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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2005



or



| ̈ | 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



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LEGACY BANCORP, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 20-3135053                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|99 North Street, Pittsfield, Massachusetts                     |  | 01201                            
|(Address of principal executive offices)                       |  | (Zip Code)                       



(413) 443-4421

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ̈No  x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Exchange
Act).    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12(b)-2 of the Exchange Act).    Yes ̈No  x



Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                               |  |                                
|------------------------------ |  | -------------------------------
|Class                          |  | Outstanding at October 26, 2005
|(Common stock, $.01 par value) |  | 10,308,600 Shares              



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##### Table of Contents

LEGACY BANCORP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY



|                               |  |                                                                                                                                                |  |         
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                               |  |                                                                                                                                                |  | Page No.
|Part I - Financial Information |  |                                                                                                                                               
|                               |  |                                                                                                                                               
|Item 1                         |  | Financial Statements                                                                                                                           |  |         
|                               |  |                                                                                                                                               
|                               |  | Consolidated Balance Sheets as of September 30, 2005, and December 31, 2004                                                                    |  | 3       
|                               |  |                                                                                                                                               
|                               |  | Consolidated Statements of Income for the three months ended September 30, 2005 and 2004 and the nine
months ended September 30, 2005 and 2004 |  | 4       
|                               |  |                                                                                                                                               
|                               |  | Consolidated Statements of Changes in Stockholders Equity for the nine months ended September 30, 2005, and
2004                               |  | 5       
|                               |  |                                                                                                                                               
|                               |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2005, and 2004                                                   |  | 6       
|                               |  |                                                                                                                                               
|                               |  | Notes to Consolidated Financial Statements                                                                                                     |  | 8       
|                               |  |                                                                                                                                               
|Item 2                         |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                          |  | 8       
|                               |  |                                                                                                                                               
|Item 3                         |  | Quantitative and Qualitative Disclosures About Market Risks                                                                                    |  | 21      
|                               |  |                                                                                                                                               
|Item 4                         |  | Controls and Procedures                                                                                                                        |  | 22      
|                               | 
|Part II -
Other Information    |  |                                                                                                                                               
|                               |  |                                                                                                                                               
|Item 2(b)                      |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                    |  | 23      
|                               |  |                                                                                                                                               
|Item 5                         |  | Other Information                                                                                                                              |  | 23      
|                               |  |                                                                                                                                               
|Item 6                         |  | Exhibits and Reports on Form 8-K                                                                                                               |  | 23      



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##### Table of Contents

Item 1: Financial Statements



Effective as of
October 26, 2005, Legacy Bancorp, Inc., a Delaware corporation (the Registrant), became the holding company of Legacy Banks, a Massachusetts-chartered stock savings bank, in connection with the conversion of the holding company
structure of Legacy Banks from mutual to stock form. Prior to October 26, 2005, Mutual Bancorp of the Berkshires, Inc., a Massachusetts-chartered mutual holding company (referred to herein as the Company), owned all of the
outstanding common stock of Legacy Group, Inc., the Massachusetts-chartered mid-tier bank holding company of Legacy Banks (the Mid-Tier), and the Mid-Tier owned all of the outstanding common stock of Legacy Banks.



Effective as of October 26, 2005, the Company and the Mid-Tier merged out of existence,
and the Registrant consummated the sale of 9,545,000 shares of its common stock to the public at a price of $10.00 per share, and contributed an additional 763,600 shares of its outstanding common stock to The Legacy Banks Foundation in exchange for
$0.01 per share, being the par value of the shares. Also on October 26, 2005, Legacy Banks issued all of its shares of common stock to the Registrant in exchange for 50% of the net proceeds of the public offering. During the period presented in
this Quarterly Report on Form 10-Q, the Registrant was newly organized and owned no assets. Therefore, the financial information presented in this report is that of Mutual Bancorp of the Berkshires, Inc. and its direct and indirect subsidiaries.



MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



|                                                                                         |  |                    |         |   |                   |   |        
|---------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | -------
|                                                                                         |  | September 30, 2005 |         |   | December 31, 2004
|                                                                                         |  | (Unaudited)        |         |   |                  
|ASSETS                                                                                   |  |                    |         |   |                   |   |        
|                                                                                         |  |                   
|Cash and due from banks                                                                  |  | $                  | 14,213  |   |                   | $ | 11,879 
|Short-term investments                                                                   |  |                    | 19,267  |   |                   |   | 4,919  
|                                                                                         |  |                    |         |   |                   |   |        
|Cash and cash equivalents                                                                |  |                    | 33,480  |   |                   |   | 16,798 
|                                                                                         |  |                   
|Securities                                                                               |  |                    | 140,517 |   |                   |   | 131,215
|Loans held for sale                                                                      |  |                    | 608     |   |                   |   | 616    
|Loans, net of allowance for loan losses of $4,196 in 2005 (unaudited) and $3,846 in 2004 |  |                    | 533,227 |   |                   |   | 504,728
|Premises and equipment, net                                                              |  |                    | 14,326  |   |                   |   | 13,777 
|Accrued interest receivable                                                              |  |                    | 2,982   |   |                   |   | 2,789  
|Goodwill, net                                                                            |  |                    | 3,085   |   |                   |   | 3,085  
|Net deferred tax asset                                                                   |  |                    | 2,702   |   |                   |   | 2,783  
|Bank-owned life insurance                                                                |  |                    | 3,861   |   |                   |   | 3,886  
|Other assets                                                                             |  |                    | 2,940   |   |                   |   | 1,610  
|                                                                                         |  |                    |         |   |                   |   |        
|                                                                                         |  | $                  | 737,728 |   |                   | $ | 681,287
|                                                                                         |  |                    |         |   |                   |   |        
|LIABILITIES AND RETAINED EARNINGS                                                        |  |                    |         |   |                   |   |        
|                                                                                         |  |                   
|Deposits                                                                                 |  | $                  | 495,396 |   |                   | $ | 450,868
|Securities sold under agreements to repurchase                                           |  |                    | 5,459   |   |                   |   | 4,557  
|Federal Home Loan Bank advances                                                          |  |                    | 168,564 |   |                   |   | 159,704
|Mortgagors escrow accounts                                                              |  |                    | 1,238   |   |                   |   | 1,020  
|Accrued expenses and other liabilities                                                   |  |                    | 5,258   |   |                   |   | 5,691  
|                                                                                         |  |                    |         |   |                   |   |        
|Total liabilities                                                                        |  |                    | 675,915 |   |                   |   | 621,840
|                                                                                         |  |                    |         |   |                   |   |        
|Retained earnings                                                                        |  |                    | 62,655  |   |                   |   | 59,437 
|Accumulated other comprehensive (loss) income                                            |  |                    | (842    | ) |                   |   | 10     
|                                                                                         |  |                    |         |   |                   |   |        
|Total retained earnings                                                                  |  |                    | 61,813  |   |                   |   | 59,447 
|                                                                                         |  |                    |         |   |                   |   |        
|                                                                                         |  | $                  | 737,728 |   |                   | $ | 681,287
|                                                                                         |  |                    |         |   |                   |   |        



See accompanying notes
to condensed consolidated financial statements



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MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands)



