##### 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, 2009
 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
(State or other jurisdiction of incorporation or organization)
    
    20-3135053
(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 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).
Yes o No þ
 8,781,912




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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, 2009
and December 31, 2008
    
    
    2Consolidated Statements of Operations for the three months
ended March 31, 2009 and 2008
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the three months ended March 31, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the three
months ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    10Item 3
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    
    19Item 4
    
    Controls and Procedures
    
    
    19Part II  Other InformationItem 1
    
    Legal Proceedings
    
    
    20Item 1A
    
    Risk Factors
    
    
    20Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3
    
    Defaults Upon Senior Securities
    
    
    20Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5
    
    Other Information
    
    
    20Item 6
    
    Exhibits
    
    
    21EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32 SECTION 906 CERTIFICATION OF CEO AND CFO
  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)
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCash and due from banks
    
    $
    10,610
    
    
    $
    13,245Short-term investments
    
    
    25,406
    
    
    
    20,350Cash and cash equivalents
    
    
    36,016
    
    
    
    33,595Securities  Available for sale
    
    
    155,091
    
    
    
    132,357Securities  Held to maturity
    
    
    97
    
    
    
    97Restricted equity securities and other investments  at cost
    
    
    20,215
    
    
    
    20,185Loans held for sale
    
    
    1,095
    
    
    
    Loans, net of allowance for loan losses of $7,330
in 2009 and $6,642 in 2008
    
    
    691,755
    
    
    
    695,264Premises and equipment, net
    
    
    20,189
    
    
    
    19,770Accrued interest receivable
    
    
    3,465
    
    
    
    3,633Goodwill, net
    
    
    9,730
    
    
    
    9,687Net deferred tax asset
    
    
    10,104
    
    
    
    10,023Bank-owned life insurance
    
    
    15,724
    
    
    
    15,551Other assets
    
    
    4,614
    
    
    
    4,495$
    968,095
    
    
    $
    944,657LIABILITIES AND STOCKHOLDERS EQUITYDeposits :Noninterest-bearing
    
    $
    65,930
    
    
    $
    66,545Interest-bearing
    
    
    577,744
    
    
    
    541,543Total deposits
    
    
    643,674
    
    
    
    608,088Securities sold under agreements to repurchase
    
    
    5,214
    
    
    
    5,238Federal Home Loan Bank advances
    
    
    187,397
    
    
    
    197,898Mortgagors escrow accounts
    
    
    1,076
    
    
    
    1,015Accrued expenses and other liabilities
    
    
    6,622
    
    
    
    8,276Total liabilities
    
    
    843,983
    
    
    
    820,515Commitments 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, 2009
and December 31, 2008; 8,781,912 outstanding at
March 31, 2009 and December 31, 2008)
    
    
    103
    
    
    
    103Additional paid-in-capital
    
    
    102,541
    
    
    
    102,475Unearned Compensation  ESOP
    
    
    (7,872
    )
    
    
    (8,055
    )Unearned Compensation  Equity Incentive Plan
    
    
    (2,517
    )
    
    
    (2,727
    )Retained earnings
    
    
    57,339
    
    
    
    58,534Accumulated other comprehensive income (loss)
    
    
    (4,016
    )
    
    
    (4,722
    )Treasury stock, at cost (1,526,688 shares at March 31, 2009
and December 31, 2008)
    
    
    (21,466
    )
    
    
    (21,466
    )Total stockholders equity
    
    
    124,112
    
    
    
    124,142$
    968,095
    
    
    $
    944,657
  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 31,2009
    
    
    2008Interest and dividend income:Loans
    
    $
    10,033
    
    
    $
    10,524Securities:Taxable
    
    
    1,746
    
    
    
    1,945Tax-Exempt
    
    
    154
    
    
    
    116Short-term investments
    
    
    4
    
    
    
    165Total interest and dividend income
    
    
    11,937
    
    
    
    12,750Interest expense:Deposits
    
    
    3,005
    
    
    
