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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 September 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 November 10, 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 SEPTEMBER 30, 2004, AND FOR THE THREE AND NINE MONTHS THEN ENDED

THIRD QUARTER REPORT



|                                                                    |  |     
|------------------------------------------------------------------- |  | ----
|                                                                    |  | Page
|PART I - FINANCIAL INFORMATION                                      |  |     
|                                                                    | 
|Item 1.
Financial Statements                                        |  | 3   
|                                                                    | 
|Item 2.
Managements Discussion and Analysis                        |  | 16  
|                                                                    | 
|Item 3.
Controls and Procedures                                     |  | 27  
|                                                                    | 
|PART II - OTHER INFORMATION                                         |  |     
|                                                                    | 
|Item 1.
Legal Proceedings                                           |  | 28  
|                                                                    | 
|Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds |  | 28  
|                                                                    | 
|Item 3.
Defaults Upon Senior Securities                             |  | 28  
|                                                                    | 
|Item 4.
Submission of Matters to a Vote of Security Holders         |  | 28  
|                                                                    | 
|Item 5.
Other Information                                           |  | 28  
|                                                                    | 
|Item 6.
Exhibits                                                    |  | 29  
|                                                                    | 
|SIGNATURES                                                          |  | 30  





2.



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##### Table of Contents

PART I  FINANCIAL INFORMATION



Item 1. Financial Statements.



OHIO
LEGACY CORP

CONSOLIDATED BALANCE SHEETS

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



|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                          |  | September 30,2004 |             |   | December 31,2003 |  
|                                                                                                                                                                          |  | (unaudited)       |             |   |                  |  
|ASSETS                                                                                                                                                                    |  |                   |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                                                   |  | $                 | 4,020,858   |   |                  | $ | 4,370,383   |  
|Federal funds sold and interest-bearing deposits in financial institutions                                                                                                |  |                   | 10,735,371  |   |                  |   | 3,814,436   |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Cash and cash equivalents                                                                                                                                                 |  |                   | 14,756,229  |   |                  |   | 8,184,819   |  
|Securities available for sale                                                                                                                                             |  |                   | 32,872,940  |   |                  |   | 38,054,644  |  
|Securities held to maturity (fair value of $649,423 in 2004)                                                                                                              |  |                   | 649,423     |   |                  |   |            |  
|Loans, net                                                                                                                                                                |  |                   | 129,457,491 |   |                  |   | 108,792,368 |  
|Federal bank stock                                                                                                                                                        |  |                   | 1,366,950   |   |                  |   | 1,039,200   |  
|Premises and equipment, net                                                                                                                                               |  |                   | 2,169,768   |   |                  |   | 2,036,544   |  
|Other real estate owned                                                                                                                                                   |  |                   |            |   |                  |   | 70,000      |  
|Intangible asset                                                                                                                                                          |  |                   | 740,570     |   |                  |   |            |  
|Accrued interest receivable and other assets                                                                                                                              |  |                   | 1,225,813   |   |                  |   | 880,904     |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Total assets                                                                                                                                                              |  | $                 | 183,239,185 |   |                  | $ | 159,058,479 |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|LIABILITIES                                                                                                                                                               |  |                   |             |   |                  |   |             |  
|Deposits:                                                                                                                                                                 |  |                   |             |   |                  |   |             |  
|Noninterest-bearing demand                                                                                                                                                |  | $                 | 11,621,269  |   |                  | $ | 7,133,620   |  
|Interest-bearing demand                                                                                                                                                   |  |                   | 13,160,954  |   |                  |   | 8,962,743   |  
|Savings                                                                                                                                                                   |  |                   | 38,940,343  |   |                  |   | 39,667,717  |  
|Certificates of deposit, net                                                                                                                                              |  |                   | 78,988,031  |   |                  |   | 67,387,021  |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Total deposits                                                                                                                                                            |  |                   | 142,710,597 |   |                  |   | 123,151,101 |  
|Federal Home Loan Bank advances                                                                                                                                           |  |                   | 18,664,432  |   |                  |   | 14,759,314  |  
|Subordinated debentures                                                                                                                                                   |  |                   | 3,325,000   |   |                  |   | 3,325,000   |  
|Capital lease obligations                                                                                                                                                 |  |                   | 970,812     |   |                  |   | 976,643     |  
|Accrued interest payable and other liabilities                                                                                                                            |  |                   | 701,498     |   |                  |   | 801,954     |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                                                                         |  |                   | 166,372,339 |   |                  |   | 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 September 30, 2004, and
December 31, 2003, respectively |  |                   | 17,729,155  |   |                  |   | 17,701,955  |  
|Accumulated deficit                                                                                                                                                       |  |                   | (707,585    | ) |                  |   | (1,555,585  | )
|Accumulated other comprehensive income (loss)                                                                                                                             |  |                   | (154,724    | ) |                  |   | (101,903    | )
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Total shareholders equity                                                                                                                                                |  |                   | 16,866,846  |   |                  |   | 16,044,467  |  
|                                                                                                                                                                          |  |                   |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                                                                |  | $                 | 183,239,185 |   |                  | $ | 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 nine months ended September 30, 2004 and 2003

(Unaudited)



|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | --------------------------------------- | --------- | -------------------------------------- | ---- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | For the three months endedSeptember 30, |           | For the nine months endedSeptember 30,
|                                                    |  | 2004                                    |           |                                        | 2003 |   | 2004      |  | 2003
|Interest income:                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                                       | 2,075,429 |                                        |      | $ | 1,621,437 |  | $    | 5,862,717 |  | $ | 4,566,173
|Securities                                          |  |                                         | 311,123   |                                        |      |   | 278,570   |  |      | 981,559   |  |   | 1,072,785
|Interest-bearing deposits and federal funds sold    |  |                                         | 40,240    |                                        |      |   | 23,664    |  |      | 91,048    |  |   | 87,180   
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Total interest income                               |  |                                         | 2,426,792 |                                        |      |   | 1,923,671 |  |      | 6,935,324 |  |   | 5,726,138
|Interest expense:                                   |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Deposits                                            |  |                                         | 672,052   |                                        |      |   | 770,067   |  |      | 2,142,855 |  |   | 2,397,339
|Other borrowings                                    |  |                                         | 237,229   |                                        |      |   | 111,346   |  |      | 659,076   |  |   | 331,063  
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Total interest expense                              |  |                                         | 909,281   |                                        |      |   | 881,413   |  |      | 2,801,931 |  |   | 2,740,514
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                                         | 1,517,511 |                                        |      |   | 1,042,258 |  |      | 4,133,393 |  |   | 2,997,736
|                                                    |  |                                         |           |                                       
|Provision for loan losses                           |  |                                         | 71,000    |                                        |      |   | 146,000   |  |      | 306,000   |  |   | 303,500  
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                                         | 1,446,511 |                                        |      |   | 896,258   |  |      | 3,827,393 |  |   | 2,694,236
|                                                    |  |                                         |           |                                       
|Noninterest income:                                 |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Service charges and other fees                      |  |                                         | 110,335   |                                        |      |   | 89,094    |  |      | 310,700   |  |   | 241,350  
|Gain (loss) on sales of securities, net             |  |                                         | (5,237    | )                                      |      |   | 41,753    |  |      | 7,910     |  |   | 116,242  
|Other income                                        |  |                                         | 2,610     |                                        |      |   | 3,145     |  |      | 7,167     |  |   | 8,121    
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Total noninterest income                            |  |                                         | 107,708   |                                        |      |   | 133,992   |  |      | 325,777   |  |   | 365,713  
|                                                    |  |                                         |           |                                       
|Noninterest expense:                                |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                                         | 531,797   |                                        |      |   | 423,008   |  |      | 1,482,402 |  |   | 1,159,050
|Occupancy and equipment                             |  |                                         | 166,591   |                                        |      |   | 143,459   |  |      | 468,051   |  |   | 420,430  
|Professional fees                                   |  |                                         | 109,288   |                                        |      |   | 80,707    |  |      | 305,911   |  |   | 290,512  
|Franchise tax                                       |  |                                         | 56,034    |                                        |      |   | 44,921    |  |      | 177,440   |  |   | 139,918  
|Data processing                                     |  |                                         | 111,819   |                                        |      |   | 84,616    |  |      | 323,311   |  |   | 237,192  
|Marketing and advertising                           |  |                                         | 38,416    |                                        |      |   | 22,860    |  |      | 122,069   |  |   | 76,757   
|Stationery and supplies                             |  |                                         | 28,756    |                                        |      |   | 21,299    |  |      | 67,717    |  |   | 61,394   
|Amortization of intangible asset                    |  |                                         | 9,042     |                                        |      |   |          |  |      | 9,042     |  |   |         
|Other expenses                                      |  |                                         | 102,476   |                                        |      |   | 84,380    |  |      | 349,227   |  |   | 253,696  
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Total noninterest expense                           |  |                                         | 1,154,219 |                                        |      |   | 905,250   |  |      | 3,305,170 |  |   | 2,638,949
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Earnings before income tax expense                  |  |                                         | 400,000   |                                        |      |   | 125,000   |  |      | 848,000   |  |   | 421,000  
|                                                    |  |                                         |           |                                       
|Income tax expense                                  |  |                                         |          |                                        |      |   |          |  |      |          |  |   |         
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Net earnings                                        |  | $                                       | 400,000   |                                        |      | $ | 125,000   |  | $    | 848,000   |  | $ | 421,000  
|                                                    |  |                                         |           |                                        |      |   |           |  |      |           |  |   |          
|Basic earnings per share                            |  | $                                       | 0.19      |                                        |      | $ | 0.06      |  | $    | 0.40      |  | $ | 0.20     
|Diluted earnings per share                          |  | $                                       | 0.19      |                                        |      | $ | 0.06      |  | $    | 0.39      |  | $ | 0.20     
|                                                    |  |                                         |           |                                       
|Basic weighted average shares outstanding           |  |                                         | 2,120,720 |                                        |      |   | 2,115,700 |  |      | 2,119,540 |  |   | 2,106,359
|Diluted weighted average shares outstanding         |  |                                         | 2,156,897 |                                        |      |   | 2,119,627 |  |      | 2,172,605 |  |   | 2,108,479



