##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 COMMISSION FILE NUMBER : 000-51525
 LEGACY BANCORP, INC.
  Delaware
    
    20-3135053(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)
 99 NORTH STREET
PITTSFIELD, MASSACHUSETTS 01201
 (413) 443-4421
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 9,022,960




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##### 



LEGACY BANCORP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page No.Part I  Financial InformationItem 1
    
    Financial StatementsConsolidated Balance Sheets as of March 31,
2008 and December 31, 2007
    
    
    2Consolidated Statements of Income for the three months ended
March 31, 2008 and 2007
    
    
    3Consolidated Statements of Changes in Stockholders Equity
for the three months ended March 31, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows for the
three months ended March 31, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    9Item 3
    
    Quantitative and Qualitative Disclosures about Market Risks
    
    
    18Item 4
    
    Controls and Procedures
    
    
    18Part II  Other InformationItem 1
    
    Legal Proceedings
    
    
    19Item 1A
    
    Risk Factors
    
    
    19Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3
    
    Defaults Upon Senior Securities
    
    
    19Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5
    
    Other Information
    
    
    19Item 6
    
    Exhibits
    
    
    20EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF CEO & CFO
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1: Financial Statements
 
 LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCash and due from banks
    
    $
    14,120
    
    
    $
    13,931Short-term investments
    
    
    24,185
    
    
    
    48,294Cash and cash equivalents
    
    
    38,305
    
    
    
    62,225Securities and other investments
    
    
    161,374
    
    
    
    152,054Loans held for sale
    
    
    
    
    
    
    395Loans, net of allowance for loan losses of $5,656
in 2008 and $5,568 in 2007
    
    
    655,547
    
    
    
    653,629Premises and equipment, net
    
    
    18,862
    
    
    
    18,866Accrued interest receivable
    
    
    3,318
    
    
    
    3,404Goodwill, net
    
    
    9,687
    
    
    
    9,687Net deferred tax asset
    
    
    5,938
    
    
    
    5,580Bank-owned life insurance
    
    
    14,922
    
    
    
    14,788Other assets
    
    
    4,371
    
    
    
    3,913$
    912,324
    
    
    $
    924,541LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    611,403
    
    
    $
    610,447Securities sold under agreements to repurchase
    
    
    3,517
    
    
    
    4,055Federal Home Loan Bank advances
    
    
    157,989
    
    
    
    167,382Mortgagors escrow accounts
    
    
    1,037
    
    
    
    1,034Accrued expenses and other liabilities
    
    
    7,160
    
    
    
    8,531Total liabilities
    
    
    781,106
    
    
    
    791,449Commitments and contingenciesStockholders EquityPreferred Stock ($.01 par value, 10,000,000 shares
authorized, none issued or outstanding)
    
    
    
    
    
    
    Common Stock ($.01 par value, 40,000,000 shares
authorized and 10,308,600 issued at March 31, 2008 and
December 31, 2006; 9,105,260 outstanding at March 31,
2008, and 9,240,960 outstanding at December 31, 2007)
    
    
    103
    
    
    
    103Additional paid-in-capital
    
    
    101,922
    
    
    
    101,720Unearned Compensation  ESOP
    
    
    (8,604
    )
    
    
    (8,787
    )Unearned Compensation  Equity Incentive Plan
    
    
    (3,357
    )
    
    
    (3,525
    )Retained earnings
    
    
    58,701
    
    
    
    58,709Accumulated other comprehensive (loss) income
    
    
    (238
    )
    
    
    270Treasury stock, at cost (1,203,340 shares at March 31, 2008
and 1,067,640 shares at December 31, 2007)
    
    
    (17,309
    )
    
    
    (15,398
    )Total stockholders equity
    
    
    131,218
    
    
    
    133,092$
    912,324
    
    
    $
    924,541
  2




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
 Three months ended March 31,2008
    
    
    2007(Unaudited)Interest and dividend income:Loans
    
    $
    10,524
    
    
    $
    9,537Securities:Taxable
    
    
    1,945
    
    
    
    2,039Tax-Exempt
    
    
    116
    
    
    
    66Short-term investments
    
    
    165
    
    
    
    156Total interest and dividend income
    
    
    12,750
    
    
    
    11,798Interest expense:Deposits
    
    
    4,515
    
    
    
    4,098Federal Home Loan Bank advances
    
    
    1,868
    
    
    
    1,611Other borrowed funds
    
    
    27
    
    
    
    33Total interest expense
    
    
    6,410
    
    
    
    5,742Net interest income
    
    
    6,340
    
    
    
    6,056Provision for loan losses
    
    
    225
    
    
    