    4,515Federal Home Loan Bank advances
    
    
    1,954
    
    
    
    1,868Other borrowed funds
    
    
    19
    
    
    
    27Total interest expense
    
    
    4,978
    
    
    
    6,410Net interest income
    
    
    6,959
    
    
    
    6,340Provision for loan losses
    
    
    728
    
    
    
    225Net interest income after provision for loan losses
    
    
    6,231
    
    
    
    6,115Non-interest income:Customer service fees
    
    
    680
    
    
    
    746Portfolio management fees
    
    
    221
    
    
    
    279Income from bank owned life insurance
    
    
    172
    
    
    
    133Insurance, annuities and mutual fund fees
    
    
    22
    
    
    
    65Gain (loss) on sales of securities, net
    
    
    (19
    )
    
    
    87Loss on impairment of securities
    
    
    (1,581
    )
    
    
    (246
    )Gain on sales of loans, net
    
    
    199
    
    
    
    65Miscellaneous
    
    
    12
    
    
    
    23Total non-interest income
    
    
    (294
    )
    
    
    1,152Non-interest expenses:Salaries and employee benefits
    
    
    3,444
    
    
    
    3,575Occupancy and equipment
    
    
    1,049
    
    
    
    912Data processing
    
    
    664
    
    
    
    636Professional fees
    
    
    245
    
    
    
    167Advertising
    
    
    326
    
    
    
    255Other general and administrative
    
    
    1,349
    
    
    
    1,119Total non-interest expenses
    
    
    7,077
    
    
    
    6,664Income (loss) before income taxes
    
    
    (1,140
    )
    
    
    603Provision (benefit) for income taxes
    
    
    (348
    )
    
    
    186Net income (loss)
    
    $
    (792
    )
    
    $
    417Earnings (loss) per shareBasic
    
    $
    (0.10
    )
    
    $
    0.05Diluted
    
    $
    (0.10
    )
    
    $
    0.05Weighted average shares outstandingBasic
    
    
    7,977,953
    
    
    
    8,280,741Diluted
    
    
    7,977,953
    
    
    
    8,308,031
 3




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Dollars in thousands)
 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, 2007
    
    
    9,240,960
    
    
    $
    103
    
    
    $
    101,720
    
    
    $
    (8,787
    )
    
    $
    (3,525
    )
    
    $
    58,709
    
    
    $
    270
    
    
    $
    (15,398
    )
    
    $
    133,092Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    417
    
    
    
    
    
    
    
    
    
    
    
    417Net unrealized loss on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    
    
    
    
    (508
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )Cash dividends declared ($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (418
    )
    
    
    
    
    
    
    
    
    
    
    (418
    )Common stock repurchased - 5% Stock Repurchase
Program announced December 2007
    
    
    (138,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,960
    )
    
    
    (1,960
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210Restricted stock granted
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    (7
    )
    
    
    
    
    
    
    49
    
    
    
    Common stock held by ESOP committed
to be released (13,745 shares)
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Balance at March 31, 2008
    
    
    9,105,260
    
    
    $
    103
    
    
    $
    101,922
    
    
    $
    (8,604
    )
    
    $
    (3,357
    )
    
    $
    58,701
    
    
    $
    (238
    )
    
    $
    (17,309
    )
    
    $
    131,218Balance at December 31, 2008
    
    
    8,781,912
    
    
    $
    103
    
    
    $
    102,475
    
    
    $
    (8,055
    )
    
    $
    (2,727
    )
    
    $
    58,534
    
    
    $
    (4,722
    )
    
    $
    (21,466
    )
    
    $
    124,142Comprehensive loss:Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (792
    )
    
    
    
    
    
    
    
    
    
    
    (792
    )Net unrealized gain on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    
    
    
    
    706Total comprehensive 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
    )
    
    $
    124,112
  4




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 Three months ended March 31,2009
    
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (792
    )
    
    $
    417Adjustments to reconcile net income to net
cash (used) provided by operating activities:Provision for loan losses
    