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 nine months ended September 30,
2004 and 2003

(Unaudited)



|                                                                                              |  |                                         |           |      |                                        |          |      |  |   |         |   |  |   |          |  
|--------------------------------------------------------------------------------------------- |  | --------------------------------------- | --------- | ---- | -------------------------------------- | -------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                                                              |  | For the three months endedSeptember 30, |           |      | For the nine monthsended September 30, |         
|                                                                                              |  | 2004                                    |           | 2003 |                                        |          | 2004 |  |   | 2003    |  
|Net earnings                                                                                  |  | $                                       | 400,000   |      | $                                      | 125,000  |      |  | $ | 848,000 |   |  | $ | 421,000  |  
|                                                                                              |  |                                         |           |     
|Other comprehensive income (loss):                                                            |  |                                         |           |      |                                        |          |      |  |   |         |   |  |   |          |  
|Reclassification adjustment for amounts realized on securities sales included in net earnings |  |                                         | 5,237     |      |                                        | (41,753  | )    |  |   | (7,910  | ) |  |   | (116,242 | )
|Net unrealized gain (loss) on available for sale securities arising during the period         |  |                                         | 662,323   |      |                                        | (665,110 | )    |  |   | (44,911 | ) |  |   | (691,310 | )
|                                                                                              |  |                                         |           |      |                                        |          |      |  |   |         |   |  |   |          |  
|Other comprehensive income (loss)                                                             |  |                                         | 667,560   |      |                                        | (706,863 | )    |  |   | (52,821 | ) |  |   | (807,552 | )
|                                                                                              |  |                                         |           |      |                                        |          |      |  |   |         |   |  |   |          |  
|Comprehensive income (loss)                                                                   |  | $                                       | 1,067,650 |      | $                                      | (581,863 | )    |  | $ | 795,179 |   |  | $ | (386,552 | )
|                                                                                              |  |                                         |           |      |                                        |          |      |  |   |         |   |  |   |          |  



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 nine months
ended September 30, 2004 and 2003

(Unaudited)



|                                                                                                                     |  |                                         |            |      |                                        |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | ---- | -------------------------------------- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                     |  | For the three months endedSeptember 30, |            |      | For the nine months endedSeptember 30, |           
|                                                                                                                     |  | 2004                                    |            | 2003 |                                        |            | 2004 |  |   | 2003       |  
|Balance, beginning of period                                                                                         |  | $                                       | 15,799,286 |      | $                                      | 16,330,856 |      |  | $ | 16,044,467 |   |  | $ | 15,003,055 |  
|Net earnings                                                                                                         |  |                                         | 400,000    |      |                                        | 125,000    |      |  |   | 848,000    |   |  |   | 421,000    |  
|Other comprehensive income (loss)                                                                                    |  |                                         | 667,560    |      |                                        | (706,863   | )    |  |   | (52,821    | ) |  |   | (807,552   | )
|Proceeds from exercise of stock warrants                                                                             |  |                                         |           |      |                                        |           |      |  |   | 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                                                                                               |  | $                                       | 16,866,846 |      | $                                      | 15,748,993 |      |  | $ | 16,866,846 |   |  | $ | 15,748,993 |  
|                                                                                                                     |  |                                         |            |      |                                        |            |      |  |   |            |   |  |   |            |  



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 nine months ended September 30, 2004 and 2003

(Unaudited)



|                                                                             |  |      |             |   |      |   |             |  
|---------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                             |  | 2004 |             |   | 2003 |  
|Cash flows from operating activities:                                        |  |      |             |   |      |   |             |  
|Net earnings                                                                 |  | $    | 848,000     |   |      | $ | 421,000     |  
|Adjustments to reconcile net earnings to net cash from operating activities: |  |      |             |   |      |   |             |  
|Depreciation and amortization                                                |  |      | 206,736     |   |      |   | 187,591     |  
|Securities amortization and accretion                                        |  |      | 122,286     |   |      |   | 196,755     |  
|Provision for loan losses                                                    |  |      | 306,000     |   |      |   | 303,500     |  
|Gain on sales of securities available for sale                               |  |      | (7,910      | ) |      |   | (116,242    | )
|Gain on sale of other real estate owned                                      |  |      | (2,000      | ) |      |   |             |  
|Stock dividends from Federal Home Loan Bank (FHLB)                           |  |      | (20,000     | ) |      |   |            |  
|Net change in:                                                               |  |      |             |   |      |   |             |  
|Accrued interest receivable and other assets                                 |  |      | (209,887    | ) |      |   | (88,554     | )
|Accrued interest payable and other liabilities                               |  |      | (423,570    | ) |      |   | (41,924     | )
|Deferred loan fees                                                           |  |      | (17,680     | ) |      |   | 65,190      |  
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by operating activities                                    |  |      | 801,975     |   |      |   | 927,316     |  
|                                                                             |  |     
|Cash flows from investing activities:                                        |  |      |             |   |      |   |             |  
|Purchases of securities available for sale                                   |  |      | (5,030,698  | ) |      |   | (32,653,659 | )
|Purchases of securities held to maturity                                     |  |      | (343,188    | ) |      |   |            |  
|Maturities, calls and paydowns of securities available for sale              |  |      | 5,805,295   |   |      |   | 25,140,645  |  
|Proceeds from sales of securities available for sale                         |  |      | 4,104,915   |   |      |   | 14,176,721  |  
|Proceeds from sale of other real estate owned                                |  |      | 72,000      |   |      |   |            |  
|Purchases of federal bank stock                                              |  |      | (307,750    | ) |      |   | (527,800    | )
|Net change in loans                                                          |  |      | (20,953,443 | ) |      |   | (21,550,319 | )
|Purchases of premises and equipment                                          |  |      | (46,918     | ) |      |   | (68,289     | )
|                                                                             |  |      |             |   |      |   |             |  
|Net cash used by investing activities                                        |  |      | (16,699,787 | ) |      |   | (15,482,701 | )
|                                                                             |  |     
|Cash flows from financing activities:                                        |  |      |             |   |      |   |             |  
|Net change in deposits                                                       |  |      | 3,977,117   |   |      |   | 6,346,929   |  
|Cash received from branch acquisition, net of assets required                |  |      | 14,565,618  |   |      |   |            |  
|Repayment of capital lease obligations                                       |  |      | (5,831      | ) |      |   | (4,993      | )
|Proceeds from exercise of stock warrants                                     |  |      | 27,200      |   |      |   |            |  
|Repayments of FHLB advances and other borrowed funds                         |  |      | (1,094,882  | ) |      |   | (105,000    | )
|Proceeds from FHLB advances                                                  |  |      | 5,000,000   |   |      |   | 5,000,000   |  
|Proceeds from issuance of common stock, net of offering costs                |  |      |            |   |      |   | 1,132,490   |  
|                                                                             |  |      |             |   |      |   |             |  
|Net cash provided by financing activities                                    |  |      | 22,469,222  |   |      |   | 12,369,426  |  
|                                                                             |  |      |             |   |      |   |             |  
|Increase (Decrease) in cash and cash equivalents                             |  |      | 6,571,410   |   |      |   | (2,185,959  | )
|Cash and cash equivalents at beginning of period                             |  |      | 8,184,819   |   |      |   | 15,719,451  |  
|                                                                             |  |      |             |   |      |   |             |  
|Cash and cash equivalents at end of period                                   |  | $    | 14,756,229  |   |      | $ | 13,533,492  |  
|                                                                             |  |      |             |   |      |   |             |  
|Supplemental disclosures of cash flow information:                           |  |      |             |   |      |   |             |  
|Cash paid during the year for:                                               |  |      |             |   |      |   |             |  
|Interest                                                                     |  | $    | 3,093,361   |   |      | $ | 2,797,495   |  
|Federal income taxes                                                         |  |      | 204,000     |   |      |   |            |  
|                                                                             |  |     
|Noncash transactions:                                                        |  |      |             |   |      |   |             |  
|Commitments to purchase securities held to maturity                          |  | $    | 306,262     |   |      | $ |            |  



