##### 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, 2007
  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 þ o
 o þ
 10,242,756




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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,
2007, and December 31, 2006
    
    
    2Consolidated Statements of Income for the
three months ended March 31, 2007 and 2006
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the three months ended March 31, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows for the
three months ended March 31, 2007, and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    8Item 3
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    
    17Item 4
    
    Controls and Procedures
    
    
    17Part II  Other InformationItem 1
    
    Legal Proceedings
    
    
    18Item 1A
    
    Risk Factors
    
    
    18Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3
    
    Defaults Upon Senior Securities
    
    
    18Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    18Item 5
    
    Other Information
    
    
    18Item 6
    
    Exhibits
    
    
    19EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEx-32 SECTION 906 CERTIFICATION OF THE C.E.O AND C.F.O
  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 31,2007
    
    
    2006(Unaudited)ASSETSCash and due from banks
    
    $
    9,904
    
    
    $
    10,442Short-term investments
    
    
    14,758
    
    
    
    11,202Cash and cash equivalents
    
    
    24,662
    
    
    
    21,644Securities and other investments
    
    
    169,491
    
    
    
    176,132Loans held for sale
    
    
    572
    
    
    
    Loans, net of allowance for loan losses of $4,864
in 2007 and $4,677 in 2006
    
    
    594,158
    
    
    
    578,802Premises and equipment, net
    
    
    17,086
    
    
    
    15,416Accrued interest receivable
    
    
    3,543
    
    
    
    3,552Goodwill, net
    
    
    3,085
    
    
    
    3,085Net deferred tax asset
    
    
    4,407
    
    
    
    4,474Bank-owned life insurance
    
    
    4,445
    
    
    
    4,424Other assets
    
    
    1,133
    
    
    
    789$
    822,582
    
    
    $
    808,318LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    518,030
    
    
    $
    518,248Securities sold under agreements to repurchase
    
    
    4,432
    
    
    
    5,575Federal Home Loan Bank advances
    
    
    148,751
    
    
    
    127,438Mortgagors escrow accounts
    
    
    1,149
    
    
    
    944Accrued expenses and other liabilities
    
    
    5,802
    
    
    
    6,116Total liabilities
    
    
    678,164
    
    
    
    658,321Commitments and contingenciesStockholders EquityPreferred Stock ($.01 par value, 10,000,000 shares
authorized, none issued or outstanding)
    
    
    
    
    
    
    Common Stock ($.01 par value, 40,000,000 shares
authorized and 10,308,600 issued at March 31, 2007 and
December 31, 2006; 10,242,756 outstanding at March 31,
2007, and 10,308,600 outstanding at December 31, 2006)
    
    
    103
    
    
    
    103Additional paid-in-capital
    
    
    100,906
    
    
    
    106,094Unearned Compensation  ESOP
    
    
    (9,336
    )
    
    
    (9,519
    )Unearned Compensation  Equity Incentive Plan
    
    
    (5,106
    )
    
    
    (5,375
    )Retained earnings
    
    
    58,980
    
    
    
    58,863Accumulated other comprehensive loss
    
    
    (49
    )
    
    
    (169
    )Treasury stock, at cost (65,844 shares at March 31, 2007
and no shares at December 31, 2006)
    
    
    (1,080
    )
    
    
    Total stockholders equity
    
    
    144,418
    
    
    
    149,997$
    822,582
    
    
    $
    808,318
  2




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
 Three Months Ended March 31,2007
    
    
    2006(Unaudited)Interest and dividend income:Loans
    
    $
    9,537
    
    
    $
    8,513Securities:Taxable
    
    
    2,039
    
    
    
    1,763Tax-Exempt
    
    
    66
    
    
    
    55Short-term investments
    
    
    156
    
    
    
    80Total interest and dividend income
    
    
    11,798
    
    
    
    10,411Interest expense:Deposits
    
    
    4,098
    
    
    
    2,701Federal Home Loan Bank advances
    
    
    1,611
    
    
    
    1,575Other borrowed funds
    
    
    33
    
    
    
    36Total interest expense
    
    
    5,742
    
    
    