    
    728
    
    
    
    225Net (accretion) amortization of securities
    
    
    43
    
    
    
    (54
    )Amortization of core deposit intangible
    
    
    168
    
    
    
    162Depreciation and amortization expense
    
    
    399
    
    
    
    339Loss on sales/impairment of securities, net
    
    
    1,600
    
    
    
    159Gain on sales of loans, net
    
    
    (199
    )
    
    
    (65
    )Loans originated for sale
    
    
    (15,148
    )
    
    
    (4,470
    )Proceeds from sales of loans
    
    
    14,252
    
    
    
    4,930Share-based compensation expense
    
    
    328
    
    
    
    406Deferred tax (benefit) provision
    
    
    (433
    )
    
    
    (1
    )Employee Stock Ownership Plan expense
    
    
    131
    
    
    
    189Net change in:Bank-owned life insurance
    
    
    (173
    )
    
    
    (134
    )Accrued interest receivable
    
    
    168
    
    
    
    86Other assets
    
    
    (2
    )
    
    
    (620
    )Accrued expenses and other liabilities
    
    
    (1,654
    )
    
    
    (1,371
    )Net cash (used) provided by operating activities
    
    
    (584
    )
    
    
    198Cash flows from investing activities:Activity in available-for-sale securities:Sales
    
    
    20,607
    
    
    
    15,201Maturities, prepayments and calls
    
    
    12,919
    
    
    
    23,148Purchases
    
    
    (56,405
    )
    
    
    (48,274
    )Purchase of other investments
    
    
    (470
    )
    
    
    (365
    )Loan originations and purchases, net of principal payments
    
    
    2,781
    
    
    
    (2,143
    )Additions to premises and equipment
    
    
    (344
    )
    
    
    (335
    )Net cash received in branch acquisition
    
    
    9,031
    
    
    
    Net cash (used) provided by investing activities
    
    
    (11,881
    )
    
    
    (12,768
    )
   5




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in thousands)
 Three months ended March 31,2009
    
    
    2008Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    25,753
    
    
    
    956Net (decrease) increase in securities sold under
agreements to repurchase
    
    
    (24
    )
    
    
    (538
    )Repayment of Federal Home Loan Bank advances
    
    
    (10,501
    )
    
    
    (14,711
    )Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    5,318Net increase (decrease) in mortgagors escrow accounts
    
    
    61
    
    
    
    3Repurchase of common stock
    
    
    
    
    
    
    (1,960
    )Payment of dividends on common stock
    
    
    (403
    )
    
    
    (418
    )Net cash provided (used) by financing activities
    
    
    14,886
    
    
    
    (11,350
    )Net change in cash and cash equivalents
    
    
    2,421
    
    
    
    (23,920
    )Cash and cash equivalents at beginning of period
    
    
    33,595
    
    
    
    62,225Cash and cash equivalents at end of period
    
    $
    36,016
    
    
    $
    38,305Supplemental cash flow information:Interest paid on deposits
    
    $
    4,632
    
    
    $
    4,581Interest paid on Federal Home Loan Bank advances
    
    
    1,905
    
    
    
    1,947Interest paid on other borrowed funds
    
    
    19
    
    
    
    27Income taxes paid
    
    
    1,350
    
    
    
    150
  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
 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly.
 Recognition and
Presentation of Other-Than-Temporary Impairments.
 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
  7




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##### Table of Contents



Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities
 , Interim Disclosures about Fair Value of Financial Instruments. Disclosures about Fair Value of Financial Instruments, Interim
Financial Reporting
 3. Earnings Per Share
  Three Months ended March 31,2009
    
    
    2008Net (loss) income applicable to common stock
(000s)
    
    $
    (792
    )
    
    $
    417Average number of shares issued
    
    
    10,308,600
    
    
    
    10,308,600Less: average unallocated ESOP shares
    
    
    (604,619
    )
    
    
    (659,600
    )Less: average treasury shares
    
    
    (1,526,688
    )
    
