##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission file number: 000-31673
 OHIO LEGACY CORP
  
 
 
 
 þ o
 o þ
  o þ




---



##### 



PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis
    
    
    13Item 3. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23-24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26EX-10.12EX-31.1EX-32.1
 
  2.




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCash and due from banks
    
    $
    5,928,830
    
    
    $
    5,659,986Federal funds sold and interest-bearing deposits in financial institutions
    
    
    2,621,771
    
    
    
    7,379,879Cash and cash equivalents
    
    
    8,550,601
    
    
    
    13,039,865Certificate of deposit in financial institution
    
    
    100,000
    
    
    
    100,000Securities available for sale
    
    
    24,474,922
    
    
    
    26,945,022Securities held to maturity (fair value of $2,932,992 and $2,166,324
at June 30, 2007, and December 31, 2006)
    
    
    3,004,207
    
    
    
    2,201,682Loans held for sale
    
    
    1,711,997
    
    
    
    1,217,035Loans, net of allowance of $1,766,379 and $1,757,110 at
June 30, 2006 and December 31, 2005
    
    
    176,208,451
    
    
    
    177,016,649Federal bank stock
    
    
    1,541,200
    
    
    
    1,541,200Premises and equipment, net
    
    
    3,468,783
    
    
    
    3,618,697Intangible asset
    
    
    211,363
    
    
    
    282,388Other real estate owned
    
    
    2,303,732
    
    
    
    2,566,301Accrued interest receivable and other assets
    
    
    2,146,854
    
    
    
    1,954,992Total assets
    
    $
    223,722,110
    
    
    $
    230,483,831LIABILITIESDeposits:Noninterest-bearing demand
    
    $
    18,601,116
    
    
    $
    17,346,767Interest-bearing demand
    
    
    9,695,442
    
    
    
    9,988,257Savings
    
    
    55,082,747
    
    
    
    49,504,180Certificates of deposit
    
    
    99,374,447
    
    
    
    109,477,664Total deposits
    
    
    182,753,752
    
    
    
    186,316,868Repurchase agreements
    
    
    1,972,282
    
    
    
    1,317,527Short-term Federal Home Loan Bank advances
    
    
    1,500,000
    
    
    
    Long-term Federal Home Loan Bank advances
    
    
    14,174,623
    
    
    
    19,433,770Subordinated debentures
    
    
    3,325,000
    
    
    
    3,325,000Capital lease obligations
    
    
    924,862
    
    
    
    940,183Accrued interest payable and other liabilities
    
    
    652,960
    
    
    
    731,926Total liabilities
    
    
    205,303,479
    
    
    
    212,065,274SHAREHOLDERS EQUITYPreferred stock, no par value, 500,000 shares authorized,
none outstanding
    
    
    
    
    
    
    Common stock, no par value, 5,000,000 shares authorized,
2,214,564 shares issued and outstanding at
June 30, 2006, and December 31, 2005, respectively
    
    
    18,759,003
    
    
    
    18,737,150Accumulated earnings
    
    
    126,652
    
    
    
    166,415Accumulated other comprehensive income (loss)
    
    
    (467,024
    )
    
    
    (485,008
    )Total shareholders equity
    
    
    18,418,631
    
    
    
    18,418,557Total liabilities and shareholders equity
    
    $
    223,722,110
    
    
    $
    230,483,831
 
  3.




---



##### Table of Contents



For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and dividends income:Loans, including fees
    
    $
    3,259,258
    
    
    $
    2,943,590
    
    
    $
    6,500,532
    
    
    $
    5,697,828Securities, taxable
    
    
    261,310
    
    
    
    301,144
    
    
    
    536,757
    
    
    
    622,808Securities, tax-exempt
    
    
    25,946
    
    
    
    7,188
    
    
    
    49,268
    
    
    
    14,369Interest-bearing deposits and federal funds
sold and other
    
    
    42,574
    
    
    
    61,070
    
    
    
    143,022
    
    
    
    103,623Dividends on federal bank stock
    
    
    24,300
    
    
    
    21,672
    
    
    
    48,123
    
    
    
    43,291Total interest and dividends income
    
    
    3,613,388
    
    
    
    3,334,664
    
    
    
    7,277,702
    
    
    
    6,481,919Interest expense:Deposits
    
    
    1,711,647
    
    
    
    1,269,073
    
    
    
    3,422,874
    
    
    
    2,342,844Federal Home Loan Bank advances
    
    
    200,501
    
    
    