|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|---------------------------------------------------- |  | -------------------------------- | ----- | ---- | ------------------------------ | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                     |  | Three Months Ended September 30, |       |      | Nine Months EndedSeptember 30, |      
|                                                     |  | 2005                             |       | 2004 |                                |       | 2005 |  |   | 2004   |  
|                                                     |  | (Unaudited)                      |       |      | (Unaudited)                    |      
|Interest and dividend income:                        |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Loans, including fees                                |  | $                                | 7,925 |      | $                              | 6,904 |      |  | $ | 22,791 |   |  | $ | 20,176 |  
|Securities:                                          |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Taxable                                              |  |                                  | 1,222 |      |                                | 1,022 |      |  |   | 3,569  |   |  |   | 2,926  |  
|Tax-Exempt                                           |  |                                  | 51    |      |                                | 8     |      |  |   | 124    |   |  |   | 19     |  
|Short-term investments                               |  |                                  | 96    |      |                                | 22    |      |  |   | 190    |   |  |   | 48     |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Total interest and dividend income                   |  |                                  | 9,294 |      |                                | 7,956 |      |  |   | 26,674 |   |  |   | 23,169 |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Interest expense:                                    |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Deposits                                             |  |                                  | 2,226 |      |                                | 1,449 |      |  |   | 5,885  |   |  |   | 4,053  |  
|Federal Home Loan Bank advances                      |  |                                  | 1,681 |      |                                | 1,436 |      |  |   | 4,969  |   |  |   | 4,102  |  
|Other borrowed funds                                 |  |                                  | 25    |      |                                | 210   |      |  |   | 61     |   |  |   | 633    |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Total interest expense                               |  |                                  | 3,932 |      |                                | 3,095 |      |  |   | 10,915 |   |  |   | 8,788  |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Net interest income                                  |  |                                  | 5,362 |      |                                | 4,861 |      |  |   | 15,759 |   |  |   | 14,381 |  
|Provision for loan losses                            |  |                                  | 99    |      |                                | 252   |      |  |   | 476    |   |  |   | 352    |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Net interest income, after provision for loan losses |  |                                  | 5,263 |      |                                | 4,609 |      |  |   | 15,283 |   |  |   | 14,029 |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Non-interest income:                                 |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Customer service fees                                |  |                                  | 701   |      |                                | 656   |      |  |   | 2,039  |   |  |   | 1,935  |  
|Trust department fees                                |  |                                  | 228   |      |                                | 205   |      |  |   | 667    |   |  |   | 624    |  
|Income from bank owned life insurance                |  |                                  | 96    |      |                                | 18    |      |  |   | 139    |   |  |   | 18     |  
|Insurance fees                                       |  |                                  | 48    |      |                                | 73    |      |  |   | 120    |   |  |   | 203    |  
|Gain (loss) on sales of securities, net              |  |                                  | 61    |      |                                | (18   | )    |  |   | 138    |   |  |   | 99     |  
|Loss on impairment of securities available for sale  |  |                                  |      |      |                                |      |      |  |   | (25    | ) |  |   |       |  
|Loss on impairment of other closely held stocks      |  |                                  |      |      |                                |      |      |  |   |       |   |  |   | (10    | )
|Gain on sales of loans, net                          |  |                                  | 117   |      |                                | 63    |      |  |   | 186    |   |  |   | 229    |  
|Miscellaneous                                        |  |                                  | 3     |      |                                | 227   |      |  |   | 7      |   |  |   | 230    |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Total non-interest income                            |  |                                  | 1,254 |      |                                | 1,224 |      |  |   | 3,271  |   |  |   | 3,328  |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Non-interest expenses:                               |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Salaries and employee benefits                       |  |                                  | 2,570 |      |                                | 2,602 |      |  |   | 7,644  |   |  |   | 7,524  |  
|Occupancy and equipment                              |  |                                  | 540   |      |                                | 503   |      |  |   | 1,629  |   |  |   | 1,580  |  
|Data processing                                      |  |                                  | 475   |      |                                | 452   |      |  |   | 1,409  |   |  |   | 1,400  |  
|Professional fees                                    |  |                                  | 133   |      |                                | 133   |      |  |   | 394    |   |  |   | 402    |  
|Advertising                                          |  |                                  | 166   |      |                                | 125   |      |  |   | 515    |   |  |   | 452    |  
|Other general and administrative                     |  |                                  | 521   |      |                                | 520   |      |  |   | 1,710  |   |  |   | 1,741  |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Total non-interest expenses                          |  |                                  | 4,405 |      |                                | 4,335 |      |  |   | 13,301 |   |  |   | 13,099 |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Income before income taxes                           |  |                                  | 2,112 |      |                                | 1,498 |      |  |   | 5,253  |   |  |   | 4,258  |  
|                                                     |  |                                  |       |     
|Provision for income taxes                           |  |                                  | 832   |      |                                | 589   |      |  |   | 2,035  |   |  |   | 1,647  |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  
|Net income                                           |  | $                                | 1,280 |      | $                              | 909   |      |  | $ | 3,218  |   |  | $ | 2,611  |  
|                                                     |  |                                  |       |      |                                |       |      |  |   |        |   |  |   |        |  



See accompanying notes
to condensed consolidated financial statements



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MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(Dollars in thousands)



|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | - | ----------------------------------- | - | ----------------- |  | ------------------------------------------- | - |  | ---------------------- | ------ |  | - | ---- | - |  | - | ------ | -
|                                                                                                                                    |  | Common Stock |  | AdditionalPaid-in Capital |   | UnallocatedCommonStock Held by ESOP |   | Retained Earnings |  | AccumulatedOtherComprehensive Income (Loss) |   |  | TotalRetained Earnings |       
|                                                                                                                                    |  | Shares       |  | Amount                    |   |                                     |   |                   | 
|Balance at December 31, 2003                                                                                                        |  |             |  | $                         |  |                                     | $ |                  |  | $                                           |  |  | $                      | 55,883 |  | $ | 452  |   |  | $ | 56,335 |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Comprehensive income:                                                                                                               |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Net income (unaudited)                                                                                                              |  |             |  |                           |  |                                     |   |                  |  |                                             |  |  |                        | 2,611  |  |   |     |   |  |   | 2,611  |  
|Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
(unaudited) |  |             |  |                           |  |                                     |   |                  |  |                                             |  |  |                        |       |  |   | (315 | ) |  |   | (315   | )
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Total comprehensive income (unaudited)                                                                                              |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   | 2,296  |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Balance at September 30, 2004 (unaudited)                                                                                           |  |             |  | $                         |  |                                     | $ |                  |  | $                                           |  |  | $                      | 58,494 |  | $ | 137  |   |  | $ | 58,631 |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Balance at December 31, 2004                                                                                                        |  |             |  | $                         |  |                                     | $ |                  |  | $                                           |  |  | $                      | 59,437 |  | $ | 10   |   |  | $ | 59,447 |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Comprehensive income:                                                                                                               |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Net income (unaudited)                                                                                                              |  |             |  |                           |  |                                     |   |                  |  |                                             |  |  |                        | 3,218  |  |   |     |   |  |   | 3,218  |  
|Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
(unaudited) |  |             |  |                           |  |                                     |   |                  |  |                                             |  |  |                        |       |  |   | (852 | ) |  |   | (852   | )
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Total comprehensive income (unaudited)                                                                                              |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |       |  |   |      |   |  |   | 2,366  |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  
|Balance at September 30, 2005 (unaudited)                                                                                           |  |             |  | $                         |  |                                     | $ |                  |  | $                                           |  |  | $                      | 62,655 |  | $ | (842 | ) |  | $ | 61,813 |  
|                                                                                                                                    |  |              |  |                           |   |                                     |   |                   |  |                                             |   |  |                        |        |  |   |      |   |  |   |        |  



See accompanying notes
to condensed consolidated financial statements



5



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##### Table of Contents

MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)



|                                                                                  |  |                                 |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months Ended September 30, |        
|                                                                                  |  | 2005                            |         |   | 2004 |  
|                                                                                  |  | (Unaudited)                     |        
|Cash flows from operating activities:                                             |  |                                 |         |   |      |   |         |  
|Net income                                                                        |  | $                               | 3,218   |   |      | $ | 2,611   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |         |   |      |   |         |  
|Provision for loan losses                                                         |  |                                 | (476    | ) |      |   | (352    | )
|Net amortization of securities                                                    |  |                                 | 204     |   |      |   | 374     |  
|Amortization of mortgage servicing rights                                         |  |                                 | 4       |   |      |   |        |  
|Depreciation and amortization expense                                             |  |                                 | 706     |   |      |   | 697     |  
|Gain on sales of securities, net                                                  |  |                                 | (138    | ) |      |   | (99     | )
|Loss on impairment of securities available for sale                               |  |                                 | 25      |   |      |   |        |  
|Loss on impairment of other closely held stocks                                   |  |                                 |        |   |      |   | 10      |  
|Gain on sales of loans, net                                                       |  |                                 | (186    | ) |      |   | (229    | )
|Loans originated for sale                                                         |  |                                 | (8,504  | ) |      |   | (9,105  | )
|Proceeds from sale of loans                                                       |  |                                 | 8,512   |   |      |   | 9,753   |  
|Deferred tax benefit                                                              |  |                                 | 601     |   |      |   | 526     |  
|Net change in:                                                                    |  |                                 |         |   |      |   |         |  
|Bank-owned life insurance                                                         |  |                                 | (173    | ) |      |   | (57     | )
|Accrued interest receivable                                                       |  |                                 | (193    | ) |      |   | (42     | )
|Other assets                                                                      |  |                                 | (1,284  | ) |      |   | (365    | )
|Accrued expenses and other liabilities                                            |  |                                 | (433    | ) |      |   | (706    | )
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                 | 1,883   |   |      |   | 3,016   |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Cash flows from investing activities:                                             |  |                                 |         |   |      |   |         |  
|Activity in available-for-sale securities:                                        |  |                                 |         |   |      |   |         |  
|Sales                                                                             |  |                                 | 4,331   |   |      |   | 1,041   |  
|Maturities, prepayments and calls                                                 |  |                                 | 18,017  |   |      |   | 35,159  |  
|Purchases                                                                         |  |                                 | (32,887 | ) |      |   | (44,797 | )
|Purchases of Federal Home Loan Bank stock                                         |  |                                 | (226    | ) |      |   | (1,070  | )
|Loan originations and purchases, net of principal payments                        |  |                                 | (27,837 | ) |      |   | (36,761 | )
|Purchases of bank-owned life insurance                                            |  |                                 |        |   |      |   | (3,000  | )
|Redemption of bank-owned life insurance                                           |  |                                 | 198     |   |      |   |        |  
|Additions to premises and equipment                                               |  |                                 | (1,255  | ) |      |   | (232    | )
|Additions to mortgage servicing rights                                            |  |                                 | (50     | ) |      |   |        |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                                 | (39,709 | ) |      |   | (49,660 | )
|                                                                                  |  |                                 |         |   |      |   |         |  