    4,312Net interest income
    
    
    6,056
    
    
    
    6,099Provision for loan losses
    
    
    245
    
    
    
    164Net interest income after provision for loan losses
    
    
    5,811
    
    
    
    5,935Non-interest income:Customer service fees
    
    
    716
    
    
    
    654Portfolio management fees
    
    
    268
    
    
    
    238Income from bank owned life insurance
    
    
    21
    
    
    
    28Insurance, annuities and mutual fund fees
    
    
    47
    
    
    
    30Gain on sales of securities, net
    
    
    88
    
    
    
    40Gain on sales of loans, net
    
    
    48
    
    
    
    39Miscellaneous
    
    
    10
    
    
    
    9Total non-interest income
    
    
    1,198
    
    
    
    1,038Non-interest expenses:Salaries and employee benefits
    
    
    3,745
    
    
    
    2,835Occupancy and equipment
    
    
    701
    
    
    
    667Data processing
    
    
    514
    
    
    
    481Professional fees
    
    
    284
    
    
    
    369Advertising
    
    
    176
    
    
    
    151Other general and administrative
    
    
    760
    
    
    
    741Total non-interest expenses
    
    
    6,180
    
    
    
    5,244Income before income taxes
    
    
    829
    
    
    
    1,729Provision for income taxes
    
    
    327
    
    
    
    648Net income
    
    $
    502
    
    
    $
    1,081Earnings per shareBasic
    
    $
    0.05
    
    
    $
    0.11Diluted
    
    $
    0.05
    
    
    $
    0.11Weighted average shares outstandingBasic
    
    
    9,564,801
    
    
    
    9,539,044Diluted
    
    
    9,565,833
    
    
    
    9,539,044
  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, 2007 AND 2006
 (Dollars in thousands)
 (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 <1>
    
    
    EquityBalance at December 31, 2005
    
    
    10,308,600
    
    
    $
    103
    
    
    $
    100,202
    
    
    $
    (10,252
    )
    
    $
    
    
    
    $
    57,202
    
    
    $
    (1,089
    )
    
    $
    
    
    
    $
    146,166Comprehensive income (loss):Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Net unrealized loss on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (369
    )
    
    
    
    
    
    
    (369
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    712Cash dividend declared ($0.03 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    
    
    
    
    (309
    )Release of ESOP stock
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197Balance at March 31, 2006
    
    
    10,308,600
    
    
    $
    103
    
    
    $
    100,216
    
    
    $
    (10,069
    )
    
    $
    
    
    
    $
    57,974
    
    
    $
    (1,458
    )
    
    $
    
    
    
    $
    146,766Balance at December 31, 2006
    
    
    10,308,600
    
    
    $
    103
    
    
    $
    106,094
    
    
    $
    (9,519
    )
    
    $
    (5,375
    )
    
    $
    58,863
    
    
    $
    (169
    )
    
    $
    
    
    
    $
    149,997Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    502Net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    120Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    622Cash dividends declared ($0.04 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (385
    )
    
    
    
    
    
    
    
    
    
    
    (385
    )Common stock repurchased
    
    
    
    
    
    
    
    
    
    
    (5,579
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,080
    )
    
    
    (6,659
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    357Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269Release of ESOP stock
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217Balance at March 31, 2007
    
    
    10,308,600
    
    
    $
    103
    
    
    $
    100,906
    
    
    $
    (9,336
    )
    
    $
    (5,106
    )
    
    $
    58,980
    
    
    $
    (49
    )
    
    $
    (1,080
    )
    
    $
    144,418
 
   4




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##### Table of Contents



LEGACY BANCORP, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 Quarters ended March 31,2007
    
    
    2006(Unaudited)Cash flows from operating activities:Net income
    
    $
    502
    
    
    $
    1,081Adjustments to reconcile net income to net cash
provided by operating activities:Provision for loan losses
    
    
    245
    
    
    
    164Net accretion of securities
    
    
    (258
    )
    
    
    (327
    )Depreciation and amortization expense
    
    
    262
    
    
    
    249Gain on sales or impairment of securities, net
    
    
    (88
    )
    
    
    (40
    )Gain on sales of loans, net
    
    
    (48
    )
    