    272,830
    
    
    
    396,339
    
    
    
    513,832Subordinated debentures
    
    
    70,722
    
    
    
    70,722
    
    
    
    141,445
    
    
    
    141,444Repurchase agreements
    
    
    27,531
    
    
    
    32,120
    
    
    
    41,122
    
    
    
    60,991Capital leases
    
    
    36,373
    
    
    
    37,378
    
    
    
    73,040
    
    
    
    74,865Total interest expense
    
    
    2,046,774
    
    
    
    1,682,123
    
    
    
    4,074,820
    
    
    
    3,133,976Net interest income
    
    
    1,566,614
    
    
    
    1,652,541
    
    
    
    3,202,882
    
    
    
    3,347,943Provision for loan losses
    
    
    14,000
    
    
    
    127,000
    
    
    
    57,000
    
    
    
    177,000Net interest income after provision for loan losses
    
    
    1,552,614
    
    
    
    1,525,541
    
    
    
    3,145,882
    
    
    
    3,170,943Noninterest income:Service charges and other fees
    
    
    289,994
    
    
    
    287,680
    
    
    
    555,633
    
    
    
    534,153Gain on sale of loans
    
    
    44,344
    
    
    
    
    
    
    
    95,295
    
    
    
    Loss on disposal of fixed asset
    
    
    
    
    
    
    (1,136
    )
    
    
    
    
    
    
    (1,872
    )Gain (loss) on sale of repossessed assets
    
    
    (620
    )
    
    
    (11,928
    )
    
    
    4,831
    
    
    
    (6,298
    )Other income
    
    
    30,377
    
    
    
    10,713
    
    
    
    53,573
    
    
    
    22,651Total noninterest income
    
    
    364,095
    
    
    
    285,329
    
    
    
    709,332
    
    
    
    548,634Noninterest expense:Salaries and benefits
    
    
    986,213
    
    
    
    910,431
    
    
    
    2,013,735
    
    
    
    1,830,027Occupancy and equipment
    
    
    232,750
    
    
    
    237,268
    
    
    
    469,564
    
    
    
    473,373Professional fees
    
    
    173,155
    
    
    
    112,496
    
    
    
    290,306
    
    
    
    202,778Franchise tax
    
    
    62,903
    
    
    
    63,750
    
    
    
    126,653
    
    
    
    127,550Data processing
    
    
    175,952
    
    
    
    150,354
    
    
    
    349,704
    
    
    
    302,073Marketing and advertising
    
    
    51,925
    
    
    
    44,811
    
    
    
    101,846
    
    
    
    86,644Stationery and supplies
    
    
    25,533
    
    
    
    34,867
    
    
    
    60,420
    
    
    
    66,343Amortization of intangible asset
    
    
    34,229
    
    
    
    44,497
    
    
    
    71,025
    
    
    
    91,562Deposit expenses and insurance
    
    
    76,453
    
    
    
    54,428
    
    
    
    118,601
    
    
    
    97,085Other expenses
    
    
    155,417
    
    
    
    98,901
    
    
    
    324,072
    
    
    
    202,248Total noninterest expense
    
    
    1,974,530
    
    
    
    1,751,803
    
    
    
    3,925,926
    
    
    
    3,479,683Earnings
(loss) before income tax expense
    
    
    (57,821
    )
    
    
    59,067
    
    
    
    (70,712
    )
    
    
    239,894Income tax
expense (benefit)
    
    
    (23,504
    )
    
    
    24,067
    
    
    
    (30,949
    )
    
    
    87,894Net earnings
(loss)
    
    $
    (34,317
    )
    
    $
    35,000
    
    
    $
    (39,763
    )
    
    $
    152,000Basic
earnings (loss) per share
    
    $
    (0.02
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.07Diluted
earnings (loss) per share
    
    
    (0.02
    )
    
    
    0.02
    
    
    
    (0.02
    )
    
    
    0.07
 
  4.




---



##### Table of Contents



For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Shareholders equity, beginning of period
    
    $
    18,526,933
    
    
    $
    18,181,118
    
    
    $
    18,418,557
    
    
    $
    18,104,875Net earnings
(loss)
    
    
    (34,317
    )
    
    
    35,000
    
    
    
    (39,763
    )
    
    
    152,000Other comprehensive income (loss), net of tax:Net unrealized gain (loss) on available for sale
securities arising during the period
    
    
    (84,348
    )
    
    
    (192,540
    )
    
    
    17,984
    
    
    
    (240,347
    )Total comprehensive income (loss)
    
    
    (118,665
    )
    
    
    (157,540
    )
    
    
    (21,779
    )
    
    
    (88,347
    )Additional paid in capital from stock options
    
    
    10,363
    
    
    
    53,795
    
    
    
    21,853
    
    
    
    60,845Shareholders equity, end of period
    
    $
    18,418,631
    
    
    $
    18,077,373
    
    
    $
    18,418,631
    
    
    $
    18,077,373
 
  5.