See accompanying notes
to condensed consolidated financial statements



6



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MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Dollars in thousands)



|                                                              |  |                                 |          |   |      |   |         |  
|------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | ------- | -
|                                                              |  | Nine Months Ended September 30, |         
|                                                              |  | 2005                            |          |   | 2004 |  
|Cash flows from financing activities:                         |  |                                 |          |   |      |   |         |  
|Net increase in deposits                                      |  |                                 | 44,528   |   |      |   | 37,360  |  
|Net decrease in securities sold under agreement to repurchase |  |                                 | 902      |   |      |   | (2,351  | )
|Repayment of Federal Home Loan Bank advances                  |  |                                 | (103,927 | ) |      |   | (72,355 | )
|Proceeds from Federal Home Loan Bank advances                 |  |                                 | 112,787  |   |      |   | 88,850  |  
|Net change in other secured borrowings                        |  |                                 |         |   |      |   | (622    | )
|Net increase in mortgagors escrow accounts                   |  |                                 | 218      |   |      |   | 482     |  
|                                                              |  |                                 |          |   |      |   |         |  
|Net cash provided (used) by financing activities              |  |                                 | 54,508   |   |      |   | 51,364  |  
|                                                              |  |                                 |          |   |      |   |         |  
|Net decrease in cash and cash equivalents                     |  |                                 | 16,682   |   |      |   | 4,720   |  
|                                                              |  |                                
|Cash and cash equivalents at beginning of period              |  |                                 | 16,798   |   |      |   | 23,042  |  
|                                                              |  |                                 |          |   |      |   |         |  
|Cash and cash equivalents at end of period                    |  | $                               | 33,480   |   |      | $ | 27,762  |  
|                                                              |  |                                 |          |   |      |   |         |  
|Supplemental cash flow information:                           |  |                                 |          |   |      |   |         |  
|Interest paid on deposits                                     |  | $                               | 5,948    |   |      | $ | 5,860   |  
|Interest paid on Federal Home Loan Bank advances              |  |                                 | 4,917    |   |      |   | 4,943   |  
|Interest paid on other borrowed funds                         |  |                                 | 61       |   |      |   | 633     |  
|Income taxes paid                                             |  |                                 | 1,900    |   |      |   | 1,765   |  
|Transfers from loans to loans held for sale                   |  |                                 | 6,629    |   |      |   |        |  



See accompanying notes
to condensed consolidated financial statements



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MUTUAL BANCORP OF THE BERKSHIRES AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. Basis of presentation



The accompanying unaudited consolidated financial statements include the accounts of Mutual Bancorp of the Berkshires (Company), its wholly-owned subsidiary,
Legacy Group, Inc. (Legacy), and its wholly-owned subsidiary, Legacy Banks (Bank). The accounts of Legacy Banks include all of its wholly-owned subsidiaries. These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) for interim financial statements and the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP for complete financial statements. The financial information included herein as of September 30, 2005 and for the interim periods ended September 30, 2005 and 2004 is unaudited; however, in the opinion of
management the information reflects all adjustments (consisting solely of normal recurring adjustments) that are necessary for a fair presentation. The results shown for nine months ended September 30, 2005 and 2004 are not necessarily
indicative of the results to be obtained for a full year.



These consolidated
interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Registration Statement on Form S-1 of Legacy Bancorp, Inc.



2. Loan Commitments and other Contingencies



Outstanding loan commitments and other contingencies totaled $105.9 million at
September 30, 2005, compared to $107.4 million as of December 31, 2004. Loan commitments and other contingencies primarily consist of commitments to originate new loans as well as the outstanding unused portions of lines of credit.



Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations



The following analysis discusses the changes in financial position and results of operations of Mutual Bancorp of the Berkshires, Inc and subsidiary, and should be read
in conjunction with their unaudited consolidated interim financial statements and the notes thereto, appearing in Part I, Item 1 of this report.



Forward-Looking Statements



Certain statements herein constitute forward-looking statements and actual results may differ from those contemplated by these statements. Forward-looking
statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like believe, expect, anticipate, estimate, and intend or
future or conditional verbs such as will, would, should, could, or may. Certain factors that could cause actual results to differ materially from expected results include changes in the
interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged and changes in the securities market.



Critical Accounting Policies



Critical accounting policies are those that involve significant judgments and assessments by
management, and which could potentially result in materially different results under different assumptions and conditions. We consider the following to be critical accounting policies:



Allowance for Loan Losses. The determination of the allowance for loan losses is considered critical due to the high degree of
judgment involved, the subjectivity of the underlying assumptions used, and the potential for changes in the economic environment that could result in material changes in the amount of the allowance for loan losses considered necessary. The
allowance is evaluated on a regular basis by management and is based on a periodic review of the collectibility of the loans in light of historical experience, the nature and size of the loan portfolio, adverse situations that may affect
borrowers ability to repay, the estimated value of any underlying collateral and prevailing economic conditions.



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Income Taxes. The Company uses the asset and liability method of accounting for income taxes. Under this
method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation
allowance related to deferred tax assets is established when, in managements judgment, it is more likely than not that all or a portion of such deferred tax assets will not be realized.



This discussion has highlighted those accounting policies that management considers to be
critical; however all accounting policies are important, and therefore you are encouraged to review each of the policies included in Note 1 to the consolidated financial statements in the Registration Statement on Form S-1 of Legacy Bancorp, Inc.,
to gain a better understanding of how our financial performance is measured and reported.



Comparison of Financial Condition At September 30, 2005 (unaudited) and December 31, 2004



Overview:Total assets increased by $56.4 million, or 8.3%, from $681.3 million at December 31, 2004 to $737.7 million at September 30, 2005. This
increase was due to growth in the loan portfolio of $28.5 million, or 5.6% to $533.8 million at September 30, 2005, as well as growth in investment securities of $9.3 million, or 7.1% to $140.5 million at September 30, 2005. Cash and short
term investments also increased by $16.7 million to $33.5 million at September 30, 2005. Each of these increases is discussed below.



Investment Activities: Cash and short term investments increased by $16.7 million, or 99.3% from $16.8 million at December 31, 2004 to $33.5 million at
September 30, 2005. This was primarily due to an increase in overnight federal funds sold, which increased by $13.4 million to $18.2 million at September 30, 2005, and was made possible by funds provided by recent deposit growth, as well
as subscription funds received during the beginning phase of the Registrants subscription offering, which ended on October 11, 2005. Investment securities increased $9.3 million, or 7.1%, to $140.5 million at September 30, 2005.
Since the beginning of the year the Bank has decreased its holdings of corporate bonds and mortgage-backed securities, replacing them with additional federal agency bonds, municipal investments which have attractive tax-equivalent yields, and common
stock. Most of the purchases of U.S. government and federal agency securities occurred during the third quarter of 2005 using short term borrowings, which the Bank expects to repay in the fourth quarter. At September 30, 2005, the
Companys available-for-sale portfolio amounted to $129.4 million, or 17.5% of total assets. The following table sets forth at the dates indicated information regarding the amortized cost and market values of the Companys investment
securities.



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|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|----------------------------------------- |  | ---------------------- | ------- | -------------------- | - | -------------- |  | ---------- | ------- |  | - | -------
|                                          |  | At September 30, 2005  |         | At December 31, 2004
|                                          |  | Amortized Cost         |         | Fair Value           |   | Amortized Cost |  | Fair Value
|                                          |  | (Dollars in Thousands)
|Securities available for sale:            |  |                        |         |                      |   |                |  |            |         |  |   |        
|U.S. Government and agency obligations    |  | $                      | 58,400  |                      | $ | 57,446         |  | $          | 42,504  |  | $ | 42,263 
|Municipal bonds                           |  |                        | 5,765   |                      |   | 5,732          |  |            | 3,575   |  |   | 3,565  
|Corporate bonds and other obligations     |  |                        | 6,664   |                      |   | 6,707          |  |            | 12,448  |  |   | 12,696 
|Mortgage-backed securities                |  |                        | 55,689  |                      |   | 54,715         |  |            | 58,657  |  |   | 58,253 
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Total debt securities                     |  |                        | 126,518 |                      |   | 124,600        |  |            | 117,184 |  |   | 116,777
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Marketable equity securities:             |  |                        |         |                      |   |                |  |            |         |  |   |        
|Common stock                              |  |                        | 4,159   |                      |   | 4,768          |  |            | 3,045   |  |   | 3,514  
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Total securities available for sale       |  |                        | 130,677 |                      |   | 129,368        |  |            | 120,229 |  |   | 120,291
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Securities held to maturity:              |  |                        |         |                      |   |                |  |            |         |  |   |        
|Other bonds                               |  |                        | 161     |                      |   | 161            |  |            | 161     |  |   | 161    
|Mortgage-backed securities                |  |                        | 1       |                      |   | 1              |  |            | 2       |  |   | 2      
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|                                          |  |                        | 162     |                      |   | 162            |  |            | 163     |  |   | 163    
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Restricted equity securities:             |  |                        |         |                      |   |                |  |            |         |  |   |        
|Federal Home Loan Bank of Boston stock    |  |                        | 9,056   |                      |   | 9,056          |  |            | 8,830   |  |   | 8,830  
|Savings Bank Life Insurance and DIF stock |  |                        | 1,709   |                      |   | 1,709          |  |            | 1,709   |  |   | 1,709  
|Other restricted equity securities        |  |                        | 222     |                      |   | 222            |  |            | 222     |  |   | 222    
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Total restricted equity securities        |  |                        | 10,987  |                      |   | 10,987         |  |            | 10,761  |  |   | 10,761 
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        
|Total securities                          |  | $                      | 141,826 |                      | $ | 140,517        |  | $          | 131,153 |  | $ | 131,215
|                                          |  |                        |         |                      |   |                |  |            |         |  |   |        



Lending Activities:Total loans, including loans held for sale, at September 30, 2005 were $533.8 million, an increase of $28.5 million, or 5.6%, from $505.3 million at December 31, 2004. The following table sets forth the composition of the
Banks loan portfolio (not including loans held for sale) in dollar amounts and as a percentage of the respective portfolio at the dates indicated.



