##### Table of Contents



UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
  þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the fiscal year ended December 31, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition
period from  to
 Commission file number 000-31673
 OHIO LEGACY CORP
  OHIO
    
    34-1903890(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2375 Benden Drive Suite C, Wooster
    
    44691(Address of principal executive offices)
    
    (Zip Code)
 (330) 263-1955
  Title of each class:
    
    Name of each exchange on which registered:Common Shares, without par value
    
    NASDAQ SmallCap
  
  o
  þ o
 o
 o þ
   
 o þ




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TABLE OF CONTENTS
 PART IItem 1. Description of BusinessItem 2. Description of PropertyItem 3. Legal ProceedingsItem 4.
Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases
of Equity SecuritiesItem 6. Managements Discussion and AnalysisItem 7.
Financial StatementsItem 8.
Changes in and Disagreements With Accountants on Accounting and Financial DisclosureItem 8A.
Controls and ProceduresItem 8B. Other InformationPART IIIItem 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a)
of the Exchange ActItem 10. Executive CompensationItem 11. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder MattersItem 12. Certain Relationships and Related
Transactions and Director IndependenceItem 13. ExhibitsItem 14. Principal Accountant Fees and
ServicesSIGNATURESEX-10.12 Change  in Control AgreementEX-10.13 Change in Control AgreementEX-10.14 Change in Control AgreementEX-14 Code of EthicsEX-20 Proxy StatementEX-21 Subsidiary of Ohio Legacy CorpEX-23 Consent of Crowe Chizek and Company LLCEX-31.1 302 Certification for CEO, CFO, and PresidentEX-31.2 Rule 13a-14(a)/15d-14(a) CertificationsEX-32.1 906 Certification for CEO, CFO and President
  2




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PART I
 
 Item 1. Description of Business.
 Background
   Products and Services
  Commercial and Construction Lending Products
     3




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Retail Lending Products
    Deposit Products
  Employees
  Competition
  4




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Wall Street Journal
 Supervision and Regulation
  Regulation of Ohio Legacy
 Bank Holding Company Act.
  Sarbanes-Oxley Act of 2002.
 Gramm-Leach-Bliley Act.
  5




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Capital Guidelines.
 Regulation of the Bank
   Dividend Restrictions.
 Interstate Banking and Branching.
 FDIC.
 6




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Community Reinvestment Act.
 USA PATRIOT Act.
 Effects of Government Monetary Policy
  Future Regulatory Uncertainty
  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;
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
    
    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.
 Statistical Disclosures
  8




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Industry Guide 3  Item I. Distribution of Assets, Liabilities and Stockholders Equity; Interest
Rates and Interest Differential
   Year ended December 31,2007
    
    
    2006Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(Dollars in thousands)AssetsInterest-earning assets:Interest-bearing deposits and federal
funds sold
    
    
    5,245
    
    
    
    263
    
    
    
    5.01
    %
    
    
    4,578
    
    
    
    231
    
    
    
    5.05
    %Securities available for sale
    
    
    24,895
    
    
    
    1,116
    
    
    
    4.48
    
    
    
    30,558
    
    
    
    1,192
    
    
    
    3.90Securities held to maturity (1)
    
    
    2,917
    
    
    
    167
    
    
    
    5.73
    
    
    
    993
    
    
    
    53
    
    
    
    5.34Federal Reserve Bank stock
    
    
    1,541
    
    
    
    98
    
    
    
    6.36
    
    
    
    1,505
    
    
    
    89
    
    
    
    5.91Loans (2)
    
    
    164,216
    
    
    
    12,198
    
    
    
    7.43
    
    
    
    170,114
    
    
    
    12,030
    
    
    
    7.07Total interest-earning assets
    
    
    198,814
    
    
    
    13,842
    
    
    
    6.96
    
    
    
    207,748
    
    
    
    13,595
    
    
    
    6.54Noninterest-earning assets
    
    
    17,637
    
    
    
    
    
    
    
    
    
    
    
    11,167Total assets
    
    $
    216,451
    
    
    
    
    
    
    
    
    
    
    $
    218,915Liabilities and Shareholders EquityInterest-bearing liabilities:Interest-bearing demand deposits
    
    
    9,465
    
    
    
    135
    
    
    
    1.43
    
    
    
    9,005
    
    
    
    67
    
    
    
    0.74Savings accounts
    
    
    7,578
    
    
    
    59
    
    
    
    0.78
    
    
    
    11,637
    
    
    
    96
    
    
    
    0.82Money market accounts
    
    
    45,160
    
    
    
    1,725
    
    
    
    3.82
    
    
    
    32,828
    
    
    
    1,116
    
    
    
    3.40Certificates of deposit
    
    
    95,738
    
    
    
    4,563
    
    
    
    4.77
    
    
    
    100,369
    
    
    
    4,171
    
    
    
    4.16Total interest-bearing deposits
    
    
    157,941
    
    
    
    6,482
    
    
    
    4.10
    
    
    
    153,839
    
    
    
    5,450
    
    
    
    3.54Other borrowings
    
    
    21,404
    
    
    
    1,194
    
    
    
    5.58
    
    
    
    31,015
    
    
    
    1,543
    
    
    
    4.98Total interest-bearing liabilities
    
    
    179,345
    
    
    
    7,676
    
    
    
    4.28
    
    
    
    184,854
    
    
    
    6,993
    
    
    
    3.78Noninterest-bearing demand deposits
    
    
    16,834
    
    
    
    
    
    
    
    
    
    
    
    15,158Noninterest-bearing liabilities
    
    
    923
    
    
    
    
    
    
    
    
    
    
    
    1,026Total liabilities
    
    
    197,102
    
    
    
    
    
    
    
    
    
    
    
    201,038Shareholders equity
    
    
    19,349
    
    
    
    
    
    
    
    
    
    
    
    17,877Total liabilities and
shareholders equity
    
    $
    216,451
    
    
    
    
    
    
    
    
    
    
    $
    218,915Net interest income; interest-rate spread
(3)
    
    
    
    
    
    
    6,166
    
    
    
    2.68
    %
    
    
    
    
    
    
    6,602
    
    
    
    2.76
    %Net earning assets
    
    
    19,469
    
    
    
    
    
    
    
    
    
    
    $
    22,894Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.10
    %
    
    
    
    
    
    
    
    
    
    
    3.17
    %Average interest-earning assets to
interest-bearing liabilities
    
    
    1.11
    x
    
    
    
    
    
    
    
    
    
    
    1.12
    x
 
 (1)
    
    Yield calculated on a taxable-equivalent basis.(2)
    
    Average loans are net of net deferred loan fees and costs
 and loans in process. Nonaccrual loans are included in noninterest-earning
assets. Fee income is included in interest earned. 9




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(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 divided by average interest-earning assets.   Year ended December 31,2007 vs. 2006
    
    
    2006 vs. 2005Increase (Decrease) due to
    
    
    Increase (Decrease) due toVolume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(Dollars in thousands)Change in interest income attributable to:Interest-bearing deposits and federal
funds sold
    
    
    33
    
    
    
    (1
    )
    
    
    32
    
    
    
    (32
    )
    
    
    106
    
    
    
    74Securities available for sale
    
    
    (239
    )
    
    
    163
    
    
    
    (76
    )
    
    
    (301
    )
    
    
    67
    
    
    
    (234
    )Securities held to maturity
    
    
    110
    
    
    
    4
    
    
    
    114
    
    
    
    11
    
    
    
    (15
    )
    
    
    (4
    )Federal agency stock
    
    
    2
    
    
    
    7
    
    
    
    9
    
    
    
    4
    
    
    
    8
    
    
    
    12Loans
    
    
    (426
    )
    
    
    594
    
    
    
    168
    
    
    
    1,655
    
    
    
    706
    
    
    
    2,361Total assets
    
    $
    (520
    )
    
    $
    767
    
    
    $
    247
    
    
    $
    1,337
    
    
    $
    872
    
    
    $
    2,209Change in interest expense attributable to:Interest-bearing demand deposits
    
    
    4
    
    
    
    64
    
    
    
    68
    
    
    
    (11
    )
    
    
    (3
    )
    
    
    (14
    )Savings accounts
    
    
    (32
    )
    
    
    (5
    )
    
    
    (37
    )
    
    
    (72
    )
    
    
    (29
    )
    
    
    (101
    )Money market accounts
    
    
    458
    
    
    
    150
    
    
    
    608
    
    
    
    194
    
    
    
    243
    
    
    
    437Certificates of deposit
    
    
    (199
    )
    
    
    591
    
    
    
    392
    
    
    
    292
    
    
    
    1,031
    
    
    
    1,323Other borrowings
    
    
    (520
    )
    
    
    171
    
    
    
    (349
    )
    
    
    435
    
    
    
    173
    
    
    
    608Total interest-bearing liabilities
    
    $
    (289
    )
    
    $
    975
    
    
    $
    683
    
    
    $
    838
    
    
    $
    1,415
    
    
    $
    2,253Change in net interest income
    
    
    
    
    
    
    
    
    
    $
    (436
    )
    
    
    
    
    
    
    
    
    
    $
    (44
    )
 Industry Guide 3  Item II. Investment Portfolio
 A.
    
