UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)





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








For the quarterly period ended
September 30, 2009


or


 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
      1934





For the transition period from
__________ to __________





Commission
file number:  000-31673





OHIO LEGACY CORP(Exact
      name of registrant as specified in its
charter)





Ohio
                
                34-1903890(State or other jurisdiction of incorporation or
    organization)
                
                I.R.S.
      Employer Identification
                  Number





2375 Benden Drive Suite C, Wooster, OH,
      44691(Address
      of principal executive offices)(330) 263-1955Registrant's
      telephone number





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 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
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes x No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in rule 12b-2 of the Exchange Act.





Large
      accelerated filer  ̈
              
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              
              Smaller
      reporting company x





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





As of
November 13, 2009, the latest practicable date, there were 2,214,564 shares of
the issuer’s Common Stock, without par value, issued and
outstanding.









OHIO
LEGACY CORP


FORM
10-Q


AS OF AND
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009


THIRD
QUARTER REPORT










PagePART
      I - FINANCIAL INFORMATIONItem
      1. Financial Statements
              3Item
      2. Management’s Discussion and Analysis
              18Item
      3. Not Applicable for Smaller Reporting Companies
              27Item
      4T. Controls and Procedures
              27PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings
              28Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              28Item
      3. Defaults Upon Senior Securities
              28Item
      4. Submission of Matters to a Vote of Security Holders
              28Item
      5. Other Information
              28Item
      6. Exhibits
              29SIGNATURES
              30




2.





PART
I – FINANCIAL INFORMATION





Item
1. Financial Statements.


OHIO
LEGACY CORP
 CONSOLIDATED
BALANCE SHEETS
 As of
September 30, 2009, and December 31, 2008


September 30,
                  2009
              
              
              December 31,
                  2008(unaudited)ASSETSCash
      and due from banks
              
              $
              2,457,897
              
              
              $
              5,234,657Federal
      funds sold and interest-bearing deposits in financial
      institutions
              
              
              23,413,833
              
              
              
              6,233,280Cash
      and cash equivalents
              
              
              25,871,730
              
              
              
              11,467,937Certificate
      of deposit in financial institution
              
              
              100,000
              
              
              
              100,000Securities
      available for sale
              
              
              28,153,543
              
              
              
              32,726,863Securities
      held to maturity (fair value of $3,106,233 and $3,003,825 at September 30,
      2009 and December 31, 2008)
              
              
              2,997,528
              
              
              
              2,999,813Loans
      held for sale
              
              
              219,685
              
              
              
              1,012,038Loans,
      net of allowance of $4,745,255 and $3,398,284 at September 30, 2009 and
      December 31, 2008
              
              
              107,003,438
              
              
              
              126,836,474Federal
      bank stock
              
              
              1,267,250
              
              
              
              1,455,100Premises
      and equipment, net
              
              
              3,033,479
              
              
              
              3,284,884Intangible
      asset
              
              
              18,826
              
              
              
              59,901Other
      real estate owned
              
              
              4,535,784
              
              
              
              5,215,696Accrued
      interest receivable and other assets
              
              
              776,167
              
              
              
              1,375,368Total
      assets
              
              $
              173,977,430
              
              
              $
              186,534,074LIABILITIESDeposits:Noninterest-bearing
      demand
              
              $
              14,286,673
              
              
              $
              16,659,300Interest-bearing
      demand
              
              
              7,197,961
              
              
              
              10,070,737Savings
              
              
              57,177,411
              
              
              
              53,483,533Certificates
      of deposit, net
              
              
              68,441,989
              
              
              
              65,491,464Total
      deposits
              
              
              147,104,034
              
              
              
              145,705,034Repurchase
      agreements
              
              
              684,934
              
              
              
              1,405,619Short
      term Federal Home Loan Bank advances
              
              
              -
              
              
              
              6,850,000Long
      term Federal Home Loan Bank advances
              
              
              18,500,000
              
              
              
              21,000,000Capital
      lease obligations
              
              
              448,285
              
              
              
              469,060Accrued
      interest payable and other liabilities
              
              
              821,218
              
              
              
              1,583,504Total
      liabilities
              
              $
              167,558,471
              
              
              $
              177,013,217SHAREHOLDERS’
      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 September 30, 2009, and December 31, 2008,
      respectively
              
              
              18,780,664
              
              
              
              18,808,311Accumulated
      earnings (loss)
              
              
              (12,397,596
              )
              
              
              (9,519,307
              )Accumulated
      other comprehensive earnings (loss)
              
              
              35,891
              
              
              
              231,853Total
      shareholders’ equity
              
              
              6,418,959
              
              
              
              9,520,857Total
      liabilities and shareholders’ equity
              
              $
              173,977,430
              
              
              $
              186,534,074




See notes
to the consolidated financial statements.


3.




OHIO
LEGACY CORP


CONSOLIDATED
STATEMENTS OF OPERATIONS


For the
Three and Nine Months Ended September 30, 2009 and 2008
 (Unaudited)


For the Three Months
                  Ended September 30,
                
                
                For the Nine Months
                  Ended September 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Interest
      and dividend income:Loans, including
    fees
                
                $
                1,693,274
                
                
                $
                2,092,490
                
                
                $
                5,384,716
                
                
                $
                6,622,956Securities,
taxable
                
                
                364,651
                
                
                
                447,153
                
                
                
                1,215,122
                
                
                
                1,302,585Securities,
    tax-exempt
                
                
                28,548
                
                
                
                28,560
                
                
                
                85,752
                
                
                
                85,788Interest-bearing deposits and
      federal funds sold
                
                
                9,638
                
                
                
                6,286
                
                
                
                23,711
                
                
                
                66,709Dividends on federal bank
      stock
                
                
                16,691
                
                
                
                20,211
                
                
                
                49,029
                
                
                
                61,913Total interest and dividend
      income
                
                
                2,112,802
                
                
                
                2,594,700
                
                
                
                6,758,330
                
                
                $
                8,139,951Interest
      expense:Deposits
                
                
                806,129
                
                
                
                931,120
                
                
                
                2,643,695
                
                
                
                3,255,333Short
      term Federal Home Loan Bank advances
                
                
                -
                
                
                
                22,463
                
                
                
                2,085
                
                
                
                51,033Long
      term Federal Home Loan Bank advances
                
                
                157,623
                
                
                
                177,320
                
                
                
                490,804
                
                
                
                516,865Repurchase
      agreements
                
                
                1,371
                
                
                
                4,810
                
                
                
                3,243
                
                
                
                22,644Capital
      leases
                
                
                18,291
                
                
                
                19,359
                
                
                
                55,712
                
                
                
                58,791Total interest
      expense
                
                
                983,414
                
                
                
                1,155,072
                
                
                
                3,195,539
                
                
                
                3,904,666Net
      interest income
                
                
                1,129,388
                
                
                
                1,439,628
                
                
                
                3,562,791
                
                
                
                4,235,285Provision
      for loan losses
                
                
                2,078,703
                
                
                
                608,996
                
                
                
                2,634,703
                
                
                
                620,496Net
      interest income after provision for loan losses
                
                
                (949,315
                )
                
                
                830,632
                
                
                
                928,088
                
                
                
                3,614,789Noninterest
      income:Service charges and other
      fees
                
                
                216,152
                
                
                
                254,638
                
                
                
                639,405
                
                
                
                715,290Gain
      on the sale of available for sale securities
                
                
                232,239
                
                
                
                -
                
                
                
                918,187
                
                
                
                -Other
      than temporary impairment of securities
                
                
                -
                
                
                
                (2,700,024
                )
                
                
                (111,200
                )
                
                
                (2,859,024
                )Gain
      on sale of loans
                
                
                15,198
                
                
                
                47,126
                
                
                
                38,365
                
                
                
                142,144Gain
      on redemption of equity interest in Visa
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                18,392Gain
      (loss) on disposition of other real estate owned
                
                
                104,402
                
                
                
                (2,434
                )
                
                
                142,896
                
                
                
                6,736Direct
      write-down of other real estate owned
                
                
                (215,532
                )
                
                
                (436,006
                )
                
                
                (262,032
                )
                
                
                (436,006
                )Other income
                
                
                21,551
                
                
                
                91,429
                
                
                
                40,903
                
                
                
                108,972Total noninterest
      income
                
                
                374,010
                
                
                
                (2,745,271
                )
                
                
                1,406,524
                
                
                
                (2,303,496
                )Noninterest
      expense:Salaries and
    benefits
                
                
                676,250
                
                
                
                848,020
                
                
                
                2,141,616
                
                
                
                2,482,923Occupancy and
      equipment
                
                
                218,679
                
                
                
                296,434
                
                
                
                634,148
                
                
                
                752,916Professional fees
                
                
                114,409
                
                
                
                67,451
                
                
                
                268,552
                
                
                
                248,349Franchise tax
                
                
                23,329
                
                
                
                43,973
                
                
                
                88,881
                
                
                
                143,045Data processing
                
                
                180,985
                
                
                
                171,688
                
                
                
                531,083
                
                
                
                507,056Marketing and
      advertising
                
                
                23,186
                
                
                
                48,531
                
                
                
                71,906
                
                
                
                144,268Stationery and
      supplies
                
                
                15,930
                
                
                
                24,372
                
                
                
                52,463
                
                
                
                76,513Amortization
      of intangible asset
                
                
                11,124
                
                
                
                21,393
                
                
                
                41,075
                
                
                
                71,595Deposit
      expenses and insurance
                
                
                216,870
                
                
                
                68,041
                
                
                
                704,137
                
                
                
                197,478Other expenses
                
                
                347,720
                
                
                
                265,416
                
                
                
                930,032
                
                
                
                583,866Total noninterest
      expense
                
                
                1,828,479
                
                
                
                1,855,319
                
                
                
                5,463,893
                
                
                
                5,208,009Earnings
      (loss) before income tax expense
                
                
                (2,403,787
                )
                
                
                (3,769,958
                )
                
                
                (3,129,281
                )
                
                
                (3,896,716
                )Income
      tax expense (benefit)
                
                
                -
                
                
                
                -
                
                
                
                (250,989
                )
                
                
                -Net
      earnings (loss)
                
                $
                (2,403,787
                )
                
                $
                (3,769,958
                )
                
                $
                (2,878,292
                )
                
                $
                (3,896,716
                )Basic
      earnings (loss) per share
                
                $
                (1.09
                )
                
                $
                (1.70
                )
                
                $
                (1.30
                )
                
                $
                (1.76
                )Diluted
      earnings (loss) per share
                
                $
                (1.09
                )
                
                $
                (1.70
                )
                
                $
                (1.30
                )
                
                $
                (1.76
                )




See notes
to the consolidated financial statements.