    
    (39
    )Loans originated for sale
    
    
    (2,820
    )
    
    
    (2,795
    )Proceeds from sale of loans
    
    
    2,296
    
    
    
    2,524Share-based compensation expense
    
    
    626
    
    
    
    Employee Stock Ownership Plan expense
    
    
    217
    
    
    
    197Net change in:Bank-owned life insurance
    
    
    (21
    )
    
    
    (28
    )Accrued interest receivable
    
    
    9
    
    
    
    (152
    )Other assets
    
    
    (344
    )
    
    
    65Accrued expenses and other liabilities
    
    
    (314
    )
    
    
    (128
    )Net cash provided by operating activities
    
    
    264
    
    
    
    771Cash flows from investing activities:Activity in available-for-sale securities:Sales
    
    
    737
    
    
    
    460Maturities, prepayments and calls
    
    
    23,316
    
    
    
    27,307Purchases
    
    
    (17,317
    )
    
    
    (24,028
    )Activity in held-to-maturity securities:Maturities, prepayments and calls
    
    
    
    
    
    
    Redemption (purchase) of Federal Home Loan Bank stock
    
    
    701
    
    
    
    (494
    )Purchase of other investments
    
    
    (303
    )
    
    
    Maturities, prepayments and call of other investments
    
    
    40
    
    
    
    118Loan originations and purchases, net of principal payments
    
    
    (15,601
    )
    
    
    (10,083
    )Additions to premises and equipment
    
    
    (1,932
    )
    
    
    (97
    )Net cash used in investing activities
    
    
    (10,359
    )
    
    
    (6,817
    )
   5




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 Quarters ended March 31,2007
    
    
    2006(Unaudited)Cash flows from financing activities:Net (decrease) increase in deposits
    
    
    (218
    )
    
    
    11,799Net (decrease) increase in securities sold under
agreements to repurchase
    
    
    (1,143
    )
    
    
    570Repayment of Federal Home Loan Bank advances
    
    
    (40,693
    )
    
    
    (31,211
    )Proceeds from Federal Home Loan Bank advances
    
    
    62,006
    
    
    
    33,266Net increase in mortgagors escrow accounts
    
    
    205
    
    
    
    293Repurchase of common stock
    
    
    (6,659
    )
    
    
    Payment of dividends on common stock
    
    
    (385
    )
    
    
    (309
    )Net cash provided by financing activities
    
    
    13,113
    
    
    
    14,408Net change in cash and cash equivalents
    
    
    3,018
    
    
    
    8,362Cash and cash equivalents at beginning of period
    
    
    21,644
    
    
    
    19,232Cash and cash equivalents at end of period
    
    $
    24,662
    
    
    $
    27,594Supplemental cash flow information:Interest paid on deposits
    
    $
    4,220
    
    
    $
    2,700Interest paid on Federal Home Loan Bank advances
    
    
    1,528
    
    
    
    1,505Interest paid on other borrowed funds
    
    
    33
    
    
    
    36Income taxes paid
    
    
    755
    
    
    
    110
 6
    Table of Contents   LEGACY BANCORP AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of presentation
  2. Recent Accounting Pronouncements
 Accounting for Servicing of Financial Assets Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
 Accounting for
Uncertainty in Income Taxes
 Fair Value
Measurement
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements
 7




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##### Table of Contents



The Fair
Value Option for Financial Assets and Financial Liabilities
 3. Earnings Per Share
  Three Months Ended March 31,2007
    
    
    2006Net income applicable to common stock
    
    $
    502
    
    
    $
    1,081Average number of shares outstanding
    
    
    10,308,600
    
    
    
    10,308,600Less: average unallocated ESOP shares
    
    
    (714,577
    )
    
    
    (769,556
    )Less: average treasury shares
    
    
    (28,190
    )
    
    
    Less: average dilutive unvested restricted stock awards
    
    
    (1,032
    )
    
    
    Average number of basic shares outstanding
    
    
    9,564,801
    
    
    
    9,539,044Plus: average dilutive unvested restricted stock awards
    
    
    1,032
    
    
    