    This information is contained in Note 3 to the Consolidated Financial
Statements on page 36.B.
    
    Other securities consist of Federal Home Loan Bank and Federal Reserve Bank
stock that bears no stated maturity or yield and FNMA and FHLMC preferred stock that
has a stated rate and an initial call date of five years from the date of issuance.
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Maturities of Investment Securities (Dollars in thousands)Due in one
    
    Due after one
    
    Due after fiveNo Stated Maturity
    
    year or less
    
    through five years
    
    through ten yearsWeighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageAmount
    
    Yields
    
    Amount
    
    Yields
    
    Amount
    
    Yields
    
    Amount
    
    YieldsU.S. Government
sponsored agencies
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    1,018
    
    
    
    5.0
    %
    
    
    
    
    
    
    
    %Mortgage-backed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    882
    
    
    
    4.6
    
    
    
    290
    
    
    
    5.1Municipal (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,096
    
    
    
    5.1Other securities (2)
    
    
    4,585
    
    
    
    9.1
    %
    
    
    100
    
    
    
    4.4
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total securities
    
    
    4,585
    
    
    
    9.1
    %
    
    
    100
    
    
    
    4.4
    %
    
    
    1,900
    
    
    
    4.8
    %
    
    
    1,386
    
    
    
    5.1
    %
 Due after ten years
    
    TotalWeighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageAmount
    
    Yields
    
    Amount
    
    YieldU.S. Government
sponsored agencies
    
    
    
    
    
    
    
    %
    
    
    1,018
    
    
    
    5.0
    %Mortgage-backed
    
    
    23,777
    
    
    
    5.3
    
    
    
    24,948
    
    
    
    5.3Municipal
    
    
    1,906
    
    
    
    5.7
    
    
    
    3,003
    
    
    
    5.5Other securities
    
    
    
    
    
    
    
    
    
    
    4,685
    
    
    
    9.025,683
    
    
    
    5.3
    %
    
    
    33,654
    
    
    
    5.8
    %
  
 (1)
    
    Fully tax-equivalent based on federal income tax structure applicable at December 31, 2007.(2)
    
    Some securities in this category are subject to the 70% dividend exclusion C.
    
    At December 31, 2007, there were no holdings of securities of any one
issuer, other than mortgage backed securities issued by U.S. Government -sponsored
enterprises, in an amount greater than 10% of shareholders equity.
 Industry Guide 3  Item III. Loan Portfolio
 A.
    
    Types of LoansThis information is contained in Note 4 to the Consolidated Financial Statements on
page 38.B.
    
    Maturities and Sensitivities of Loans to Changes in Interest RatesThe following is a schedule of maturities of loans based on contractual terms and
assuming no amortization or prepayments, excluding residential real estate and
consumer loans, as of December 31, 2007:
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MaturingAfter oneOne year
    
    
    through
    
    
    After five(Dollars in thousands)
    
    or less
    
    
    five years
    
    
    years
    
    
    TotalCommercial
    
    $
    7,776
    
    
    $
    2,741
    
    
    $
    2,011
    
    
    $
    12,528Commercial real estate
    
    
    8,652
    
    
    
    13,303
    
    
    
    37,620
    
    
    
    59,575Real estate construction
    
    
    6,922
    
    
    
    1,918
    
    
    
    1,875
    
    
    
    10,715Total
    
    $
    23,350
    
    
    $
    17,962
    
    
    $
    41,506
    
    
    $
    82,818
  Fixed rate
    
    $
    23,713Adjustable rate
    
    
    35,755Total
    
    $
    59,468
 C.
    
    Risk Elements
 1.
    
    Nonaccrual, Past Due and Restructured Loans  This information is
contained in Note 4 to the Consolidated Financial Statements on page 39.The policy for placing loans on nonaccrual status is to cease accruing interest on
loans when management believes that collection of interest is doubtful or when
loans are past due as to principal and interest 90 days or more, except that in
certain circumstances interest accruals are continued on loans deemed by
management to be fully collectible. In such cases, loans are evaluated
individually in order to determine whether to continue income recognition after 90
days beyond the due dates. When loans are placed on nonaccrual, any accrued
interest that will not be collected is charged against interest income.When analysis of a borrowers operating results and financial condition indicates
the borrowers underlying cash flows are not adequate to meet debt service
requirements, the loan is evaluated for impairment. Smaller-balance homogeneous
loans are evaluated for impairment in total. These loans include residential
first mortgage and construction loans secured by one- to four-family residences,
consumer, credit card and home equity loans. Commercial, agricultural and
commercial real estate loans are evaluated individually for impairment. In
addition, loans held for sale and leases are excluded from consideration of
impairment.Loans individually considered impaired are carried at (a) the present value of
expected cash flows, discounted at the loans effective interest rate, or (b) at
fair value of collateral, if the loan is collateral dependent. A portion of the
allowance for loan losses is allocated to impaired loans. Impaired loans, or
portions thereof, are charged off when deemed uncollectible.2.
    
    Potential Problem Loans  At December 31, 2007, no loans were
identified that management had serious doubts about the borrowers ability to
comply with present loan repayment terms and that are not included above in
Industry Guide 3  Item III.C.1.3.
    
    Foreign Outstandings  There were no foreign loans outstanding
during any period presented.4.
    
    Loan Concentrations  At December 31, 2007, approximately
$7,351,000 of loans were made to individuals or companies involved in the rental
of residential real estate. This concentration accounts for 5.5% of total loans
at that date. Loans to individuals or companies involved in the leasing of
commercial real estate total $10,269,000 or 7.7% of total loans at December 31,
2007.
 D.
    
    Other Interest-bearing Assets  At December 31, 2007, there were no other
interest-bearing assets required to be disclosed under Industry Guide 3  Item
III.C.1. or 2 if such assets were loans.
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Industry Guide 3  Item IV. Summary of Loan Loss Experience
 A.
    
    Analysis of the Allowance for Loan Losses
  2007
    
    
    2006Balance, January 1
    
    $
    1,757,110
    
    
    $
    1,589,407Provision for loan losses
    
    
    3,482,854
    
    
    
    467,000Loans charged-off:Commercial
    
    
    (1,807,150
    )
    
    
    (3,267
    )Residential real estate
    
    
    (1,033,553
    )
    
    
    (297,938
    )Construction
    
    
    (378,757
    )
    
    
    Consumer and home equity
    
    
    (23,051
    )
    
    
    (9,981
    )Total loans charged-off
    
    
    (3,242,511
    )
    
    
    (311,186
    )RecoveriesResidential real estate
    
    
    2,500
    
    
    
    4,560Commercial
    
    
    5,000
    
    
    
    Consumer and home
    
    
    2,740
    
    
    
    7,329Total recoveries
    
    
    10,240
    
    
    
    11,889Reduction in allowance for loans sold
    
    
    (384,787
    )
    
    
    Balance, December 31
    
    $
    1,622,906
    
    
    $
    1,757,110Balance as a percentage of total loans
    
    
    1.22
    %
    
    
    0.98
    %
 The allowance for loan losses balance and provision charged to operating expense are
determined by management based on periodic reviews of the loan portfolio, economic
conditions and various other circumstances that are subject to change over time. In
making this judgment, management reviews selected large loans as well as loans
individually considered impaired, other delinquent, nonaccrual and problem loans and
loans to industries experiencing economic difficulties. The collectability of these
loans is evaluated after considering current operating results and financial position
of the borrower, estimated market value of collateral, guarantees and the Companys
collateral position versus other creditors. Judgments, which are necessarily
subjective, as to probability of loss and amount of such loss are formed on these
loans, as well as other loans taken together.B.
    
    Allocation of the Allowance for Loan LossesWhile managements periodic analysis of the adequacy of the allowance for loan losses
may allocate portions of the allowance to specific problem loan situations, the entire
allowance is available for any loan charge-offs that occur. The following schedule is
a breakdown of the allowance for loan losses allocated by type of loan and related
ratios at December 31:
 13




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2007
    
    2006Percentage of
    
    
    
    
    
    Percentage ofLoans in Each
    
    
    
    
    
    Loans in EachAllowance
    
    Category to
    
    Allowance
    
    Category toAmount
    
    Total Loans
    
    Amount
    
    Total LoansCommercial
    
    $
    185,283
    
    
    
    9.4
    %
    
    $
    185,000
    
    
    
    10.4
    %Commercial real estate
    
    
    744,692
    
    
    
    44.7
    
    
    
    962,110
    
    
    
    36.4Multifamily residential real estate
    
    
    99,936
    
    
    
    5.9
    
    
    
    100,000
    
    
    
    5.3Residential real estate
    
    
    357,254
    
    
    
    27.4
    
    
    
    370,000
    
    
    
    36.5Construction
    
    
    164,850
    
    
    
    8.0
    
    
    
    35,000
    
    
    
    5.7Consumer and home equity
    
    
    70,891
    
    
    
    4.6
    
    
    
    105,000
    
    
    
    5.7Total
    
    $
    1,622,906
    
    
    
    100.0
    %
    
    $
    1,757,110
    
    
    
    100.0
    %
 Industry Guide 3  Item V. Deposits
 A.
    