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|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|------------------------------ |  | ---------------------- | ------- | - | -------------------- | ------ | - | ------ | - | ------- | ------- |  | ------ | -
|                               |  | At September 30, 2005  |         |   | At December 31, 2004 |       
|                               |  | Amount                 |         |   | Percent              |        |   | Amount |   |         | Percent | 
|                               |  | (Dollars in Thousands) |        
|Mortgage loans on real estate: |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Residential                    |  | $                      | 288,206 |   |                      | 53.66  | % |        | $ | 276,318 |         |  | 54.36  | %
|Commercial                     |  |                        | 160,693 |   |                      | 29.92  |   |        |   | 141,616 |         |  | 27.86  |  
|Home equity                    |  |                        | 56,717  |   |                      | 10.55  |   |        |   | 55,078  |         |  | 10.83  |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|                               |  |                        | 505,616 |   |                      | 94.13  |   |        |   | 473,012 |         |  | 93.05  |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Other loans:                   |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Commercial                     |  |                        | 22,621  |   |                      | 4.21   |   |        |   | 24,856  |         |  | 4.89   |  
|Consumer and other             |  |                        | 8,901   |   |                      | 1.66   |   |        |   | 10,482  |         |  | 2.06   |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|                               |  |                        | 31,522  |   |                      | 5.87   |   |        |   | 35,338  |         |  | 6.95   |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Total loans                    |  |                        | 537,138 |   |                      | 100.00 | % |        |   | 508,350 |         |  | 100.00 | %
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Other Items:                   |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Net deferred loan costs        |  |                        | 285     |   |                      |        |   |        |   | 224     |         |  |        |  
|Allowance for loan losses      |  |                        | (4,196  | ) |                      |        |   |        |   | (3,846  | )       |  |        |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  
|Total Loans, net               |  | $                      | 533,227 |   |                      |        |   |        | $ | 504,728 |         |  |        |  
|                               |  |                        |         |   |                      |        |   |        |   |         |         |  |        |  



An increase in commercial and
commercial real estate loans of $16.8 million and an increase in residential mortgages of $11.9 million accounted for the increase in net loans, offset in part by a decrease of $1.6 million in other consumer loans. The increase in commercial loans
was primarily the result of the Banks significant business development efforts in the Albany, New York area, which helped to geographically diversify our loan mix. The increase in residential mortgages resulted from the Banks continued
strategy of offering a variety of mortgage products at competitive rates.



Non-performing Assets:The table below sets forth the amounts and categories of our non-performing assets at the dates indicated. No interest income from these loans was recorded in net income for the nine months ended
September 30, 2005 while they were on non-accrual status. At September 30, 2005 and December 31, 2004, the Bank has two troubled debt restructurings (loans for which a portion of interest or principal has been forgiven or the loans
have been modified at an interest rate less than current market rates). The combined balance of these loans was $753,000 and $891,000 at September 30, 2005 and December 31, 2004, respectively.



|                                                          |  |                        |       |   |                      |   |       |  
|--------------------------------------------------------- |  | ---------------------- | ----- | - | -------------------- | - | ----- | -
|                                                          |  | At September 30, 2005  |       |   | At December 31, 2004 |  
|                                                          |  | (Dollars in Thousands) |      
|Non-accrual loans:                                        |  |                        |       |   |                      |   |       |  
|Residential mortgage                                      |  | $                      | 243   |   |                      | $ | 123   |  
|Commercial mortgage                                       |  |                        | 483   |   |                      |   | 1,229 |  
|Commercial                                                |  |                        | 452   |   |                      |   | 388   |  
|Home equity, consumer and other                           |  |                        |      |   |                      |   | 29    |  
|                                                          |  |                        |       |   |                      |   |       |  
|Total non-accrual loans                                   |  |                        | 1,178 |   |                      |   | 1,769 |  
|                                                          |  |                        |       |   |                      |   |       |  
|Loans 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                               |  | $                      | 1,178 |   |                      | $ | 1,769 |  
|                                                          |  |                        |       |   |                      |   |       |  
|Ratios:                                                   |  |                        |       |   |                      |   |       |  
|Non-performing loans to total loans                       |  |                        | 0.22  | % |                      |   | 0.35  | %
|Non-performing assets to total assets                     |  |                        | 0.16  | % |                      |   | 0.26  | %



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Allowance for Loan Losses:In originating loans, the Bank recognizes that losses will be experienced
on loans and that the risk of loss will vary with many factors, including the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the
security for the loan over the term of the loan. The Bank maintains an allowance for loan losses to absorb losses inherent in the loan portfolio, and as such, this allowance represents managements best estimate of the probable known and
inherent credit losses in the loan portfolio as of the date of the financial statements.



The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience, portfolio volume
and mix, geographic and large borrower concentrations, estimated credit losses based on internal and external portfolio reviews, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral
and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.



The allowance consists of allocated, general and unallocated components. The allocated component relates to loans that are classified as
either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows or collateral value or observable market price of the impaired loan is lower than the
carrying value of the loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect
managements estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general losses in the
portfolio.



A loan is considered impaired when, based on current information
and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows
discounted at the loans effective interest rate or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank
generally does not separately identify individual consumer and residential loans for impairment disclosures. At September 30, 2005, impaired loans totaled $2.3 million, including two loans with one customer with a valuation allowance of
$179,000.



While the Bank believes that it has established adequate allocated
and general allowances for losses on loans, adjustments to the allowance may be necessary if future conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process,
the Banks regulators periodically review the allowance for loan losses. These regulatory agencies may require the Bank to recognize additions to the allowance based on their judgments of information available to them at the time of their
examination, thereby negatively affecting the Banks financial condition and earnings.



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The following table sets forth activity in the Banks allowance for loan losses for
the periods indicated:



|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | ---------------------------------------------- | ------ | - | --------------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                   |  | At or for the Three Months Ended September 30, |        |   | At or for the Nine Months Ended September 30, |  
|                                                                   |  | 2005                                           |        |   | 2004                                          |   |        | 2005 |  |   | 2004   |  
|                                                                   |  | (Dollars in Thousands)                         |       
|Balance at beginning of period                                     |  | $                                              | 4,140  |   |                                               | $ | 3,917  |      |  | $ | 3,846  |   |  | $ | 4,420  |  
|                                                                   |  |                                                |        |  
|Charge-offs:                                                       |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Mortgage loans on real estate:                                     |  |                                                |       |   |                                               |   |       |      |  |   |       |   |  |   |       |  
|Other loans:                                                       |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Commercial                                                         |  |                                                | (54    | ) |                                               |   |       |      |  |   | (155   | ) |  |   | (684   | )
|Consumer and other                                                 |  |                                                | (23    | ) |                                               |   | (15    | )    |  |   | (74    | ) |  |   | (50    | )
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Total other loans                                                  |  |                                                | (77    | ) |                                               |   | (15    | )    |  |   | (229   | ) |  |   | (734   | )
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Total charge-offs                                                  |  |                                                | (77    | ) |                                               |   | (15    | )    |  |   | (229   | ) |  |   | (734   | )
|                                                                   |  |                                                |        |  
|Recoveries:                                                        |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Mortgage loans on real estate                                      |  |                                                |       |   |                                               |   |       |      |  |   |       |   |  |   |       |  
|Other loans:                                                       |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Commercial                                                         |  |                                                | 16     |   |                                               |   | 5      |      |  |   | 40     |   |  |   | 104    |  
|Consumer and other                                                 |  |                                                | 18     |   |                                               |   | 4      |      |  |   | 63     |   |  |   | 21     |  
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Total other loans                                                  |  |                                                | 34     |   |                                               |   | 9      |      |  |   | 103    |   |  |   | 125    |  
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Total recoveries                                                   |  |                                                | 34     |   |                                               |   | 9      |      |  |   | 103    |   |  |   | 125    |  
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Net charge-offs                                                    |  |                                                | (43    | ) |                                               |   | (6     | )    |  |   | (126   | ) |  |   | (609   | )
|                                                                   |  |                                                |        |  
|Provision for loan losses                                          |  |                                                | 99     |   |                                               |   | 252    |      |  |   | 476    |   |  |   | 352    |  
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Balance at end of period                                           |  | $                                              | 4,196  |   |                                               | $ | 4,163  |      |  | $ | 4,196  |   |  | $ | 4,163  |  
|                                                                   |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Ratios:                                                            |  |                                                |        |   |                                               |   |        |      |  |   |        |   |  |   |        |  
|Net charge-offs to average loans outstanding (annualized)          |  |                                                | -0.03  | % |                                               |   | 0.00   | %    |  |   | -0.03  | % |  |   | -0.17  | %
|Allowance for loan losses to non-performing loans at end of period |  |                                                | 356.20 | % |                                               |   | 247.65 | %    |  |   | 356.20 | % |  |   | 247.65 | %
|Allowance for loan losses to total loans at end of period          |  |                                                | 0.78   | % |                                               |   | 0.82   | %    |  |   | 0.78   | % |  |   | 0.82   | %



Deposits: The following
table sets forth the Banks deposit accounts (including escrow deposits) for the periods indicated.