---



##### Table of Contents



For the six months ended June 302007
    
    
    2006Cash flows from operating activities:Net earnings (loss)
    
    
    (39,763
    )
    
    $
    152,000Adjustments to reconcile net earnings to net cash from
operating activities:Depreciation and amortization
    
    
    276,050
    
    
    
    296,715Securities amortization and accretion, net
    
    
    44,097
    
    
    
    60,724Federal Home Loan Bank (FHLB) stock dividends
    
    
    
    
    
    
    (26,400
    )Origination of loans held for sale
    
    
    (9,549,556
    )
    
    
    Proceeds from sales of loans held for sale
    
    
    9,149,889
    
    
    
    Provision for loan losses
    
    
    57,000
    
    
    
    177,000Loss from Ohio Legacy Trust 1
    
    
    772
    
    
    
    4,038Gain on sale of other real estate owned
    
    
    (4,831
    )
    
    
    11,928Provision for other real estate owned
    
    
    39,949
    
    
    
    Gain on sale of loans held for sale
    
    
    (95,295
    )
    
    
    Accretion of fair value purchase adjustments
    
    
    (7,999
    )
    
    
    (10,385
    )Stock option expense
    
    
    21,853
    
    
    
    60,845Net change in:Accrued interest receivable and other assets
    
    
    (201,898
    )
    
    
    (262,116
    )Accrued interest payable and other liabilities
    
    
    (78,966
    )
    
    
    77,644Deferred loan fees
    
    
    (16,344
    )
    
    
    (26,277
    )Net cash from operating activities
    
    
    (425,042
    )
    
    
    515,716Cash flows from investing activities:Purchases of securities held to maturity
    
    
    (804,847
    )
    
    
    Maturities, calls and paydowns of securities available for sale
    
    
    2,455,573
    
    
    
    3,294,337Proceeds from sales of other real estate owned
    
    
    401,130
    
    
    
    182,090Net change in loans
    
    
    2,305,779
    
    
    
    (14,607,674
    )Participation loans purchased
    
    
    (1,667,606
    )
    
    
    Expenditures to improve other real estate owned
    
    
    (44,310
    )
    
    
    Purchases of premises and equipment
    
    
    (55,111
    )
    
    
    (143,312
    )Net cash from investing activities
    
    
    2,590,608
    
    
    
    (11,274,559
    )Cash flows from financing activities:Net change in deposits
    
    
    (3,555,117
    )
    
    
    6,599,665Net change in repurchase agreements
    
    
    654,755
    
    
    
    (168,628
    )Repayment of capital lease obligations
    
    
    (15,321
    )
    
    
    (7,222
    )Proceeds from short term FHLB advances, net of repayments
    
    
    1,500,000
    
    
    
    (500,000
    )Proceeds from FHLB advances
    
    
    
    
    
    
    12,000,000Repayments of FHLB advances
    
    
    (5,259,147
    )
    
    
    (2,262,941
    )Net cash provided by financing activities
    
    
    (6,674,830
    )
    
    
    15,660,874Net change in cash and cash equivalents
    
    
    (4,489,264
    )
    
    
    4,902,031Cash and cash equivalents at beginning of period
    
    
    13,039,865
    
    
    
    8,122,546Cash and cash equivalents at end of period
    
    
    8,550,601
    
    
    $
    13,024,577Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    4,137,149
    
    
    $
    3,055,853Federal income taxes
    
    
    
    
    
    
    160,000Non-cash transactions:Transfer of loans to other real estate owned
    
    $
    129,369
    
    
    $
    216,841
 
  6.




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Principles of Consolidation
    Use of Estimates
 Reclassifications
 Income Taxes
   
  7.




