UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 000-31673

OHIO LEGACY CORP

(Exact name of registrant as specified in its charter)

Ohio		34-1903890
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

600 South Main Street, North Canton, Ohio		44720
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (330) 499-1900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Common stock, without par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨		Accelerated filer ¨

Non-accelerated filer ¨		Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of June 30, 2012, the aggregate market value of the registrant’s common stock held by non-affiliates was $5,158,241, based on the closing sale price as reported on the NASDAQ Stock Market.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of March 29, 2013

Common stock, without par value	1,971,431

Documents Incorporated by Reference

None.

Index to Exhibits begins on page 83.

TABLE OF CONTENTS

PART I		Page

Item 1	Business.	4
Item 1A	Risk Factors	18
Item 1B	Unresolved Staff Comments.	18
Item 2	Properties.	18
Item 3	Legal Proceedings.	18
Item 4	Mine Safety Disclosures	18

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	19
Item 6	Selected Financial Data	19
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	19
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 8	Financial Statements and Supplementary Data.	29
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	69
Item 9A	Controls and Procedures.	69
Item 9B	Other Information.	70

PART III

Item 10	Directors, Executive Officers and Corporate Governance.	70
Item 11	Executive Compensation.	74
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	78
Item 13	Certain Relationships and Related Transactions, and Director Independence.	81
Item 14	Principal Accountant Fees and Services.	81

PART IV

Item 15	Exhibits and Financial Statement Schedules	81

SIGNATURES		82

INDEX TO EXHIBITS		84

PART I

Item 1. Business.

Background

Ohio Legacy Corp (“Ohio Legacy”) is a bank holding company incorporated in July 1999 under the laws of the State of Ohio. Ohio Legacy has one wholly-owned subsidiary, Premier Bank & Trust, National Association (“Bank”) (formerly known as Ohio Legacy Bank, National Association). On March 23, 2010, the Bank received approval from the Comptroller of the Currency of its application to commence fiduciary powers pursuant to 12 USC 92a. Subsequently, the Bank opted to include “Trust” in its name and announced a name change to Premier Bank and Trust, N.A. effective April 2010. Unless otherwise noted, the “Company,” “us,” “we,” and “our” refer to Ohio Legacy, together with the Bank. The Bank opened for business on October 3, 2000.

Ohio Legacy’s principal executive offices are located at 600 South Main Street, North Canton, Ohio 44720, and its telephone office is (330) 499-1900. Shares of Ohio Legacy’s common stock, each without par value, are quoted on the over the counter bulletin board under the symbol “OLCB.” Prices are available at OTCMarkets.com or OTCBB.com.

Ohio Legacy maintains an Internet Web site at www.ohiolegacycorp.com (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate Ohio Legacy’s Internet Web site into this Annual Report on Form 10-K (this “Form 10-K”)). Ohio Legacy makes available free of charge on or through its Internet Web site Ohio Legacy’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as Ohio Legacy’s definitive proxy statements filed pursuant to Section 14 of the Exchange Act, as soon as reasonably practicable after Ohio Legacy electronically files such material with, or furnishes it to, the Securities and Exchange Commission (the “SEC”). Ohio Legacy intends to deregister its common shares under the Exchange Act and suspend its reporting obligations under the Exchange Act shortly after the filing of this Form 10-K. When it does so it will no longer file reports, proxy statements, or other materials with the SEC. Although Ohio Legacy will continue to make previously filed materials available at its Web site, it undertakes no duty to update the disclosures in those materials. As a result, investors and potential investors in the securities of Ohio Legacy will have less access to current information. Following deregistration of its common stock under the Exchange Act, the Company intends to make public its quarterly and annual financial results as well as any significant corporate developments by posting such information on its website. However the extent of future disclosure will be less than the SEC requirements in quarterly and annual report filings.

On February 1, 2013, the Bank entered into a Branch Office Purchase and Assumption Agreement (the “Agreement”), with First National Bank, N.A. located in Orrville, Ohio (“FNB”), and a wholly owned subsidiary of National Bancshares Corporation and with NBOH Properties, LLC, an Ohio limited liability company, for the purchase of certain assets and the assumption of certain liabilities of FNB’s Fairlawn branch located at 3085 West Market Street, Akron, Ohio. Under the terms of the Agreement, the Bank will purchase $10 million to $12 million in loans and will assume $13 million to $16 million in deposits and will pay a deposit premium of approximately 5.25% based on the average amount of assumed deposits during a specified period prior to the closing, with a minimum premium of $682,500. The Bank will also purchase real estate owned by NBOH Properties, LLC for $1.1 million and other assets including fixtures and equipment associated with the branch location. The transaction, which is subject to regulatory approvals and certain closing conditions, is expected to be completed during the second quarter of 2013.