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, National Association (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 endedSeptember 30, |           | Nine months endedSeptember 30,
|                                                                                                                                                                                                                                        |  | 2004                            |           | 2003                           |   | 2004      |  | 2003
|BASIC:                                                                                                                                                                                                                                  |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Net earnings                                                                                                                                                                                                                            |  | $                               | 400,000   |                                | $ | 125,000   |  | $    | 848,000   |  | $ | 421,000  
|                                                                                                                                                                                                                                        |  |                                 |           |                               
|Weighted average common shares outstanding                                                                                                                                                                                              |  |                                 | 2,120,720 |                                |   | 2,115,700 |  |      | 2,119,540 |  |   | 2,106,359
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Basic earnings per share                                                                                                                                                                                                                |  | $                               | 0.19      |                                | $ | 0.06      |  |      | 0.40      |  | $ | 0.20     
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|DILUTED:                                                                                                                                                                                                                                |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Net earnings                                                                                                                                                                                                                            |  | $                               | 400,000   |                                | $ | 125,000   |  | $    | 848,000   |  | $ | 421,000  
|                                                                                                                                                                                                                                        |  |                                 |           |                               
|Weighted average common shares outstanding                                                                                                                                                                                              |  |                                 | 2,120,720 |                                |   | 2,115,700 |  |      | 2,119,540 |  |   | 2,106,359
|Dilutive effect of stock options                                                                                                                                                                                                        |  |                                 | 36,177    |                                |   | 3,927     |  |      | 53,065    |  |   | 2,120    
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Total common shares and dilutive potential common shares                                                                                                                                                                                |  |                                 | 2,156,897 |                                |   | 2,119,627 |  |      | 2,172,605 |  |   | 2,108,479
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Diluted earnings per share                                                                                                                                                                                                              |  | $                               | 0.19      |                                | $ | 0.06      |  | $    | 0.39      |  | $ | 0.20     
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|                                                                                                                                                                                                                                       
|The following table details, as of September 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 endedSeptember 30, |           | Nine months endedSeptember 30,
|                                                                                                                                                                                                                                        |  | 2004                            |           | 2003                           |   | 2004      |  | 2003
|Stock warrants                                                                                                                                                                                                                          |  |                                 |          |                                |   | 339,600   |  |      |          |  |   | 339,600  
|Stock options                                                                                                                                                                                                                           |  |                                 | 54,500    |                                |   | 86,500    |  |      | 54,500    |  |   | 95,000   
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          
|Total                                                                                                                                                                                                                                   |  |                                 | 54,500    |                                |   | 426,100   |  |      | 54,500    |  |   | 434,600  
|                                                                                                                                                                                                                                        |  |                                 |           |                                |   |           |  |      |           |  |   |          



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 (FAS) 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 FAS 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 endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|                                                                                 |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003     |  
|Net earnings as reported                                                         |  | $                               | 400,000 |   |                                | $ | 125,000 |      |  | $ | 848,000  |   |  | $ | 421,000  |  
|Deduct stock-based compensation expense determined under fair value based method |  |                                 | (56,000 | ) |                                |   | (73,608 | )    |  |   | (246,000 | ) |  |   | (241,281 | )
|                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |          |  
|Pro forma net earnings                                                           |  | $                               | 344,000 |   |                                | $ | 51,392  |      |  | $ | 602,000  |   |  | $ | 179,719  |  
|                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |          |  
|Basic earnings per share as reported                                             |  | $                               | 0.19    |   |                                | $ | 0.06    |      |  | $ | 0.40     |   |  | $ | 0.20     |  
|Pro forma basic earnings per share                                               |  |                                 | 0.16    |   |                                |   | 0.02    |      |  |   | 0.28     |   |  |   | 0.09     |  
|                                                                                 |  |                                 |         |  
|Diluted earnings per share as reported                                           |  | $                               | 0.19    |   |                                | $ | 0.06    |      |  | $ | 0.39     |   |  | $ | 0.20     |  
|Pro forma diluted earnings per share                                             |  |                                 | 0.16    |   |                                |   | 0.02    |      |  |   | 0.28     |   |  |   | 0.09     |  



The fair value of common stock options
and warrants was estimated using the Black-Scholes option valuation model. Options forfeited during the three months ended September 30, 2004, totaled 9,000. At September 30, 2004, there were 188,500 options outstanding with a weighted average
strike price of $10.22 per share.



NOTE 2 - SECURITIES



The securities portfolio was comprised of the following at September 30, 2004 and December
31, 2003:



|                                           |  |            |            |                      |   |                       |  |   |          |  
|------------------------------------------ |  | ---------- | ---------- | -------------------- | - | --------------------- |  | - | -------- | -
|                                           |  | Fair Value |            | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|Available for sale, carried at fair value: |  |            |            |                      |   |                       |  |   |          |  
|                                           |  |            |           
|September 30, 2004                         |  |            |            |                      |   |                       |  |   |          |  
|U.S. Government agencies and corporations  |  | $          | 7,926,611  |                      | $ | 6,707                 |  | $ | (120,174 | )
|Mortgage-backed securities                 |  |            | 24,946,329 |                      |   | 115,602               |  |   | (156,859 | )
|                                           |  |            |            |                      |   |                       |  |   |          |  
|Total                                      |  | $          | 32,872,940 |                      | $ | 122,309               |  | $ | (277,033 | )
|                                           |  |            |            |                      |   |                       |  |   |          |  
|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 | )
|                                           |  |            |            |                      |   |                       |  |   |          |  



|                                             |  |                |         |                        |   |                         |  |            |   |  |   |        
|-------------------------------------------- |  | -------------- | ------- | ---------------------- | - | ----------------------- |  | ---------- | - |  | - | -------
|                                             |  | CarryingAmount |         | GrossUnrecognizedGains |   | GrossUnrecognizedLosses |  | Fair Value
|Held to maturity, carried at amortized cost: |  |                |         |                        |   |                         |  |            |   |  |   |        
|September 30, 2004                           |  |                |         |                        |   |                         |  |            |   |  |   |        
|Obligations of state and local governments   |  | $              | 649,423 |                        | $ |                        |  | $          |  |  | $ | 649,423
|                                             |  |                |         |                        |   |                         |  |            |   |  |   |        



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 September
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 |  | $                  |       |      | $                |    |            |       | $    | 7,375  |  | $          | (120 | )    |  | $ | 7,375  |  | $ | (120 | )
|Mortgage-backed securities                |  |                    | 11,909 |      |                  | (74 | )          |       |      | 4,446  |  |            | (83  | )    |  |   | 16,355 |  |   | (157 | )
|                                          |  |                    |        |      |                  |     |            |       |      |        |  |            |      |      |  |   |        |  |   |      |  
|Total                                     |  | $                  | 11,909 |      | $                | (74 | )          |       | $    | 11,821 |  | $          | (203 | )    |  | $ | 23,730 |  | $ | (277 | )
|                                          |  |                    |        |      |                  |     |            |       |      |        |  |            |      |      |  |   |        |  |   |      |  



At September 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 compared to the rate environment when the securities were acquired. Fair values are expected to recover as the
bonds approach their maturity date.



