##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission file number: 000-31673
 OHIO LEGACY CORP
   
   
   
   
  þ o
 o þ
  o þ




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PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis
    
    
    15Item 3. Controls and Procedures
    
    
    21PART II  OTHER INFORMATION
    
    
    22Item 1. Legal Proceedings
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    23SIGNATURES
    
    
    24EX-31.1 302 Certification for CEO, CFO and PresidentEX-32.1 906 Certification for CEO, CFO and President
  2.




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 March 31,
    
    
    December 31,2006
    
    
    2005(unaudited)ASSETSCash and due from banks
    
    $
    6,254,019
    
    
    $
    4,528,094Federal funds sold and interest-bearing deposits in financial institutions
    
    
    5,622,414
    
    
    
    3,594,452Cash and cash equivalents
    
    
    11,876,433
    
    
    
    8,122,546Certificate of deposit in financial institution
    
    
    100,000
    
    
    
    100,000Securities available for sale
    
    
    31,395,865
    
    
    
    33,032,297Securities held to maturity (fair value of $819,902 and $823,359 at
March 31, 2006 and December 31, 2005)
    
    
    835,829
    
    
    
    838,224Loans, net of allowance of $1,637,205 and $1,589,407 at
March 31, 2006 and December 31, 2005
    
    
    160,952,596
    
    
    
    158,182,319Federal bank stock
    
    
    1,492,500
    
    
    
    1,479,500Premises and equipment, net
    
    
    3,750,847
    
    
    
    3,797,314Intangible assets
    
    
    408,179
    
    
    
    455,244Other real estate owned
    
    
    161,517
    
    
    
    Accrued interest receivable and other assets
    
    
    2,146,124
    
    
    
    2,010,323Total assets
    
    $
    213,119,890
    
    
    $
    208,017,767LIABILITIESDeposits:Noninterest-bearing demand
    
    $
    14,400,390
    
    
    $
    15,727,338Interest-bearing demand
    
    
    11,079,624
    
    
    
    12,231,345Savings
    
    
    42,759,668
    
    
    
    42,665,057Certificates of deposit, net
    
    
    94,118,634
    
    
    
    92,273,308Total deposits
    
    
    162,358,316
    
    
    
    162,897,048Repurchase agreements
    
    
    3,305,992
    
    
    
    3,066,517Short term Federal Home Loan Bank advances
    
    
    700,000
    
    
    
    7,200,000Federal Home Loan Bank advances
    
    
    23,415,664
    
    
    
    11,796,010Subordinated debentures
    
    
    3,325,000
    
    
    
    3,325,000Capital lease obligations
    
    
    956,902
    
    
    
    959,450Accrued interest payable and other liabilities
    
    
    876,898
    
    
    
    668,867Total liabilities
    
    
    194,938,772
    
    
    
    189,912,892SHAREHOLDERS 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
March 31, 2006, and December 31, 2005, respectively
    
    
    18,665,436
    
    
    
    18,658,386Accumulated earnings
    
    
    196,415
    
    
    
    79,415Accumulated other comprehensive loss
    
    
    (680,733
    )
    
    
    (632,926
    )Total shareholders equity
    
    
    18,181,118
    
    
    
    18,104,875Total liabilities and shareholders equity
    
    $
    213,119,890
    
    
    $
    208,017,767
 3.
    Table of Contents   
 For the Three Months EndedMarch 31,2006
    
    
    2005Interest and dividends income:Loans, including fees
    
    $
    2,754,238
    
    
    $
    2,118,411Securities, taxable
    
    
    321,664
    
    
    
    387,964Securities, tax-exempt
    
    
    7,181
    
    
    
    5,738Interest-bearing deposits, federal funds sold and other
    
    
    42,553
    
    
    
    63,078Dividends on federal bank stock
    
    
    21,619
    
    
    
    17,389Total interest income
    
    
    3,147,255
    
    
    
    2,592,580Interest expense:Deposits
    
    
    1,073,771
    
    
    