4.


OHIO
LEGACY CORP
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For the
Nine Months Ended September 30, 2009 and 2008
 (Unaudited)


For the Nine Months EndedSeptember
      30,2009
                
                
                2008Cash
      flows from operating activities:Net
      earnings (loss)
                
                $
                (2,878,292
                )
                
                $
                (3,896,716
                )Adjustments
      to reconcile net earnings to net cash fromoperating
      activities:Depreciation
      and amortization
                
                
                300,597
                
                
                
                408,452Securities
      amortization and accretion, net
                
                
                102,277
                
                
                
                16,335(Gain)
      loss on the sale of securities available for sale
                
                
                (918,187
                )
                
                
                -Origination
      of loans held for sale
                
                
                (1,593,918
                )
                
                
                (14,668,786
                )Proceeds
      from sales of loans held for sale
                
                
                2,424,636
                
                
                
                14,820,687Provision
      for loan losses
                
                
                2,634,703
                
                
                
                620,496(Gain)
      loss on disposition of other real estate
                
                
                (138,597
                )
                
                
                (6,736
                )Direct
      write-down of other real estate
                
                
                262,032
                
                
                
                436,006Gain
      on sale of loans held for sale
                
                
                (38,365
                )
                
                
                (142,144
                )FHLB
      stock dividend
                
                
                -
                
                
                
                (39,600
                )Stock
      option expense
                
                
                (27,644
                )
                
                
                21,846Other
      than temporary impairment of securities
                
                
                111,200
                
                
                
                2,859,024Net
      change in:Accrued
      interest receivable and other assets
                
                
                599,324
                
                
                
                (236,172
                )Accrued
      interest payable and other liabilities
                
                
                (642,969
                )
                
                
                224,105Deferred
      loan fees
                
                
                18,235
                
                
                
                (43,219
                )Net
      cash from operating activities
                
                
                215,032
                
                
                
                373,578Cash
      flows from investing activities:Purchases
      of securities available for sale
                
                
                (58,739,297
                )
                
                
                (9,920,610
                )Sale
      of securities available for sale
                
                
                59,368,575
                
                
                
                -Maturities,
      calls and paydowns of securities available for sale
                
                
                4,335,637
                
                
                
                2,892,300Redemption
      of federal bank stock
                
                
                187,850
                
                
                
                118,750Proceeds
      from sales of other real estate owned
                
                
                1,599,870
                
                
                
                235,973Net change in loans
                
                
                16,206,556
                
                
                
                1,444,839Expenditures
      to improve other real estate owned
                
                
                (69,853
                )
                
                
                (336,399
                )Purchases of premises and equipment
                
                
                (8,116
                )
                
                
                (764,947
                )Net cash from investing activities
                
                
                22,881,221
                
                
                
                (6,330,094
                )Cash
      flows from financing activities:Net change in
      deposits
                
                
                1,399,000
                
                
                
                (7,270,894
                )Net change in repurchase
      agreements
                
                
                (720,685
                )
                
                
                (191,365
                )Repayment of capital lease
      obligations
                
                
                (20,775
                )
                
                
                (17,720
                )Net
      change in Fed funds purchased
                
                
                -
                
                
                
                898,000Proceeds from short term FHLB
      advances, net of repayments
                
                
                (6,850,000
                )
                
                
                1,075,000Proceeds from long
      term  FHLB advances
                
                
                3,000,000
                
                
                
                11,000,000Repayments of long term FHLB
      advances
                
                
                (5,500,000
                )
                
                
                (2,000,000
                )Net cash provided by financing activities
                
                
                (8,962,460
                )
                
                
                3,493,021Net
      change in cash and cash equivalents
                
                
                14,403,793
                
                
                
                (2,463,495
                )Cash
      and cash equivalents at beginning of period
                
                
                11,467,937
                
                
                
                7,115,205Cash
      and cash equivalents at end of period
                
                $
                25,871,730
                
                
                $
                4,651,710Supplemental
      disclosures of cash flow information:Cash
      received during the period for:Federal
      income tax refund
                
                $
                250,989
                
                
                $
                -Cash paid during the period
      for:Interest
                
                $
                3,223,075
                
                
                $
                3,904,666Federal
      income taxes
                
                
                -
                
                
                
                -Non-cash
      transactions:Transfer
      of loans to other real estate owned
                
                $
                973,541
                
                
                $
                1,969,642




See notes
to the consolidated financial statements.


5.




OHIO
LEGACY CORP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





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 on July 1, 1999 under the laws of
the State of Ohio. The Bank began operations on October 3, 2000. The Bank
provides financial services through its full-service offices in Wooster 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 at September 30, 2009, 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 U.S.
GAAP. However, the financial statements have been prepared in accordance with
the instructions of Form 10-Q and, therefore, do not purport to contain all
necessary financial and footnote disclosures required by U.S. GAAP.





For
reasons more fully described in Note 9 to these interim financial statements,
the Company’s auditors added an explanatory paragraph to its opinion on the
Company’s December 31, 2008 consolidated financial statements expressing
substantial doubt about the Company’s ability to continue as a going
concern.





The
financial information presented in this report should be read in conjunction
with the Company’s Form 10-K for the year ended December 31, 2008, 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.  The Company has consistently
followed those policies in preparing this Form 10-Q.





Use of Estimates: To
prepare financial statements in conformity with U.S. 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, judgments about the other than temporary impairment of securities, fair
value of financial instruments, valuation of deferred tax assets and the fair
value of other real estate owned 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. A
valuation allowance, if needed, reduces deferred tax assets to the amount
expected to be realized.





Subsequent Events:
The Company has evaluated subsequent events from the balance sheet date through
the issuance of the financial statements November 16, 2009 determining no events
require adjustments or additional disclosure in the consolidated financial
statements.




6.




OHIO
LEGACY CORP


NOTE
2 – RECENT ACCOUNTING PRONOUNCEMENTS





With the
issuance of ASC-105-10 on June 29, 2009, the FASB Accounting Standards
CodificationTM (Codification) became the source of authoritative U.S. generally
accepted accounting principles (GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. On the effective date of this
Statement, the Codification superseded all then-existing non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification became non-authoritative.   This
Statement is effective for financial statements issued for interim and annual
periods ending after September 15, 2009.


Adoption
of New Accounting Pronouncements:
 
 Accounting for Business
Combinations:The Company adopted new guidance impacting
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 805, Business
Combinations(SFAS 141(R), “Business Combinations”), on January 1, 2009.
This guidance was issued with the objective to improve the comparability of
information that a company provides in its financial statements related to a
business combination. This new guidance establishes principles and requirements
for how the acquirer: (i) recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (ii) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (iii) determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. This new guidance does not apply to combinations between
entities under common control. The Company’s adoption of the new guidance had no
impact on the Company’s financial statements and applies prospectively to
business combinations for which the acquisition date is on or after January 1,
2009.
 
 Noncontrolling Interests in
Consolidated Financial Statements:The Company adopted new guidance
impacting FASB ASC 810-10, Consolidation(SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements”), on January 1,
2009. A noncontrolling interest, also known as a “minority interest,” is the
portion of equity in a subsidiary not attributable, directly or indirectly, to a
parent. This guidance was issued with the objective to improve upon the
consistency of financial information that a company provides in its consolidated
financial statements. This guidance is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. The
Company’s adoption of the new guidance did not have a material impact on the
Company’s consolidated financial statements.
 
 Disclosures about Derivative
Instruments and Hedging Activities:The Company adopted new guidance
impacting FASB ASC 815-10, Derivatives and Hedging(SFAS
No. 161 “Disclosures about Derivative Instruments and Hedging Activities”), on
January 1, 2009. This guidance requires enhanced disclosures about an entity’s
derivative and hedging activities and therefore should improve the transparency
of financial reporting, and is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008. The
Company’s adoption of the new guidance did not have a material impact on the
Company’s consolidated financial  statements.
 
 Subsequent Events:The Company
adopted FASB ASC 855, Subsequent Events(SFAS No.
165 “Subsequent Events”), on June 30, 2009. This guidance establishes general
standards of accounting for and disclosures of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. The Company’s adoption of this guidance did not have a material
impact on The Company’s consolidated financial statements.
 
 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly:In April
2009, the FASB issued new guidance impacting FASB ASC 820, Fair Value Measurements and
Disclosures(FASB Staff Position (FSP) FAS 157-4, “Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly”).
This provides additional guidance for estimating fair value when the volume and
level of activity for the asset or liability have significantly decreased. This
also includes guidance on identifying circumstances that indicate a transaction
is not orderly. The Company’s adoption of the new guidance did not have a
material impact on the Company’s consolidated financial statements.
 
 Interim Disclosures about Fair Value
of Financial Instruments:The Company adopted new guidance impacting FASB
ASC 825-10-50, Financial
Instruments(FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair
Value of Financial Instruments”), effective June 30, 2009. This guidance amended
existing GAAP to require disclosures about fair value of financial instruments
for interim reporting periods of publicly traded companies as well as in annual
financial statements. The Company’s adoption of the new guidance did not have a
material impact on the Company’s consolidated financial statements.
 
 Recognition and Presentation of
Other-Than-Temporary Impairments:In April 2009, the FASB issued new
guidance impacting FASB ASC 320-10, Investments — Debt and Equity
Securities(FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments”). This guidance amends the
other-than-temporary impairment guidance in GAAP for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than temporary impairments on debt and equity securities in the financial
statements. This FSP does not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities. The
Company’s adoption of the new guidance did not have a material impact on The
Company’s consolidated financial statements as the Company has not experienced
other-than temporary impairment within its debt securities
portfolio.
 
 7.
  Recently
Issued but not yet Effective Accounting Pronouncements:
 
 Accounting for Transfers of Financial
Assets:In June 2009, FASB issued SFAS No. 166 “Accounting for Transfers
of Financial Assets—an amendment of FASB Statement No. 140.” This removes the
concept of a qualifying special-purpose entity from existing GAAP and removes
the exception from applying FASB ASC 810-10, Consolidation(FASB
Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest
Entities) to qualifying special purpose entities. The objective of this new
guidance is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial  performance, and cash
flows; and a transferor’s continuing involvement in transferred financial
assets. The new guidance will be effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November
15, 2009 (for the Company  this will be as of January 1, 2010), for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. Management is still evaluating the impact
of this accounting standard.
 
