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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

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

|
|



For the
quarterly period ended June 30, 2004



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------



For the transition period from  to



Commission file number: 000-31673



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OHIO LEGACY CORP

(Exact name of small business issuer as specified in its charter)



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OHIO

(State or other jurisdiction of incorporation or organization)



34-1903890

(I.R.S. Employer Identification No.)



305 West Liberty Street, Wooster, OH, 44691

(Address of principal executive
offices)



(330) 263-1955

(Issuers telephone number)



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Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 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  x    No ̈



As of August 12, 2004, the latest practicable date, there were 2,120,720 shares of the
issuers Common Stock, Without Par Value, issued and outstanding.



Transitional Small Business Disclosure Format (Check one):    Yes ̈No  x



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1.



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##### Table of Contents

OHIO LEGACY CORP

FORM 10-QSB

AS OF JUNE 30, 2004, AND FOR THE THREE AND SIX MONTHS THEN ENDED

SECOND QUARTER REPORT



|                                                            |  |     
|----------------------------------------------------------- |  | ----
|                                                            |  | Page
|PART I -
FINANCIAL INFORMATION                              |  |     
|                                                            | 
|Item 1.
Financial Statements                                |  | 3   
|                                                            | 
|Item 2.
Managements Discussion and Analysis                |  | 15  
|                                                            | 
|Item 3.
Controls and Procedures                             |  | 26  
|                                                            | 
|PART II -
OTHER INFORMATION                                 |  |     
|                                                            | 
|Item 1.
Legal Proceedings                                   |  | 27  
|                                                            | 
|Item 2.
Changes in Securities                               |  | 27  
|                                                            | 
|Item 3.
Defaults Upon Senior Securities                     |  | 27  
|                                                            | 
|Item 4.
Submission of Matters to a Vote of Security Holders |  | 27  
|                                                            | 
|Item 5.
Other Information                                   |  | 28  
|                                                            | 
|Item 6.
Exhibits and Reports on Form 8-K                    |  | 28  
|                                                            | 
|SIGNATURES                                                  |  | 29  



2.



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##### Table of Contents

PART I  FINANCIAL INFORMATION



Item 1. Financial Statements.



OHIO
LEGACY CORP

CONSOLIDATED BALANCE SHEETS

As of June 30, 2004, and December 31, 2003



|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                     |  | June 30, 2004 |             |   | December 31,2003 |  
|                                                                                                                                                                     |  | (unaudited)   |             |   |                  |  
|ASSETS                                                                                                                                                               |  |               |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                                              |  | $             | 5,197,182   |   |                  | $ | 4,370,383   |  
|Federal funds sold and interest-bearing deposits in financial institutions                                                                                           |  |               | 1,563,124   |   |                  |   | 3,814,436   |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                                            |  |               | 6,760,306   |   |                  |   | 8,184,819   |  
|Securities available for sale                                                                                                                                        |  |               | 33,053,465  |   |                  |   | 38,054,644  |  
|Loans, net                                                                                                                                                           |  |               | 128,178,255 |   |                  |   | 108,792,368 |  
|Federal bank stock                                                                                                                                                   |  |               | 1,250,050   |   |                  |   | 1,039,200   |  
|Premises and equipment, net                                                                                                                                          |  |               | 1,935,167   |   |                  |   | 2,036,544   |  
|Other real estate owned                                                                                                                                              |  |               | 70,000      |   |                  |   | 70,000      |  
|Accrued interest receivable and other assets                                                                                                                         |  |               | 1,283,430   |   |                  |   | 880,904     |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Total assets                                                                                                                                                         |  | $             | 172,530,673 |   |                  | $ | 159,058,479 |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|LIABILITIES                                                                                                                                                          |  |               |             |   |                  |   |             |  
|Deposits:                                                                                                                                                            |  |               |             |   |                  |   |             |  
|Noninterest-bearing demand                                                                                                                                           |  | $             | 7,799,869   |   |                  | $ | 7,133,620   |  
|Interest-bearing demand                                                                                                                                              |  |               | 11,701,908  |   |                  |   | 8,962,743   |  
|Savings                                                                                                                                                              |  |               | 38,987,329  |   |                  |   | 39,667,717  |  
|Certificates of deposit                                                                                                                                              |  |               | 70,227,998  |   |                  |   | 67,387,021  |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Total deposits                                                                                                                                                       |  |               | 128,717,104 |   |                  |   | 123,151,101 |  
|Federal Home Loan Bank advances                                                                                                                                      |  |               | 23,031,548  |   |                  |   | 14,759,314  |  
|Subordinated debentures                                                                                                                                              |  |               | 3,325,000   |   |                  |   | 3,325,000   |  
|Capital lease obligations                                                                                                                                            |  |               | 972,833     |   |                  |   | 976,643     |  
|Accrued interest payable and other liabilities                                                                                                                       |  |               | 684,902     |   |                  |   | 801,954     |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                    |  |               | 156,731,387 |   |                  |   | 143,014,012 |  
|                                                                                                                                                                     |  |              
|SHAREHOLDERS EQUITY                                                                                                                                                 |  |               |             |   |                  |   |             |  
|Preferred stock, no par value, 500,000 shares authorized, none outstanding                                                                                           |  |               |            |   |                  |   |            |  
|Common stock, no par value, 5,000,000 shares authorized, 2,120,720 and 2,118,000 shares issued and outstanding at June 30, 2004, and December
31, 2003, respectively |  |               | 17,729,155  |   |                  |   | 17,701,955  |  
|Accumulated deficit                                                                                                                                                  |  |               | (1,107,585  | ) |                  |   | (1,555,585  | )
|Accumulated other comprehensive income (loss)                                                                                                                        |  |               | (822,284    | ) |                  |   | (101,903    | )
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Total shareholders equity                                                                                                                                           |  |               | 15,799,286  |   |                  |   | 16,044,467  |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                                                           |  | $             | 172,530,673 |   |                  | $ | 159,058,479 |  
|                                                                                                                                                                     |  |               |             |   |                  |   |             |  



See notes to the
consolidated financial statements.



3.



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##### Table of Contents

OHIO LEGACY CORP

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2004 and 2003

(Unaudited)



|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ---------------------------------- | --------- | -------------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | For the Three Months EndedJune 30, |           | For the Six Months EndedJune 30,
|                                                    |  | 2004                               |           | 2003                             |   | 2004      |  | 2003
|Interest income:                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                                  | 1,981,839 |                                  | $ | 1,517,081 |  | $    | 3,787,288 |  | $ | 2,944,736
|Securities                                          |  |                                    | 314,070   |                                  |   | 353,978   |  |      | 670,436   |  |   | 794,215  
|Interest-bearing deposits and federal funds sold    |  |                                    | 24,875    |                                  |   | 33,669    |  |      | 50,808    |  |   | 63,516   
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Total interest income                               |  |                                    | 2,320,784 |                                  |   | 1,904,728 |  |      | 4,508,532 |  |   | 3,802,467
|                                                    |  |                                    |           |                                 
|Interest expense:                                   |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Deposits                                            |  |                                    | 731,768   |                                  |   | 787,398   |  |      | 1,470,803 |  |   | 1,627,272
|Other borrowings                                    |  |                                    | 224,027   |                                  |   | 109,092   |  |      | 421,847   |  |   | 219,717  
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Total interest expense                              |  |                                    | 955,795   |                                  |   | 896,490   |  |      | 1,892,650 |  |   | 1,846,989
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                                    | 1,364,989 |                                  |   | 1,008,238 |  |      | 2,615,882 |  |   | 1,955,478
|                                                    |  |                                    |           |                                 
|Provision for loan losses                           |  |                                    | 150,000   |                                  |   | 77,500    |  |      | 235,000   |  |   | 157,500  
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                                    | 1,214,989 |                                  |   | 930,738   |  |      | 2,380,882 |  |   | 1,797,978
|Noninterest income:                                 |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Service charges and other fees                      |  |                                    | 112,433   |                                  |   | 85,696    |  |      | 200,365   |  |   | 152,256  
|Gain on sales of securities, net                    |  |                                    |          |                                  |   | 16,640    |  |      | 13,147    |  |   | 74,489   
|Other income                                        |  |                                    | 2,271     |                                  |   | 2,322     |  |      | 4,557     |  |   | 4,976    
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Total noninterest income                            |  |                                    | 114,704   |                                  |   | 104,658   |  |      | 218,069   |  |   | 231,721  
|                                                    |  |                                    |           |                                 
|Noninterest expense:                                |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                                    | 485,903   |                                  |   | 355,882   |  |      | 950,605   |  |   | 736,042  
|Occupancy and equipment                             |  |                                    | 151,177   |                                  |   | 137,797   |  |      | 301,460   |  |   | 276,971  
|Professional fees                                   |  |                                    | 108,656   |                                  |   | 129,541   |  |      | 196,623   |  |   | 209,805  
|Franchise tax                                       |  |                                    | 58,356    |                                  |   | 46,197    |  |      | 121,406   |  |   | 94,997   
|Data processing                                     |  |                                    | 110,567   |                                  |   | 76,515    |  |      | 211,492   |  |   | 152,576  
|Marketing and advertising                           |  |                                    | 39,756    |                                  |   | 25,650    |  |      | 83,653    |  |   | 53,897   
|Stationery and supplies                             |  |                                    | 21,543    |                                  |   | 21,339    |  |      | 38,961    |  |   | 40,095   
|Other expenses                                      |  |                                    | 127,735   |                                  |   | 82,475    |  |      | 246,751   |  |   | 169,316  
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Total noninterest expense                           |  |                                    | 1,103,693 |                                  |   | 875,396   |  |      | 2,150,951 |  |   | 1,733,699
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Earnings before income tax expense                  |  |                                    | 226,000   |                                  |   | 160,000   |  |      | 448,000   |  |   | 296,000  
|                                                    |  |                                    |           |                                 
|Income tax expense                                  |  |                                    |          |                                  |   |          |  |      |          |  |   |         
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Net earnings                                        |  |                                    | 226,000   |                                  | $ | 160,000   |  | $    | 448,000   |  | $ | 296,000  
|                                                    |  |                                    |           |                                  |   |           |  |      |           |  |   |          
|Basic earnings per share                            |  | $                                  | 0.11      |                                  | $ | 0.08      |  | $    | 0.21      |  | $ | 0.14     
|Diluted earnings per share                          |  | $                                  | 0.10      |                                  | $ | 0.08      |  | $    | 0.21      |  | $ | 0.14     
|                                                    |  |                                    |           |                                 
|Basic weighted average shares outstanding           |  |                                    | 2,119,138 |                                  |   | 2,115,700 |  |      | 2,118,944 |  |   | 2,101,612
|Diluted weighted average shares outstanding         |  |                                    | 2,180,962 |                                  |   | 2,118,674 |  |      | 2,181,649 |  |   | 2,103,450



See notes to the
consolidated financial statements.



4.