    846,178Federal Home Loan Bank advances
    
    
    241,002
    
    
    
    90,886Subordinated debentures
    
    
    70,722
    
    
    
    70,722Repurchase agreements
    
    
    28,871
    
    
    
    Capital leases
    
    
    37,487
    
    
    
    37,852Total interest expense
    
    
    1,451,853
    
    
    
    1,045,638Net interest income
    
    
    1,695,402
    
    
    
    1,546,942Provision for loan losses
    
    
    50,000
    
    
    
    92,046Net interest income after provision for loan losses
    
    
    1,645,402
    
    
    
    1,454,896Noninterest income:Service charges and other fees
    
    
    246,473
    
    
    
    126,237Gain on sale of credit card portfolio
    
    
    
    
    
    
    9,782Loss on disposal of fixed assets
    
    
    (736
    )
    
    
    Other income
    
    
    17,568
    
    
    
    5,477Total noninterest income
    
    
    263,305
    
    
    
    141,496Noninterest expense:Salaries and benefits
    
    
    919,596
    
    
    
    603,473Occupancy and equipment
    
    
    236,105
    
    
    
    200,923Professional fees
    
    
    90,282
    
    
    
    137,553Franchise tax
    
    
    63,800
    
    
    
    71,300Data processing
    
    
    151,719
    
    
    
    162,275Marketing and advertising
    
    
    41,833
    
    
    
    38,614Stationery and supplies
    
    
    31,476
    
    
    
    31,698Amortization of intangible assets
    
    
    47,065
    
    
    
    57,333Deposit expense and insurance
    
    
    42,657
    
    
    
    35,853Other expenses
    
    
    103,347
    
    
    
    83,877Total noninterest expense
    
    
    1,727,880
    
    
    
    1,422,899Net earnings before income taxes
    
    
    180,827
    
    
    
    173,493Income tax expense
    
    
    63,827
    
    
    
    58,493Net earnings
    
    $
    117,000
    
    
    $
    115,000Basic earnings per share
    
    $
    0.05
    
    
    $
    0.05Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.05
 4.
    Table of Contents  For the Three Months EndedMarch 31,2006
    
    
    2005Balance, beginning of period
    
    $
    18,104,875
    
    
    $
    17,240,374Net earnings (loss)
    
    
    117,000
    
    
    
    115,000Other comprehensive income:Net unrealized gain (loss) on available for sale securities
arising during the period, net of tax
    
    
    (47,807
    )
    
    
    (305,257
    )Other comprehensive income (loss), net of tax
    
    
    (47,807
    )
    
    
    (305,257
    )Additional
paid in capital from stock options
    
    
    7,050
    
    
    
    Proceeds from exercises of stock warrants and options
    
    
    
    
    
    
    136,500Balance, end of period
    
    $
    18,181,118
    
    
    $
    17,186,617
  5.
    Table of Contents  For the Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net earnings
    
    $
    117,000
    
    
    $
    115,000Adjustments to reconcile net earnings to net cash from
operating activities:Depreciation and amortization
    
    
    148,452
    
    
    
    137,810Securities amortization and accretion, net
    
    
    29,393
    
    
    
    35,966Federal Home Loan Bank (FHLB) stock dividends
    
    
    (13,000
    )
    
    
    (9,200
    )Provision for loan losses
    
    
    50,000
    
    
    
    92,046Loss from Ohio Legacy Trust I
    
    
    2,019
    
    
    
    2,019Loss on disposal of fixed asset
    
    
    736
    
    
    
    Gain on sale of credit card portfolio
    
    
    
    
    
    
    (9,782
    )Accretion of fair value purchase adjustments
    
    
    (5,265
    )
    
    
    (40,473
    )Stock option expense
    
    
    7,050
    
    
    
    Net change in:Accrued interest receivable and other assets
    
    
    (158,219
    )
    
    
    (134,530
    )Accrued interest payable and other liabilities
    
    
    208,031
    
    
    
    92,762Deferred loan fees
    
    
    (10,456
    )
    