---



##### Table of Contents



NOTE 2  STOCK BASED COMPENSATION
    Six months endedJune 30, 2007Total options outstandingWeighted
    
    WeightedAverage
    
    AverageExercise
    
    FairShares
    
    Price
    
    ValueOptions outstanding, beginning of period
    
    
    287,375
    
    
    $
    10.62
    
    
    $
    4.72Forfeited
    
    
    (31,350
    )
    
    
    10.45
    
    
    
    4.55Exercised
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    5,000
    
    
    
    8.28
    
    
    
    3.77Options outstanding, end of period
    
    
    261,025
    
    
    $
    10.60
    
    
    $
    4.72Options exercisable, end of period
    
    
    229,000
    
    
    $
    10.79
    
    
    $
    4.77
  
  8.




---



##### Table of Contents



NOTE 2  STOCK BASED COMPENSATION (continued)
  May 2007
    
    May 2006
    
    May 2006Stock Options
    
    Stock Options
    
    Stock OptionsOptions granted
    
    
    5,000
    
    
    
    500
    
    
    
    29,375Fair value, calculated
    
    $
    3.77
    
    
    $
    4.50
    
    
    $
    4.64Exercise price
    
    $
    8.28
    
    
    $
    9.27
    
    
    $
    9.52Risk-free interest rate, 10-year Treasury
    
    
    4.64
    %
    
    
    5.12
    %
    
    
    5.10
    %Expected stock price volatility
    
    
    22.52
    %
    
    
    24.14
    %
    
    
    24.43
    %Expected dividend rate
    
    None
    
    None
    
    NoneExpected life
    
    10 years
    
    10 years
    
    10 years
  CompensationCostsRemainder of 2007
    
    $
    23,7032008
    
    
    45,3532009
    
    
    21,0772010
    
    
    2,081Total
    
    $
    92,214
 NOTE 3  EARNINGS PER SHARE
  
  9.




---



##### Table of Contents



NOTE 3  EARNINGS PER SHARE (continued)
 Three months ended
    
    
    Six months endedJune 30
    
    
    June 302007
    
    
    2006
    
    
    2007
    
    
    2006BASIC:Net earnings (loss)
    
    $
    (34,317
    )
    
    $
    35,000
    
    
    $
    (39,763
    )
    
    $
    152,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,214,564
    
    
    
    2,214,564
    
    
    
    2,214,564Basic earnings per share
    
    $
    (0.02
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.07DILUTED:Net earnings
    
    $
    (34,317
    )
    
    $
    35,000
    
    
    $
    (39,763
    )
    
    $
    152,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,214,564
    
    
    
    2,214,564
    
    
    
    2,214,564Dilutive effect of stock options
    
    
    
    
    
    
    3,642
    
    
    
    
    
    
    
    5,108Dilutive effect of stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284Total common shares and dilutive potential
common shares
    
    
    2,214,564
    
    
    
    2,218,206
    
    
    
    2,214,564
    
    
    
    2,219,956Diluted earnings per share
    
    $
    (0.02
    )
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    0.07
  Three months ended June 30
    
    Six months ended June 302007
    
    2006
    
    2007
    
    2006Stock options
    
    
    286,025
    
    
    
    222,000
    
    
    
    286,025
    
    
    
    130,500Stock warrants
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000
 NOTE 4  LOANS
  June 30, 2007
    
    
    December 31, 2006Balance
    
    
    Percent
    
    
    Balance
    
    
    PercentResidential real estate
    
    $
    60,455,276
    
    
    
    33.9
    %
    
    $
    65,282,422
    
    
    
    36.5
    %Multifamily residential real estate
    
    
    10,582,468
    
    
    
    5.9
    
    
    
    9,452,861
    
    
    
    5.3Commercial real estate
    
    
    69,088,291
    
    
    
    38.8
    
    
    
    65,228,180
    
    
    
    36.4Construction
    
    
    10,414,290
    
    
    
    5.9
    
    
    
    10,235,414
    
    
    
    5.7Commercial
    
    
    17,347,196
    
    
    
    9.7
    
    
    
    18,524,153
    
    
    
    10.4Consumer and home equity
    
    
    10,279,603
    
    
    
    5.8
    
    
    
    10,259,367
    
    
    
    5.7Total loans
    
    
    178,167,124
    
    
    
    100.0
    %
    
    
    178,982,397
    
    
    
    100.0
    %Less: Allowance for loan losses
    
    
    (1,766,379
    )
    
    
    
    
    
    
    (1,757,110
    )Net deferred loan fees
    
    
    (192,294
    )
    
    
    
    
    
    
    (208,638
    )Loans, net
    
    $
    176,208,451
    
    
    
    
    
    
    $
    177,016,649
  
  10.