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##### Table of Contents

OHIO LEGACY CORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three and Six Months Ended June 30, 2004 and
2003

(Unaudited)



|                                                                                              |  |                                     |          |   |                                   |   |         |      |  |   |          |   |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | ----------------------------------- | -------- | - | --------------------------------- | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                                                              |  | For the Three Months Ended June 30, |          |   | For the Six Months Ended June 30, |  
|                                                                                              |  | 2004                                |          |   | 2003                              |   |         | 2004 |  |   | 2003     |  
|Net earnings                                                                                  |  | $                                   | 226,000  |   |                                   | $ | 160,000 |      |  | $ | 448,000  |   |  | $ | 296,000 |  
|Other comprehensive income (loss):                                                            |  |                                     |          |   |                                   |   |         |      |  |   |          |   |  |   |         |  
|Reclassification adjustment for amounts realized on securities sales included in net earnings |  |                                     |         |   |                                   |   | (16,640 | )    |  |   | (13,147  | ) |  |   | (74,489 | )
|Net unrealized gain (loss) on available for sale securities arising during the period         |  |                                     | (997,173 | ) |                                   |   | 77,324  |      |  |   | (707,234 | ) |  |   | (26,200 | )
|                                                                                              |  |                                     |          |   |                                   |   |         |      |  |   |          |   |  |   |         |  
|Other comprehensive income (loss)                                                             |  |                                     | (997,173 | ) |                                   |   | 60,684  |      |  |   | (720,381 | ) |  |   | 100,689 |  
|                                                                                              |  |                                     |          |   |                                   |   |         |      |  |   |          |   |  |   |         |  
|Comprehensive income (loss)                                                                   |  | $                                   | (771,173 | ) |                                   | $ | 220,684 |      |  | $ | (272,381 | ) |  |   | 195,311 |  
|                                                                                              |  |                                     |          |   |                                   |   |         |      |  |   |          |   |  |   |         |  



See notes to the
consolidated financial statements.



5.



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##### Table of Contents

OHIO LEGACY CORP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

For the Three and Six Months Ended
June 30, 2004 and 2003

(Unaudited)



|                                                                                                                     |  |                                     |            |                                   |      |   |            |  |   |            |   |  |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | --------------------------------- | ---- | - | ---------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                     |  | For the Three Months Ended June 30, |            | For the Six Months Ended June 30, |     
|                                                                                                                     |  | 2004                                |            |                                   | 2003 |   | 2004       |  |   | 2003       |  
|Balance, beginning of period                                                                                         |  | $                                   | 16,553,459 |                                   |      | $ | 16,110,172 |  | $ | 16,044,467 |   |  | $ | 15,003,055 |  
|Net earnings                                                                                                         |  |                                     | 226,000    |                                   |      |   | 160,000    |  |   | 448,000    |   |  |   | 296,000    |  
|Other comprehensive income (loss)                                                                                    |  |                                     | (997,173   | )                                 |      |   | 60,684     |  |   | (720,381   | ) |  |   | (100,689   | )
|Proceeds from exercise of stock warrants                                                                             |  |                                     | 17,000     |                                   |      |   |           |  |   | 27,200     |   |  |   |           |  
|Proceeds from exercise of over-allotment option on 150,000 shares of common stock, net of offering costs of $142,510 |  |                                     |           |                                   |      |   |           |  |   |           |   |  |   | 1,132,490  |  
|                                                                                                                     |  |                                     |            |                                   |      |   |            |  |   |            |   |  |   |            |  
|Balance, end of period                                                                                               |  | $                                   | 15,799,286 |                                   |      | $ | 16,330,856 |  | $ | 15,799,286 |   |  | $ | 16,330,856 |  
|                                                                                                                     |  |                                     |            |                                   |      |   |            |  |   |            |   |  |   |            |  



See notes to the
consolidated financial statements.



6.



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##### Table of Contents

OHIO LEGACY CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2004 and 2003

(Unaudited)



|                                                                             |  |                                   |             |   |      |   |             |  
|---------------------------------------------------------------------------- |  | --------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                             |  | For the Six Months Ended June 30, |            
|                                                                             |  | 2004                              |             |   | 2003 |  
|Cash flows from operating activities:                                        |  |                                   |             |   |      |   |             |  
|Net earnings                                                                 |  | $                                 | 448,000     |   |      | $ | 296,000     |  
|Adjustments to reconcile net earnings to net cash from operating activities: |  |                                   |             |   |      |   |             |  
|Depreciation                                                                 |  |                                   | 129,449     |   |      |   | 123,327     |  
|Securities amortization and accretion                                        |  |                                   | 89,698      |   |      |   | 108,921     |  
|Provision for loan losses                                                    |  |                                   | 235,000     |   |      |   | 157,500     |  
|Gain on sales of securities available for sale                               |  |                                   | (13,147     | ) |      |   | (74,489     | )
|Stock dividends from Federal Home Loan Bank (FHLB)                         |  |                                   | (11,700     | ) |      |   |            |  
|Net change in:                                                               |  |                                   |             |   |      |   |             |  
|Accrued interest receivable and other assets                                 |  |                                   | (221,977    | ) |      |   | (127,361    | )
|Accrued interest payable and other liabilities                               |  |                                   | (117,052    | ) |      |   | 4,041       |  
|Deferred loan fees                                                           |  |                                   | (2,952      | ) |      |   | 30,000      |  
|                                                                             |  |                                   |             |   |      |   |             |  
|Net cash provided by operating activities                                    |  |                                   | 535,319     |   |      |   | 517,939     |  
|                                                                             |  |                                  
|Cash flows from investing activities:                                        |  |                                   |             |   |      |   |             |  
|Purchases of securities available for sale                                   |  |                                   | (3,040,773  | ) |      |   | (23,625,690 | )
|Maturities, calls and paydowns of securities available for sale              |  |                                   | 4,097,869   |   |      |   | 19,872,375  |  
|Proceeds from sale of securities available for sale                          |  |                                   | 2,966,602   |   |      |   | 8,214,886   |  
|Purchases of federal bank stock                                              |  |                                   | (199,150    | ) |      |   | (219,000    | )
|Net change in loans                                                          |  |                                   | (19,617,935 | ) |      |   | (9,301,250  | )
|Purchase of premises and equipment                                           |  |                                   | (28,072     | ) |      |   | (55,180     | )
|                                                                             |  |                                   |             |   |      |   |             |  
|Net cash used by investing activities                                        |  |                                   | (15,821,459 | ) |      |   | (5,113,859  | )
|                                                                             |  |                                  
|Cash flows from financing activities:                                        |  |                                   |             |   |      |   |             |  
|Net change in deposits                                                       |  |                                   | 5,566,003   |   |      |   | 3,717,552   |  
|Repayment of capital lease obligations                                       |  |                                   | (3,810      | ) |      |   | (3,265      | )
|Proceeds from exercise of stock warrants                                     |  |                                   | 27,200      |   |      |   |            |  
|Repayments of FHLB advances and other borrowed funds                         |  |                                   | (727,766    | ) |      |   | (105,000    | )
|Proceeds from overnight FHLB advances, net of repayments                     |  |                                   | 4,000,000   |   |      |   |            |  
|Proceeds from FHLB advances                                                  |  |                                   | 5,000,000   |   |      |   |            |  
|Proceeds from issuance of common stock, net of offering costs                |  |                                   |            |   |      |   | 1,132,490   |  
|                                                                             |  |                                   |             |   |      |   |             |  
|Net cash provided by financing activities                                    |  |                                   | 13,861,627  |   |      |   | 4,741,777   |  
|                                                                             |  |                                   |             |   |      |   |             |  
|Increase (Decrease) in cash and cash equivalents                             |  |                                   | (1,424,513  | ) |      |   | 145,857     |  
|Cash and cash equivalents at beginning of period                             |  |                                   | 8,184,819   |   |      |   | 15,719,451  |  
|                                                                             |  |                                   |             |   |      |   |             |  
|Cash and cash equivalents at end of period                                   |  | $                                 | 6,760,306   |   |      | $ | 15,865,308  |  
|                                                                             |  |                                   |             |   |      |   |             |  
|Supplemental disclosures of cash flow information:                           |  |                                   |             |   |      |   |             |  
|Cash paid during the period for:                                             |  |                                   |             |   |      |   |             |  
|Interest                                                                     |  | $                                 | 1,937,135   |   |      | $ | 1,840,497   |  
|Federal income taxes                                                         |  |                                   | 59,000      |   |      |   |            |  
|                                                                             |  |                                  
|Noncash transactions:                                                        |  |                                   |             |   |      |   |             |  
|Commitments to purchase securities available for sale                        |  | $                                 |            |   |      | $ | 2,515,000   |  



See notes to the
consolidated financial statements.



7.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Nature of Operations and Principles of Consolidation: The consolidated financial
statements include Ohio Legacy Corp (Ohio Legacy) and its wholly-owned subsidiary, Ohio Legacy Bank, N.A. (Bank). Intercompany transactions and balances are eliminated in consolidation. References to the Company include Ohio
Legacy, consolidated with its subsidiary, the Bank.



Ohio Legacy is a bank
holding company incorporated in July 1999 under the laws of the State of Ohio. The Company began operations in October 2000. The Bank provides financial services through its full-service offices in Wooster, Millersburg and Canton, Ohio. Its primary
deposit products are checking, savings and certificate of deposit accounts, and its primary lending products are residential mortgage, commercial and installment loans. Substantially all loans are secured by specific items of collateral including
business and consumer assets and real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by residential and commercial real estate. Other financial instruments that
potentially represent concentrations of credit risk include deposit accounts in other financial institutions and federal funds sold.



These consolidated financial statements are prepared without audit and reflect all adjustments that, in the opinion of management, are necessary to present fairly the
financial position of the Company and its results of operations and cash flows for the periods presented. All such adjustments are normal and recurring in nature. The accounting principles used to prepare the consolidated financial statements are in
compliance with accounting principles generally accepted in the United States of America (GAAP). However, the financial statements have been prepared in accordance with the instructions of Form 10-QSB and, therefore, do not purport to contain all
necessary financial and footnote disclosures required by GAAP.



The financial
information presented in this report should be read in conjunction with the Companys Form 10-KSB for the year ended December 31, 2003, which includes information and disclosures not presented in this report. Reference is made to the accounting
policies of the Company described in Note 1 of the Notes to Consolidated Financial Statements contained in the Companys 2003 Annual Report that was filed as Exhibit 13 to the December 31, 2003, Form 10-KSB. The Company has consistently
followed those policies in preparing this Form 10-QSB.



Use of
Estimates: To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the
disclosures provided, and actual results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.



Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.



Income Taxes: Income tax expense is the total of the current year
income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. As a result of cumulative operating losses, a valuation allowance has been recorded to offset deferred tax assets. The valuation allowance will be removed when management believes it is more likely than
not that the Company will be able to realize its deferred tax assets.



8.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



Earnings per Share: Basic earnings per share is net earnings divided by the weighted
average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of additional potential common shares that may be issued upon the exercise of stock options and stock warrants. The following
table details the calculation of basic and diluted earnings per share.



|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          
|-------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                         |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                                                         |  | 2004                        |           | 2003                      |   | 2004      |  | 2003
|BASIC:                                                   |  |                             |           |                           |   |           |  |      |           |  |   |          
|Net earnings                                             |  | $                           | 226,000   |                           | $ | 160,000   |  | $    | 448,000   |  | $ | 296,000  
|                                                         |  |                             |           |                          
|Weighted average common shares outstanding               |  |                             | 2,119,138 |                           |   | 2,115,700 |  |      | 2,118,944 |  |   | 2,101,612
|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          
|Basic earnings per share                                 |  | $                           | 0.11      |                           | $ | 0.08      |  | $    | 0.21      |  | $ | 0.14     
|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          
|DILUTED:                                                 |  |                             |           |                           |   |           |  |      |           |  |   |          
|Net earnings                                             |  | $                           | 226,000   |                           | $ | 160,000   |  | $    | 448,000   |  | $ | 296,000  
|                                                         |  |                             |           |                          
|Weighted average common shares outstanding               |  |                             | 2,119,138 |                           |   | 2,115,700 |  |      | 2,118,944 |  |   | 2,101,612
|Dilutive effect of stock options                         |  |                             | 61,824    |                           |   | 2,974     |  |      | 62,705    |  |   | 1,838    
|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          
|Total common shares and dilutive potential common shares |  |                             | 2,180,962 |                           |   | 2,118,674 |  |      | 2,181,649 |  |   | 2,103,450
|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          
|Diluted earnings per share                               |  | $                           | 0.10      |                           | $ | 0.08      |  | $    | 0.21      |  | $ | 0.14     
|                                                         |  |                             |           |                           |   |           |  |      |           |  |   |          



The following table details, as of
June 30, dilutive potential common shares that were excluded from the computation of diluted earnings per share during the periods then ended as the effect of their exercise was antidilutive:



|               |  |                             |  |                           |  |        |  |        
|-------------- |  | --------------------------- |  | ------------------------- |  | ------ |  | -------
|               |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|               |  | 2004                        |  | 2003                      |  | 2004   |  | 2003   
|Stock warrants |  |                            |  | 339,600                   |  |       |  | 339,600
|Stock options  |  | 58,500                      |  | 87,000                    |  | 58,500 |  | 87,000 
|               |  |                             |  |                           |  |        |  |        
|Total          |  | 58,500                      |  | 426,600                   |  | 58,500 |  | 426,600
|               |  |                             |  |                           |  |        |  |        



Stock Compensation: The Company
accounts for stock warrants granted to the Companys Board of Directors and all stock options using the intrinsic value method under Accounting Principles Board Opinion No. 25 and has elected to disclose the pro forma impact of warrants and
options on net earnings in accordance with Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. Accordingly, no stock-based compensation expense is reflected in net earnings in the
accompanying consolidated statements of operations as all options and warrants granted had an exercise price equal to the market price of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings
and earnings per share if compensation expense were reported using the fair value recognition provisions of SFAS No. 123.