    Plus: average diluted shares based on stock options
    
    
    
    
    
    
    Average number of diluted shares outstanding
    
    
    9,565,833
    
    
    
    9,539,044Basic earnings per share
    
    $
    0.05
    
    
    $
    0.11Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.11
 4. Dividends
  5. Loan Commitments and other Contingencies
  
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
  8




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##### Table of Contents



Forward-Looking Statements
  Critical Accounting Policies
  Allowance for Loan Losses.
 Income Taxes.
  Comparison of Financial Condition at March 31, 2007 and December 31, 2006
 Overview:
 Investment Activities
 9




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##### Table of Contents



At March 31, 2007
    
    
    At December 31, 2006Amortized
    
    
    
    
    
    
    Amortized
    
    
    FairCost
    
    
    Fair Value
    
    
    Cost
    
    
    Value(Dollars in Thousands)Securities available for sale:Government-sponsored enterprises
    
    $
    89,431
    
    
    $
    89,319
    
    
    $
    91,181
    
    
    $
    90,906Municipal bonds
    
    
    7,194
    
    
    
    7,175
    
    
    
    7,199
    
    
    
    7,174Corporate bonds and other obligations
    
    
    1,470
    
    
    
    1,480
    
    
    
    2,971
    
    
    
    2,977Mortgage-backed securities
    
    
    51,192
    
    
    
    50,974
    
    
    
    54,165
    
    
    
    53,838Total debt securities
    
    
    149,287
    
    
    
    148,948
    
    
    
    155,516
    
    
    
    154,895Common stock
    
    
    5,852
    
    
    
    7,062
    
    
    
    6,013
    
    
    
    7,318Total securities available for sale
    
    
    155,139
    
    
    
    156,010
    
    
    
    161,529
    
    
    
    162,213Securities held to maturity:Other bonds and obligations
    
    
    97
    
    
    
    97
    
    
    
    97
    
    
    
    97Restricted equity securities and other investments:Federal Home Loan Bank of Boston stock
    
    
    8,298
    
    
    
    8,298
    
    
    
    8,999
    
    
    
    8,999Savings Bank Life Insurance
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709Other investments
    
    
    3,377
    
    
    
    3,377
    
    
    
    3,114
    
    
    
    3,114Total restricted equity securities
and other investments
    
    
    13,384
    
    
    
    13,384
    
    
    
    13,822
    
    
    
    13,822Total securities
    
    $
    168,620
    
    
    $
    169,491
    
    
    $
    175,448
    
    
    $
    176,132
 Lending Activities:
 At March 31, 2007
    
    
    At December 31, 2006Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Mortgage loans on real estate:Residential
    
    $
    329,227
    
    
    
    55.05
    %
    
    $
    325,407
    
    
    
    55.85
    %Commercial
    
    
    183,724
    
    
    
    30.72
    
    
    
    170,971
    
    
    
    29.35Home equity
    
    
    54,780
    
    
    
    9.16
    
    
    
    56,856
    
    
    
    9.76567,731
    
    
    
    94.93
    
    
    
    553,234
    
    
    
    94.96Other loans:Commercial
    
    
    22,757
    
    
    
    3.80
    
    
    
    22,903
    
    
    
    3.93Consumer and other
    
    
    7,610
    
    
    
    1.27
    
    
    
    6,451
    
    
    
    1.1130,367
    
    
    
    5.07
    
    
    
    29,354
    
    
    
    5.04Total loans
    
    
    598,098
    
    
    
    100.00
    %
    
    
    582,588
    
    
    
    100.00
    %Other Items:Net deferred loan costs
    
    
    924
    
    
    
    
    
    
    
    891Unamortized premiums
    
    
    
    
    
    
    
    
    
    
    Allowance for loan losses
    
    
    (4,864
    )
    
    
    
    
    
    
    (4,677
    )Total Loans, net
    
    $
    594,158
    
    
    
    
    
    
    $
    578,802
 10




---



##### Table of Contents



Non-performing Assets:
 At March 31,
    
    
    At December 31,2007
    
    
    2006(Dollars in Thousands)Non-accrual loans:Residential mortgage
    
    $
    489
    
    
    $
    483Commercial mortgage
    
    
    346
    
    
    