    245Net interest income after provision for loan
losses
    
    
    6,115
    
    
    
    5,811Non-interest income:Customer service fees
    
    
    746
    
    
    
    716Portfolio management fees
    
    
    279
    
    
    
    268Income from bank owned life insurance
    
    
    133
    
    
    
    21Insurance, annuities and mutual fund fees
    
    
    65
    
    
    
    47Gain on sales of securities, net
    
    
    87
    
    
    
    88Loss on impairment of securities
    
    
    (246
    )
    
    
    Gain on sales of loans, net
    
    
    65
    
    
    
    48Miscellaneous
    
    
    23
    
    
    
    10Total non-interest income
    
    
    1,152
    
    
    
    1,198Non-interest expenses:Salaries and employee benefits
    
    
    3,575
    
    
    
    3,745Occupancy and equipment
    
    
    912
    
    
    
    701Data processing
    
    
    636
    
    
    
    514Professional fees
    
    
    167
    
    
    
    284Advertising
    
    
    255
    
    
    
    176Other general and administrative
    
    
    1,119
    
    
    
    760Total non-interest expenses
    
    
    6,664
    
    
    
    6,180Income before income taxes
    
    
    603
    
    
    
    829Provision for income taxes
    
    
    186
    
    
    
    327Net income
    
    $
    417
    
    
    $
    502Earnings per shareBasic
    
    $
    0.05
    
    
    $
    0.05Diluted
    
    $
    0.05
    
    
    $
    0.05Weighted average shares outstandingBasic
    
    
    8,280,741
    
    
    
    9,564,801Diluted
    
    
    8,308,031
    
    
    
    9,565,833
  3




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##### Table of Contents



LEGACY BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Dollars in thousands)
(Unaudited)
 Unearned
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    Unearned
    
    
    Compensation -
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Compensation -
    
    
    Equity
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    ESOP
    
    
    Incentive Plan
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at December 31, 2006
    
    
    10,308,600
    
    
    $
    103
    
    
    $
    106,094
    
    
    $
    (9,519
    )
    
    $
    (5,375
    )
    
    $
    58,863
    
    
    $
    (169
    )
    
    $
    
    
    
    $
    149,997Comprehensive income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    502Net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    120Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    622Cash dividends declared ($0.04 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (385
    )
    
    
    
    
    
    
    
    
    
    
    (385
    )Common stock repurchased  Restricted stock
portion
of 2006 Equity Incentive Plan (412,344 shares)
    
    
    (65,844
    )
    
    
    
    
    
    
    (5,579
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,080
    )
    
    
    (6,659
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    357Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269Common stock held by ESOP committed
to be released (13,745 shares)
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217Balance at March 31, 2007
    
    
    10,242,756
    
    
    $
    103
    
    
    $
    100,906
    
    
    $
    (9,336
    )
    
    $
    (5,106
    )
    
    $
    58,980
    
    
    $
    (49
    )
    
    $
    (1,080
    )
    
    $
    144,418Balance at December 31, 2007
    
    
    9,240,960
    
    
    $
    103
    
    
    $
    101,720
    
    
    $
    (8,787
    )
    
    $
    (3,525
    )
    
    $
    58,709
    
    
    $
    270
    
    
    $
    (15,398
    )
    
    $
    133,092Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    417
    
    
    
    
    
    
    
    
    
    
    
    417Net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508
    )
    
    
    
    
    
    
    (508
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )Cash dividends declared ($0.05 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (418
    )
    
    
    
    
    
    
    
    
    
    
    (418
    )Common stock repurchased  5% Stock Repurchase
Program announced December 2007
    
    
    (138,700
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,960
    )
    
    
    (1,960
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196Restricted stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210Restricted stock granted
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    (7
    )
    
    
    
    
    
    
    49
    
    
    
    Common stock held by ESOP committed
to be released (13,745 shares)
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189Balance at March 31, 2008
    
    
    9,105,260
    
    
    $
    103
    
    
    $
    101,922
    
    
    $
    (8,604
    )
    
    $
    (3,357
    )
    
    $
    58,701
    
    
    $
    (238
    )
    
    $
    (17,309
    )
    
    $
    131,218
  4




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
 Three Months ended March 31,2008
    
    
    2007(Unaudited)Cash flows from operating activities:Net income
    
    $
    417
    
    
    $
    502Adjustments to reconcile net income to net cash
provided by operating activities:Provision for loan losses
    
    
    225
    
    
    
    245Net accretion of securities
    
    
    (54
    )
    
    
    (258
    )Depreciation and amortization expense
    
    
    339
    
    
    
    262Loss (Gain) on sales/impairment of securities, net
    
    
    159
    
    
    