    
    (1,101,004
    )Less: average unvested restricted stock awards
    
    
    (199,340
    )
    
    
    (267,255
    )Average number of basic shares outstanding
    
    
    7,977,953
    
    
    
    8,280,741Plus: dilutive unvested restricted stock awards
    
    
    
    
    
    
    25,880Plus: diluted stock option shares
    
    
    
    
    
    
    1,410Average number of diluted shares outstanding
    
    
    7,977,953
    
    
    
    8,308,031Basic earnings (loss) per share
    
    $
    (0.10
    )
    
    $
    0.05Diluted earnings (loss) per share
    
    $
    (0.10
    )
    
    $
    0.05
 4. Dividends
  8




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##### Table of Contents



5. Loan Commitments and Other Contingencies
  6. Branch Acquisition
  7.  Fair Values of Assets and Liabilities: Fair Value Measurements
 Level 1
 Level 2
 Level 3
  March 31, 2009Assets/LiabilitiesLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    
    at Fair Value(Dollars in thousands)AssetsSecurities available for sale
    
    
    4,933
    
    
    
    132,323
    
    
    
    17,835
    
    
    
    
    155,091Total assets
    
    
    4,933
    
    
    
    132,323
    
    
    
    17,835
    
    
    
    
    155,091
 December 31, 2008Assets/LiabilitiesLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    
    at Fair Value(Dollars in thousands)AssetsSecurities available for sale
    
    $
    5,544
    
    
    
    104,954
    
    
    
    21,859
    
    
    
    
    132,357Total assets
    
    $
    5,544
    
    
    
    104,954
    
    
    
    21,859
    
    
    
    
    132,357
  AssetsAFSBalance as of January 1, 2009
    
    $
    21,859Total realized/unrealized gains (losses) included in net income
    
    
    (476
    )Total unrealized gains (losses) included in other comprehensive income
    
    
    509Purchases, sales, issuances and settlements
    
    
    (4,057
    )Transfers in and/or out of Level 3
    
    
    Balance as of March 31, 2009
    
    $
    17,835Change in unrealized gains/(losses) relating to
instruments still held at the reporting date
    
    $
    509
 9




---



##### Table of Contents



QuarterEndedMarch
31, 2009
    
    
    

March 31, 2009TotalLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    
    Gains/(Losses)(Dollars in thousands)AssetsLoans
    
    
    
    
    
    
    3,589
    
    
    
    
    
    
    
    
    (554
    )Total assets
    
    
    
    
    
    
    3,589
    
    
    
    
    
    
    
    
    (554
    )
 QuarterEndedMarch 31, 2008
    
    
    
    March 31, 2008TotalLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    
    Gains/(Losses)(Dollars in thousands)AssetsLoans
    
    
    
    
    
    
    1,195
    
    
    
    
    
    
    
    
    (101
    )Total assets
    
    
    
    
    
    
    1,195
    
    
    
    
    
    
    
    
    (101
    )
  
 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
 Income Taxes.
 Other-Than-Temporary Impairment.
 10




---



##### Table of Contents



Fair
Values of Assets and Liabilities: Fair Value Measurements,
 Goodwill.
  Comparison of Financial Condition at March 31, 2009 and December 31, 2008
 Overview:
 Investment Activities
 11




---



##### Table of Contents



At March 31, 2009
    
    
    At December 31, 2008Amortized Cost
    
    
    Fair Value
    
    
    Amortized Cost
    
    
    Fair Value(Dollars in Thousands)Securities available for sale:Government-sponsored enterprises (GSE)
    
    $
    56,397
    
    
    $
    56,730
    
    
    $
    36,459
    
    
    $
    36,832Municipal bonds
    
    
    16,048
    
    
    
    15,893
    
    
    
    15,876
    
    
    
    15,632Corporate bonds and other obligations
    
    
    1,478
    
    
    
    1,425
    
    
    
    363
    
    
    
    363GSE mortgage-backed securities
    
    
    57,327
    
    
    