    179Commercial
    
    
    640
    
    
    
    132Home equity, consumer and other
    
    
    56
    
    
    
    85Total non-accrual loans
    
    
    1,531
    
    
    
    879Loans greater than 90 days delinquent and still accruing:Residential mortgage
    
    
    
    
    
    
    Commercial mortgage
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    Home equity, consumer and other
    
    
    
    
    
    
    Total loans 90 days delinquent and still accruing
    
    
    
    
    
    
    Total non-performing assets
    
    $
    1,531
    
    
    $
    879Troubled debt restructurings
    
    $
    938
    
    
    $
    943Ratios:Non-performing loans to total loans
    
    
    0.26
    %
    
    
    0.15
    %Non-performing assets to total assets
    
    
    0.19
    %
    
    
    0.11
    %
 Allowance for Loan Losses :
   11




---



##### Table of Contents



At or for the Three MonthsEnded March 31,2007
    
    
    2006(Dollars in Thousands)Balance at beginning of period
    
    $
    4,677
    
    
    $
    4,220Charge-offs:Mortgage loans on real estate:
    
    
    
    
    
    
    Other loans:Commercial
    
    
    (40
    )
    
    
    (4
    )Consumer and other
    
    
    (40
    )
    
    
    (33
    )Total other loans
    
    
    (80
    )
    
    
    (37
    )Total charge-offs
    
    
    (80
    )
    
    
    (37
    )Recoveries:Mortgage loans on real estate
    
    
    
    
    
    
    Other loans:Commercial
    
    
    7
    
    
    
    97Consumer and other
    
    
    15
    
    
    
    19Total other loans
    
    
    22
    
    
    
    116Total recoveries
    
    
    22
    
    
    
    116Net (charge-offs) recoveries
    
    
    (58
    )
    
    
    79Provision for loan losses
    
    
    245
    
    
    
    164Balance at end of period
    
    $
    4,864
    
    
    $
    4,463Ratios:Net recoveries (charge-offs) to average loans outstanding  annualized
    
    
    (0.04
    %)
    
    
    0.06
    %Allowance for loan losses to non-performing loans at end of period
    
    
    317.70
    %
    
    
    939.58
    %Allowance for loan losses to total loans at end of period
    
    
    0.81
    %
    
    
    0.79
    %
 12




---



##### Table of Contents



Deposits
 At March 31, 2007
    
    
    At December 31, 2006Balance
    
    
    Percent
    
    
    Balance
    
    
    Percent(Dollars in Thousands)
    
    
    (Dollars in Thousands)Deposit type:Demand
    
    $
    51,457
    
    
    
    9.93
    %
    
    $
    50,753
    
    
    
    9.79
    %Regular savings
    
    
    48,564
    
    
    
    9.38
    
    
    
    50,939
    
    
    
    9.83LifePath Savings
    
    
    99,177
    
    
    
    19.15
    
    
    
    93,017
    
    
    
    17.95Money market deposits
    
    
    51,971
    
    
    
    10.03
    
    
    
    58,097
    
    
    
    11.21NOW deposits
    
    
    38,757
    
    
    
    7.48
    
    
    
    37,553
    
    
    
    7.24Total transaction accounts
    
    
    289,926
    
    
    
    55.97
    
    
    
    290,359
    
    
    
    56.02Certificates of deposit
    
    
    228,104
    
    
    
    44.03
    
    
    
    227,889
    
    
    
    43.98Total deposits
    
    $
    518,030
    
    
    
    100.00
    %
    
    $
    518,248
    
    
    
    100.00
    %
  Borrowings
 Stockholders Equity
 Comparison of Operating Results for the Three Months Ended March 31, 2007 and 2006
  Analysis of Net Interest Income
   13




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##### Table of Contents



Three Months Ended March 31, 2007
    
    
    Three Months Ended March 31, 2006Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    OutstandingBalance
    
    
    Interest
    
    
    Yield/ Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Yield/ Rate(1)(Dollars in thousands)Interest-earning assets:Loans  Net (2)
    
    $
    584,730
    
    
    $
    9,537
    
    
    