    (88
    )Gain on sales of foreclosed real estate, net
    
    
    
    
    
    
    Gain on sales of loans, net
    
    
    (65
    )
    
    
    (48
    )Loans originated for sale
    
    
    (4,470
    )
    
    
    (2,820
    )Proceeds from sale of loans
    
    
    4,930
    
    
    
    2,296Share-based compensation expense
    
    
    406
    
    
    
    626Deferred tax provision
    
    
    (1
    )
    
    
    Employee Stock Ownership Plan expense
    
    
    189
    
    
    
    217Net change in:Bank-owned life insurance
    
    
    (134
    )
    
    
    (21
    )Accrued interest receivable
    
    
    86
    
    
    
    9Other assets
    
    
    (458
    )
    
    
    (344
    )Accrued expenses and other liabilities
    
    
    (1,371
    )
    
    
    (314
    )Net cash provided by operating activities
    
    
    198
    
    
    
    264Cash flows from investing activities:Activity in available-for-sale securities:Sales
    
    
    15,201
    
    
    
    737Maturities, prepayments and calls
    
    
    23,148
    
    
    
    23,316Purchases
    
    
    (48,274
    )
    
    
    (17,317
    )Purchase of Federal Home Loan Bank stock
    
    
    
    
    
    
    701Purchase of other investments
    
    
    (365
    )
    
    
    (303
    )Maturities, prepayments and call of other investments
    
    
    
    
    
    
    40Loan originations and purchases, net of principal payments
    
    
    (2,143
    )
    
    
    (15,601
    )Additions to premises and equipment
    
    
    (335
    )
    
    
    (1,932
    )Net cash used in investing activities
    
    
    (12,768
    )
    
    
    (10,359
    )
   5




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##### Table of Contents



LEGACY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in thousands)
 Three Months ended March 31,2008
    
    
    2007(Unaudited)Cash flows from financing activities:Net increase in deposits
    
    
    956
    
    
    
    (218
    )Net decrease in securities sold under
agreements to repurchase
    
    
    (538
    )
    
    
    (1,143
    )Repayment of Federal Home Loan Bank advances
    
    
    (14,711
    )
    
    
    (40,693
    )Proceeds from Federal Home Loan Bank advances
    
    
    5,318
    
    
    
    62,006Net increase in mortgagors escrow accounts
    
    
    3
    
    
    
    205Repurchase of common stock
    
    
    (1,960
    )
    
    
    (6,659
    )Payment of dividends on common stock
    
    
    (418
    )
    
    
    (385
    )Net cash (used) provided by financing activities
    
    
    (11,350
    )
    
    
    13,113Net change in cash and cash equivalents
    
    
    (23,920
    )
    
    
    3,018Cash and cash equivalents at beginning of period
    
    
    62,225
    
    
    
    21,644Cash and cash equivalents at end of period
    
    $
    38,305
    
    
    $
    24,662Supplemental cash flow information:Interest paid on deposits
    
    $
    4,581
    
    
    $
    4,220Interest paid on Federal Home Loan Bank advances
    
    
    1,947
    
    
    
    1,528Interest paid on other borrowed funds
    
    
    27
    
    
    
    33Income taxes paid
    
    
    150
    
    
    
    755
  6




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##### Table of Contents



LEGACY BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of presentation
  2. Recent Accounting Pronouncements
 Noncontrolling Interests in
Consolidated Financial Statements  An Amendment of ARB No. 51.
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements
 Fair Values of Assets and Liabilities: Fair Value Measurements The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No. 115
  7




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##### Table of Contents



Level 1
 Level 2
 Level 3
  March 31, 2008Assets/LiabilitiesLevel 1
    
    Level 2
    
    Level 3
    
    
    at Fair Value(Dollars in thousands)AssetsSecurities available for sale
    
    
    8,410
    
    
    
    135,089
    
    
    
    
    
    
    
    
    143,499Total
assets
    
    
    8,410
    
    
    
    135,089
    
    
    
    
    
    
    
    
    143,499
  Quarter endedMarch 31, 2008
    
    
    March 31, 2008TotalLevel 1
    
    Level 2
    
    Level 3
    
    
    Gains/(Losses)(Dollars in thousands)AssetsLoans
    
    
    
    
    
    
    1,195
    
    
    
    
    
    
    
    
    (101
    )Total assets
    
    
    
    
    
    
    1,195
    
    
    
    
    
    
    
    
    (101
    )
 Impaired loans level 2:
 8




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##### Table of Contents



3. Earnings Per Share
  Three months ended March 31,2008
    
    
    2007Net income applicable to common stock (000s)
    
    $
    417
    
    
    $
    502Average number of shares issued
    
    
    10,308,600
    
    
    
