##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM ______ TO ______
 COMMISSION FILE NUMBER : 000-51525
 LEGACY BANCORP, INC.
  Delaware
    
    20-3135053(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)
 99 NORTH STREET
PITTSFIELD, MASSACHUSETTS 01201
 (413) 443-4421
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
 8,704,312




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##### 



LEGACY BANCORP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page No.Part I  Financial InformationItem 1
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2010
and December 31, 2009
    
    
    2Consolidated Statements of Operations for the three
months ended March 31, 2010 and 2009
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the three months ended March 31, 2010 and 2009
    
    
    4Consolidated Statements of Cash Flows for the three
months ended March 31, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    
    26Item 4
    
    Controls and Procedures
    
    
    26Part II  Other InformationItem 1
    
    Legal Proceedings
    
    
    27Item 1A
    
    Risk Factors
    
    
    27Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3
    
    Defaults Upon Senior Securities
    
    
    27Item 4
    
    (Removed and
Reserved)
    
    
    27Item 5
    
    Other Information
    
    
    27Item 6
    
    Exhibits
    
    
    28EX-31.1EX-31.2EX-32
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1: Financial Statements
 
 LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCash and due from banks
    
    $
    14,073
    
    
    $
    11,281Short-term investments
    
    
    24,470
    
    
    
    28,874Cash and cash equivalents
    
    
    38,543
    
    
    
    40,155Securities  Available for sale
    
    
    180,195
    
    
    
    167,426Securities  Held to maturity
    
    
    97
    
    
    
    97Restricted equity securities and other investments  at cost
    
    
    17,090
    
    
    
    17,193Loans held for sale
    
    
    1,018
    
    
    
    706Loans, net of allowance for loan losses of $8,099
in 2010 and $11,089 in 2009
    
    
    639,560
    
    
    
    652,628Premises and equipment, net
    
    
    19,654
    
    
    
    19,568Accrued interest receivable
    
    
    3,191
    
    
    
    3,306Goodwill, net
    
    
    9,730
    
    
    
    9,730Net deferred tax asset
    
    
    8,810
    
    
    
    10,202Bank-owned life insurance
    
    
    16,419
    
    
    
    16,263Foreclosed assets
    
    
    1,781
    
    
    
    1,195Other assets
    
    
    10,136
    
    
    
    7,796$
    946,224
    
    
    $
    946,265LIABILITIES AND STOCKHOLDERS EQUITYDeposits:Noninterest-bearing
    
    $
    68,491
    
    
    $
    75,232Interest-bearing
    
    
    592,753
    
    
    
    576,146Total deposits
    
    
    661,244
    
    
    
    651,378Securities sold under agreements to repurchase
    
    
    6,165
    
    
    
    6,386Federal Home Loan Bank advances
    
    
    150,349
    
    
    
    160,352Mortgagors escrow accounts
    
    
    1,095
    
    
    
    1,058Accrued expenses and other liabilities
    
    
    7,047
    
    
    
    5,724Total liabilities
    
    
    825,900
    
    
    
    824,898Commitments 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 March 31, 2010 and
December 31, 2009; 8,719,512 outstanding at March 31, 2010
and 8,734,712 outstanding at December 31, 2009)
    
    
    103
    
    
    
    103Additional paid-in-capital
    
    
    102,857
    
    
    
    102,788Unearned Compensation  ESOP
    
    
    (7,139
    )
    
    
    (7,322
    )Unearned Compensation  Equity Incentive Plan
    
    
    (1,858
    )
    
    
    (2,078
    )Retained earnings
    
    
    47,295
    
    
    
    48,998Accumulated other comprehensive income
    
    
    1,044
    
    
    
    711Treasury stock, at cost (1,589,088 shares at March 31, 2010
and 1,573,888 shares at December 31, 2009)
    
    
    (21,978
    )
    
    
    (21,833
    )Total stockholders equity
    
    
    120,324
    
    
    
    121,367$
    946,224
    
    
    $
    946,265
  2




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
 Three Months Ended March 31,2010
    
    
    2009(Unaudited)Interest and dividend income:Loans
    
    $
    9,296
    
    
    $
    10,033Securities:Taxable
    
    
    1,185
    
    
    
    1,746Tax-Exempt
    
    
    167
    
    
    
    154Short-term investments
    
    
    6
    
    
    
    4Total interest and dividend income
    
    
    10,654
    
    
    
    11,937Interest expense:Deposits
    
    
    2,439
    
    
    
    3,005Federal Home Loan Bank advances
    
    
    1,449
    
    
    
    1,954Other borrowed funds
    
    
    10
    
    
    
    19Total interest expense
    
    
    3,898
    
    
    
    4,978Net interest income
    
    
    6,756
    
    
    
    6,959Provision for loan losses
    
    
    2,421
    
    
    
    728Net interest income after provision for loan losses
    
    
    4,335
    
    
    
    6,231Non-interest income:Customer service fees
    
    
    722
    
    
    
    680Portfolio management fees
    
    
    280
    
    
    
    221Income from bank owned life insurance
    
    
    154
    
    
    
    172Insurance, annuities and mutual fund fees
    
    
    20
    
    
    
    22Gain (loss) on sales of securities, net
    
    
    101
    
    
    
    (19
    )Impairment losses on securities, net
    
    
    (299
    )
    
    
    (1,581
    )Gain on sales of loans, net
    
    
    60
    
    
    
    199Miscellaneous
    
    
    11
    
    
    
    12Total non-interest income
    
    
    1,049
    
    
    
    (294
    )Non-interest expenses:Salaries and employee benefits
    
    
    3,475
    
    
    
    3,444Occupancy and equipment
    
    
    991
    
    
    
    1,049Data processing
    
    
    694
    
    
    
    664Professional fees
    
    
    323
    
    
    
    245Advertising
    
    
    319
    
    
    
    326FDIC deposit insurance
    
    
    269
    
    
    
    250Other general and administrative
    
    
    1,102
    
    
    
    1,099Total non-interest expenses
    
    
    7,173
    
    
    
    7,077Income (loss) before income taxes
    
    
    (1,789
    )
    