    
    28,621Net cash provided by operating activities
    
    
    375,741
    
    
    
    310,239Cash flows from investing activities:Purchases of securities available for sale
    
    
    
    
    
    
    (3,459,730
    )Purchase of certificate of deposit
    
    
    
    
    
    
    (100,000
    )Maturities, calls and paydowns of securities available for sale
    
    
    1,582,026
    
    
    
    1,845,917Proceeds from sale of credit card portfolio
    
    
    
    
    
    
    257,418Net change in loans
    
    
    (2,971,338
    )
    
    
    (9,744,831
    )Purchases of premises and equipment
    
    
    (55,656
    )
    
    
    (73,228
    )Net cash used by investing activities
    
    
    (1,444,968
    )
    
    
    (11,274,454
    )Cash flows from financing activities:Net change in deposits
    
    
    (533,467
    )
    
    
    5,798,659Net change in repurchase agreements
    
    
    239,475
    
    
    
    Repayment of capital lease obligations
    
    
    (2,548
    )
    
    
    (2,183
    )Proceeds from exercise of stock warrants and options
    
    
    
    
    
    
    136,500Proceeds from short term FHLB advances, net of repayments
    
    
    (6,500,000
    )
    
    
    Proceeds from FHLB advances
    
    
    12,000,000
    
    
    
    Repayments of FHLB advances
    
    
    (380,346
    )
    
    
    (371,473
    )Net cash provided by financing activities
    
    
    4,823,114
    
    
    
    5,561,503Net change in cash and cash equivalents
    
    
    3,753,887
    
    
    
    (5,402,712
    )Cash and cash equivalents at beginning of period
    
    
    8,122,546
    
    
    
    16,989,323Cash and cash equivalents at end of period
    
    $
    11,876,433
    
    
    $
    11,586,611Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    1,434,951
    
    
    $
    1,081,708Federal income taxes
    
    
    
    
    
    
    Noncash transactions:Transfer of loans to other real estate owned
    
    $
    161,517
  6.
    Table of Contents  NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Principles of Consolidation
    Use of Estimates
 Reclassifications
 Income Taxes
 Stock Compensation
 7.
    Table of Contents  NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     8.
    Table of Contents  NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Three months ended March 31, 2006Using
    
    
    SFASPrevious
    
    
    123(R)
    
    
    AsAccounting
    
    
    Adjustments
    
    
    ReportedIncome before income taxes
    
    $
    187,877
    
    
    $
    (7,050
    )
    
    $
    180,827Income taxes
    
    
    63,827
    
    
    
    
    
    
    
    63,827Net income
    
    $
    124,050
    
    
    $
    (7,050
    )
    
    $
    117,000Basic earnings per share
    
    $
    0.06
    
    
    $
    (0.01
    )
    
    $
    0.05Diluted earnings per share
    
    $
    0.06
    
    
    $
    (0.01
    )
    
    $
    0.05
  Three months ended March 31, 2005Pro Forma asAs
    
    
    Pro Forma
    
    
    If underReported
    
    
    Adjustments
    
    
    SFAS 123(R)Income before income taxes
    
    $
    173,493
    
    
    $
    (50,277
    )
    
    $
    123,216Income taxes
    
    
    58,493
    
    
    
    3,039
    
    
    
    55,454Net income
    
    $
    115,000
    
    
    $
    (47,238
    )
    
    $
    67,762Basic earnings per share
    
    $
    0.05
    
    
    $
    (0.02
    )
    
    $
    0.03Diluted earnings per share
    
    $
    0.05
    
    
    $
    (0.02
    )
    
    $
    0.03
 9.
    Table of Contents  NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Three months endedMarch 31, 2006Total options outstandingWeighted
    
    
    WeightedAverage
    
    
    AverageExercise
    
    
    FairShares
    
    
    Price
    
    
    ValueOptions outstanding, beginning of
period
    
    
    285,750
    
    
    $
    10.76
    
    
    $
    4.73Forfeited
    
    
    (5,250
    )
    