 Amendments to FASB Interpretation No.
46(R):In June 2009, FASB issued SFAS No. 167 “Amendments to FASB Interpretation
No. 46(R).” The objective of this new guidance is to amend certain
requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest
Entities,to improve financial reporting by enterprises involved with
variable interest entities and to provide more relevant and reliable information
to users of financial statements. This guidance will be effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009 (for the Company, this will be as of January 1, 2010),
for interim periods within that first annual reporting period, and for interim
and annual reporting periods thereafter. Earlier application is prohibited.
Management is still evaluating the impact of this accounting
standard.





NOTE
3 – STOCK BASED COMPENSATION





The
Company granted 150,000 warrants (Director Warrants) to organizers of the
Company at the time of closing of the 2000 Offering. The Director Warrants vest
in equal percentages each year over a three-year period from the date of grant.
Each warrant entitles the holder to purchase a share of common stock at $10.00
per share and will expire ten years from the date of issuance. At September 30,
2009 all Director Warrants were vested and exercisable. No warrants have been
exercised to date.





The
Company’s Board of Directors has adopted an Omnibus Stock Option, Stock
Ownership and Long-Term Incentive Plan (Stock Ownership Plan).  A
total of 400,000 common shares are available for grants under the Stock
Ownership Plan. The following types of awards may be granted under the Stock
Ownership Plan to eligible persons:  nonqualified stock options,
incentive stock options and restricted stock.  Under the Stock
Ownership Plan, each nonemployee Director may be granted 2,500 nonqualified
options at the time or soon after, that person first becomes a Director. This
initial option grant will vest annually in equal amounts over a five-year
term.  In addition, each nonemployee Director may receive an annual
grant of up to 1,000 nonqualified options during his or her tenure on the Board,
which will vest immediately. No Director grants were made in
2009.  Employee option grants usually vest three years from the date
of grant.  The exercise price of an option shall not be less than the
fair market value of the underlying common stock on the date of the
grant.  In the event of a change in control of the Company, all
outstanding options may become immediately exercisable in full at the discretion
of the Compensation Committee of the Board of Directors.  Otherwise,
all outstanding options will terminate unless the successor corporation agrees
to assume or replace such options with an equivalent entitlement. Management
expects 100% of the options to vest.





Following
is the activity under the plan:





Nine months ended
                        September 30, 2009Total options outstandingShares
                      
                      
                      Weighted
                          Average
                          Exercise
                          PriceOptions
      outstanding, beginning of period
                      
                      
                      184,700
                      
                      
                      $
                      10.69Forfeited
                      
                      
                      (19,050
                      )
                      
                      
                      9.82Exercised
                      
                      
                      -
                      
                      
                      
                      -Granted
                      
                      
                      -
                      
                      
                      
                      -Options
      outstanding, end of period
                      
                      
                      165,650
                      
                      
                      $
                      10.79Options
      exercisable, end of period
                      
                      
                      159,150
                      
                      
                      $
                      10.88





The
aggregate intrinsic value of all options outstanding and exercisable at
September 30, 2009 was $0.




8.




OHIO
LEGACY CORP


NOTE
3 – STOCK BASED COMPENSATION (continued)





The
compensation cost yet to be recognized for stock options that have been awarded
but not vested is as follows:





CompensationCostsRemainder
      of 2009
                  
                  $
                  1,7162010
                  
                  
                  2,081Total
                  
                  $
                  3,797





NOTE 4 – EARNINGS (LOSS) PER
SHARE





Basic
earnings (loss) per share is net earnings (loss) divided by the weighted average
number of shares outstanding during the period.  Diluted earnings
(loss) per share include the dilutive effect of additional potential 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 (loss) per share:





Three months ended
                  September 30,
              
              
              Nine months ended
                  September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008BASIC:Net
      earnings (loss)
              
              $
              (2,403,787
              )
              
              $
              (3,769,958
              )
              
              $
              (2,878,292
              )
              
              $
              (3,896,716
              )Weighted
      average common shares outstanding
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564Basic earnings (loss) per
      share
              
              $
              (1.09
              )
              
              $
              (1.70
              )
              
              $
              (1.30
              )
              
              $
              (1.76
              )DILUTED:Net
      earnings (loss)
              
              $
              (2,403,787
              )
              
              $
              (3,769,958
              )
              
              $
              (2,878,292
              )
              
              $
              (3,896,716
              )Weighted
      average common shares outstanding
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564Dilutive
      effect of stock options
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Dilutive
      effect of stock warrants
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
      common shares and dilutive potential common shares
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564
              
              
              
              2,214,564Diluted earnings (loss) per
      share
              
              $
              (1.09
              )
              
              $
              (1.70
              )
              
              $
              (1.30
              )
              
              $
              (1.76
              )





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 ended
                    September 30,
                
                
                Nine months ended
                    September 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Stock
      options
                
                
                165,650
                
                
                
                185,350
                
                
                
                165,650
                
                
                
                185,350Stock
      warrants
                
                
                150,000
                
                
                
                150,000
                
                
                
                150,000
                
                
                
                150,000




9.




OHIO
LEGACY CORP


NOTE
5 – LOANS





Loans, by
collateral type, were as follows at September 30, 2009, and December 31,
2008:





September 30, 2009
                
                
                December 31, 2008Balance
                
                
                Percent
                
                
                Balance
                
                
                PercentResidential
      real estate
                
                $
                35,316,629
                
                
                
                31.6
                %
                
                $
                37,091,918
                
                
                
                28.5
                %Multifamily
      residential real estate
                
                
                5,817,732
                
                
                
                5.2
                
                
                
                5,558,771
                
                
                
                4.2Commercial
      real estate
                
                
                50,778,889
                
                
                
                45.4
                
                
                
                56,921,284
                
                
                
                43.7Construction
                
                
                4,830,096
                
                
                
                4.3
                
                
                
                10,799,541
                
                
                
                8.3Commercial
                
                
                8,378,270
                
                
                
                7.5
                
                
                
                12,082,242
                
                
                
                9.3Consumer
      and home equity
                
                
                6,721,306
                
                
                
                6.0
                
                
                
                7,893,464
                
                
                
                6.0Total loans
                
                
                111,842,922
                
                
                
                100.0
                %
                
                
                130,347,220
                
                
                
                100.0
                %Less:  Allowance for loan
      losses
                
                
                (4,745,255
                )
                
                
                
                
                
                
                (3,398,284
                )Net deferred loan
      fees
                
                
                (94,229
                )
                
                
                
                
                
                
                (112,463
                )Loans, net
                
                $
                107,003,438
                
                
                
                
                
                
                $
                126,836,473





At
September 30, 2009, and December 31, 2008, approximately $21,635,000 and
$24,656,000, respectively of single-family residential real estate loans were
pledged as collateral for advances from the Federal Home Loan Bank of
Cincinnati.





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





For the Three Months Ended
                  
                  
                  For the Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Balance,
      beginning of period
                  
                  $
                  2,818,212
                  
                  
                  $
                  1,632,253
                  
                  
                  $
                  3,398,284
                  
                  
                  $
                  1,622,906Provision
      for loan losses
                  
                  
                  2,078,703
                  
                  
                  
                  608,996
                  
                  
                  
                  2,634,703
                  
                  
                  
                  620,496Loans
      charged-off
                  
                  
                  (215,945
                  )
                  
                  
                  (634,369
                  )
                  
                  
                  (1,735,629
                  )
                  
                  
                  (658,902
                  )Recoveries
                  
                  
                  64,285
                  
                  
                  
                  24,131
                  
                  
                  
                  447,897
                  
                  
                  
                  46,511Balance,
      end of period
                  
                  $
                  4,745,255
                  
                  
                  $
                  1,631,011
                  
                  
                  $
                  4,745,255
                  
                  
                  $
                  1,631,011Allowance
      for loan losses, percent of total loans
                  
                  
                  4.23
                  %
                  
                  
                  1.26
                  %





Loans
individually considered impaired and nonaccrual loans were as follows at
September 30, 2009, and December 31, 2008:





September 30,
                    2009
                
                
                December 31,
                    2008Loans
      past due over 90 days still on accrual
                
                $
                344,388
                
                
                $
                279,800Nonaccrual
      loans, includes smaller balance homogeneous loans
                
                
                7,555,302
                
                
                
                4,636,376Impaired
      loans with no allowance for loan losses allocated
                
                
                1,943,984
                
                
                
                3,380,537Impaired
      loans with allowance for loan losses allocated
                
                
                5,611,319
                
                
                
                1,235,839Amount
      of the allowance for loan losses allocated
                
                $
                1,253,796
                
                
                $
                772,000




10.
 
  OHIO
LEGACY CORP


NOTE
6 – OTHER REAL ESTATE OWNED





Other
real estate owned was as follows at September 30, 2009 and December 31,
2008:





September 30,
                    2009
                
                
                December 31,
                    2008Residential
      real estate
                
                $
                2,021,162
                
                
                $
                2,430,803Land
      development
                
                
                2,514,622
                
                
                
                2,784,893Total
      real estate owned
                
                
                4,535,784
                
                
                
                5,215,696Less:
      valuation allowance
                
                
                -
                
                
                
                -Real
      estate owned, net
                
                $
                4,535,784
                
                
                $
                5,215,696





Assets
acquired through or instead of loan foreclosure are initially recorded at fair
value less costs to sell when acquired, establishing a new cost basis. If fair
value declines, a valuation allowance is recorded through expense. Costs after
acquisition are expensed. Expenditures that improve the fair value of the
property are capitalized. It is the Company’s intention to make periodic
reassessments of the value of assets held in this category and record valuation
adjustments or write-downs as the reassessments dictate.  Real estate
owned at September 30, 2009 and December 31, 2008 includes a property placed
into receivership until it can be improved and sold in an orderly
fashion.





NOTE
7 – INVESTMENT SECURITIES





The fair
value of available for sale securities and the related gross unrealized gains
and losses recognized in accumulated other comprehensive income (loss) were as
follows:





September 30, 2009Amortized Cost
                
                
                Unrealized
                    Gains
                
                
                Unrealized
                    Losses
                
                
                Fair ValueAvailable
      for saleFederal
      agency mortgage-backed securities
                
                $
                27,372,705
                
                
                $
                71,432
                
                
                $
                168,416
                
                
                $
                27,275,721Other
      mortgage-backed securities
                
                
                656,147
                
                
                
                1,991
                
                
                
                23,916
                
                
                
                634,222Equity
      securities
                
                
                88,800
                
                
                
                154,800
                
                
                
                -
                
                
                
                243,600Total
      available for sale
                
                $
                28,117,652
                
                
                $
                228,223
                
                
                $
                192,332
                
                
                $
                28,153,543Amortized
      Cost
                
                
                Unrecognized
                  Gains
                
                
                Unrecognized
                  Losses
                
                
                Fair
      ValueHeld
      to maturityStates
      and political subdivisions
                
                $
                2,997,528
                
                
                $
                108,705
                
                
                $
                -
                
                
                $
                3,106,233Total
      held to maturity
                
                $
                2,997,528
                
                
                $
                108,705
                
                
                $
                -
                
                
                $
                3,106,233




11.




