FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by the use of forward-looking terminology, such as: "may," "might," "could," "would," "should," "believe," "expect," "intend," "plan," "seek," "anticipate," "estimate," "project" or "continue" or the negative thereof or comparable terminology. All statements other than statements of historical fact included in this MD&A regarding our financial position, capital adequacy and liquidity are forward-looking statements. These forward-looking statements also include, but are not limited to:

· anticipated changes in industry conditions created by state and federal legislation and regulations;

· anticipated changes in general interest rates and the impact of future interest rate changes on our profitability, capital adequacy and the fair value of our financial assets and liabilities;

· retention of our existing customer base and our ability to attract new customers;

· the development of new products and services and their success in the marketplace;

· the adequacy of the allowance for loan losses; and

· statements regarding our anticipated loan and deposit account growth, expense levels, liquidity and capital resources and projections of earnings.

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements included herein include, but are not limited to:

· competition in the industry and markets in which we operate;

· changes in general interest rates;

· rapid changes in technology affecting the financial services industry;

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

· changes in government regulation; and

· general economic and business conditions.

12.

OVERVIEW

The following key items summarize the Company's financial results through September 30, 2008:

§ The company recognized an other-than-temporary impairment (OTTI) charge of $2.7 million for Fannie Mae and Freddie Mac Preferred Shares in the third quarter and $2.9 million for the year to date

§ The company wrote down the value of assets held in its OREO portfolio by $436,006

§ The company took a loan loss provision expense of $608,996 during the third quarter

Credit Quality- The provision for loan losses totaled $609,000 and $620,500, respectively, for the quarter and the first nine months of 2008. The Company's level of non-performing loans has increased during the year, with $5.2 million categorized as non-accrual and $4.1 million as other real estate owned (OREO.) Criticized substandard loans that are still accruing also remained high at $2.2 million. At December 31, 2007, non-accrual loans were $4.2 million, other real estate owned was $2.4 million and loans criticized but still accruing were $3.1 million. Management believes that these loans are correctly valued. The Company is actively monitoring all substandard, non-accrual and OREO assets through monthly or more frequent reviews of each relationship. The provision expense and write-down in value of OREO assets was largely due to two residential subdivisions that the company financed in 2004. The slowdown in the housing market has driven the appraised values of these properties lower through the decrease in "absorption rates"- the speed at which the subdivisions will be completed. As a result, the net present values of these properties have been reduced. Actual lot prices in both of these subdivisions seem to be holding steady; however sales across the markets in which these properties are located are sluggish. Due to the unpredictable nature of the housing economy, it is difficult to determine if and when sales could regain speed.

Net Interest Income - Interest income was down compared to the same period in 2007, reflecting both the decrease in interest rates and the reduction of $38.9 million in earning assets as a result of the sale of loans associated with the Millersburg office during the third quarter of 2007. Respectively, for the quarter and for the first nine months of 2008, interest income fell $1.0 million or 28.3% and $2.8 million or 25.3% compared to the same periods a year ago. Interest expense for the same periods declined $0.9 million or 43.5% and $2.2 million or 36.2%. The net interest margin increased to 3.41% in the third quarter, compared to 3.08% for the same period last year. For the year to date through September 30, the net interest margin was 3.34% compared to 3.08% in 2007.

Noninterest Income - Compared to the third quarter and the first nine months of 2007, noninterest income fell $4.2 million and $4.4 million, respectively. Both quarters included significant unusual transactions. We recorded an other-than-temporary impairment charge of $2.7 million on the Company's holdings of the preferred shares of FHLMC and FNMA and direct write-downs of other real estate of $436,000 as of September 30, 2008. In the previous year, the Bank recorded a $2.1 million gain on the sale of the Millersburg branch, which was partially offset by a $660,000 write-down of other real estate owned and a $340,100 loss on the sale of available for sale securities during the third quarter.

Noninterest Expense - The Company continued to focus on reducing and stabilizing noninterest expense levels, resulting in declines of $238,000 or 11.4% and $811,200 or 13.5% for the quarter and the first nine months of 2008 compared to 2007. Salaries and professional fees accounted for the largest share of this reduction, with decreases of $182,300 and $126,700 respectively for the quarter and $561,200 and $236,100 respectively for the first nine months of the year. Other non-interest expense is the only category showing material increases, which is due largely to costs associated with the management of the OREO portfolio. The Company has not disposed of several properties according to its original timetable, which is increasing the maintenance, repair and tax costs associated with holding these properties.

