Ohio Legacy (OLCB) 8-K Ohio Legacy Corp Announces Second Quarter Results

EXHIBIT 99.1

OHIO LEGACY CORP ANNOUNCES SECOND QUARTER RESULTS

Wooster, Ohio, August 1, 2005— Ohio Legacy Corp (NASDAQ: OLCB), parent company of Ohio Legacy Bank, N.A., today reported net earnings for the three months ended June 30, 2005, of $151,000, or $0.07 per share, compared to $226,000, or $0.10 per share, during the second quarter of 2004. Earnings before federal income tax expense increased to $228,000 during the second quarter of 2005 from $226,000 in 2004. The Company did not recognize federal income tax expense in 2004 due to a valuation allowance on its deferred tax assets. Net earnings for the first half of 2005 totaled $226,000, or $0.12 per share. Assets totaled $202.0 million at June 30, 2005.

The following key items summarize the Company’s financial results during the second quarter of 2005:

• Spread and margin improved, despite increases in short-term rates and the cost of funds

• Net interest income increased $284,000 from the second quarter of 2004

• Noninterest expense increased primarily due to the addition of personnel in 2005

• The Bank purchased land and commenced construction on its fifth banking office

• The loan portfolio increased $4.1 million during the quarter, resulting in a 10% increase from year end

• The deposit portfolio decreased $381,000

Net Interest Income— During the three months ended June 30, 2005, net interest income grew 21% to
$1.6 million from $1.3 million in the second quarter of 2004. Net interest margin increased to 3.49% in the second quarter of 2005 compared to 3.28% in 2004. Interest rate spread was 3.19% in 2005 compared to 3.01% in the year-ago period. The yield on performing assets was 5.88%, an increase of 35 basis points from the linked-quarter and 29 basis points from the second quarter of 2004. The cost of funds increased 18 basis points during the quarter primarily due to a shift in the mix of the deposit portfolio, which became more dependent on certificates of deposits.

Noninterest Income— Service charges on deposit accounts increased to $128,000 from $112,000 in 2004 due to a higher volume of overdraft fees and returned check charges. A gain on the sale of repossessed property and the loss on disposal of fixed assets totaled $7,000 and $4,000, respectively during the second quarter of 2005.

Noninterest Expense— Total noninterest expense was $1.5 million in the second quarter of 2005 compare to $1.4 million in the first quarter of 2005 and $1.1 million in the second quarter of 2004. Salaries and benefits increased during the second quarter of 2005 as the Bank added operations personnel. Compared to 2004, salaries were also higher in 2005 due to the addition of a branch in Wooster in the third quarter of 2004. Personnel expenses should continue to increase in the second half of 2005 as the Bank expects to open its fifth banking office in October 2005 and branch personnel will be hired to support that facility.

Occupancy and equipment expenses increased with the addition of the Wooster Milltown banking office in August 2004. The Company expects occupancy and equipment expense to increase during 2005 with the construction of the banking office in North Canton, Ohio.

Professional fees were higher in the first half of 2005 due to management succession costs, consulting fees incurred to assist management with performing due diligence on information technology service contracts and audit fees as a result of the Sarbanes-Oxley Act.

Data processing expense increased during 2005 as a result of higher transaction volumes, more deposit and loan accounts and additional services offered to customers, including set-up costs for internet banking and online bill payment. Data processing expense in the second quarter of 2005 decreased from the first quarter of 2005 as pricing discounts related to the renewal of information technology service agreements became effective.

Loans and Asset Quality — At June 30, 2005, the loan portfolio, net of the allowance for loan losses and deferred fees, totaled $145.7 million, an increase of $4.2 million from March 31, 2005. The loan portfolio increased $13.5 million, or 10%, during the first half of 2005. During the second quarter of 2005, the largest increase in loans came in the commercial portfolio, which grew $1.8 million. Loans secured by residential real estate and commercial real estate increased $1.4 million and $1.1 million, respectively, during the second quarter.

The average rate of loans originated during the second quarter of 2005 was 6.60%. This compares favorably to the 6.40% rate on the rest of the portfolio. At June 30, 2005, approximately 20% of the loan portfolio reprices with changes in the Prime rate and 42% of the portfolio is indexed to the three-year constant maturity Treasury note rate. Approximately 27% of the loan portfolio is comprised of fixed-rate loans.

