Ohio Legacy (OLCB) 8-K Ohio Legacy Corp Announces Fourth Quarter and Full Year Results

EXHIBIT 99.1

OHIO LEGACY CORP ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS

Wooster, Ohio, February 13, 2006– Ohio Legacy Corp (NASDAQ: OLCB) today reported net earnings for the three months ended December 31, 2005, of ($44,000) or ($0.02) per share, compared to $425,000, or $0.19 per share, during the fourth quarter of 2004. Net earnings totaled $362,000 for the full year, or $0.16 per share. Earnings declined due to three primary factors; increases in noninterest expense, an income tax benefit in the fourth quarter of 2004 did not reoccur in 2005, and an increase in the provision for loan losses.

Net Interest Income– During the three months ended December 31, 2005, net interest income grew to $1.7 million, compared to $1.6 million in the fourth quarter of 2004. Net interest margin decreased to 3.49% in the fourth quarter of 2005 compared to 3.52% in the same period of 2004. Interest rate spread was 3.11% compared to 3.23% in the year-ago period.

Net interest income increased 15% to $6.6 million for the full year of 2005, driven by an increase in average interest-earning assets. The decrease in interest rate spread, driven by rising rates in the certificate of deposit (CD) and money market accounts, negatively impacted net interest income. Loan yield improved to 6.77% at quarter end, compared to 6.34% for the year ago period. While margin and spread did not show improvement for the year, the yield on interest earning assets increased 65 basis points to 6.18%. The cost of funds increased 77 basis points, or 34%, to 3.07% during the fourth quarter of 2005.

The cost of all liability funding sources rose significantly during 2005. Increases in the targeted overnight borrowing rate by the Federal Reserve fueled a rising short term rate environment which impacted short term liability rates. Money market rates rose from 1.46% in 2004 to an average of 2.59% for the full year 2005. The cost of CD’s rose from an average of 3.05% for the full year 2004 to 3.46% in the fourth quarter of 2005 and 3.11% for the full year.

The Company is managing its fixed-term and core deposit portfolios in an interest rate environment much different than has been encountered since its inception in 2000. In general, rates fell each year since 2001 until 2005. As a result the Company enjoyed a consistent reduction in deposit costs as fixed-term accounts matured. However, the CD portfolio consistently repriced upward throughout 2005. The Company continues to focus on growing low cost deposit accounts, specifically amongst its business banking clientele. In 2005 the Company saw some success with this strategy growing noninterest bearing checking account balances 32% from the same year end period for 2004.

Noninterest Income– For the year ended December 31, 2005, noninterest income increased to $582,601 from $446,050 in 2004, an increase of 31%. This increase is attributable primarily to the growth in deposit accounts and the transaction fees these accounts generate. Noninterest income excluding gains on sales of securities and loans rose from .23% of average assets in 2004 to .29% in 2005.

Noninterest Expense– Total noninterest expense increased to $6.1 million during 2005, a 30% increase from 2004. The Company added several key management positions and the new North Canton Branch office in 2005. This additional staff increased salary and benefit expense $836,000 for the year. Occupancy expense increased $159,000 for the period primarily as a result of the branch expansion and a full year of operating expense for the Wooster-Milltown Road Branch office, which was acquired in August of 2004. Data processing costs increased $133,000 for the year as a result of account growth. Lastly the intangible amortization associated with the acquisition of the Milltown Road office increased $133,000 for the year as a result of a full year of amortization.

Additional staff expense is primarily accounted for in four areas;

Audit and Compliance; in order to comply with the Sarbanes Oxley Act of 2002, the USA Patriot Act and the Bank Secrecy Act, the Company has added staff in its Operations, Compliance, Accounting and Audit departments.

Management Succession; the Company hired Mike Kramer to succeed Dwight Douce as President and CEO

Commercial Banking; the Company has added talent targeted at client acquisition on both Commercial Loan and Deposit business relationships.

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Branch Expansion; the Company acquired the Milltown road branch in August of 2004 and opened its fifth office, the North Canton Branch, in November of 2005.

Credit Quality. At December 31, 2005, the loan portfolio, net of the allowance for loan losses and deferred fees, was $158.2 million, an increase of $26.1 million, or 20%, from December 31, 2004.

Overall credit quality remained stable during the quarter and the year. Net charged off loans as a percentage of total loans fell to .03% for the quarter from .08% in both the 3^rd quarter of 2005 and the year 2004.