|                           |  |                        |         |         |                   |   |         |   |         |  |        |  
|-------------------------- |  | ---------------------- | ------- | ------- | ----------------- | - | ------- | - | ------- |  | ------ | -
|                           |  | At September 30, 2005  |         |         | December 31, 2004 |  
|                           |  | Balance                |         | Percent |                   |   | Balance |   | Percent | 
|                           |  | (Dollars in Thousands) |        
|Deposit type:              |  |                        |         |         |                   |   |         |   |         |  |        |  
|Demand deposits            |  | $                      | 64,818  |         | 13.05             | % |         | $ | 48,057  |  | 10.63  | %
|Regular savings            |  |                        | 69,137  |         | 13.92             |   |         |   | 73,567  |  | 16.28  |  
|LifePath Savings           |  |                        | 73,110  |         | 14.72             |   |         |   | 62,309  |  | 13.79  |  
|Money market deposits      |  |                        | 63,120  |         | 12.71             |   |         |   | 63,473  |  | 14.05  |  
|NOW deposits               |  |                        | 43,621  |         | 8.78              |   |         |   | 39,036  |  | 8.64   |  
|                           |  |                        |         |         |                   |   |         |   |         |  |        |  
|Total transaction accounts |  |                        | 313,806 |         | 63.18             |   |         |   | 286,442 |  | 63.39  |  
|                           |  |                        |         |        
|Certificates of deposit    |  |                        | 182,828 |         | 36.82             |   |         |   | 165,446 |  | 36.61  |  
|                           |  |                        |         |         |                   |   |         |   |         |  |        |  
|Total deposits             |  | $                      | 496,634 |         | 100.00            | % |         | $ | 451,888 |  | 100.00 | %
|                           |  |                        |         |         |                   |   |         |   |         |  |        |  



Deposits increased $44.7 million, or
9.9%, to $496.6 million at September 30, 2005 from $451.9 million at December 31, 2004. This increase was due primarily to increases in certificates of deposit, demand deposits and LifePath Savings Account. Certificates of deposit,
including brokered certificates, increased by $17.4 million, or 10.5%, to $182.8 million, which is attributable to our competitive rates and focused marketing efforts and special rates on certain CDs. Demand deposit growth



13



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##### Table of Contents

of $16.8 million, or 34.9% to $64.8 million was fueled by overall deposit growth as well as proceeds of $9.3 million of
subscription funds deposited during the beginning weeks of the subscription rights period relating to the Registrants initial public offering. Our LifePath Savings accounts increased by $10.8 million, or 17.3%, to $73.1 million at
September 30, 2005. LifePath Savings accounts, introduced in January 2004, pay a high interest rate similar to a money market rate and are made available, along with certain special benefits, to clients who maintain certain minimum balances and
deposit accounts with the Bank. Regular savings, NOW deposits and the various money market accounts have, in total, remained relatively flat since December 31, 2004.



Borrowings include borrowings from the Federal Home Loan Bank of Boston (FHLBB) as well as securities sold under agreements to
repurchase, and have increased $9.8 million, or 5.9%, to $174.0 million at September 30, 2005. During the first two quarters of 2005, success in attracting new deposits allowed the Bank to repay shorter term FHLBB borrowings as they matured.
During the third quarter of 2005 the Bank increased its short-term (3 months or less) borrowing balances to fund the growth in the investment portfolio. These borrowings are scheduled to mature and the Bank intends to repay them in the fourth
quarter of 2005.



Retained Earnings increased by $2.4 million to
$61.8 million at September 30, 2005, an increase of 4.0%. This change resulted from net income of $3.2 million for the nine months ended September 30, 2005, offset by an increase in our unrealized loss on available for sale securities by
$852,000 to a balance of $842,000. Our ratio of capital to total assets was 8.38% as of September 30, 2005, compared to 8.73% as of December 31, 2004.



Comparison of Operating Results for the Three Months Ended September 30, 2005 and September 30, 2004



Net Income for the three months ended September 30, 2005 was $1.3 million, an increase
of $371,000, or 40.8% from $909,000 for the same period in 2004. This increase was primarily due to an increase in net interest income of $501,000 as well as a reduction in the provision for loan losses of $153,000 for the three months ended
September 30, 2005 as compared to the same period in 2004. This increase in net interest income after provision for loan losses was offset primarily by an increase in non-interest expenses and income taxes of $313,000.



Analysis of Net Interest Income



Net interest income represents the difference between income on interest-earning assets and
expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.



The following table sets forth average balance sheets, average yields and costs, and certain
other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred fees, and discounts and premiums that are amortized or accreted to interest income or expense.
The Bank does not accrue interest on loans on non-accrual status, however, the balance of these loans is included in the total average balance, which has the effect of lowering average loan yields.



14



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|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|--------------------------------------------------------------- |  | ------------------------------------- | ------- | -------- | ------------------------------------- | ------------- |  | ------ | ------------------------- |  | -------- | ------- | ------------- | - | ----- |  | ------ | -
|                                                                |  | Three Months Ended September 30, 2005 |         |          | Three Months Ended September 30, 2004 |              
|                                                                |  | AverageOutstandingBalance             |         | Interest |                                       | Yield/Rate(1) |  |        | AverageOutstandingBalance |  | Interest |         | Yield/Rate(1) |  
|                                                                |  | (Dollars in thousands)                |        
|Interest-earning assets:                                        |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Loans - Net (2)                                                 |  | $                                     | 527,776 |          | $                                     | 7,925         |  | 6.01   | %                         |  | $        | 494,946 |               | $ | 6,904 |  | 5.58   | %
|Investment securities                                           |  |                                       | 129,848 |          |                                       | 1,273         |  | 3.92   | %                         |  |          | 120,724 |               |   | 1,030 |  | 3.41   | %
|Interest-earning deposits                                       |  |                                       | 11,735  |          |                                       | 96            |  | 3.27   | %                         |  |          | 6,903   |               |   | 22    |  | 1.27   | %
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total interest-earning assets                                   |  |                                       | 669,359 |          |                                       | 9,294         |  | 5.55   | %                         |  |          | 622,573 |               |   | 7,956 |  | 5.11   | %
|Non-interest-earning assets                                     |  |                                       | 39,286  |          |                                       |               |  |        |                           |  |          | 37,125  |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total assets                                                    |  | $                                     | 708,645 |          |                                       |               |  |        |                           |  | $        | 659,698 |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Interest-bearing liabilities:                                   |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Savings deposits                                                |  | $                                     | 70,179  |          |                                       | 75            |  | 0.43   | %                         |  | $        | 79,104  |               |   | 83    |  | 0.42   | %
|LifePath Savings                                                |  |                                       | 73,628  |          |                                       | 453           |  | 2.46   | %                         |  |          | 53,395  |               |   | 243   |  | 1.82   | %
|Money market                                                    |  |                                       | 62,232  |          |                                       | 286           |  | 1.84   | %                         |  |          | 67,609  |               |   | 163   |  | 0.96   | %
|NOW accounts                                                    |  |                                       | 41,108  |          |                                       | 23            |  | 0.22   | %                         |  |          | 36,887  |               |   | 15    |  | 0.16   | %
|Certificates of deposits                                        |  |                                       | 182,347 |          |                                       | 1,389         |  | 3.05   | %                         |  |          | 155,758 |               |   | 945   |  | 2.43   | %
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total deposits                                                  |  |                                       | 429,494 |          |                                       | 2,226         |  | 2.07   | %                         |  |          | 392,753 |               |   | 1,449 |  | 1.48   | %
|Borrowed Funds                                                  |  |                                       | 158,636 |          |                                       | 1,706         |  | 4.30   | %                         |  |          | 154,706 |               |   | 1,646 |  | 4.26   | %
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total interest-bearing liabilities                              |  |                                       | 588,130 |          |                                       | 3,932         |  | 2.67   | %                         |  |          | 547,459 |               |   | 3,095 |  | 2.26   | %
|Non-interest bearing liabilities                                |  |                                       | 57,913  |          |                                       |               |  |        |                           |  |          | 54,369  |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total liabilities                                               |  |                                       | 646,043 |          |                                       |               |  |        |                           |  |          | 601,828 |               |   |       |  |        |  
|Equity                                                          |  |                                       | 62,602  |          |                                       |               |  |        |                           |  |          | 57,870  |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Total liabilities and equity                                    |  | $                                     | 708,645 |          |                                       |               |  |        |                           |  | $        | 659,698 |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Net interest income                                             |  |                                       |         |          | $                                     | 5,362         |  |        |                           |  |          |         |               | $ | 4,861 |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Net interest rate spread (3)                                    |  |                                       |         |          |                                       |               |  | 2.88   | %                         |  |          |         |               |   |       |  | 2.85   | %
|Net interest-earning assets (4)                                 |  | $                                     | 81,229  |          |                                       |               |  |        |                           |  | $        | 75,114  |               |   |       |  |        |  
|                                                                |  |                                       |         |          |                                       |               |  |        |                           |  |          |         |               |   |       |  |        |  
|Net interest margin (5)                                         |  |                                       |         |          |                                       |               |  | 3.20   | %                         |  |          |         |               |   |       |  | 3.12   | %
|Average interest-earning assets to interest-bearing liabilities |  |                                       |         |          |                                       |               |  | 113.81 | %                         |  |          |         |               |   |       |  | 113.72 | %

---

|(1) | Yields and rates for the three months ended September 30, 2005 and 2004 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 September 30, 2005 and 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|--- | -------------------------------------------------------------------------------------------------------------

|(5) | Net interest margin represents net interest income divided by average total interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------------



The following table presents the dollar amount of changes in interest income and interest expense for the major categories of the
Banks interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e.,
changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). The changes attributable to the combined impact of
volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.