    58,422
    
    
    
    51,679
    
    
    
    52,490Private issue mortgage-backed securities
    
    
    24,081
    
    
    
    17,688
    
    
    
    28,588
    
    
    
    21,496Total debt securities
    
    
    155,331
    
    
    
    150,158
    
    
    
    132,965
    
    
    
    126,813Common stock
    
    
    5,624
    
    
    
    4,933
    
    
    
    6,314
    
    
    
    5,544Total securities available for sale
    
    
    160,955
    
    
    
    155,091
    
    
    
    139,279
    
    
    
    132,357Securities 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
    
    
    
    1,709Other investments
    
    
    7,574
    
    
    
    7,574
    
    
    
    7,544
    
    
    
    7,544Total restricted equity securities
and other investments
    
    
    20,215
    
    
    
    20,215
    
    
    
    20,185
    
    
    
    20,185Total securities
    
    $
    181,267
    
    
    $
    175,403
    
    
    $
    159,561
    
    
    $
    152,639
 Lending Activities:
 At March 31, 2009
    
    
    At December 31, 2008Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Mortgage loans on real estate:Residential
    
    $
    326,415
    
    
    
    46.79
    %
    
    $
    344,235
    
    
    
    49.15
    %Commercial
    
    
    255,253
    
    
    
    36.59
    
    
    
    246,374
    
    
    
    35.18Home equity
    
    
    67,262
    
    
    
    9.64
    
    
    
    63,138
    
    
    
    9.01648,930
    
    
    
    93.02
    
    
    
    653,747
    
    
    
    93.34Other loans:Commercial
    
    
    36,408
    
    
    
    5.22
    
    
    
    34,242
    
    
    
    4.89Consumer and other
    
    
    12,295
    
    
    
    1.76
    
    
    
    12,386
    
    
    
    1.7748,703
    
    
    
    6.98
    
    
    
    46,628
    
    
    
    6.66Total loans
    
    
    697,633
    
    
    
    100.00
    %
    
    
    700,375
    
    
    
    100.00
    %Other Items:Net deferred loan costs
    
    
    1,452
    
    
    
    
    
    
    
    1,531Allowance for loan losses
    
    
    (7,330
    )
    
    
    
    
    
    
    (6,642
    )Total Loans, net
    
    $
    691,755
    
    
    
    
    
    
    $
    695,264
  Non-performing Assets:
 12




---



##### Table of Contents



At March 31,
    
    
    At December 31,2009
    
    
    2008(Dollars in Thousands)Non-accrual loans:Residential mortgage
    
    $
    1,920
    
    
    $
    1,190Commercial mortgage
    
    
    8,535
    
    
    
    5,777Commercial
    
    
    597
    
    
    
    410Home equity, consumer and other
    
    
    153
    
    
    
    172Total non-accrual loans
    
    
    11,205
    
    
    
    7,549Loans 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
    
    $
    11,205
    
    
    $
    7,549Troubled debt restructurings
    
    $
    
    
    
    $
    Ratios:Non-performing loans to total loans
    
    
    1.61
    %
    
    
    1.08
    %Non-performing assets to total assets
    
    
    1.16
    %
    
    
    0.80
    %
  Allowance for Loan Losses :
   13




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##### Table of Contents



At or for the three monthsended March 31,2009
    
    
    2008(Dollars in Thousands)Balance at beginning of period
    
    $
    6,642
    
    
    $
    5,568Charge-offs:Mortgage loans on real estate:
    
    
    
    
    
    
    (77
    )Other loans:Commercial
    
    
    (14
    )
    
    
    (19
    )Consumer and other
    
    
    (57
    )
    
    
    (75
    )Total other loans
    
    
    (71
    )
    
    
    (94
    )Total charge-offs
    
    
    (71
    )
    
    
    (171
    )Recoveries:Mortgage loans on real estate
    
    
    
    
    
    
    7Other loans:Commercial
    
    
    12
    
    
    