9.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



|                                                                                 |  |                            |         |   |                           |   |         |      |  |   |          |   |  |   |          |  
|-------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                 |  | Three Months EndedJune 30, |         |   | Six Months Ended June 30, |  
|                                                                                 |  | 2004                       |         |   | 2003                      |   |         | 2004 |  |   | 2003     |  
|Net earnings as reported                                                         |  | $                          | 226,000 |   |                           | $ | 160,000 |      |  | $ | 448,000  |   |  | $ | 296,000  |  
|Deduct stock-based compensation expense determined under fair value based method |  |                            | (60,000 | ) |                           |   | (70,633 | )    |  |   | (190,000 | ) |  |   | (167,673 | )
|                                                                                 |  |                            |         |   |                           |   |         |      |  |   |          |   |  |   |          |  
|Pro forma net earnings                                                           |  | $                          | 166,000 |   |                           | $ | 89,367  |      |  | $ | 258,000  |   |  | $ | 128,327  |  
|                                                                                 |  |                            |         |   |                           |   |         |      |  |   |          |   |  |   |          |  
|Basic earnings per share as reported                                             |  | $                          | 0.11    |   |                           | $ | 0.08    |      |  | $ | 0.21     |   |  | $ | 0.14     |  
|Pro forma basic earnings per share                                               |  |                            | 0.08    |   |                           |   | 0.04    |      |  |   | 0.12     |   |  |   | 0.06     |  
|                                                                                 |  |                            |         |  
|Diluted earnings per share as reported                                           |  | $                          | 0.10    |   |                           | $ | 0.08    |      |  | $ | 0.21     |   |  | $ | 0.14     |  
|Pro forma diluted earnings per share                                             |  |                            | 0.08    |   |                           |   | 0.04    |      |  |   | 0.12     |   |  |   | 0.06     |  



The fair value of common stock options
and warrants was estimated using the Black-Scholes option valuation model. No options were granted, forfeited or exercised during the three months ended June 30, 2004. At June 30, 2004, there were 197,500 options outstanding with a weighted average
strike price of $10.25 per share.



NOTE 2 - SECURITIES



Securities available for sale at June 30, 2004 and December 31, 2003, were as follows:



|                                          |  |            |            |                      |   |                       |  |   |          |  
|----------------------------------------- |  | ---------- | ---------- | -------------------- | - | --------------------- |  | - | -------- | -
|                                          |  | Fair Value |            | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|June 30, 2004                             |  |            |            |                      |   |                       |  |   |          |  
|U.S. Government agencies and corporations |  | $          | 8,796,092  |                      | $ | 9,081                 |  | $ | (396,092 | )
|Mortgage-backed securities                |  |            | 24,257,373 |                      |   | 52,093                |  |   | (487,366 | )
|                                          |  |            |            |                      |   |                       |  |   |          |  
|Total                                     |  | $          | 33,053,465 |                      | $ | 61,174                |  | $ | (883,458 | )
|                                          |  |            |            |                      |   |                       |  |   |          |  
|December 31, 2003                         |  |            |            |                      |   |                       |  |   |          |  
|U.S. Government agencies and corporations |  | $          | 9,031,234  |                      | $ | 18,462                |  | $ | (169,171 | )
|Mortgage-backed securities                |  |            | 29,023,410 |                      |   | 171,083               |  |   | (122,277 | )
|                                          |  |            |            |                      |   |                       |  |   |          |  
|Total                                     |  | $          | 38,054,644 |                      | $ | 189,545               |  | $ | (291,448 | )
|                                          |  |            |            |                      |   |                       |  |   |          |  



10.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 2  SECURITIES (Continued)



Securities with unrealized losses for less than one year and one year or more at June 30,
2004, were as follows:



|                                          |  |                    |        |      |                  |      |            |       |      |       |  |            |      |      |  |   |        |  |   |      |  
|----------------------------------------- |  | ------------------ | ------ | ---- | ---------------- | ---- | ---------- | ----- | ---- | ----- |  | ---------- | ---- | ---- |  | - | ------ |  | - | ---- | -
|                                          |  | Less than one year |        |      | One year or more |      |            | Total |     
|(Dollars in thousands)                    |  | Fair Value         |        | Loss |                  |      | Fair Value |       | Loss |       |  | Fair Value |      | Loss | 
|U.S. Government agencies and corporations |  | $                  | 5,371  |      | $                | (267 | )          |       | $    | 2,871 |  | $          | (129 | )    |  | $ | 8,242  |  | $ | (396 | )
|Mortgage-backed securities                |  |                    | 18,371 |      |                  | (393 | )          |       |      | 2,968 |  |            | (94  | )    |  |   | 21,339 |  |   | (487 | )
|                                          |  |                    |        |      |                  |      |            |       |      |       |  |            |      |      |  |   |        |  |   |      |  
|Total                                     |  | $                  | 23,742 |      | $                | (660 | )          |       | $    | 5,839 |  | $          | (223 | )    |  | $ | 29,581 |  | $ | (883 | )
|                                          |  |                    |        |      |                  |      |            |       |      |       |  |            |      |      |  |   |        |  |   |      |  



At June 30, 2004, there were no
securities with other than temporary declines in fair value as the decline in fair value is largely due to an increase in market rates. Fair values are expected to recover as the bonds approach maturity.



Contractual maturities of debt securities at June 30, 2004, were as follows. Balances are
presented at fair value with the yield calculated on amortized cost:



|                                          |        |                    |       |  |                              |        |  |                              |       |  |                 |   |       |   |       |        |      |       |  |   |        |  |      |  
|----------------------------------------- | ------ | ------------------ | ----- |  | ---------------------------- | ------ |  | ---------------------------- | ----- |  | --------------- | - | ----- | - | ----- | ------ | ---- | ----- |  | - | ------ |  | ---- | -
|                                          |        | Maturing           |      
|(Dollars in thousands)                    |        | Less than one year |       |  | After one through five years |        |  | After five through ten years |       |  | After ten years |  
|                                          | Amount |                    | Yield |  |                              | Amount |  | Yield                        |       |  | Amount          |   | Yield |   |       | Amount |      | Yield | 
|U.S. Government agencies and corporations |        | $                  | 554   |  | 4.30                         | %      |  | $                            | 6,673 |  | 3.37            | % |       | $ | 1,569 |        | 3.40 | %     |  | $ |       |  |     | %
|Mortgage-backed securities                |        |                    |      |  |                             |        |  |                              | 269   |  | 5.25            |   |       |   | 7,726 |        | 3.83 |       |  |   | 16,262 |  | 3.43 |  
|                                          |        |                    |       |  |                              |        |  |                              |       |  |                 |   |       |   |       |        |      |       |  |   |        |  |      |  
|Total                                     |        | $                  | 554   |  | 4.30                         | %      |  | $                            | 6,942 |  | 3.43            | % |       |   | 9,295 |        | 3.76 | %     |  | $ | 16,262 |  | 3.43 | %
|                                          |        |                    |       |  |                              |        |  |                              |       |  |                 |   |       |   |       |        |      |       |  |   |        |  |      |  



The following table details sales
transactions of securities available for sale during the periods presented:



|                                |  |                             |   |                           |   |           |  |   |           |   |  |   |          
|------------------------------- |  | --------------------------- | - | ------------------------- | - | --------- |  | - | --------- | - |  | - | ---------
|                                |  | Three Months Ended June 30, |   | Six Months Ended June 30,
|                                |  | 2004                        |   | 2003                      |   | 2004      |  |   | 2003     
|Proceeds from sales             |  | $                           |  |                           | $ | 2,036,169 |  | $ | 2,966,602 |   |  | $ | 8,214,886
|                                |  |                             |   |                           |   |           |  |   |           |   |  |   |          
|Gross realized gains            |  | $                           |  |                           | $ | 16,640    |  | $ | 23,163    |   |  | $ | 74,489   
|Gross realized losses           |  |                             |  |                           |   |          |  |   | (10,016   | ) |  |   |         
|                                |  |                             |   |                           |   |           |  |   |           |   |  |   |          
|Net gain on sales of securities |  | $                           |  |                           | $ | 16,640    |  | $ | 13,147    |   |  | $ | 74,489   
|                                |  |                             |   |                           |   |           |  |   |           |   |  |   |          



Securities with a fair value of
$29,038,000 and $20,202,000 were pledged as collateral for public fund deposits and Federal Home Loan Bank advances at June 30, 2004 and December 31, 2003, respectively. At June 30, 2004, there were no holdings of securities of any one issuer, other
than U.S. Government agencies and corporations, in an amount greater than 10% of shareholders equity. At June 30, 2004 and December 31, 2003, federal bank stock consisted of Federal Reserve Bank stock of $544,350 and $533,800, respectively,
and stock of the Federal Home Loan Bank of Cincinnati of $705,700 and $505,400, respectively.



11.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 3 - LOANS



Loans, by collateral type, were as follows at June 30, 2004 and December 31, 2003:



|                                    |  |               |             |   |                   |       |   |         |   |             |         |  |       |  
|----------------------------------- |  | ------------- | ----------- | - | ----------------- | ----- | - | ------- | - | ----------- | ------- |  | ----- | -
|                                    |  | June 30, 2004 |             |   | December 31, 2003 |      
|                                    |  | Balance       |             |   | Percent           |       |   | Balance |   |             | Percent | 
|Residential real estate             |  | $             | 48,448,503  |   |                   | 37.4  | % |         | $ | 42,510,798  |         |  | 38.7  | %
|Multifamily residential real estate |  |               | 10,048,671  |   |                   | 7.8   |   |         |   | 8,120,517   |         |  | 7.4   |  
|Commercial real estate              |  |               | 32,337,632  |   |                   | 25.0  |   |         |   | 24,457,198  |         |  | 22.2  |  
|Construction                        |  |               | 15,331,330  |   |                   | 11.8  |   |         |   | 11,791,077  |         |  | 10.7  |  
|Commercial                          |  |               | 11,732,956  |   |                   | 9.0   |   |         |   | 12,698,536  |         |  | 11.5  |  
|Consumer and home equity            |  |               | 11,677,046  |   |                   | 9.0   |   |         |   | 10,511,437  |         |  | 9.5   |  
|                                    |  |               |             |   |                   |       |   |         |   |             |         |  |       |  
|Total loans                         |  |               | 129,576,138 |   |                   | 100.0 | % |         |   | 110,089,563 |         |  | 100.0 | %
|                                    |  |               |             |   |                   |       |   |         |   |             |         |  |       |  
|Less: Allowance for loan losses     |  |               | (1,225,553  | ) |                   |       |   |         |   | (1,121,913  | )       |  |       |  
|Net deferred loan fees              |  |               | (172,330    | ) |                   |       |   |         |   | (175,282    | )       |  |       |  
|                                    |  |               |             |   |                   |       |   |         |   |             |         |  |       |  
|Loans, net                          |  | $             | 128,178,255 |   |                   |       |   |         | $ | 108,792,368 |         |  |       |  
|                                    |  |               |             |   |                   |       |   |         |   |             |         |  |       |  



At June 30, 2004, approximately
$5,000,000 of single-family residential real estate loans were pledged as collateral for cash management advances from the Federal Home Loan Bank.