    6.52
    %
    
    $
    551,127
    
    
    $
    8,513
    
    
    
    6.18
    %Investment securities
    
    
    167,049
    
    
    
    2,105
    
    
    
    5.04
    %
    
    
    176,233
    
    
    
    1,818
    
    
    
    4.13
    %Short-term investments
    
    
    12,890
    
    
    
    156
    
    
    
    4.84
    %
    
    
    7,334
    
    
    
    80
    
    
    
    4.36
    %Total interest-earning assets
    
    
    764,669
    
    
    
    11,798
    
    
    
    6.17
    %
    
    
    734,694
    
    
    
    10,411
    
    
    
    5.67
    %Non-interest-earning assets
    
    
    40,697
    
    
    
    
    
    
    
    
    
    
    
    41,861Total assets
    
    $
    805,366
    
    
    
    
    
    
    
    
    
    
    $
    776,555Interest-bearing liabilities:Savings deposits
    
    $
    50,545
    
    
    
    53
    
    
    
    0.42
    %
    
    $
    62,205
    
    
    
    67
    
    
    
    0.43
    %LifePath Savings
    
    
    95,840
    
    
    
    979
    
    
    
    4.09
    %
    
    
    72,524
    
    
    
    562
    
    
    
    3.10
    %Money market
    
    
    48,294
    
    
    
    390
    
    
    
    3.23
    %
    
    
    51,879
    
    
    
    306
    
    
    
    2.36
    %NOW accounts
    
    
    35,581
    
    
    
    55
    
    
    
    0.62
    %
    
    
    38,166
    
    
    
    21
    
    
    
    0.22
    %Certificates of deposits
    
    
    228,583
    
    
    
    2,621
    
    
    
    4.59
    %
    
    
    197,220
    
    
    
    1,745
    
    
    
    3.54
    %Total interest-bearing deposits
    
    
    458,843
    
    
    
    4,098
    
    
    
    3.57
    %
    
    
    421,994
    
    
    
    2,701
    
    
    
    2.56
    %Borrowed Funds
    
    
    142,512
    
    
    
    1,644
    
    
    
    4.61
    %
    
    
    151,627
    
    
    
    1,611
    
    
    
    4.25
    %Total interest-bearing liabilities
    
    
    601,355
    
    
    
    5,742
    
    
    
    3.82
    %
    
    
    573,621
    
    
    
    4,312
    
    
    
    3.01
    %Non-interest-bearing liabilities
    
    
    56,259
    
    
    
    
    
    
    
    
    
    
    
    55,645Total liabilities
    
    
    657,614
    
    
    
    
    
    
    
    
    
    
    
    629,266Equity
    
    
    147,752
    
    
    
    
    
    
    
    
    
    
    
    147,289Total liabilities and equity
    
    $
    805,366
    
    
    
    
    
    
    
    
    
    
    $
    776,555Net interest income
    
    
    
    
    
    $
    6,056
    
    
    
    
    
    
    
    
    
    
    $
    6,099Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.35
    %
    
    
    
    
    
    
    
    
    
    
    2.66
    %Net interest-earning assets (4)
    
    $
    163,314
    
    
    
    
    
    
    
    
    
    
    $
    161,073Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.17
    %
    
    
    
    
    
    
    
    
    
    
    3.32
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    127.16
    %
    
    
    
    
    
    
    
    
    
    
    128.08
    %
 
 (1)
    
    Yields and rates for the three months ended March 31, 2007 and 2006 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, 2007 and 2006.(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.  14




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##### Table of Contents



Three Months Ended March 31,2007 vs. 2006Increase
    
    
    Total(Decrease) Due to
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)(Dollars in thousands)Interest-earning assets:Loans  Net
    
    $
    538
    
    
    $
    486
    
    
    $
    1,024Investment securities
    
    
    (89
    )
    
    
    376
    
    
    
    287Short-term investments
    
    
    66
    
    
    
    10
    
    
    
    76Total interest-earning assets
    
    
    515
    
    
    
    872
    
    
    
    1,387Interest-bearing liabilities:Savings deposits
    
    
    (12
    )
    