Nonperforming loans totaled $664,000 at December 31, 2005, compared to $1.1 million at December 31, 2004, a reduction of 41%. Loans are considered nonperforming if they are impaired or if they are in nonaccrual status.

The allowance for loan losses increased to $1.6 million at December 31, 2005. The allowance for loan losses as a percentage of loans increased to 0.99% at December 31, 2005, from .95% at December 31, 2004.

The provision for loan losses for the year increased primarily due to a provision of $313,000 in the fourth quarter of 2005. The increase is due primarily to the downgrade of two large loans secured by commercial real estate assets. Neither loan has experienced any payment interruptions but concerns regarding cash flows of the borrowers resulted in the downgrades. The Company has confidence, however, in the underlying quality of the collateral in both loans. The Company’s provision continues to be determined through the consistent use of a calculation methodology adopted by the Company in 2004.

Deposits. Total deposits increased $5.3 million, or 3.3% during 2005. Core deposit balances increased $1.6 million, and remained stable as a percent of total deposits at 43%, as compared to the same period in 2004. Same-store total deposits increased $2.7 million during the year.

OUTLOOK

In 2005 significant investment has been made in people, product and process development. Leadership in three areas was added; Executive, Process/Product and Sales. These changes were made to position the Company for profitable growth in the future.

While these initiatives have increased noninterest expense, the Company is beginning to see the investments pay off in its existing markets. Loan growth remained strong throughout 2005 and core deposit growth in the 3^rd and 4^th quarter amongst our target client; the small to medium business client was strong. Management continues to believe that the consolidation of regional and national banks that has taken place in our markets provides additional opportunity for the Company to win new customers looking for a bank focused on meeting the needs of the small to medium business banking client.

Fiscal 2005 began with a flattening of the Treasury yield curve. This developed into a historically flat curve which at times has shown inversion (long term interest rates actually lower than short term rates). This flattening yield curve will place pressure on interest rate spread as short-term rates, which usually drive core deposit costs, are expected to continue their rise in 2006. Historically the Company has relied on CD’s to fund the majority of its loan growth. In this interest rate environment this practice will place even greater pressure on our margin. Therefore our strategy is to continue to place effort into growing valuable core deposits to manage our margin and to add more valuable, longer lived client relationships. The Company will, however, continue to be largely dependent on spread and margin for income generation.

ANNUAL MEETING

The Board of Directors of Ohio Legacy Corp has declared March 1, 2006, to be the date of record for the Company’s 2006 Annual Meeting of Shareholders. The annual meeting will be held at 10:00 AM Eastern Time on April 18, 2006 at the Wooster Country Club, located at 1251 Oak Hill Road, Wooster, Ohio.

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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 though five full-service banking locations 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.

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

	2005			2004
ASSETS
Cash and due from banks	$	4,528,094		$	4,571,131
Federal funds sold and interest-earning deposits in financial institutions		3,594,452			12,418,192
Cash and cash equivalents		8,122,546			16,989,323
Certificate of deposit in financial institution		100,000			—
Securities available for sale		33,032,297			39,357,929
Securities held to maturity		838,224			647,981
Loans, net of allowance of $1,589,407 and $1,263,655 at December 31, 2005 and 2004		158,182,319			132,084,072
Federal bank stock		1,479,500			1,375,650
Premises and equipment, net		3,797,314			2,269,068
Intangible assets		455,244			669,174
Accrued interest receivable and other assets		2,010,323			1,658,860
Total assets	$	208,017,767		$	195,052,057
LIABILITIES
Deposits:
Noninterest-bearing demand	$	15,727,338		$	11,914,867
Interest-bearing demand		12,231,345			13,262,252
Savings and money market		42,665,057			43,847,951
Certificates of deposit, net		92,273,308			88,617,541
Total deposits		162,897,048			157,642,611
Repurchase agreements		3,066,517			—
Overnight Federal Home Loan Bank advances		7,200,000			—
Federal Home Loan Bank advances		11,796,009			15,295,144
Subordinated debentures		3,325,000			3,325,000
Capital lease obligations		959,450			968,712
Accrued interest payable and other liabilities		668,868			580,216
Total liabilities		189,912,892			177,811,683
SHAREHOLDERS’ EQUITY
Preferred 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 and 2,121,220 outstanding in 2005 and 2004		18,658,386			17,734,155
Accumulated earnings (deficit)		79,415			(282,585	)
Accumulated other comprehensive loss		(632,926	)		(211,196	)
Total shareholders’ equity		18,104,875			17,240,374
Total liabilities and shareholders’ equity	$	208,017,767		$	195,052,057