Loans and Leases - Loan balances decreased $4.0 million from December 31, 2007. Our financial plan for 2008 did not include any loan growth, which reflects the Company's decision to reduce the concentration of commercial real estate assets in our portfolio. Commercial real estate loans have declined $5.2 million since the end of 2007, and residential real estate loans have increased by $2.0 million. Virtually all residential real estate loans are in-market and conforming loans.

Deposits - Non-interest bearing demand deposits were up $2.7 million or 18.6% since December 31, 2007, while interest-bearing demand deposits decreased $1.0 million or 10.3% during the same period. Money market and savings balances were essentially unchanged at $49.7 million Certificates of deposit declined by $9.0 million or 12.3% since year end. The changes in the mix of deposits reflect the Company's continued focus on growing core deposit relationships and reducing its dependence on higher cost CDs. Certificate of deposit pricing in our markets has been irrationally high due largely to the liquidity positions of several large super-regional bank competitors. The Company has opted to not meet this price competition, which has contributed in large part to the CD run-off noted above. We have replaced the funding with FHLB advances, which is not a core funding strategy. However, given the dramatic differences in funding costs, the Company has consciously chosen this route for the time being.

13.

CRITICAL ACCOUNTING POLICIES

Allowance for loan losses. The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.

Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.

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

FINANCIAL CONDITION - SEPTEMBER 30, 2008 COMPARED TO DECEMBER 31, 2007

Assets. At September 30, 2008, assets totaled $180.0 million, down from $180.3 million at December 31, 2007. Growth in securities and other real estate offset declines in net loans. Our balance sheet strategy for the year was to maintain year end levels as we continued to restructure the earning asset portfolio.

Securities. Total securities increased by $3.9 million to $36.0 million. The portfolio consists primarily of mortgage backed securities, which provide cash flow that can be used to fund additional loan growth, liability runoff or be reinvested. At September 30, 2008 we believe the effective duration of the portfolio excluding equity investments was approximately 3.8 years. The unrealized loss on the portfolio, net of tax, was approximately $136,516, compared to a gain of $3,900 at year end. The market has experienced significant volatility in prices and yields due to ongoing concerns about the economy in general and the mortgage sector in particular.

The Company recorded an other-than-temporary impairment charge of $2.9 million on its holdings of preferred shares of FHLMC and FNMA. As of September 30, the price of these securities had declined over 93% from their original cost as a result of the Treasury Department's actions during the quarter.

Loans. At September 30, 2008, the loan portfolio, net of the allowance for loan losses and deferred fees, totaled $127.7 million, a decrease of just under $4.0 million compared to December 31, 2007. Commercial real estate loans make up the largest segment of the portfolio, but decreased from 44.7% of loans at year end to 42.0% as of September 30, 2008. Residential real estate loans increased from 27.4% of loans to 29.8% during the period. The Company remains committed to a long-term strategy of diversifying the mix of the loan portfolio by adding high-quality commercial business banking assets while maintaining or reducing real estate-based assets.

14.

Allowance for loan losses and asset quality. Nonperforming loans totaled $5.2 million at September 30, 2008 compared to $4.2 million at December 31, 2007 and $4.0 million at June 30, 2008. The increase is the result of the addition of ten relationships totaling approximately $3.4 million to the category. This was offset by $1.8 million in balances transferred to other real estate, $0.8 million in balances paid down or paid off and $12,500 in balances charged off. Loans are considered nonperforming if they are impaired or if they are in non-accrual status. We review nonperforming loans on a weekly basis to assess the risk of loss. Our OREO totals and individual properties continue to be monitored very closely. We believe that we will continue to see movement on this front as properties that have been in foreclosure for some time work through the sheriff's sale process and others for which we have now acquired the deeds to begin to sell. We do not believe that we will see net reductions to this category for some time; however, we believe that if we do experience movement of properties in and out of this category over the next three quarters it will represent success as we gradually eliminate the amount of impaired assets that the Company is managing.

The allowance for loan losses totaled $1.6 million at September 30, 2008, essentially unchanged since year end 2007. We continue to closely monitor credit quality and delinquencies as our loan portfolio seasons, and will increase the allowance for loan losses if we believe losses have been incurred. As a percentage of total loans, the allowance has increased from 1.22% to 1.26%.