Nonperforming loans totaled $419,000 at June 30, 2005, compared to $1.2 million at March 31, 2005. Loans are considered nonperforming if they are impaired or if they are in nonaccrual status. Two loans to one borrower, which were nonperforming at March 31, 2005, were refinanced to an unrelated party who purchased the collateral property during the second quarter of 2005. These loans totaled $723,000 at March 31, 2005. No loss of principal was incurred and the loans were performing at June 30, 2005. The allowance for loan losses totaled $1.2 million at June 30, 2005. Net charge-offs and the provision for loan losses totaled $144,000 and $15,000, respectively, during the second quarter of 2005.

Deposits — The deposit portfolio decreased $381,000 during the second quarter of 2005. An increase in noninterest-bearing demand deposits was offset by a decrease in interest-bearing demand deposits and a $2.2 million decrease in money market accounts was mostly offset by an increase of $2.0 million of certificates of deposit. Core deposit balances decreased $2.4 million overall as the Company has experienced strong competitive pricing of money market deposits in its market areas.

Borrowings — A $2.5 million fixed-rate advance from the Federal Home Loan Bank matured during the second quarter of 2005. Additionally, the decrease in the deposit portfolio and the growth in the loan portfolio resulted in the need to draw $4.5 million in overnight borrowings during the second quarter.

Branch development — In March 2005, the Bank received approval from the Office of the Comptroller of the Currency to establish its fifth banking office, which will be located at 600 South Main Street in North Canton, Ohio. Construction commenced in May 2005 and the office is expected to be in service during the fourth quarter of 2005.

Common stock warrant redemption — On June 9, 2005, the Company announced that it called for redemption of the stock purchase warrants that were issued in connection with the Company’s initial public offering in October 2000 (“IPO Warrants”). Warrant holders have until August 5, 2005, to exercise their right to purchase the Company’s common stock underlying the warrants at a price of $10.00 per share. All outstanding IPO Warrants will terminate at 5:00 P.M., New York Time, on August 5, 2005. The IPO Warrants will be redeemed by the Company on August 6, 2005, at a redemption price of $0.10 (ten cents) per IPO Warrant. As of June 30, 2005, there were 167,520 IPO Warrants outstanding.

ABOUT OHIO LEGACY CORP

Ohio Legacy Corp is a bank holding company headquartered in Wooster, Ohio. Its subsidiary,
Ohio Legacy Bank, N.A., provides financial services to small businesses and consumers through four full-service banking offices in Canton, Millersburg and Wooster, Ohio.

FORWARD-LOOKING STATEMENTS DISCLOSURE

This release contains certain forward-looking statements related to the future performance and financial condition of Ohio Legacy Corp. These statements, which are subject to numerous risks and uncertainties, are presented in good faith based on the Company’s current condition and management’s understanding, expectations, and assumptions regarding its future prospects as of the date of this release. Actual results could differ materially from those projected or implied by the statements contained herein. The factors that could affect the Company’s future results are set forth in the periodic reports and registration statements filed by the Company with the Securities and Exchange Commission.

OHIO LEGACY CORP
CONSOLIDATED BALANCE SHEETS
As of June 30, 2005, and December 31, 2004

	June 30,			December 31,
	2005			2004
	(unaudited)
ASSETS
Cash and due from banks	$	5,855,510		$	4,571,131
Federal funds sold and interest-bearing deposits in financial institutions		5,184,938			12,418,192
Cash and cash equivalents		11,040,448			16,989,323
Certificate of deposit in financial institution		100,000			—
Securities available for sale		38,076,236			39,357,929
Securities held to maturity (fair value of $641,000 and $640,000 at June 30, 2005, and December 31, 2004)		644,995			647,981
Loans, net of allowance of $1,215,760 and $1,263,655 at June 30, 2005 and December 31, 2004		145,657,797			132,084,072
Federal bank stock		1,455,500			1,375,650
Premises and equipment, net		2,676,057			2,269,068
Intangible asset		557,075			669,174
Accrued interest receivable and other assets		1,795,231			1,658,860
Total assets	$	202,003,339		$	195,052,057
LIABILITIES
Deposits:
Noninterest-bearing demand	$	12,901,249		$	11,914,867
Interest-bearing demand		10,088,823			13,262,252
Savings		47,251,108			43,847,951
Certificates of deposit		92,778,488			88,617,541
Total deposits		163,019,668			157,642,611
Federal Home Loan Bank advances		16,550,000			15,295,144
Subordinated debentures		3,325,000			3,325,000
Capital lease obligations		964,260			968,712
Accrued interest payable and other liabilities		556,942			580,216
Total liabilities		184,415,870			177,811,683
SHAREHOLDERS’ EQUITY
Preferred stock, no par value, 500,000 shares authorized, none outstanding		—			—
Common stock, no par value, 5,000,000 shares authorized, 2,138,780 and 2,121,220 shares issued and outstanding at June 30, 2005, and December 31, 2004, respectively		17,909,785			17,734,155
Accumulated deficit		(16,585	)		(282,585	)
Accumulated other comprehensive loss		(305,731	)		(211,196	)
Total shareholders’ equity		17,587,469			17,240,374
Total liabilities and shareholders’ equity	$	202,003,339		$	195,052,057

OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2005 and 2004
(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Interest income:
Loans, including fees	$	2,357,997		$	1,981,839		$	4,476,408		$	3,787,288
Securities		373,466			314,070			767,168			670,436
Interest-bearing deposits and federal funds sold and dividends on federal bank stock		47,796			24,875			128,263			50,808
Total interest income		2,779,259			2,320,784			5,371,839			4,508,532
Interest expense:
Deposits		928,416			731,768			1,774,594			1,470,803
Federal Home Loan Bank advances		93,421			115,211			184,307			204,145
Subordinated debentures		70,722			70,722			141,444			141,444
Capital leases		37,766			38,094			75,618			76,258
Total interest expense		1,130,325			955,795			2,175,963			1,892,650
Net interest income		1,648,934			1,364,989			3,195,876			2,615,882
Provision for loan losses		15,000			150,000			107,046			235,000
Net interest income after provision for loan losses		1,633,934			1,214,989			3,088,830			2,380,882
Noninterest income:
Service charges and other fees		128,050			112,433			254,287			200,365
Gain on sales of securities available for sale, net		—			—			—			13,147
Gain on sale of loans		—			—			9,782			—
Loss on disposal of fixed asset		(4,424	)		—			(4,424	)		—
Gain on sale of repossessed assets		7,000			—			7,000			—
Other income		5,316			2,271			10,793			4,557
Total noninterest income		135,942			114,704			277,438			218,069
Noninterest expense:
Salaries and benefits		721,531			485,903			1,325,004			950,605
Occupancy and equipment		196,174			151,177			397,097			301,460
Professional fees		138,164			108,656			275,717			196,623
Franchise tax		62,213			58,356			133,513			121,406
Data processing		147,950			110,567			310,225			211,492
Marketing and advertising		43,056			39,756			81,670			83,653
Stationery and supplies		28,128			21,543			59,826			38,961
Intangible asset amortization		54,766			—			112,099			—
Other expenses		149,916			127,735			269,646			246,751
Total noninterest expense		1,541,898			1,103,693			2,964,797			2,150,951
Earnings before income tax expense		227,978			226,000			401,471			448,000
Income tax expense		76,978			—			135,471			—
NET EARNINGS		151,000			226,000			266,000			448,000
Other comprehensive income (loss), net of tax		210,722			(997,173	)		(94,534	)		(720,381	)
Comprehensive income (loss)	$	361,722		$	(771,173	)	$	171,466		$	(272,381	)
Basic earnings per share	$	0.07		$	0.11		$	0.12		$	0.21
Diluted earnings per share		0.07			0.10			0.12			0.21

OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)

	2005						2004
	June 30			March 31			Dec. 31			Sept. 30			June 30
Cash and cash equivalents	$	11,040		$	11,587		$	16,989		$	14,756		$	6,760
Securities and time deposits		38,821			41,267			40,006			33,522			33,054
Loans, net of fees		146,874			142,805			133,348			130,745			129,405
Allowance for loan losses		(1,216	)		(1,344	)		(1,264	)		(1,288	)		(1,226	)
Premises and equipment, net		2,676			2,262			2,269			2,170			1,935
Core deposit intangible		557			612			669			741			—
Other assets		3,251			3,287			3,035			2,593			2,603
Total assets	$	202,003		$	200,476		$	195,052		$	183,239		$	172,531
Noninterest-bearing demand	$	12,901		$	11,885		$	11,915		$	11,621		$	7,800
Interest-bearing demand		10,089			11,265			13,262			13,161			11,702
Savings and money market		47,251			49,477			43,848			38,941			38,987
Certificates of deposit		92,779			90,774			88,618			78,988			70,228
Total deposits		163,020			163,401			157,643			142,711			128,717
Other borrowings		20,839			19,215			19,589			22,960			27,329
Other liabilities		557			673			580			701			685
Total liabilities		184,416			183,289			177,812			166,372			156,731
Shareholders’ equity		17,587			17,187			17,240			16,867			15,800
Total liabilities and shareholders’ equity	$	202,003		$	200,476		$	195,052		$	183,239		$	172,531
LOAN PORTFOLIO:
Residential real estate	$	55,031		$	53,593		$	50,728		$	49,459		$	48,449
Commercial real estate		45,963			44,847			36,365			33,856			32,338
Consumer and home equity		11,915			12,586			12,250			12,127			11,677
Commercial		13,412			11,567			10,710			11,751			11,733
Construction		10,948			10,506			13,315			13,591			15,331
Multifamily residential		9,955			9,903			10,148			10,119			10,049
Net deferred loan fees		(350	)		(197	)		(168	)		(158	)		(172	)
Loans		146,874		$	142,805		$	133,348		$	130,745		$	129,405
QUARTERLY AVERAGES:
Fed funds sold and securities (1)	$	45,773		$	55,041		$	49,690		$	40,794		$	40,745
Loans		143,907			136,073			132,607			131,248			125,102
Total interest-earning assets		189,680			191,114			182,297			172,042			165,847
Total assets		198,832			198,487			190,032			178,296			172,672
Noninterest-bearing deposits		12,192			11,860			11,784			9,078			7,367
Interest-bearing deposits		149,085			149,477			138,666			124,158			123,176
Other borrowings and leases		19397			19,349			22,204			27,982			25,203
Total interest-bearing liabilities		168,482			168,826			160,870			152,140			148,379
Shareholders’ equity		17,337			17,238			16,851			16,235			16,093