    Consumer and other
    
    
    19
    
    
    
    27Total other loans
    
    
    31
    
    
    
    27Total recoveries
    
    
    31
    
    
    
    34Net recoveries (charge-offs)
    
    
    (40
    )
    
    
    (137
    )Provision for loan losses
    
    
    728
    
    
    
    225Balance at end of period
    
    $
    7,330
    
    
    $
    5,656Ratios:Net recoveries (charge-offs) to average
loans outstanding  annualized
    
    
    (0.02
    %)
    
    
    (0.08
    %)Allowance for loan losses to
non-performing loans at end of period
    
    
    65.42
    %
    
    
    73.79
    %Allowance for loan losses to total loans
at end of period
    
    
    1.05
    %
    
    
    0.86
    %
 Deposits
 14




---



##### Table of Contents



At March 31, 2009
    
    
    At December 31, 2008Balance
    
    
    Percent
    
    
    Balance
    
    
    Percent(Dollars in Thousands)Deposit type:Demand
    
    $
    65,930
    
    
    
    10.24
    %
    
    $
    66,545
    
    
    
    10.94
    %Regular savings
    
    
    52,312
    
    
    
    8.13
    
    
    
    46,946
    
    
    
    7.72Relationship
savings
    
    
    124,465
    
    
    
    19.34
    
    
    
    121,376
    
    
    
    19.96Money market
deposits
    
    
    70,788
    
    
    
    11.00
    
    
    
    60,174
    
    
    
    9.89NOW deposits
    
    
    44,645
    
    
    
    6.94
    
    
    
    43,206
    
    
    
    7.11Total transaction
accounts
    
    
    358,140
    
    
    
    55.64
    
    
    
    338,247
    
    
    
    55.62Term
certificates
less
than $100,000
    
    
    173,768
    
    
    
    27.00
    
    
    
    162,739
    
    
    
    26.76Term
certificates
$100,000 or more
    
    
    111,766
    
    
    
    17.36
    
    
    
    107,102
    
    
    
    17.62Total certificate
accounts
    
    
    285,534
    
    
    
    44.36
    
    
    
    269,841
    
    
    
    44.38Total deposits
    
    $
    643,674
    
    
    
    100.00
    %
    
    $
    608,088
    
    
    
    100.00
    %
  Borrowings
 Stockholders Equity
 Comparison of Operating Results for the Three Months Ended March 31, 2009 and 2008
  Analysis of Net Interest Income
   15




---



##### Table of Contents



Three Months Ended March 31, 2009
    
    
    Three Months Ended March 31, 2008Average Outstanding
    
    
    
    
    
    
    
    
    
    
    Average OutstandingBalance
    
    
    Interest
    
    
    Yield/ Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate(1)(Dollars in thousands)Interest-earning assets:Loans  Net (2)
    
    $
    694,359
    
    
    $
    10,033
    
    
    
    5.78
    %
    
    $
    655,712
    
    
    $
    10,524
    
    
    
    6.42
    %Investment securities
    
    
    158,293
    
    
    
    1,900
    
    
    
    4.80
    %
    
    
    169,087
    
    
    
    2,061
    
    
    
    4.88
    %Short-term investments
    
    
    22,121
    
    
    
    4
    
    
    
    0.07
    %
    
    
    20,998
    
    
    
    165
    
    
    
    3.14
    %Total interest-earning assets
    
    
    874,773
    
    
    
    11,937
    
    
    
    5.46
    %
    
    
    845,797
    
    
    
    12,750
    
    
    
    6.03
    %Non-interest-earning assets
    
    
    73,681
    
    
    
    
    
    
    
    
    
    
    
    66,331Total assets
    
    $
    948,454
    
    
    
    
    
    
    
    
    
    
    $
    912,128Interest-bearing liabilities:Savings deposits
    
    $
    50,142
    
    
    
    48
    
    
    
    0.38
    %
    
    $
    51,671
    
    
    
    53
    
    
    
    0.41
    %Relationship Savings
    
    
    123,614
    
    
    