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OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and twelve months ended December 31, 2005 and 2004

	For the three months ended						For the twelve months ended
	December 31,						December 31,
	2005			2004			2005			2004
Interest income:
Loans, including fees	$	2,676,553		$	2,119,406		$	9,668,907		$	7,982,123
Securities		336,651			346,118			1,451,659			1,327,677
Interest-bearing deposits and federal funds sold		35,517			54,930			157,468			101,474
Dividends on federal bank stock		21,537			16,953			77,294			61,457
Total interest income		3,070,258			2,537,407			11,355,328			9,472,731
Interest expense:
Deposits		1,048,011			683,810			3,805,256			2,826,665
Federal Home Loan Bank advances		159,453			105,284			472,284			437,921
Subordinated debentures		70,722			70,722			282,888			282,888
Repurchase agreements		23,861			—			28,757			—
Capital leases		37,583			37,935			150,877			152,208
Total interest expense		1,339,630			897,751			4,740,062			3,699,682
Net interest income		1,730,628			1,639,656			6,615,266			5,773,049
Provision for loan losses		313,000			—			523,046			306,000
Net interest income after provision for loan losses		1,417,628			1,639,656			6,092,220			5,467,049
Noninterest income:
Service charges and other fees		149,249			115,905			541,594			426,605
Gain on sales of securities, net		—			—			—			7,910
Gain on sales of loans		—			—			9,782			—
Other losses		—			—			(6,929	)		—
Other income		12,405			4,367			38,155			11,534
Total noninterest income		161,654			120,272			582,602			446,049
Noninterest expense:
Salaries and benefits		859,856			659,123			2,977,111			2,141,525
Occupancy and equipment		227,149			189,193			816,499			657,244
Professional fees		91,736			101,313			463,233			407,224
Franchise tax		50,725			56,034			242,507			233,474
Data processing		141,660			128,201			584,086			451,512
Marketing and advertising		57,758			51,305			175,569			173,374
Stationery and supplies		35,575			35,288			125,023			103,005
Intangible asset amortization		49,632			71,396			213,930			80,438
Other expenses		130,464			129,127			529,121			478,354
Total noninterest expense		1,644,555			1,420,980			6,127,079			4,726,150
Earnings before income tax expense		(65,273	)		338,948			547,743			1,186,948
Income tax expense (benefit)		(21,273	)		(86,052	)		185,743			(86,052	)
Net earnings (loss)	$	(44,000	)	$	425,000		$	362,000		$	1,273,000
Basic earnings per share	$	(0.02	)	$	0.20		$	0.17		$	0.60
Diluted earnings per share	$	(0.02	)	$	0.19		$	0.16		$	0.58
Basic weighted average shares outstanding		2,214,564			2,120,750			2,148,822			2,119,857
Diluted weighted average shares outstanding		2,214,564			2,206,031			2,201,218			2,186,684

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OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)

