In the following section, management presents an analysis of Ohio Legacy Corp's financial condition as of March 31, 2009, and December 31, 2008 and results of operations for the three months ended March 31, 2009 and 2008. This discussion is provided to give shareholders a more comprehensive review of the operating results and financial condition than could be obtained from an examination of the financial statements alone. This analysis should be read in conjunction with the consolidated financial statements and related footnotes and the selected financial data elsewhere in this report. As used herein and except as the context may otherwise require, references to "the Company," "we," "us," or "our" means, collectively, Ohio Legacy Corp (Ohio Legacy) and its wholly-owned subsidiary, Ohio Legacy Bank, N.A. (Bank).

15.

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;

· changes in government regulation; and

· general economic and business conditions.

16.

OVERVIEW

The following key factors summarize changes in our financial condition during the three months ended March 31, 2009:

· The total risk based capital ratio increased to 8.8% from 7.6% at year end

· Real estate owned declined by $524,100
· Non-accrual loans increased by $2.3 million

· Loans declined $5.6 million

The following key factors summarize our results of operations during the three months ended March 31, 2009:

· Net income for the period was $502,382

· Noninterest income was $829,539 compared to $284,200 in 2008 as a result of gains on the sale of $27.9 million of securities

· The provision for loan losses was $181,000 compared to $6,500 in the prior year
· A prior year tax refund of $244,900 was recorded due to recent changes in the tax law

The following forward-looking statements describe our near term outlook:

· Credit quality continues to be the primary focus of the Company

· Capital preservation is also a key priority for the Company

· The Company is fully engaged in exploring all alternatives to address our capital shortfall

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.

17.

Valuation allowance for deferred tax assets. Another critical accounting policy relates to valuation of the deferred tax asset for net operating losses. Net operating loss carryforwards of approximately $1,551,000 will expire as follows:
$1,419,000 on December 31, 2027 and $132,000 on December 31, 2028. A valuation allowance has been recorded for the related deferred tax asset for these carryforwards and other net deferred tax assets recorded by the Company to reduce the carrying amount of these assets to zero.

FINANCIAL CONDITION - MARCH 31, 2009, COMPARED TO DECEMBER 31, 2008

Assets. At March 31, 2009, assets totaled $190.2 million, an increase of $3.6 million or 1.9%, from December 31, 2008. The overall mix of the balance sheet changed as part of the Company's efforts to strengthen its risk based capital position.

Securities. Total securities increased by $5.0 million to $40.8 million. The portfolio consists primarily of mortgage backed securities issued by the Government National Mortgage Association (GNMA), which are guaranteed by the full faith and credit of the U.S. Government. At March 31, 2009 we believe the effective duration of the portfolio excluding equity investments is approximately 3.6 years. The unrealized loss on the portfolio, net of tax, was $2,000 compared to an unrealized gain of $231,900 at year end.

Loans. At March 31, 2009, the loan portfolio, net of the allowance for loan losses and deferred fees, totaled $121.2 million, a decrease of approximately $5.6 million compared to December 31, 2008. The Company is strategically working to change the composition of the portfolio to lower its risk profile.

Allowance for loan losses and asset quality. Nonperforming loans totaled $6.9 million at March 31, 2009 compared to $4.6 million at December 31, 2008. The increase is the result of the addition of one loan with a balance of $2.5 million, which was previously rated as substandard. The loan is a participation with multiple banks, and the borrower and the banking group are in the process of restructuring the debt. Since the property owners made the January 2009 payment and have indicated a willingness to consider an additional capital infusion, management has determined that no additional provision is needed at this time. The increase was offset in part by $151,500 that was transferred to REO and approximately $49,500 in payoffs. 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.

The allowance for loan losses totaled $3.6 million at March 31, 2009, compared to $3.4 million at year end 2008. As part of the Company's quarterly reevaluation of the ALLL, the negative outlook for the commercial real estate market was increased, requiring the addition of $181,000 to the allowance. Credit quality and delinquencies are closely monitored, and the allowance for loan losses will be increased if we believe losses have been incurred.