    
    (2
    )
    
    
    (14
    )Life Path
    
    
    210
    
    
    
    207
    
    
    
    417Money market
    
    
    (19
    )
    
    
    103
    
    
    
    84NOW accounts
    
    
    (1
    )
    
    
    35
    
    
    
    34Certificates of deposits
    
    
    306
    
    
    
    570
    
    
    
    876Total deposits
    
    
    484
    
    
    
    913
    
    
    
    1,397Borrowed Funds
    
    
    (82
    )
    
    
    115
    
    
    
    33Total interest-bearing liabilities
    
    
    402
    
    
    
    1,028
    
    
    
    1,430Change in net interest income
    
    $
    113
    
    
    $
    (156
    )
    
    $
    (43
    )
 Net interest income
 Interest income
 Interest expense
 Provision for loan loss expense
 Non-interest income
 15




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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, 2007Total capital to risk weighted assets
    
    $
    101,517
    
    
    
    18.2
    %
    
    $
    44,578
    
    
    
    8.0
    %
    
    $
    55,723
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:
    
    
    95,937
    
    
    
    17.2
    
    
    
    22,289
    
    
    
    4.0
    
    
    
    33,434
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    95,937
    
    
    
    12.5
    
    
    
    23,045
    
    
    
    3.0
    
    
    
    38,408
    
    
    
    5.0December 31, 2006:Total capital to risk weighted assets:
    
    $
    101,280
    
    
    
    18.9
    %
    
    $
    42,808
    
    
    
    8.0
    %
    
    $
    53,510
    
    
    
    10.0
    %Tier 1 capital to risk weighted assets:
    
    
    95,825
    
    
    
    17.9
    
    
    
    21,404
    
    
    
    4.0
    
    
    
    32,106
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    95,825
    
    
    
    12.5
    
    
    
    22,906
    
    
    
    3.0
    
    
    
    38,177
    
    
    
    5.0
 Contractual Obligations
 March 31, 2007More than
    
    More thanOne Year
    
    Three YearsOne Year
    
    through
    
    through
    
    Over FiveTotal
    
    or Less
    
    Three Years
    
    Five Years
    
    Years(Dollars in Thousands)Federal Home Loan Bank of Boston advances
    
    $
    148,751
    
    
    $
    39,700
    
    
    $
    85,061
    
    
    $
    8,750
    
    
    $
    15,240Securities sold under agreements to repurchase
    
    
    4,432
    
    
    
    4,432
    
    
    
    
    
    
    
    
    
    
    
    Total FHLBB advances and repurchase agreements
    
    $
    153,183
    
    
    $
    44,132
    
    
    $
    85,061
    
    
    $
    8,750
    
    
    $
    15,240
 16




---



##### Table of Contents



Off-Balance Sheet Arrangements:
 March 31, 2007More than
    
    
    More thanOne Year
    
    
    Three YearsOne Year
    
    
    through
    
    
    Through FiveTotal
    
    
    or Less
    
    
    Three Years
    
    
    Years
    
    
    Over Five years(Dollars in Thousands)Commitments to grant loans (1)
    
    $
    21,496
    
    
    $
    21,496
    
    
    $
    
    
    
    $
    
    
    
    $
    Commercial loan lines-of-credit
    
    
    14,689
    
    
    
    14,689
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity loans (2)
    
    
    68,318
    
    
    
    477
    
    
    
    1,662
    
    
    
    8,084
    
    
    
    58,095Unused portion of construction loans (3)
    
    
    4,625
    
    
    
    4,625
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of overdraft lines-of-credit(4)
    
    
    3,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,995Unused portion of personal lines-of-credit(5)
    
    
    456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    456Standby letters of credit(6)
    
    
    606
    
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    Other commitments and contingencies(7)
    
    
    7,832
    
    
    
    7,832
    
    
    
    
    
    
    
    
    
    
    
    Total loan commitments
    
    $
    122,017
    
    
    $
    49,725
    
    
    $
    1,662
    
    
    $
    8,084
    
    
    $
    62,546
 
 (1)
    
    Commitments for loans are extended to customers for up to 60 days after which they expire.(2)
    