    
    (1,140
    )Provision (benefit) for income taxes
    
    
    (545
    )
    
    
    (348
    )Net income (loss)
    
    $
    (1,244
    )
    
    $
    (792
    )Earnings (loss) per shareBasic
    
    $
    (0.15
    )
    
    $
    (0.10
    )Diluted
    
    $
    (0.15
    )
    
    $
    (0.10
    )Weighted average shares outstandingBasic
    
    
    8,028,621
    
    
    
    7,977,953Diluted
    
    
    8,028,621
    
    
    
    7,977,953
  3




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Dollars in thousands, except per share amounts)
(Unaudited)
 Unearned
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    Unearned
    
    
    Compensation 
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Compensation 
    
    
    Equity
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    ESOP
    
    
    Incentive Plan
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at December 31, 2008
    
    
    8,781,912
    
    
    $
    103
    
    
    $
    102,475
    
    
    $
    (8,055
    )
    
    $
    (2,727
    )
    
    $
    58,534
    
    
    $
    (4,722
    )
    
    $
    (21,466
    )
    
    $
    124,142Comprehensive income (loss):Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (792
    )
    
    
    
    
    
    
    
    
    
    
    (792
    )Net unrealized gain/loss on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    
    
    
    
    706Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86
    )Cash dividends declared ($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (403
    )
    
    
    
    
    
    
    
    
    
    
    (403
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210Common stock held by ESOP committed
to be released (13,745 shares)
    
    
    
    
    
    
    
    
    
    
    (52
    )
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131Balance at March 31, 2009
    
    
    8,781,912
    
    
    $
    103
    
    
    $
    102,541
    
    
    $
    (7,872
    )
    
    $
    (2,517
    )
    
    $
    57,339
    
    
    $
    (4,016
    )
    
    $
    (21,466
    )
    
    $
    124,112Balance at December 31, 2009
    
    
    8,734,712
    
    
    $
    103
    
    
    $
    102,788
    
    
    $
    (7,322
    )
    
    $
    (2,078
    )
    
    $
    48,998
    
    
    $
    711
    
    
    $
    (21,833
    )
    
    $
    121,367Comprehensive income (loss):Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,244
    )
    
    
    
    
    
    
    
    
    
    
    (1,244
    )Net unrealized gain/loss on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    333Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (911
    )Cash dividends declared ($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (408
    )
    
    
    
    
    
    
    
    
    
    
    (408
    )Common stock repurchased  5% stock repurchase
Program announced March 2009
    
    
    (15,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145
    )
    
    
    (145
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220Common stock held by ESOP committed
to be released (13,745 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    
    
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    132Balance at March 31, 2010
    
    
    8,719,512
    
    
    $
    103
    
    
    $
    102,857
    
    
    $
    (7,139
    )
    
    $
    (1,858
    )
    
    $
    47,295
    
    
    $
    1,044
    
    
    $
    (21,978
    )
    
    $
    120,324
  4




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 Three months ended March 31,2010
    
    
    2009Cash flows from operating activities:Net (loss) income
    
    $
    (1,244
    )
    
    $
    (792
    )Adjustments to reconcile net loss to net cash
provided (used) by operating activities:Provision for loan losses
    
    
    2,421
    
    
    
    728Net amortization of securities
    
    
    205
    
    
    
    43Amortization of core deposit intangible
    
    
    177
    
    
    
    168Depreciation and amortization expense
    
    
    395
    
    
    
    399Loss on sales/impairment of securities, net
    
    
    198
    
    
    
    1,600Loss on sales of foreclosed real estate, net
    
    
    75
    
    
    
    Gain on sales of loans, net
    
    
    (60
    )
    
    
    (199
    )Loans originated for sale
    
    
    (5,667
    )
    
    
    (15,148
    )Proceeds from sales of loans
    
    
    5,415
    
    
    
    14,252Share-based compensation expense
    
    
    289
    
    
    
    328Deferred tax provision (benefit)
    
    
    1,195
    
    
    
    (433
    )Employee Stock Ownership Plan expense
    
    
    132
    
    
    
    131Net change in:Bank-owned life insurance
    
    
    (156
    )
    
    
    (173
    )Accrued interest receivable
    
    
    115
    
    
    
    168Other assets
    
    
    (2,517
    )
    
    
    (2
    )Accrued expenses and other liabilities
    
    
    1,323
    
    
    
    (1,654
    )Net cash provided (used) by operating activities
    
    
    2,296
    
    
    
    (584
    )Cash flows from investing activities:Activity in available-for-sale securities:Sales
    
    
    2,141
    
    
    
    20,607Maturities, prepayments and calls
    
    
    28,010
    
    
    
    12,919Purchases
    
    
    (42,494
    )
    
    
    (56,405
    )Purchase of other investments
    
    
    (196
    )
    
    
    (470
    )Loan originations and purchases, net of principal payments
    
    
    9,986
    
    
    
    2,781Additions to premises and equipment
    
    
    (481
    )
    
    
    (344
    )Net cash received in branch acquisition
    
    
    
    
    
    
    9,031Net cash provided (used) by investing activities
    
    
    (3,034
    )
    
    
    (11,881
    )
   5




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in thousands)
 Three months ended March 31,2010
    
    
    2009(Unaudited)Cash flows from financing activities:Net increase in deposits
    
    
    9,866
    
    
    
    25,753Net increase in securities sold under
agreements to repurchase
    
    
    (221
    )
    
    
    (24
    )Repayment of Federal Home Loan Bank advances
    
    
    (13,021
    )
    
    
    (10,501
    )Proceeds from Federal Home Loan Bank advances
    
    
    3,018
    
    
    
    Net increase in mortgagors escrow accounts
    
    
    37
    
    
    
    61Repurchase of common stock
    
    
    (145
    )
    
    
    Payment of dividends on common stock
    
    
    (408
    )
    
    
    (403
    )Net cash provided (used) by financing activities
    
    
    (874
    )
    
    
    14,886Net change in cash and cash equivalents
    
    
    (1,612
    )
    