Accrued interest receivable and other assets. Accrued interest receivable and other assets increased by $308,500 from year end. Higher balances of accrued interest on loans and securities accounts for approximately $100,000 of the increase and accounts receivable on one OREO property represents an additional $150,000 of the increase.

Deposits. Total deposits decreased $7.2 million to $140.0 million at September 30, 2008. Core deposit balances increased 2.4% to $75.6 million from $73.9 million at year end. Noninterest bearing demand deposits increased 18.6% to $17.0 million. We remain committed to our strategy of growing core deposits through the acquisition of business banking relationships. The certificate of deposit portfolio decreased $9.0 million during the period to $64.4 million or 46.0% of total deposits compared to $73.5 million or 49.9% of total deposits at year-end. Our deposit strategy continues to focus on reducing the size of the CD portfolio as a percentage of total deposits while increasing the average maturity. This will help reduce our overall cost of funds and provide protection against rising interest rates in the future.

Federal Home Loan Bank advances. Long term advances increased from $12.0 million at year end 2007 to $21.0 million at September 30, 2008. The growth was part of an asset/liability management strategy executed during the year to lock in long term borrowing rates at historically low levels. Four advances totaling $11.0 million with a weighted average original term of twenty-six months and a weighted average rate of 3.02% were added. A $2.0 million twenty-seven month advance with a rate of 4.94% matured early in the second quarter.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2008

The following tables set forth information relating to our average balance sheets and reflect the average yield on interest-earning assets and the average cost of interest-bearing liabilities for the periods indicated. These yields and costs are derived by dividing income or expense, on an annualized basis, by the average balances of interest-earning assets or interest-bearing liabilities for the periods presented.

15.

                                OHIO LEGACY CORP


                                                                 Three months ended September 30,
                                                        2008                                            2007
                                       Average           Interest                        Average       Interest
                                     Outstanding         earned/         Yield/        outstanding      earned/       Yield/
(Dollars in thousands)                 Balance             paid           Rate           balance         paid          Rate
Assets
Interest-earning assets:
Interest-bearing deposits and
federal funds sold                 $          1,052               6           2.38 %  $       4,259   $        55          5.15 %
Securities available for sale                36,336             447           4.90           24,761           271          4.37
Securities held to maturity                   3,001              29           3.79            3,004            26          3.46
Federal agency stock                          1,449              20           5.55            1,541            26          6.84
Loans (1)                                   125,713           2,093           6.62          169,245         3,241          7.66
Total interest-earning assets               167,551           2,595           6.16 %        202,810         3,619          7.10
Noninterest-earning assets                   15,329                                          20,001
Total assets                                182,880                                         222,811

Liabilities and Shareholders'
Equity
Interest-bearing liabilities:
Interest-bearing
demand deposits                    $          9,095              23           0.99 %  $       9,863   $        49          1.96 %
Savings accounts                              5,420              11           0.82            7,277            14          0.78
Money market accounts                        47,779             272           2.26           49,062           481          3.89
Certificates of deposit                      66,963             625           3.72           95,266         1,155          4.81
Total interest-bearing deposits             129,257             931           2.87          161,468         1,699          4.18
Other borrowings                             22,715             224           3.92           23,998           345          5.70
Total interest-bearing
liabilities                                 151,972           1,155           3.02          185,466         2,044          4.37
Noninterest-bearing demand
deposits                                     16,178                                          17,268
Noninterest-bearing liabilities                 279                                             961
Total liabilities                           168,429                                         203,695
Shareholders' equity                         14,451                                          19,116
Total liabilities and
shareholders' equity               $        182,880                                   $     222,811

Net interest income;
interest-rate spread (2)                               $      1,440           3.14 %                  $     1,575          2.73 %
Net earning assets                 $         15,579                                   $      17,344
Net interest margin (3)                                                       3.41 %                                       3.09 %
Average interest-earning assets
to interest-bearing liabilities               1.10x                                           1.09x

Net earnings (loss) totaled $(3.8) million for the three months ended September 30, 2008, or $(1.70) per diluted share, compared to $(1.4) million or ($0.65) per diluted share during the third quarter of 2007.

Net interest income. During the three months ended September 30, 2008, net interest income was $1.4 million, compared to net interest income of $1.6 million in the comparable quarter last year. The decrease in the volume of earning assets due to the branch sale was offset in large part by an increase in the net interest margin from 3.09% to 3.41%.