    10,308,600Less: average unallocated ESOP shares
    
    
    (659,600
    )
    
    
    (714,577
    )Less: average treasury shares
    
    
    (1,101,004
    )
    
    
    (28,190
    )Less: average unvested restricted stock awards
    
    
    (267,255
    )
    
    
    (1,032
    )Average number of basic shares outstanding
    
    
    8,280,741
    
    
    
    9,564,801Plus: dilutive unvested restricted stock awards
    
    
    25,880
    
    
    
    1,032Plus: diluted stock option shares
    
    
    1,410
    
    
    
    Average number of diluted shares outstanding
    
    
    8,308,031
    
    
    
    9,565,833Basic earnings per share
    
    $
    0.05
    
    
    $
    0.05Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.05
 4. Dividends
  5. Loan Commitments and other Contingencies
  
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  9




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##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses.
 Income Taxes.
 Other-Than-Temporary Impairment.
  Comparison of Financial Condition at March 31, 2008 and December 31, 2007
 Overview:
 Investment Activities
 10




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##### Table of Contents



At March 31, 2008
    
    
    At December 31, 2007Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(Dollars in Thousands)Securities available for sale:Government-sponsored enterprises
    
    $
    31,503
    
    
    $
    31,696
    
    
    $
    48,041
    
    
    $
    48,262Municipal bonds
    
    
    13,507
    
    
    
    13,422
    
    
    
    9,930
    
    
    
    9,941Corporate bonds and other obligations
    
    
    1,899
    
    
    
    1,937
    
    
    
    1,501
    
    
    
    1,531Mortgage-backed securities
    
    
    87,891
    
    
    
    88,034
    
    
    
    65,551
    
    
    
    65,726Total debt securities
    
    
    134,800
    
    
    
    135,089
    
    
    
    125,023
    
    
    
    125,460Common stock
    
    
    8,142
    
    
    
    8,410
    
    
    
    8,100
    
    
    
    9,084Total securities available for sale
    
    
    142,942
    
    
    
    143,499
    
    
    
    133,123
    
    
    
    134,544Securities held to maturity:Other bonds and obligations
    
    
    97
    
    
    
    97
    
    
    
    97
    
    
    
    97Restricted equity securities and other investments:Federal Home Loan Bank of Boston stock
    
    
    10,722
    
    
    
    10,722
    
    
    
    10,722
    
    
    
    10,722Savings Bank Life Insurance
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709
    
    
    
    1,709Other investments
    
    
    5,347
    
    
    
    5,347
    
    
    
    4,982
    
    
    
    4,982Total restricted equity securities
and other investments
    
    
    17,778
    
    
    
    17,778
    
    
    
    17,413
    
    
    
    17,413Total securities
    
    $
    160,817
    
    
    $
    161,374
    
    
    $
    150,633
    
    
    $
    152,054
 Lending Activities:
 At March 31, 2008
    
    
    At December 31, 2007Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Mortgage loans on real estate:Residential
    
    $
    343,671
    
    
    
    52.09
    %
    
    $
    349,772
    
    
    
    53.17
    %Commercial
    
    
    219,240
    
    
    
    33.23
    
    
    
    212,191
    
    
    
    32.26Home equity
    
    
    57,126
    
    
    
    8.66
    
    
    
    56,752
    
    
    
    8.63620,037
    
    
    
    93.98
    
    
    
    618,715
    
    
    
    94.06Other loans:Commercial
    
    
    28,028
    
    
    
    4.25
    
    
    
    27,664
    
    
    
    4.20Consumer and other
    
    
    11,719
    
    
    
    1.77
    
    
    
    11,421
    
    
    
    1.7439,747
    
    
    
    6.02
    
    
    
    39,085
    
    
    
    5.94Total loans
    
    
    659,784
    
    
    
    100.00
    %
    
    
    657,800
    
    
    
    100.00
    %Other Items:Net deferred loan costs
    
    
    1,419
    
    
    
    
    
    
    
    1,397Unamortized premiums
    
    
    
    
    
    
    
    
    
    
    Allowance for loan losses
    
    
    (5,656
    )
    
    
    
    
    
    
    (5,568
    )Total Loans, net
    
    $
    655,547
    
    
    
    
    
    
    $
    653,629
  11




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##### Table of Contents



Non-performing Assets:
 At March 31,
    
    
    At December 31,2008
    
    
    2007(Dollars in Thousands)Non-accrual loans:Residential mortgage
    
    $
    137
    
    
    $
    499Commercial mortgage
    
    
    6,903
    
    
    
    539Commercial
    
    
    503
    
    
    