    
    2,421Cash and cash equivalents at beginning of period
    
    
    40,155
    
    
    
    33,595Cash and cash equivalents at end of period
    
    $
    38,543
    
    
    $
    36,016Supplemental cash flow information:Interest paid on deposits
    
    $
    2,497
    
    
    $
    4,632Interest paid on Federal Home Loan Bank advances
    
    
    1,433
    
    
    
    1,905Interest paid on other borrowed funds
    
    
    10
    
    
    
    19Income taxes paid
    
    
    100
    
    
    
    1,350Non-cash activities:Real estate acquired through foreclosure
    
    
    708
    
    
    
    
  6




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##### Table of Contents



LEGACY BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of presentation
  2. Recent Accounting Pronouncements
    3. Earnings Per Share
  7




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##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009Net (loss) income applicable to common stock (000s)
    
    $
    (1,244
    )
    
    $
    (792
    )Average number of shares issued
    
    
    10,308,600
    
    
    
    10,308,600Less: average unallocated ESOP shares
    
    
    (549,640
    )
    
    
    (604,619
    )Less: average treasury shares
    
    
    (1,581,449
    )
    
    
    (1,526,688
    )Less: average unvested restricted stock awards
    
    
    (148,890
    )
    
    
    (199,340
    )Average number of basic shares outstanding
    
    
    8,028,621
    
    
    
    7,977,953Plus: dilutive unvested restricted stock awards
    
    
    
    
    
    
    Plus: diluted stock option shares
    
    
    
    
    
    
    Average number of diluted shares outstanding
    
    
    8,028,621
    
    
    
    7,977,953Basic earnings (loss) per share
    
    $
    (0.15
    )
    
    $
    (0.10
    )Diluted earnings (loss) per share
    
    $
    (0.15
    )
    
    $
    (0.10
    )
 4. Comprehensive Income (Loss)
   Three Months Ended March 31,2010
    
    
    2009SecuritiesNet unrealized holding gains (losses) on available for sale (AFS) securities
    
    $
    631
    
    
    $
    (104
    )Reclassification adjustment for (gains) losses on sales of AFS securities
    
    
    (101
    )
    
    
    19Reclassification adjustment for OTTI losses on AFS securities
    
    
    
    
    
    
    1,143530
    
    
    
    1,058Tax effect
    
    
    (197
    )
    
    
    (352
    )Net-of-tax amount
    
    $
    333
    
    
    $
    706
  8




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)SecuritiesNet unrealized holding gains (losses)
on available for sale securities
    
    $
    2,266
    
    
    $
    1,736Tax effects
    
    
    (861
    )
    
    
    (664
    )Net-of-tax amount
    
    
    1,405
    
    
    
    1,072Directors Fee PlanUnrecognized net actuarial loss and prior service costs
    
    
    (611
    )
    
    
    (611
    )Tax effect
    
    
    250
    
    
    
    250Net-of-tax amount
    
    
    (361
    )
    
    
    (361
    )$
    1,044
    
    
    $
    711
 5. Dividends
  6. Commitments and Other Contingencies
   7. Securities
  March 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises (GSE)
    
    $
    91,117
    
    
    $
    277
    
    
    $
    (161
    )
    
    $
    91,233Municipal
    
    
    17,034
    
    
    
    402
    
    
    
    (77
    )
    
    
    17,359Corporate and other
    
    
    1,318
    
    
    
    29
    
    
    
    
    
    
    
    1,347GSE residential mortgage-backed
    
    
    27,869
    
    
    
    998
    
    
    
    (59
    )
    
    
    28,808U.S. Government guaranteed residential mortgage-backed
    
    
    37,471
    
    
    
    331
    
    
    
    (175
    )
    
    
    37,627Total debt securities
    
    
    174,809
    
    
    
    2,037
    
    
    
    (472
    )
    
    
    176,374Marketable equity securities
    
    
    3,120
    
    
    
    744
    
    
    
    (43
    )
    
    
    3,821Total securities available for sale
    
    $
    177,929
    
    
    $
    2,781
    
    
    $
    (515
    )
    
    $
    180,195Securities Held to MaturityOther bonds and obligations
    
    $
    97
    
    
    $
    
    
    
    $
    
    
    
    $
    97
 9




---



##### Table of Contents



December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for SaleDebt securities:Government-sponsored enterprises (GSE)
    
    $
    80,393
    
    
    $
    138
    
    
    $
    (555
    )
    
    $
    79,976Municipal
    
    
    17,521
    
    
    
    398
    
    
    
    (44
    )
    
    
    17,875Corporate and other
    
    
    1,321
    
    
    
    30
    
    
    
    
    
    
    
    1,351GSE residential mortgage-backed
    
    
    29,591
    
    
    
    983
    
    
    
    (71
    )
    
    
    30,503U.S. Government guaranteed residential mortgage-backed
    
    
    33,625
    
    
    
    248
    
    
    
    (237
    )
    
    
    33,636Total debt securities
    
    
    162,451
    
    
    
    1,797
    
    
    
    (907
    )
    
    
    163,341Marketable equity securities
    
    
    3,239
    
    
    
    889
    
    
    
    (43
    )
    
    
    4,085Total securities available for sale
    
    $
    165,690
    
    
    $
    2,686
    
    
    $
    (950
    )
    
    $
    167,426Securities Held to MaturityOther bonds and obligations
    
    $
    97
    
    
    $
    
    
    
    $
    
    
    
    $
    97
  Available for Sale
    
    
    Held to MaturityAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueWithin 1 year
    
    $
    7,590
    
    
    $
    7,603
    
    
    $
    
    
    
    $
    Over 1 year to 5 years
    
    
    53,900
    
    
    
    54,069
    
    
    
    82
    
    
    
    82Over 5 years to 10 years
    
    
    25,516
    
    
    
    25,660
    
    
    
    
    
    
    
    Over 10 years
    
    
    22,463
    
    
    
    22,607
    
    
    
    15
    
    
    
    15Total bonds and obligations
    
    
    109,469
    
    
    
    109,939
    
    
    
    97
    
    
    