---



##### Table of Contents



NOTE 4  LOANS (Continued)
  For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance, beginning of period
    
    $
    1,756,875
    
    
    $
    1,637,205
    
    
    $
    1,757,110
    
    
    $
    1,589,407Provision for loan losses
    
    
    14,000
    
    
    
    127,000
    
    
    
    57,000
    
    
    
    177,000Loans charged-off
    
    
    (5,984
    )
    
    
    (59,075
    )
    
    
    (52,611
    )
    
    
    (63,087
    )Recoveries
    
    
    1,488
    
    
    
    1,114
    
    
    
    4,880
    
    
    
    2,924Balance, end of period
    
    $
    1,766,379
    
    
    $
    1,706,244
    
    
    $
    1,766,379
    
    
    $
    1,706,244Allowance for loan losses, percent of total loans
    
    
    0.99
    %
    
    
    0.98
    %
  June 30,
    
    December 31,2007
    
    2006Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    Nonaccrual loans, includes smaller balance homogeneous loans
    
    
    2,895,470
    
    
    
    2,439,938Impaired
loans, included in nonaccrual loans
    
    
    1,961,825
    
    
    
    1,481,109Amount of
the allowance for loan losses allocated
    
    
    6,000
    
    
    
    32,000
 For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Interest income foregone on nonaccrual loans
    
    $
    35,493
    
    
    $
    9,429
    
    
    $
    71,745
    
    
    $
    14,451
 NOTE 5  ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
  
  11.




---



##### Table of Contents



NOTE 6  OTHER REAL ESTATE OWNED
  June 30,
    
    December 31,2007
    
    2006Residential real estate
    
    
    535,673
    
    
    
    819,602Construction
    
    
    1,791,008
    
    
    
    1,746,698Total real estate owned
    
    
    2,326,681
    
    
    
    2,566,300Less: valuation allowance
    
    
    (22,949
    )
    
    
    Real estate owned, net
    
    
    2,303,732
    
    
    
    2,566,300
  NOTE 7  BRANCH SALE
  
  12.




---



##### Table of Contents



Item 2. Managements Discussion and Analysis
  FORWARD-LOOKING STATEMENTS
  
    
    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.
  
    
    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.
 
  13.




---



##### Table of Contents



OVERVIEW
  
    
    Our first priority remains the transformation of our balance sheet through low cost
deposit growth. Measurement: reach the middle third of peer performance on Interest
Expense (33rd or better percentile)
    
    Continue to grow our top line revenue. Measurement: Achieve peer average performance on
top line revenue (45th to 55th percentile)
    
    Improve our Credit Quality Standards. Measurement: maintain or improve our percentile
ranking on Loan Losses, reach into the middle third (33 percentile or better) for
Non-Accrual to total loans.
  
 
    
    Loan growth slowed, with balances slipping from $177.0 million at year end 2006 to
$176.2 million at June 30, 2007.
    
    Total deposits also shrank, from $186.3 million at year end 2006 to $182.8 million at
quarter end. However, core deposits and particularly non-interest bearing deposits showed
growth during the period.
    
    Despite the dynamics in the deposit mix, interest expense increased $.9 million for the
first six months of 2007 over the same period in 2006.
    
    The year-to-date net loss was ($39,763) compared to net income of $152,000 for the first
six months of 2006.
  
    
    Second quarter net loss was ($34,317) compared to net income of $35,000 for the same
period a year ago.
    
    Spread and margin decreased as the cost of funds increased 67 basis points over the
second quarter of 2006.
    
    Net interest income was down $86,000 for the quarter, due to increased interest expense for the quarter.
    
    Non-salary related non-interest expense increased $147,000 for the quarter compared to
the second quarter in 2006, including $33,000 in deposit insurance as the result of newly
reinstated FDIC premiums.
    
    Non-interest income increased $79,000 over the same quarter in 2006.
 SIGNIFICANT ACCOUNTING POLICIES
 Allowance for loan losses
  
 14.




---



##### Table of Contents



FINANCIAL CONDITION
 Assets
 Securities
 Loans
  Allowance for loan losses and asset quality
  Premises and equipment, accrued interest receivable and other assets.
 Deposits.
 Federal Home Loan Bank advances
 
 15.




---



##### Table of Contents



Other borrowings
 RESULTS OF OPERATIONS  THREE MONTHS ENDED JUNE 30, 2007
  Net interest income
  
 16.