Contractual maturities of debt securities
at September 30, 2004, were as follows. Balances are presented at carrying value with the yield calculated on amortized cost on a tax equivalent basis:



|                                           |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  
|------------------------------------------ |  | ------------------ | --- | ----- | -------------------------- | - | ------ | --------------------------- | ----- |  | --------------- | ------ |  | ----- | ----- |  | ------ | - | ----- | - | ------ |  | ---- | -
|                                           |  | Maturing           |    
|                                           |  | Less than one year |     |       | After onethrough fiveyears |   |        | After five through tenyears |       |  | After ten years |       
|(Dollars in thousands)                     |  | Amount             |     | Yield |                            |   | Amount |                             | Yield |  |                 | Amount |  | Yield |       |  | Amount |   | Yield |  
|Available for sale:                        |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  
|U.S. Government agencies and corporations  |  | $                  | 552 |       | 4.30                       | % |        | $                           | 6,390 |  | 3.34            | %      |  | $     | 985   |  | 3.00   | % |       | $ |       |  | -    | %
|Mortgage-backed securities                 |  |                    |    |       |                           |   |        |                             | 238   |  | 5.19            |        |  |       | 7,479 |  | 3.89   |   |       |   | 17,229 |  | 3.82 |  
|                                           |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  
|Total                                      |  | $                  | 552 |       | 4.30                       | % |        | $                           | 6,628 |  | 3.40            | %      |  |       | 8,464 |  | 3.78   | % |       | $ | 17,229 |  | 3.82 | %
|                                           |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  
|Held to maturity:                          |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  
|Obligations of state and local governments |  | $                  |    |       |                           | % |        | $                           |      |  |                | %      |  | $     |      |  |       | % |       | $ | 649    |  | 5.40 | %
|                                           |  |                    |     |       |                            |   |        |                             |       |  |                 |        |  |       |       |  |        |   |       |   |        |  |      |  



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



|                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |            |  
|------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | ---------- | -
|                                |  | Three months endedSeptember 30, |           |   | Nine months ended September 30, |  
|                                |  | 2004                            |           |   | 2003                            |   |           | 2004 |  |   | 2003      |  
|Proceeds from sales             |  | $                               | 1,138,313 |   |                                 | $ | 5,961,835 |      |  | $ | 4,104,915 |   |  | $ | 14,176,721 |  
|                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |            |  
|Gross realized gains            |  | $                               |          |   |                                 | $ | 71,122    |      |  | $ | 23,163    |   |  | $ | 145,611    |  
|Gross realized losses           |  |                                 | (5,237    | ) |                                 |   | (29,369   | )    |  |   | (15,253   | ) |  |   | (29,369    | )
|                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |            |  
|Net gain on sales of securities |  | $                               | (5,237    | ) |                                 | $ | 41,753    |      |  | $ | 7,910     |   |  | $ | 116,242    |  
|                                |  |                                 |           |   |                                 |   |           |      |  |   |           |   |  |   |            |  



11.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 2  SECURITIES(Continued)



Securities with a fair value of $29,258,000 and $20,202,000 were pledged as collateral for
public fund deposits and Federal Home Loan Bank advances at September 30, 2004 and December 31, 2003, respectively.



At September 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 September 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 $822,600 and $505,400, respectively.



NOTE 3 - LOANS



The loan portfolio was comprised of the following loans at September 30, 2004 and December 31, 2003:



|                                    |  |                    |             |   |                   |       |   |         |   |             |         |  |       |  
|----------------------------------- |  | ------------------ | ----------- | - | ----------------- | ----- | - | ------- | - | ----------- | ------- |  | ----- | -
|                                    |  | September 30, 2004 |             |   | December 31, 2003 |      
|                                    |  | Balance            |             |   | Percent           |       |   | Balance |   |             | Percent | 
|Residential real estate             |  | $                  | 49,459,109  |   |                   | 37.7  | % |         | $ | 42,510,798  |         |  | 38.7  | %
|Multifamily residential real estate |  |                    | 10,119,268  |   |                   | 7.7   |   |         |   | 8,120,517   |         |  | 7.4   |  
|Commercial real estate              |  |                    | 33,856,348  |   |                   | 25.9  |   |         |   | 24,457,198  |         |  | 22.2  |  
|Construction                        |  |                    | 13,591,137  |   |                   | 10.4  |   |         |   | 11,791,077  |         |  | 10.7  |  
|Commercial                          |  |                    | 11,750,535  |   |                   | 9.0   |   |         |   | 12,698,536  |         |  | 11.5  |  
|Consumer and home equity            |  |                    | 12,126,705  |   |                   | 9.3   |   |         |   | 10,511,437  |         |  | 9.5   |  
|                                    |  |                    |             |   |                   |       |   |         |   |             |         |  |       |  
|Total loans                         |  |                    | 130,903,102 |   |                   | 100.0 | % |         |   | 110,089,563 |         |  | 100.0 | %
|                                    |  |                    |             |   |                   |       |   |         |   |             |         |  |       |  
|Less: Allowance for loan losses     |  |                    | (1,288,009  | ) |                   |       |   |         |   | (1,121,913  | )       |  |       |  
|Net deferred loan fees              |  |                    | (157,602    | ) |                   |       |   |         |   | (175,282    | )       |  |       |  
|                                    |  |                    |             |   |                   |       |   |         |   |             |         |  |       |  
|Loans, net                          |  | $                  | 129,457,491 |   |                   |       |   |         | $ | 108,792,368 |         |  |       |  
|                                    |  |                    |             |   |                   |       |   |         |   |             |         |  |       |  



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



|                                                  |  |                                         |           |   |                                        |   |           |      |  |   |           |   |  |   |           |  
|------------------------------------------------- |  | --------------------------------------- | --------- | - | -------------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                  |  | For the three months endedSeptember 30, |           |   | For the nine months endedSeptember 30, |  
|                                                  |  | 2004                                    |           |   | 2003                                   |   |           | 2004 |  |   | 2003      |  
|Balance, beginning of period                      |  | $                                       | 1,225,553 |   |                                        | $ | 966,413   |      |  | $ | 1,121,913 |   |  | $ | 837,210   |  
|Provision for loan losses                         |  |                                         | 71,000    |   |                                        |   | 146,000   |      |  |   | 306,000   |   |  |   | 303,500   |  
|Loans charged-off                                 |  |                                         | (9,413    | ) |                                        |   | (49,979   | )    |  |   | (144,013  | ) |  |   | (80,547   | )
|Recoveries                                        |  |                                         | 869       |   |                                        |   | 705       |      |  |   | 4,109     |   |  |   | 2,976     |  
|                                                  |  |                                         |           |   |                                        |   |           |      |  |   |           |   |  |   |           |  
|Balance, end of period                            |  | $                                       | 1,288,009 |   |                                        | $ | 1,063,139 |      |  | $ | 1,288,009 |   |  | $ | 1,063,139 |  
|                                                  |  |                                         |           |   |                                        |   |           |      |  |   |           |   |  |   |           |  
|Allowance for loan losses, percent of total loans |  |                                         | 0.98      | % |                                        |   | 1.06      | %    |  |   |           |   |  |   |           |  
|                                                  |  |                                         |           |   |                                        |   |           |      |  |   |           |   |  |   |           |  



12.



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 3  LOANS(Continued)



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



|                                                  |  |                    |         |                   |   |        
|------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | -------
|                                                  |  | September 30, 2004 |         | December 31, 2003
|Nonaccrual loans                                  |  | $                  | 273,000 |                   | $ | 154,000
|Loans past due over 90 days still on accrual      |  |                    |        |                   |   |       
|                                                  |  |                   
|Impaired loans, included in nonaccrual loans      |  | $                  | 148,000 |                   | $ |       
|Amount of the allowance for loan losses allocated |  |                    | 35,000  |                   |   |       



|                                                        |  |                                          |         |                                         |   |        |  |      |         |  |   |       
|------------------------------------------------------- |  | ---------------------------------------- | ------- | --------------------------------------- | - | ------ |  | ---- | ------- |  | - | ------
|                                                        |  | For the three months ended September 30, |         | For the nine months ended September 30,
|                                                        |  | 2004                                     |         | 2003                                    |   | 2004   |  | 2003
|Average of impaired loans during the period             |  | $                                        | 209,000 |                                         | $ | 81,000 |  | $    | 133,000 |  | $ | 27,000
|                                                        |  |                                          |         |                                        
|Interest income foregone on nonaccrual loans            |  | $                                        | 3,073   |                                         | $ | 1,446  |  | $    | 4,308   |  | $ | 1,446 
|Interest income recognized during impairment            |  |                                          |        |                                         |   |       |  |      |        |  |   |      
|Cash-basis interest income recognized during impairment |  |                                          |        |                                         |   |       |  |      |        |  |   |      



NOTE 4  INTANGIBLE ASSET



On May 21, 2004, the Company announced that the Bank entered into a
purchase and assumption agreement to acquire a branch in Wooster, Ohio, from Unizan Bank. The purchase and assumption transaction was consummated on August 28, 2004. Under the purchase agreement, the Bank acquired the physical assets and
approximately $15.6 million of deposits, including fair value adjustments.