    
    8.67
    
    
    
    2.90Exercised
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    
    
    
    
    
    
    
    
    Options outstanding, end of period
    
    
    280,500
    
    
    $
    10.80
    
    
    $
    4.77Options exercisable, end of period
    
    
    275,500
    
    
    $
    10.83
    
    
    $
    4.77
  Three Months EndedMarch 31, 2006WeightedAverageTotal unvested options
    
    Shares
    
    Fair ValueUnvested options, beginning of period
    
    
    37,500
    
    
    $
    2.99Vested
    
    
    27,250
    
    
    
    2.77Forfeited
    
    
    5,250
    
    
    
    2.77Granted
    
    
    
    
    
    
    Unvested options, end of period
    
    
    5,000
    
    
    $
    2.77
  Three Months EndedMarch 31,2006
    
    2005Proceeds of options exercised
    
    $
    
    
    
    $
    8,500Related tax benefit recognized
    
    
    
    
    
    
    1,530Intrinsic value of options exercised
    
    
    
    
    
    
    4,500
  10.
    Table of Contents  NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  OutstandingWeighted
    
    
    
    
    
    ExercisableAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageContractual
    
    
    Exercise
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Number
    
    
    Life (years)
    
    
    Price
    
    
    Number
    
    
    Price$8.50 - $9.99
    
    
    46,000
    
    
    
    7.40
    
    
    $
    8.67
    
    
    
    41,000
    
    
    $
    8.60$10.00
    
    
    91,500
    
    
    
    6.08
    
    
    
    10.00
    
    
    
    91,500
    
    
    
    10.00$12.00
    
    
    143,000
    
    
    
    8.63
    
    
    
    12.00
    
    
    
    143,000
    
    
    
    12.00280,500
    
    
    
    7.57
    
    
    $
    10.80
    
    
    
    275,500
    
    
    $
    10.83
   CompensationCostsRemainder of 2006
    
    $
    5,5262007
    
    
    7,3682008
    
    
    5,522Total
    
    $
    18,416
 11.
    Table of Contents  NOTE 2  EARNINGS PER SHARE
  Three Months Ended March 31,2006
    
    
    2005BASIC:Net earnings
    
    $
    117,000
    
    
    $
    115,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,122,833Basic earnings per share
    
    $
    0.05
    
    
    $
    0.05DILUTED:Net earnings
    
    $
    117,000
    
    
    $
    115,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,122,833Dilutive effect of stock options
    
    
    6,573
    
    
    
    65,936Dilutive effect of stock warrants
    
    
    569
    
    
    
    55,789Total common shares and dilutive potential
common shares
    
    
    2,221,706
    
    
    
    2,244,558Diluted earnings per share
    
    $
    0.05
    
    
    $
    0.05
  Three Months Ended March 31,2006
    
    
    2005Stock options
    
    
    143,000
    
    
    
    Total
    
    
    143,000
    
    
    
    
 NOTE 3  LOANS AND LOAN COMMITMENTS
  March 31, 2006
    
    
    December 31, 2005Balance
    
    
    Percent
    
    
    Balance
    
    
    PercentResidential real estate
    
    $
    60,032,262
    
    
    
    36.9
    %
    
    $
    59,320,852
    
    
    
    37.1
    %Multifamily residential real estate
    
    
    9,890,430
    
    
    
    6.1
    
    
    
    9,929,945
    
    
    
    6.2Commercial real estate
    
    
    56,490,197
    
    
    
    34.7
    
    
    
    54,522,175
    
    
    
    34.1Construction
    
    
    11,455,566
    
    
    
    7.0
    
    
    
    11,758,408
    
    
    
    7.3Commercial
    
    
    13,500,960
    
    
    
    8.3
    
    
    
    12,805,424
    
    
    
    8.0Consumer and home equity
    
    
    11,430,801
    
    
    
    7.0
    
    
    
    11,655,793
    
    
    