    97Mortgage-backed
    
    
    65,340
    
    
    
    66,435
    
    
    
    
    
    
    
    Total debt securities
    
    $
    174,809
    
    
    $
    176,374
    
    
    $
    97
    
    
    $
    97
   10




---



##### Table of Contents



Less Than Twelve Months
    
    
    Over Twelve MonthsGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    ValueMarch 31, 2010:Debt securities:Government-sponsored enterprises (GSE)
    
    $
    159
    
    
    $
    28,780
    
    
    $
    2
    
    
    $
    1,498Municipal
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    2,664GSE residential mortgage-backed
    
    
    34
    
    
    
    2,350
    
    
    
    25
    
    
    
    1,580U.S. Government guaranteed residential mortgage-backed
    
    
    168
    
    
    
    17,759
    
    
    
    7
    
    
    
    1,111Total debt securities
    
    
    361
    
    
    
    48,889
    
    
    
    111
    
    
    
    6,853Marketable equity securities
    
    
    15
    
    
    
    431
    
    
    
    28
    
    
    
    105Total temporarily impaired securities
    
    $
    376
    
    
    $
    49,320
    
    
    $
    139
    
    
    $
    6,958December 31, 2009:Debt securities:Government-sponsored enterprises (GSE)
    
    $
    555
    
    
    $
    46,751
    
    
    $
    
    
    
    $
    Municipal
    
    
    2
    
    
    
    818
    
    
    
    42
    
    
    
    2,472GSE residential mortgage-backed
    
    
    38
    
    
    
    2,983
    
    
    
    33
    
    
    
    1,779U.S. Government guaranteed residential mortgage-backed
    
    
    237
    
    
    
    19,171
    
    
    
    
    
    
    
    Total debt securities
    
    
    832
    
    
    
    69,723
    
    
    
    75
    
    
    
    4,251Marketable equity securities
    
    
    35
    
    
    
    472
    
    
    
    8
    
    
    
    226Total temporarily impaired securities
    
    $
    867
    
    
    $
    70,195
    
    
    $
    83
    
    
    $
    4,477
  Gross# of
    
    Amortized
    
    Unrealized
    
    % ofSecurities
    
    Cost
    
    Loss
    
    DepreciationGovernment-sponsored enterprises (GSE)
    
    
    39
    
    
    $
    30,439
    
    
    $
    161
    
    
    
    0.5
    %Municipal
    
    
    10
    
    
    
    2,741
    
    
    
    77
    
    
    
    2.8
    %GSE residential mortgage-backed
    
    
    4
    
    
    
    3,989
    
    
    
    59
    
    
    
    1.5
    %U.S. Government guaranteed residential mortgage-backed
    
    
    25
    
    
    
    19,045
    
    
    
    175
    
    
    
    0.9
    %
    11




---



##### Table of Contents



8. Fair Values of Assets and Liabilities
      Cash and cash equivalents
 Interest-bearing deposits in banks
 Securities available for sale
 Federal Home Loan Bank stock
 Restricted equity securities and other investments
 Loans receivable
 12




---



##### Table of Contents



Deposit liabilities
 Short-term borrowings
 Long-term borrowings
 Accrued interest
  March 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueAssetsDebt Securities:Government-sponsored enterprises (GSE)
    
    $
    
    
    
    $
    91,233
    
    
    $
    
    
    
    $
    91,233Municipal bonds
    
    
    
    
    
    
    17,359
    
    
    
    
    
    
    
    17,359Corporate bonds and other obligations
    
    
    
    
    
    
    1,347
    
    
    
    
    
    
    
    1,347GSE residential mortgage-backed
    
    
    
    
    
    
    28,808
    
    
    
    
    
    
    
    28,808U.S. Government guaranteed residential mortagage-backed
    
    
    
    
    
    
    37,627
    
    
    
    
    
    
    
    37,627Common stock
    
    
    3,821
    
    
    
    
    
    
    
    
    
    
    
    3,821Securities available for sale
    
    
    3,821
    
    
    
    176,374
    
    
    
    
    
    
    
    180,195Total assets
    
    $
    3,821
    
    
    $
    176,374
    
    
    $
    
    
    
    $
    180,195
 December 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueAssetsDebt Securities:Government-sponsored enterprises (GSE)
    
    $
    
    
    
    $
    79,976
    
    
    $
    
    
    
    $
    79,976Municipal bonds
    
    
    
    
    
    
    17,875
    
    
    
    
    
    
    
    17,875Corporate bonds and other obligations
    
    
    
    
    
    
    1,351
    
    
    
    
    
    
    
    1,351GSE residential mortgage-backed
    
    
    
    
    
    
    30,503
    
    
    
    
    
    
    
    30,503U.S. Government guaranteed residential mortagage-backed
    
    
    
    
    
    
    33,636
    
    
    
    
    
    
    
    33,636Common stock
    
    
    4,085
    
    
    
    
    
    
    
    
    
    
    
    4,085Securities available for sale
    
    
    4,085
    
    
    
    163,341
    
    
    
    
    
    
    
    167,426Total assets
    
    $
    4,085
    
    
    $
    163,341
    
    
    $
    
    
    
    $
    167,426
   13




---



##### Table of Contents



Quarter EndedMarch 31, 2010
    
    
    March 31, 2010TotalLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Gains/(Losses)(Dollars in thousands)AssetsImpaired loans
    
    $
    
    
    
    $
    
    
    
    $
    16,380
    
    
    $
    (2,103
    )Other investments
    
    
    
    
    
    
    
    
    
    
    4,449
    
    
    
    (299
    )Foreclosed assets
    
    
    
    
    
    
    
    
    
    
    1,781
    
    
    
    (75
    )Total assets
    
    $
    
    
    
    $
    
    
    
    $
    22,610
    
    
    $
    (2,477
    )
 Quarter EndedMarch 31, 2009
    
    
    March 31, 2009TotalLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Gains/(Losses)(Dollars in thousands)AssetsImpaired loans
    
    $
    
    
    
    $
    3,589
    
    
    $
    
    
    
    $
    (554
    )Total assets
    
    $
    
    
    