Interest income. Total interest income for the quarter was $2.6 million, down 28.3% from $3.6 million in the same quarter in 2007. The decrease in the both the volume and yield on earning assets contributed to the decline. Average earning assets were $167.5 million in the third quarter of 2008, compared to $202.8 in 2007. The sale of the branch in September 2007 had greater impact in subsequent quarters than in the quarter in which it occurred. The yield on earning assets decreased by 101 basis points from 7.17% to 6.16%, which also had a negative impact on total interest income.

Interest expense. For the three months ended September 30, total interest expense was $1.2 million compared to $2.0 million in the prior year. Average interest bearing liabilities declined from $203.7 million in the third quarter of 2007 to $168.4 million for the same period in 2008. The average rate dropped 135 basis points from 4.37% to 3.02%, reflecting the redemption of the Company's subordinated debt, active management of the liability mix to reduce costs and an overall decrease in rates over the year.

16.

Provision for loan losses. The provision for loan losses totaled $609,000 during the third quarter of 2008, compared to $3.1 million in the third quarter of 2007. One loan represented $544,000 of the 2008 total. The amount recorded in 2007 represented significant write-downs in value of a small number of large commercial relationships. As discussed above in the "Allowance for loan losses," our provision for loan losses can be expected to fluctuate from period to period.

Noninterest income. Noninterest income (loss) for the third quarter of 2008 was $(2.7) million compared to $1.4 million for the same period the prior year. Both periods included significant unusual items. In 2008, the Bank recorded an other-than-temporary impairment charge of $2.7 million related to FNMA and FHLMC preferred stock and $436,000 in direct write-downs of other real estate.. In 2007, the Bank recorded a gain of $2.1 million on the sale of the branch, which was offset by a loss of $340,100 on the sale of securities and a write-down in the value of loans of $660,200. Service charge income declined by $25,000, primarily as a result of the branch sale in 2007. Other income increased $64,400, due in large part to loan sales resulting from the Company's relationship with Midwest Marketing, LLC.

Noninterest expense. Total noninterest expense decreased $238,000 to $1.9 million compared to $2.1 million for the prior year quarter. The significant changes are described below.

Salary and benefits. The largest portion of the decrease is due to a $182,300 reduction in salary and benefits as a result of the branch sale and the elimination of additional positions in the fourth quarter of 2007.

Professional fees. In the third quarter, professional fees were $126,700 lower than in the previous year, due in part to the expenses associated with the branch sale and other new product development in 2007.

Other expenses. Legal expenses related to troubled commercial loans and improvements to real estate owned increased approximately $101,200 in the third quarter of 2008 compared to the same period in 2007.

17.

                                OHIO LEGACY CORP

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2008

                                                             Nine months ending September 30,
                                                    2008                                         2007
                                     Average       Interest                       Average       Interest
                                   Outstanding      earned/       Yield/        outstanding      earned/       Yield/
(Dollars in thousands)               balance         Paid          Rate           balance         paid          Rate
Assets
Interest-earning assets:
Interest-bearing deposits and
federal funds sold                $       3,407   $        67          2.62 %  $       5,049   $       198          5.23 %
Securities available for sale            32,860         1,302          5.29           25,240           808          4.27
Securities held to maturity               3,002            86          3.81            2,889            75          3.46
Federal agency stock                      1,485            62          5.56            1,541            74          6.43
Loans (1)                               128,203         6,623          6.90          172,659         9,742          7.52
Total interest-earning assets           168,957         8,140          6.44          207,378        10,897          7.03
Noninterest-earning assets               16,017                                       20,491
Total assets                      $     184,974                                $     227,869

Liabilities and Shareholders'
Equity
Interest-bearing liabilities:
Interest-bearing
demand deposits                   $       9,508            82          1.16    $       9,488            89          1.25
Savings accounts                          5,416            33          0.82            8,151            48          0.79
Money market accounts                    46,835           955          2.72           45,290         1,310          3.87
Certificates of deposit                  71,361         2,185          4.09          102,644         3,676          4.79
Total interest-bearing deposits         133,120         3,255          3.27          165,573         5,123          4.14
Other borrowings                         20,348           650          4.25           23,766           996          5.61
Total interest-bearing
liabilities                             153,468         3,905          3.40          189,339         6,119          4.32
Noninterest-bearing demand
deposits                                 15,435                                       18,129
Noninterest-bearing liabilities             548                                          759
Total liabilities                       169,451                                      208,227
Shareholders' equity                     15,523                                       19,642
. . .