Products and Services

The Company, through the Bank’s three branch offices, provides retail and commercial banking services to its customers located primarily in Stark and Belmont Counties in Ohio. The Bank opened a full service branch in Belmont County, Ohio, in February 2012, expanding the services previously offered since 2010 in this market for trust and brokerage services. Product offerings include demand, savings, and time deposit accounts, cash management and electronic funds transfer services, safe deposit box facilities, courier services, online internet banking with bill pay service, commercial loans, real estate mortgage loans, installment and personal loans and night depository facilities to customers. The Bank also began to offer trust, wealth management and investment brokerage services in April 2010.

Commercial and Construction Lending Products

Commercial loans are primarily variable rate and include operating lines of credit and term loans made to small businesses based primarily on their ability to repay the loan from cash flows. These loans typically are secured by business assets such as equipment or inventory. For entity borrowers, the Bank generally obtains a personal guarantee of the business owner. Compared to retail lending for residential real estate, personal installment loans and automobile loans, commercial lending entails significant additional risks. These loans typically involve larger loan balances and are generally dependent on the businesses’ cash flows and may be subject to adverse conditions in the general economy or in a specific industry. Management reviews the borrower’s cash flows when deciding whether or not to grant the credit. Management also evaluates if estimated future cash flows will be adequate to service principal and interest of the new obligation in addition to existing obligations. Additionally, the company’s historical performance, business principles and industry are reviewed prior to the extension of credit. Commercial loans, including loans principally used for commercial purposes and secured by trust assets, comprised 10.2% of the Bank’s loan portfolio at December 31, 2012.

Commercial real estate loans are secured primarily by borrower-occupied business real estate or multifamily residential real estate, such as apartment buildings, and are dependent on the ability of the related business to generate adequate cash flow to service the debt. These loans primarily carry variable interest rates. Commercial real estate loans generally are originated with a loan-to-value ratio of 80% or less. Management performs much the same analysis when deciding whether to grant a commercial real estate loan as it performs when deciding whether to grant a commercial loan. Commercial real estate and multifamily real estate loans comprised 43.5% of the Bank’s loan portfolio at December 31, 2012.

Construction loans are secured by residential and business real estate. Construction loans generally involve greater underwriter and default risks than loans on existing real estate due to the inherent uncertainties in construction costs and the difficulty in valuing property under construction. The Bank’s construction lending program is established in a manner to minimize risk of this type of lending by not making a significant number of loans on speculative projects located outside its geographic marketplace. While not required to do so contractually, the Bank may finance the permanent loan at the end of the construction phase. Construction loans also are generally made in amounts of 80% or less of the value of collateral. Construction loans comprised 5.1% of the Bank’s loan portfolio at December 31, 2012.

Certain risks are involved in granting loans that primarily relate to the borrower’s ability and willingness to repay the debt. Before the Bank extends a new loan to a customer, these risks are assessed through a review of the borrower’s past and current credit history, the collateral used to secure the transaction in case the customer does not repay the debt, cash flows of any related businesses, the availability of personal guarantees and other factors. Once the decision is made to extend credit, the Bank’s credit officers monitor these factors throughout the life of the loan.

Loans to nondepository financial institutions consist of indirect financing provided to a nationwide network of qualified mortgage brokers that originate mortgage loans for sale to third-party investors. The Bank has a loan participation agreement with another financial institution (the “Direct Lender”) which purchases mortgage loans from the mortgage brokers. The Bank purchases a 75% interest in each mortgage loan offered to the Bank by the Direct Lender for purchase subject to appropriate underwriting requirements up to an aggregate limit of $10 million. Since the loans are returned to the mortgage broker for sale to the third party investor, the transactions do not meet the definition of a participating interest under generally accepted accounting principles and the financing arrangement is classified as loans to nondepository financial institutions (the originating mortgage brokers). The financing arrangement is collateralized by first mortgages on single family homes. If the loan has not been sold to the third-party investor, the mortgage broker must repurchase the mortgage loan from the Direct Lender. The mortgage broker must pay the Direct Lender an amount equal to 10% of the mortgage loan purchase price sixty days after the purchase date and an equal amount ninety days after the purchase date. The mortgage broker, at the Direct Lender’s sole discretion, must repurchase each mortgage loan from the Direct Lender within 120 days after the date of purchase. There is no agreement between the third party investor and the Direct Lender or the Bank. The Bank receives interest on the mortgage loans equivalent to the fixed coupon rates of the underlying mortgage loans. The Direct Lender and the Bank review each underlying mortgage loan to reasonably ensure conformity with U.S. Agency-sponsored underwriting qualifications prior to the advancement of funds. The underwriting package includes an approved investor commitment to purchase the loan. Loans to nondepository financial institutions comprised 4.9% of the Bank’s loan portfolio at December 31, 2012