Activity in the allowance for loan losses for the three and six months ended June 30 was as follows:



|                                                  |  |                                     |           |   |                                   |   |         |      |  |   |           |   |  |   |         |  
|------------------------------------------------- |  | ----------------------------------- | --------- | - | --------------------------------- | - | ------- | ---- |  | - | --------- | - |  | - | ------- | -
|                                                  |  | For the Three Months Ended June 30, |           |   | For the Six Months Ended June 30, |  
|                                                  |  | 2004                                |           |   | 2003                              |   |         | 2004 |  |   | 2003      |  
|Balance, beginning of period                      |  | $                                   | 1,188,749 |   |                                   | $ | 890,767 |      |  | $ | 1,121,913 |   |  | $ | 837,210 |  
|Provision for loan losses                         |  |                                     | 150,000   |   |                                   |   | 77,500  |      |  |   | 235,000   |   |  |   | 157,500 |  
|Loans charged-off                                 |  |                                     | (114,800  | ) |                                   |   | (2,779  | )    |  |   | (134,600  | ) |  |   | (30,568 | )
|Recoveries                                        |  |                                     | 1,604     |   |                                   |   | 925     |      |  |   | 3,240     |   |  |   | 2,271   |  
|                                                  |  |                                     |           |   |                                   |   |         |      |  |   |           |   |  |   |         |  
|Balance, end of period                            |  | $                                   | 1,225,553 |   |                                   | $ | 966,413 |      |  | $ | 1,225,553 |   |  | $ | 966,413 |  
|                                                  |  |                                     |           |   |                                   |   |         |      |  |   |           |   |  |   |         |  
|Allowance for loan losses, percent of total loans |  |                                     | 0.95      | % |                                   |   | 1.09    | %    |  |   |           |   |  |   |         |  
|                                                  |  |                                     |           |   |                                   |   |         |      |  |   |           |   |  |   |         |  



Impaired and nonperforming loans were
as follows at June 30, 2004 and December 31, 2003, and during the three and six months ended June 30, 2004 and 2003:



|                                                  |  |               |         |                   |   |        
|------------------------------------------------- |  | ------------- | ------- | ----------------- | - | -------
|                                                  |  | June 30, 2004 |         | December 31, 2003
|Loans past due over 90 days still on accrual      |  | $             |        |                   | $ |       
|Nonaccrual loans                                  |  |               | 217,512 |                   |   | 154,140
|                                                  |  |              
|Impaired loans, included in nonaccrual loans      |  | $             | 112,500 |                   | $ |       
|Amount of the allowance for loan losses allocated |  |               |        |                   |   |       



12.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 3  LOANS (Continued)



|                                                        |  |                                     |         |                                   |   |      |  |      |        |  |   |  
|------------------------------------------------------- |  | ----------------------------------- | ------- | --------------------------------- | - | ---- |  | ---- | ------ |  | - | -
|                                                        |  | For the Three Months Ended June 30, |         | For the Six Months Ended June 30,
|                                                        |  | 2004                                |         | 2003                              |   | 2004 |  | 2003
|Interest income foregone on nonaccrual loans            |  | $                                   | 499     |                                   | $ |     |  | $    | 1,235  |  | $ | 
|                                                        |  |                                     |         |                                  
|Average of impaired loans during the period             |  | $                                   | 112,500 |                                   | $ |     |  | $    | 94,000 |  | $ | 
|Interest income recognized during impairment            |  |                                     |        |                                   |   |     |  |      |       |  |   | 
|Cash-basis interest income recognized during impairment |  |                                     |        |                                   |   |     |  |      |       |  |   | 



NOTE 4  FEDERAL HOME LOAN
BANK ADVANCES



The following table details Federal Home Loan Bank
(FHLB) advances as of June 30, 2004:



|                                                                                              |  |   |           
|--------------------------------------------------------------------------------------------- |  | - | ----------
|Overnight cash management advances, variable rate                                             |  | $ | 4,000,000 
|One-year interest-only advance 1.64% fixed rate, maturing December 16, 2004                   |  |   | 3,000,000 
|Eighteen-month interest-only advance 2.02% fixed rate, maturing June 16, 2005                 |  |   | 2,500,000 
|Two-year interest-only advance 2.36% fixed rate, maturing December 16, 2005                   |  |   | 1,500,000 
|Thirty-month interest-only advance 2.77% fixed rate, maturing June 23, 2006                   |  |   | 1,500,000 
|Three-year interest-only advance 3.07% fixed rate, maturing December 22, 2006                 |  |   | 1,500,000 
|Three-year, constant monthly payment advance 2.26% fixed rate, final maturity October 1, 2006 |  |   | 2,350,783 
|Three-year interest-only advance 2.42% fixed rate, maturing March 10, 2007                    |  |   | 5,000,000 
|Four-year, constant monthly payment advance 2.57% fixed rate, final maturity October 1, 2007  |  |   | 1,680,765 
|                                                                                              |  |   |           
|                                                                                              |  | $ | 23,031,548
|                                                                                              |  |   |           



Each advance is payable at its
maturity date and has a prepayment penalty if repaid prior to maturity. The advances were collateralized by securities. Based upon securities specifically pledged as collateral to the FHLB at June 30, 2004, the Bank had approximately $329,000 in
additional borrowing capacity available for advances from the FHLB. As of June 30, 2004, required principal payments on FHLB advances, excluding overnight cash management advances, over the next five years are:



|     |  |   |            
|---- |  | - | -----------
|2004 |  | $ | 3,736,403  
|2005 |  |   | 5,499,136  
|2006 |  |   | 4,362,239  
|2007 |  |   | 5,433,770  
|2008 |  |   |           
|     |  |   |            
|     |  |   | $19,031,548
|     |  |   |            



13.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 5  COMMON STOCK WARRANTS



There were 1,700 and 2,720 warrants exercised during the three and six months ended June 30,
2004, respectively. At June 30, 2004, there were 184,580 warrants outstanding with an exercise price of $10.00 per share.



NOTE 6  OFF-BALANCE SHEET ACTIVITIES



Some financial instruments, such as loan commitments, credit lines and overdraft protection, are issued to meet customer financing needs. These are agreements to provide
credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of
these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.



The contractual amount of financial instruments with off-balance sheet risk was as follows at
June 30, 2004:



|                                      |  |   |           
|------------------------------------- |  | - | ----------
|Commitments to make loans:            |  |   |           
|Variable-rate                         |  | $ | 1,879,000 
|Fixed-rate                            |  |   | 156,000   
|                                      | 
|Unused lines of credit, variable-rate |  | $ | 16,640,000



Commitments to make loans generally
are made for periods of 60 days or less. The fixed-rate loan commitments have interest rates of 6.75%.



NOTE 7  REGULATORY MATTERS



After
a regular examination of the Bank in early 2002 by the Office of the Comptroller of the Currency (OCC), the Bank entered into a formal agreement with the OCC on June 18, 2002 (OCC Agreement). Under the OCC Agreement, the Bank
must adopt and implement certain plans, policies and strategies, including a strategic plan and a related staffing plan, improved management information systems and information security programs and an independent, ongoing review system for the
Banks loan portfolio. In addition, under the OCC Agreement, the Bank must maintain a Tier 1 capital level of at least 11.0% of risk-weighted assets and 8.0% of adjusted total assets. Although the Banks capital ratios at June 30, 2004,
and December 31, 2003, met the provisions to be considered well capitalized, it cannot be considered well-capitalized while under the terms of the OCC Agreement.



During the third quarter of 2003, in response to progress made by management under the terms of the agreement, the OCC modified Article VI
of the OCC Agreement. Before October 1, 2003, the Banks average asset growth was restricted to no greater than 5% each calendar quarter. The modification relieved the Bank of the quarterly compliance requirement and implemented an annual
growth restriction of no greater than 22% over the Banks average assets during the third quarter of 2003. The annual growth restriction will remain in place until the OCC agrees that the Bank has achieved compliance with its strategic and
staffing plans.



NOTE 8  BRANCH ACQUISITION



On May 21, 2004, the Company announced that the Bank entered into a purchase and assumption
OCC Agreement to acquire a branch in Wooster, Ohio, from Unizan Bank. Under the purchase agreement, the Bank would acquire the physical assets and approximately $15.3 million of deposits. In July 2004, the Bank received regulatory approval and the
purchase is expected to close in August 2004.



14.



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##### Table of Contents

Item 2. Managements Discussion and Analysis



In the following section, management presents an analysis of Ohio Legacy Corps financial condition and results of operations as of June 30, 2004, and December 31, 2003, and for the three and six months ended June 30, 2004 and 2003.
This discussion is provided to give shareholders a more comprehensive review of the operating results and financial condition than could be obtained from an examination of the financial statements alone. This analysis should be read in conjunction
with the consolidated financial statements and related footnotes and the selected financial data elsewhere in this report. As used herein and except as the context may otherwise require, references to the Company, we,
us, or our means, collectively, Ohio Legacy Corp and its wholly-owned subsidiary, Ohio Legacy Bank, N.A.