    386Home equity, consumer and other
    
    
    122
    
    
    
    108Total non-accrual loans
    
    
    7,665
    
    
    
    1,532Loans greater than 90 days delinquent and still accruing:Residential mortgage
    
    
    
    
    
    
    Commercial mortgage
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    Home equity, consumer and other
    
    
    
    
    
    
    Total loans 90 days delinquent and
still accruing
    
    
    
    
    
    
    Total non-performing loans
    
    $
    7,665
    
    
    $
    1,532Other non-performing assets:Real estate owned
    
    $
    185
    
    
    $
    185Troubled debt restructurings
    
    
    
    
    
    
    Total other non-performing assets
    
    $
    185
    
    
    $
    185Total non-performing assets
    
    $
    7,850
    
    
    $
    1,717Ratios:Non-performing loans to total loans
    
    
    1.16
    %
    
    
    0.23
    %Non-performing assets to total assets
    
    
    0.86
    %
    
    
    0.19
    %
  Allowance for Loan Losses :
  12




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##### Table of Contents



At or for the Three MonthsEnded March 31,2008
    
    
    2007(Dollars in Thousands)Balance at beginning of period
    
    $
    5,568
    
    
    $
    4,677Charge-offs:Mortgage loans on real estate
    
    
    (77
    )
    
    
    Other loans:Commercial
    
    
    (19
    )
    
    
    (40
    )Consumer and other
    
    
    (75
    )
    
    
    (40
    )Total other loans
    
    
    (94
    )
    
    
    (80
    )Total charge-offs
    
    
    (171
    )
    
    
    (80
    )Recoveries:Mortgage loans on real estate
    
    
    7
    
    
    
    Other loans:Commercial
    
    
    
    
    
    
    7Consumer and other
    
    
    27
    
    
    
    15Total other loans
    
    
    27
    
    
    
    22Total recoveries
    
    
    34
    
    
    
    22Net (charge-offs) recoveries
    
    
    (137
    )
    
    
    (58
    )Provision for loan losses
    
    
    225
    
    
    
    245Balance at end of period
    
    $
    5,656
    
    
    $
    4,864Ratios:Net (charge-offs) recoveries to average loans outstanding  annualized
    
    
    (0.08
    %)
    
    
    (0.04
    %)Allowance for loan losses to non-performing loans at end of period
    
    
    73.79
    %
    
    
    317.70
    %Allowance for loan losses to total loans at end of period
    
    
    0.86
    %
    
    
    0.81
    %
 13




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##### Table of Contents



Deposits
 At March 31, 2008
    
    
    At December 31, 2007Balance
    
    
    Percent
    
    
    Balance
    
    
    Percent(Dollars in Thousands)
    
    
    (Dollars in Thousands)Deposit type:Demand
    
    $
    59,892
    
    
    
    9.80
    %
    
    $
    64,348
    
    
    
    10.54
    %Regular savings
    
    
    49,695
    
    
    
    8.13
    
    
    
    53,684
    
    
    
    8.79Relationship Savings
    
    
    124,077
    
    
    
    20.29
    
    
    
    112,705
    
    
    
    18.46Money market deposits
    
    
    66,830
    
    
    
    10.93
    
    
    
    64,373
    
    
    
    10.55NOW deposits
    
    
    41,870
    
    
    
    6.85
    
    
    
    41,981
    
    
    
    6.88Total transaction accounts
    
    
    342,364
    
    
    
    56.00
    
    
    
    337,091
    
    
    
    55.22Certificates of deposit
    
    
    269,039
    
    
    
    44.00
    
    
    
    273,356
    
    
    
    44.78Total deposits
    
    $
    611,403
    
    
    
    100.00
    %
    
    $
    610,447
    
    
    
    100.00
    %
  Borrowings
 Stockholders Equity
 Comparison of Operating Results for the Three Months Ended March 31, 2008 and 2007
  Analysis of Net Interest Income
   14




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##### Table of Contents



Three Months Ended March 31, 2008
    
    
    Three Months Ended March 31, 2007Average
    
    
    
    
    
    
    
    
    
    
    AverageOutstanding
    
    
    
    
    
    
    
    
    
    
    Outstanding
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Yield/ Rate(1)
    
    
    Balance
    
    
    Interest
    
    
    Rate(1)(Dollars in thousands)Interest-earning assets:Loans  Net (2)
    
    $
    655,712
    
    
    $
    10,524
    
    
    
    6.42
    %
    
    $
    584,730
    
    
    $
    9,537
    
    
    
    6.52
    %Investment securities
    
    
    169,087
    
    
    
    2,061
    
    
    
    4.88
    %
    
    
    167,049
    
    
    