    Average Amount and Average Rate Paid On Deposits. This information is
contained in Note 7 to the Consolidated Financial Statements on page.41.B.
    
    Other categories  not applicable.C.
    
    Foreign deposits  not applicable.D.
    
    The following is a schedule of maturities of certificates of deposit in
amounts of $100,000 or more as of December 31, 2007:
 Three months or less
    
    $
    5,086,543Over three through six months
    
    
    5,536,407Over six through twelve months
    
    
    13,403,070Over twelve months
    
    
    2,664,643Total
    
    $
    26,690,663
 E.
    
    Time deposits greater than $100,000 issued by foreign offices  not
applicable.
 Industry Guide 3  Item VI. Return on Equity and Assets
 2007
    
    2006Return on average assets
    
    
    (1.68
    )
    
    
    0.04Return on average equity
    
    
    (18.81
    )
    
    
    0.49Dividend payout ratio
    
    
    0.0
    
    
    
    0.00Average shareholders equity to average assets
    
    
    8.94
    
    
    
    7.99
 Industry Guide
3  Item VII. Short-Term Borrowings
  14




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Item 2. Description of Property.
  
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
  2007
    
    2006HIGH
    
    LOW
    
    HIGH
    
    LOWFirst Quarter
    
    $
    10.40
    
    
    $
    8.31
    
    
    $
    10.75
    
    
    $
    9.67Second Quarter
    
    
    9.06
    
    
    
    8.08
    
    
    
    9.80
    
    
    
    9.10Third Quarter
    
    
    8.88
    
    
    
    8.00
    
    
    
    9.47
    
    
    
    8.80Fourth Quarter
    
    
    8.90
    
    
    
    4.20
    
    
    
    9.35
    
    
    
    8.50
   
 Item 6. Managements Discussion and Analysis
  15




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##### Table of Contents



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.
 16




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##### Table of Contents



OVERVIEW OF STRATEGIC DEVELOPMENTS
 
    
    Balance Sheet Transformation: The sale of our Millersburg office accomplished a number
of objectives, but the assistance it provided in changing our balance sheet was critical.
At the time of the sale, the Millersburg office had approximately $23.1 million in deposits
and $38.9 million in loans that were transferred to the buyer; First-Knox National Bank.
The final transaction involved the buyer paying a 7.17% premium on all deposits, and
purchasing the $38.9 million in loans at par. Within the loan portfolio, there were
approximately $18.8 million in 1-4 family residential real estate loans, $5.0 million in
home equity lines of credit or second mortgages, and $0.8 million of multi-family
residential mortgages. It was the belief of management that the residential real estate
portfolio had inherent weakness, which was borne out by its performance over the previous
six years. Additionally, within the $23.1 million deposit portfolio were approximately
$19.0 million in certificates of deposit which carried at an average rate of 5.0% at the
time of the sale. This represented the highest weighted deposit cost in our Company.
Lastly, the office included some of our highest operating costs in a market dominated by
two banking companies that held over 80% of the local deposit market share. The analysis
of these combined factors led to our decision to sell the office. Since the sale of the
office, we have seen steady improvement in net interest margin, a lessening of our negative
gap (the difference in timing of the repricing of our deposits and loans) and a reduction
in operating costs on an adjusted basis.
    
    Improvement of Credit Quality: The Company took a series of direct write-downs and
charge-offs in the third and fourth quarters to transition certain impaired credit
relationships out of the Company. In early 2007, when we initially discussed the issues
surrounding these declining credits, management believed that the credit issues we were
dealing with were contained within a small group of larger loans that could be managed out
of the Company relatively quickly with little or no loss. Management underestimated the
depth and breadth of the credit quality issues the Company was facing and particularly the
impact that a rapidly deteriorating residential real estate market would have on our
portfolio. While the relationships initially identified have remained essentially
unchanged, the magnitude of the losses was much higher than anticipated. Nearly all of
these credits have or had residential real estate exposure. These relationships ranged
from borrowers with several single family rental properties to a development loan for a
residential real estate sub-division. The slowdown of the real estate market in
Northeastern Ohio is having a significant impact on nearly every industry involved in
housing, including realtors, contractors, title companies, real estate developers and
excavators. While we believe that we have largely contained and dealt with the major
issues in our loan portfolio, the market will make it difficult to see the type of rapid
resolution that we believed we were capable of one year ago.
    
    Top-Line Revenue growth: Adjusted for the Millersburg transaction, we saw improvement
in our top-line revenue growth, but not to the levels that we had planned. Our mortgage
banking initiative was another casualty of the real estate market in Northeastern Ohio.
While our volume increased from the prior year, it did not meet our goals and expectations.
Similarly, while interest income and non-interest income, adjusted for the Millersburg
transaction, were both ahead of 2006 results, they were not at the levels the Company
hoped to achieve in 2007.
   17




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  Allowance for loan losses
  Valuation
allowance for deferred tax assets.
 FINANCIAL CONDITION  DECEMBER 31, 2007, COMPARED TO DECEMBER 31, 2006
 Cash
and cash equivalents.
 Securities.
 18




---



##### Table of Contents



Loans.
 Allowance for loan losses.
  Premises and equipment.
 Intangible assets.
 Federal bank stock.
 Accrued interest receivable and
other assets.
 Deposits.
 Repurchase agreements.
 19




---



##### Table of Contents



FHLB advances .
  Accrued interest payable and other liabilities.
 RESULTS OF OPERATIONS  YEARS ENDED DECEMBER 31, 2007 AND 2006
 Net interest income.
 Interest income.
 Interest expense.
 Provision for loan losses.
 Noninterest income.
 Noninterest expense.
   20




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##### Table of Contents



Income
taxes.
 CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS
  Note(Dollars in thousands)
    
    Reference
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterCertificates of
deposit
    
    
    7
    
    
    $
    66,561
    
    
    $
    3,245
    
    
    $
    2,066
    
    
    $
    911
    
    
    $
    532
    
    
    $
    143Repurchase
agreements
    
    
    8
    
    
    
    2,023
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FHLB advances
    
    
    9
    
    
    
    4,025
    
    
    
    5,500
    
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    Capital lease
obligations (1)
    
    
    5
    
    
    
    102
    
    
    
    102
    
    
    
    102
    
    
    
    111
    
    
    
    116
    
    
    
    386Operating leases
    
    
    5
    
    
    
    225
    
    
    
    198
    
    
    
    204
    
    
    
    124
    
    
    
    110
    
    
    
    233Deposits without
maturity
    
    
    
    
    
    
    73,891
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Includes $425 of amounts allocable to interest payments over the remaining term of the
leases.   LIQUIDITY
   21




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##### Table of Contents



CAPITAL RESOURCES
     INTEREST RATE SENSITIVITY
  22




---



##### Table of Contents



Percent variable rate2007
    
    2006Interest-bearing deposits and federal funds sold
    
    
    100
    %
    
    
    100
    %Securities
    
    
    21
    
    
    
    34Loans
    
    
    57
    
    
    
    72Federal bank stock
    
    
    100
    
    
    
    100Total interest-earning assets
    
    
    49
    
    
    
    68
 
  IMPACT OF INFLATION AND CHANGING PRICES
   CORPORATE GOVERNANCE AND AVAILABILITY OF REPORTS
  §
    
    The Chairman of the Board of Directors is a non-employee director.§
    
    After the Companys 2005 Annual Meeting of Shareholders the Board of Directors
restructured the composition of the holding companys board. This restructuring resulted
in seven of the nine directors of Ohio Legacy meeting the more stringent independence
requirements of Rule 10A-3 of the Securities Exchange Act and Section 301(3)(B) of the
Sarbanes-Oxley Act of 2002. At December 31, 2007, seven of eight directors met this
threshold.§
    
    The Company has a Nominating and Corporate Governance Committee which includes three
independent directors.§
    
    The Companys Audit and Compliance Committee comprises four independent directors. The
Board has identified an audit committee financial expert who serves as Chairman of the
Audit and Compliance Committee.
 23




---



##### Table of Contents



§
    
    The Board of Directors has adopted and implemented a Code of Ethics for Senior Financial
Officers, a Director Code of Conduct and a Code of Business Conduct and Ethics for all
employees of the Company and its subsidiary.§
    
    The Audit and Compliance Committee has developed a process for the receipt, retention
and investigation of anonymous submissions by employees or external parties of concerns
regarding questionable accounting or auditing matters.
  24




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##### Table of Contents



PERFORMANCE GRAPH
  
 12/31/02
    
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07Ohio Legacy Corp (OLCB)
    
    
    
    100
    
    
    
    
    127.1
    
    
    
    
    175.4
    
    
    
    
    109.9
    
    
    
    
    102.3
    
    
    
    
    59.9NASDAQ Composite Index
    
    
    
    100
    
    
    
    
    149.5
    
    
    
    
    162.7
    
    
    
    
    166.2
    
    
    
    
    182.6
    
    
    
    
    198.0NASDAQ Bank Index
    
    
    
    100
    
    
    
    
    128.6
    
    
    
    
    147.2
    
    
    