FORWARD-LOOKING STATEMENTS



This Managements Discussion and Analysis (MD&A) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by the use of forward-looking terminology, such as: may, might, could, would, should,
believe, expect, intend, plan, seek, anticipate, estimate, project or continue or the negative thereof or comparable terminology. All
statements other than statements of historical fact included in this MD&A regarding our financial position, capital adequacy and liquidity are forward-looking statements. These forward-looking statements also include, but are not limited to:



| |  | anticipated changes in industry conditions created by state and federal legislation and regulations;
| | - | ----------------------------------------------------------------------------------------------------



| |  | anticipated changes in general interest rates and the impact of future interest rate changes on our profitability, capital adequacy and the fair value of our financial assets and
liabilities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | retention of our existing customer base and our ability to attract new customers;
| | - | ---------------------------------------------------------------------------------



| |  | the development of new products and services and their success in the marketplace;
| | - | ----------------------------------------------------------------------------------



| |  | the adequacy of the allowance for loan losses; and
| | - | --------------------------------------------------



| |  | statements regarding our anticipated loan and deposit account growth, expense levels, liquidity and capital resources and projections of earnings.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



These forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable,
we can give no assurance such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements included herein include, but are not limited to:



| |  | competition in the industry and markets in which we operate;
| | - | ------------------------------------------------------------



| |  | changes in general interest rates;
| | - | ----------------------------------



| |  | rapid changes in technology affecting the financial services industry;
| | - | ----------------------------------------------------------------------



| |  | changes in government regulation; and
| | - | -------------------------------------



| |  | general economic and business conditions.
| | - | -----------------------------------------



(Continued)



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##### Table of Contents

OVERVIEW



The following key factors summarize changes in our financial condition during the six months ended June 30, 2004:



| |  | total assets increased 8% between December 31, 2003, and June 30, 2004. Growth during the second quarter was impacted by the loss of $5.0 million of deposits during month of June,
nearly all in the certificates of deposit (CD) portfolio;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the maturity of a large pool of certificates of deposit during June 2004 required us to borrow additional overnight funds to meet loan demand;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | the cost of our CDs and borrowings decreased, and should continue to decrease through maturities and repricings during the second half of 2004 as 33% of our CD portfolio will
mature;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | growth in our loan portfolio during the second quarter of 2004 was stronger than the first with net loans to deposits and interest-earning assets increasing to 100% and 78%,
respectively;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | credit quality is strong with annualized charge-offs of 0.22% of average loans during the first half of 2004; and,
| | - | ------------------------------------------------------------------------------------------------------------------



| |  | we received approval from our primary regulatory agency for the acquisition of another branch in our Wooster market.
| | - | --------------------------------------------------------------------------------------------------------------------



The following key factors summarize our results of operations during the three months ended
June 30, 2004:



| |  | net income was $226,000, flat compared to the first quarter of 2004 and 41% over the second quarter of fiscal 2003;
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | net interest income increased 9% over the first quarter of 2004;
| | - | ----------------------------------------------------------------



| |  | margin improved 5 bp over the previous quarter, driven by a 15 bp fall in our cost of funds due to significant maturities of high-costing CDs;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | the efficiency ratio improved over the previous quarter as increases in net interest margin and other income outweighed increases in noninterest expense; and,
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | annualized return on equity improved to 5.62%.
| | - | ----------------------------------------------



SIGNIFICANT ACCOUNTING POLICIES



Allowance for loan losses. The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. We estimate the allowance balance by considering the nature and size of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other
factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged-off. Loan losses are charged against the allowance when we believe the loan balance
cannot be collected.



We consider various factors, including portfolio risk,
the economic environment and loan delinquencies, when determining the level of the provision for loan losses. Loan quality is monitored on a monthly basis by management and on a quarterly basis by an independent third party. Delinquent loans are not
material at this time.



FINANCIAL CONDITION



Assets.At June 30, 2004, total assets were $172.5 million, an increase of
$13.5 million or 8%, from December 31, 2003. This increase was funded primarily by borrowings from the FHLB of $9.0 million, net of repayments of $728,000, and growth in deposits of $5.6 million. Loans increased as a percent of total assets to 74%
from 68% at December 31, 2003.



(Continued)



16.



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##### Table of Contents

Securities. Total securities decreased by $5.0 million during the first half of 2004. The decrease was the result
of the prepayments on mortgage-backed securities caused by a drop in interest rates during March and April of 2004, which fueled another round of mortgage refinancings. Mortgage-backed securities (MBS) comprise 73% of our securities portfolio. We
anticipate continued growth in loan originations through 2004 and, thus, have given preference to MBS with short average lives and duration to provide an additional source of liquidity through principal paydowns. At June 30, 2004, approximately 27%
of our securities portfolio was comprised of variable-rate MBS, most of which will not reprice until fiscal year 2006.



During the first quarter of 2004, we sold $3.0 million of low-balance MBS that we believed were likely to prepay in the next twelve months. Rather than allow the
securities to prepay at par, we sold them at a net gain and reinvested the proceeds in MBS with relatively short estimated average lives and duration.



Loans. At June 30, 2004, the loan portfolio (before the allowance for loan losses and deferred fees) was $129.6 million, an increase of $19.5 million, or 18%, from
December 31, 2003. This growth includes $5.0 million of commercial real estate loan participations. The strongest increases during the first half came in the commercial real estate and residential real estate categories, with each increasing 32% and
14% respectively.



We will continue to focus on commercial and commercial real
estate loans as we believe the optimal mix for the Banks loan portfolio under our strategic plan is 65% commercial, commercial real estate and multifamily real estate, 25% residential real estate and construction loans and 10% consumer loans.
While Note 3 to the consolidated financial statements discloses that 37% of the loan portfolio is secured by residential real estate, this component includes approximately $15.5 million of residential real estate loans, including nonowner-occupied
rental properties, that were underwritten as commercial projects and currently yield 100 basis points higher than our conventional owner-occupied residential real estate portfolio and are mostly variable rate.



Allowance for loan losses and asset quality. At June 30, 2004, the allowance for loan
losses was $1.2 million or 0.95% of total loans, an increase from $1.1 million, or 1.02% of loans at December 31, 2003. Asset quality remained strong as nonperforming loans (nonaccrual and impaired loans) totaled $218,000, or 0.17% of total loans,
compared to $154,000 at December 31, 2003. Nonperforming loans at June 30, 2004, are comprised of two residential real estate loans secured by first mortgage liens. There were no loans past due greater than 90 days and still accruing interest. We
continue to closely monitor credit quality and delinquencies as our loan portfolio seasons and may increase the allowance for loan losses if we believe losses are imminent. See Significant Accounting Policies  Allowance for loan
losses above.



Accrued interest receivable and other assets.Accrued interest receivable was essentially flat at June 30, 2004, compared to December 31, 2003, as interest due on higher loan balances was partially offset by lower rates. The increase in other assets is attributable to prepaid state
franchise taxes which are paid in the first half of the year and amortized to a zero balance at the end of the year. Other real estate owned is comprised of a single property near our Wooster office. Increases in federal bank stock were the result
of stock dividends and required purchases of FHLB stock as a result of our asset growth and additional borrowings from the FHLB.



Deposits. Total deposits increased $5.6 million during the half to $128.7 million at June 30, 2004. Deposits increased $894,000 during the second quarter of 2004
despite the loss of $5.0 million in deposits during June. The loss of deposits was primarily in the CD portfolio as a large pool of a single product began to mature during that month.



We anticipate continued liquidity pressure during the third quarter as the rest of this CD pool matures. Approximately $17.7 million, or 25%
of our June 30, 2004, CD portfolio will mature during the third quarter of 2004 compared to $18.8 million that matured during the second quarter of 2004. We believe the likelihood of further significant runoff of the CD portfolio is less than it was
at March 31, 2004, as the average balance and interest rate of the CDs maturing during the third quarter of 2004 are less than those that matured during the second quarter of 2004. However, there can be no assurances we will be able to retain these
deposit accounts upon maturity. As a result, we are cognizant of the need to monitor our liquidity position and contingency funding plan to ensure the availability of funds should we experience significant runoff of these accounts when they mature.



(Continued)



17.



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##### Table of Contents

Core deposits (checking and savings accounts) increased $3.7 million during the second quarter of 2004, reversing the
loss of $1.0 million of core deposits during the first quarter of 2004. The increase in core deposit balances in 2004 has been driven by interest-bearing checking accounts. Growth in noninterest checking accounts this year has been offset by
decreases in savings account balances. However, such a shift to lower-costing deposits serves to improve our interest rate spread and margin. In April 2004, we launched a new suite of checking accounts that offers a number of benefits and services.
We believe these features will attract new customers and potentially increase fee income as some of the features require a monthly fee for access.



In May 2004, we entered a purchase and assumption agreement with Unizan Bank to acquire Unizans branch in Wooster, Ohio. The Office of the Comptroller of the
Currency approved our application in July and the acquisition is scheduled to close in August 2004. This acquisition includes a physical location, which will become our fourth banking office, and approximately $16 million of deposits. We believe
this branch addition will improve customer service and attract new customers in our Wooster market by providing them another banking location in a thriving retail district.



Federal Home Loan Bank advances. During the first half of 2004, we borrowed $9.0 million from the FHLB to fund loan demand and the
runoff of CDs. These borrowings consisted of a $5.0 million three year fixed-rate advance, with a rate of 2.42% and $4.0 million of overnight borrowings. The overnight borrowings are collateralized by a blanket pledge of our 1-4 family residential
mortgage loan portfolio. All other advances are collateralized by securities.



RESULTS OF OPERATIONS  THREE MONTHS ENDED JUNE 30, 2004



Net earnings increased to $226,000 for the three months ended June 30, 2004, essentially flat compared to the first quarter of 2004 and a 41% increase over the $160,000 netted during the second quarter 2003.



Net interest income. During the three months ended June 30, 2004, net interest income
increased to $1.4 million compared to $1.0 million during the second quarter of 2003, primarily as a result of a higher average balance of interest-earning assets and a shift in asset composition to higher yielding loans from securities. During the
quarter ended June 30, 2004, average loans as a percent of average interest-earning assets was 75% compared to 65% during the second quarter of 2003.



During the second quarter of 2004, interest rate spread (the difference between the yield earned on assets and the cost of deposits and borrowings) increased to 3.01%
compared to 2.75% in 2003 and 2.93% during the first quarter of 2004. Net interest margin (net interest income divided by average interest-earning assets) increased to 3.28% in 2004 compared to 3.09% in the second quarter of 2003 and 3.23% during
the first quarter of 2004. Currently, we expect spread and margin to continue to increase during the second half of 2004 as a result of the maturity and expected repricing of 25% of our CD portfolio during the third quarter of 2004. See
Deposits above.



(Continued)



18.



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##### Table of Contents

The following table sets forth information relating to our average balance sheet and reflects the average yield on
interest-earning assets and the average cost of interest-bearing liabilities for the periods indicated. These yields and costs are derived by dividing income or expense, on an annualized basis, by the average balances of interest-earning assets or
interest-bearing liabilities for the periods presented.



|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|--------------------------------------------------------------- |  | --------------------------- | ------- | ------------------- | ---- | ---------- |  | ---- | ------------------------- |  | ------------------- | ------- | ---------- | - | ----- |  | ----- | -
|                                                                |  | Three months ended June 30, |        
|                                                                |  | 2004                        |         |                     | 2003 |           
|(Dollars in thousands)                                          |  | AverageOutstandingBalance   |         | Interestearned/paid |      | Yield/Rate |  |      | Averageoutstandingbalance |  | Interestearned/paid |         | Yield/Rate |  
|Assets                                                          |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-earning assets:                                        |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing deposits and federal funds sold                |  | $                           | 4,287   |                     | $    | 10         |  | 0.95 | %                         |  | $                   | 8,591   |            | $ | 26    |  | 1.21  | %
|Securities available for sale(1)                                |  |                             | 35,253  |                     |      | 314        |  | 3.51 |                           |  |                     | 37,142  |            |   | 354   |  | 3.87  |  
|Federal agency stock                                            |  |                             | 1,205   |                     |      | 15         |  | 4.89 |                           |  |                     | 510     |            |   | 8     |  | 6.03  |  
|Loans(2)                                                        |  |                             | 125,102 |                     |      | 1,982      |  | 6.35 |                           |  |                     | 84,898  |            |   | 1,517 |  | 7.17  |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-earning assets                                   |  |                             | 165,847 |                     |      | 2,321      |  | 5.59 |                           |  |                     | 131,141 |            |   | 1,905 |  | 5.85  |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-earning assets                                      |  |                             | 6,825   |                     |      |            |  |      |                           |  |                     | 7,897   |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total assets                                                    |  | $                           | 172,672 |                     |      |            |  |      |                           |  | $                   | 139,038 |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Liabilities and Shareholders Equity                            |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing liabilities:                                   |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing demand deposits                                |  | $                           | 10,872  |                     |      | 22         |  | 0.80 |                           |  | $                   | 7,155   |            |   | 22    |  | 1.23  |  
|Savings accounts                                                |  |                             | 34,955  |                     |      | 90         |  | 1.03 |                           |  |                     | 39,901  |            |   | 150   |  | 1.50  |  
|Money market accounts                                           |  |                             | 2,931   |                     |      | 6          |  | 0.80 |                           |  |                     | 2,519   |            |   | 5     |  | 0.84  |  
|Certificates of deposit                                         |  |                             | 74,418  |                     |      | 614        |  | 3.31 |                           |  |                     | 62,361  |            |   | 611   |  | 3.93  |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing deposits                                 |  |                             | 123,176 |                     |      | 732        |  | 2.38 |                           |  |                     | 111,936 |            |   | 788   |  | 2.82  |  
|Other borrowings                                                |  |                             | 25,203  |                     |      | 224        |  | 3.56 |                           |  |                     | 4,306   |            |   | 109   |  | 10.16 |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing liabilities                              |  |                             | 148,379 |                     |      | 956        |  | 2.58 |                           |  |                     | 116,242 |            |   | 897   |  | 3.10  |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-bearing demand deposits                             |  |                             | 7,367   |                     |      |            |  |      |                           |  |                     | 5,835   |            |   |       |  |       |  
|Noninterest-bearing liabilities                                 |  |                             | 833     |                     |      |            |  |      |                           |  |                     | 741     |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities                                               |  |                             | 156,579 |                     |      |            |  |      |                           |  |                     | 122,818 |            |   |       |  |       |  
|Shareholders equity                                            |  |                             | 16,093  |                     |      |            |  |      |                           |  |                     | 16,220  |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities and shareholders equity                      |  | $                           | 172,672 |                     |      |            |  |      |                           |  | $                   | 139,038 |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest income; interest rate spread(3)                    |  |                             |         |                     | $    | 1,365      |  | 3.01 | %                         |  |                     |         |            | $ | 1,008 |  | 2.75  | %
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net earning assets                                              |  | $                           | 17,468  |                     |      |            |  |      |                           |  | $                   | 14,899  |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest margin(4)                                          |  |                             |         |                     |      |            |  | 3.28 | %                         |  |                     |         |            |   |       |  | 3.09  | %
|Average interest-earning assets to interest-bearing liabilities |  |                             | 1.12x   |                     |      |            |  |      |                           |  |                     | 1.13x   |            |   |       |  |       |  
|                                                                |  |                             |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  