OHIO
LEGACY CORP


NOTE
7 – INVESTMENT SECURITIES (continued)





The
amortized cost and fair value of the investment securities portfolio are shown
by expected maturity. Expected maturities may differ from contractual maturities
because the loans underlying the mortgage backed securities generally can be
prepaid without penalty.





September 30, 2009Amortized
      Cost
                  
                  
                  Fair
      ValueAvailable for
      saleMortgage
      backed securities
                  
                  $
                  28,028,852
                  
                  
                  $
                  27,909,943Equity
      securities
                  
                  
                  88,800
                  
                  
                  
                  243,600Total
                  
                  $
                  28,117,652
                  
                  
                  $
                  28,153,543Held to
      maturityOne
      to five years
                  
                  $
                  508,001
                  
                  
                  $
                  520,549Five
      to ten years
                  
                  
                  2,489,527
                  
                  
                  
                  2,585,684Beyond
      ten years
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  $
                  2,997,528
                  
                  
                  $
                  3,106,233





The
following summarizes the investment securities with unrealized losses at
September 30, 2009 by aggregated major security type and length of time in a
continuous unrealized loss position:





Less than 12 months
              
              
              12 months or greater
              
              
              TotalDescription of
                  securities
              
              Fair Value
              
              
              Unrealized
                  Losses
              
              
              Fair Value
              
              
              Unrealized
                  Losses
              
              
              Fair Value
              
              
              Unrealized
                  LossesAvailable
      for saleFederal
      agency mortgage-backed securities
              
              $
              12,976,247
              
              
              $
              160,549
              
              
              $
              283,357
              
              
              $
              7,867
              
              
              $
              13,259,604
              
              
              $
              168,416Other
      mortgage-backed securities
              
              
              -
              
              
              
              -
              
              
              
              417,856
              
              
              
              23,916
              
              
              
              417,856
              
              
              
              23,916Total
      available for sale
              
              $
              12,976,247
              
              
              $
              160,549
              
              
              $
              701,213
              
              
              $
              31,783
              
              
              $
              13,677,460
              
              
              $
              192,332





Proceeds
from sales and calls of securities available for sale were $59.4 million
for the nine months ended September 30, 2009. Gross gains of $918,200 were
realized on these sales during the period. The funds were reinvested into
similar securities. There were no sales of securities in the first nine months
of 2008.





Other-Than-Temporary-Impairment





Management
evaluates securities for other-than-temporary impairment (“OTTI”) at least on a
quarterly basis, and more frequently when economic or market conditions warrant
such an evaluation. The investment securities portfolio is evaluated for OTTI by
segregating the portfolio into two general segments and applying the appropriate
OTTI model. Investment securities classified as available for sale or
held-to-maturity are generally evaluated for OTTI under ASC 320, Investments – Debt and Equity
Securities.





In
determining OTTI under the ASC 320 model, management considers many factors,
including: (1) the length of time and the extent to which the fair value
has been less than cost, (2) the financial condition and near-term
prospects of the issuer, (3) whether the market decline was affected by
macroeconomic conditions, and (4) whether the entity has the intent to sell
the debt security or more likely than not will be required to sell the debt
security before its anticipated recovery. The assessment of whether an
other than temporary
decline exists involves a high degree of subjectivity and judgment and is based
on the information available to management at a point in time.




12.




OHIO
LEGACY CORP


NOTE
7 – INVESTMENT SECURITIES (continued)





The
second segment of the portfolio uses the OTTI guidance provided by ASC 325 that
is specific to purchased beneficial interests that, on the purchase date, were
rated below AA. Under the ASC 325 model, the Company compares the present value
of the remaining cash flows as estimated at the preceding evaluation date to the
current expected remaining cash flows. An OTTI is deemed to have occurred if
there has been an adverse change in the remaining expected future cash flows.
The Company has no securities that meet this definition as of September 30,
2009.





When OTTI
occurs under either model, the amount of the OTTI recognized in earnings depends
on whether an entity intends to sell the security or it is more likely than not
it will be required to sell the security before recovery of its amortized cost
basis, less any current-period credit loss. If an entity intends to sell or it
is more likely than not it will be required to sell the security before recovery
of its amortized cost basis, less any current-period credit loss, the OTTI shall
be recognized in earnings equal to the entire difference between the
investment’s amortized cost basis and its fair value at the balance sheet date.
If an entity does not intend to sell the security and it is not more likely than
not that the entity will be required to sell the security before recovery of its
amortized cost basis less any current-period loss, the OTTI shall be separated
into the amount representing the credit loss and the amount related to all other
factors. The amount of the total OTTI related to the credit loss is determined
based on the present value of cash flows expected to be collected and is
recognized in earnings. The amount of the total OTTI related to other factors is
recognized in other
comprehensive income, net of applicable taxes. The previous amortized cost basis
less the OTTI recognized in earnings becomes the new amortized cost basis of the
investment.




As of
September 30, 2009, the Company’s security portfolio consisted of 37 securities,
eight of which were in an unrealized loss position for less than 12 months and
two for 12 months or longer. The unrealized losses are related to the Company’s
mortgage-backed securities, as discussed below:




Mortgage-backedsecurities




At
September 30, 2009, 93.4% of the mortgage-backed securities held by the Company
were issued by Ginnie Mae, which are backed by the full faith and credit of the
U.S. government and an additional 5.0% were issued by Fannie Mae and Freddie
Mac, institutions which the government has affirmed its commitment to support.
Because the decline in fair value is attributable to changes in interest rates
and illiquidity, and not credit quality, and because the Company does not have
the intent to sell these mortgage-backed securities and it is likely that it
will not be required to sell the securities before their anticipated recovery,
the Company does not consider these securities to be other-than-temporarily
impaired at September 30, 2009.




The
Company’s mortgage-backed securities portfolio includes one non-agency security
with fair value of $417,900 which represents an unrealized loss of
approximately $23,900 at September 30, 2009. This non-agency mortgage-backed
security was rated AAA and Aaa by Standard and Poor’s and Moody’s,
respectively, when it was purchased and is still rated investment
grade. As part of this issue, certain subordinated classes of securities are
designated to receive principal repayments only after all payments have been
made to senior classes. As of the reporting date, the balances available to
support this security were 6.7 times the estimated potential loss, an increase
from 3.5 times at issuance. As of September 30, 2009, 1.06% of the loans serving
as collateral for this security were 30 days delinquent and 1.45% were 60 days
delinquent. There were no loans that were 90 days delinquent and no loans in
foreclosure or bankruptcy. The loans are adjustable rate mortgages with an
initial fixed rate for 10 years, which then adjust annually at 2.75% over one
year LIBOR. The first rate reset would occur in September, 2013. Although the
borrowers are not required to make principal payments during the initial 10 year
period, 54.7% of the original principal has been repaid as of September 30,
2009. There are no negative amortization loans in the pool and none of the loans
are subprime, Alt A or similar type of high-default product. Based on these
factors, as of September 30, 2009, the Company believes there is no OTTI and
does not have the intent to sell this security and it is likely that it will not
be required to sell the security before its anticipated recovery.


NOTE
8 – FAIR VALUE
 
 ASC
820, Fair Value
Measurements and Disclosure defines fair value as the exchange price
that would be received for an asset or paid to transfer a liability (exit price)
in the principal or most advantageous market for the asset or liability in an
orderly hierarchy
which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair values:


13.




OHIO
LEGACY CORP





NOTE
8 – FAIR VALUE (continued)




Level
      1 – Quoted prices (unadjusted) for identical assets or liabilities in
      active markets that the entity has the ability to access as of the
      measurement date.





Level
      2 – Quoted prices (unadjusted) for similar assets or liabilities in active
      markets that the entity has the ability to access as of the measurement
      date.





Level
      3 – Significant unobservable inputs that reflect a company’s own
      assumptions about the assumptions that market participants would use in
      pricing an asset or liability.





The
Company used the following methods and significant assumptions to estimate the
fair value of each type of financial asset:





Investment
Securities:  The fair values for investment securities are
determined by quoted market prices, if available (Level 1). For securities where
quoted prices are not available, fair values are calculated based on market
prices of similar securities (Level 2). For securities where quoted prices or
market prices of similar securities are not available, fair values are
calculated using discounted cash flows or other market indicators (Level 3).
Discounted cash flows are calculated using spread to swap and LIBOR curves that
are updated to incorporate loss severities, volatility, credit spread and
optionality. During times when trading is more liquid, broker quotes are
used (if available) to validate the model. Rating agency and industry research
reports as well as defaults and deferrals on individual securities are reviewed
and incorporated into the calculations.





Impaired Loansand Other Real
Estate:  The fair value of impaired loans with specific
allocations of the allowance for loan losses and other real estate is generally
based on recent real estate appraisals. These appraisals may utilize a single
valuation approach or a combination of approaches including comparable sales and
the income approach. Adjustments are routinely made in the appraisal process by
the appraisers to adjust for differences between the comparable sales and income
data available. Such adjustments are typically significant and result in a Level
3 classification of the inputs for determining fair value.




Assets
measured at fair value on a recurring basis are summarized below:
 
 September
      30,
                  2009
              
              
              December
      31,
                  2008Available
      for sale securities
              
              $
              28,153,543
              
              
              $
              32,726,863Quoted
      prices on active markets for identical assets (Level 1)Equity
      securities
              
              
              243,600
              
              
              
              58,000Significant
      other observable inputs (Level 2)U.S.
      government sponsored enterprises
              
              
              -
              
              
              
              1,031,763Federal
      agency mortgage backed securities
              
              
              27,275,721
              
              
              
              22,015,357Other
      mortgage backed securities
              
              
              634,222
              
              
              
              9,621,743Significant
      unobservable inputs (Level 3)
              
              
              -
              
              
              
              -


14.