    $
    3,589
    
    
    $
    
    
    
    $
    (554
    )
    Summary of Fair Values of Financial Instruments
  14




---



##### Table of Contents



March 31, 2010
    
    December 31, 2009Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    38,543
    
    
    $
    38,543
    
    
    $
    40,155
    
    
    $
    40,155Securities  Available for sale
    
    
    180,195
    
    
    
    180,195
    
    
    
    167,426
    
    
    
    167,426Securities  Held to maturity
    
    
    97
    
    
    
    97
    
    
    
    97
    
    
    
    97Federal Home Loan Bank of
Boston stock
    
    
    10,932
    
    
    
    10,932
    
    
    
    10,932
    
    
    
    10,932Savings Bank Life Insurance stock
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709Other investments
    
    
    4,449
    
    
    
    4,449
    
    
    
    4,552
    
    
    
    4,552Loans and loans held for sale
    
    
    640,578
    
    
    
    647,972
    
    
    
    653,334
    
    
    
    656,978Accrued interest receivable
    
    
    3,191
    
    
    
    3,191
    
    
    
    3,306
    
    
    
    3,306Financial liabilities:Deposits
    
    
    661,244
    
    
    
    666,377
    
    
    
    651,378
    
    
    
    656,038Repurchase agreements
    
    
    6,165
    
    
    
    6,165
    
    
    
    6,386
    
    
    
    6,386FHLB advances
    
    
    150,349
    
    
    
    157,745
    
    
    
    160,352
    
    
    
    167,331Mortgagors escrow accounts
    
    
    1,095
    
    
    
    1,095
    
    
    
    1,058
    
    
    
    1,058
 
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  Critical Accounting Policies
  Allowance for Loan Losses. Allowance for
Loan Losses Comparison of Financial Condition
 15




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##### Table of Contents



Income Taxes.
  Other-Than-Temporary Impairment (OTTI).
 Fair Values of Assets and Liabilities: Fair Values of Assets and Liabilities
 Goodwill.
   Comparison of Financial Condition at March 31, 2010 and December 31, 2009
 Overview:
 Investment Activities
 16




---



##### Table of Contents



At March 31, 2010
    
    
    At December 31, 2009Amortized Cost
    
    
    Fair Value
    
    
    Amortized Cost
    
    
    Fair Value(Dollars in Thousands)Securities available for sale:Government-sponsored enterprises (GSE)
    
    $
    91,117
    
    
    $
    91,233
    
    
    $
    80,393
    
    
    $
    79,976Municipal bonds
    
    
    17,034
    
    
    
    17,359
    
    
    
    17,521
    
    
    
    17,875Corporate bonds and other obligations
    
    
    1,318
    
    
    
    1,347
    
    
    
    1,321
    
    
    
    1,351GSE residential mortgage-backed
    
    
    27,869
    
    
    
    28,808
    
    
    
    29,591
    
    
    
    30,503U.S. Government guaranteed residential mortagage-backed
    
    
    37,471
    
    
    
    37,627
    
    
    
    33,625
    
    
    
    33,636Total debt securities
    
    
    174,809
    
    
    
    176,374
    
    
    
    162,451
    
    
    
    163,341Common stock
    
    
    3,120
    
    
    
    3,821
    
    
    
    3,239
    
    
    
    4,085Total securities available for sale
    
    
    177,929
    
    
    
    180,195
    
    
    
    165,690
    
    
    
    167,426Securities held to maturity:Other bonds and obligations
    
    
    97
    
    
    
    97
    
    
    
    97
    
    
    
    97Restricted equity securities and other investments:Federal Home Loan Bank of Boston stock
    
    
    10,932
    
    
    
    10,932
    
    
    
    10,932
    
    
    
    10,932Savings Bank Life Insurance
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709Real estate partnerships
    
    
    4,296
    
    
    
    4,296
    
    
    
    4,397
    
    
    
    4,397Other investments
    
    
    153
    
    
    
    153
    
    
    
    155
    
    
    
    155Total restricted equity securities
and other investments
    
    
    17,090
    
    
    
    17,090
    
    
    
    17,193
    
    
    
    17,193Total securities
    
    $
    195,116
    
    
    $
    197,382
    
    
    $
    182,980
    
    
    $
    184,716
 Lending Activities:
 17




---



##### Table of Contents



At March 31, 2010
    
    
    At December 31, 2009Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Mortgage loans on real estate:Residential
    
    $
    279,419
    
    
    
    43.23
    %
    
    $
    285,618
    
    
    
    43.12
    %Commercial
    
    
    254,866
    
    
    
    39.44
    
    
    
    263,910
    
    
    
    39.85Home equity
    
    
    68,771
    
    
    
    10.64
    
    
    
    69,625
    
    
    
    10.51603,056
    
    
    
    93.31
    
    
    
    619,153
    
    
    
    93.48Other loans:Commercial
    
    
    31,829
    
    
    
    4.93
    
    
    
    31,373
    
    
    
    4.74Consumer and other
    
    
    11,401
    
    
    
    1.76
    
    
    
    11,791
    
    
    
    1.7843,230
    
    
    
    6.69
    
    
    
    43,164
    
    
    
    6.52Total loans
    
    
    646,286
    
    
    
    100.00
    %
    
    
    662,317
    
    
    
    100.00
    %Other Items:Net deferred loan costs
    
    
    1,373
    
    
    
    
    
    
    
    1,400Allowance for loan losses
    
    
    (8,099
    )
    
    
    
    
    
    
    (11,089
    )Total Loans, net
    
    $
    639,560
    
    
    
    
    
    
    $
    652,628
  Non-performing Assets:
 18




---



##### Table of Contents



At March 31,
    
    
    At December 31,2010
    
    
    2009(Dollars in Thousands)Non-accrual loans:Residential mortgage
    
    $
    3,519
    
    
    $
    4,822Commercial mortgage
    
    
    7,974
    
    
    
    13,942Commercial
    
    
    666
    
    
    
    743Home equity, consumer and other
    
    
    9
    
    
    
    71Total non-accrual loans
    
    
    12,168
    
    
    
