. FAS 157-3, Determining the Fair Value of a Financial Asset When the
    Market for That Asset Is Not Active FSP 157-3 FSP 157-3
  No. 06-4, Accounting for Deferred Compensation and Postretirement
    Benefit Aspects of Endorsement Split-Dollar Life Insurance
    Arrangements EITF 06-4,
  No. 06-11, Accounting for Income Tax Benefits of Dividends on
    Share-based Payment Awards
 66




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING
    POLICIES  (Continued)  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  2.
    RESTRICTIONS
    ON CASH AND AMOUNTS DUE FROM BANKS    3.
    SHORT-TERM
    INVESTMENTS    December 31,2008


2007Federal funds sold

$
16,278


$
22,199FHLB overnight deposits


4,072



15,277Money market funds






10,818$
20,350


$
48,294   4.
    SECURITIES    December 31,2008


2007Securities available for sale, at fair value

$
132,357


$
134,544Securities held to maturity, at amortized cost


97



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


10,932



10,722Savings Bank Life Insurance Company of Massachusetts stock


1,709



1,709Non-marketable equity securities and other investments


7,544



4,982$
152,639


$
152,054  67




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Continued)    December 31, 2008Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises (GSE)

$
36,459


$
463


$
(90
)

$
36,832Municipal


15,876



176



(420
)


15,632Corporate and other


363











363GSE mortgage-backed


51,679



921



(110
)


52,490Private issue mortgage-backed securities


28,588







(7,092
)


21,496Total debt securities


132,965



1,560



(7,712
)


126,813Marketable equity securities


6,314



92



(862
)


5,544Total securities available for sale

$
139,279


$
1,652


$
(8,574
)

$
132,357Securities Held to MaturityOther bonds and obligations

$
97


$



$



$
97   December 31, 2007Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises (GSE)

$
48,041


$
234


$
(13
)

$
48,262Municipal


9,930



48



(37
)


9,941Corporate and other


1,501



30







1,531GSE mortgage-backed securities


53,628



341



(33
)


53,936Private issue mortgage-backed securities


11,923



17



(150
)


11,790Total 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  68




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Continued)    Available for Sale


Held to MaturityAmortized


Fair


Amortized


FairCost


Value


Cost


ValueWithin 1 year

$
1,000


$
1,000


$



$
Over 1 year to 5 years


4,491



4,577



82



82Over 5 years to 10 years


15,087



15,389







Over 10 years


32,120



31,861



15



15Total bonds and obligations


52,698



52,827



97



97Mortgage-backed securities


80,267



73,986







Total debt securities

$
132,965


$
126,813


$
97


$
97      69




---



##### Table of Contents



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


Over Twelve MonthsGross





GrossUnrealized


Fair


Unrealized


FairLosses


Value


Losses


ValueDecember 31, 2008:Debt securities:Government-sponsored enterprises

$
90


$
5,821


$



$
Municipal


354



6,078



66



2,551GSE mortgage-backed


81



5,737



29



637Private issue mortgage-backed securities


5,037



16,172



2,055



5,324Total debt securities


5,562



33,808



2,150



8,512Marketable equity securities


862



2,530







Total temporarily impaired securities

$
6,424


$
36,338


$
2,150


$
8,512December 31, 2007:Debt securities:Government-sponsored enterprises

$
13


$
13,481


$



$
Municipal


27



2,960



10



1,621GSE mortgage-backed securities


15



10,502



18



1,034Private issue mortgage-backed securities










150



8,432Total debt securities


55



26,943



178



11,087Marketable equity securities


411



2,489



40



393Total temporarily impaired securities

$
466


$
29,432


$
218


$
11,480        70




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   4.
    SECURITIES  (Continued)      5.
    LOANS    December 31,2008


2007Mortgage loans on real estate:Residential

$
344,235


$
349,772Commercial


246,374



212,191Home equity


63,138



56,752653,747



618,715Other loans:Commercial


34,242



27,664Consumer and other


12,386



11,42146,628



39,085Total loans


700,375



657,800Net deferred loan costs


1,531



1,397Allowance for loan losses


(6,642
)


(5,568
)Loans, net

$
695,264


$
653,629     Years Ended December 31,2008


2007


2006Balance at beginning of year

$
5,568


$
4,677


$
4,220Provision for loan losses


1,465



1,051



233Recoveries


188



58



387Loans charged-off


(579
)