---



##### Table of Contents



Three months ended June 30,2007
    
    
    2006Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    earned/
    
    
    Yield/
    
    
    outstanding
    
    
    earned/
    
    
    Yield/(Dollars in thousands)
    
    Balance
    
    
    paid
    
    
    Rate
    
    
    balance
    
    
    paid
    
    
    RateAssetsInterest-earning assets:Interest-bearing deposits and federal funds sold
    
    $
    3,211
    
    
    $
    43
    
    
    
    5.30
    %
    
    $
    5,273
    
    
    $
    61
    
    
    
    4.65
    %Securities available for sale
    
    
    24,950
    
    
    
    261
    
    
    
    4.19
    
    
    
    31,400
    
    
    
    301
    
    
    
    3.84Securities held to maturity (1)
    
    
    3,005
    
    
    
    39
    
    
    
    5.23
    
    
    
    835
    
    
    
    11
    
    
    
    5.22Federal agency stock
    
    
    1,541
    
    
    
    24
    
    
    
    6.31
    
    
    
    1,498
    
    
    
    22
    
    
    
    5.79Loans (2)
    
    
    179,217
    
    
    
    3,259
    
    
    
    7.29
    
    
    
    167,591
    
    
    
    2,943
    
    
    
    7.04Total interest-earning assets
    
    
    211,924
    
    
    
    3,626
    
    
    
    6.86
    
    
    
    206,597
    
    
    
    3,338
    
    
    
    6.48Noninterest-earning assets
    
    
    17,540
    
    
    
    
    
    
    
    
    
    
    
    10,078Total assets
    
    $
    229,464
    
    
    
    
    
    
    
    
    
    
    $
    216,675Liabilities and Shareholders EquityInterest-bearing liabilities:Interest-bearing demand deposits
    
    $
    9,633
    
    
    
    23
    
    
    
    0.97
    
    
    $
    9,188
    
    
    
    17
    
    
    
    0.74Savings accounts
    
    
    8,046
    
    
    
    15
    
    
    
    0.77
    
    
    
    12,195
    
    
    
    25
    
    
    
    0.83Money market accounts
    
    
    45,421
    
    
    
    440
    
    
    
    3.88
    
    
    
    32,333
    
    
    
    265
    
    
    
    3.29Certificates of deposit
    
    
    102,471
    
    
    
    1,234
    
    
    
    4.83
    
    
    
    96,416
    
    
    
    962
    
    
    
    4.00Total interest-bearing deposits
    
    
    165,571
    
    
    
    1,712
    
    
    
    4.15
    
    
    
    150,132
    
    
    
    1,269
    
    
    
    3.39Other borrowings
    
    
    23,521
    
    
    
    335
    
    
    
    5.70
    
    
    
    33,556
    
    
    
    413
    
    
    
    4.92Total interest-bearing liabilities
    
    
    189,092
    
    
    
    2,047
    
    
    
    4.34
    
    
    
    183,688
    
    
    
    1,682
    
    
    
    3.67Noninterest-bearing demand deposits
    
    
    18,260
    
    
    
    
    
    
    
    
    
    
    
    13,870Noninterest-bearing liabilities
    
    
    876
    
    
    
    
    
    
    
    
    
    
    
    1,141Total liabilities
    
    
    208,228
    
    
    
    
    
    
    
    
    
    
    
    198,699Shareholders equity
    
    
    21,236
    
    
    
    
    
    
    
    
    
    
    
    17,976Total liabilities and shareholders equity
    
    $
    229,464
    
    
    
    
    
    
    
    
    
    
    $
    216,675Net interest income; interest rate spread (3)
    
    
    
    
    
    $
    1,579
    
    
    
    2.52
    %
    
    
    
    
    
    $
    1,656
    
    
    
    2.81
    %Net earning assets
    
    $
    22,832
    
    
    
    
    
    
    
    
    
    
    $
    22,909Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    2.99
    %
    
    
    
    
    
    
    
    
    
    
    3.22
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    1.12x
    
    
    
    
    
    
    
    
    
    
    
    1.12x
 
 (1)
    
    Presented on a taxable-equivalent basis.(2)
    
    Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets.(3)
    
    Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income, annualized, divided by average interest-earning assets. Interest income
 Interest expense
 
    
    Interest bearing demand deposit balances increased $0.5 million while rates increased 23 basis points
    
    Savings account balances decreased $4.1 million while rates actually decreased 6 basis points
    
    Money market balances increased $13.1 million with average rates increasing 59 basis points
    
    CD balances increased $6.1 million with average rates increasing 83 basis points
    
    Borrowings decreased $10.0 million with average rates increasing 78 basis points
  
 17.