Retail Lending Products

Residential real estate loans, primarily fixed rate, and home equity lines of credit, primarily variable rate, are secured by the borrower’s residence. These loans are made based on the borrower’s ability to make repayment from employment and other income. Using secondary market approval standards, management assesses the borrower’s ability to repay the debt through a review of credit history and ratings, verification of employment and other income, review of debt-to-income ratios and other measures of repayment ability. The Bank generally makes these loans in amounts of 95% or less of the value of collateral. An appraisal is obtained from a qualified real estate appraiser for substantially all loans secured by real estate. Beginning in November 2006, the Bank began originating residential real estate loans and selling these loans to the secondary market. The Company typically originates its mortgage loans in accordance with secondary market guidelines and sells long term, fixed rate loans.

Consumer installment loans to individuals include loans secured by automobiles and other consumer assets, including home equity loans on personal residences. Consumer loans for the purchase of new automobiles do not exceed 100% of the purchase price of the car. Loans for used cars generally do not exceed the average wholesale or trade-in value of the car as stipulated in a recent auto industry used car price guide. Overdraft protection loans are unsecured personal lines of credit to individuals of demonstrated good credit character with reasonably assured sources of income and satisfactory credit histories. Consumer loans generally involve more risk than residential mortgage loans because of the type and nature of collateral and, in certain types of consumer loans, the absence of collateral. Since these loans generally are repaid from ordinary income of an individual or family unit, repayment may be adversely affected by job loss, divorce, ill health or a general decline in economic conditions. The Bank assesses the borrower’s ability to make repayment through a review of credit history, credit ratings, debt-to-income ratios and other measures.

At December 31, 2012, residential real estate loans comprised 22.1% and consumer and home equity loans comprised 10.3% of the Bank’s total loans.

Deposit Products

The Bank offers a broad range of deposit products, such as personal and business checking, savings and money market accounts, certificates of deposit, internet banking, cash management and direct-deposit services. Deposit accounts are tailored to each market area at rates competitive with those offered in Stark and Belmont Counties in Ohio and consistent with the Bank’s asset-liability management goals. All deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to the maximum amount permitted by law. The Bank solicits deposit accounts from individuals, businesses, associations, financial institutions, credit unions, government entities, and an internet listing service for certificates of deposit. The Bank is not significantly affected by seasonal activity or large deposits of any individual depositor.

Employees

At December 31, 2012, the Bank had 59 employees, including 48 full-time employees. The Bank provides a number of benefits to its employees, such as health, disability and life insurance for all qualified employees. No employee is represented by a union or collective bargaining group. Management considers its employee relations to be good. Ohio Legacy has no employees who are not also employed by the Bank.

Competition

The Bank operates in a highly competitive industry. In its primary market areas of Stark and Belmont Counties in Ohio, the Bank competes for new deposit accounts and loans with numerous other commercial banks, both large regional banks and smaller community banks, as well as savings and loan associations, credit unions, finance companies, insurance companies, brokerage firms and investment companies. Many of our competitors enjoy the benefits of greater financial resources, advanced technology, fewer regulatory constraints and lower cost structures. The Bank’s ability to generate earnings is impacted in part by interest rates offered on loans and deposits, and by changes in the rates on loans and various other securities which comprise the Bank’s investment portfolio. The Bank is competitive with respect to the interest rates and loan fees it charges, as well as in the variety of accounts and interest rates it offers to customers. The dominant pricing mechanisms on loans are the Prime interest rate as published in the Wall Street Journal, U.S. Treasury Note rates with three-year or five-year maturities, and the London Interbank Offered Rate (“LIBOR”). The interest margin in excess of the applicable base rate depends on the overall account relationship and the creditworthiness of the borrower. Deposit rates are regularly reviewed and established by management. The Bank’s primary objective in setting deposit rates is to remain competitive in the market area while maintaining an adequate interest rate spread (the difference between the yield earned on interest-earning assets and the rates paid on deposits and borrowed funds) to meet overhead costs and provide a profitable return.