(218
)


(163
)Balance at end of year

$
6,642


$
5,568


$
4,677  71




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   5.
    LOANS  (Continued)    December 31,2008


2007


2006Impaired loans with no valuation allowance

$
5,771


$
810


$
277Impaired loans with a valuation allowance


4,611



1,982



2,042Total impaired loans

$
10,382


$
2,792


$
2,319Valuation allowance allocated to impaired loans

$
966


$
440


$
374Average investment in impaired loans

$
7,808


$
3,293


$
2,253Interest income recognized on impaired loans

$



$



$
Non-accrual loans

$
7,549


$
1,532


$
879         6.
    PREMISES
    AND EQUIPMENT    December 31,


Estimated2008


2007


Useful LivesPremises:Land

$
1,414


$
1,414Buildings and improvements


20,050



19,294



5-39 YearsFurniture and equipment


8,548



7,745



3-10 YearsConstruction in process


828



30,840



28,453Accumulated depreciation and amortization


(11,070
)


(9,587
)$
19,770


$
18,866      72




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  7.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS  Goodwill
    Year Ended December 31,2008


2007Balance at beginning of the year


9,687



3,085Acquired goodwill






6,602Impairment






Balance at end of year


9,687



9,687   Other
    intangible assets
    December 31,2008


2007Gross Carrying Value


3,247



3,247Accumulated Amortization


(692
)


(39
)2,555



3,208     Years Ended December 31,2009


6492010


6492011


6492012


608    73




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  8.
    DEPOSITS    December 31,2008


2007Demand

$
66,545


$
64,348Regular savings


46,946



53,684Relationship savings


121,376



112,705Money market deposits


60,174



64,373NOW deposits


43,206



41,981Total non-certificate accounts


338,247



337,091Term certificates less than $100,000


162,739



161,385Term certificates of $100,000 or more


107,102



111,971Total certificate accounts


269,841



273,356Total deposits

$
608,088


$
610,447     AmountMaturing During the Year Ending December 31,

2008


20072008

$



$
241,5422009


171,540



20,6332010


68,993



6,5832011


23,135



2,4722012


3,797



2,0402013


2,354



33Therafter


22



53$
269,841


$
273,356     9.
    SECURITIES
    SOLD UNDER AGREEMENTS TO REPURCHASE      December 31,2008


2007Repurchase agreements with customers

$
5,238


$
4,055Fair value of securities underlying the agreements

$
6,386


$
8,251Weighted average interest rate


2.03
%


2.95
%    74




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  10.
    FEDERAL
    HOME LOAN BANK ADVANCES   Weighted AverageAmount


Interest RateMaturing During the Year Ending December 31,

2008


2007


2008


20072008

$



$
53,200




%


4.88
%2009


37,532
*


38,303
*


4.52



4.502010


45,150



30,650



4.32



4.792011


12,500







3.59



2012


22,000



20,000



4.11



4.242013


17,500







3.79



Thereafter


63,216
*


25,229
*


3.78



4.23$
197,898


$
167,382



4.07
%


4.60
%   *
    
    Includes amortizing advances requiring $67 in combined monthly
    principal and interest payments at December 31, 2008.    2009

$
3,0002010


4,5002011


2012


18,0002013


2,000Thereafter


60,500$
88,000     11.
    INCOME
    TAXES    Years Ended December 31,2008


2007


2006Current tax provision:Federal

$
1,709


$
1,395


$
1,927State


304



202



4472,013



1,597



2,374Deferred tax benefit:Federal


(1,154
)


(950
)


(372
)State


(208
)


(438
)


(8
)(1,362
)


(1,388
)


(380
)Change in valuation reserve


125



40



659$
776


$
249


$
2,653  75




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   11.
    INCOME
    TAXES  (Continued)    Years Ended December 31,2008


2007


2006Statutory tax rate


34.0
%


34.0
%


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


2.9



(10.4
)


5.3Bank-owned life insurance


(10.9
)


(11.4
)


(1.4
)Dividends received deduction


(2.6
)


(3.4
)


(0.7
)Change in valuation reserve


5.6



2.7



12.1Tax-exempt income


(6.4
)


(5.1
)


(1.2
)Stock-based compensation plan


7.8



7.9



0.5Other, net


4.6



2.4



Effective tax rates


35.0
%


16.7
%


48.6
%     December 31,2008


2007Deferred tax assets:Federal

$
10,533


$
6,855State


2,129



1,52212,662



8,377Valuation reserve


(1,654
)