---



##### Table of Contents



Provision for loan losses
 Noninterest income
 Noninterest expense
     RESULTS OF OPERATIONS  SIX MONTHS ENDED JUNE 30, 2007
  Net interest income
 
 18.




---



##### Table of Contents



Six months ending June 30,2007
    
    
    2006Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    Interestoutstanding
    
    
    earned/
    
    
    Yield/
    
    
    outstanding
    
    
    earned/
    
    
    Yield/(Dollars in thousands)
    
    balance
    
    
    Paid
    
    
    Rate
    
    
    balance
    
    
    paid
    
    
    RateAssetsInterest-earning assets:Interest-bearing deposits and federal funds sold
    
    $
    5,495
    
    
    $
    143
    
    
    
    5.25
    %
    
    $
    4,438
    
    
    $
    103
    
    
    
    4.71
    %Securities available for sale
    
    
    25,224
    
    
    
    537
    
    
    
    4.32
    
    
    
    32,232
    
    
    
    623
    
    
    
    3.86Securities held to maturity (1)
    
    
    2,831
    
    
    
    75
    
    
    
    5.27
    
    
    
    836
    
    
    
    22
    
    
    
    5.21Federal agency stock
    
    
    1,541
    
    
    
    48
    
    
    
    6.30
    
    
    
    1,489
    
    
    
    43
    
    
    
    5.81Loans (2)
    
    
    177,828
    
    
    
    6,501
    
    
    
    7.37
    
    
    
    164,061
    
    
    
    5,698
    
    
    
    7.00Total interest-earning assets
    
    
    212,919
    
    
    
    7,304
    
    
    
    6.92
    
    
    
    203,056
    
    
    
    6,489
    
    
    
    6.44Noninterest-earning assets
    
    
    17,463
    
    
    
    
    
    
    
    
    
    
    
    10,202Total assets
    
    $
    230,382
    
    
    
    
    
    
    
    
    
    
    $
    213,258Liabilities and Shareholders EquityInterest-bearing liabilities:Interest-bearing demand deposits
    
    $
    9,290
    
    
    
    40
    
    
    
    0.87
    
    
    $
    9,505
    
    
    
    36
    
    
    
    0.76Savings accounts
    
    
    8,523
    
    
    
    34
    
    
    
    0.80
    
    
    
    13,113
    
    
    
    54
    
    
    
    0.84Money market accounts
    
    
    44,301
    
    
    
    828
    
    
    
    3.77
    
    
    
    29,387
    
    
    
    443
    
    
    
    3.04Certificates of deposit
    
    
    105,222
    
    
    
    2,521
    
    
    
    4.83
    
    
    
    94,989
    
    
    
    1,810
    
    
    
    3.84Total interest-bearing deposits
    
    
    167,336
    
    
    
    3,423
    
    
    
    4.12
    
    
    
    146,994
    
    
    
    2,343
    
    
    
    3.21Other borrowings
    
    
    24,065
    
    
    
    652
    
    
    
    5.46
    
    
    
    32,960
    
    
    
    791
    
    
    
    4.80Total interest-bearing liabilities
    
    
    191,401
    
    
    
    4,075
    
    
    
    4.29
    
    
    
    179,954
    
    
    
    3,134
    
    
    
    3.51Noninterest-bearing demand deposits
    
    
    18,139
    
    
    
    
    
    
    
    
    
    
    
    14,178Noninterest-bearing liabilities
    
    
    1,035
    
    
    
    
    
    
    
    
    
    
    
    1,083Total liabilities
    
    
    210,575
    
    
    
    
    
    
    
    
    
    
    
    195,215Shareholders equity
    
    
    19,807
    
    
    
    
    
    
    
    
    
    
    
    18,043Total liabilities and shareholders equity
    
    $
    230,382
    
    
    
    
    
    
    
    
    
    
    $
    213,258Net interest income; interest-rate spread (3)
    
    
    
    
    
    $
    3,229
    
    
    
    2.63
    %
    
    
    
    
    
    $
    3,355
    
    
    
    2.93
    %Net earning assets
    
    $
    21,518
    
    
    
    
    
    
    
    
    
    
    $
    23,102Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.06
    %
    
    
    
    
    
    
    
    
    
    
    3.33
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    1.11x
    
    
    
    
    
    
    
    
    
    
    
    1.13x
 FOOTNOTES TO YIELD TABLE
 (1)
    
    Presented on a taxable-equivalent basis.(2)
    
    Net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning
assets.(3)
    
    Interest rate spread represents the difference between the yield on interest-earning assets and the cost of
interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income, annualized, divided by average interest-earning assets. Interest income
 Interest expense
 Provision for loan losses
 
 19.