    
    143.8
    
    
    
    
    161.4
    
    
    
    
    127.9
 25




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##### Table of Contents



Item 7. Financial Statements
 CONSOLIDATED BALANCE SHEETS
 2007
    
    
    2006ASSETSCash and due from banks
    
    $
    5,764,580
    
    
    $
    5,659,986Federal funds sold and interest-bearing deposits in financial institutions
    
    
    1,350,625
    
    
    
    7,379,879Cash and cash equivalents
    
    
    7,115,205
    
    
    
    13,039,865Certificate of deposit in financial institution
    
    
    100,000
    
    
    
    100,000Securities available for sale
    
    
    29,010,334
    
    
    
    26,945,022Securities held to maturity (fair value of $2,995,122 and $2,166,324 at
December 31, 2007 and 2006
    
    
    3,002,754
    
    
    
    2,201,682Loans held for sale
    
    
    911,906
    
    
    
    1,212,470Loans, net of allowance of $1,622,906 and $1,757,110 at December 31,
2007 and 2006
    
    
    131,642,471
    
    
    
    177,021,214Federal bank stock
    
    
    1,541,200
    
    
    
    1,541,200Premises and equipment, net
    
    
    2,901,906
    
    
    
    3,618,697Intangible assets
    
    
    150,322
    
    
    
    282,388Other real estate owned
    
    
    2,416,367
    
    
    
    2,566,301Accrued interest receivable and other assets
    
    
    1,488,214
    
    
    
    1,954,992Total assets
    
    $
    180,280,679
    
    
    $
    230,483,831LIABILITIESDeposits:Noninterest-bearing demand
    
    $
    14,329,339
    
    
    $
    17,346,767Interest-bearing demand
    
    
    9,995,343
    
    
    
    9,988,257Savings
    
    
    49,566,417
    
    
    
    49,504,180Certificates of deposit, net
    
    
    73,458,253
    
    
    
    109,477,664Total deposits
    
    
    147,349,352
    
    
    
    186,316,868Repurchase agreements
    
    
    2,022,869
    
    
    
    1,317,527Short term Federal Home Loan Bank advances
    
    
    2,025,000
    
    
    
    Federal Home Loan Bank advances
    
    
    12,000,000
    
    
    
    19,433,770Subordinated debentures
    
    
    
    
    
    
    3,325,000Capital lease obligations
    
    
    493,168
    
    
    
    940,183Accrued interest payable and other liabilities
    
    
    1,076,647
    
    
    
    731,926Total liabilities
    
    
    164,967,036
    
    
    
    212,065,274SHAREHOLDERS EQUITYPreferred stock, no par value, 500,000 shares authorized and
None outstanding
    
    
    
    
    
    
    Common stock, no par value, 5,000,000 shares authorized and
2,214,564 outstanding in 2007 and 2006
    
    
    18,781,925
    
    
    
    18,737,150Accumulated earnings (deficit)
    
    
    (3,472,218
    )
    
    
    166,415Accumulated other comprehensive income (loss)
    
    
    3,936
    
    
    
    (485,008
    )Total shareholders equity
    
    
    15,313,643
    
    
    
    18,418,557Total liabilities and shareholders equity
    
    $
    180,280,679
    
    
    $
    230,483,831
  26




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS
 2007
    
    
    2006Interest and dividends income:Loans, including fees
    
    $
    12,197,884
    
    
    $
    12,030,510Securities, taxable
    
    
    1,116,060
    
    
    
    1,192,162Securities, tax-exempt
    
    
    111,028
    
    
    
    34,847Interest-bearing deposits and federal funds sold and other
    
    
    262,913
    
    
    
    230,725Dividends on federal bank stock
    
    
    98,307
    
    
    
    88,520Total interest and dividends income
    
    
    13,786,192
    
    
    
    13,576,764Interest expense:Deposits
    
    
    6,481,949
    
    
    
    5,449,750Short term Federal Home Loan Bank advances
    
    
    95,600
    
    
    
    219,945Federal Home Loan Bank advances
    
    
    693,267
    
    
    
    779,990Subordinated debentures
    
    
    190,213
    
    
    
    282,888Repurchase agreements
    
    
    87,504
    
    
    
    111,270Capital leases
    
    
    127,580
    
    
    
    148,944Total interest expense
    
    
    7,676,113
    
    
    
    6,992,787Net interest income
    
    
    6,110,079
    
    
    
    6,583,977Provision for loan losses
    
    
    3,482,854
    
    
    
    467,000Net interest income after provision for loan losses
    
    
    2,627,225
    
    
    
    6,116,977Noninterest income:Service charges and other fees
    
    
    1,078,284
    
    
    
    1,050,597Gain on sales of loans
    
    
    206,760
    
    
    
    24,702Gain (loss) on sales of securities available for sale, net
    
    
    (340,066
    )
    
    
    Gain (loss) on disposition or direct write-down of other
real estate owned
    
    
    (1,167,229
    )
    
    
    (4,036
    )Gain on sale of branch
    
    
    2,077,556
    
    
    
    Other income
    
    
    96,196
    
    
    
    68,070Total other income
    
    
    1,951,501
    
    
    
    1,139,333Noninterest expense:Salaries and benefits
    
    
    4,177,669
    
    
    
    3,774,255Occupancy and equipment
    
    
    968,484
    
    
    
    951,264Professional fees
    
    
    627,552
    
    
    
    357,661Franchise tax
    
    
    249,070
    
    
    
    241,362Data processing
    
    
    702,988
    
    
    
    627,733Marketing and advertising
    
    
    222,610
    
    
    
    185,087Stationery and supplies
    
    
    118,030
    
    
    
    126,678Amortization of intangible asset
    
    
    132,066
    
    
    
    172,856Deposit expenses and insurance
    
    
    277,785
    
    
    
    204,649Other expenses
    
    
    616,728
    
    
    
    453,337Total noninterest expense
    
    
    8,092,982
    
    
    
    7,094,882Earnings (loss) before income taxes
    
    
    (3,514,256
    )
    
    
    161,428Income tax expense
    
    
    124,377
    
    
    
    74,428Net earnings (loss)
    
    $
    (3,638,633
    )
    
    $
    87,000Basic net earnings (loss) per share
    
    $
    (1.64
    )
    
    $
    0.04Diluted net earnings (loss) per share
    
    $
    (1.64
    )
    
    $
    0.04
  27




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 Outstanding
    
    
    
    
    
    
    
    
    
    
    AccumulatedShares of
    
    
    
    
    
    
    Accumulated
    
    
    Other
    
    
    TotalCommon
    
    
    Common
    
    
    Earnings
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Stock
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    EquityBalance, January 1, 2006
    
    
    2,214,564
    
    
    $
    18,658,386
    
    
    $
    79,415
    
    
    $
    (632,926
    )
    
    $
    18,104,875Stock based compensation expense
    
    
    
    
    
    
    78,764
    
    
    
    
    
    
    
    
    
    
    
    78,764Comprehensive income (loss):Net earnings (loss)
    
    
    
    
    
    
    
    
    
    
    87,000
    
    
    
    
    
    
    
    87,000Net unrealized gain (loss) on
securities available for sale
arising during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,918
    
    
    
    147,918Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,918Balance, December 31, 2006
    
    
    2,214,564
    
    
    
    18,737,150
    
    
    
    166,415
    
    
    
    (485,008
    )
    
    
    18,418,557Stock based compensation expense
    
    
    
    
    
    
    44,775
    
    
    
    
    
    
    
    
    
    
    
    44,775Comprehensive income (loss):Net income (loss)
    
    
    
    
    
    
    
    
    
    
    (3,638,633
    )
    
    
    
    
    
    
    (3,638,633
    )Net unrealized gain (loss) on
securities available for sale
arising during the period including effect of reclassifications
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    488,944
    
    
    
    488,944Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,821,648
    )Balance, December 31 2007
    
    
    2,214,564
    
    
    $
    18,781,925
    
    
    $
    (3,472,218
    )
    
    $
    3,936
    
    
    $
    15,313,643
  28




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS
 2007
    
    
    2006Cash flows from operating activities:Net earnings
    
    $
    (3,638,633
    )
    
    $
    87,000Adjustments to reconcile net earnings to net cash from operating
activities:Depreciation and amortization
    
    
    532,371
    
    
    
    583,625Securities amortization and accretion, net
    
    
    70,729
    
    
    
    114,543Federal Home Loan Bank (FHLB) stock dividends
    
    
    
    
    
    
    (54,700
    )Origination of loans held for sale
    
    
    (26,150,822
    )
    
    
    (4,140,970
    )Proceeds from sale of loans held for sale
    
    
    26,658,146
    
    
    
    2,953,202Provision for loan losses
    
    
    3,482,854
    
    
    
    467,000Loss from Ohio Legacy Trust I
    
    
    (754
    )
    
    
    8,076Loss on disposition or write-down on other real estate owned
    
    
    1,167,229
    
    
    
    4,036Loss (gain) on sale of securities available for sale
    
    
    340,066
    
    
    
    Gain on sale of loans held for sale
    
    
    (206,760
    )
    
    
    (24,702
    )Gain on sale of branch
    
    
    (2,077,556
    )
    