(1) Includes federal agency stock not classified in securities on the consolidated balance sheets and interest-earning deposits in financial institutions

OHIO LEGACY CORP
QUARTERLY STATEMENTS OF OPERATIONS
(In thousands, except per share data and ratios)

	2005						2004
For the three months ended	June 30			March 31			Dec. 31			Sept. 30			June 30
Interest income	$	2,779		$	2,593		$	2,537		$	2,427		$	2,321
Interest expense		(1,130	)		(1,046	)		(897	)		(910	)		(956	)
Net interest income		1,649			1,547			1,640			1,517			1,365
Provision for loan losses		(15	)		(92	)		—			(71	)		(150	)
Loss on sales of securities		—			—			—			(5	)		—
Gain on sale of loans		—			10			—			—			—
Other gains and losses, net		3			—			—			—			—
Noninterest income		133			131			120			113			115
Amortization of intangible asset		(55	)		(57	)		(71	)		(9	)		—
Noninterest expense		(1,487	)		(1,366	)		(1,350	)		(1,145	)		(1,104	)
Net earnings before taxes		228			173			339			400			226
Income tax (expense) benefit		(77	)		(58	)		86			—			—
Net earnings	$	151		$	115		$	425		$	400		$	226
Earnings per share, diluted	$	0.07		$	0.05		$	0.19		$	0.19		$	0.10
Common and dilutive shares, avg.		2,219			2,123			2,206			2,157			2,181
KEY RATIOS:
Net interest margin (1)		3.49	%		3.28	%		3.52	%		3.52	%		3.28	%
Yield on interest-earning assets		5.88			5.50			5.53			5.58			5.59
Cost of funds		2.69			2.51			2.30			2.37			2.58
Interest rate spread (2)		3.19			2.99			3.23			3.21			3.01
Efficiency ratio (3)		83.32			84.76			76.68			70.80			74.59
Allowance as a percent of loans		0.83			0.94			0.95			0.98			0.95
Net loans as a percent of deposits		89.35			86.57			83.79			90.98			99.58
Annualized net charge-offs to loans		0.40			0.04			0.08			0.03			0.36
Annualized noninterest income to average assets (4)		0.27			0.27			0.25			0.25			0.27
Annualized noninterest expense to average assets (5)		2.99			2.75			2.84			2.58			2.56
Annualized return on average assets (6)		0.30			0.23			0.71			0.89			0.52
Annualized return on average equity (6)		5.26			2.67			8.05			9.86			5.62

(1)	Net interest income, annualized, divided by average interest-earning assets for the period
(2)	Difference between the yield on interest-earning assets and the cost of funds
(3)	Noninterest expense, excluding intangible asset amortization divided by net interest income and noninterest income, excluding gains and losses on sales of securities and loans
(4)	Excludes gains and losses on sales of securities and loans
(5)	Excludes intangible asset amortization
(6)	Excludes income tax benefit recorded in the three months ended December 31, 2004. The Company did not record income tax expense prior to December 31, 2004

Contact:	L. Dwight Douce, Chief Executive Officer and President
	Eric S. Nadeau, Chief Financial Officer and Treasurer
	330-263-1955
	http://www.ohiolegacycorp.com