    7.3Total loans
    
    
    162,800,216
    
    
    
    100.0
    %
    
    
    159,992,597
    
    
    
    100.0
    %Less: Allowance for loan losses
    
    
    (1,637,205
    )
    
    
    
    
    
    
    (1,589,407
    )Net deferred loan fees
    
    
    (210,415
    )
    
    
    
    
    
    
    (220,871
    )Loans, net
    
    $
    160,952,596
    
    
    
    
    
    
    $
    158,182,319
 12.
    Table of Contents  NOTE 3  LOANS AND LOAN COMMITMENTS
  2006
    
    
    2005Balance, beginning of period
    
    $
    1,589,407
    
    
    $
    1,263,655Provision for loan losses
    
    
    50,000
    
    
    
    92,046Loans charged-off
    
    
    (4,012
    )
    
    
    (12,221
    )Recoveries
    
    
    1,810
    
    
    
    521Balance, end of period
    
    $
    1,637,205
    
    
    $
    1,344,001
  March 31,
    
    
    December 31,2006
    
    
    2005Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    Nonaccrual loans, includes smaller balance homogeneous loans
    
    
    657,505
    
    
    
    663,970Impaired loans, included in nonaccrual loans
    
    $
    348,000
    
    
    $
    344,837Amount of the allowance for loan losses allocated
    
    
    35,000
    
    
    
    35,000
 Three months ended March 31,2006
    
    
    2005Interest income foregone on nonaccrual loans
    
    $
    3,139
    
    
    $
    21,136Average of impaired loans during the period
    
    $
    346,000
    
    
    $
    1,066,000Interest income recognized during impairment
    
    
    
    
    
    
    Cash-basis interest income recognized during impairment
    
    
    
    
    
    
    
  March 31,
    
    
    December 31,2006
    
    
    2005Commitments to make loans:Variable-rate
    
    $
    1,793,500
    
    
    $
    702,000Fixed-rate
    
    
    441,500
    
    
    
    123,000Unused lines of credit, variable-rate
    
    $
    17,720,000
    
    
    $
    19,052,000
  13.
    Table of Contents  NOTE 4  FEDERAL HOME LOAN BANK ADVANCES
   March
    
    
    December2006
    
    
    2005Thirty-month interest-only advance
2.77% fixed rate, maturing June 23, 2006
    
    $
    1,500,000
    
    
    $
    1,500,000Three-year interest-only advance
3.07% fixed rate, maturing December 22, 2006
    
    
    1,500,000
    
    
    
    1,500,000Three-year, constant monthly payment advance
2.26% fixed rate, final maturity October 1, 2006
    
    
    599,357
    
    
    
    853,818Three-year interest-only advance
2.42% fixed rate, maturing March 10, 2007
    
    
    5,000,000
    
    
    
    5,000,000Two-year interest-only advance
4.32% fixed rate, maturing September 7, 2007
    
    
    2,000,000
    
    
    
    2,000,000Four-year, constant monthly payment advance
2.57% fixed rate, final maturity October 1, 2007
    
    
    816,307
    
    
    
    942,192Twenty seven month interest-only advance
4.94% fixed rate, maturing April 25, 2008
    
    
    2,000,000
    
    
    
    Three-year interest-only advance
4.89% fixed rate, maturing January 16, 2009
    
    
    3,000,000
    
    
    
    Three-year interest-only advance
5.24% fixed rate, maturing February 23, 2009
    
    
    2,500,000
    
    
    
    Four-year interest-only advance
4.98% fixed rate, maturing January 25, 2010
    
    
    2,000,000
    
    
    
    Four-year interest-only advance
5.25% fixed rate, maturing February 23, 2010
    
    
    2,500,000
    
    
    
    $
    23,415,664
    
    
    $
    11,796,010
  14.
    Table of Contents  Item 2. Managements Discussion and Analysis
 