    2,105
    
    
    
    5.04
    %Short-term investments
    
    
    20,998
    
    
    
    165
    
    
    
    3.14
    %
    
    
    12,890
    
    
    
    156
    
    
    
    4.84
    %Total interest-earning assets
    
    
    845,797
    
    
    
    12,750
    
    
    
    6.03
    %
    
    
    764,669
    
    
    
    11,798
    
    
    
    6.17
    %Non-interest-earning assets
    
    
    66,331
    
    
    
    
    
    
    
    
    
    
    
    40,697Total assets
    
    $
    912,128
    
    
    
    
    
    
    
    
    
    
    $
    805,366Interest-bearing liabilities:Savings deposits
    
    $
    51,671
    
    
    
    53
    
    
    
    0.41
    %
    
    $
    50,545
    
    
    
    54
    
    
    
    0.43
    %Relationship Savings
    
    
    116,765
    
    
    
    811
    
    
    
    2.78
    %
    
    
    95,840
    
    
    
    979
    
    
    
    4.09
    %Money market
    
    
    61,535
    
    
    
    497
    
    
    
    3.23
    %
    
    
    48,294
    
    
    
    390
    
    
    
    3.23
    %NOW accounts
    
    
    40,031
    
    
    
    59
    
    
    
    0.59
    %
    
    
    35,581
    
    
    
    55
    
    
    
    0.62
    %Certificates of deposits
    
    
    274,266
    
    
    
    3,095
    
    
    
    4.51
    %
    
    
    228,583
    
    
    
    2,620
    
    
    
    4.58
    %Total interest-bearing
deposits
    
    
    544,268
    
    
    
    4,515
    
    
    
    3.32
    %
    
    
    458,843
    
    
    
    4,098
    
    
    
    3.57
    %Borrowed Funds
    
    
    168,375
    
    
    
    1,895
    
    
    
    4.50
    %
    
    
    142,512
    
    
    
    1,644
    
    
    
    4.61
    %Total interest-bearing
liabilities
    
    
    712,643
    
    
    
    6,410
    
    
    
    3.60
    %
    
    
    601,355
    
    
    
    5,742
    
    
    
    3.82
    %Non-interest-bearing
liabilities
    
    
    65,803
    
    
    
    
    
    
    
    
    
    
    
    56,259Total liabilities
    
    
    778,446
    
    
    
    
    
    
    
    
    
    
    
    657,614Equity
    
    
    133,682
    
    
    
    
    
    
    
    
    
    
    
    147,752Total liabilities and equity
    
    $
    912,128
    
    
    
    
    
    
    
    
    
    
    $
    805,366Net interest income
    
    
    
    
    
    $
    6,340
    
    
    
    
    
    
    
    
    
    
    $
    6,056Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.43
    %
    
    
    
    
    
    
    
    
    
    
    2.35
    %Net interest-earning assets
(4)
    
    $
    133,154
    
    
    
    
    
    
    
    
    
    
    $
    163,314Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.00
    %
    
    
    
    
    
    
    
    
    
    
    3.17
    %Average interest-earning
assets to interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    118.68
    %
    
    
    
    
    
    
    
    
    
    
    127.16
    %
 
 (1)
    
    Yields and rates for the three months ended March 31, 2008 and 2007 are annualized.(2)
    
    Includes loans held for sale.(3)
    
    Net interest rate spread represents the difference between the yield on total average interest-earning assets and the cost of total average
interest-bearing liabilities for the three months ended March 31, 2008 and 2007.(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.  15




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##### Table of Contents



Three Months Ended March 31,2008 vs. 2007Increase
    
    Total(Decrease) Due to
    
    IncreaseVolume
    
    Rate
    
    (Decrease)(Dollars in thousands)Interest-earning assets:Loans  Net
    
    $
    1,130
    
    
    $
    (143
    )
    
    $
    987Investment securities
    
    
    28
    
    
    
    (72
    )
    
    
    (44
    )Short-term investments
    
    
    21
    
    
    
    (12
    )
    
    
    9Total interest-earning assets
    
    
    1,179
    
    
    
    (227
    )
    
    
    952Interest-bearing liabilities:Savings deposits
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Relationship Savings
    
    
    360
    
    
    
    (528
    )
    
    
    (168
    )Money market
    
    
    107
    
    
    
    
    
    
    
    107NOW accounts
    
    
    7
    
    
    
    (3
    )
    
    
    4Certificates of deposits
    
    
    514
    
    
    
    (39
    )
    
    
    475Total deposits
    
    
    988
    
    
    
    (571
    )
    
    
    417Borrowed Funds
    
    
    289
    
    
    
    (38
    )
    