(1,529
)11,008



6,848Deferred tax liabilities:Federal


(763
)


(960
)State


(222
)


(308
)(985
)


(1,268
)Net deferred tax asset

$
10,023


$
5,580  76




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   11.
    INCOME
    TAXES  (Continued)    December 31,2008


2007Net unrealized loss (gain) on securities available for sale

$
2,698


$
(566
)Depreciation and amortization


66



67Deferred income


(612
)


(572
)Allowance for loan losses


2,653



2,277Employee benefit plans


2,892



3,036Capital loss carryforward


281



326Charitable contribution carryforward


1,936



2,119Projected benefit obligation  Directors fee plan


345



405Impairment losses


1,530



108Other


(112
)


(91
)Valuation reserve


(1,654
)


(1,529
)Net deferred tax asset

$
10,023


$
5,580     December 31,2008


2007


2006Balance at beginning of year

$
1,529


$
1,489


$
830Reserve for charitable contribution carryforward


125



40



659Balance at end of year

$
1,654


$
1,529


$
1,489       12.
    COMMITMENTS
    AND CONTINGENCIES    Loan
    and other financial commitments
   77




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   12.
    COMMITMENTS
    AND CONTINGENCIES  (Continued)    December 31,2008


2007Commitments to grant loans

$
17,474


$
27,070Unused funds on commercial lines-of-credit


19,749



20,139Unadvanced funds on home equity lines-of-credit


67,037



68,721Unadvanced funds on construction loans


15,479



9,498Standby letters-of-credit and other commitments


15,402



18,387   case-by-case
    Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  Operating
    lease commitments
    Years EndingDecember 31,

Amount2009

$
3392010


2602011


2262012


2232013


212Thereafter


1,373$
2,633  78




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   12.
    COMMITMENTS
    AND CONTINGENCIES  (Continued)    Legal
    claims
    Employment
    and change of control agreements
      Branch
    Acquisition
    13.
    MINIMUM
    REGULATORY CAPITAL REQUIREMENTS       79




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   13.
    MINIMUM
    REGULATORY CAPITAL
    REQUIREMENTS  (Continued)    Minimum To Be WellMinimum


Capitalized UnderCapital


Prompt CorrectiveActual


Requirement


Action ProvisionsAmount


Ratio


Amount


Ratio


Amount


RatioDecember 31, 2008:Total capital to risk weighted assets

$
91,400



13.0
%

$
56,082



8.0
%

$
70,102



10.0
%Tier 1 capital to risk weighted assets:


84,533



12.1



28,041



4.0



42,061



6.0Tier 1 capital to average assets:


84,533



9.4



26,917



3.0



44,862



5.0December 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



5.0     12/31/2008


12/31/2007Total stockholders equity per consolidated financial
    statements

$
124,142


$
133,092Adjustments for Bank Tier 1 capital:Holding company equity adjustment


(30,187
)


(37,002
)Net unrealized losses (gains) on available for sale securities


3,090



(841
)Unrecognized net actuarial loss and prior service costs


498



585Net unrealized losses on available for sale equity securities


(754
)


Disallowed goodwill and intangible assets and other adjustments


(12,256
)


(12,897
)Total Bank Tier 1 capital


84,533



82,937Adjustments for total capital:Allowed unrealized (losses) gains on equity securities






440Includable allowances for loan and commitment losses


6,867



5,806Total Bank capital per regulatory reporting

$
91,400


$
89,183     14.
    EMPLOYEE
    BENEFIT PLANS  Defined
    benefit plan
   80




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   14.
    EMPLOYEE
    BENEFIT PLANS  (Continued)  Defined
    contribution plan
    Supplemental
    executive plans
    Split
    dollar life insurance
    Employee
    Stock Ownership plan
  15-year
 81




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   14.
    EMPLOYEE
    BENEFIT PLANS  (Continued)    Year Ending December 31,

Amount2009


5452010


5822011


6232012


6642013


712Thereafter


5,432$
8,558       December 31,2008


2007Allocated


194,354



156,697Unallocated


604,772



659,751799,126



816,448    82




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   14.
    EMPLOYEE
    BENEFIT PLANS  (Continued)  Director
    fee continuation plan
    December 31,2008