OHIO
LEGACY CORP


NOTE
8 – FAIR VALUE (continued)





Assets
measured at fair value on a non-recurring basis are summarized
below:





September 30,
                    2009
                
                
                December 31,
                    2008Impaired
      loans
                
                $
                4,374,823
                
                
                $
                1,002,322Quoted
      prices on active markets for identical assets (Level 1)
                
                
                -
                
                
                
                -Significant
      other observable inputs (Level 2)
                
                
                -
                
                
                
                -Significant
      unobservable inputs (Level 3)
                
                $
                4,374,823
                
                
                $
                1,002,322Other
      real estate
                
                $
                3,242,961
                
                
                $
                2,888,998Quoted
      prices on active markets for identical assets (Level 1)
                
                
                -
                
                
                
                -Significant
      other observable inputs (Level 2)
                
                
                -
                
                
                
                -Significant
      unobservable inputs (Level 3)
                
                $
                3,242,961
                
                
                $
                2,888,998





Impaired
loans, which are measured for impairment using the fair value of the collateral
for collateral dependent loans, had a carrying amount of $5,628,619 with a
specific allocation of the allowance for loan losses of $1,253,796 at September
30, 2009. Since year end, loans with a total carrying value of $1.2 million and
a specific allocation of $772,000 have been charged off. New specific loss
reserves of $1,253,796 have been provided for during the year to date
period.





A write
down of $262,000 was recorded on other real estate during the year to date
period.





In
accordance with ASC 825-10-65-1, the carrying amounts and estimated fair values
of financial assets and liabilities at September 30, 2009 are as
follows:





September 30, 2009
                  
                  
                  December 31, 2008Carrying
                      Amounts
                  
                  
                  Estimated Fair
                      Value
                  
                  
                  Carrying
                      Amounts
                  
                  
                  Estimated Fair
                      ValueFinancial
      assetsCash
      and cash equivalents
                  
                  $
                  25,872,000
                  
                  
                  $
                  25,872,000
                  
                  
                  $
                  11,468,000
                  
                  
                  $
                  11,468,000Securities
      available for sale
                  
                  
                  28,154,000
                  
                  
                  
                  28,154,000
                  
                  
                  
                  32,727,000
                  
                  
                  
                  32,727,000Securities
      held to maturity
                  
                  
                  2,998,000
                  
                  
                  
                  3,106,000
                  
                  
                  
                  3,000,000
                  
                  
                  
                  3,004,000Loans
      held for sale
                  
                  
                  220,000
                  
                  
                  
                  221,000
                  
                  
                  
                  1,012,000
                  
                  
                  
                  1,038,000Loans,
      net
                  
                  
                  107,003,000
                  
                  
                  
                  108,076,000
                  
                  
                  
                  126,836,000
                  
                  
                  
                  133,500,000Accrued
      interest receivable
                  
                  
                  532,000
                  
                  
                  
                  532,000
                  
                  
                  
                  602,000
                  
                  
                  
                  602,000Financial
      liabilitiesDeposits
                  
                  
                  (147,104,000
                  )
                  
                  
                  (148,374,000
                  )
                  
                  
                  (145,705,000
                  )
                  
                  
                  (146,982,000
                  )Repurchase
      agreements
                  
                  
                  (685,000
                  )
                  
                  
                  (685,000
                  )
                  
                  
                  (1,406,000
                  )
                  
                  
                  (1,406,000
                  )Overnight
      FHLB advances
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (6,850,000
                  )
                  
                  
                  (6,850,000
                  )FHLB
      advances
                  
                  
                  (18,500,000
                  )
                  
                  
                  (18,681,000
                  )
                  
                  
                  (21,000,000
                  )
                  
                  
                  (21,286,000
                  )Accrued
      interest payable
                  
                  
                  (188,000
                  )
                  
                  
                  (188,000
                  )
                  
                  
                  (236,000
                  )
                  
                  
                  (236,000
                  )




15.




OHIO
LEGACY CORP


NOTE
8 – FAIR VALUE (continued)





The
methods and assumptions used to estimate fair value are described as
follows:





Carrying
amount is the estimated fair value for cash and cash equivalents, interest
bearing deposits, accrued interest receivable and payable, demand deposits,
short-term debt, and variable rate loans or deposits that reprice frequently and
fully.  The methods for determining the fair values for securities
were described previously.  For fixed rate loans or deposits and for
variable rate loans or deposits with infrequent repricing or repricing limits,
fair value is based on discounted cash flows using current market rates applied
to the estimated life and credit risk including consideration of widening credit
spreads.  Fair value of debt is based on current rates for similar
financing.  It was not practicable to determine the fair value of FHLB
stock due to restrictions placed on its transferability.  The fair
value of off-balance-sheet items is not considered material.




NOTE
9 – REGULATORY MATTERS
 
 The Board
of Directors of the Bank entered into a Consent Order (“Order”) with the Bank’s
primary federal regulator, the Office of the Comptroller of the Currency (“OCC”)
dated February 17, 2009. The Order required the Board of Directors to submit a
capital plan to the Assistant Deputy Controller that included specific plans to
achieve and maintain a minimum ratio of Tier 1 capital to average assets of
8.75% and a minimum ratio of total capital to risk-weighted assets of 13.25% by
August 31, 2009. The Board of Directors submitted the capital plan to the OCC,
which includes the engagement of an advisory firm to seek out capital investment
from parties not currently affiliated with the Company or the Bank or attracting
a merger partner. The Company’s management and Board of Directors are in active
discussions with several parties in an attempt to achieve one of these
objectives. Additionally, the capital plan calls for management to continue to
manage the Bank’s assets with the goal of protecting and growing capital and
reducing the level of criticized assets. However, the Company did not achieve
the minimum capital ratios as of the date specified in the Order.
 
 The Order
provides that the OCC shall maintain the ability to take any action the OCC
deems appropriate in fulfilling its regulatory and supervisory
responsibilities during the term of the Consent Order or upon the failure of the
Bank to comply with the terms of the Consent Order. Among the actions that may
be taken by the OCC is the placing of the bank into receivership.
 
 The Bank
is 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.  Prompt corrective action
regulations provide five classifications: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized, although these terms are not used to represent overall
financial condition. Failure to meet capital requirements can initiate
regulatory action. At September 30, 2009, the Bank did not meet the definition
of adequately capitalized as described above and as such is subject to certain
restrictions.
 
 Actual
and required capital amounts (in thousands) and ratios are presented below at
September 30, 2009, though the Bank is subject to higher capital requirements as
discussed above.
 
 Actual
              
              
              For
      Capital Adequacy Purposes
              
              
              To
      Be Well-Capitalized Under Prompt Corrective Action
      ProvisionsAmount
              
              
              Ratio
              
              
              Amount
              
              
              Ratio
              
              
              Amount
              
              
              RatioTotal
      capital to risk-weighted assets
              
              $
              7,550
              
              
              
              7.1
              %
              
              $
              8,551
              
              
              
              8.0
              %
              
              $
              10,689
              
              
              
              10.0
              %Tier
      1 capital to risk-weighted assets
              
              $
              6,172
              
              
              
              5.8
              %
              
              $
              4,275
              
              
              
              4.0
              %
              
              $
              6,413
              
              
              
              6.0
              %Tier
      1 capital to average assets
              
              $
              6,172
              
              
              
              3.4
              %
              
              $
              7,294
              
              
              
              4.0
              %
              
              $
              9,118
              
              
              
              5.0
              %
  16.
    NOTE
9 – REGULATORY MATTERS (continued)
 
 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 the 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. During 2009, the Bank could not declare
dividends without prior approval of the Comptroller of the Currency. In addition
to the dividend restrictions, the Bank is not permitted to issue brokered
deposits without prior approval from its regulators and may not pay rates on
deposits in excess of 75 basis points above the national average as published
weekly by the Federal Deposit Insurance Corporation. The Bank also must maintain
average total assets for the current quarter at a level below that of the prior
quarter. On
November 16, 2009, the Company announced it had reached a definitive agreement
with another party that would result in a $15 million capital injection into the
Company in exchange for majority ownership.  The Company intends to
use the capital to restore the Bank to “well capitalized” status. A copy of the
definitive agreement was filed under Form 8-K on November 16,
2009.




17.




OHIO
LEGACY CORP





Item
2. Management’s Discussion and Analysis





FORWARD-LOOKING
STATEMENTS





This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations (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;





·
            deterioration
      in securities markets due to a lack of liquidity and demand for securities
      related to real estate,





·
            changes
      in government regulation; and





·
            general
      economic and business conditions.





OVERVIEW





The
following key factors summarize the Company’s financial condition through
September 30, 2009:





·
            Other
      real estate decreased from $5.2 million to $4.5
  million


·
            Nonaccrual
      loans increased from $4.6 million to $7.6
  million


·
            Net
      loans decreased from $126.8 million to $107.0
  million


·
            Tier
      1 and total capital declined to $6.2 million and $7.6 million,
      respectively


18.


OHIO
LEGACY CORP





The
following key factors summarize our results of operations for the first nine
months of 2009:





·
            Net
      interest income fell $672,500 compared to the same period in
      2008


·
            The
      provision for loan losses increased $2,014,200 compared to last
      year


·
            Gains
      on the sale of available securities net of OTTI totaled
      $807,000





The
following forward-looking statements describe our near term
outlook:





·
            Credit
      quality continues to be the primary focus of the
  Company


·
            The
      Company reached a definitive agreement with another party that would
      result in a $15.0 million capital
injection


·
            Capital
      preservation is a key priority for the
Company





CRITICAL
ACCOUNTING POLICIES





Allowance for loan and lease
losses.  The allowance for loan losses (“ALLL”) is a valuation
allowance for probable incurred credit losses.  Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed.





Subsequent
recoveries, if any, are credited to the allowance. Management estimates the
allowance balance required using past loan loss experience, the nature and
volume 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 management’s
judgment, should be charged off.





The
allowance consists of specific and general components.  The specific
component relates to loans that are individually classified as impaired and
assigned a probable loss amount. The Company then divides the remaining loans by
risk into three grades: pass, special mention and substandard. Loans with a pass
grade are divided into nine separate categories. Total charge-offs for a
specified time period, currently 2.25 years, are divided into the same
categories and used as a starting point to estimate credit losses in each
category. Other subjective factors, such as industry conditions, local economic
trends and similar items are assigned a numeric value by category and are also
applied to the balances in the pass grade. Historic loss percentages are applied
separately to the special mention and substandard pools of loans based on actual
charge-offs for each pool in total regardless of the category. In prior
quarters, charge-offs were not differentiated between the pass, special mention
and substandard grades and were applied equally to the total balance regardless
of grade. The impact of the change was to increase the total amount of the ALLL.
The summarized table below illustrates the current estimation:


19.