    
    251Total interest-bearing liabilities
    
    
    1,277
    
    
    
    (609
    )
    
    
    668Change in net interest income
    
    $
    (98
    )
    
    $
    382
    
    
    $
    284
 Net interest income
 Interest income
 Interest expense
 Provision for loan loss expense
 Non-interest income
 16




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##### Table of Contents



Non-interest expense
 Income tax expense
 Minimum Regulatory Capital Requirements:
 Minimum To Be WellMinimum
    
    Capitalized UnderCapital
    
    Prompt CorrectiveActual
    
    Requirement
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2008:Total capital to risk weighted assets
    
    $
    89,585
    
    
    
    13.9
    %
    
    $
    51,529
    
    
    
    8.0
    %
    
    $
    64,411
    
    
    
    10.0
    %Tier 1 capital to risk weighted
assets:
    
    
    83,565
    
    
    
    13.0
    
    
    
    25,764
    
    
    
    4.0
    
    
    
    38,647
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    83,565
    
    
    
    9.5
    
    
    
    26,265
    
    
    
    3.0
    
    
    
    43,775
    
    
    
    5.0December 31, 2007:Total capital to risk weighted assets:
    
    $
    89,183
    
    
    
    13.9
    %
    
    $
    51,265
    
    
    
    8.0
    %
    
    $
    64,081
    
    
    
    10.0
    %Tier 1 capital to risk weighted
assets:
    
    
    82,937
    
    
    
    12.9
    
    
    
    25,632
    
    
    
    4.0
    
    
    
    38,449
    
    
    
    6.0Tier 1 capital to average assets:
    
    
    82,937
    
    
    
    9.9
    
    
    
    25,161
    
    
    
    3.0
    
    
    
    41,935
    
    
    
    5.0
 Contractual Obligations
 March 31, 2008More than One Year
    
    Three Years throughTotal
    
    One Year or Less
    
    through Three Years
    
    Five Years
    
    Over Five Years(Dollars in Thousands)Federal Home Loan Bank of Boston advances
    
    $
    157,989
    
    
    $
    49,300
    
    
    $
    58,463
    
    
    $
    20,000
    
    
    $
    30,226Securities sold under agreements to repurchase
    
    
    3,517
    
    
    
    3,517
    
    
    
    
    
    
    
    
    
    
    
    Total FHLBB advances and repurchase agreements
    
    $
    161,506
    
    
    $
    52,817
    
    
    $
    58,463
    
    
    $
    20,000
    
    
    $
    30,226
 Off-Balance Sheet Arrangements:
 17




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##### Table of Contents



March 31, 2008More than
    
    
    More thanOne Year
    
    
    Three YearsOne Year
    
    
    through
    
    
    Through Five
    
    
    Over FiveTotal
    
    
    or Less
    
    
    Three Years
    
    
    Years
    
    
    years(Dollars in Thousands)Commitments to grant loans (1)
    
    $
    36,458
    
    
    $
    36,458
    
    
    $
    
    
    
    $
    
    
    
    $
    Commercial loan lines-of-credit
    
    
    17,960
    
    
    
    17,960
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of home equity loans (2)
    
    
    71,186
    
    
    
    1,072
    
    
    
    2,615
    
    
    
    10,871
    
    
    
    56,628Unused portion of construction loans (3)
    
    
    4,183
    
    
    
    4,183
    
    
    
    
    
    
    
    
    
    
    
    Unused portion of overdraft
lines-of-credit(4)
    
    
    5,419
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,419Unused portion of personal
lines-of-credit(5)
    
    
    878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    878Standby letters of credit(6)
    
    
    631
    
    
    
    631
    
    
    
    
    
    
    
    
    
    
    
    Other commitments and contingencies(7)
    
    
    10,860
    
    
    
    10,860
    
    
    
    
    
    
    
    
    
    
    
    Total loan & other commitments
    
    $
    147,575
    
    
    $
    71,164
    
    
    $
    2,615
    
    
    $
    10,871
    
    
    $
    62,925
 
 (1)
    
    Commitments for loans are extended to customers for up to 60 days after which they expire.(2)
    
    Unused portions of home equity loans are available to the borrower for up to 10 years.(3)
    
    Unused portions of construction loans are available to the borrower for up to one year.(4)
    
    Unused portion of checking overdraft lines-of-credit are available to customers in good
standing indefinitely.(5)
    
    Unused portion of personal lines-of-credit are available to customers in good standing
indefinitely.(6)
    
    Standby letters of credit are generally available for less than one year.(7)
    
    Other commitments relate primarily to potential additional capital calls the Company is
committed to contribute as part of its investment
in certain limited partnerships. 
 Item 3: Quantitative and Qualitative Disclosures about Market Risks
  