Accrued interest receivable and other assets. Accrued interest receivable and other assets decreased by $85,500 during the first quarter. Prepaid franchise taxes and insurance that are booked at the beginning of the year and expensed on a monthly basis increased by $90,100. The Company recorded a tax refund of $289,000 as a result of changes in the tax code that allow net operating losses to be carried back five years, which was offset by a $585,100 reduction in the current tax provision.

18.

Deposits. Total deposits increased $13.7 million to $159.4 million at March 31, 2009. Core deposit balances increased $3.6 million to $83.8 million, largely in response to deposit promotions introduced late in 2008 that continued throughout the early part of the quarter. Certificates of deposit increased $10.1 million, also due to a short term promotion that began late in the fourth quarter of 2008 and ended early in 2009. The Company's strategy in the first quarter focused on developing business banking relationship in both markets and reducing other borrowings

Federal Home Loan Bank advances. The Company decreased its overnight borrowing position with the Federal Home Loan Bank by $6.9 million early in the quarter. In addition, a $3.0 million 24 month term advance maturing in January was renewed, reducing the rate from 4.89% to 3.19%. A $2.5 million term advance with a rate of 5.24% was paid off in February.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2009

Net earnings (loss) totaled $502,382 for the three months ended March 31, 2009, or $0.23 per diluted share, compared to ($31,100) or ($0.01) per diluted share during the first quarter of 2008.

Net interest income. During the three months ended March 31, 2009, net interest income was $1.3 million, compared to $1.4 million in the comparable quarter. Net interest income year-over-year was negatively impacted by both a decrease in earning assets and a decrease in the yield on those assets. Total interest bearing liabilities increased, but was offset by a significant decrease in the rates paid.

The following table sets forth information relating to our average balance sheets and reflects 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.

19.

                                OHIO LEGACY CORP

                                                                  Three months ended March 31,
                                                      2009                                            2008
                                      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                         4,602              6           0.55 %           3,992             32           3.24 %
Securities available for sale             32,203            401           4.99            28,688            399           5.56
Securities held to maturity                3,000             29           3.81             3,002             29           3.81
Federal agency stock                       1,354             16           4.86             1,541             21           5.51
Loans (1)                                122,963          1,944           6.41           131,011          2,328           7.15
Total interest-earning assets            164,122          2,397           5.92 %         168,234          2,809           6.71 %
Noninterest-earning assets                27,423                                          16,893
Total assets                             191,545                                         185,127

Liabilities and Shareholders'
Equity
Interest-bearing liabilities:
Interest-bearing demand deposits          10,031             19           0.75 %           9,874             35           1.43 %
Savings accounts                          15,757             85           2.19             5,414             11           0.85
Money market accounts                     39,940            187           1.90            44,231            363           3.30
Certificates of deposit                   74,714            649           3.52            74,395            822           4.45
Total interest-bearing deposits          140,442            940           2.72           133,914          1,231           3.70
Other borrowings                          23,240            199           3.48            18,941            221           4.68
Total interest-bearing
liabilities                              163,682          1,139           2.82 %         152,855          1,452           3.82 %
Noninterest-bearing demand
deposits                                  16,849                                          14,590
Noninterest-bearing liabilities              819                                             945
Total liabilities                        181,350                                         168,390
Shareholders' equity                      10,195                                          16,737
Total liabilities and
shareholders' equity                     191,545                                         185,127

Net interest income;
interest-rate spread (2)                                  1,258           3.10 %                          1,357           2.89 %
Net earning assets                           440                                          15,379
Net interest margin (3)                                                   3.12 %                                          3.24 %
Average interest-earning assets
to interest-bearing liabilities            1.00X                                           1.10x

(2) Interest rate spread represents the difference between the yield on interest earning assets and the cost of interest bearing liabilities.

(3) Net interest margin represents net interest income, annualized, divided by average interest-earning assets.

20.