2007Change in projected benefit obligation:Benefit obligation at beginning of year

$
1,539


$
1,206Interest cost


92



78Service cost


85



78Actuarial gain


42



216Benefits paid


(39
)


(39
)Benefit obligation accrued at end of year


1,719



1,539Accumulated benefit obligation

$
1,568


$
1,373     December 31,2008

2007Discount rate


5.75
%


6.00
%Rates of fee increase


5.00
%


5.00
%     Years Ended December 31,2008


2007


2006Service Cost

$
85


$
78


$
59Interest Cost


92



78



65Amortization of prior service cost


145



145



145Actuarial loss


44



14



$
366


$
315


$
269     Years Ended December 31,2008

2007

2006Discount rate


6.00
%


5.75
%


5.75
%Rates of fee increase


5.00
%


5.00
%


5.00
%    83




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  15.
    POSTRETIREMENT
    HEALTH AND LIFE INSURANCE BENEFITS    Years Ended December 31,2008


2007


2006Interest cost on projected benefits

$
39


$
36


$
36Recognized net actuarial loss


5







Net amortization of transition obligation and prior service cost


(1
)


(1
)


(1
)$
43


$
35


$
35     December 31,2008


2007Change in benefit obligation:Benefit obligation at beginning of year

$
656


$
627Interest cost


39



36Actuarial gain (loss)


29



55Benefits paid


(63
)


(62
)Benefit obligation at end of year

$
661


$
656     1% decrease

1% increaseEffect on total of service and interest cost components for 2008

$
(3
)

$
3Effect on the postretirement benefit obligation as of
    December 31, 2008


(40
)


44     2009


662010


652011


642012


622013


612014-2017


277   16.
    EQUITY
    INCENTIVE PLAN  Stock
    options
   84




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   16.
    EQUITY
    INCENTIVE PLAN  (Continued)    For Options Granted InYears Ended December 31,2008


2007


2006Fair Value

$
2.90


$
2.85


$
3.98Expected dividends


1.13
%


1.24
%


0.75
%Expected term (years)


6.50



6.50



6.50Expected volatility


16.44
%


15.90
%


13.53
%Risk-free interest rate


3.02
%


3.88
%


4.54
%         WeightedWeighted


AverageAverage


Remaining


AggregateExercise Price


Contractual Term


IntrinsicShares


Per Share


(in years)


ValueOutstanding at January 1, 2008


904,300


$
15.95



8.9Granted


63,860



14.16



9.0Forfeited or expired


(163,880
)


15.98Outstanding at December 31, 2008


804,280


$
15.80



8.1


$
Exercisable at December 31, 2008


144,380


$
16.03



7.9


$
     Stock
    awards
   85




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   16.
    EQUITY
    INCENTIVE PLAN  (Continued)      Weighted-AverageGrant-DateNonvested Shares

Shares


Fair ValueBalance at beginning of year


347,500


$
16.02Granted


2,000



14.16Vested


(69,300
)


16.03Forfeited


(11,560
)


16.03Balance at end of year


268,640


$
16.00     17.
    RELATED
    PARTY TRANSACTIONS      Years Ended December 31,2008


2007Balance at beginning of year

$
2,792


$
3,237Additions/change in status


288



101Repayments


(273
)


(546
)Balance at end of year

$
2,807


$
2,792   18.  RESTRICTIONS
    ON DIVIDENDS, LOANS AND ADVANCES
     86




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  19.
    FAIR
    VALUE OF ASSETS AND LIABILITIES  Determination
    of Fair Value
    Fair
    Value Hierarchy
            Cash and cash equivalents 
  Interest-bearing deposits in banks 
  Securities available for sale 
 87




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   19.
    FAIR
    VALUE OF ASSETS AND
    LIABILITIES  (Continued)  and/or
  Other equity securities 
  Loans receivable 
  Deposit liabilities 
  Short-term borrowings 
  Long-term borrowings 
  Accrued interest 
  Assets
    and Liabilities Measured at Fair Value on a Recurring
    Basis
    December 31,2008Level 1


Level 2


Level 3


Fair ValueAssetsSecurities available for sale


5,544



104,954



21,859



132,357Total assets

$
5,544


$
104,954


$
21,859


$
132,357  88




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   19.
    FAIR
    VALUE OF ASSETS AND
    LIABILITIES  (Continued)    AssetsSecuritiesAvailable for SaleBalance as of January 1, 2008