    Unused portions of home equity loans are available to the borrower for up to 10 years.(3)
    
    Unused portions of construction loans are available to the borrower for up to one year.(4)
    
    Unused portion of checking overdraft lines-of-credit are available to customers in good standing indefinitely.(5)
    
    Unused portion of personal lines-of-credit are available to customers in good standing indefinitely.(6)
    
    Standby letters of credit are generally available for less than one year.(7)
    
    Other commitments relate primarily to potential additional capital calls the Company is committed to contribute as part of its investment
in certain limited partnerships. 
 Item 3: Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4: Controls and Procedures
 Disclosure Controls and Procedures
 Internal Control Over Financial Reporting
 17




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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  A trust established under the Companys 2006
Equity Incentive Plan purchased 412,344 shares in connection with anticipated awards of
restricted stock under the Plan as approved by the Shareholders at a Special Meeting on
November 1, 2006, as follows:
 (d) Maximum Number or(c) Total Number of
    
    
    Approximate Dollar ValueShares Purchased as Part
    
    
    of Shares that May Yet Be(a) Total Number of
    
    
    (b) Average Price
    
    
    of Publicly announced
    
    
    Purchased Under the PlansPeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    Plans or Programs
    
    
    or ProgramsJanuary 1  31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    412,344February 1  28
    
    
    412,344
    
    
    $
    16.15
    
    
    
    412,344
    
    
    
    March 1 - 31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5 Other Information
  18




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##### Table of Contents



Item 6 Exhibits
 2.1
    
    Amended and Restated Plan of Conversion*3.1
    
    Certificate of Incorporation of Legacy Bancorp, Inc.*3.2
    
    Bylaws of Legacy Bancorp, Inc. (as amended)*10.1
    
    Legacy Banks ESOP Trust Agreement**10.2
    
    ESOP Plan Document**10.3
    
    ESOP Loan Documents**10.4.1
    
    Employment Agreement between Legacy Banks and J. Williar Dunlaevy**10.4.2
    
    Employment Agreement between Legacy Banks and Michael A. Christopher**10.4.3
    
    Employment Agreement between Legacy Banks and Steven F. Pierce**10.4.4
    
    Employment Agreement between Legacy Banks and Stephen M. Conley**10.4.5
    
    Employment Agreement between Legacy Banks and Richard M. Sullivan**10.5.1
    
    Employment Agreement between Legacy Bancorp, Inc. and J. Williar Dunlaevy**10.5.2
    
    Employment Agreement between Legacy Bancorp, Inc. and Michael A. Christopher**10.5.3
    
    Employment Agreement between Legacy Bancorp, Inc. and Steven F. Pierce**10.5.4
    
    Employment Agreement between Legacy Bancorp, Inc. and Stephen M. Conley**10.5.5
    
    Employment Agreement between Legacy Bancorp, Inc. and Richard M. Sullivan**10.8
    
    Legacy Banks Employee Severance Compensation Plan**10.9.1
    
    Legacy Banks Supplemental Executive Retirement Plan with J. Williar Dunlaevy**10.9.2
    
    Legacy Banks Supplemental Executive Retirement Plan with Michael A. Christopher**10.10
    
    Director Fee Continuation Plan**11.0
    
    Statement re: Computation of per share earnings is incorporated herein by
reference to Notes to Consolidated Financial Statementswithin Part I, Item 1,
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 Stephen M. Conley32
    
    Certification pursuant to 18 U.S.C. Section 1350
 
 *
    
    Incorporated by reference from the Registrants Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 2005 filed October 27, 2005.**
    
    Incorporated by reference from the Registration Statement on Form S-1 (No. 333-126481) filed
July 8, 2005, as amended. 19




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##### Table of Contents



SIGNATURES
  LEGACY BANCORP, INC.Date: May 10, 2007
    
    /s/ J. Williar Dunlaevy

J. Williar Dunlaevy
Chief Executive Officer and Chairman of the BoardDate: May 10, 2007
    
    /s/ Stephen M. ConleyStephen M. ConleySenior Vice President, Chief Financial Officer and
Treasurer (Principal Accounting Officer)
 20