Supervision and Regulation

The Bank is subject to supervision, regulation and periodic examination by the Office of the Comptroller of the Currency (the “OCC”) and Ohio Legacy is supervised by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). Earnings of the Company are affected by state and federal laws and regulations and by policies of various regulatory authorities. These policies include, for example, statutory maximum lending rates, loan loss reserves, requirements on maintenance of reserves against deposits, domestic monetary policies of the Federal Reserve Board, United States federal government fiscal policy, international currency regulations and monetary policies, certain restrictions on banks’ relationships with the securities business, capital adequacy requirements and liquidity restraints.

Regulation of Ohio Legacy

Bank Holding Company Act. As a bank holding company, Ohio Legacy is subject to regulation under the Bank Holding Company Act of 1956, as amended (the “BHCA”). Under the BHCA, Ohio Legacy is subject to periodic examination by the Federal Reserve Board and is required to file periodic reports regarding its operations and any additional information that the Federal Reserve Board may require.

The BHCA generally limits the activities of a bank holding company to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries and engaging in any other activities that the Federal Reserve Board has determined to be so closely related to banking or to managing or controlling banks as to be incidental to those activities. In addition, the BHCA requires bank holding companies to obtain the approval of the Federal Reserve Board prior to acquiring substantially all the assets of another bank or bank holding company, acquiring direct or indirect ownership or control of more than 5% of the voting shares of a bank or merging or consolidating with another bank holding company.

The Federal Reserve Board has extensive enforcement authority over bank holding companies, including, among other things, the ability to: (i) assess civil money penalties; (ii) issue cease and desist or removal orders; and (iii) require that a bank holding company divest subsidiaries (including its subsidiary banks). In general, the Federal Reserve Board may initiate enforcement actions for violations of laws and regulations and unsafe or unsound practices.

Under Federal Reserve Board policy, a bank holding company is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support those subsidiary banks. Under this policy, the Federal Reserve Board may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to shareholders if the Federal Reserve Board believes the payment of such dividends would be an unsafe or unsound practice. These provisions could have the effect of limiting Ohio Legacy’s ability to pay dividends on its common stock.

Capital Guidelines. The OCC and the Federal Reserve Board each have adopted risk-based and leverage capital guidelines to evaluate the adequacy of capital of national banks and bank holding companies. The guidelines involve a process of assigning various risk weights to different classes of assets, then evaluating the sum of the risk-weighted balance sheet structure against the capital base. Most of the bank holding company capital requirements do not apply to the Ohio Legacy based on its current size and circumstances. Actual and required capital amounts for the Bank are disclosed in Note 12 of the consolidated financial statements. Failure to meet capital guidelines could subject a banking institution to various penalties, including termination of FDIC deposit insurance. In addition, the OCC and the FDIC may take various corrective actions against any undercapitalized bank and any bank that fails to submit an acceptable capital restoration plan or fails to implement a plan accepted by the OCC or the FDIC. These powers include, but are not limited to, requiring the institution to be recapitalized, prohibiting asset growth, restricting interest rates paid, requiring prior approval of capital distributions by any bank holding company that controls the institution, requiring divestiture by the institution of its subsidiaries or by the holding company of the institution itself, requiring new election of directors, and requiring the dismissal of directors and officers.

Regulation of the Bank

The Bank is also subject to federal regulation regarding such matters as reserves, limitations on the nature and amount of loans and investments, issuance or retirement of its securities, limitations on the payment of dividends and other aspects of banking operations.

The Bank is a member of the Federal Reserve System and, as a national bank, is regulated and subject to periodic examination by the OCC. These examinations are designed primarily for the protection of the depositors of the Bank and not for its shareholder, Ohio Legacy, or for the shareholders of Ohio Legacy. The OCC has broad enforcement powers over national banks, including the power to impose fines and other civil and criminal penalties and to appoint a conservator or receiver if any of a number of conditions is met.

Dividend Restrictions. The Bank is a legal entity separate and distinct from Ohio Legacy, although Ohio Legacy owns 100% of the outstanding stock of the Bank. Virtually all of Ohio Legacy’s revenues result from dividends paid by the Bank. The Bank is subject to laws and regulations that limit the amount of dividends it can pay to Ohio Legacy. Under OCC regulations, a national bank may not declare a dividend in excess of its undivided profits. Additionally, the Bank may not declare a dividend if the total amount of all dividends declared by the Bank in any calendar year, including the proposed dividend, exceeds the total of the Bank’s retained net income of that year to date, combined with its retained net income of the preceding two years. However, a dividend that does not meet this measurement may be approved by the OCC in certain circumstances. In addition, the Bank may not declare or pay any dividend if, after making the dividend, the Bank would be undercapitalized under applicable federal regulations.