	2005												2004
	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
Cash and cash equivalents	$	8,123		$	9,473		$	11,040		$	11,587		$	16,989
Securities and time deposits		33,971			36,236			38,821			41,267			40,006
Loans, net of fees		159,771			155,021			146,874			142,805			133,348
Allowance for loan losses		(1,589	)		(1,289	)		(1,216	)		(1,344	)		(1,264	)
Premises and equipment, net		3,797			3,316			2,676			2,262			2,269
Intangible assets		455			505			557			612			669
Other assets		3,490			3,335			3,251			3,287			3,035
Total assets	$	208,018		$	206,597		$	202,003		$	200,476		$	195,052
Noninterest-bearing demand	$	15,727		$	12,535		$	12,901		$	11,885		$	11,915
Interest-bearing demand		12,231			10,019			10,089			11,265			13,262
Savings and money market		42,665			42,389			47,251			49,477			43,848
Certificates of deposit		92,273			93,830			92,779			90,774			88,618
Total deposits		162,896			158,773			163,020			163,401			157,643
Other borrowings		26,348			28,861			20,839			19,215			19,589
Other liabilities		669			609			557			673			580
Total liabilities		189,913			188,243			184,416			183,289			177,812
Shareholders’ equity		18,105			18,354			17,587			17,187			17,240
Total liabilities and shareholders’ equity	$	208,018		$	206,597		$	202,003		$	200,476		$	195,052
LOAN PORTFOLIO:
Residential real estate	$	59,321		$	56,405		$	55,031		$	53,593		$	50,728
Commercial real estate		54,522			51,053			45,817			44,847			36,365
Consumer and home equity		11,656			11,716			11,915			12,586			12,250
Commercial		12,805			14,606			13,412			11,567			10,710
Construction		11,758			11,617			10,948			10,506			13,315
Multifamily residential		9,930			9,832			9,955			9,903			10,148
Net deferred loan fees		(221	)		(208	)		(204	)		(197	)		(168	)
Loans	$	159,771		$	155,021		$	146,874		$	142,805		$	133,348
QUARTERLY AVERAGES:
Fed funds sold and securities (1)	$	40,595		$	41,471		$	45,773		$	55,041		$	49,690
Loans		156,945			149,183			143,907			136,073			132,607
Total interest-earning assets		197,540			192,110			189,680			191,114			182,297
Total assets		207,392			201,152			198,832			198,487			190,032
Total assets, year to date		201,465			199,490			198,660			198,487			175,758
Noninterest-bearing deposits		15,070			12,449			12,192			11,860			11,784
Interest-bearing deposits		146,791			147,546			149,085			149,477			138,666
Other borrowings and leases		26,453			22,418			19,397			19,349			22,204
Total interest-bearing liabilities		173,244			169,964			168,482			168,826			160,870
Shareholders’ equity		18,142			18,028			17,337			17,238			16,851
Shareholders’ equity, year to date		17,685			17,534			17,288			17,238			16,341

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

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

	2005												2004
For the three months ended	Dec. 31			Sept. 30			June 30			March 31			Dec. 31
Interest income	$	3,070		$	2,913		$	2,779		$	2,593		$	2,537
Interest expense		(1,340	)		(1,224	)		(1,130	)		(1,046	)		(897	)
Net interest income		1,730			1,689			1,649			1,547			1,640
Provision for loan losses		(313	)		(103	)		(15	)		(92	)		—
Gain on sale of loans		—			—			—			10			—
Other gains and losses, net		—			(3	)		3			—			—
Noninterest income		162			146			133			131			120
Amortization of intangible asset		(50	)		(52	)		(55	)		(57	)		—
Noninterest expense		(1,594)	)		(1,466	)		(1,487	)		(1,366	)		(1,421	)
Net earnings (loss) before taxes		(65	)		211			228			173			339
Income tax (expense) benefit		21			(71	)		(77	)		(58	)		86
Net income (loss)	$	(44	)	$	140		$	151		$	115		$	425
Income per share, diluted	$	(0.02	)	$	0.06		$	0.07		$	0.05		$	0.19
Common and dilutive shares, avg.		2,215			2,199			2,219			2,123			2,206
SELECTED RATIOS:
Net interest margin (1)		3.49	%		3.50	%		3.49	%		3.28	%		3.52	%
Yield on interest-earning assets		6.18			6.02			5.88			5.50			5.53
Cost of funds		3.07			2.86			2.69			2.51			2.30
Interest rate spread (2)		3.11			3.16			3.19			2.99			3.23
Money market rates, year to date		2.59			2.58			2.57			2.49			1.46
Certificate of deposit rates, year to date		3.11			2.98			2.90			2.81			3.05
Certificate of deposit rates		3.46			3.15			2.98			2.81			2.63
Efficiency ratio (3)		84.29			79.87			83.32			84.76			76.68
Allowance as a percent of loans		0.99			0.83			0.83			0.94			0.95
Net loans as a percent of deposits		97.11			96.82			89.35			86.57			83.79
Loan yield		6.77			6.69			6.57			6.36			6.34
Annualized net charge-offs to loans		0.03			0.08			0.40			0.04			0.08
Annualized noninterest income to average assets (4)		0.31			0.29			0.27			0.27			0.25
Annualized noninterest expense to average assets (5)		3.08			2.91			2.99			2.75			2.84
Annualized return on average assets (6)	NA				0.28			0.30			0.23			0.71
Annualized return on average equity (6)	NA				3.11			5.26			2.67			8.05

(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 securities sales
(4)	Excludes gains and losses on securities sales
(5)	Excludes intangible asset amortization
(6)	Excludes income tax benefit in the quarter ended December 31, 2004

Contact: D. Michael Kramer, Chief Executive Officer and President
330-263-1955
http://www.ohiolegacycorp.com

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