    
    Accretion of fair value purchase adjustments
    
    
    (8,048
    )
    
    
    (19,599
    )Change in
deferred income taxes and valuation allowance
    
    
    693,103
    
    
    
    (109,648
    )Stock based compensation expense
    
    
    44,775
    
    
    
    78,764Net change in:Accrued interest receivable and other assets
    
    
    (700,908
    )
    
    
    (110,745
    )Accrued interest payable and other liabilities
    
    
    403,005
    
    
    
    181,285Deferred loan fees
    
    
    (63,948
    )
    
    
    (16,797
    )Net cash from operating activities
    
    
    544,848
    
    
    
    370Cash flows from investing activities:Purchases of securities available for sale
    
    
    (19,217,045
    )
    
    
    (1,000,000
    )Purchases of securities held to maturity
    
    
    (804,847
    )
    
    
    (1,373,638
    )Sales of securities available for sale
    
    
    13,147,235
    
    
    
    Maturities, calls and paydowns of securities available for sale
    
    
    4,338,301
    
    
    
    7,280,252Proceeds from sale of other real estate owned
    
    
    734,348
    
    
    
    201,471Net cash from branch sale
    
    
    17,750,281
    
    
    
    Purchases of federal bank stock
    
    
    
    
    
    
    (7,000
    )Net change in loans
    
    
    2,601,426
    
    
    
    (22,060,906
    )Proceeds from sale of loans
    
    
    612,264
    
    
    
    Improvements to real estate owned
    
    
    (1,507,968
    )
    
    
    Purchases of premises and equipment
    
    
    (217,797
    )
    
    
    (232,152
    )Net cash from investing activities
    
    
    (17,436,193
    )
    
    
    (17,191,973
    )Cash flows from financing activities:Net change in deposits
    
    
    (15,847,672
    )
    
    
    23,439,419Net change in repurchase agreements
    
    
    705,342
    
    
    
    (1,748,990
    )Repayment of capital lease obligations
    
    
    (29,606
    )
    
    
    (19,267
    )Repayment of debt obligation
    
    
    (3,325,000
    )
    
    
    Proceeds from short term FHLB advances, net of repayments
    
    
    2,025,000
    
    
    
    (7,200,000
    )Proceeds from FHLB advances
    
    
    
    
    
    
    12,000,000Repayments of FHLB advances
    
    
    (7,433,776
    )
    
    
    (4,362,240
    )Net cash
from (used by) financing activities
    
    
    (23,905,706
    )
    
    
    22,108,922Net change in cash and cash equivalents
    
    
    (5,924,660
    )
    
    
    4,917,319Cash and cash equivalents at beginning of period
    
    
    13,039,865
    
    
    
    8,122,546
  29




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##### Table of Contents



2007
    
    
    2006Cash and cash equivalents at end of period
    
    $
    7,115,205
    
    
    $
    13,039,865Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    7,824,289
    
    
    $
    6,882,201Federal income taxes
    
    
    
    
    
    
    233,948Noncash transactions:Transfer of loans to other real estate owned
    
    $
    243,590
    
    
    $
    2,777,438
 30




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Principles of Consolidation:
  Use of Estimates:
 Cash Flows:
 InterestBearing Deposits in Other Financial Institutions
 Restrictions on Cash:
 Securities:
   Loans Held for Sale:
 31




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##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Loans:
    Allowance for Loan Losses:
  Transfers of Financial Assets
 Federal Bank Stock:
 32




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Premises and Equipment:
 Intangible Assets:
 Other Real Estate Owned:
 Long-Term Assets
 Income Taxes:
  Earnings Per Share:
 2007
    
    
    2006BASIC:Net earnings (loss)
    
    $
    (3,638,633
    )
    
    $
    87,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,214,564Basic earnings (loss) per share
    
    $
    (1.64
    )
    
    $
    0.04
 33




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 2007
    
    
    2006DILUTED:Net earnings (loss)
    
    $
    (3,638,633
    )
    
    $
    87,000Weighted average common shares outstanding
    
    
    2,214,564
    
    
    
    2,214,564Dilutive effect of stock options
    
    
    
    
    
    
    3,629Dilutive effect of stock warrants
    
    
    
    
    
    
    142Total common shares and dilutive potential
common shares
    
    
    2,214,564
    
    
    
    2,218,335Diluted earnings (loss) per share
    
    $
    (1.64
    )
    
    $
    0.04
  Stock-Based Compensation:
  Loan Commitments and Related Financial Instruments
 Comprehensive Income (Loss)
 Loss Contingencies
 Dividend Restriction
 Fair Values of Financial Instruments
 Operating Segments
 34




---



##### Table of Contents



NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Reclassifications
 Effect of Newly Issued But Not Yet Effective Accounting Standards Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Written Loan Commitments
Recorded at Fair Value through Earnings Application of Accounting
Principles to Loan Commitments
 NOTE 2
 BRANCH SALE
  Loans, net of allowance for loan losses of $384,787
    
    $
    38,502,472Premises and equipment, net
    
    
    534,283Accrued interest receivable and other assets
    
    
    223,45839,260,213Deposits
    
    
    23,111,796Capital lease obligation
    
    
    417,409Accrued interest payable and other liabilities
    
    
    58,28323,587,488Net assets sold
    
    
    15,672,725Net cash received
    
    
    17,750,281Gain on sale of branch
    
    $
    2,077,556
 35




---



##### Table of Contents



NOTE 3  SECURITIES
  Gross
    
    
    GrossFair
    
    
    Unrealized
    
    
    UnrealizedAvailable for sale, carried at fair value:
    
    Value
    
    
    Gains
    
    
    LossesDecember 31, 2007U.S. Government -sponsored
enterprises
    
    $
    1,017,652
    
    
    $
    17,652
    
    
    $
    Equity securities
    
    
    3,043,687
    
    
    
    
    
    
    
    (21,894
    )Mortgage-backed securities
    
    
    24,948,995
    
    
    
    178,256
    
    
    
    (168,051
    )Total
    
    $
    29,010,334
    
    
    $
    195,908
    
    
    $
    (189,945
    )December 31, 2006U.S. Government -sponsored
enterprises
    
    $
    7,286,761
    
    
    $
    
    
    
    $
    (210,796
    )Mortgage-backed securities
    
    
    19,658,261
    
    
    
    2,016
    
    
    
    (526,080
    )Total
    
    $
    26,945,022
    
    
    $
    2,016
    
    
    $
    (736,876
    )
  Gross
    
    
    GrossCarrying
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairHeld to maturity, carried at amortized cost:
    
    Amount
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2007Obligations of local governments
    
    $
    3,002,754
    
    
    $
    8,222
    
    
    $
    (15,854
    )
    
    $
    2,995,122December 31, 2006Obligations of local governments
    
    $
    2,201,682
    
    
    $
    
    
    
    $
    (35,358
    )
    
    $
    2,166,324
  Less than
    
    
    12 months12 months
    
    
    or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossAvailable for sale:U.S. Government-sponsored enterprises
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    3,540
    
    
    
    (13
    )
    
    
    7,641
    
    
    
    (155
    )
    
    
    11,181
    
    
    
    (168
    )Equity securities
    
    
    3,044
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    3,044
    
    
    
    (22
    )Total
    
    $
    6,584
    
    
    $
    (35
    )
    
    $
    7,641
    
    
    $
    (155
    )
    
    $
    14,225
    
    
    $
    (190
    )Held to maturity:Obligations of local governments
    
    $
    698
    
    
    $
    (7
    )
    
    $
    771
    
    
    $
    (9
    )
    
    $
    1,469
    
    
    $
    (16
    )
 36




---



##### Table of Contents



NOTE 3  SECURITIES (continued)
  Less than
    
    
    12 months12 months
    
    
    or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossAvailable for sale:U.S. Government
sponsored enterprises
    
    $
    988
    
    
    $
    (12
    )
    
    $
    6,299
    
    
    $
    (199
    )
    
    $
    7,287
    
    
    $
    (211
    )Mortgage-backed
securities
    
    
    691
    
    
    
    (3
    )
    
    
    18,292
    
    
    
    (523
    )
    
    
    18,983
    
    
    
    (526
    )Total
    
    $
    1,679
    
    
    $
    (15
    )
    
    $
    24,591
    
    
    $
    (722
    )
    
    $
    26,270
    
    
    $
    (737
    )Held to maturity:Obligations of local
governments
    
    $
    1,350
    
    
    $
    (23
    )
    
    $
    816
    
    
    $
    (12
    )
    
    $
    2,166
    
    
    $
    (35
    )
   AvailableHeld-to-maturity
    
    
    for saleCarrying
    
    
    Fair
    
    
    Fair(Dollars in thousands)
    
    Amount
    
    
    Value
    
    
    ValueDue in one year or less
    
    $
    
    
    
    $
    
    
    
    $
    Due from one to five years
    
    
    
    
    
    
    
    
    
    
    1,017Due from five to ten years
    
    
    1,096
    
    
    
    1,103
    
    
    
    Due after ten years
    
    
    1,906
    
    
    
    1,892
    
    
    
    Equity securities
    
    
    