Interest income. Total interest income declined by $411,900 to $2.4 million from the same period a year ago. The decrease reflects both a decline in average earning assets year over year of $4.1 million, and a 77 basis point decline in the overall yield on earning assets from 6.71% to 5.94%. The yield on loans decreased to 6.43% in the first quarter of 2009 from 7.15% in the first quarter of 2008. These lower rates reflect the decrease in market rates during the past year. The yield on securities available for sale decreased to 4.98% from 5.56% during the same period as a result of restructuring the portfolio in the first quarter of 2009 as well as the overall decline in market rates. As part of a strategy to reduce the Company's risk profile, approximately $28.0 million of agency-issued mortgage backed securities, collateralized mortgage obligations and notes with an average yield of 5.34% were sold in February and March, 2009. The Company recognized a gain of $685,900 on the transaction. The proceeds of the sales and additional cash were used to purchase $33.1 million of GNMA MBS, which are backed by the full faith and credit of the U.S. government, at an average yield of approximately 4.25%

Interest expense. Total interest expense declined by $313,500 to $1.1 million year over year. The average rate fell 99 basis points from 3.82% to 2.83%, and average total interest bearing liabilities increased $10.8 million from $152.9 million to $163.7 million. The increase in balances was primarily the result of deposit promotions offered late in 2008 and early in 2009. The average balances in transaction accounts increased $6.2 million, and the average rate declined 97 basis points. Total average certificates of deposit increased slightly from $74.4 million to $74.7 million, and the rate declined from 4.45% to 3.53%.

Provision for loan losses. The provision for loan losses totaled $181,000 during the first quarter of 2009, compared to $6,500 in the first quarter of 2008. 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 increased by $545,300 during the first quarter of 2009 compared to the first quarter of 2008. In 2009, the Company recognized a gain of $685,900 on the sale of available for securities, which was partially offset by a $111,200 other than temporary impairment of FNMA and FHLMC preferred stock.

Noninterest expense. Although total noninterest expense was essentially the same in both quarters, there were significant changes in several categories.

Salary and benefits. Total salaries and benefits declined $70,100 as a result of the elimination of a number of positions at the end of 2008.

Deposit expense and insurance. As an FDIC insured institution, the Bank is required to pay deposit insurance premiums to the FDIC. Because the FDIC's deposit insurance fund fell below prescribed levels in 2008, the FDIC has announced increased premiums for all insured depository institutions, including the Bank, in order to begin recapitalizing the fund. Insurance assessments range from 0.12% to 0.50% of total deposits for the first calendar quarter 2009 assessment. Effective April 1, 2009, insurance assessments will range from 0.07% to 0.78%, depending on an institution's risk classification and other factors.

In addition, under a proposed rule, the FDIC indicated its plans to impose a 20 basis point emergency assessment on insured depository institutions to be paid on September 30, 2009, based on deposits at June 30, 2009. FDIC representatives subsequently indicated the amount of this special assessment could decrease if certain events transpire. The proposed rule would also authorize the FDIC to impose an additional emergency assessment of up to 10 basis points after June 30, 2009, if necessary to maintain public confidence in federal deposit insurance.

These changes would result in increased deposit insurance expense for the Bank in 2009. These increases will be reflected in other expenses in the Bank's income statement in the period of enactment.

21.

The increase of $64,500 from $61,600 to $125,700 was the result of the first scheduled increase in FDIC premiums as described above.

Other expenses. Other expenses increased by $59,100 to $207,600 in 2009 as compared to $148,500 in the first quarter of 2008. The decrease is primarily due to higher expenses to manage properties held in Other Real Estate.

Tax expense (benefit). As a result of a change in the tax law late in 2008 that allows net operating losses to be carried back five years, the Company was able to amend its 2003 tax return and record a refund of taxes paid for that year. The refund of $289,300 was offset by a $44,400 change in accrued taxes for 2008, resulting in a tax benefit of $244,900. The Company does not expect to recognize any further tax benefits in 2009.