As a result of this transaction, the Bank recorded an intangible asset of $749,612 related to core deposit intangible. Accumulated amortization at September 30, 2004, totaled $9,042, all of which was recognized as expense during the three
months ended September 30, 2004. The following table summarizes estimated amortization expense for the remainder of 2004 and each of the next five years:



|                    |  |   |        
|------------------- |  | - | -------
|2004 (three months) |  | $ | 71,396 
|2005                |  |   | 213,931
|2006                |  |   | 172,856
|2007                |  |   | 131,781
|2008                |  |   | 90,706 
|2009                |  |   | 49,632 



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##### Table of Contents

OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 5  FEDERAL HOME LOAN BANK ADVANCES



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



|                                                                                             |  |   |           
|-------------------------------------------------------------------------------------------- |  | - | ----------
|One-year interest-only advance1.64% fixed rate, maturing December 16, 2004                   |  | $ | 3,000,000 
|Eighteen-month interest-only advance2.02% fixed rate, maturing June 16, 2005                 |  |   | 2,500,000 
|Two-year interest-only advance2.36% fixed rate, maturing December 16, 2005                   |  |   | 1,500,000 
|Thirty-month interest-only advance2.77% fixed rate, maturing June 23, 2006                   |  |   | 1,500,000 
|Three-year interest-only advance3.07% fixed rate, maturing December 22, 2006                 |  |   | 1,500,000 
|Three-year, constant monthly payment advance2.26% fixed rate, final maturity October 1, 2006 |  |   | 2,104,796 
|Three-year interest-only advance2.42% fixed rate, maturing March 10, 2007                    |  |   | 5,000,000 
|Four-year, constant monthly payment advance2.57% fixed rate, final maturity October 1, 2007  |  |   | 1,559,636 
|                                                                                             |  |   |           
|                                                                                             |  | $ | 18,664,432
|                                                                                             |  |   |           



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 September 30, 2004, the Bank had approximately
$10,541,000 in additional borrowing capacity available for advances from the FHLB. As of September 30, 2004, required principal payments on FHLB advances over the next five years are:



|     |  |   |           
|---- |  | - | ----------
|2004 |  | $ | 3,369,287 
|2005 |  |   | 5,499,136 
|2006 |  |   | 4,362,239 
|2007 |  |   | 5,433,770 
|2008 |  |   |          
|     |  |   |           
|     |  | $ | 18,664,432
|     |  |   |           



NOTE 6  COMMON STOCK WARRANTS



There were 2,720 warrants exercised during the nine months ended
September 30, 2004. None was exercised during the three months ended September 30, 2004. At September 30, 2004, there were 184,580 warrants outstanding with an exercise price of $10.00 per share.



NOTE 7  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.



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OHIO LEGACY CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 7  OFF-BALANCE SHEET ACTIVITIES(Continued)



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



|                                      |  |   |           
|------------------------------------- |  | - | ----------
|Commitments to make loans:            |  |   |           
|Variable-rate                         |  | $ | 3,100,000 
|Fixed-rate                            |  |   | 421,000   
|                                      | 
|Unused lines of credit, variable-rate |  | $ | 15,548,000



Commitments to make loans generally
are made for periods of 60 days or less. The fixed-rate loan commitments have interest rates ranging between 5.25% and 6.75%.



NOTE 8  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 was required to 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. The Bank was required to maintain a Tier 1 capital level of at least 11.0% of risk-weighted assets and 8.0% of adjusted total assets. In
addition, the OCC Agreement imposed an annual asset growth restriction of no greater than 22%.



On October 1, 2004, the OCC terminated the agreement as the Bank was found to be materially in compliance with the agreements requirements. As of that date, the Bank was no longer bound by the restrictions
imposed by the OCC Agreement.



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Item 2. Managements Discussion and Analysis



In the following section, management presents an analysis of Ohio Legacy Corps financial condition as of September 30, 2004, and December 31, 2003, and results of operations for the three and nine months ended September 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, National Association.



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.
| | - | -----------------------------------------



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OVERVIEW



The following key factors summarize changes in our financial condition during the three and nine months ended September 30, 2004:



| |  | Assets increased 6% during the third quarter of 2004. Growth during the third quarter was the result of the acquisition of a banking office which provided $15.6 million of deposits,
offset somewhat by the repayment of $4.0 million of overnight borrowings;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The maturity of a large pool of certificates of deposit (CD) during July and August 2004 required us to borrow additional overnight funds during the third quarter to maintain
liquidity as some of those CD accounts were lost. All overnight borrowings were repaid after the branch acquisition;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | While the loan portfolio has increased $20.8 million, or 19%, during the nine months ended September 30, 2004, demand for loans subsided during the third quarter and a large
construction project was completed and the related loan matured. The loan portfolio increased $1.3 million, net, during the third quarter.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Credit quality is strong with annualized net charge-offs equating to 0.15% of average loans during the first nine months of 2004; and,
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| |  | The Banks primary regulator, the OCC, terminated their regulatory order against the Bank, which previously placed significant restrictions on our operations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  | Net income was $400,000, a 77% increase from the second quarter of 2004 and a 220% increase over the third quarter of 2003;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| |  | Net interest income increased 11% over the second quarter of 2004 and 46% over the third quarter last year;
| | - | -----------------------------------------------------------------------------------------------------------



| |  | Margin improved 24 basis points (bp) over the second quarter of 2004, driven by a 21 bp fall in our cost of funds due to significant maturities of high-costing CDs;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  | Annualized return on equity improved to 9.86%.
| | - | ----------------------------------------------



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 September 30, 2004, assets totaled $183.2 million, an increase of
$24.1 million, or 15%, from December 31, 2003. This increase was driven by a $19.6 million increase in deposit balances, of which $15.6 million were acquired through the purchase of a banking office in Wooster. Assets also grew through net borrowing
increases from the FHLB of $3.9 million and $848,000 of earnings retention.



Securities. Total securities decreased by $4.5 million during the first nine months of 2004. The decrease was the result of the prepayments on mortgage-backed securities. Mortgage-backed securities (MBS) comprise 74% of our
securities portfolio. We anticipate growth in loan originations and, thus, have given preference to MBS with short



17.



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average lives and duration to provide an additional source of liquidity through principal paydowns. At September 30,
2004, approximately 31% 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. During the third quarter of 2004, we sold $1.1 million of agency notes at a small loss and
reinvested the proceeds in variable-rate MBS, which are expected to provide a better total return than the notes. During the first nine months of 2003, proceeds of $14.2 million from the sales of securities were used to fund loan growth as we did
not have a borrowing facility in place during the first half of 2003.



Loans. At September 30, 2004, the loan portfolio (before the allowance for loan losses and deferred fees) was $130.9 million, an increase of $20.8 million, or 19%, from December 31, 2003. This growth includes $5.0 million of
commercial real estate loan participations. The strongest increases during the nine months of 2004 came in the commercial real estate and residential real estate categories, with each increasing 38% and 16% 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 38% of the loan portfolio is secured by residential real estate, this component includes approximately $16.4 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. Additionally, nearly 59% of the growth in the residential
real estate loan category during 2004 is attributable to these commercial credits.



Allowance for loan losses and asset quality. At September 30, 2004, the allowance for loan losses was $1.3 million or 0.98% 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 $273,000, or 0.21% of total loans, compared to $154,000 at December 31, 2003. 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 $99,000 higher at September 30, 2004, compared to December 31, 2004, due on higher loan balances. The increase in other assets is attributable to prepaid expenses and payments due on MBS. During the third quarter of 2004, we sold the
property that comprised other real estate owned and realized a gain of $2,000. 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. As noted earlier, we entered a purchase and assumption
agreement with Unizan Bank to acquire Unizans branch in Wooster, Ohio, which was consummated in late August 2004. 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. Core deposit intangibles acquired in the conversion totaled $750,000. Amortization of this intangible was $9,000 during the third quarter. Additionally, the $10.6 million of CDs acquired were
recorded on the balance sheet at their fair value. This resulted in an adjustment of $211,000, which will be amortized through interest expense over the life of the CDs as a yield adjustment.



Deposits have increased $19.6 million during 2004 to $142.7 million at September 30, 2004.
Purchased deposits totaled $15.4 million at September 30, 2004. Organically, deposits increased $4.2 million during the first nine months of 2004 despite the loss of $8.0 million in CDs during June and August. Those balances were primarily part of a
large pool of a single CD product that began to mature early in the second quarter of 2004. At September 30, 2004, approximately $1.6 million of this product remained in the CD portfolio. At December 31, 2003, this product totaled $27.1 million.



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Core deposits (checking and savings accounts) increased $400,000 during the third quarter of 2004 and by $8.0 million
year to date. Excluding the core deposits acquired in the branch purchase, growth totaled $3.1 million during the first nine months of this year. The increase in core deposit balances in 2004 has been driven by interest-bearing checking accounts.
Organic 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.



Federal Home Loan Bank advances. During the first six months 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. During the third quarter of 2004, we borrowed
another $6.0 million of overnight funds to provide liquidity as a result of continued runoff of high-cost CD accounts. All overnight borrowings, totaling $10.0 million, were repaid in early September after the branch acquisition.