    
    
    
    
    
    
    
    3,044Mortgage-backed
    
    
    
    
    
    
    
    
    
    
    24,949Total
    
    $
    3,002
    
    
    $
    2,995
    
    
    $
    29,010
  2007
    
    2006Proceeds
    
    $
    13,147,235
    
    
    $
    Gross gains
    
    
    
    
    
    
    Gross losses
    
    
    (340,066
    )
    
    
    Tax benefit
    
    
    115,622
    
    
    
    
 37




---



##### Table of Contents



NOTE 3
 SECURITIES (continued)
   NOTE 4
 LOANS
  2007
    
    
    2006Balance
    
    
    Percent
    
    
    Balance
    
    
    PercentResidential real estate
    
    $
    36,548,270
    
    
    
    27.4
    %
    
    $
    65,282,422
    
    
    
    36.5
    %Multifamily residential real estate
    
    
    7,918,222
    
    
    
    5.9
    
    
    
    9,452,861
    
    
    
    5.3Commercial real estate
    
    
    59,574,635
    
    
    
    44.7
    
    
    
    65,228,180
    
    
    
    36.4Construction
    
    
    10,714,524
    
    
    
    8.0
    
    
    
    10,235,414
    
    
    
    5.7Commercial
    
    
    12,528,137
    
    
    
    9.4
    
    
    
    18,524,153
    
    
    
    10.4Consumer and home equity
    
    
    6,141,569
    
    
    
    4.6
    
    
    
    10,259,367
    
    
    
    5.7Total loans
    
    
    133,425,357
    
    
    
    100.0
    %
    
    
    178,982,397
    
    
    
    100.0
    %Less: Allowance for loan losses
    
    
    (1,622,906
    )
    
    
    
    
    
    
    (1,757,110
    )Net deferred loan fees
    
    
    (159,980
    )
    
    
    
    
    
    
    (204,073
    )Loans, net
    
    $
    131,642,471
    
    
    
    
    
    
    $
    177,021,214
   2007
    
    
    2006Balance, January 1
    
    $
    1,757,110
    
    
    $
    1,589,407Provision for loan losses
    
    
    3,482,854
    
    
    
    467,000Loans charged-off
    
    
    (3,242,511
    )
    
    
    (311,186
    )Recoveries of charged-off loans
    
    
    10,240
    
    
    
    11,889Reduction of allowance for loans sold
    
    
    (384,787
    )
    
    
    Balance, December 31
    
    $
    1,622,906
    
    
    $
    1,757,110Balance as a percentage of total loans
    
    
    1.22
    %
    
    
    0.98
    %
  38




---



##### Table of Contents



NOTE 4
 LOANS (continued)
 2007
    
    2006At December 31:Loans past due over 90 days still on accrual
    
    $
    
    
    
    $
    Nonaccrual loans, includes smaller balance homogeneous loans
    
    
    4,205,143
    
    
    
    2,439,938Impaired loans, included in nonaccrual loans
    
    
    3,550,936
    
    
    
    1,481,109Amount of the allowance for loan losses allocated
    
    
    
    
    
    
    32,000During the year ended December 31:Average of impaired loans during the year
    
    $
    2,518,559
    
    
    $
    1,170,561Interest income recognized during impairment
    
    
    55,904
    
    
    
    5,424Cash-basis interest income recognized during impairment
    
    
    55,904
    
    
    
    5,424Interest income foregone on nonaccrual loans
    
    $
    191,756
    
    
    $
    153,178
  Balances, January 1
    
    $
    4,647,417New loans
    
    
    424,397Repayments
    
    
    (231,596
    )Effects of changes in composition of related parties
    
    
    (805,960
    )Balances, December 31
    
    $
    4,034,258
 NOTE 5  PREMISES AND EQUIPMENT
  2007
    
    
    2006Land
    
    $
    524,559
    
    
    $
    524,559Office building
    
    
    1,477,141
    
    
    
    1,930,141Leasehold improvements
    
    
    761,039
    
    
    
    977,068Furniture, fixtures and equipment
    
    
    1,648,131
    
    
    
    1,687,164Premises and equipment, cost
    
    
    4,410,870
    
    
    
    5,118,932Less: Accumulated depreciation
    
    
    (1,508,964
    )
    
    
    (1,500,235
    )Premises and equipment, net
    
    $
    2,901,906
    
    
    $
    3,618,697
   39




---



##### Table of Contents



NOTE 5  PREMISES AND EQUIPMENT (continued)
        Operating
    
    
    CapitalLeases
    
    
    Leases2008
    
    $
    224,538
    
    
    $
    101,9832009
    
    
    197,886
    
    
    
    101,9832010
    
    
    203,634
    
    
    
    101,9832011
    
    
    123,837
    
    
    
    111,1432012
    
    
    109,528
    
    
    
    115,723Thereafter
    
    
    233,456
    
    
    
    385,746Total minimum lease payments
    
    $
    1,092,879
    
    
    $
    918,561Amounts representing interest
    
    
    
    
    
    
    (425,393
    )Present value of minimum lease payments
    
    
    
    
    
    $
    493,168
 NOTE 6
 INTANGIBLE ASSETS
  2008
    
    $
    90,7062009
    
    
    49,6322010
    
    
    10,269
 40




---



##### Table of Contents



NOTE 7  DEPOSITS
   2008
    
    $
    66,561,3102009
    
    
    3,244,6982010
    
    
    2,066,1242011
    
    
    911,2932012
    
    
    531,501Thereafter
    
    
    143,327$
    73,458,253
   2007
    
    
    2006Average
    
    
    Average
    
    
    Average
    
    
    AverageBalances
    
    
    Rate
    
    
    Balances
    
    
    RateNoninterest-bearing demand deposits
    
    $
    16,834,000
    
    
    
    N/A
    
    
    $
    15,158,000
    
    
    
    N/AInterest-bearing demand deposits
    
    
    9,465,000
    
    
    
    1.43
    %
    
    
    9,005,000
    
    
    
    0.75
    %Savings accounts
    
    
    7,578,000
    
    
    
    0.78
    
    
    
    11,637,000
    
    
    
    0.82Money market accounts
    
    
    45,160,000
    
    
    
    3.82
    
    
    
    32,828,000
    
    
    
    3.40Certificates of deposit
    
    
    95,738,000
    
    
    
    4.77
    
    
    
    100,369,000
    
    
    
    4.16Total deposits
    
    $
    174,775,000
    
    
    
    
    
    
    $
    168,997,000
 NOTE 8
 REPURCHASE AGREEMENTS
  2007
    
    2006Average daily balance during the year
    
    $
    1,997,848
    
    
    $
    2,608,000Average interest rate during the year
    
    
    4.38
    %
    
    
    4.27
    %Maximum month-end balance during the year
    
    $
    2,981,006
    
    
    $
    3,375,685Interest rate at year-end
    
    
    3.59
    %
    
    
    4.45
    %
 41




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##### Table of Contents



NOTE 9  FEDERAL HOME LOAN BANK ADVANCES
  2007
    
    
    2006Three-year interest-only advance
2.42% fixed rate, maturing March 10, 2007
    
    $
    
    
    
    $
    5,000,000Two-year interest-only advance
4.32% fixed rate, maturing September 7, 2007
    
    
    
    
    
    
    2,000,000Four-year, constant monthly payment advance
2.57% fixed rate, final maturity October 1, 2007
    
    
    
    
    
    
    433,770Twenty seven month interest-only advance
4.94% fixed rate, maturing April 25, 2008
    
    
    2,000,000
    
    
    
    2,000,000Three-year interest-only advance
4.89% fixed rate, maturing January 16, 2009
    
    
    3,000,000
    
    
    
    3,000,000Three-year interest-only advance
5.24% fixed rate, maturing February 23, 2009
    
    
    2,500,000
    
    
    
    2,500,000Four-year interest-only advance
4.98% fixed rate, maturing January 25, 2010
    
    
    2,000,000
    
    
    
    2,000,000Four-year interest-only advance
5.25% fixed rate, maturing February 23, 2010
    
    
    2,500,000
    
    
    
    2,500,000$
    12,000,000
    
    
    $
    19,433,770
  2008
    
    $
    4,025,0002009
    
    
    5,500,0002010
    
    
    4,500,000$
    14,025,000
 NOTE
10  SUBORDINATED DEBENTURES
  42




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##### Table of Contents



NOTE 11  INCOME TAXES
  2007
    
    
    2006Current federal
    
    $
    (568,726
    )
    
    $
    184,076Deferred federal
    
    
    (634,938
    )
    
    
    (109,648
    )Change in
valuation allowance
    
    
    1,328,041
    
    
    
    Total income tax expense
    
    $
    124,377
    
    
    $
    74,428
  2007
    
    
    2006Federal statutory rate (34%) times financial statement
earnings (loss)
    
    $
    (1,194,847
    )
    
    $
    54,887Effect of:Tax exempt income net of disallowed interest expense
    
    
    (30,775
    )
    
    
    (13,229
    )Stock based compensation
    
    
    16,801
    
    
    
    11,793Change in
valuation allowance
    
    
    1,328,041
    
    
    