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|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|---------------------------------- |  | ---------------------------------------------- | --- | ------------------------- | ---- | - | --- |  | - | ----- | -
|                                   |  | Three Months Ended September 30, 2005 vs. 2004 |    
|                                   |  | Increase(Decrease) Due to                      |     | Total Increase (Decrease) |     
|                                   |  | Volume                                         |     |                           | Rate |  
|                                   |  | (Dollars in thousands)                         |    
|Interest-earning assets:           |  |                                                |     |                           |      |   |     |  |   |       |  
|Loans - Net                        |  | $                                              | 472 |                           |      | $ | 549 |  | $ | 1,021 |  
|Investment securities              |  |                                                | 82  |                           |      |   | 161 |  |   | 243   |  
|Interest-earning deposits          |  |                                                | 22  |                           |      |   | 52  |  |   | 74    |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|Total interest-earning assets      |  |                                                | 576 |                           |      |   | 762 |  |   | 1,338 |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|Interest-bearing liabilities:      |  |                                                |     |                           |      |   |     |  |   |       |  
|Savings deposits                   |  |                                                | (10 | )                         |      |   | 2   |  |   | (8    | )
|Life Path                          |  |                                                | 109 |                           |      |   | 101 |  |   | 210   |  
|Money market                       |  |                                                | (12 | )                         |      |   | 135 |  |   | 123   |  
|NOW accounts                       |  |                                                | 2   |                           |      |   | 6   |  |   | 8     |  
|Certificates of deposits           |  |                                                | 178 |                           |      |   | 266 |  |   | 444   |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|Total deposits                     |  |                                                | 267 |                           |      |   | 510 |  |   | 777   |  
|Borrowed Funds                     |  |                                                | 44  |                           |      |   | 16  |  |   | 60    |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|Total interest-bearing liabilities |  |                                                | 311 |                           |      |   | 526 |  |   | 837   |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  
|Change in net interest income      |  | $                                              | 265 |                           |      | $ | 236 |  | $ | 501   |  
|                                   |  |                                                |     |                           |      |   |     |  |   |       |  



Net interest incomefor
the three months ended September 30, 2005 was $5.4 million, an increase of $501,000, or 10.3% over the same period of 2004, primarily due to an increase in our average loans outstanding of $32.8 million, or 6.6%, and an increase in the average
balance of investment securities of $9.1 million, or 7.6%, for the three months ended September 30, 2005 over the same period of 2004, as well as an increase in our net interest margin.



Interest incomefor the three months ended September 30, 2005 increased
$1.3 million, or 16.8%, to $9.3 million over the same period of 2004. This increase was primarily due to an increase in average interest earning assets of $46.8 million for the three months ended September 30, 2005. For the three months ended
September 30, 2005, average outstanding loans increased $32.8 million, or 6.6%, and the average balance of investment securities increased $9.1 million, or 7.6%, over the three month period ended September 30, 2004, which provided
additional interest income of $472,000 and $82,000, respectively, for the three months ended September 30, 2005. The average yield on interest earning assets increased 44 basis points to 5.55% for the three months ended September 30, 2005,
compared to 5.11% for the same period in 2004, accounting for additional interest income of $762,000.



Interest expenseincreased $837,000, or 27.0%, to $3.9 million for the three months ended September 30, 2005 as compared to $3.1 million during the same period in 2004. $311,000 of this increase was
due to an increase in average interest bearing liabilities of $40.7 million, or 7.4%, at September 30, 2005. The average cost of funds also increased to 2.67% for the three month period ended September 30, 2005, an increase of 41 basis
points from a cost of funds of 2.26% for the same period in 2004, which increased interest expense by $526,000. Deposit growth, especially LifePath Savings accounts, certificates of deposit, and increased borrowings from the Federal Home Loan Bank
generated this increased interest expense while allowing us to fund our loan growth and maintain liquidity.



Provision for loan loss expense decreased to $99,000 for the three months ended September 30, 2005, compared to $252,000 for the three months ended September 30, 2004, primarily as of a result
of the decrease in the overall loan growth as well as the mix of loan growth. Provisions for loan loss are affected by loan growth, loan mix, net charge-offs and our evaluation of the loan portfolio, all of which impacted the decrease. At
September 30, 2005, our total allowance for loan losses was $4.2 million, or 0.78% of total loans, compared to $4.2 million or 0.82% of total loans, at September 30, 2004.



16



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Non-interest incometotaled $1.3 million for the three months ended September 30, 2005, an increase of
$30,000 from the same period a year ago. This increase is primarily a result of increased income from checking accounts, bank owned life insurance, gains on sales of mortgages, gains on sales of securities and fiduciary income fees from our Legacy
Portfolio Management division. These increases were partially offset by a reduction of income from the sale of annuities and other insurance products. Additionally, the Bank recorded a one-time receipt of miscellaneous income in the third quarter of
2004 on the reimbursement of prior year expenses from one vendor.



Non-interest expense increased $70,000, or 1.6%, to $4.4 million for the three months ended September 30, 2005. Occupancy and equipment expenses increased by $37,000, or 7.4%, due primarily to significant improvements to
the Lenox Main Street branch and the relocation of the West Housatonic Street branch to newer facilities. Advertising expenses increased $41,000, or 32.8% primarily due to the agency and production costs of the Banks new electronic banking
campaign. Increases in data processing expenses were offset by a slight reduction in salaries and employee benefits.



Income tax expense increased $243,000 to $832,000 for the three months ended September 30, 2005, due to an increase in taxable income of $614,000 for
the three months ended September 30, 2005 as compared to the same period in 2004. Our combined federal and state effective tax rate was 39.4%, virtually unchanged from the 39.3% for the same period in 2004.



Comparison of Operating Results for the Nine Months Ended September 30, 2005
(unaudited) and September 30, 2004 (unaudited)



Net income for the
nine months ended September 30, 2005 was $3.2 million, an increase of $607,000, or 23.2% from $2.6 million for the same period in 2004. This increase was primarily due to an increase in net interest income of $1.4 million for the nine months
ended September 30, 2005, offset primarily by increases of $124,000 in the loan loss provision, $202,000 in non-interest expenses, and $388,000 in income tax expense.



Analysis of Net Interest Income



Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the
relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.



The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily
average balances. The yields set forth below include the effect of deferred fees, and discounts and premiums that are amortized or accreted to interest income or expense. Legacy does not accrue interest on loans on non-accrual status, however, the
balance of these loans is included in the total average balance, which has the effect of lowering average loan yields.



17



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|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|--------------------------------------------------------------- |  | ------------------------------------ | ------- | -------- | ------------------------------------ | ------------- |  | ------ | ------------------------- |  | -------- | ------- | ------------- | - | ------ |  | ------ | -
|                                                                |  | Nine Months Ended September 30, 2005 |         |          | Nine Months Ended September 30, 2004 |              
|                                                                |  | AverageOutstandingBalance            |         | Interest |                                      | Yield/Rate(1) |  |        | AverageOutstandingBalance |  | Interest |         | Yield/Rate(1) |  
|                                                                |  | (Dollars in thousands)               |        
|Interest-earning assets:                                        |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Loans - Net (2)                                                 |  | $                                    | 519,339 |          | $                                    | 22,791        |  | 5.85   | %                         |  | $        | 480,083 |               | $ | 20,176 |  | 5.60   | %
|Investment securities                                           |  |                                      | 128,952 |          |                                      | 3,693         |  | 3.82   | %                         |  |          | 117,885 |               |   | 2,945  |  | 3.33   | %
|Interest-earning deposits                                       |  |                                      | 8,982   |          |                                      | 190           |  | 2.82   | %                         |  |          | 6,415   |               |   | 48     |  | 1.00   | %
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total interest-earning assets                                   |  |                                      | 657,273 |          |                                      | 26,674        |  | 5.41   | %                         |  |          | 604,383 |               |   | 23,169 |  | 5.11   | %
|Non-interest-earning assets                                     |  |                                      | 37,708  |          |                                      |               |  |        |                           |  |          | 35,623  |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total assets                                                    |  | $                                    | 694,981 |          |                                      |               |  |        |                           |  | $        | 640,006 |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Interest-bearing liabilities:                                   |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Savings deposits                                                |  | $                                    | 71,077  |          |                                      | 228           |  | 0.43   | %                         |  | $        | 82,971  |               |   | 261    |  | 0.42   | %
|LifePath Savings                                                |  |                                      | 70,260  |          |                                      | 1,189         |  | 2.26   | %                         |  |          | 33,793  |               |   | 474    |  | 1.87   | %
|Money market                                                    |  |                                      | 60,214  |          |                                      | 675           |  | 1.49   | %                         |  |          | 74,601  |               |   | 509    |  | 0.91   | %
|NOW accounts                                                    |  |                                      | 39,175  |          |                                      | 62            |  | 0.21   | %                         |  |          | 36,168  |               |   | 39     |  | 0.14   | %
|Certificates of deposits                                        |  |                                      | 176,063 |          |                                      | 3,731         |  | 2.83   | %                         |  |          | 152,069 |               |   | 2,770  |  | 2.43   | %
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total deposits                                                  |  |                                      | 416,789 |          |                                      | 5,885         |  | 1.88   | %                         |  |          | 379,602 |               |   | 4,053  |  | 1.42   | %
|Borrowed Funds                                                  |  |                                      | 162,360 |          |                                      | 5,030         |  | 4.13   | %                         |  |          | 150,483 |               |   | 4,735  |  | 4.20   | %
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total interest-bearing liabilities                              |  |                                      | 579,149 |          |                                      | 10,915        |  | 2.51   | %                         |  |          | 530,085 |               |   | 8,788  |  | 2.21   | %
|Non-interest bearing liabilities                                |  |                                      | 54,721  |          |                                      |               |  |        |                           |  |          | 52,321  |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total liabilities                                               |  |                                      | 633,870 |          |                                      |               |  |        |                           |  |          | 582,406 |               |   |        |  |        |  
|Equity                                                          |  |                                      | 61,111  |          |                                      |               |  |        |                           |  |          | 57,600  |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Total liabilities and equity                                    |  | $                                    | 694,981 |          |                                      |               |  |        |                           |  | $        | 640,006 |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Net interest income                                             |  |                                      |         |          | $                                    | 15,759        |  |        |                           |  |          |         |               | $ | 14,381 |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Net interest rate spread (3)                                    |  |                                      |         |          |                                      |               |  | 2.90   | %                         |  |          |         |               |   |        |  | 2.90   | %
|Net interest-earning assets (4)                                 |  | $                                    | 78,124  |          |                                      |               |  |        |                           |  | $        | 74,298  |               |   |        |  |        |  
|                                                                |  |                                      |         |          |                                      |               |  |        |                           |  |          |         |               |   |        |  |        |  
|Net interest margin (5)                                         |  |                                      |         |          |                                      |               |  | 3.20   | %                         |  |          |         |               |   |        |  | 3.17   | %
|Average interest-earning assets to interest-bearing liabilities |  |                                      |         |          |                                      |               |  | 113.49 | %                         |  |          |         |               |   |        |  | 114.02 | %