At September 30, 2004, all FHLB advances were collateralized by securities. With the
termination of the OCC Agreement, which was effective October 1, 2004, we will be able to collateralize long-term borrowings with our mortgage loan portfolio. This shift will improve our liquidity and our ability to manage interest rate risk as our
securities portfolio will be less encumbered by collateral pledges. However, some securities will continue to be pledged as collateral for public fund deposits whose balances exceed FDIC coverage.



RESULTS OF OPERATIONS  THREE MONTHS ENDED SEPTEMBER 30, 2004



Net earnings increased to $400,000 for the three months ended September 30, 2004, a 77%
increase over the second quarter of 2004 and a 220% increase over the third quarter of 2003.



Net interest income. During the three months ended September 30, 2004, net interest income increased to $1.5 million compared to $1.0 million during the third 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 September 30, 2004, average loans as a percent of average interest-earning assets was 76% compared to 69%
during the third quarter of 2003. The shift in asset mix helped to offset a lower overall yield on assets.



During the third quarter of 2004, interest rate spread (the difference between the yield earned on assets and the cost of deposits and borrowings) increased to 3.21% compared to 2.72% in 2003 and 3.01% during the
second quarter of 2004. Net interest margin (net interest income divided by average interest-earning assets) increased to 3.52% in 2004 compared to 3.06% in the third quarter of 2003 and 3.28% during the second quarter of 2004. The amortization of
the fair value adjustment recorded on purchased CDs negatively impacted both spread and margin by 4 basis points during the third quarter. Currently, we expect spread and margin to decrease during the fourth quarter of 2004 to levels slightly above
the second quarter of 2004 as a result of the fair value adjustment on purchased CDs and because the cost of funds acquired, including noninterest checking balances, was 115 bp higher than the average cost of funds for our existing deposit
portfolio.



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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 September 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                |  | $                                | 6,759   |                     | $    | 24         |  | 1.39 | %                         |  | $                   | 5,572   |            | $ | 14    |  | 0.98 | %
|Securities available for sale(1)                                |  |                                  | 32,699  |                     |      | 311        |  | 3.74 |                           |  |                     | 35,612  |            |   | 278   |  | 3.15 |  
|Securities held to maturity(2)                                  |  |                                  | 11      |                     |      |           |  | 5.55 |                           |  |                     |        |            |   |      |  |     |  
|Federal agency stock                                            |  |                                  | 1,325   |                     |      | 16         |  | 4.98 |                           |  |                     | 706     |            |   | 10    |  | 5.55 |  
|Loans(3)                                                        |  |                                  | 131,248 |                     |      | 2,076      |  | 6.27 |                           |  |                     | 93,287  |            |   | 1,621 |  | 6.90 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total interest-earning assets                                   |  |                                  | 172,042 |                     |      | 2,427      |  | 5.58 |                           |  |                     | 135,177 |            |   | 1,923 |  | 5.67 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Noninterest-earning assets                                      |  |                                  | 6,884   |                     |      |            |  |      |                           |  |                     | 6,842   |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total assets                                                    |  | $                                | 178,926 |                     |      |            |  |      |                           |  | $                   | 142,019 |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Liabilities and Shareholders Equity                            |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Interest-bearing liabilities:                                   |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Interest-bearing demand deposits                                |  | $                                | 11,874  |                     |      | 26         |  | 0.86 |                           |  | $                   | 7,888   |            |   | 20    |  | .99  |  
|Savings accounts                                                |  |                                  | 35,702  |                     |      | 93         |  | 1.03 |                           |  |                     | 40,418  |            |   | 136   |  | 1.33 |  
|Money market accounts                                           |  |                                  | 3,415   |                     |      | 9          |  | 1.07 |                           |  |                     | 2,556   |            |   | 5     |  | 0.75 |  
|Certificates of deposit                                         |  |                                  | 73,167  |                     |      | 544        |  | 2.95 |                           |  |                     | 63,080  |            |   | 609   |  | 3.84 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total interest-bearing deposits                                 |  |                                  | 124,158 |                     |      | 672        |  | 2.15 |                           |  |                     | 113,942 |            |   | 770   |  | 2.68 |  
|Other borrowings                                                |  |                                  | 27,982  |                     |      | 237        |  | 3.39 |                           |  |                     | 4,694   |            |   | 113   |  | 9.58 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total interest-bearing liabilities                              |  |                                  | 152,140 |                     |      | 909        |  | 2.37 |                           |  |                     | 118,636 |            |   | 883   |  | 2.95 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Noninterest-bearing demand deposits                             |  |                                  | 9,078   |                     |      |            |  |      |                           |  |                     | 5,651   |            |   |       |  |      |  
|Noninterest-bearing liabilities                                 |  |                                  | 1,473   |                     |      |            |  |      |                           |  |                     | 1,338   |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total liabilities                                               |  |                                  | 162,691 |                     |      |            |  |      |                           |  |                     | 125,625 |            |   |       |  |      |  
|Shareholders equity                                            |  |                                  | 16,235  |                     |      |            |  |      |                           |  |                     | 16,394  |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Total liabilities and shareholders equity                      |  | $                                | 178,926 |                     |      |            |  |      |                           |  | $                   | 142,019 |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Net interest income; interest rate spread(4)                    |  |                                  |         |                     | $    | 1,518      |  | 3.21 | %                         |  |                     |         |            | $ | 1,040 |  | 2.72 | %
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Net earning assets                                              |  | $                                | 19,902  |                     |      |            |  |      |                           |  | $                   | 16,541  |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  
|Net interest margin(5)                                          |  |                                  |         |                     |      |            |  | 3.52 | %                         |  |                     |         |            |   |       |  | 3.06 | %
|Average interest-earning assets to interest-bearing liabilities |  |                                  | 1.13x   |                     |      |            |  |      |                           |  |                     | 1.14x   |            |   |       |  |      |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |      |  

---

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

|(2) | Yield calculated on a taxable equivalent basis.
|--- | -----------------------------------------------

|(3) | Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets
|--- | -------------------------------------------------------------------------------------------------------------------------

|(4) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(5) | 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 mitigated the impact
of a low interest rate environment as the yield on assets fell to 5.58% during the third quarter of 2004 from 5.67% in 2003. Federal funds sold, securities and agency stock decreased to 24% of average interest-earning assets during the third quarter
of 2004 from 31% in 2003. The yield earned on federal funds sold increased during the third quarter as the Federal Reserve Bank increased its discount rate and targeted federal funds rates by 75 basis points during the second and third quarters of
2004.



During 2003, as long-term interest 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 amortization of purchase premiums on those MBS was accelerated, reducing the yield to 3.15% in 2003. While the
proceeds from those early retirements were invested in securities with lower coupons and yields, the prepayment speeds on MBS has slowed considerably and amortization of purchase premiums has not significantly reduced the yield on our securities
portfolio during 2004. As a result, the yield earned on securities during the third quarter of 2004 rose to 3.75%. At September 30, 2004, approximately 69% of our securities portfolio is fixed rate; however, with 74% of



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##### Table of Contents

the portfolio invested in MBS, the monthly principal paydowns can be reinvested at higher yields should interest rates
rise. Additionally, we have sought to purchase MBS with adjustable-rate loans with short reset periods underlying the securities to obtain higher interest income should short-term interest rates continue to rise.



The yield on loans was lower during the third quarter of 2004 compared to the third quarter
of 2003 as a result of the general interest rate environment being lower during the periods of our strongest loan growth in late 2003 and early 2004. At September 30, 2004, approximately 70% of our loan portfolio is variable rate with 19% 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 39% 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. The weighted average number of months to repricing for this three-year CMT portfolio is 22 months from September 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. However, the yield on the loan portfolio may
continue to decline as seasoned loans with higher interest rates pay down and new loans with lower interest rates are added to the portfolio, given the current interest rate environment.



Interest expense. The cost of funds continued to fall as a result of significant maturities of high-cost CDs during the second and
third quarters of 2004. During the third quarter of 2004, our cost of funds was 2.37% compared to 2.95% during the 2003 period.



The average balance of low-cost core deposits was a lower percentage of deposits during the third quarter of 2004 compared to 2003, resulting in a greater dependence on
higher-costing CDs. The deposit portfolio assumed under the branch acquisition also diluted core deposits as a percent of our portfolio as CDs comprised 68% of the deposits acquired, compared to 50% within our existing portfolio. The purchased CDs
were recorded at fair value with the fair value adjustment amortized to interest expense over the life of the CDs acquired. This resulted in $17,000 of amortization expense in the third quarter of 2004.



Our CD portfolio will be priced near or slightly below like-term offering rates starting in
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, at September 30, 2004, $38.6 million, or 49%, of the CD portfolio had
variable-rate features. Approximately 6% of the CD portfolio reprices monthly while 43% 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 September 30, 2004, the average rate would have increased 21 basis points from the original rate on the account.