---

|(1) | Average balance includes unrealized gains and losses. Yield is based on amortized cost.
|--- | ---------------------------------------------------------------------------------------

|(2) | Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets
|--- | -------------------------------------------------------------------------------------------------------------------------

|(3) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin represents net interest income, annualized, divided by average interest-earning assets.
|--- | -----------------------------------------------------------------------------------------------------------



Interest income. The shift in asset mix to loans from securities helped to mitigate
the impact of a lower rate environment as the yield on assets fell to 5.59% during the second quarter of 2004 from 5.85% in 2003.



Federal funds sold, securities and agency stock decreased to 25% of average interest-earning assets during the second quarter of 2004 from 35% in 2003. The yield earned
on federal funds sold has fallen with the general decline in interest rates as the Federal Reserve Bank lowered its discount rate and targeted federal funds in 2003. However, that yield should increase commensurate with the upward adjustment to the
Federal Reserve Banks discount and federal funds target rate in late June 2004.



In structuring our securities portfolio, we have given preference to mortgage-backed securities to provide an additional source of liquidity through principal paydowns to fund our loan growth. During 2003, as rates fell during the first
half of the year, a number of U.S. Government agency notes were called and significant prepayments occurred in the MBS portfolio. As a result, the cash flows were reinvested in lower yielding securities as net loan growth was weaker in the first
half of 2003 than in the latter months. We also purchased a large pool of MBS in December 2003, which had an average yield lower than securities held at December 2002. These scenarios caused the yield on our securities portfolio to fall to 3.51%
during the second quarter of 2004 from 3.87% in 2003. At June 30, 2004, approximately 73% of our securities portfolio is fixed rate; however, with 73% of the portfolio invested in MBS, the monthly principal paydowns can be reinvested at higher
yields should interest rates rise.



(Continued)



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##### Table of Contents

The yield on loans was lower during the second quarter of 2004 compared to the second quarter of 2003 as a result of the
general rate environment being lower during the periods of our strongest loan growth in 2003. At June 30, 2004, approximately 66% of our loan portfolio is variable rate, with 21% of all loans based on the Prime rate. Prime rate-based loans usually
reprice immediately or within one month following changes in the index rate. Approximately 38% of our loan portfolio is based on the three-year constant maturity Treasury (CMT) rate. These loans typically reprice every three years and are priced
above the index plus the margin at origination. However, the weighted average number of months to repricing for this three-year CMT portfolio is 24 months from June 30, 2004. Although we cannot be certain rates will be higher in the future, we
believe the risk of downward repricing of our current loan portfolio is low and that we have structured our loan portfolio to provide a positive impact to net interest income should interest rates rise in the future.



Interest expense. The average balance of low-cost core deposits was lower during the
second quarter of 2004 compared to 2003 resulting in a greater dependence on higher-costing CDs. While interest expense was higher during the second quarter of 2004 compared to the same period in 2003 as a result of higher balances of
interest-bearing liabilities, the cost of funds continued to fall as a result of a lower interest rate environment and significant maturities of high-cost CDs during June 2004. During the second quarter of 2004, our cost of funds was 2.58% compared
to 3.10% during the 2003 period.



As noted earlier, 25% of our CD portfolio
will mature during the third quarter of 2004. We expect improvement in our interest rate spread as a result of these accounts repricing downward. However, our CD portfolio will be priced near or slightly below like-term offering rates during the
fourth quarter of 2004. As a result, CDs maturing during 2005 may result in upward rate repricing which may put pressure on net interest spread and margin.



Additionally, $30.4 million of the June 30, 2004, CD portfolio had variable-rate features. Approximately 3% of the CD portfolio reprices monthly while 40% of the CD
portfolio has an adjustment feature that allows the customer to request a one-time rate change during the original term of the certificate to the rate offered on a like-term CD at the time of adjustment. Upward adjustments of rates on those
accounts, which must be made at the election of the customer, could result in a higher cost of funds in a rising interest rate environment. If all of the single-adjustment certificates had repriced on June 30, 2004, the average rate would have
increased 15 basis points from the original rate on the account.



We have also
become more dependent on fixed-rate term borrowings and overnight advances from the FHLB. While locking in funding costs in the current low interest rate environment is attractive, these borrowings carry a higher cost of funds than core deposits.
Other borrowings comprised 16% of our funding sources during the second quarter of 2004 compared to 4% during the second quarter of 2003.



Provision for loan losses. The provision for loan losses was $150,000 during the second quarter of 2004 compared to $77,500 in 2003 and $85,000 during the first
quarter of 2004. The provision increased during 2004 as loan growth was greater in 2004 than it was in 2003 and delinquencies were slightly higher. We have yet to encounter material deterioration in the credit quality of our loan portfolio.
Nonetheless, with the guidelines discussed above in Allowance for loan losses, our provision for loan losses can be expected to increase during periods when we are experiencing degradation in credit quality and as the probability of
losses in the loan portfolio increases with changes in the portfolios composition.



Noninterest income. Total noninterest income increased during the second quarter of 2004 compared to 2003. The increase in overdraft fees and other service charges on deposit accounts was due to higher number
of deposit customers and the related fees associated with those accounts.



Noninterest expense. Total noninterest expense increased 26% for the three months ended June 30, 2004, as compared to the three months ending June 30, 2003. The efficiency ratio (noninterest expense divided by the sum of net interest
income and other income, excluding gains on securities sales) was 75% during the second quarter of 2004 compared to 80% during the second quarter of 2003 and 78% during the first quarter of 2004. Annualized noninterest expense as a percent of
average assets was 2.56% during the second quarter of 2004 compared to 2.51 during the second quarter of 2003 and 2.60% during the first quarter of 2004.



(Continued)



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##### Table of Contents

Occupancy and equipment expense was higher in 2004 due to rent expense from the addition of an operations center in late
2003, which also increased depreciation expense from leasehold improvements. Professional fees decreased compared to the 2003 period as we used outside consultants last year to assist us with operational reviews and improvements to address concerns
identified under our written agreement with the OCC. Franchise tax is assessed on the Banks capital balance and can be expected to increase each year as the Banks capital balance grows. Data processing is higher in 2004 due to an
increase in the volume of transactions and accounts from the growth in our loan and deposit portfolios. Marketing and advertising is higher in 2004 as we launched a marketing campaign to increase awareness and visibility of the Bank in our market
areas. Other expenses are higher primarily due to check printing costs, director fees, higher deposit insurance premiums and other deposit maintenance costs.



Income taxes. Because of net operating losses during the years prior to December 31, 2002, we have recorded a valuation allowance to offset deferred tax assets. We
reversed part of the valuation allowance in 2004 and 2003 to offset tax expense. When we believe that it is more likely than not that the income tax benefit will be used, the valuation allowance will be removed and a deferred tax asset will be
realized.



RESULTS OF OPERATIONS  SIX MONTHS ENDED JUNE 30, 2004



Net income during the first six months of 2004 was $448,000, or $0.21 per
share, compared to $296,000, or $0.14 per share, during the same period in 2003.



Net interest income. During the six months ended June 30, 2004, net interest income was $2.6 million compared to $2.0 million during the first half of 2003, primarily as a result of a higher balance of interest-earning assets and
improvements in interest rate spread. Net interest margin improved to 3.25% in 2004 from 3.01% in the first six months of 2003 and interest rate spread improved to 2.97% during the first half of 2004 compared to 2.65% during 2003.



The following table sets forth information relating to our average balance sheet and reflects
the average yield on interest-earning assets and the average cost of interest-bearing liabilities for the periods indicated. These yields and costs are derived by dividing income or expense, on an annualized basis, by the average balances of
interest-earning assets or interest-bearing liabilities for the periods presented.



(Continued)



21.