    478
    
    
    
    1.55
    %
    
    
    116,765
    
    
    
    811
    
    
    
    2.78
    %Money market
    
    
    57,454
    
    
    
    199
    
    
    
    1.39
    %
    
    
    61,535
    
    
    
    497
    
    
    
    3.23
    %NOW accounts
    
    
    41,486
    
    
    
    49
    
    
    
    0.47
    %
    
    
    40,031
    
    
    
    59
    
    
    
    0.59
    %Certificates of deposits
    
    
    279,579
    
    
    
    2,231
    
    
    
    3.19
    %
    
    
    274,266
    
    
    
    3,095
    
    
    
    4.51
    %Total interest-bearing
deposits
    
    
    552,275
    
    
    
    3,005
    
    
    
    2.18
    %
    
    
    544,268
    
    
    
    4,515
    
    
    
    3.32
    %Borrowed Funds
    
    
    198,926
    
    
    
    1,973
    
    
    
    3.97
    %
    
    
    168,375
    
    
    
    1,895
    
    
    
    4.50
    %Total interest-bearing
liabilities
    
    
    751,201
    
    
    
    4,978
    
    
    
    2.65
    %
    
    
    712,643
    
    
    
    6,410
    
    
    
    3.60
    %Non-interest-bearing
liabilities
    
    
    71,839
    
    
    
    
    
    
    
    
    
    
    
    65,803Total liabilities
    
    
    823,040
    
    
    
    
    
    
    
    
    
    
    
    778,446Equity
    
    
    125,414
    
    
    
    
    
    
    
    
    
    
    
    133,682Total liabilities and equity
    
    $
    948,454
    
    
    
    
    
    
    
    
    
    
    $
    912,128Net interest income
    
    
    
    
    
    $
    6,959
    
    
    
    
    
    
    
    
    
    
    $
    6,340Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.81
    %
    
    
    
    
    
    
    
    
    
    
    2.43
    %Net interest-earning assets (4)
    
    $
    123,572
    
    
    
    
    
    
    
    
    
    
    $
    133,154Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.18
    %
    
    
    
    
    
    
    
    
    
    
    3.00
    %Average interest-earning
assets to interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    116.45
    %
    
    
    
    
    
    
    
    
    
    
    118.68
    %
 
 (1)
    
    Yields and rates for the three months ended March 31, 2009 and 2008 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, 2009 and 2008.(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.  16




---



##### Table of Contents



Three Months Ended March 31,2009 vs. 2008Increase
    
    Total(Decrease) Due to
    
    IncreaseVolume
    
    Rate
    
    (Decrease)(Dollars in thousands)Interest-earning assets:Loans  Net
    
    $
    710
    
    
    $
    (1,201
    )
    
    $
    (491
    )Investment securities
    
    
    (128
    )
    
    
    (33
    )
    
    
    (161
    )Short-term investments
    
    
    10
    
    
    
    (171
    )
    
    
    (161
    )Total interest-earning assets
    
    
    592
    
    
    
    (1,405
    )
    
    
    (813
    )Interest-bearing liabilities:Savings deposits
    
    
    (2
    )
    
    
    (3
    )
    
    
    (5
    )Relationship Savings
    
    
    51
    
    
    
    (384
    )
    
    
    (333
    )Money market
    
    
    (31
    )
    
    
    (267
    )
    
    
    (298
    )NOW accounts
    
    
    2
    
    
    
    (12
    )
    
    
    (10
    )Certificates of deposits
    
    
    61
    
    
    
    (925
    )
    
    
    (864
    )Total deposits
    
    
    81
    
    
    
    (1,591
    )
    
    
    (1,510
    )Borrowed Funds
    
    
    222
    
    
    
    (144
    )
    
    
    78Total interest-bearing liabilities
    
    
    303
    
    
    
    (1,735
    )
    