 FORWARD-LOOKING STATEMENTS
  
    
    anticipated changes in industry conditions created by state and federal
legislation and regulations;
    
    anticipated changes in general interest rates and the impact of future interest
rate changes on our profitability, capital adequacy and the fair value of our financial
assets and liabilities;
    
    retention of our existing customer base and our ability to attract new customers;
    
    the development of new products and services and their success in the marketplace;
    
    the adequacy of the allowance for loan losses; and
    
    statements regarding our anticipated loan and deposit account growth, expense
levels, liquidity and capital resources and projections of earnings.
  
    
    competition in the industry and markets in which we operate;
    
    changes in general interest rates;
    
    rapid changes in technology affecting the financial services industry;
    
    changes in government regulation; and
    
    general economic and business conditions.
 15.
    Table of Contents  OVERVIEW
  
    
    Loan growth has continued however at lower than predicted levels
    
    Core deposits experienced seasonal declines
  
    
    Strong yield performance offset some, but not all margin compression
    
    Noninterest expense continued to grow, led by increases in salaries and benefits and occupancy
    
    Increases in the cost of funds outpaced improvement in the yield on interest-earning assets
    
    Noninterest income grew substantially
 SIGNIFICANT ACCOUNTING POLICIES
 Allowance for loan losses
  FINANCIAL CONDITION  MARCH 31, 2006, COMPARED TO DECEMBER 31, 2005
 Assets
 Securities
 Loans
 Allowance for loan losses and asset quality
 16.
    Table of Contents  Accrued interest receivable and other assets.
 Deposits
  Federal Home Loan Bank advances
 RESULTS OF OPERATIONS  THREE MONTHS ENDED MARCH 31, 2006
  Net interest income
  17.
    Table of Contents  Three months ended March 31,2006
    
    
    2005Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    earned/
    
    
    Yield/
    
    
    outstanding
    
    
    earned/
    
    
    Yield/(Dollars in thousands)
    
    Balance
    
    
    paid
    
    
    Rate
    
    
    balance
    
    
    paid
    
    
    RateAssetsInterest-earning assets:Interest-bearing deposits and federal funds sold
    
    $
    3,603
    
    
    $
    43
    
    
    
    4.79
    %
    
    $
    11,571
    
    
    $
    63
    
    
    
    2.21
    %Securities available for sale
    
    
    33,063
    
    
    
    322
    
    
    
    3.89
    
    
    
    41,447
    
    
    
    388
    
    
    
    3.74Securities held to maturity (1)
    
    
    837
    
    
    
    10
    
    
    
    5.20
    
    
    
    647
    
    
    
    9
    
    
    
    5.38Federal agency stock
    
    
    1,480
    
    
    
    22
    
    
    
    5.84
    
    
    
    1,376
    
    
    
    17
    
    
    
    5.06Loans (2)
    
    
    160,531
    
    
    
    2,754
    
    
    
    6.96
    
    
    
    135,003
    
    
    
    2,119
    
    
    
    6.36Total interest-earning assets
    
    
    199,514
    
    
    
    3,151
    
    
    
    6.40
    
    
    
    190,044
    
    
    
    2,596
    
    
    
    5.53Noninterest-earning assets
    
    
    10,325
    
    
    
    
    
    
    
    
    
    
    
    8,443Total assets
    
    
    209,839
    
    
    
    
    
    
    
    
    
    
    
    198,487Liabilities and Shareholders EquityInterest-bearing liabilities:Interest-bearing demand deposits
    
    $
    9,822
    
    
    
    19
    
    
    
    0.77
    %
    
    $
    11,526
    
    
    
    22
    
    
    
    0.78
    %Savings accounts
    
    
    14,030
    
    
    
    29
    
    
    
    0.84
    
    
    
    26,910
    
    
    
    72
    
    
    
    1.08Money market accounts
    
    
    26,441
    
    
    
    178
    
    
    
    2.73
    
    
    
    21,529
    
    
    
    132
    
    
    
    2.49Certificates of deposit
    
    
    93,562
    
    
    
    848
    
    
    
    3.67
    
    
    
    89,512
    
    
    