We have also become more dependent on fixed-rate borrowings 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 18% of our interest-bearing funding sources during the third quarter of 2004 compared to 4% during the second quarter of 2003.



Provision for loan losses. The provision for loan losses was $71,000 during the third
quarter of 2004 compared to $146,000 in 2003. Net charge offs totaled $9,000 during the third quarter of 2004, compared to $49,000 during 2003. 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.



21.



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Noninterest income. Total noninterest income decreased during the third quarter of 2004 compared to 2003.
Excluding the sales of securities, noninterest income increased $21,000, or 22% during the third quarter of 2004 compared to 2003. We did not have a borrowing facility in place with the FHLB until late 2003. Accordingly, we were required to sell
some securities to fund loan growth. 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 increased 28% for the three months
ended September 30, 2004, compared to the three months ending September 30, 2003, and 5% over the second quarter of 2004. The efficiency ratio (noninterest expense divided by the sum of net interest income and other income, excluding gains and
losses on securities sales) was 71% during the third quarter of 2004 compared to 80% during the third quarter of 2003 and 75% during the second quarter of 2004. Annualized noninterest expense as a percent of average assets was 2.58% during the third
quarter of 2004 compared to 2.54% during the third quarter of 2003 and 2.56% during the second quarter of 2004.



Salaries and benefits were higher during the third quarter of 2004, reflecting a higher level of employment and a decrease in loan production, which results in less
expense deferral. The branch acquisition increased salaries and benefits by $15,000 during the third quarter and will add approximately $50,000 per quarter, compared to our second quarter run rate. We expect salaries and benefits expense to continue
to increase in 2005 as a number of sales and back office positions need to be filled in order to meet our growth objectives, assist in implementing and monitoring sections of the Sarbanes-Oxley Act of 2002 and ensure safe and sound management of
operational, credit and interest rate risks.



Occupancy and equipment expense
was higher in 2004 due to rent expense from the addition of an operations center in late 2003 and the branch acquisition in August 2004. These transactions also increased depreciation expense through related leasehold improvements. We will perform
renovations in the lobby of the new banking office during the fourth quarter of 2004, which will further increase depreciation expense. We are currently planning to launch another banking office in our Stark County region in late 2005, which will
require capital expenditures and additional depreciation expense. Our current strategy seeks to launch or acquire at least one banking office each fiscal year.



Professional fees increased compared to the 2003 period due to additional legal and accounting fees related to filings with the Securities and Exchange Commission and
other matters. 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 costs are higher in 2004 due to an increase in the volume of transactions and accounts resulting from the growth in our loan and deposit portfolios.
Additional data processing expenses were incurred during the third quarter of 2004 in connection with the branch acquisition.



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, 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 it is more likely than not that our income tax assets will be realized, the valuation allowance will be removed and a deferred tax asset will be
recognized.



22.



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RESULTS OF OPERATIONS  NINE MONTHS ENDED SEPTEMBER 30, 2004



Net income during the first nine months of 2004 was $848,000, or $0.39 per share, compared
to $421,000, or $0.20 per share, during the same period in 2003.



Net
interest income. During the nine months ended September 30, 2004, net interest income was $4.1 million compared to $3.0 million during the 2003 period. This increase was primarily as a result of a higher balance of interest-earning assets and
improvement in interest rate spread. Net interest margin improved to 3.35% in 2004 from 3.03% in the first nine months of 2003 and interest rate spread improved to 3.05% during 2004 compared to 2.67% 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.



|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|--------------------------------------------------------------- |  | -------------------------------- | ------- | ------------------- | ---- | ---------- |  | ---- | ------------------------- |  | ------------------- | ------- | ---------- | - | ----- |  | ----- | -
|                                                                |  | Nine months ending September 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                |  | $                                | 5,461   |                     | $    | 47         |  | 1.14 | %                         |  | $                   | 7,477   |            | $ | 64    |  | 1.14  | %
|Securities available for sale(1)                                |  |                                  | 35,122  |                     |      | 981        |  | 3.69 |                           |  |                     | 38,298  |            |   | 1,073 |  | 3.80  |  
|Securities held to maturity(2)                                  |  |                                  | 4       |                     |      |           |  | 5.55 |                           |  |                     |        |            |   |      |  |      |  
|Federal agency stock                                            |  |                                  | 1,197   |                     |      | 45         |  | 4.96 |                           |  |                     | 537     |            |   | 23    |  | 5.84  |  
|Loans(3)                                                        |  |                                  | 122,541 |                     |      | 5,862      |  | 6.37 |                           |  |                     | 86,128  |            |   | 4,566 |  | 7.09  |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-earning assets                                   |  |                                  | 164,325 |                     |      | 6,935      |  | 5.61 |                           |  |                     | 132,440 |            |   | 5,726 |  | 5.80  |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-earning assets                                      |  |                                  | 6,672   |                     |      |            |  |      |                           |  |                     | 7,177   |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total assets                                                    |  | $                                | 170,997 |                     |      |            |  |      |                           |  | $                   | 139,617 |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Liabilities and Shareholders Equity                            |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing liabilities:                                   |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Interest-bearing demand deposits                                |  | $                                | 10,647  |                     |      | 66         |  | 0.82 |                           |  | $                   | 7,580   |            |   | 66    |  | 1.17  |  
|Savings accounts                                                |  |                                  | 35,375  |                     |      | 274        |  | 1.03 |                           |  |                     | 39,054  |            |   | 461   |  | 1.58  |  
|Money market accounts                                           |  |                                  | 3,135   |                     |      | 21         |  | 0.90 |                           |  |                     | 2,688   |            |   | 17    |  | 0.83  |  
|Certificates of deposit                                         |  |                                  | 72,508  |                     |      | 1,782      |  | 3.27 |                           |  |                     | 63,073  |            |   | 1,853 |  | 3.93  |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing deposits                                 |  |                                  | 121,665 |                     |      | 2,143      |  | 2.35 |                           |  |                     | 112,395 |            |   | 2,397 |  | 2.85  |  
|Other borrowings                                                |  |                                  | 24,363  |                     |      | 659        |  | 3.61 |                           |  |                     | 4,468   |            |   | 337   |  | 10.09 |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total interest-bearing liabilities                              |  |                                  | 146,028 |                     |      | 2,802      |  | 2.56 |                           |  |                     | 116,863 |            |   | 2,734 |  | 3.13  |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Noninterest-bearing demand deposits                             |  |                                  | 7,783   |                     |      |            |  |      |                           |  |                     | 5,681   |            |   |       |  |       |  
|Noninterest-bearing liabilities                                 |  |                                  | 1,019   |                     |      |            |  |      |                           |  |                     | 1,016   |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities                                               |  |                                  | 154,830 |                     |      |            |  |      |                           |  |                     | 123,560 |            |   |       |  |       |  
|Shareholders equity                                            |  |                                  | 16,167  |                     |      |            |  |      |                           |  |                     | 16,057  |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Total liabilities and shareholders equity                      |  | $                                | 170,997 |                     |      |            |  |      |                           |  | $                   | 139,617 |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest income; interest rate spread(4)                    |  |                                  |         |                     | $    | 4,133      |  | 3.05 |                           |  |                     |         |            | $ | 2,992 |  | 2.67  | %
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net earning assets                                              |  | $                                | 18,297  |                     |      |            |  |      |                           |  | $                   | 15,577  |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  
|Net interest margin(5)                                          |  |                                  |         |                     |      |            |  | 3.35 |                           |  |                     |         |            |   |       |  | 3.03  | %
|Average interest-earning assets to interest-bearing liabilities |  |                                  | 1.13x   |                     |      |            |  |      |                           |  |                     | 1.13x   |            |   |       |  |       |  
|                                                                |  |                                  |         |                     |      |            |  |      |                           |  |                     |         |            |   |       |  |       |  

---

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

|(2) | Yield calculated on a taxable equivalent basis.
|--- | -----------------------------------------------

|(3) | Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets
|--- | -------------------------------------------------------------------------------------------------------------------------

|(4) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

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



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##### Table of Contents

Interest income. The yield on interest-earning assets fell to 5.61% during the first nine months of 2004 compared
to 5.80% in 2003. The yields on federal funds sold and securities fell as a result of the reinvestment of proceeds from security calls and accelerated prepayments on mortgage-backed securities at lower interest rates during 2003. The yield on loans
declined during the first nine months 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 2.56% during the first nine months of 2004, compared to 3.13% in 2003. As
noted earlier, the decrease in the cost of deposits was driven by the maturing of high interest rate CD accounts that repriced at lower rates or were lost to competitors. 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 more of our deposit portfolio during 2004 than 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 15.7%. The average cost of FHLB advances during the first nine months of 2004 was
2.21%. Our FHLB advances increased significantly in late 2003 and 2004, which diluted the cost of the subordinated debentures and leases.