$
Total realized/unrealized gains(losses) included in net income


(530
)Total unrealized gains(losses) included in other comprehensive
    income


(7,092
)Purchases, sales, issuances and settlementsTransfers in and/or out of Level 3


29,481Balance as of December 31, 2008

$
21,859Change in unrealized gains/(losses) relating to instruments
    still held at the reporting date

$
(7,092
)   Assets
    Measured at Fair Value on a Non-recurring Basis
    Year EndedDecember 31, 2008December 31, 2008


TotalLevel 1


Level 2


Level 3


Gains/(Losses)AssetsImpaired loans

$



$
4,611


$



$
(652
)Total assets

$



$
4,611


$



$
(652
)    89




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   19.
    FAIR
    VALUE OF ASSETS AND
    LIABILITIES  (Continued)  Summary
    of Fair Values of Financial Instruments
    December 31,2008


2007Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial assets:Cash and cash equivalents

$
33,595


$
33,595


$
62,225


$
62,225Securities available for sale


132,357



132,357



134,544



134,544Securities held to maturity


97



97



97



97Federal Home Loan Bank of Boston stock


10,932



10,932



10,722



10,722Savings Bank Life Insurance stock


1,709



1,709



1,709



1,709Other investments


7,544



7,544



4,982



4,982Loans and loans held for sale


695,264



704,765



654,024



658,526Accrued interest receivable


3,633



3,633



3,404



3,404Financial liabilities:Deposits






613,251



610,447



611,339Repurchase agreements


5,238



5,237



4,055



4,055FHLB advances


197,898



200,836



167,382



169,791Mortgagors escrow accounts


1,015



1,015



1,034



1,034    90




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  20.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL STATEMENTS    BALANCE
    SHEETS
  December 31,2008


2007Cash and cash equilavents

$
4,534


$
3,169Securities at fair value


16,733



24,044Investment in common stock of Legacy Banks


93,955



96,090Investment in common stock of LB Funding Corp.


7,782



8,536Accrued interest receivable


125



219Deferred tax asset






387Other assets


1,218



704Total Assets

$
124,347


$
133,149Deferred tax Liability


92



Accrued expenses and other Liabilities

$
113


$
57Stockholders equity


124,142



133,092Total Liabilities and Stockholders Equity

$
124,347


$
133,149   CONDENSED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2008


2007


2006Income:Dividends from Legacy Banks

$



$
4,000


$
4,000Interest on securities


1,019



1,370



1,622Interest on cash and short-term investments


96



252



168Gain on sale of securities


41







Total Income


1,156



5,622



5,790Operating expenses


1,022



1,024



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


134



4,598



4,661Income tax provision


50



261



919Income before equity in income (loss) of subsidiaries


84



4,337



3,742Equity in undistributed income (loss) of Legacy Banks


1,005



(3,465
)


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


355



373



391Net income

$
1,444


$
1,245


$
2,806  91




---



##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
   20.
    PARENT
    COMPANY-ONLY CONDENSED FINANCIAL
    STATEMENTS  (Continued)  CONDENSED
    STATEMENT OF CASH FLOWS
  Years Ended December 31,2008


2007


2006Cash flows from operating activities:Net income

$
1,444


$
1,245


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


(67
)


(472
)


(Gain) loss on sales of securities, net


(41
)






Equity in undistributed (income) loss of Legacy Banks


(1,005
)


3,465



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


(355
)


(373
)


(391
)Share-based compensation expense


1,624



2,984



417Deferred tax provision


1,093



476



860Net change in:Accrued interest receivable


94



98



(317
)Other assets


(514
)


(702
)


(2
)Accrued expenses and other liabilities


56



46



(18
)Net cash provided by operating activities:


2,329



6,767



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


12,028







Maturities, prepayments and calls


16,854



49,500



69,000Purchases


(23,226
)


(38,748
)


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


5,656



10,752



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


(1,612
)


(1,399
)


(1,145
)Payment of loan from LB Funding


1,109



1,108



1,109Repurchase of common stock


(6,117
)


(20,977
)


Other, net






416



(418
)Net cash used by financing activities:


(6,620
)


(20,852
)


(454
)Net change in cash and cash equivalents


1,365



(3,333
)