    19,578Loans 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
    
    
    12,168
    
    
    
    19,578Other real estate owned
    
    
    1,781
    
    
    
    1,195Total non-performing assets (NPAs)
    
    $
    13,949
    
    
    $
    20,773Troubled debt restructurings included in NPAs
    
    $
    3,514
    
    
    $
    5,905Troubled debt restructurings not included in NPAs
    
    
    5,526
    
    
    
    4,887Total troubled debt restructurings
    
    $
    9,040
    
    
    $
    10,792Ratios:Non-performing loans to total loans
    
    
    1.88
    %
    
    
    2.96
    %Non-performing assets to total assets
    
    
    1.47
    %
    
    
    2.20
    %
  Allowance for Loan Losses :
  19




---



##### Table of Contents



20




---



##### Table of Contents



At or for the three monthsended March 31,2010
    
    
    2009(Dollars in Thousands)Balance at beginning of period
    
    $
    11,089
    
    
    $
    6,642Charge-offs:Mortgage loans on real estate:
    
    
    (35
    )
    
    
    Other loans:Commercial
    
    
    (5,375
    )
    
    
    (14
    )Consumer and other
    
    
    (20
    )
    
    
    (57
    )Total other loans
    
    
    (5,395
    )
    
    
    (71
    )Total charge-offs
    
    
    (5,430
    )
    
    
    (71
    )Recoveries:Mortgage loans on real estate
    
    
    
    
    
    
    Other loans:Commercial
    
    
    
    
    
    
    12Consumer and other
    
    
    19
    
    
    
    19Total other loans
    
    
    19
    
    
    
    31Total recoveries
    
    
    19
    
    
    
    31Net recoveries (charge-offs)
    
    
    (5,411
    )
    
    
    (40
    )Provision for loan losses
    
    
    2,421
    
    
    
    728Balance at end of period
    
    $
    8,099
    
    
    $
    7,330Ratios:Net
recoveries (charge-offs) to average loans outstanding  12 month
rolling average
    
    
    (0.88
    %)
    
    
    (0.04
    %)Allowance for loan losses to non-performing loans at end of period
    
    
    66.56
    %
    
    
    65.42
    %Allowance for loan losses to total loans at end of period
    
    
    1.25
    %
    
    
    1.05
    %
 Deposits
 At March 31, 2010
    
    
    At December 31, 2009Balance
    
    
    Percent
    
    
    Balance
    
    
    Percent(Dollars in Thousands)Deposit type:Demand
    
    $
    68,491
    
    
    
    10.36
    %
    
    $
    75,232
    
    
    
    11.55
    %Regular savings
    
    
    51,563
    
    
    
    7.80
    
    
    
    49,883
    
    
    
    7.66Relationship savings
    
    
    138,761
    
    
    
    20.99
    
    
    
    125,328
    
    
    
    19.24Money market deposits
    
    
    71,453
    
    
    
    10.80
    
    
    
    63,077
    
    
    
    9.68NOW deposits
    
    
    43,895
    
    
    
    6.64
    
    
    
    48,546
    
    
    
    7.45Total transaction accounts
    
    
    374,163
    
    
    
    56.58
    
    
    
    362,066
    
    
    
    55.58Term certificates less than $100,000
    
    
    170,709
    
    
    
    26.02
    
    
    
    174,284
    
    
    
    26.76Term certificates $100,000 or more
    
    
    116,372
    
    
    
    17.40
    
    
    
    115,028
    
    
    
    17.66Total certificate accounts
    
    
    287,081
    
    
    
    43.42
    
    
    
    289,312
    
    
    
    44.42Total deposits
    
    $
    661,244
    
    
    
    100.00
    %
    
    $
    651,378
    
    
    
    100.00
    %
  21




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##### Table of Contents



Borrowings:
 Stockholders Equity:
 Comparison of Operating Results for the Three Months Ended March 31, 2010 and 2009
  Analysis of Net Interest Income
   22




---



##### Table of Contents



Three Months Ended March 31, 2010
    
    
    Three Months Ended March 31, 2009Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/ Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate(1)(Dollars in thousands)Interest-earning assets:Loans  Net (2)
    
    $
    647,710
    
    
    $
    9,296
    
    
    
    5.74
    %
    
    $
    694,359
    
    
    $
    10,033
    
    
    
    5.78
    %Investment securities
    
    
    190,406
    
    
    
    1,352
    
    
    
    2.84
    %
    
    
    158,293
    
    
    
    1,900
    
    
    
    4.80
    %Short-term investments
    
    
    15,743
    
    
    
    6
    
    
    
    0.15
    %
    
    
    22,121
    
    
    
    4
    
    
    
    0.07
    %Total interest-earning assets
    
    
    853,859
    
    
    
    10,654
    
    
    
    4.99
    %
    
    
    874,773
    
    
    
    11,937
    
    
    
    5.46
    %Non-interest-earning assets
    
    
    78,336
    
    
    
    
    
    
    
    
    
    
    
    73,681Total assets
    
    $
    932,195
    
    
    
    
    
    
    
    
    
    
    $
    948,454Interest-bearing liabilities:Savings deposits
    
    $
    50,232
    
    
    
    33
    
    
    
    0.26
    %
    
    $
    50,142
    
    
    
    48
    
    
    
    0.38
    %Relationship savings
    
    
    128,198
    
    
    
    324
    
    
    
    1.01
    %
    
    
    123,614
    
    
    
    478
    
    
    
    1.55
    %Money market
    
    
    64,336
    
    
    
    131
    
    
    
    0.81
    %
    
    
    57,454
    
    
    
    199
    
    
    
    1.39
    %NOW accounts
    
    
    44,208
    
    
    
    34
    
    
    
    0.31
    %
    
    
    41,486
    
    
    
    49
    
    
    
    0.47
    %Certificates of deposits
    
    
    289,174
    
    
    
    1,917
    
    
    
    2.65
    %
    
    
    279,579
    
    
    
    2,231
    
    
    
    3.19
    %Total interest-bearing
deposits
    
    
    576,148
    
    
    