    
    (1,432
    )Change in net interest income
    
    $
    289
    
    
    $
    330
    
    
    $
    619
 Net interest income
 Interest income
 Interest expense
 Provision for loan loss expense
 Non-interest income
 17




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##### Table of Contents



Non-interest expense
 Income tax expense
 Minimum Regulatory Capital Requirements:
 Minimum To Be WellMinimum
    
    Capitalized UnderCapital
    
    Prompt CorrectiveActual

    
    Requirement
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2009:Total capital to risk weighted assets
    
    $
    91,241
    
    
    
    12.5
    %
    
    $
    58,453
    
    
    
    8.0
    %
    
    $
    73,066
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:
    
    
    83,686
    
    
    
    11.5
    
    
    
    29,226
    
    
    
    4.0
    
    
    
    43,840
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    83,686
    
    
    
    9.1
    
    
    
    27,455
    
    
    
    3.0
    
    
    
    45,758
    
    
    
    5.0December 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
    
    
    
    5.0
 Contractual Obligations
 March 31, 2009More than One

    
    ThreeYear through
    
    Years throughTotal
    
    One Year or Less
    
    Three  Years
    
    Five Years
    
    Over Five Years(Dollars in Thousands)Federal Home Loan Bank of Boston advances
    
    $
    187,397
    
    
    $
    38,235
    
    
    $
    48,450
    
    
    $
    47,500
    
    
    $
    53,212Securities sold under agreements to
repurchase
    
    
    5,214
    
    
    
    5,214
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    192,611
    
    
    $
    43,449
    
    
    $
    48,450
    
    
    $
    47,500
    
    
    $
    53,212
 Off-Balance Sheet Arrangements:
 18




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##### Table of Contents



March 31, 2009More than One
    

    
    More than ThreeYear through
    
    
    Years ThroughTotal
    
    
    One Year or Less
    
    
    Three Years
    
    
    Five Years
    
    
    Over Five years(Dollars in Thousands)Commitments to grant loans (1)
    
    $
    19,359
    
    
    $
    19,359
    
    
    $
    
    
    
    $
    
    
    
    $
    Commercial loan lines-of-credit
    
    
    15,242
    
    
    
    15,242
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity loans (2)
    
    
    66,821
    
    
    
    967
    
    
    
    5,446
    
    
    
    13,470
    
    
    
    46,938Unused portion of construction loans (3)
    
    
    14,543
    
    
    
    14,543
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of overdraft
lines-of-credit(4)
    
    
    5,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,125Unused portion of personal
lines-of-credit(5)
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    840Standby letters of credit(6)
    
    
    3,566
    
    
    
    3,566
    
    
    
    
    
    
    
    
    
    
    
    Other commitments and contingencies(7)
    
    
    5,577
    
    
    
    5,577
    
    
    
    
    
    
    
    
    
    
    
    Total loan and other commitments
    
    $
    131,073
    
    
    $
    59,254
    
    
    $
    5,446
    
    
    $
    13,470
    
    
    $
    52,903
 
 (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
   19




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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. Through May 8, 2009 the Company did not make any
purchases under this Stock Repurchase Program.
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5 Other Information
  20




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##### Table of Contents



Item 6 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 (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 (4)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)10.11
    
    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 Registrants Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 2005 filed October 27, 2005.(2)
    
    Incorporated by reference from the Registration Statement on Form S-1 (No. 333-126481) filed
July 8, 2005, as amended.(3)
    
    Incorporated by reference from the Registrants Definitive Proxy Statement on Form DEF 14A
filed September 25, 2006(4)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed November 5,
2007.(5)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed December 21,
2007.(6)
    
    Incorporated by reference from the Registrants 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. 21




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SIGNATURES
  LEGACY BANCORP, INC.Date: May 11, 2009
    /s/ J. Williar DunlaevyJ. Williar DunlaevyChief Executive Officer and Chairman of the BoardDate: May 11, 2009
    /s/ Paul H. BrucePaul H. BruceSenior Vice President, Chief Financial Officer and
Treasurer (Principal Accounting Officer) 22