Provision for loan losses. The provision for loan losses during 2004 was $306,000, compared to $304,000 in 2003. Net charge-offs during the first nine months of
2004 totaled $140,000 compared to $78,000 during 2003.



Noninterest income.Excluding the gain on sales of securities, noninterest income increased $68,000, or 27% during the first nine months of the year compared to 2003. We did not have a borrowing facility in place with the FHLB until June 2003. Accordingly, we were
required to sell securities to fund loan growth during 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 $672,000, or 26%,
higher during the nine months ended September 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 2.51% in 2003 while our efficiency ratio improved to 74% during
2004 compared to 81% during 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 were 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 and the branch acquisition of August 2004, which also increased depreciation expense from leasehold improvements. 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 costs are 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 deposit maintenance costs.



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##### Table of Contents

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



The following table presents, as of September 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 unamortized premiums or discounts or other similar carrying value adjustments.



|                              |  |                   |        |                         |      |        |      |   |        |  |            |        |  |   |       |  |   |      
|----------------------------- |  | ----------------- | ------ | ----------------------- | ---- | ------ | ---- | - | ------ |  | ---------- | ------ |  | - | ----- |  | - | -----
|                              |  | Three months 2004 |        | Year ended December 31,
|(Dollars in thousands)        |  |                   | 2005   |                         | 2006 |        | 2007 |   | 2008   |  | Thereafter
|Certificates of deposit (1)   |  | $                 | 8,124  |                         | $    | 28,740 |      | $ | 25,469 |  | $          | 13,419 |  | $ | 1,620 |  | $ | 1,387
|FHLB advances                 |  |                   | 3,369  |                         |      | 5,499  |      |   | 4,362  |  |            | 5,434  |  |   |      |  |   |     
|Subordinated debentures (2)   |  |                   |       |                         |      |       |      |   |       |  |            |       |  |   |      |  |   | 3,325
|Capital lease obligations (3) |  |                   | 40     |                         |      | 160    |      |   | 168    |  |            | 179    |  |   | 181   |  |   | 1,519
|Operating leases              |  |                   | 46     |                         |      | 178    |      |   | 182    |  |            | 183    |  |   | 183   |  |   | 869  
|Deposits without maturity     |  |                   | 63,723 |                         |      |       |      |   |       |  |            |       |  |   |      |  |   |     

---

|(1) | Excludes fair value adjustment for purchased certificates of deposit
|--- | --------------------------------------------------------------------

|(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 $1,276 of amounts allocable to interest payments over the remaining terms of the leases.
|--- | -------------------------------------------------------------------------------------------------



Note 7 to the consolidated financial statements discusses other commitments and contingencies and the various obligations that exist under
those agreements.



At September 30, 2004, we had no unconsolidated, related
special purpose entities other than Ohio Legacy Trust I, which is discussed in Note 7 to the consolidated financial statements filed with our December 31, 2003, Form 10-KSB, nor did we engage in derivatives or 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. Alternative sources of funds include repurchase agreements and brokered CDs. 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 liquidity 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.



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##### Table of Contents

During the first nine months of 2004, cash and cash equivalents increased $6.6 million to $14.8 million at September 30,
2004. Cash and cash equivalents represented 8.1% of total assets at September 30, 2004, and 5.1% of total assets at December 31, 2003. This increase came primarily from the funds received from the acquisition of a branch in August 2004, offset by a
shift in assets as cash and equivalents were used to fund loans.



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 September 30, 2004, approximately 87% of our securities portfolio
was pledged as collateral for public funds and FHLB borrowings. However, the termination of the OCC Agreement, effective October 1, 2004, will allow us to pledge our residential real estate loan portfolio as collateral instead of securities.
Shifting the pledge commitments to our loan portfolio from our marketable securities portfolio will improve our liquidity position as we will be able to sell selective securities to fund loans (which provide higher yields) or meet deposit runoff.



During the first nine months of 2004, approximately 70% of the December 31,
2003, CD portfolio matured, with most of those maturities occurring in the second and third quarters. The majority of the maturing CDs related to a unique product offered in 2001, which also carried the highest average rate of all products in our CD
portfolio. A number of these customers did not keep their funds with us when their account matured. As a result of this runoff, we were required to borrow overnight funds to meet loan and general liquidity demands. Before the acquisition of our
fourth banking office in August 2004, we had $10.0 million in overnight borrowings. All of these borrowings were repaid in September 2004 once the acquisition was consummated and we received $14.4 million of deposit funds, net of purchase premiums
and other cash settlement items of approximately $996,000. We do not foresee such a concentration of funding maturities reoccurring over the next 36 months, based on the current composition of our funding sources. However, as noted earlier, we
actively monitor our liquidity risks and ensure contingency funding alternatives should we encounter the significant likelihood of a liquidity crisis.



CAPITAL RESOURCES



Total shareholders equity was $16.9 million at September 30, 2004, an increase of $822,000 from December 31, 2003. The increase was primarily from earnings retention of $848,000. Accumulated other comprehensive
income (loss) has been variable during 2004 due to a highly volatile interest rate environment. For example, we encountered an unrealized gain of $668,000 on securities available for sale during the third quarter of 2004 compared to a $997,000 loss
during the second quarter of 2004. This reversal was due to sharply-rising bond prices during the third quarter of 2004 compared to sharply-falling prices during the second quarter of 2004, which negatively impacted the value of our securities
portfolio.



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.



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##### Table of Contents

Actual and required capital amounts and ratios are presented below at September 30, 2004:



|                                       |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |      |  
|-------------------------------------- |  | ------ | ------ | ----- | ----------------------------- | - | ------ | ---------------------------------------------------------------- | ------ |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                       |  | Actual |        |       | For Capital Adequacy Purposes |   |        | To Be Well-Capitalized Under Prompt Corrective Action Provisions |       
|(Dollars in thousands)                 |  | Amount |        | Ratio |                               |   | Amount |                                                                  | Ratio  |  |     | Amount |  | Ratio |       
|Total capital to risk-weighted assets  |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 21,317 |       | 17.1                          | % |        | $                                                                | 9,959  |  | 8.0 | %      |  | $     | 12,449 |  | 10.0 | %
|Ohio Legacy Bank                       |  |        | 20,335 |       | 16.3                          |   |        |                                                                  | 10,001 |  | 8.0 |        |  |       | 12,501 |  | 10.0 |  
|                                       |  |        |        |       |                               |  
|Tier 1 capital to risk-weighted assets |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 20,029 |       | 16.1                          | % |        | $                                                                | 4,980  |  | 4.0 | %      |  | $     | 7,470  |  | 6.0  | %
|Ohio Legacy Bank                       |  |        | 19,047 |       | 15.2                          |   |        |                                                                  | 5,001  |  | 4.0 |        |  |       | 7,501  |  | 6.0  |  
|                                       |  |        |        |       |                               |  
|Tier 1 capital to average assets       |  |        |        |       |                               |   |        |                                                                  |        |  |     |        |  |       |        |  |      |  
|Ohio Legacy Corp                       |  | $      | 20,029 |       | 11.2                          | % |        | $                                                                | 7,159  |  | 4.0 | %      |  | $     | 8,948  |  | 5.0  | %
|Ohio Legacy Bank                       |  |        | 19,047 |       | 10.6                          |   |        |                                                                  | 7,158  |  | 4.0 |        |  |       | 8,948  |  | 5.0  |  



Under the OCC Agreement (discussed in
Note 8 to the consolidated financial statements), 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 September
30, 2004. However, the OCC Agreement was terminated on October 1, 2004, and the Bank will no longer be subject to these higher minimum capital requirements.



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
September 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-15(e) 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 September 30, 2004, that has materially affected, or is reasonably likely to materially
affect, Ohio Legacys Corps internal control over financial reporting.

|
|



27.



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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. Unregistered Sales of Equity Securities and Use of Proceeds.



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.



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



Item 5. Other Information.



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



28.



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##### Table of Contents

Item 6. Exhibits.



|              |  |          |  |                                                                                                                                                                                                                       
|------------- |  | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Note Ref |  | 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
|--- | ----------------------------------------------------------------------------------------------------------------------------



29.



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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: November 15, 2004 |  | By:              |  | /s/ L. Dwight Douce                            
|                        |  |                  |  | L. Dwight Douce                                
|                        |  |                  |  | President, Chief Executive Officer and Director
|                        |  |                 
|Date: November 15, 2004 |  | By:              |  | /s/ Eric S. Nadeau                             
|                        |  |                  |  | Eric S. Nadeau                                 
|                        |  |                  |  | Chief Financial Officer and Treasurer          



30.