OHIO
LEGACY CORP





Single family
              
              
              1-4 family
                  Rental
              
              
              Commercial
              
              
              HELOC
              
              
              CRE Non-
                  Owner
                  Occupied
              
              
              CRE Owner
                  Occupied
              
              
              CRE Multi
                  Unit
              
              
              Consumer
              
              
              Construction/
                  development
              
              
              TotalImpaired
              
              $
              291,233
              
              
              $
              164,606
              
              
              $
              1,350,768
              
              
              $
              -
              
              
              $
              181,422
              
              
              $
              3,482,757
              
              
              $
              107,459
              
              
              $
              -
              
              
              $
              1,977,055
              
              
              $
              7,555,300Special
      Mention
              
              
              399,076
              
              
              
              293,187
              
              
              
              1,098,108
              
              
              
              
              
              
              
              775,330
              
              
              
              3,382,158
              
              
              
              2,807,492
              
              
              
              -
              
              
              
              -
              
              
              
              8,755,351Substandard
              
              
              655,381
              
              
              
              678,555
              
              
              
              447,115
              
              
              
              7,792
              
              
              
              1,443,332
              
              
              
              459,313
              
              
              
              1,066,548
              
              
              
              -
              
              
              
              1,465,324
              
              
              
              6,223,360Pass
              
              
              26,535,417
              
              
              
              4,163,130
              
              
              
              3,830,334
              
              
              
              6,008,329
              
              
              
              17,297,696
              
              
              
              25,072,180
              
              
              
              3,972,279
              
              
              
              647,600
              
              
              
              1,687,717
              
              
              
              89,214,682Total
      loans
              
              $
              27,881,107
              
              
              $
              5,299,478
              
              
              $
              6,726,325
              
              
              $
              6,016,121
              
              
              $
              19,697,780
              
              
              $
              32,396,408
              
              
              $
              7,953,778
              
              
              $
              647,600
              
              
              $
              5,130,096
              
              
              $
              111,748,693Historical
      charge off
              
              
              0.0075
              
              
              
              0.0268
              
              
              
              0.0427
              
              
              
              0.0084
              
              
              
              0.0048
              
              
              
              0.0015
              
              
              
              0.0213
              
              
              
              0.0582
              
              
              
              0.1900Base
      allowance pass grade loans
              
              $
              199,915
              
              
              $
              111,676
              
              
              $
              163,499
              
              
              $
              50,185
              
              
              $
              83,324
              
              
              $
              37,326
              
              
              $
              84,798
              
              
              $
              27,962
              
              
              $
              320,703
              
              
              $
              1,079,387Other
      factors pass grade loans
              
              
              0.00825
              
              
              
              0.03555
              
              
              
              0.00575
              
              
              
              0.00700
              
              
              
              0.00525
              
              
              
              0.01125
              
              
              
              0.00275
              
              
              
              0.00050
              
              
              
              0.02535Additional
      allowance pass grade loans
              
              $
              218,917
              
              
              $
              147,791
              
              
              $
              22,024
              
              
              $
              42,058
              
              
              $
              90,813
              
              
              $
              282,062
              
              
              $
              10,924
              
              
              $
              240
              
              
              $
              42,784
              
              
              $
              857,614Allowance
      special mention pool
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              437,768Allowance
      substandard pool
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,116,690Specific
      allowance for impaired loans
              
              
              -
              
              
              
              -
              
              
              
              368,796
              
              
              
              -
              
              
              
              -
              
              
              
              618,000
              
              
              
              -
              
              
              
              -
              
              
              
              267,000
              
              
              
              1,253,796Total
      allowance
              
              $
              418,832
              
              
              $
              259,467
              
              
              $
              554,320
              
              
              $
              92,243
              
              
              $
              174,137
              
              
              $
              937,388
              
              
              $
              95,722
              
              
              $
              28,202
              
              
              $
              630,486
              
              
              $
              4,745,255





A loan is
considered impaired when, based on current information and events, it is
probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement.  Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due.  Loans that
experience insignificant payment delays and payment shortfalls generally are not
classified as impaired.  Management determines the significance of
payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower’s
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan by loan basis for
commercial and construction loans by either the present value of expected future
cash flows discounted at the loan’s effective interest rate, the loan’s
obtainable market price, or the fair value of the collateral if the loan is
collateral dependent.  Large groups of smaller balance homogeneous
loans are collectively evaluated for impairment. Accordingly, the Company does
not separately identify individual consumer and residential loans for impairment
disclosures.





Valuation allowance for deferred tax
assets. Another
critical accounting policy relates to valuation of the deferred tax asset for
net operating losses. A valuation allowance has been recorded for the deferred
tax asset for net operating loss carryforwards and other net deferred tax assets
to reduce the carrying amount of these assets to zero. Additional information is
included in Note 1 to our audited consolidated financial
statements.


20.


OHIO
LEGACY CORP





FINANCIAL
CONDITION – September 30, 2009 COMPARED TO DECEMBER 31, 2008





Assets.At September 30, 2009,
assets totaled $174.0 million, down $12.6 million from $186.5 million at
December 31, 2008. The composition of the balance sheet has changed
significantly as the Company executed strategies to strengthen its capital
position and reduce its overall risk profile.





Securities. Total securities
classified as available for sale decreased by $4.6 million to $28.2 million. The
portfolio consists primarily of 30-year mortgage backed securities issued by the
Government National Mortgage Association (GNMA), an agency guaranteed by the
full faith and credit of the U.S. government. For the year to date, the Bank
sold approximately $59.4 million of 15, 20 and 30 year mortgage backed
securities and reinvested the proceeds into GNMA securities to improve its risk
weighted capital ratio.   The monthly cash flow of principal and
interest has been used to repay liabilities, but is available to fund loan
growth or be reinvested should the Bank choose that strategy. At September 30,
2009 we believe the effective duration of the portfolio excluding equity
investments was approximately 4.9%, compared to 2.1% at December 31, 2008 as a
result of the strategies noted above. The increase in duration from purchasing
longer average life securities can be expected to contribute to increased
volatility in the market value of the portfolio for any given change in market
rates. The net unrealized gain on the portfolio at September 30, 2009 was
approximately $35,900, compared to a gain of $351,300 at year end.





Loans.  At
September 30, 2009, the loan portfolio, net of the allowance for loan losses and
deferred fees, totaled $107.0 million, a decrease of $19.8 million compared to
December 31, 2008. The Company is strategically working to reduce the size and
change the composition of the portfolio to lower its risk profile.





Allowance for loan losses and asset
quality.The
allowance for loan losses totaled $4.7 million at September 30, 2009, an
increase of $1.3 million compared to $3.4 million at December 31, 2008. The
amount of the allowance is based on a combination of actual experiential factors
such as historical losses for each category of loans and information about
specific borrowers as well as projections for various other factors, including
delinquencies, general economic conditions and the outlook for specific
industries, which are more subjective in nature. The increase included specific
reserves of $1.3 million on ten relationships, as well as $927,100 of general
reserves as a result of enhancements in the model used to estimate the
allowance. The Company recognized charge-offs of $1.7 million, representing
$968,400 in specific reserves and $767,100 in general reserves. Recoveries of
$447,900 were recognized during the period, due primarily to a $366,800 mediated
insurance settlement related to construction defects in one of the loans charged
off and a recovery of $54,800 on a commercial loan that was repaid.





As a
percentage of total loans, the allowance has increased from 2.61% at year end to
4.23% at the end of the third quarter. We continue to closely monitor credit
quality and delinquencies as our loan portfolio seasons, and will increase the
allowance for loan losses if we believe losses have been incurred.





Loans are
considered nonperforming if they are impaired or if they are in nonaccrual
status. Nonperforming loans totaled $7.6 million at September 30, 2009 compared
to $4.6 million at December 31, 2008. During the first nine months of the year,
25 loans totaling approximately $6.1 million converted to nonaccrual status.
Three loans totaling $389,300 paid off, nine loans totaling $1.5 million were
charged off, nine loans totaling $973,500 were transferred to other real estate
and specific reserves of $1.3 million were established for nine others with
balances of $5.4 million.





Accrued interest receivable and
other assets.Accrued interest receivable and other assets decreased by
$599,200 from year end. Changes in the accounting for income taxes as the result
of the net loss booked in 2008 resulted in a decrease of $570,800; other changes
in prepaid assets and accrued interest arising from normal business activities
comprised the remainder.





Deposits. Total deposits
increased $1.4 million from year end to $147.1 million at September 30, 2009.
Overall, core deposit balances decreased 1.9% to $78.7 million from $80.2
million at year end. Noninterest bearing demand deposits decreased 14.2% to
$14.3 million. The decline in transaction accounts can be attributed to a
consistent strategy to reduce funding to levels needed to support declining
loans by lowering rates consistently over the last six months. The certificate
of deposit portfolio increased $2.9 million during the period to $68.4 million
or 46.5% of total deposits compared to $65.5 million or 45.0% of total deposits
at year-end.  The increase was largely the result of a short-term
promotion late in the fourth quarter of 2008 and the first few days of
2009.


21.


OHIO
LEGACY CORP





Federal Home Loan Bank
advances.  Total advances decreased $9.4 million from $27.9
million to $18.5 million at September 30, 2009. An overnight advance of $6.9
million was repaid early in the first quarter. A $3.0 million 4.89% advance that
matured in January was renewed at 3.19%, and a $2.5 million term advance with a
rate of 5.24% was paid off at maturity in February.




RESULTS
OF OPERATIONS – THREE MONTHS ENDED SEPTEMBER 30, 2009





The
following tables set forth information relating to the average balance sheet and
reflect 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 30,2009
                
                
                2008Average
                
                
                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
                
                $
                21,550
                
                
                $
                10
                
                
                
                0.18
                %
                
                $
                1,052
                
                
                $
                6
                
                
                
                2.38
                %Securities
      available for sale
                
                
                34,099
                
                
                
                365
                
                
                
                4.24
                
                
                
                36,336
                
                
                
                447
                
                
                
                4.90Securities held to
      maturity
                
                
                2,998
                
                
                
                29
                
                
                
                3.78
                
                
                
                3,001
                
                
                
                29
                
                
                
                3.79Federal agency
      stock
                
                
                1,295
                
                
                
                17
                
                
                
                5.11
                
                
                
                1,449
                
                
                
                20
                
                
                
                5.55Loans (1)
                
                
                106,750
                
                
                
                1,693
                
                
                
                6.29
                
                
                
                125,713
                
                
                
                2,093
                
                
                
                6.62Total
      interest-earning assets
                
                
                166,692
                
                
                $
                2,113
                
                
                
                5.03
                %
                
                
                167,551
                
                
                
                2,595
                
                
                
                6.16
                %Noninterest-earning assets
                
                
                15,315
                
                
                
                
                
                
                
                
                
                
                
                15,329Total
      assets
                
                $
                182,007
                
                
                
                
                
                
                
                
                
                
                $
                182,880Liabilities
      and Shareholders’ EquityInterest-bearing
      liabilities:Interest-bearing
      demand deposits
                
                $
                7,977
                
                
                $
                14
                
                
                
                0.70
                %
                
                $
                9,095
                
                
                $
                23
                
                
                