---



##### Table of Contents



Non-interest income.
 Non-interest expense
     STRATEGIC DEVELOPMENTS
    
 20.




---



##### Table of Contents



CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET
ARRANGEMENTS
   LIQUIDITY
     CAPITAL RESOURCES
 
  
 21.




---



##### Table of Contents



To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital to risk-weighted assets
    
    $
    22,283
    
    
    
    12.8
    
    
    $
    13,915
    
    
    
    8.0
    
    
    $
    17,394
    
    
    
    10.0
    %Tier 1 capital to risk-weighted
assets
    
    $
    20,517
    
    
    
    11.8
    
    
    $
    6,958
    
    
    
    4.0
    
    
    $
    10,436
    
    
    
    6.0
    %Tier 1 capital to average assets
    
    $
    20,517
    
    
    
    9.1
    
    
    $
    9,038
    
    
    
    4.0
    
    
    $
    11,298
    
    
    
    5.0
    %
  
 3. Controls and Procedures
  
 22.




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
    Nominee for Director
    
    For
    
    Against
    
    AbstainD. William Allen
    
    
    1,645,412
    
    
    
    
    
    
    
    294,485Scott J. Fitzpatrick
    
    
    1,645,212
    
    
    
    
    
    
    
    294,685
  Nominee for Director
    
    For
    
    Against
    
    AbstainD. Michael Kramer
    
    
    1,645,412
    
    
    
    
    
    
    
    294,485
  Class I  Term ends 2009
    
    Class II  Term ends 2008J. Edward Diamond
    
    Robert F. BeldenDaniel H. Plumly
    
    Gregory A. LongMelvin J. Yoder
 
 Item 5. Other Information.
  
 23.




---



##### Table of Contents



Item 6. Exhibits.
 ExhibitNumber
    
    Note
    
    Description of Document3.1
    
    
    (1
    )
    
    Second Amended and Restated Articles of Incorporation of Ohio Legacy Corp3.2
    
    
    (2
    )
    
    Code of Regulations of Ohio Legacy Corp, as amended by Amendment No. 14.1
    
    
    (3
    )
    
    See Pages 1 through 9 of Exhibit 3.1 for provisions defining the rights of the holders of
common shares4.2
    
    
    (3
    )
    
    Form of Organizer Stock Purchase Warrant4.4
    
    
    (2
    )
    
    2004 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio
Legacy Corp10.1
    
    
    (3
    )
    
    Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan10.2
    
    
    (4
    )
    
    2002 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio
Legacy Corp10.4
    
    
    (3
    )
    
    Employment Agreement with Mr. Pettit10.5
    
    
    (3
    )
    
    Lease Agreement dated August 24, 1999, by and among Jack K. and Heidi M. Gant and Ohio Legacy
Corp10.6
    
    
    (3
    )
    
    Lease Agreement dated November 30, 1999, by and between Schoeppner Properties and Ohio Legacy
Corp10.7
    
    
    (5
    )
    
    Employment Agreement with Mr. Boss10.8
    
    
    (5
    )
    
    Lease Agreement dated October 2001 by and between Shee-Brees, L.L.C. and Ohio Legacy Corp10.10
    
    
    (6
    )
    
    Assignment and assumption of lease by and among Unizan Bank, Ohio Legacy Bank and Chesterland
Productions, P.L.L. dated August 27, 200410.11
    
    
    (7
    )
    
    Employment Agreement with Mr. Kramer10.12
    
    
    
    
    
    Purchase and Assumption Agreement by and between Ohio Legacy Bank NA and
The First-Knox National Bank of Mount Vernon11
    
    
    
    
    
    Statement Regarding Computation of Per Share Earnings (incorporated by
reference to Note 3 on page 9 of the this Form 10-QSB)31.1
    
    
    
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and
acting Chief Financial Officer32.1
    
    
    
    
    
    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, 2004, filed on March 22, 2005(7)
    
     Incorporated by reference to Registrants Form 8-K filed on May 6, 2005 
 24.




---



##### Table of Contents



SIGNATURES
  OHIO LEGACY CORP
(Registrant)Date:  August 14, 2007
    By:
    /s/ D. Michael KramerD. Michael KramerPresident, Chief Executive Officer, Director and acting Chief Financial Officer 
 25.