---

|(1) | Yields and rates for the nine months ended September 30, 2005 and 2004 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 nine
months ended September 30, 2005 and 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|--- | -------------------------------------------------------------------------------------------------------------

|(5) | Net interest margin represents net interest income divided by average total interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------------



The following table presents the dollar amount of changes in interest income and interest expense for the major categories of the
Banks interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e.,
changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). The changes attributable to the combined impact of
volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.



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|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|---------------------------------- |  | --------------------------------------------- | ----- | ------------------------- | ---- | - | ----- |  | - | ----- | -
|                                   |  | Nine Months Ended September 30, 2005 vs. 2004 |      
|                                   |  | Increase (Decrease) Due to                    |       | Total Increase (Decrease) |     
|                                   |  | Volume                                        |       |                           | Rate |  
|                                   |  | (Dollars in thousands)                        |      
|Interest-earning assets:           |  |                                               |       |                           |      |   |       |  |   |       |  
|Loans - Net                        |  | $                                             | 1,692 |                           |      | $ | 923   |  | $ | 2,615 |  
|Investment securities              |  |                                               | 291   |                           |      |   | 457   |  |   | 748   |  
|Interest-earning deposits          |  |                                               | 26    |                           |      |   | 116   |  |   | 142   |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|Total interest-earning assets      |  |                                               | 2,009 |                           |      |   | 1,496 |  |   | 3,505 |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|Interest-bearing liabilities:      |  |                                               |       |                           |      |   |       |  |   |       |  
|Savings deposits                   |  |                                               | (39   | )                         |      |   | 6     |  |   | (33   | )
|Life Path                          |  |                                               | 599   |                           |      |   | 116   |  |   | 715   |  
|Money market                       |  |                                               | (71   | )                         |      |   | 237   |  |   | 166   |  
|NOW accounts                       |  |                                               | 3     |                           |      |   | 20    |  |   | 23    |  
|Certificates of deposits           |  |                                               | 471   |                           |      |   | 490   |  |   | 961   |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|Total deposits                     |  |                                               | 963   |                           |      |   | 869   |  |   | 1,832 |  
|Borrowed Funds                     |  |                                               | 278   |                           |      |   | 17    |  |   | 295   |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|Total interest-bearing liabilities |  |                                               | 1,241 |                           |      |   | 886   |  |   | 2,127 |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  
|Change in net interest income      |  | $                                             | 768   |                           |      | $ | 610   |  | $ | 1,378 |  
|                                   |  |                                               |       |                           |      |   |       |  |   |       |  



Net interest income for
the nine months ended September 30, 2005 was $15.8 million, an increase of $1.4 million over the same period of 2004, primarily due to an increase in our average loans outstanding of $39.3 million, or 8.2%, and an increase in the average
balance of investment securities of $11.1 million, or 9.4%, for the nine months ended September 30, 2005 over the same period of 2004, and the relative stability of our net interest rate spread.



Interest incomeincreased $3.5 million, or 15.1%, to $26.7 million. This
increase was primarily due to an increase in average interest earning assets of $52.9 million for the nine months ended September 30, 2005, accounting for $2.0 million of additional revenue. For the nine months ended September 30, 2005,
average outstanding loans increased $39.3 million and the average balance of investment securities increased $11.1 million over the nine month period ended September 30, 2004, which provided additional interest income of $1.7 million and
$291,000, respectively, for the nine months ended September 30, 2005. The average yield on interest earning assets increased 30 basis points to 5.41% for the nine months ended September 30, 2005, compared to 5.11% for the same period in
2004, which resulted in additional revenue of $1.5 million. Higher yields were a result of the higher interest rate environment.



Interest expenseincreased $2.1 million, or 24.2%, to $10.9 million for the nine months ended September 30, 2005. This increase was primarily due to an
increase in average interest bearing liabilities of $49.0 million, or 9.3%, for the nine months ended September 30, 2005 which accounted for $1.2 million additional interest expense. The average cost of funds also increased to 2.51% for the
nine month period ended September 30, 2005, an increase of 30 basis points from a cost of funds of 2.21% for the same period in 2004. This increase in the average cost of funds accounted for additional interest expense of $886,000. Deposit
growth, especially in LifePath Savings accounts and certificate of deposit accounts and increased borrowings from the Federal Home Loan Bank generated this increased interest expense while allowing us to fund our loan and investment security growth
and maintain liquidity.



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Provision for loan loss expense was $476,000 for the nine months ended September 30, 2005, compared to
$352,000 for the nine months ended September 30, 2004, primarily as of a result of the increase in commercial real estate loans. Provisions for loan loss are affected by loan growth, loan mix, net charge-offs and our evaluation of the loan
portfolio, all of which impacted the increase. At September 30, 2005, our total allowance for loan losses was $4.2 million, or 0.78% of total loans, compared to $4.2 million or 0.82% of total loans at September 30, 2004.



Non-interest incometotaled $3.3 million for the nine
months ended September 30, 2005, a decrease of $57,000, or 1.7%, from the same period a year ago. This decrease is a result of less income from gains on sales of mortgages and fee income from the sales of annuities and other insurance products.
These decreases were mostly offset by increased fee income from customer accounts, bank owned life insurance and fiduciary income fees from our Legacy Portfolio Management division. Additionally, the Bank recorded a one-time receipt of miscellaneous
income in the third quarter of 2004 on the reimbursement of prior year expenses from one vendor.



Non-interest expense increased $202,000, or 1.5%, to $13.3 million for the nine months ended September 30, 2005. Salaries and employee benefits expenses increased $120,000, or 1.6%, to $7.6
million for the nine months ended September 30, 2005. This increase is a result of merit increases for salaries and increased retirement expenses, offset by a slight reduction in staff. Occupancy and equipment expenses increased by $49,000, or
3.1%, due primarily to significant improvements to the Lenox Main Street branch and the relocation of the West Housatonic Street branch to newer facilities. Advertising expenses increased $63,000, or 13.9% primarily due to the agency and production
costs of the banks new electronic banking campaign and direct mail checking account acquisition program.



Income tax expense increased $388,000 to $2.0 million, or 23.6%, for the nine months ended September 30, 2005, due to an increase in taxable income of $995,000 for the nine months ended
September 30, 2005. Our combined federal and state effective tax rate was 38.7% for both periods.



Minimum Regulatory Capital Requirements: As of September 30, 2005, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table. There are
no conditions or events since that notification that management believes have changed the Banks category. Upon the consummation of the Registrants public offering, the Registrant expects the Banks capital ratios to be significantly
higher. For further discussion of the public offering, see Part II, Item 2(b) of this report. On October 26, 2005, the Company merged out of existence pursuant to its plan of conversion whereby the Banks holding company structure
converted from mutual to stock ownership. The Registrant, as the new holding company for the Bank, elected to be regulated by the Office of Thrift Supervision as a savings and loan holding company, and is not subject to minimum capital requirements.
The Companys and Banks capital amounts and ratios as of September 30, 2005 (unaudited) and December 31, 2004 are presented in the table.