                0.99
                %Savings
      accounts
                
                
                16,646
                
                
                
                46
                
                
                
                1.10
                
                
                
                5,420
                
                
                
                11
                
                
                
                0.82Money market
      accounts
                
                
                42,407
                
                
                
                134
                
                
                
                1.26
                
                
                
                47,779
                
                
                
                272
                
                
                
                2.26Certificates
      of deposit
                
                
                70,757
                
                
                
                612
                
                
                
                3.43
                
                
                
                66,963
                
                
                
                625
                
                
                
                3.72Total
      interest-bearing deposits
                
                
                137,787
                
                
                
                806
                
                
                
                2.32
                
                
                
                129,257
                
                
                
                931
                
                
                
                2.87Other
      borrowings
                
                
                20,076
                
                
                
                177
                
                
                
                3.50
                
                
                
                22,715
                
                
                
                224
                
                
                
                3.92Total
      interest-bearing liabilities
                
                
                157,863
                
                
                $
                983
                
                
                
                2.47
                %
                
                
                151,972
                
                
                $
                1,155
                
                
                
                3.02
                %Noninterest-bearing
      demand deposits
                
                
                15,132
                
                
                
                
                
                
                
                
                
                
                
                16,178Noninterest-bearing liabilities
                
                
                569
                
                
                
                
                
                
                
                
                
                
                
                279Total
      liabilities
                
                
                173,564
                
                
                
                
                
                
                
                
                
                
                
                168,429Shareholders’
      equity
                
                
                8,443
                
                
                
                
                
                
                
                
                
                
                
                14,451Total
      liabilities and shareholders’ equity
                
                $
                182,007
                
                
                
                
                
                
                
                
                
                
                $
                182,880Net interest income;
      interest-rate spread (2)
                
                
                
                
                
                $
                1,129
                
                
                
                2.56
                %
                
                
                
                
                
                $
                1,440
                
                
                
                3.14
                %Net
      earning assets
                
                $
                8,829
                
                
                
                
                
                
                
                
                
                
                $
                15,579Net interest margin
      (3)
                
                
                
                
                
                
                
                
                
                
                2.69
                %
                
                
                
                
                
                
                
                
                
                
                3.41
                %Average
      interest-earning assets tointerest-bearing liabilities
                
                
                1.1
                X
                
                
                
                
                
                
                
                
                
                
                1.1
                x





(1)
            Net
      of net deferred loan fees and costs and loans in process. Non-accrual
      loans are reported in non-interest earning assets in this
      table.


(2)
            Interest
      rate spread represents the difference between the yield on interest
      earning assets and the cost of interest bearing
    liabilities.


(3)
              Net
      interest margin represents net interest income, annualized, divided by
      average interest-earning
assets.


22.


OHIO
LEGACY CORP





The net
loss totaled $2.4 million for the three months ended September 30, 2009, or
$1.09 per diluted share, compared to a net loss of $3.8 million or $1.70 per
diluted share during the third quarter of 2008.





Net interest
income.  During the three months ended September 30, 2009, net
interest income was $1.1 million compared to $1.4 million the comparable quarter
last year, due in large part to the decline in the net interest margin from
3.41% to 2.69%. Third quarter net earning assets declined from $15.6 million in
2008 to $8.8 million in 2009, contributing to the decline in net interest
income,





Interest income. Total
interest income for the quarter was $2.1 million, down $481,900 from $2.6
million in the same quarter in 2008. The minor decrease in earning assets from
$167.5 million to $166.7 million was significantly impacted by the decrease in
the yield on earning assets by 113 basis points from 6.16% to
5.03%.





Interest
expense.  For the three months ended September 30, total
interest expense was $983,400 million compared to $1.2 million in the prior
year. The increase in average interest bearing liabilities from $152.0
million  to $157.9 million was more than offset by the decrease in the
cost of interest bearing liabilities by 55 basis points from 3.02% to
2.47%.





Provision for loan
losses.  The provision for loan losses totaled $2.1 million
during the third quarter of 2009, compared to $609,000 for the same period the
prior year. The increase comprised both specific and general reserves, primarily
related to commercial real estate loans. As discussed above in the “Allowance
for loan losses,” our provision for loan losses can be expected to fluctuate
from period to period.





Noninterest
income.  Noninterest income for the third quarter was $374,000
compared to a loss of $2.7 million for the same period the prior year. Both
periods included significant unusual items. The Company recognized a gain of
$232,200 on the sale of available for sale securities in 2009, compared to an
other than temporary impairment charge of $2.7 million in
2008.   In 2009, gains on the sale of loans held for sale fell by
$31,900 to $15,200 as a result of lower activity in the housing market. The
Company recorded a write-down of other real estate of $215,500 in 2009, offset
in part by a gain of $104,400 on the disposition of certain properties held in
other real estate.  In 2008, losses of $436,006 and $2,400 were
recorded as write downs and loss on the sale of other real estate. Service
charge income declined 15.1% in 2009 to $216,200. The reduction is due to both
changes in customer behavior in response to general economic conditions and a
decrease in accounts previously maintained in conjunction with loan
relationships.





Noninterest
expense.  Total noninterest expense was essentially unchanged
in the comparable quarters, despite significant variations in several
categories. The relevant changes are described below.





Salary and benefits.
Continued reduction and consolidation of positions resulted in a $171,800
decrease in salary and benefits.





Deposit expenses. The
Company’s FDIC premium for the third quarter increased by $148,800 as a result
of an increase in FDIC premiums for all insured depository institutions as part
of its transition to a risk-based assessment methodology implemented earlier in
the year and a revision of the Company’s premium due to changes in regulatory
capital status.





Other expenses. An increase
of $82,300 in the most recent quarter was primarily the result of $79,200 in
commission expense related to the sale of multiple properties held in other real
estate. Legal expenses related to the foreclosure of commercial real estate
increased by $51,000, offset in part by a reduction in repair and maintenance
expenses on other real estate.


23.


OHIO
LEGACY CORP





RESULTS
OF OPERATIONS – NINE MONTHS ENDED SEPTEMBER 30, 2009





Nine
      months ending September 30,2009
                
                
                2008Average
                
                
                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
                
                $
                13,497
                
                
                $
                24
                
                
                
                0.24
                %
                
                $
                3,407
                
                
                $
                67
                
                
                
                2.62
                %Securities
      available for sale
                
                
                36,163
                
                
                
                1,215
                
                
                
                4.48
                
                
                
                32,860
                
                
                
                1,303
                
                
                
                5.29Securities held to
      maturity
                
                
                2,999
                
                
                
                86
                
                
                
                3.81
                
                
                
                3,002
                
                
                
                86
                
                
                
                3.81Federal agency
      stock
                
                
                1,323
                
                
                
                49
                
                
                
                4.94
                
                
                
                1,485
                
                
                
                62
                
                
                
                5.56Loans (1)
                
                
                114,224
                
                
                
                5,385
                
                
                
                6.32
                
                
                
                128,203
                
                
                
                6,623
                
                
                
                6.90Total
      interest-earning assets
                
                
                168,206
                
                
                $
                6,758
                
                
                
                5.39
                %
                
                
                168,957
                
                
                $
                8,140
                
                
                
                6.44
                %Noninterest-earning assets
                
                
                19,927
                
                
                
                
                
                
                
                
                
                
                
                16,017Total
      assets
                
                $
                188,133
                
                
                
                
                
                
                
                
                
                
                $
                184,974Liabilities
      and Shareholders’ EquityInterest-bearing
      liabilities:Interest-bearing
      demand deposits
                
                $
                8,943
                
                
                $
                52
                
                
                
                0.77
                %
                
                $
                9,508
                
                
                $
                82
                
                
                
                1.16
                %Savings
      accounts
                
                
                16,514
                
                
                
                205
                
                
                
                1.66
                
                
                
                5,416
                
                
                
                33
                
                
                
                0.82Money market
      accounts
                
                
                41,520
                
                
                
                485
                
                
                
                1.56
                
                
                
                46,835
                
                
                
                954
                
                
                
                2.72Certificates
      of deposit
                
                
                73,725
                
                
                
                1,903
                
                
                
                3.46
                
                
                
                71,361
                
                
                
                2,185
                
                
                
                4.09Total
      interest-bearing deposits
                
                
                140,702
                
                
                
                2,644
                
                
                
                2.51
                
                
                
                133,120
                
                
                
                3,255
                
                
                
                3.27Other
      borrowings
                
                
                21,141
                
                
                
                552
                
                
                
                3.48
                
                
                
                20,348
                
                
                
                649
                
                
                
                4.25Total
      interest-bearing liabilities
                
                
                161,843
                
                
                $
                3,196
                
                
                
                2.65
                %
                
                
                153,468
                
                
                $
                3,905
                
                
                
                3.40
                %Noninterest-bearing
      demand deposits
                
                
                16,224
                
                
                
                
                
                
                
                
                
                
                
                15,435Noninterest-bearing liabilities
                
                
                601
                
                
                
                
                
                
                
                
                
                
                
                548Total
      liabilities
                
                
                178,668
                
                
                
                
                
                
                
                
                
                
                
                169,451Shareholders’
      equity
                
                
                9,465
                
                
                
                
                
                
                
                
                
                
                
                15,523Total
      liabilities and shareholders’ equity
                
                $
                188,133
                
                
                
                
                
                
                
                
                
                
                $
                184,974Net interest income;
      interest-rate spread (2)
                
                
                
                
                
                $
                3,563
                
                
                
                2.74
                %
                
                
                
                
                
                $
                4,235
                
                
                
                3.04
                %Net
      earning assets
                
                $
                6,363
                
                
                
                
                
                
                
                
                
                
                $
                15,489Net interest margin
      (3)
                
                
                
                
                
                
                
                
                
                
                2.83
                %
                
                
                
                
                
                
                
                
                
                
                3.34
                %Average
      interest-earning assets tointerest-bearing liabilities
                
                
                1.0
                x
                
                
                
                
                
                
                
                
                
                
                1.10
                x





FOOTNOTES TO YIELD
TABLE





(1)
            Net
      of net deferred loan fees and costs and loans in process. Nonaccrual loans
      are included in noninterest-earning
assets.


(2)
            Interest
      rate spread represents the difference between the yield on
      interest-earning assets and the cost of interest-bearing
      liabilities.


(3)
            Net
      interest margin represents net interest income, annualized, divided by
      average interest-earning assets.





The net loss totaled $2.9 million for
the nine months ended September 30, 2009, or $1.30 per share, compared to a net
loss of $3.9 million or $1.76 per share during the first three quarters of
2008.