STRATEGIC DEVELOPMENTS

As disclosed in an 8-K on February 20, 2009, the Company entered into an Order of Consent with the Comptroller of the Currency of the United States of America. The Order requires the Bank to increase its capital to certain specified levels. As disclosed in the 10-K filed on April 3, 2009, the Board of Directors has retained the services of the investment banking firm of Stifel, Nicolaus to explore the options of raising private equity capital, or merging with or being acquired by another financial institution or other interested investors to achieve compliance with the Order of Consent.

The Company has been successful in disposing of a number of properties held in other real estate during the first quarter. A total of five properties were sold during the quarter, generating proceeds of $694,600 and gains of $38,000. Subsequent to the end of the quarter, three additional properties were sold, generating approximately $271,000 in proceeds. Another property is under contract for a gross selling price of $162,500. Two properties carried at a total value of $323,000 were sold at sheriff sale during the first quarter of 2009. In May, five properties carried at a total value of $510,000 are scheduled for sheriff sale. Once the deeds from the completed sheriff sales are received, the properties will be listed for sale. The total value of the properties discussed above is approximately $1.8 million; converting these balances to earning assets will generate interest income and eliminate the recurring expenses associated with managing and maintaining the properties.

The investment portfolio restructuring completed during the quarter benefited the Company's risk-based capital ratio both by generating securities gains, which increased total capital, and by reducing total risk-weighted assets, which lessened the base on which the ratio is calculated. As loans continue to pay off, the Company intends to invest a portion of the proceeds into additional GNMA securities, which will keep total risk-weighted assets near their current level while generating interest income. Despite these improvements, second quarter results will be negatively impacted by the increased FDIC premium expense discussed above in "Deposit expense and insurance."

CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS

There have been no material changes in the Company's contractual obligations since December 31, 2008.

At March 31, 2009, we had no active unconsolidated, related special purpose entities, nor did we engage in derivatives and hedging contracts, such as interest rate swaps, that may expose us to liabilities greater than the amounts recorded on the consolidated balance sheet. Our investment policy prohibits engaging in derivatives contracts for speculative trading purposes; however, we may pursue certain contracts, such as interest rate swaps, in our efforts to execute a sound and defensive interest rate risk management policy.

22.

LIQUIDITY

Liquidity refers to our ability to fund loan demand and customers' deposit withdrawal needs and to meet other commitments and contingencies. The purpose of liquidity management is to ensure sufficient cash flow to meet all of our financial commitments and to capitalize on opportunities for business expansion in the context of managing the Company's interest rate risk exposure. This ability depends on our financial strength, asset quality and the types of deposit and loan instruments we offer to our customers.

Our principal sources of funds are deposits, loan and security repayments and maturities, sales of securities, borrowings from the FHLB and capital transactions. Alternative sources of funds include repurchase agreements and brokered CDs and the sale of loans. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan and security prepayments are more influenced by interest rates, general economic conditions and competition. We maintain investments in liquid assets based upon our assessment of our need for funds, our expected deposit flows, yields available on short-term liquid assets and the objectives of our asset/liability management program.

We have implemented a liquidity contingency funding plan that identifies liquidity thresholds and red flags that may provide evidence of impending liquidity crises. Additionally, the liquidity contingency plan details specific actions to be taken by management and the Board of Directors and identifies sources of emergency liquidity, both asset and liability-based, should we encounter a liquidity crisis. We actively monitor liquidity risk and analyze various scenarios that could impact our ability to access emergency funding in conjunction with our asset/liability and interest rate risk management activities.

The balances in cash and cash equivalents increased $5.8 million to $17.2 million at March 31, 2009 compared to year end 2008. Cash and cash equivalents represented 9.1% of total assets at March 31, 2009 and 6.2% of total assets at December 31, 2008. The increase in cash was due largely to deposit promotions early in 2009.

CAPITAL RESOURCES

Total shareholders' equity was $9.8 million at March 31, 2009, an increase of $275,700 from the prior year-end balance. The increase in equity was due to net income of $502,400 for the period, partially offset by a $233,100 decrease in the unrealized gain of securities available for sale during the quarter.

. . .