2,606Cash and cash equivalents at beginning of year


3,169



6,502



3,896Cash and cash equivalents at end of year

$
4,534


$
3,169


$
6,502   92




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##### Table of Contents



LEGACY
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 (Dollars in Thousands)
  21.
    QUARTERLY
    DATA (UNAUDITED)    2008


2007Fourth


Third


Second


First


Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


QuarterInterest and dividend income

$
12,493


$
12,618


$
12,466


$
12,750


$
12,778


$
12,544


$
12,237


$
11,798Interest expense


5,214



5,353



5,487



6,410



6,829



6,585



6,354



5,742Net interest income


7,279



7,265



6,979



6,340



5,949



5,959



5,883



6,056Provision for loan losses


890



4



346



225



453



160



193



245Non-interest income


(705
)


532



1,428



1,152



1,437



1,497



1,753



1,198Non-interest expenses


6,339



6,835



6,746



6,664



8,160



6,506



6,343



6,180Provision (benefit) for income taxes


(204
)


394



401



186



(733
)


270



385



327Net income (loss)

$
(451
)

$
564


$
914


$
417


$
(494
)

$
520


$
715


$
502Basic earnings (loss) per share

$
(0.06
)

$
0.07


$
0.11


$
0.05



(0.06
)


0.06



0.08



0.05Diluted earnings (loss) per share

$
(0.06
)

$
0.07


$
0.11


$
0.05



(0.06
)


0.06



0.08



0.05         22.
    SUBSEQUENT
    EVENTS   93




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##### 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
        Item 9b.
    Other
    Information   94




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##### Table of Contents



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 SecuritiesWeighted-


Remaining Available forNumber of Securities


Average Exercise


Future Issuance Underto be Issued Upon


Price of


Equity CompensationExercise of


Outstanding


Plans (ExcludingOutstanding Options,


Options, Warrants


Securities Reflected inPlan Category

Warrants and Rights


and Rights


the First Column)Equity compensation plans approved by security holders


804,280


$
15.80



226,580Equity compensation plans not approved by security holders










Total


804,280


$
15.80



226,580   Item 13.
    Certain
    Relationships And Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees And Services   95




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##### Table of Contents



PART IV  Item 15.
    Exhibits And
    Financial Statement Schedules     96




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##### Table of Contents



SIGNATURES    LEGACY BANCORP, INC.
   By:
    /s/  J.
    Williar Dunlaevy   
        /s/  J.
    Williar Dunlaevy   
     /s/  Paul
    H. Bruce    
     /s/  Eugene
    A. Dellea  
   97




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##### Table of Contents



/s/  David
    L. Klausmeyer         /s/  Gary
    A. Lopenzina      /s/  Anne
    W. Pasko        /s/  Robert
    B. Trask        /s/  Dorothy
    B. Winsor      98




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##### Table of Contents



INDEX TO
    EXHIBITS
  2
.1

Amended and Restated Plan of Conversion(1)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
.5.10

Change In Control Agreement between Legacy Bancorp, Inc. and
    Paul H. Bruce(6)10
.5.11

Change In Control Agreement between Legacy Bancorp, Inc. and
    Kimberly A. Mathews(6)10
.5.12

Purchase Agreement by and between The Bank of Western
    Massachusetts and Legacy Banks dated as of December 15,
    2008(7)10
.5.13

Amended and Restated Employment Agreement effective as of
    November 20, 2008 by and between Legacy Bancorp, Inc.,
    Legacy Banks and J. Williar Dunlaevy.(8)10
.5.14

Amended and Restated Employment Agreement effective as of
    November 20, 2008 by and between Legacy Bancorp, Inc.,
    Legacy Banks and Steven F. Pierce.(8)10
.5.15

Amended and Restated Employment Agreement effective as of
    November 20, 2008 by and between Legacy Bancorp, Inc.,
    Legacy Banks and Richard M. Sullivan.(8)10
.5.16

Amended and Restated Supplemental Executive Retirement Agreement
    effective as of November 20, 2008 by and between Legacy
    Bancorp, Inc., Legacy Banks and J. Williar Dunlaevy.(8)10
.11

2007 Equity Incentive Plan(3)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 Paul H. Bruce32


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. 99




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##### Table of Contents



(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.(6)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K
    filed October 30, 2008.(7)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K
    filed December 16, 2008.(8)
    
    Incorporated by reference from the Registrants Current
    Report on
    Form 8-K
    filed November 25, 2008. 100