Net interest
income.  During the nine months ended September 30, 2009, net
interest income was $3.6 million, compared to $4.2 million for the same period
the prior year. The decrease of $9.1 million in average net earning assets was
further impacted by a decrease in the net interest margin from 3.34% to
2.83%.





Interest income. Total
interest income was $6.8 million for the first nine months of 2009, compared to
$8.1 million for the comparable period in 2008. The yield on loans dropped 0.58%
during the period, from 6.90% to 6.32% as variable rate notes reset downward and
new volume was added at lower rates. Average volume declined from $128.2 million
to $114.2 million, as the Company continued to reduce its risk profile by
lowering total loan balances. The combination of factors resulted in a decrease
of $1.4 million in income. The yield on available for sale securities declined
from 5.29% to 4.48% as a result of restructuring the investment portfolio to
reduce risk-weighted assets to improve the risk-based capital ratio. However,
the decrease was partially offset by a $3.3 million increase in the average
balance, resulting in a decrease of $87,500 in income.


24.


OHIO
LEGACY CORP





Interest
expense.  Total interest expense fell $709,100 to $3.2 million
in 2009, compared to $3.9 million for the same period in 2008, despite an
increase in the average volume of interest bearing liabilities from $153.5
million to $161.8 million. Deposit expense reductions accounted for $661,600 and
other borrowings contributed approximately $97,500.





Provision for loan
losses.  The provision for loan losses totaled $2.6 million
during the first nine months of 2009, compared to $620,500 for the same period
in 2008. The increase comprises both specific and general reserves determined as
part of the regular quarterly evaluation, as well as additional reserves due to
a change in the method the Company uses to estimate credit loss. As discussed
above in the “Allowance for loan losses,” our provision for loan losses can be
expected to fluctuate from period to period.





Noninterest
income.  Noninterest income was $1.4 million for the first nine
months of 2009, compared to $(2.3) million for the first nine months of 2008.
Both periods included significant unusual items. During the first nine months of
2009, a $918,200 gain on the sale of available for sale securities was recorded.
This was offset in part by the recognition of an other than temporary impairment
of $111,200 related to the Company’s holdings of FNMA and FHLMC preferred stock.
For the same period in 2008, a $2.9 million other than temporary impairment was
recorded on the same securities. Write downs of other real estate owned totaled
$262,000 and $436,000 during the first three quarters of 2009 and 2008,
respectively.





Noninterest
expense.  Total noninterest expense increased $255,900 to $5.5
million compared to $5.2 million for the first nine months of the prior year.
The significant changes are described below.





Salary and benefits. The
decrease of $341,300 is due to the ongoing elimination and consolidation of
positions throughout the organization.





Deposit expense and insurance
fees. As disclosed in prior quarters, the FDIC increased premiums for all
insured depository institutions for the first calendar quarter 2009 assessment
as part of its transition to a risk-based assessment methodology. In addition,
they FDIC imposed an emergency assessment for all insured depository
institutions to be paid on September 30, 2009. The combination of these changes
and a revision of the Company’s premium due to changes in regulatory capital
status resulted in an increase of $506,700.





Other expenses.An increase
of $346,100 for the first three quarters of 2009 was the result of $147,600 in
legal expenses related to the foreclosure of multiple properties. Delinquent and
current real estate taxes on foreclosed properties increased by
$135,100.





Tax expense (benefit).As a
result of a change in the tax law late in 2008 that allows net operating losses
to be carried back five years, the company was able to amend its 2003 tax return
and record a refund of taxes paid for that year. The refund of $289,300 was
offset by a $44,400 change in accrued taxes for 2008, resulting in a tax benefit
of $244,900.





STRATEGIC
DEVELOPMENTS





As
disclosed in an 8-K on February 20, 2009, the Company entered into an Order of
Consent with the Comptroller of the Currency of the United States of America.
The Order requires the Bank to increase its capital to certain specified levels.
As disclosed in the 10-K filed on April 3, 2009, the Board of Directors has
retained the services of the investment banking firm of Stifel, Nicolaus to
actively explore the options of raising private equity capital, or merging with
or being acquired by another financial institution or other interested investors
to achieve compliance with the Order of Consent.





The
Company remains steadfast in its commitment to be a strong, community partner
providing the best financial solutions for our local customers. However, as part
of the efforts to comply with the Order, in addition to raising capital, we
intend to reduce the size of the balance sheet. Besides selling real estate
acquired in settlement of impaired loans as noted below, other strategies may
include the sale of securities or loans, participating loans to other financial
institutions and limiting the growth of loans and deposits through pricing
initiatives. Successful execution of these interim strategies will enable the
Company to move forward from a position of strength.


25.


OHIO
LEGACY CORP





The
Company continues to actively work to reduce its portfolio of Other Real Estate.
During the third quarter, five properties were recorded as other real estate at
a value of $500,300 and 12 properties were sold for gross proceeds of $415,700.
As of the report date, 14 of the 19 properties in the portfolio were listed for
sale. These disposals benefit the Company both in terms of eliminating the
expenses associated with their acquisition and maintenance and allowing the
funds to be invested in interest earning assets.




On
November 16, 2009, the Company announced that it had reached a definitive
agreement with another party that would result in a $15.0 million capital
injection into the Company in exchange for majority ownership. The agreement is
subject to approval by the Company’s shareholders as well as applicable
regulatory agencies. Upon approval, the Company intends to rebuild the Bank into
a profitable entity and to take advantage of the opportunities the current
banking landscape presents.





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





There
have been no material changes in the Company’s contractual obligations since
December 31, 2008.





At
September 30, 2009, we had no active unconsolidated, related special purpose
entities, nor did we engage in derivatives and hedging contracts, such as
interest rate swaps, that may expose us to liabilities greater than the amounts
recorded on the consolidated balance sheet. Our investment policy prohibits
engaging in derivatives contracts for speculative trading purposes; however, we
may pursue certain contracts, such as interest rate swaps, in our efforts to
execute a sound and defensive interest rate risk management policy.





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 and the sale of loans. 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.





At
September 30, 2009, the balances in cash and cash equivalents were $14.4 million
higher than at year-end. Cash and cash equivalents represented 14.9% of total
assets at September 30, 2009 and 6.2% of total assets at December 31, 2008. The
higher cash balances are an integral part of the Company’s strategy to reduce
its risk profile.





CAPITAL
RESOURCES





Total
shareholders’ equity was $6.4 million at September 30, 2009, a decrease of $3.1
million from the prior year-end balance. The reduction in equity was due to a
net loss for the period.  See Note 9 to the financial statements for a
discussion of the Bank’s capital resources.


26.


OHIO
LEGACY CORP





The Bank
is 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.  Prompt corrective action
regulations provide five classifications: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized, although these terms are not used to represent overall
financial condition. Failure to meet capital requirements can initiate
regulatory action. At September 30, 2009, the Bank did not meet the definition
of adequately capitalized as described above and as such is subject to certain
restrictions.





On
February 17, 2009, the Company entered into an Order of Consent with the
Comptroller of the Currency of the United States of America. The Order requires
the Bank to increase its Tier 1 capital to at least 8.75% of adjusted total
assets and its total risk based capital to at least 13.25% of risk-weighted
assets by August 31, 2009. To have achieved both those levels at September 30,
2009 the Bank would have needed approximately $9.8 million of additional
capital.





The Board
of Directors has retained the services of the investment banking firm of Stifel,
Nicolaus to actively explore the options of raising private equity capital, or
merging with or being acquired by another financial institution or other
interested investors. The Company has been in active discussions with potential
partners since that time.





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 the 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. During 2009, the Bank could not declare
dividends without prior approval of the Comptroller of the Currency. In addition
to the dividend restrictions, the Bank is not permitted to issue brokered
deposits without prior approval from its regulators.





Actual
and required capital amounts (in thousands) and ratios are presented below at
September 30, 2009:





Actual
              
              
              For
      Capital
                  Adequacy Purposes
              
              
              To
      Be Well-
                  Capitalized Under
                  Prompt Corrective
                  Action ProvisionsAmount
              
              
              Ratio
              
              
              Amount
              
              
              Ratio
              
              
              Amount
              
              
              RatioTotal
      capital to risk-weighted assets
              
              $
              7,550
              
              
              
              7.1
              %
              
              $
              8,551
              
              
              
              8.0
              %
              
              $
              10,689
              
              
              
              10.0
              %Tier
      1 capital to risk-weighted assets
              
              $
              6,172
              
              
              
              5.8
              %
              
              $
              4,275
              
              
              
              4.0
              %
              
              $
              6,413
              
              
              
              6.0
              %Tier
      1 capital to average assets
              
              $
              6,172
              
              
              
              3.4
              %
              
              $
              7,294
              
              
              
              4.0
              %
              
              $
              9,118
              
              
              
              5.0
              %




Item
3.  Not applicable for Smaller Reporting Companies.




Item
4T.  Controls and Procedures





As of
September 30, 2009, an evaluation was conducted under the supervision and with
the participation of Ohio Legacy Corp’s management, including our Chief
Executive Officer and acting 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 acting 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, 2009, that has
materially affected, or is reasonably likely to materially affect, Ohio Legacy’s
Corp’s internal control over financial reporting.


27.


OHIO
LEGACY CORP





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.


OHIO
LEGACY CORP





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
      Planof Ohio
      Legacy Corp10.3
                      
                      (3)
                      
                      Lease
      Agreement dated August 24, 1999, by and among Jack K. and Heidi M. Gant
      and Ohio Legacy Corp10.4
                      
                      (3)
                      
                      Lease
      Agreement dated November 30, 1999, by and between Schoeppner Properties
      and Ohio Legacy Corp10.5
                      
                      (7)
                      
                      Lease
      Agreement dated August 1, 2007 by and between Allen P. Reinhardt and WMBC
      Company and Ohio Legacy Bank, N.A.10.6
                      
                      (5)
                      
                      Employment
      Agreement with Mr. Kramer10.7
                      
                      (6)
                      
                      Change
      in Control Agreement with Mr. Spradlin10.8
                      
                      (7)
                      
                      Change
      in Control Agreement with Ms. Richards11
                      
                      
                      
                      Statement
      Regarding Computation of Per Share Earnings (incorporated by reference to
      Note 4 of this Form 10-Q)31.1
                      
                      
                      
                      Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer and 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 8-K filed on May 6, 2005
 (6)
                -Incorporated
      by reference to Registrant’s Form 10-K filed on April 7,
      2008
 (7)
                –Incorporated
      by reference to Registrant’s Form 10-K filed on April 3,
      2009








29.


OHIO
LEGACY CORP





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 16,
      2009
                    By:
                    /s/ D. Michael KramerD.
      Michael Kramer, President,President,
      Chief Executive
Officer




30.