    620
    
    
    
    2.81Total interest-bearing deposits
    
    
    143,855
    
    
    
    1,074
    
    
    
    3.03
    
    
    
    149,477
    
    
    
    846
    
    
    
    2.30Other borrowings
    
    
    32,363
    
    
    
    378
    
    
    
    4.67
    
    
    
    19,349
    
    
    
    200
    
    
    
    4.12Total interest-bearing liabilities
    
    
    176,218
    
    
    
    1,452
    
    
    
    3.34
    
    
    
    168,826
    
    
    
    1,046
    
    
    
    2.51Noninterest-bearing demand deposits
    
    
    14,485
    
    
    
    
    
    
    
    
    
    
    
    11,860Noninterest-bearing liabilities
    
    
    1,025
    
    
    
    
    
    
    
    
    
    
    
    563Total liabilities
    
    
    191,728
    
    
    
    
    
    
    
    
    
    
    
    181,249Shareholders equity
    
    
    18,111
    
    
    
    
    
    
    
    
    
    
    
    17,238Total liabilities and shareholders equity
    
    $
    209,839
    
    
    
    
    
    
    
    
    
    
    $
    198,487Net interest income; interest-rate spread (3)
    
    
    
    
    
    $
    1,699
    
    
    
    3.06
    %
    
    
    
    
    
    $
    1,550
    
    
    
    3.02
    %Net earning assets
    
    $
    23,296
    
    
    
    
    
    
    
    
    
    
    $
    21,218Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.46
    %
    
    
    
    
    
    
    
    
    
    
    3.31
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    1.13x
    
    
    
    
    
    
    
    
    
    
    
    1.13x
 
 (1)
    
    Presented on a taxable-equivalent basis(2)
    
    Net of net deferred loan fees and costs and loans in process.
Nonaccrual loans are reported in noninterest-earning assets in this table.(3)
    
    Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.(4)
    
    Net interest margin represents net interest income, annualized, divided by average interest-earning assets. Interest
income
 Interest expense
 Provision for loan losses
 18.
    Table of Contents  Noninterest income
 Noninterest expense
    Income taxes
 CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS
  Nine months
    
    Year ended December 31,(Dollars in thousands)
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    ThereafterCertificates of deposit
    
    $
    46,284
    
    
    $
    32,692
    
    
    $
    9,769
    
    
    $
    2,973
    
    
    $
    1,977
    
    
    $
    424Repurchase agreements
    
    
    3,306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term FHLB advances
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FHLB advances
    
    
    3,982
    
    
    
    7,434
    
    
    
    2,000
    
    
    
    5,500
    
    
    
    4,500
    
    
    
    Subordinated debentures (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,325Capital lease obligations (2)
    
    
    128
    
    
    
    179
    
    
    
    181
    
    
    
    181
    
    
    
    181
    
    
    
    1,157Operating leases
    
    
    158
    
    
    
    200
    
    
    
    183
    
    
    
    183
    
    
    
    183
    
    
    
    502Deposits without maturity
    
    
    68,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    The subordinated debentures are redeemable at par at the Companys option any time prior to
maturity, which is March 31, 2022.(2)
    
    Includes $1,050 of amounts allocable to interest payments over the remaining term of the
leases.  19.
    Table of Contents  LIQUIDITY
     CAPITAL RESOURCES
   20.
    Table of Contents  To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital to risk-weighted assets
Ohio Legacy Corp
    
    
    23,415
    
    
    
    15.2
    %
    
    
    12,316
    
    
    
    8.0
    %
    
    
    15,396
    
    
    
    10.0
    %Ohio Legacy Bank
    
    
    21,545
    
    
    
    14.0
    
    
    
    12,323
    
    
    
    8.0
    
    
    
    15,403
    
    
    
    10.0Tier 1 capital to risk-weighted
assets
Ohio Legacy Corp
    
    
    21,778
    
    
    
    14.1
    %
    
    
    6,158
    
    
    
    4.0
    %
    
    
    9,237
    
    
    