    Other, net
    
    
    5,157
    
    
    
    20,977Total income tax expense
    
    $
    124,377
    
    
    $
    74,428
  2007
    
    
    2006Deferred tax assets:Allowance for loan losses
    
    $
    301,960
    
    
    $
    525,810Deferred loan fees
    
    
    53,564
    
    
    
    69,384Deferred and accrued compensation
    
    
    62,819
    
    
    
    38,608Nonaccrual loan interest income
    
    
    7,142
    
    
    
    34,555Intangible asset amortization
    
    
    147,122
    
    
    
    119,210Stock based compensation
    
    
    13,410
    
    
    
    14,987REO valuation allowance
    
    
    343,943
    
    
    
    Net operating loss carryforward
    
    
    482,469
    
    
    
    Unrealized loss on securities available
for sale
    
    
    
    
    
    
    249,852Other
    
    
    10,849
    
    
    
    9,956Total deferred tax assets
    
    
    1,423,278
    
    
    
    1,055,362Deferred tax liabilities:Depreciation
    
    
    (13,294
    )
    
    
    (38,023
    )Unrealized gain on securities available for sale
    
    
    (2,027
    )
    
    
    Prepaid expenses
    
    
    (36,883
    )
    
    
    (28,127
    )FHLB stock dividends
    
    
    (45,016
    )
    
    
    (45,016
    )Other
    
    
    (44
    )
    
    
    (1,241
    )Total deferred tax liabilities
    
    
    97,264
    
    
    
    (112,407
    )Net deferred
tax assets before valuation allowance
    
    
    1,326,014
    
    
    
    942,955Less
valuation allowance
    
    
    (1,328,041
    )
    
    
    Net deferred
tax assets (liabilities)
    
    $
    (2,027
    )
    
    $
    942,955
 43




---



##### Table of Contents



NOTE 11  INCOME TAXES (continued)
   NOTE 12  STOCK-BASED COMPENSATION
    2007WeightedAverageExerciseOptions
    
    
    PriceOutstanding at January 1
    
    
    287,375
    
    
    $
    10.62Granted
    
    
    5,000
    
    
    
    8.28Forfeited
    
    
    (78,225
    )
    
    
    10.41Exercised
    
    
    
    
    
    
    Outstanding at December 31
    
    
    214,150
    
    
    $
    10.64Exercisable at December 31
    
    
    187,000
    
    
    $
    10.86
 2007
    
    2006Weighted average fair value of options granted during the year:
    
    
    3.77
    
    
    
    4.58
   44




---



##### Table of Contents



NOTE
12  STOCK BASED COMPENSATION (continued)
 Outstanding
    
    
    ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageContractual
    
    
    Exercise
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Number
    
    
    Life (years)
    
    
    Price
    
    
    Number
    
    
    Price$8.28 - $9.99
    
    
    58,650
    
    
    
    6.51
    
    
    $
    8.95
    
    
    
    31,500
    
    
    $
    8.78$10.00
    
    
    56,000
    
    
    
    3.75
    
    
    
    10.00
    
    
    
    56,000
    
    
    
    10.00$12.00
    
    
    99,500
    
    
    
    6.22
    
    
    
    12.00
    
    
    
    99,500
    
    
    
    12.00214,150
    
    
    
    5.66
    
    
    $
    10.64
    
    
    
    187,000
    
    
    $
    10.86
   May
    
    October
    
    October
    
    July
    
    May
    
    May2007
    
    2006
    
    2006
    
    2006
    
    2006
    
    2006Stock
    
    Stock
    
    Stock
    
    Stock
    
    Stock
    
    StockOptions
    
    Options
    
    Options
    
    Options
    
    Options
    
    OptionsOptions granted
    
    
    5,000
    
    
    
    1,000
    
    
    
    1,500
    
    
    
    3,000
    
    
    
    500
    
    
    
    29,375Fair value, calculated
    
    $
    3.77
    
    
    $
    4.19
    
    
    $
    4.24
    
    
    $
    4.36
    
    
    $
    4.50
    
    
    $
    4.64Exercise price
    
    $
    8.28
    
    
    $
    9.01
    
    
    $
    9.00
    
    
    $
    9.05
    
    
    $
    9.27
    
    
    $
    9.52Risk-free interest
rate, 10-year
Treasury
    
    
    4.64
    %
    
    
    4.68
    %
    
    
    4.83
    %
    
    
    5.06
    %
    
    
    5.12
    %
    
    
    5.10
    %Expected stock price
volatility
    
    
    22.52
    %
    
    
    23.54
    %
    
    
    23.54
    %
    
    
    23.87
    %
    
    
    24.14
    %
    
    
    24.43
    %Expected dividend rate
    
    None
    
    None
    
    None
    
    None
    
    None
    
    NoneExpected life
    
    10 years
    
    10 years
    
    10 years
    
    10 years
    
    10 years
    
    10 years
  CompensationCosts2008
    
    $
    37,9502009
    
    
    17,6882010
    
    
    2,081Total
    
    $
    57,719
 NOTE
13  REGULATORY CAPITAL MATTERS
  45




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##### Table of Contents



NOTE
13  REGULATORY CAPITAL MATTERS (continued)
    To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio2007Total capital to risk-weighted
assetsOhio Legacy Bank
    
    $
    16,189
    
    
    
    11.5
    %
    
    $
    11,298
    
    
    
    8.0
    %
    
    $
    14,123
    
    
    
    10.0
    %Tier 1 capital to risk-weighted
assetsOhio Legacy Bank
    
    
    14,566
    
    
    
    10.3
    
    
    
    5,649
    
    
    
    4.0
    
    
    
    8,474
    
    
    
    6.0Tier 1 capital to average assetsOhio Legacy Bank
    
    
    14,566
    
    
    
    8.1
    
    
    
    7,213
    
    
    
    4.0
    
    
    
    9,017
    
    
    
    5.02006Total capital to risk-weighted
assetsOhio Legacy Bank
    
    $
    22,055
    
    
    
    12.8
    %
    
    $
    13,823
    
    
    
    8.0
    %
    
    $
    17,279
    
    
    
    10.0
    %Tier 1 capital to risk-weighted
assetsOhio Legacy Bank
    
    
    20,298
    
    
    
    11.7
    
    
    
    6,911
    
    
    
    4.0
    
    
    
    10,367
    
    
    
    6.0Tier 1 capital to average assetsOhio Legacy Bank
    
    
    20,298
    
    
    
    8.9
    
    
    
    9,157
    
    
    
    4.0
    
    
    
    11,446
    
    
    
    5.0
  NOTE 14  LOAN COMMITMENTS AND RELATED ACTIVITIES
  46




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##### Table of Contents



NOTE 14  LOAN COMMITMENTS AND RELATED ACTIVITIES (continued)
  2007
    
    2006Commitments to make loans:Variable-rate
    
    $
    1,803,000
    
    
    $
    3,643,000Unused lines of credit, variable-rate
    
    $
    17,982,000
    
    
    $
    20,633,000Standby letters of credit
    
    $
    100,000
    
    
    $
    599,000
  NOTE 15  FAIR VALUES OF FINANCIAL INSTRUMENTS
  2007
    
    2006Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    7,115,205
    
    
    $
    7,115,000
    
    
    $
    13,039,865
    
    
    $
    13,040,000Certificate of deposit in
financial institution
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Securities available for sale
    
    
    29,010,334
    
    
    
    29,010,000
    
    
    
    26,945,022
    
    
    
    26,945,000Securities held to maturity
    
    
    3,002,754
    
    
    
    2,995,000
    
    
    
    2,201,682
    
    
    
    2,166,000Loans held for sale
    
    
    911,906
    
    
    
    927,000
    
    
    
    1,212,470
    
    
    
    1,230,000Loans, net
    
    
    131,642,471
    
    
    
    131,861,000
    
    
    
    177,021,214
    
    
    
    175,440,000Federal bank stock
    
    
    1,541,200
    
    
    
    1,541,200
    
    
    
    1,541,200
    
    
    
    1,541,000Accrued interest receivable
    
    
    632,311
    
    
    
    632,000
    
    
    
    917,811
    
    
    
    918,000Financial liabilities:Deposits
    
    $
    (147,349,352
    )
    
    $
    (147,880,000
    )
    
    $
    (186,316,868
    )
    
    $
    (187,760,000
    )Repurchase agreements
    
    
    (2,022,869
    )
    
    
    (2,023,000
    )
    
    
    (1,317,527
    )
    
    
    (1,317,000
    )Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    (3,325,000
    )
    
    
    (3,337,000
    )Overnight FHLB advances
    
    
    (2,025,000
    )
    
    
    (2,025,000
    )
    
    
    
    
    
    
    FHLB advances
    
    
    (12,000,000
    )
    
    
    (12,056,000
    )
    
    
    (19,433,770
    )
    
    
    (19,301,000
    )Accrued interest payable
    
    
    (278,509
    )
    
    
    (279,000
    )
    
    
    (426,686
    )
    
    
    (426,000
    )
  47




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##### Table of Contents



NOTE 16  PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
 As of December 31,2007
    
    
    2006CONDENSED BALANCE SHEETSASSETSCash and cash equivalents
    
    $
    468,449
    
    
    $
    1,270,165Investment in subsidiary, Ohio Legacy Bank, N.A.
    