---

##### Table of Contents

|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|--------------------------------------------------------------- |  | -------------------------- | ------- | ------------------- | ---- | ---------- |  | ---- | ------------------------- |  | ------------------- | ------- | ---------- | - | ----- |  | ----- | -
|                                                                |  | Six months ending June 30, |        
|                                                                |  | 2004                       |         |                     | 2003 |           
|(Dollars in thousands)                                          |  | Averageoutstandingbalance  |         | Interestearned/paid |      | Yield/Rate |  |      | Averageoutstandingbalance |  | Interestearned/paid |         | Yield/Rate |  
|Assets                                                          |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-earning assets:                                        |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing deposits and federal funds sold                |  | $                          | 4,813   |                     | $    | 23         |  | 0.95 | %                         |  | $                   | 8,431   |            | $ | 50    |  | 1.19  | %
|Securities available for sale(1)                                |  |                            | 36,334  |                     |      | 671        |  | 3.66 |                           |  |                     | 39,627  |            |   | 794   |  | 4.10  |  
|Federal agency stock                                            |  |                            | 1,134   |                     |      | 28         |  | 4.94 |                           |  |                     | 452     |            |   | 13    |  | 6.05  |  
|Loans(2)                                                        |  |                            | 118,188 |                     |      | 3,787      |  | 6.43 |                           |  |                     | 82,561  |            |   | 2,945 |  | 7.19  |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-earning assets                                   |  |                            | 160,469 |                     |      | 4,509      |  | 5.62 |                           |  |                     | 131,071 |            |   | 3,802 |  | 5.87  |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-earning assets                                      |  |                            | 6,567   |                     |      |            |  |      |                           |  |                     | 7,038   |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total assets                                                    |  | $                          | 167,036 |                     |      |            |  |      |                           |  | $                   | 138,109 |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Liabilities and Shareholders Equity                            |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing liabilities:                                   |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing demand deposits                                |  | $                          | 10,033  |                     |      | 40         |  | 0.80 |                           |  | $                   | 7,424   |            |   | 47    |  | 1.27  |  
|Savings accounts                                                |  |                            | 35,211  |                     |      | 181        |  | 1.03 |                           |  |                     | 38,383  |            |   | 325   |  | 1.71  |  
|Money market accounts                                           |  |                            | 2,995   |                     |      | 12         |  | 0.81 |                           |  |                     | 2,752   |            |   | 12    |  | 0.87  |  
|Certificates of deposit                                         |  |                            | 72,178  |                     |      | 1,238      |  | 3.44 |                           |  |                     | 63,066  |            |   | 1,243 |  | 3.98  |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing deposits                                 |  |                            | 120,417 |                     |      | 1,471      |  | 2.45 |                           |  |                     | 111,625 |            |   | 1,627 |  | 2.94  |  
|Other borrowings                                                |  |                            | 22,553  |                     |      | 422        |  | 3.74 |                           |  |                     | 4,308   |            |   | 220   |  | 10.17 |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing liabilities                              |  |                            | 142,970 |                     |      | 1,893      |  | 2.65 |                           |  |                     | 115,933 |            |   | 1,847 |  | 3.22  |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-bearing demand deposits                             |  |                            | 7,135   |                     |      |            |  |      |                           |  |                     | 5,679   |            |   |       |  |       |  
|Noninterest-bearing liabilities                                 |  |                            | 792     |                     |      |            |  |      |                           |  |                     | 830     |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities                                               |  |                            | 150,897 |                     |      |            |  |      |                           |  |                     | 122,442 |            |   |       |  |       |  
|Shareholders equity                                            |  |                            | 16,139  |                     |      |            |  |      |                           |  |                     | 15,667  |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities and shareholders equity                      |  | $                          | 167,036 |                     |      |            |  |      |                           |  | $                   | 138,109 |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest income; interest-rate spread(3)                    |  |                            |         |                     | $    | 2,616      |  | 2.97 | %                         |  |                     |         |            | $ | 1,955 |  | 2.65  | %
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net earning assets                                              |  | $                          | 17,499  |                     |      |            |  |      |                           |  | $                   | 15,138  |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest margin(4)                                          |  |                            |         |                     |      |            |  | 3.25 | %                         |  |                     |         |            |   |       |  | 3.01  | %
|Average interest-earning assets to interest-bearing liabilities |  |                            | 1.12x   |                     |      |            |  |      |                           |  |                     | 1.13x   |            |   |       |  |       |  
|                                                                |  |                            |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  

---

|(1) | Average balance includes unrealized gains and losses. Yield is based on amortized cost.
|--- | ---------------------------------------------------------------------------------------

|(2) | Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(3) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin represents net interest income, annualized, divided by average interest-earning assets.
|--- | -----------------------------------------------------------------------------------------------------------



Interest income. The yield on interest-earning assets fell to 5.62% during the first
half of 2004 compared to 5.87% in 2003. The yields on federal funds sold and securities fell as a result of the lower interest rate environment and the reinvestment of proceeds from security calls and accelerated prepayments on mortgage-backed
securities at lower rates during 2003. The yield on loans declined during the first half of 2004 compared to 2003 as we have significantly increased our loan portfolio during periods of historically low interest rates.



Interest expense. Our overall cost of funds declined to 2.65% during the first six
months of 2004, compared to 3.22% in 2003. As noted earlier, the decrease in the cost of deposits was driven by the repricing of maturing CD accounts at lower rates. However, the improvement in the cost of funds caused by the decrease in the cost of
our CD portfolio was somewhat tempered by a shift in mix of interest-bearing liabilities as CDs comprised 57% of our deposit portfolio during 2004 compared to 54% during 2003.



The significant decrease in the cost of other borrowings during 2004 is a result of our advances from the FHLB. During 2003, other
borrowings consisted of fixed-rate subordinated debentures with an effective cost of 8.51% and capital leases on two of our banking offices with implied costs of 15.76%. The average cost of FHLB advances during the first six months of 2004 was
2.24%, which significantly dilutes the cost of the subordinated debentures and leases.



(Continued)



22.



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##### Table of Contents

Provision for loan losses. The provision for loan losses during the first half of 2004 was $235,000, compared to
$158,000 in 2003. Charge-offs during the first six months of 2004 totaled $135,000, offset by $3,000 in recoveries, compared to $28,000 of net charge-offs during 2003.



Noninterest income.Total noninterest income was $218,000 for the six months ended June 30, 2004, compared to $232,000 during the
same period in 2003. The 2003 amount includes $74,000 of gains from the sale of securities compared to $13,000 during 2004. We did not have a borrowing facility in place with the FHLB until June 2003. Accordingly, we were required to sell some
securities to fund loan growth in 2003. The increase in overdraft fees and other service charges on deposit accounts was due to higher volume of deposit customers and the related fees associated with those accounts in 2004.



Noninterest expense. Total noninterest expense was $417,000 higher during the six
months ended June 30, 2004, compared to the same period in 2003. Annualized noninterest expense as a percent of average assets was 2.58% in 2004 compared to 2.50% in 2003 while our efficiency ratio improved to 76% during the first half of 2004
compared to 82% during the first half of 2003. This is a reflection of the improvement in the interest margin outweighing our ability to leverage overhead costs through asset growth.



Salaries and benefits are higher in 2004, reflecting a higher level of employment at the Bank. Occupancy and equipment expense was higher in
2004 due to rent expense from the addition of an operations center in late 2003, which also increased depreciation expense from leasehold improvements. Professional fees decreased compared to the 2003 period as we used outside consultants to assist
us with operational review and improvements in internal controls to address concerns identified under our written agreement with the OCC. Franchise tax is assessed on the Banks capital balance and can be expected to increase each year as the
Banks capital balance grows. Data processing is higher in 2004 due to an increase in the volume of transactions and accounts from the growth in our loan and deposit portfolios. Marketing and advertising is higher in 2004 as we launched a
marketing campaign to increase awareness and visibility of the Bank in our market areas. Other expenses are higher primarily due to check printing costs, director fees, higher deposit insurance premiums and other deposit maintenance costs.



IMPACT OF BRANCH ACQUISITION



On May 21, 2004, we announced that Ohio Legacy Bank entered into a purchase and assumption
agreement to acquire a branch in Wooster, Ohio, from Unizan Bank. Under the purchase agreement, we will acquire the physical assets and approximately $15.3 million of deposits (balances as of July 31, 2004). In July 2004, we received regulatory
approval and the purchase is expected to close in August 2004.



Core deposits
comprised 32% of the July 31, 2004, deposit portfolio of the branch we will acquire. We estimate the branch acquisition will negatively impact net income by approximately $150,000 during 2004 as a result of the additional noninterest expense
associated with the lease of the building and employee costs and the negative interest rate spread we will encounter in the near term until those funds can be employed in higher-yielding assets such as loans and securities.



However, we believe this branch acquisition will improve customer service and attract new
customers and core deposits in our Wooster market by providing them another banking location in a thriving retail district. As a result, we expect this branch to be accretive to earnings in 2005 by lowering our cost of funds through core deposits
and providing additional funds to acquire interest-earning assets.



(Continued)



23.



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##### Table of Contents

CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS



The following table presents, as of June 30, 2004, significant fixed and determinable
contractual obligations by payment date. The payment amounts represent those amounts contractually due to the recipient and do not include any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments.



|                              |      |            |        |                         |      |        |      |   |        |  |            |        |  |   |       |  |   |      
|----------------------------- | ---- | ---------- | ------ | ----------------------- | ---- | ------ | ---- | - | ------ |  | ---------- | ------ |  | - | ----- |  | - | -----
|(Dollars in thousands)        |      | Six months |        | Year ended December 31,
|                              | 2004 |            | 2005   |                         | 2006 |        | 2007 |   | 2008   |  | Thereafter
|Certificates of deposit       |      | $          | 23,445 |                         | $    | 14,587 |      | $ | 18,654 |  | $          | 11,942 |  | $ | 1,027 |  | $ | 573  
|FHLB advances (1)             |      |            | 7,736  |                         |      | 5,499  |      |   | 4,362  |  |            | 5,434  |  |   |      |  |   |     
|Subordinated debentures (2)   |      |            |       |                         |      |       |      |   |       |  |            |       |  |   |      |  |   | 3,325
|Capital lease obligations (3) |      |            | 80     |                         |      | 160    |      |   | 168    |  |            | 179    |  |   | 181   |  |   | 1,519
|Operating leases              |      |            | 71     |                         |      | 135    |      |   | 140    |  |            | 141    |  |   | 141   |  |   | 602  
|Deposits without maturity     |      |            | 58,489 |                         |      |       |      |   |       |  |            |       |  |   |      |  |   |     

---

|(1) | Includes $4,000 of overnight borrowings
|--- | ---------------------------------------

|(2) | The subordinated debentures are redeemable at par, at the Companys option, any time prior to maturity, which is March 31, 2022.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes $1,314 of amounts allocable to interest payments over the remaining term of the leases.
|--- | ------------------------------------------------------------------------------------------------



Note 6 to the consolidated financial statements discusses other commitments and contingencies and the various obligations that exists under
those agreements.



At June 30, 2004, we had no unconsolidated, related special
purpose entities other than Ohio Legacy Trust I, as described in Note 7 to the consolidated financial statements filed with our December 31, 2003, Form 10-KSB, nor did we engage in derivatives and hedging contracts, such as interest rate swaps, that
may expose us to liabilities greater than the amounts recorded on the consolidated balance sheet. However, as discussed under interest expense above, a significant portion of our CD portfolio contains embedded options that may result in additional
interest expense.



LIQUIDITY



Liquidity refers to our ability to fund loan demand and customers deposit
withdrawal needs and to meet other commitments and contingencies. The purpose of liquidity management is to ensure sufficient cash flow to meet all of our financial commitments and to capitalize on opportunities for business expansion in the context
of managing the Companys interest rate risk exposure. This ability depends on our financial strength, asset quality and the types of deposit and loan instruments we offer to our customers.



Our principal sources of funds are deposits, loan and security repayments and maturities,
sales of securities, borrowings from the FHLB and capital transactions. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan and security prepayments are more influenced by interest rates,
general economic conditions and competition. We maintain investments in liquid assets based upon our assessment of our need for funds, our expected deposit flows, yields available on short-term liquid assets and the objectives of our asset/liability
management program.



We have implemented a liquidity contingency funding plan
that identifies liquidity thresholds and red-flags that may provide evidence of impending liquidity crises. Additionally, the contingency plan details specific actions to be taken by management and the Board of Directors and identifies sources of
emergency liquidity, both asset and liability-based, should we encounter a liquidity crisis. We actively monitor liquidity risk and analyze various scenarios that could impact our ability to access emergency funding in conjunction with our
asset/liability and interest rate risk management activities.



During the first
six months of 2004, cash and cash equivalents decreased $1.4 million to $6.8 million at June 30, 2004. Cash and cash equivalents represented 3.9% of total assets at June 30, 2004, and 5.1% of total assets at December 31, 2003. This decrease came
primarily as a result of a shift in assets as cash and equivalents were used to fund loans. Our loans to deposits and loans to interest-earning assets ratios increased significantly during 2003 and the first half of 2004 as loan growth has outpaced
deposit growth, which has reduced our liquidity position.



(Continued)



24.