    2,439
    
    
    
    1.69
    %
    
    
    552,275
    
    
    
    3,005
    
    
    
    2.18
    %Borrowed funds
    
    
    160,469
    
    
    
    1,459
    
    
    
    3.64
    %
    
    
    198,926
    
    
    
    1,973
    
    
    
    3.97
    %Total interest-bearing
liabilities
    
    
    736,617
    
    
    
    3,898
    
    
    
    2.12
    %
    
    
    751,201
    
    
    
    4,978
    
    
    
    2.65
    %Non-interest-bearing
liabilities
    
    
    71,916
    
    
    
    
    
    
    
    
    
    
    
    71,839Total liabilities
    
    
    808,533
    
    
    
    
    
    
    
    
    
    
    
    823,040Equity
    
    
    123,662
    
    
    
    
    
    
    
    
    
    
    
    125,414Total liabilities and equity
    
    $
    932,195
    
    
    
    
    
    
    
    
    
    
    $
    948,454Net interest income
    
    
    
    
    
    $
    6,756
    
    
    
    
    
    
    
    
    
    
    $
    6,959Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.87
    %
    
    
    
    
    
    
    
    
    
    
    2.81
    %Net interest-earning assets (4)
    
    $
    117,242
    
    
    
    
    
    
    
    
    
    
    $
    123,572Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.16
    %
    
    
    
    
    
    
    
    
    
    
    3.18
    %Average interest-earning
assets to interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    115.92
    %
    
    
    
    
    
    
    
    
    
    
    116.45
    %
 
 (1)
    
    Yields and rates for the three months ended March 31, 2010 and 2009 are annualized.(2)
    
    Includes loans held for sale.(3)
    
    Net interest rate spread represents the difference between the yield on total average interest-earning assets and the cost of total average
interest-bearing liabilities for the three months ended March 31, 2010 and 2009.(4)
    
    Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average total interest-earning assets.  23




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##### Table of Contents



Three Months Ended March 31,2010 vs. 2009Increase(Decrease) Due to
    
    TotalIncreaseVolume
    
    Rate
    
    (Decrease)(Dollars in thousands)Interest-earning assets:Loans  Net
    
    $
    (669
    )
    
    $
    (68
    )
    
    $
    (737
    )Investment securities
    
    
    540
    
    
    
    (1,088
    )
    
    
    (548
    )Short-term investments
    
    
    (1
    )
    
    
    3
    
    
    
    2Total interest-earning assets
    
    
    (130
    )
    
    
    (1,153
    )
    
    
    (1,283
    )Interest-bearing liabilities:Savings deposits
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )Relationship savings
    
    
    19
    
    
    
    (173
    )
    
    
    (154
    )Money market
    
    
    28
    
    
    
    (96
    )
    
    
    (68
    )NOW accounts
    
    
    3
    
    
    
    (18
    )
    
    
    (15
    )Certificates of deposits
    
    
    81
    
    
    
    (395
    )
    
    
    (314
    )Total deposits
    
    
    131
    
    
    
    (697
    )
    
    
    (566
    )Borrowed funds
    
    
    (360
    )
    
    
    (154
    )
    
    
    (514
    )Total interest-bearing liabilities
    
    
    (229
    )
    
    
    (851
    )
    
    
    (1,080
    )Change in net interest income
    
    $
    99
    
    
    $
    (302
    )
    
    $
    (203
    )
 Net interest income
 Interest income
 Interest expense
 Provision for loan loss expense
 Non-interest income
 24




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##### Table of Contents



Non-interest expense
 Income tax benefit
 Minimum Regulatory Capital Requirements:
 Minimum To Be WellMinimum
    
    Capitalized UnderCapital
    
    Prompt CorrectiveActual
    
    Requirement
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2010:Total capital to risk weighted assets
    
    $
    79,033
    
    
    
    12.4
    %
    
    $
    51,015
    
    
    
    8.0
    %
    
    $
    63,768
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:
    
    
    70,743
    
    
    
    11.1
    
    
    
    25,507
    
    
    
    4.0
    
    
    
    38,261
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    70,743
    
    
    
    7.9
    
    
    
    35,695
    
    
    
    4.0
    
    
    
    44,618
    
    
    
    5.0December 31, 2009:Total capital to risk weighted assets:
    
    $
    81,484
    
    
    
    12.3
    %
    
    $
    52,824
    
    
    
    8.0
    %
    
    $
    66,030
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:
    
    
    72,811
    
    
    
    11.0
    
    
    
    26,412
    
    
    
    4.0
    
    
    
    39,618
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    72,811
    
    
    
    8.0
    
    
    
    36,232
    
    
    
    4.0
    
    
    
    45,290
    
    
    
    5.0
 Contractual Obligations
 March 31, 2010More thanOne
    
    One Year
    
    Three YearsYear or
    
    through
    
    through
    
    Over FiveTotal
    
    Less
    
    Three Years
    
    Five Years
    
    Years(Dollars in Thousands)Federal Home Loan Bank of Boston advances
    
    $
    150,349
    
    
    $
    15,250
    
    
    $
    29,500
    
    
    $
    57,900
    
    
    $
    47,699Securities sold under agreements to repurchase
    
    
    6,165
    
    
    
    6,165
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    156,514
    
    
    $
    21,415
    
    
    $
    29,500
    
    
    $
    57,900
    
    
    $
    47,699
 Off-Balance Sheet Arrangements:
 25




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##### Table of Contents



March 31, 2010More than
    
    
    More thanOne Year
    
    
    Three YearsOne Year or
    
    
    through
    
    
    Through Five
    
    
    Over FiveTotal
    
    
    Less
    
    
    Three Years
    
    
    Years
    
    
    years(Dollars in Thousands)Commitments to grant loans (1)
    
    $
    20,108
    
    
    $
    20,108
    
    
    $
    
    
    
    $
    
    
    
    $
    Commercial loan lines-of-credit
    
    
    15,692
    
    
    
    15,692
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity loans (2)
    
    
    63,842
    
    
    
    1,225
    
    
    
    6,735
    
    
    