    6.0
    %Ohio Legacy Bank
    
    
    19,908
    
    
    
    12.9
    
    
    
    6,161
    
    
    
    4.0
    
    
    
    9,242
    
    
    
    6.0Tier 1 capital to average assets
Ohio Legacy Corp
    
    
    21,778
    
    
    
    10.5
    %
    
    
    8,414
    
    
    
    5.0
    %
    
    
    10,517
    
    
    
    5.0
    %Ohio Legacy Bank
    
    
    19,908
    
    
    
    9.5
    
    
    
    8,414
    
    
    
    5.0
    
    
    
    10,517
    
    
    
    5.0
  
 Item 3. Controls and Procedures
  21.
    Table of Contents  PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
 There are no matters required to be reported under this item.
 22.
    Table of Contents  Item 6. Exhibits.
  Number
    
    Note
    
    Description of Document3.1
    
    
    
    (1
    )
    
    Second Amended and Restated Articles of Incorporation of Ohio Legacy Corp3.2
    
    
    
    (2
    )
    
    Code of Regulations of Ohio Legacy Corp, as amended by Amendment No. 14.1
    
    
    
    (3
    )
    
    See Pages 1 through 9 of Exhibit 3.1 for provisions defining the rights of the holders of
common shares4.2
    
    
    
    (3
    )
    
    Form of Organizer Stock Purchase Warrant4.4
    
    
    
    (2
    )
    
    2004 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio
Legacy Corp10.1
    
    
    
    (3
    )
    
    Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan10.2
    
    
    
    (4
    )
    
    2002 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio
Legacy Corp10.3
    
    
    
    (3
    )
    
    Employment Agreement with Mr. Douce10.4
    
    
    
    (3
    )
    
    Employment Agreement with Mr. Pettit10.5
    
    
    
    (3
    )
    
    Lease Agreement dated August 24, 1999, by and among Jack K. and Heidi M. Gant and Ohio Legacy
Corp10.6
    
    
    
    (3
    )
    
    Lease Agreement dated November 30, 1999, by and between Schoeppner Properties and Ohio Legacy
Corp10.7
    
    
    
    (5
    )
    
    Employment Agreement with Mr. Boss10.8
    
    
    
    (5
    )
    
    Lease Agreement dated October 2001 by and between Shee-Brees, L.L.C. and Ohio Legacy Corp10.10
    
    
    
    (6
    )
    
    Assignment and assumption of lease by and among Unizan Bank, Ohio Legacy Bank and Chesterland
Productions, P.L.L. dated August 27, 200410.11
    
    
    
    (7
    )
    
    Employment Agreement with Mr. Kramer11
    
    
    
    
    
    
    Statement Regarding Computation of Per Share Earnings (incorporated by reference to
Note 2 on page 12 of this Form 10-QSB)31.1
    
    
    
    
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and
acting Chief Financial Officer32.1
    
    
    
    
    
    
    Certification Pursuant To 18 U.S.C. Section 1350 As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    -      Incorporated by reference to Registrants Form 10-QSB for the fiscal quarter ended June 30, 2003, filed on August 14, 2003(2)
    
    -      Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2003, filed on March 17, 2004(3)
    
    -      Incorporated by reference to Registrants Form SB-2, File No. 333-38328, effective June 1, 2000(4)
    
    -      Incorporated by reference to Registrants Form S-8, File No. 333-88842, effective May 22, 2002(5)
    
    -      Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2001, filed on April 1, 2002(6)
    
    -      Incorporated by reference to Registrants Form 10-KSB for the fiscal year ended December 31, 2004, filed on March 22, 2005(7)
    
    -      Incorporated by reference to Registrants Form 8-K filed on May 6, 2005 23.
    Table of Contents  SIGNATURES
  OHIO LEGACY CORP(Registrant)Date: May 15, 2006
    
    By: /s/ D. Michael KramerD. Michael Kramer, President,President, Chief Executive Officer and actingChief Financial Officer
 24.