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|                                        |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|--------------------------------------- |  | ------ | ------ | ----- | --------------------------- | - | ------ | ------------------------------------------------------------------------ | ------ |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                        |  | Actual |        |       | Minimum Capital Requirement |   |        | Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions |       
|                                        |  | Amount |        | Ratio |                             |   | Amount |                                                                          | Ratio  |  |     | Amount |  | Ratio |       
|September 30, 2005:                     |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Total capital to risk weighted assets:  |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  | $      | 64,112 |       | 13.1                        | % |        | $                                                                        | 39,220 |  | 8.0 | %      |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 62,146 |       | 12.6                        |   |        |                                                                          | 39,194 |  | 8.0 |        |  | $     | 48,992 |  | 10.0 | %
|                                        |  |        |        |       |                             |  
|Tier 1 capital to risk weighted assets: |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  |        | 59,524 |       | 12.1                        |   |        |                                                                          | 19,610 |  | 4.0 |        |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 57,558 |       | 11.7                        |   |        |                                                                          | 19,597 |  | 4.0 |        |  |       | 29,395 |  | 6.0  |  
|                                        |  |        |        |       |                             |  
|Tier 1 capital to average assets:       |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  |        | 59,524 |       | 8.4                         |   |        |                                                                          | 28,221 |  | 4.0 |        |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 57,558 |       | 8.2                         |   |        |                                                                          | 21,107 |  | 3.0 |        |  |       | 35,178 |  | 5.0  |  
|                                        |  |        |        |       |                             |  
|December 31, 2004:                      |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Total capital to risk weighted assets:  |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  | $      | 60,592 |       | 13.0                        | % |        | $                                                                        | 37,319 |  | 8.0 | %      |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 58,603 |       | 12.6                        |   |        |                                                                          | 37,285 |  | 8.0 |        |  | $     | 46,607 |  | 10.0 | %
|                                        |  |        |        |       |                             |  
|Tier 1 capital to risk weighted assets: |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  |        | 56,352 |       | 12.1                        |   |        |                                                                          | 18,659 |  | 4.0 |        |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 54,363 |       | 11.7                        |   |        |                                                                          | 18,643 |  | 4.0 |        |  |       | 27,964 |  | 6.0  |  
|                                        |  |        |        |       |                             |  
|Tier 1 capital to average assets:       |  |        |        |       |                             |   |        |                                                                          |        |  |     |        |  |       |        |  |      |  
|Company                                 |  |        | 56,352 |       | 8.3                         |   |        |                                                                          | 27,269 |  | 4.0 |        |  |       | N/A    |  | N/A  |  
|Legacy Banks                            |  |        | 54,363 |       | 8.0                         |   |        |                                                                          | 20,391 |  | 3.0 |        |  |       | 33,984 |  | 5.0  |  



Item 3: Quantitative and Qualitative Disclosures About Market Risks



There have been no material changes in the Companys market risk during the nine months ended September 30, 2005. See disclosures as of April 30, 2005 in the section entitled Managements
Discussion and Analysis of Financial Condition and Results of Operation in the Companys Registration Statement on Form S-1 (File No. 333-126481), as amended.



Contractual Obligations.The following tables present information indicating various contractual obligations and
commitments of the Company as of September 30, 2005 and the respective maturity dates:



|                                               |  |                        |         |                  |   |                                     |  |                             |        |                |   |        |  |   |       
|---------------------------------------------- |  | ---------------------- | ------- | ---------------- | - | ----------------------------------- |  | --------------------------- | ------ | -------------- | - | ------ |  | - | ------
|                                               |  | September 30, 2005    
|                                               |  | Total                  |         | One Year or Less |   | More thanOne YearthroughThree Years |  | ThreeYearsthroughFive Years |        | Over FiveYears
|                                               |  | (Dollars in Thousands)
|Federal Home Loan Bank of Boston advances      |  | $                      | 168,564 |                  | $ | 37,900                              |  | $                           | 55,320 |                | $ | 36,584 |  | $ | 38,760
|Securities sold under agreements to repurchase |  |                        | 5,459   |                  |   | 5,459                               |  |                             |       |                |   |       |  |   |      
|                                               |  |                        |         |                  |   |                                     |  |                             |        |                |   |        |  |   |       
|Total contractual obligations                  |  | $                      | 174,023 |                  | $ | 43,359                              |  | $                           | 55,320 |                | $ | 36,584 |  | $ | 38,760
|                                               |  |                        |         |                  |   |                                     |  |                             |        |                |   |        |  |   |       



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Loan Commitments and other contingencies.Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition established in the contract and generally have fixed expiration dates or other termination clauses. The following table presents certain information about the Banks loan commitments
and other contingencies outstanding as of September 30, 2005:



|                                               |  |                        |         |                 |   |                                        |  |                                         |       |                |   |       |  |   |       
|---------------------------------------------- |  | ---------------------- | ------- | --------------- | - | -------------------------------------- |  | --------------------------------------- | ----- | -------------- | - | ----- |  | - | ------
|                                               |  | September 30, 2005    
|                                               |  | Total                  |         | One Year orLess |   | More than One Year through Three Years |  | More than Three Years Through FiveYears |       | Over Fiveyears
|                                               |  | (Dollars in Thousands)
|Commitments to grant loans(1)                  |  | $                      | 17,565  |                 | $ | 17,565                                 |  | $                                       |      |                | $ |      |  | $ |      
|Commercial loan lines-of-credit                |  |                        | 13,043  |                 |   | 13,043                                 |  |                                         |      |                |   |      |  |   |      
|Unused portion of home equity loans(2)         |  |                        | 59,494  |                 |   | 567                                    |  |                                         | 1,269 |                |   | 2,576 |  |   | 55,082
|Unused portion of construction loans(3)        |  |                        | 8,497   |                 |   | 8,497                                  |  |                                         |      |                |   |      |  |   |      
|Unused portion of overdraft lines-of-credit(4) |  |                        | 4,434   |                 |   |                                       |  |                                         |      |                |   |      |  |   | 4,434 
|Unused portion of personal lines-of-credit(5)  |  |                        | 452     |                 |   |                                       |  |                                         |      |                |   |      |  |   | 452   
|Standby letters of credit(6)                   |  |                        | 711     |                 |   | 711                                    |  |                                         |      |                |   |      |  |   |      
|Other commitments and contingencies            |  |                        | 1,702   |                 |   | 1,702                                  |  |                                         |      |                |   |      |  |   |      
|                                               |  |                        |         |                 |   |                                        |  |                                         |       |                |   |       |  |   |       
|Total loan commitments                         |  | $                      | 105,898 |                 | $ | 42,085                                 |  | $                                       | 1,269 |                | $ | 2,576 |  | $ | 59,968
|                                               |  |                        |         |                 |   |                                        |  |                                         |       |                |   |       |  |   |       

---

|(1) | Commitments for loans are extended to customers for up to 60 days after which they expire.
|--- | ------------------------------------------------------------------------------------------

|(2) | Unused portions of home equity loans are available to the borrower for up to 10 years.
|--- | --------------------------------------------------------------------------------------

|(3) | Unused portions of construction loans are available to the borrower for up to one year for development loans and up to one year for other construction loans.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Unused portion of checking overdraft lines-of-credit are available to customers in good standing indefinitely.
|--- | ----------------------------------------------------------------------------------------------------------------

|(5) | Unused portion of personal lines-of-credit are available to customers in good standing indefinitely.
|--- | ------------------------------------------------------------------------------------------------------

|(6) | Standby letters of credit are generally available for less than one year.
|--- | -------------------------------------------------------------------------



Off-Balance Sheet Arrangements: Other than loan commitments, the Company does not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future material effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



Item 4: Controls and Procedures



Disclosure Controls and Procedures. The Companys management, under the supervision and with the participation of the Companys Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design
and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this
report. Based on such evaluation, the Companys Chief Executive Officer and Chief Financial Officer concluded that as of end of the period covered by this report, the Companys disclosure controls and procedures were effective in
recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.



Internal Control Over Financial Reporting. There were no changes in the Companys internal control over financial reporting (as
defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



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PART II - OTHER INFORMATION



Item 2(b) Unregistered Sales of Equity Securities and Use of Proceeds



Legacy Bancorp, Inc. (the Registrant) was formed in connection with the conversion of the holding company structure of Legacy Banks from mutual to stock form. In connection with the conversion, on or about
September 17, 2005, the Registrant commenced a public offering of 9,545,000 shares of its common stock in a subscription offering for a purchase price of $10.00 per share pursuant to a Registration Statement on Form S-1 (No. 333-126481) which
was declared effective by the Securities and Exchange Commission on September 12, 2005. The stock offering, which expired on October 11, 2005 and was consummated on October 26, 2005, resulted in the sale of 9,545,000 shares for gross
proceeds of approximately $95.5 million. Expenses related to the offering were approximately $2.8 million. Net proceeds of the offering were approximately $92.7 million. As a result of the offering, 10,308,600 shares are outstanding, representing
9,545,000 shares sold at $10 per share, and 763,600 shares contributed to The Legacy Banks Foundation for payment of the $.01 par value per share.



50% of the net proceeds of the offering was retained by the Registrant, and 50% was contributed to Legacy Banks in exchange for all of the outstanding common stock of
Legacy Banks. All of such proceeds will initially be invested in short-term investments with maturities of ninety days or less. Upon maturity of the short-term investments, the resulting funds will be re-invested predominately in investment
securities with maturities of five years or less. During the remainder of 2005, the offering proceeds will be used to repay loans to the Federal Home Loan Bank of Boston, or used to fund loan growth.



Item 5 Other Information



Item 6: Exhibits



(a) See Index to Exhibits
immediately following the signature page.



(b) Form 8-K filed on
September 20, 2005 regarding the Registrants commencement of its conversion offering.





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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                        |  |                                                   
|----------------------- |  | --------------------------------------------------
|                        |  | LEGACY BANCORP, INC.                              
|                        | 
|Date: November 10, 2005 |  | /s/ J. Williar Dunlaevy                           
|                        |  | J. Williar Dunlaevy                               
|                        |  | Chief Executive Officer and Chairman of the Board 
|                        | 
|Date: November 10, 2005 |  | /s/ Stephen M. Conley                             
|                        |  | Stephen M. Conley                                 
|                        |  | Senior Vice President, Chief Financial Officer and
|                        |  | Treasurer (Principal Accounting Officer)          



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##### Table of Contents

INDEX TO 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**                                                 
|       | 
|31.1   |  | Certification pursuant to Rule 13a-14(a)/15d-14(a) of J. Williar Dunlaevy        
|       | 
|31.2   |  | Certification pursuant to Rule 13a-14(a)/15d-14(a) of Stephen M. Conley          
|       | 
|32     |  | Certification pursuant to 18 U.S.C. Section 1350                                 

---

|* | Incorporated by reference from the Registration 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
|-- | ---------------------------------------------------------------------------------------------------------------------



25