    
    14,733,066
    
    
    
    20,094,088Other assets
    
    
    180,463
    
    
    
    426,624Total assets
    
    $
    15,381,978
    
    
    $
    21,790,877LIABILITIES AND SHAREHOLDERS EQUITYSubordinated debenture to Ohio Legacy Trust I
    
    $
    
    
    
    $
    3,325,000Other liabilities
    
    
    68,335
    
    
    
    47,320Shareholders equity
    
    
    15,313,643
    
    
    
    18,418,557Total liabilities and shareholders equity
    
    $
    15,381,978
    
    
    $
    21,790,877
 For the year ended December 31,2007
    
    
    2006CONDENSED STATEMENTS OF OPERATIONSInterest income
    
    $
    
    
    
    $
    Interest expense
    
    
    (190,212
    )
    
    
    (282,893
    )Net interest expense
    
    
    (190,212
    )
    
    
    (282,893
    )Gain (loss) on investment in Ohio Legacy Trust I
    
    
    754
    
    
    
    (8,074
    )Professional fees
    
    
    (171,714
    )
    
    
    (146,240
    )Other income (expense)
    
    
    (74,193
    )
    
    
    (115,208
    )Loss before undistributed earnings of subsidiary
    
    
    (435,365
    )
    
    
    (552,415
    )Equity in undistributed earnings (loss) of subsidiary
    
    
    (3,194,741
    )
    
    
    462,591Earnings (loss) before income taxes
    
    
    (3,630,106
    )
    
    
    (89,824
    )Income tax expense (benefit)
    
    
    8,527
    
    
    
    (176,824
    )Net earnings (loss)
    
    $
    (3,638,633
    )
    
    $
    87,000
 48




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##### Table of Contents



NOTE 16  PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (continued)
 For the year ended December 31,2007
    
    
    2006CONDENSED STATEMENTS OF CASH FLOWSCash flows from operating activities:Net earnings (loss)
    
    $
    (3,638,633
    )
    
    $
    87,000Adjustments:Equity in undistributed (earnings) loss of subsidiary
    
    
    3,194,741
    
    
    
    (462,591
    )(Gain) loss on investment in Ohio Legacy Trust I
    
    
    (754
    )
    
    
    8,074Stock based
compensation expense
    
    
    
    
    
    
    78,764Net change in other assets and other liabilities
    
    
    267,930
    
    
    
    (37,813
    )Net cash used by operating activities
    
    
    (176,716
    )
    
    
    (326,566
    )Cash flows from investing activitiesReturn of capital from bank subsidiary
    
    
    2,700,000
    
    
    
    Net cash from investing activities
    
    
    2,700,000
    
    
    
    Cash flows from financing activities:Repayment of subordinated debenture
    
    
    (3,325,000
    )
    
    
    Net cash from financing activities
    
    
    (3,325,000
    )
    
    
    Net change in cash and cash equivalents
    
    
    (801,716
    )
    
    
    (326,566
    )Beginning cash and cash equivalents
    
    
    1,270,165
    
    
    
    1,596,731Ending cash and cash equivalents
    
    $
    468,449
    
    
    $
    1,270,165
 NOTE
17  OTHER COMPREHENSIVE INCOME (LOSS)
  2007
    
    
    2006Unrealized holding gains on available for sale securities during the period
    
    $
    400,757
    
    
    
    224,119Reclassification adjustment for losses realized in income
    
    
    340,066
    
    
    
    740,823
    
    
    
    224,119Tax effect
    
    
    (251,879
    )
    
    
    (76,201
    )Other comprehensive income
    
    $
    488,944
    
    
    
    147,918
 49




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 50




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##### Table of Contents



EXECUTIVE OFFICERS OF OHIO LEGACY CORP AND OHIO LEGACY BANK, N.A.
 
 DIRECTORS OF OHIO LEGACY CORP
 D. William Allen
Chief Financial Officer,
National Pro Football Hall of Fame
Canton, Ohio
    
    Gregory A. Long
President, Long, Cook & Samsa, Inc. CPAs
Wooster, OhioJ. Edward Diamond
Private investor 
Canton, Ohio
    
    Daniel H. Plumly, Chairman
Member, Critchfield, Critchfield & Johnston, Ltd.
Wooster, OhioRobert F. Belden
President, Belden Brick Company
Canton, Ohio
    
    D. Michael Kramer
President and Chief Executive Officer
Ohio Legacy Corp and Ohio Legacy Bank, N.A.
Wooster, OhioScott J. Fitzpatrick
Partner, Fitzpatrick Enterprises 
Canton, Ohio
    
    Melvin Yoder
President, Yoder Lumber
Sugarcreek, Ohio
 CORPORATE AND BANK LOCATIONS
 Main Office
    
    Milltown Office
    
    Canton Office
    
    North Canton Office305 West Liberty Street
    
    3562 Commerce Parkway
    
    4026 Dressler Road NW
    
    600 South Main StreetWooster, Ohio 44691
    
    Wooster, Ohio 44691
    
    Canton, Ohio 44718
    
    North Canton, Ohio 44718
 Corporate Office and Operations Center2375 Benden Drive Suite C.Wooster, Ohio 44691
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##### Table of Contents



Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
  
 Item 8A. Controls and Procedures.
   
 Item 8B. Other Information.
  
 PART III
 
 Item 9.
    
    Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.
   
 Item 10. Executive Compensation.
  
 Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
  52




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##### Table of Contents



Equity Compensation Plan Table
  Number of securitiesremaining availablefor future issuanceNumber of securities to
    
    
    Weighted-average
    
    
    under equitybe issued upon exercise
    
    
    exercise price of
    
    
    compensation plansof outstanding options
    
    
    outstanding
    
    
    (excluding securitiesand warrants
    
    
    options and warrants
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    

    214,150(1)
    
    

    $10.38
    
    

    185,850Equity compensation
plans not approved
by security holders
    

    N/A
    
    

    N/A
    
    

    N/A
 
 (1)
    
    Includes 150,000 warrants granted to directors and officers of the Company. 
 Item 12. Certain Relationships and Related Transactions.
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##### Table of Contents



Item 13. Exhibits
 ExhibitNumber
    
    Note
    
    Description of Document3.1
    
    
    (1
    )
    
    Second Amended and Restated Articles of Incorporation of Ohio Legacy Corp3.2
    
    
    (2
    )
    
    Code of Regulations of Ohio Legacy Corp, as amended by Amendment No. 14.1
    
    
    (3
    )
    
    See Pages 1 through 9 of Exhibit 3.1 for provisions defining the rights of the holders of common shares4.2
    
    
    (3
    )
    
    Form of Organizer Stock Purchase Warrant4.4
    
    
    (2
    )
    
    2004 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio Legacy Corp10.1
    
    
    (3
    )
    
    Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan10.2
    
    
    (4
    )
    
    2002 Amendment to Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan of Ohio Legacy Corp10.5
    
    
    (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 Corp10.8
    
    
    (5
    )
    
    Lease Agreement dated October 2001 by and between Shee-Brees, L.L.C. and Ohio Legacy Corp10.10
    
    
    (6
    )
    
    Assignment and assumption of lease by and among Unizan Bank, Ohio Legacy Bank and Chesterland Productions,
P.L.L. dated August 27, 200410.11
    
    
    (7
    )
    
    Employment Agreement with Mr. Kramer10.12
    
    
    
    
    
    Change in Control Agreement with Mr. Williams10.13
    
    
    
    
    
    Change in Control Agreement with Mr. Spradlin10.14
    
    
    
    
    
    Change in Control Agreement with Mr. Dodds14
    
    
    
    
    
    Code of Ethics20
    
    
    
    
    
    Proxy Statement for the 2008 Annual Meeting of Shareholders21
    
    
    
    
    
    Subsidiary of Ohio Legacy Corp23
    
    
    
    
    
    Consent of Crowe Chizek and Company LLC31.1
    
    
    
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and
acting Chief Financial Officer31.2
    
    
    
    
    
    Managements Report of Internal Control Over Financial Reporting32.1
    
    
    
    
    
    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 26, 2005 
 Item 14. Principal Accountant Fees and Services.
  54




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SIGNATURES
  OHIO LEGACY CORP(Registrant)By:
    /s/  D. Michael KramerD. Michael KramerPresident and Chief Executive Officer and acting Chief Financial Officer  By:
    /s/ D. Michael KramerD. Michael KramerPresident and Chief       Executive Officer and acting Chief
Financial Officer and acting
Principal Accounting Officer  By:
    /s/ D. William AllenD. William Allen, Director  By:
    /s/ Robert F. BeldenRobert F. Belden, Director  By:
    /s/ Scott J.FitzpatrickScott J. Fitzpatrick, Director  By:
    /s/ Gregory A. LongGregory A. Long, Director  By:
    /s/ Daniel H. PlumlyDaniel H. Plumly, Directorand Secretary  By:
    /s/ Melvin J. YoderMelvin J. Yoder, Director  By:
    /s/ J. Edward DiamondJ. Edward Diamond, Director