 Item 4: Controls and Procedures
 Disclosure Controls and Procedures
 Internal Control Over Financial Reporting
 18




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a)
    
    Unregistered Sales of Equity Securities  Not applicable(b)
    
    Use of Proceeds  Not applicable(c)
    
    Repurchase of Our Equity Securities  In December 2007 the Company announced that its
Board of Directors authorized a stock repurchase program (the Stock Repurchase Program)
for the purchase of up to 462,048 shares of the Companys common stock or approximately 5%
of its outstanding common stock. Purchases under this Stock Repurchase Program in the
first quarter of 2008 were as follows:
 (d) Maximum Numberor Approximate(c) Total Number of
    
    Dollar Value ofShares Purchased as
    
    Shares that May YetPart of Publicly
    
    Be Purchased Under(a) Total Number of
    
    (b) Average Price
    
    announced Plans or
    
    the Plans orPeriod
    
    Shares Purchased
    
    Paid per Share
    
    Programs
    
    ProgramsJanuary 1  31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462,048February 1  29
    
    
    42,700
    
    
    $
    14.24
    
    
    
    42,700
    
    
    
    419,348March 1  31
    
    
    96,000
    
    
    $
    14.09
    
    
    
    96,000
    
    
    
    323,348
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
 19




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##### Table of Contents



Item 6 Exhibits
 2.1
    
    Amended and Restated Plan of Conversion  (1)3.1
    
    Certificate of Incorporation of Legacy Bancorp, Inc. (1)3.2
    
    Bylaws of Legacy Bancorp, Inc. (as amended) (1)10.1
    
    Legacy Banks ESOP Trust Agreement (2)10.2
    
    ESOP Plan Document (2)10.3
    
    ESOP Loan Documents (2)10.4.1
    
    Employment Agreement between Legacy Banks and J. Williar Dunlaevy (2)10.4.2
    
    Employment Agreement between Legacy Banks and Michael A. Christopher (2)10.4.3
    
    Employment Agreement between Legacy Banks and Steven F. Pierce (2)10.4.4
    
    Employment Agreement between Legacy Banks and Stephen M. Conley (2)10.4.5
    
    Employment Agreement between Legacy Banks and Richard M. Sullivan (2)10.5.1
    
    Employment Agreement between Legacy Bancorp, Inc. and J. Williar Dunlaevy (2)10.5.2
    
    Employment Agreement between Legacy Bancorp, Inc. and Michael A. Christopher (2)10.5.3
    
    Employment Agreement between Legacy Bancorp, Inc. and Steven F. Pierce (2)10.5.4
    
    Employment Agreement between Legacy Bancorp, Inc. and Stephen M. Conley (2)10.5.5
    
    Employment Agreement between Legacy Bancorp, Inc. and Richard M. Sullivan (2)10.5.6
    
    Separation Agreement and General Release dated as of November 5, 2007 between Legacy Bancorp,Inc., Legacy Banks and Michael A. Christopher (3)10.5.7
    
    Separation Agreement and General Release dated as of December 21, 2007 between Legacy Bancorp,Inc., Legacy Banks and Stephen M. Conley (4)10.5.8
    
    Consulting Agreement dated as of November 5, 2007 between Legacy Bancorp, Inc., Legacy Banks andMichael A. Christopher (3)10.5.9
    
    Purchase Agreement by and between First Niagara Bank and Legacy Banks dated as of July 25, 2007 (5)10.11
    
    2007 Equity Incentive Plan (3)11.0
    
    Statement re: Computation of per share earnings is incorporated herein by reference to  Notes toConsolidated Financial
Statementswithin Part I, Item 1, Financial
Statements31.1
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of J. Williar Dunlaevy31.2
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of Stephen M. Conley32
    
    Certification pursuant to 18 U.S.C. Section 1350
 
 (1)
    
    Incorporated by reference from the Registrants Quarterly Report on Form 10-Q for the Quarter
Ended June 30, 2005 filed October 27, 2005.(2)
    
    Incorporated by reference from the Registration Statement on Form S-1 (No. 333-126481) filed
July 8, 2005, as amended.(3)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed November 5,
2007.(4)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed December 21,
2007.(5)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K filed July 25, 2007. 20




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SIGNATURES
  LEGACY BANCORP, INC.Date: May 12, 2008
    /s/ J. Williar DunlaevyJ. Williar DunlaevyChief Executive Officer and Chairman of the BoardDate: May 12, 2008
    /s/ Paul H. BrucePaul H. BruceSenior Vice President, Chief Financial Officer and
Treasurer (Principal Accounting Officer) 21