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##### Table of Contents

Additionally, we have become more dependent on FHLB advances and deposits of public agencies that exceed federal deposit
insurance limits, which require us to pledge securities or loans as collateral. At June 30, 2004, approximately 88% of our securities portfolio was pledged as collateral for public funds and FHLB borrowings. This significantly reduces our ability to
sell securities to fund loans (which provide higher yields), meet deposit withdrawal demands or to reduce interest rate risk exposure. Accordingly, we monitor our liquidity position on a regular basis in conjunction with our asset/liability and
interest rate risk management activities and ensure additional sources of liquidity funding.



Approximately 33% of our CD portfolio will mature during the second half of 2004 with most of the maturities occurring during the third quarter. The majority of these CDs also carry the highest average rate of all
products in our CD portfolio. This large pool of maturing CDs may significantly reduce our liquidity and asset size if we cannot retain these accounts upon maturity. If a significant amount of this pool matures and does not renew at the Bank, we may
be required to sell securities or other assets, possibly at a loss, to meet the ensuing demand for funds, resulting in a decrease in our asset size and a further reduction in our liquidity. If we encounter nominal or moderate runoff from these
maturities, we could borrow from the FHLB to offset the loss of deposits and maintain a level asset base. However, as noted, those borrowings require us to pledge securities or loans as collateral. Therefore, we could maintain our asset level, but
our liquidity will be restricted as a large portion of our assets will continue to be pledged as collateral. See Deposits above for additional discussion.



CAPITAL RESOURCES



Total shareholders equity was $15.8 million at June 30, 2004, a decrease of $245,000 from December 31, 2003. The decrease was a result of other comprehensive losses
of $720,000 due to sharply-rising long-term rates during the second quarter of 2004 that negatively impact the value of our securities portfolio. This unrealized loss on securities was partially offset by earnings retention of $448,000 and the
exercise of stock purchase warrants, which provided $27,000 of capital.



Banks
and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain
off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.



(Continued)



25.



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##### Table of Contents

OHIO LEGACY CORP

MANAGEMENTS DISCUSSION AND ANALYSIS



Actual and required capital amounts (in thousands) and ratios are presented below at June 30, 2004:



|                                       |  |        |        |       |                              |   |        |                                                                |       |  |     |        |  |       |        |  |      |  
|-------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | -------------------------------------------------------------- | ----- |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                       |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be Well-Capitalized UnderPrompt CorrectiveAction Provisions |      
|                                       |  | Amount |        | Ratio |                              |   | Amount |                                                                | Ratio |  |     | Amount |  | Ratio |       
|Total capital to risk-weighted assets  |  |        |        |       |                              |   |        |                                                                |       |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 21,172 |       | 17.3                         | % |        | $                                                              | 9,780 |  | 8.0 | %      |  | $     | 12,224 |  | 10.0 | %
|Ohio Legacy Bank                       |  |        | 20,085 |       | 16.4                         |   |        |                                                                | 9,769 |  | 8.0 |        |  |       | 12,212 |  | 10.0 |  
|                                       |  |        |        |       |                              |  
|Tier 1 capital to risk-weighted assets |  |        |        |       |                              |   |        |                                                                |       |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 19,946 |       | 16.3                         | % |        | $                                                              | 4,889 |  | 4.0 | %      |  | $     | 7,335  |  | 6.0  | %
|Ohio Legacy Bank                       |  |        | 18,859 |       | 15.4                         |   |        |                                                                | 4,885 |  | 4.0 |        |  |       | 7,327  |  | 6.0  |  
|                                       |  |        |        |       |                              |  
|Tier 1 capital to average assets       |  |        |        |       |                              |   |        |                                                                |       |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 19,946 |       | 11.6                         | % |        | $                                                              | 6,908 |  | 4.0 | %      |  | $     | 8,634  |  | 5.0  | %
|Ohio Legacy Bank                       |  |        | 18,859 |       | 10.9                         |   |        |                                                                | 6,935 |  | 4.0 |        |  |       | 8,668  |  | 5.0  |  



Under the OCC Agreement, the Bank must
maintain a Tier 1 capital level of at least 11.0% of risk-weighted assets and 8.0% of adjusted total assets. The Bank exceeded the amounts required under the OCC Agreement at June 30, 2004. Additionally, although the Banks capital ratios met
the provisions to be considered well capitalized, it may not be considered well capitalized while under the terms of the OCC Agreement.



The payment of dividends by the Bank to Ohio Legacy and by Ohio Legacy to shareholders is subject to restrictions by regulatory agencies. These restrictions generally
limit dividends to the sum of current years and the prior two years retained earnings, as defined. In addition, dividends may not reduce capital levels below the minimum regulatory requirements as described above.



Item 3. Controls and Procedures



As of June
30, 2004, an evaluation was conducted under the supervision and with the participation of Ohio Legacy Corps management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in Ohio Legacy Corps internal control over financial reporting that occurred during the Companys fiscal quarter ended June 30, 2004, that has materially affected, or is reasonably likely to materially
affect, Ohio Legacys Corps internal control over financial reporting.



26.



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##### Table of Contents

PART II  OTHER INFORMATION



Item 1. Legal Proceedings.



There are no matters
required to be reported under this item.



Item 2. Changes in Securities.



There are no
matters required to be reported under this item.



Item 3. Defaults Upon Senior Securities.



There
are no matters required to be reported under this item.



Item 4. Submission of Matters to a Vote of Security Holders.



The Company delivered to its stockholders the Companys Notice of Annual Meeting of Shareholders, which was held on April 22, 2004, to vote on the following items:



| | 1. | The election of five Class III directors to serve until the 2007 Annual Meeting.
| | -- | --------------------------------------------------------------------------------



| | 2. | An amendment to the Companys Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan to increase the number of authorized shares under the Stock Ownership Plan
eligible for issuance to employees and to non-employee directors of the Company to 400,000 shares.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



With respect to each matter (as more fully described in the proxy statement) voted upon at the meeting, the inspector of elections tabulated the following votes:



| | 1. | Election of Directors
| | -- | ---------------------



|                     |  |           |  |         |  |        
|-------------------- |  | --------- |  | ------- |  | -------
|Nominee for Director |  | For       |  | Against |  | Abstain
|D. William Allen     |  | 1,956,428 |  |        |  | 2,200  
|Scott J. Fitzpatrick |  | 1,956,728 |  |        |  | 1,900  
|Randy G. Jones       |  | 1,956,728 |  |        |  | 1,900  
|Michael D. Meenan    |  | 1,956,228 |  |        |  | 2,400  
|Steven G. Pettit     |  | 1,956,228 |  |        |  | 2,400  



| | Board | members continuing in service were:
| | ----- | -----------------------------------



|                  |  |                    
|----------------- |  | -------------------
|William T. Baker  |  | Gregory A. Long    
|Daniel H. Plumly  |  | Robert F. Belden   
|L. Dwight Douce   |  | Thomas W. Schervish
|J. Edward Diamond |  | Benjamin M. Mast   



| | 2. | Amendment to the Companys Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan
| | -- | ---------------------------------------------------------------------------------------------



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|1,700,453 |  | 241,335 |  | 16,840 



27.



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##### Table of Contents

Item 5. Other Information.



There are no matters
required to be reported under this item.



Item 6. Exhibits and Reports on Form 8-K.



(a).
Exhibits



|              |  |         |  |                                                                                                                                                                                                                       
|------------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | NoteRef |  | Description of Document                                                                                                                                                                                               
|3.1           |  | (1)     |  | Second Amended and Restated Articles of Incorporation of Ohio Legacy Corp                                                                                                                                             
|              |  |        
|3.2           |  | (2)     |  | Code of Regulations of Ohio Legacy Corp, as amended by Amendment No. 1                                                                                                                                                
|              |  |        
|4.1           |  | (3)     |  | See Pages 1 through 9 of Exhibit 3.1 for provisions defining the rights of the holders of common shares                                                                                                               
|              |  |        
|4.2           |  | (3)     |  | Form of Organizer Stock Purchase Warrant                                                                                                                                                                              
|              |  |        
|4.3           |  | (3)     |  | Form of Public Stock Purchase Warrant                                                                                                                                                                                 
|              |  |        
|10.1          |  | (3)     |  | Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan                                                                                                                                                    
|              |  |        
|10.2          |  | (4)     |  | 2002 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio Legacy Corp                                                                                                              
|              |  |        
|10.3          |  | (3)     |  | Employment Agreement with Mr. Douce                                                                                                                                                                                   
|              |  |        
|10.4          |  | (3)     |  | Employment Agreement with Mr. Pettit                                                                                                                                                                                  
|              |  |        
|10.5          |  | (3)     |  | Lease Agreement dated August 24, 1999 by and among Jack K. and Heidi M. Gant and Ohio Legacy Corp                                                                                                                     
|              |  |        
|10.6          |  | (3)     |  | Lease Agreement dated November 30, 1999 by and between Schoeppner Properties and Ohio Legacy Corp                                                                                                                     
|              |  |        
|10.7          |  | (5)     |  | Employment Agreement with Mr. Boss                                                                                                                                                                                    
|              |  |        
|10.8          |  | (5)     |  | Lease Agreement dated October 2001 by and between Shee-Brees, L.L.C. and Ohio Legacy Corp                                                                                                                            
|              |  |        
|10.9          |  | (6)     |  | Agreement By And Between Ohio Legacy Bank, National Association, Wooster, Ohio, and the Office of the Comptroller of the Currency, dated
June 18, 2002                                                                
|              |  |        
|10.10         |  | (2)     |  | Change of Control Severance Agreement with Mr. Nadeau                                                                                                                                                                 
|              |  |        
|10.11         |  | (2)     |  | Change of Control Severance Agreement with Mr. Saporito                                                                                                                                                               
|              |  |        
|10.12         |  | (2)     |  | 2004 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio Legacy Corp                                                                                                              
|              |  |        
|11            |  |         |  | Statement Regarding Computation of Per Share Earnings (reference is hereby made to the Consolidated Statements of Operations on page 4 and
Note 1 of Notes to the Consolidated Financial Statements on page 9, herein)
|              |  |        
|31.1          |  |         |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer                                                                                                                                                 
|              |  |        
|31.2          |  |         |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer                                                                                                                                                 
|              |  |        
|32.1          |  |         |  | Certification Pursuant To 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                 

---

|(1) | - Incorporated by reference to Registrants Form 10-QSB for the fiscal quarter ended June 30, 2003, filed on August 14, 2003
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | - Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2003, filed on March 17, 2004
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(3) | - Incorporated by reference to Registrants Form SB-2, File No. 333-38328, effective June 1, 2000
|--- | -------------------------------------------------------------------------------------------------

|(4) | - Incorporated by reference to Registrants Form S-8, File No. 333-88842, effective May 22, 2002
|--- | ------------------------------------------------------------------------------------------------

|(5) | - Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2001, filed on April 1, 2002
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(6) | - Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2002, filed on March 28, 2003
|--- | ----------------------------------------------------------------------------------------------------------------------------



(b) Reports on Form 8-K.



On June 1, 2004, the Company filed a Form 8-K under Item 2. Acquisition or Disposition of Assets regarding the
signing of a definitive purchase and assumption agreement to acquire a banking office.

|
|



28.



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##### Table of Contents

SIGNATURES



In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |  |                  |  |                                                
|--------------------- |  | ---------------- |  | -----------------------------------------------
|                      |  | OHIO LEGACY CORP
|                      |  | (Registrant)    
|                      |  |                 
|Date: August 13, 2004 |  | By:              |  | /s/ L. Dwight Douce                            
|                      |  |                  |  | L. Dwight Douce                                
|                      |  |                  |  | President, Chief Executive Officer and Director
|                      |  |                 
|Date: August 13, 2004 |  | By:              |  | /s/ Eric S. Nadeau                             
|                      |  |                  |  | Eric S. Nadeau                                 
|                      |  |                  |  | Chief Financial Officer and Treasurer          



29.