    17,061
    
    
    
    38,821Unused portion of construction loans (3)
    
    
    14,047
    
    
    
    14,047
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of overdraft
lines-of-credit(4)
    
    
    4,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,962Unused portion of personal
lines-of-credit(5)
    
    
    777
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    777Standby letters of credit(6)
    
    
    3,174
    
    
    
    3,174
    
    
    
    
    
    
    
    
    
    
    
    Other commitments and contingencies(7)
    
    
    6,316
    
    
    
    
    
    
    
    6,316
    
    
    
    
    
    
    
    Total loan and other commitments
    
    $
    128,918
    
    
    $
    54,246
    
    
    $
    13,051
    
    
    $
    17,061
    
    
    $
    44,560
 
 (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 real estate limited partnerships. 
 Item 3: Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4: Controls and Procedures
   26




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    Unregistered Sales of Equity Securities  Not applicable(b)
    
    Use of Proceeds  Not applicable(c)
    
    Repurchase of Our Equity Securities  In March 2009 the Company announced that its
Board of Directors authorized a stock repurchase program (the Stock Repurchase Program)
for the purchase of up to 439,095 shares of the Companys common stock or approximately 5%
of its outstanding common stock. Purchases under this Stock Repurchase Program in the
first quarter of 2010 were as follows:
 (d) Maximum Number(c) Total Number of
    
    or Approximate(a) Total
    
    
    
    
    
    Shares Purchased as
    
    Dollar Value ofNumber of
    
    (b) Average
    
    Part of Publicly
    
    Shares that May Yet BeShares
    
    Price
    
    announced Plans or
    
    Purchased Under the PlansPeriod
    
    Purchased
    
    Paid per Share
    
    Programs
    
    or ProgramsJanuary 1  31
    
    
    6,800
    
    
    $
    9.69
    
    
    
    6,800
    
    
    
    365,045February 1  28
    
    
    3,700
    
    
    $
    9.25
    
    
    
    3,700
    
    
    
    361,345March 1  31
    
    
    4,700
    
    
    $
    9.61
    
    
    
    4,700
    
    
    
    356,645
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and Reserved)
 
 Item 5 Other Information
  27




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##### Table of Contents



Item 6 Exhibits
 3.1
    
    Certificate of Incorporation of Legacy Bancorp, Inc.(1)3.2
    
    Bylaws of Legacy Bancorp, Inc. (as amended) (1)10.1
    
    Legacy Banks ESOP Trust Agreement(2)10.2
    
    ESOP Plan Document (2)10.3
    
    ESOP Loan Documents (2)10.4.1
    
    Employment Agreement between Legacy Banks and J. Williar Dunlaevy (2)10.4.2
    
    Employment Agreement between Legacy Banks and Michael A. Christopher (2)10.4.3
    
    Employment Agreement between Legacy Banks and Steven F. Pierce (2)10.4.4
    
    Employment Agreement between Legacy Banks and Stephen M. Conley (2)10.4.5
    
    Employment Agreement between Legacy Banks and Richard M. Sullivan (2)10.5.1
    
    Employment Agreement between Legacy Bancorp, Inc. and J. Williar Dunlaevy (2)10.5.2
    
    Employment Agreement between Legacy Bancorp, Inc. and Michael A. Christopher (2)10.5.3
    
    Employment Agreement between Legacy Bancorp, Inc. and Steven F. Pierce (2)10.5.4
    
    Employment Agreement between Legacy Bancorp, Inc. and Stephen M. Conley (2)10.5.5
    
    Employment Agreement between Legacy Bancorp, Inc. and Richard M. Sullivan (2)10.5.6
    
    Separation Agreement and General Release dated as of November 5, 2007 between Legacy Bancorp,
Inc., Legacy Banks and Michael A. Christopher (4)10.5.7
    
    Separation Agreement and General Release dated as of December 21, 2007 between Legacy Bancorp,
Inc., Legacy Banks and Stephen M. Conley (5)10.5.8
    
    Consulting Agreement dated as of November 5, 2007 between Legacy Bancorp, Inc., Legacy Banks and
Michael A. Christopher (4)10.5.9
    
    Purchase Agreement by and between First Niagara Bank and Legacy Banks dated as of July 25, 2007 (6)10.5.10
    
    Change In Control Agreement between Legacy Bancorp, Inc. and Paul H. Bruce (7)10.5.11
    
    Change In Control Agreement between Legacy Bancorp, Inc. and Kimberly A. Mathews (7)10.5.12
    
    Purchase Agreement by and between The Bank of Western Massachusetts and Legacy Banks dated as of
December 15, 2008 (8)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 (9)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 (9)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 (9)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 (9)10.5.17
    
    Employment Agreement effective as of April, 2010 by and between Legacy Bancorp, Inc., Legacy Banks
and Patrick J. Sullivan (10)10.11
    
    2006 Equity Incentive Plan (3)11.0
    
    Statement re: Computation of Per Share Earnings is incorporated herein by reference to Notes to
Consolidated Financial Statementswithin Part I, Financial Statements31.1
    
    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 Registrants Quarterly Report on Form 10-Q for the Quarter
Ended March 31, 2005 filed October 27, 2005.(2)
    
    Incorporated by reference from the Registration Statement on Form S-1 (No. 333-126481) filed
July 8, 2005, as amended.(3)
    
    Incorporated by reference from the Registrants Definitive Proxy Statement on Form DEF 14A
filed September 28, 2006(4)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed November 5,
2007.(5)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed December 21,
2007.(6)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed July 25,
2007.(7)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed October 30,
2008.(8)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed December 16,
2008.(9)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed November 25,
2008.(10)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed March 4,
2010. 28




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##### Table of Contents



SIGNATURES
  LEGACY BANCORP, INC.Date: May 7, 2010
    /s/ J. Williar DunlaevyJ. Williar DunlaevyChief Executive Officer and Chairman of the BoardDate: May 7, 2010
    /s/ Paul H. BrucePaul H. BruceSenior Vice President, Chief Financial Officer and
Treasurer (Principal Financial and Accounting Officer) 29