FDIC. The FDIC is an independent federal agency that insures the deposits of federally-insured banks and savings associations up to prescribed limits. In July 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

In November 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts were fully insured, regardless of the balance of the account, at all FDIC-insured institutions through the Transaction Account Guarantee Program (“TAG”). The unlimited insurance coverage was available to all depositors, including consumers, businesses, and government entities. This unlimited insurance coverage was separate from, and in addition to, the insurance coverage provided to a depositor’s other deposit accounts held at an FDIC-insured institution. The term “noninterest-bearing transaction account” included a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It also included Interest on Lawyers Trust Accounts (“IOLTAs”). It did not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts and money-market deposit accounts. The Company did not experience a material change to its affected deposits as a result of the TAG Program’s expiration at December 31, 2012.

The FDIC is required to maintain designated levels of reserves. The FDIC may increase assessment rates if necessary to restore the ratio of reserves to insured deposits to its target level within a reasonable time and may decrease rates if the target level has been met. Assessments vary based on the risk the institution poses to the deposit insurance fund and the FDIC may alter its method of determining risk at any time. The risk level is determined based on the institution's capital level and the FDIC's level of supervisory concern about the institution. The FDIC may, in its discretion, impose special assessments on insured institutions at any time. In July 2011, the FDIC changed the method used to calculate the assessments charged to insured depository institutions to an assessment based on total assets, net of Tier 1 capital, instead of a deposit-based formula.

The FDIC safeguards the safety and soundness of financial institutions through examinations of insured institutions. The Bank is subject to examination by the FDIC, and the Bank’s deposits are assessed deposit insurance premiums by the Bank Insurance Fund of the FDIC. Under the FDIC’s deposit insurance assessment system, the assessment rate for any insured institution may vary according to regulatory capital levels of the institution and other factors such as supervisory evaluations.

The FDIC is authorized to prohibit any insured institution from engaging in any activity that poses a serious threat to the insurance fund and may initiate enforcement actions against banks. The FDIC may also terminate the deposit insurance of any institution that has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, order or condition imposed by the FDIC. If deposit insurance is terminated, the deposits at the institution at the time of termination, less subsequent withdrawals, will continue to be insured for a period from six months to two years, as determined by the FDIC. The Company is not aware of any existing circumstances that could result in termination of the Bank’s deposit insurance.

Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) marks the greatest legislative change to financial supervision since the 1930s. It affects the regulatory environment in the areas of securities, derivatives, executive compensation, consumer protection and corporate governance that will grow out of the general framework established by the Act. The Act was designed to become effective in stages following the regulatory implementation phase during which an intense period of rulemaking will occur. Agency rulemaking will largely establish the parameters of the new regulatory framework and is expected to occur for an extended period. While much of the Act will directly affect large, complex financial institutions, smaller community banks will also face a more complicated and expensive regulatory framework.

The following changes that have or will be implemented pursuant to the Dodd-Frank Act may have an effect on the Company’s business:

the Dodd-Frank Act creates a Consumer Financial Protection Bureau with broad powers to adopt and enforce consumer protection regulations;

new capital regulations for bank holding companies will be adopted, which may impose stricter requirements, and any new trust preferred securities will no longer constitute Tier I capital (although these new requirements do not apply to Ohio Legacy based on its current size and circumstances);

the federal law prohibiting the payment of interest on commercial demand deposit accounts was eliminated in July 2011;

the standard maximum amount of deposit insurance per customer was permanently increased to $250,000, and non-interest bearing transaction accounts have unlimited insurance through December 31, 2012;

the assessment base for determining deposit insurance premiums was expanded and the assessment base was changed from deposits to average assets minus average tangible equity; and

new corporate governance requirements applicable generally to all public companies in all industries will require new compensation practices and disclosure requirements, including requiring companies to “claw back” incentive compensation under certain circumstances, to provide shareholders the opportunity to cast a non-binding vote on executive compensation and to consider the independence of compensation advisers.

While the ultimate effect of the Dodd-Frank Act on the Company cannot yet be determined, the law is likely to increase compliance costs and fees paid to regulators, along with possible restrictions on the operations of the Company and its subsidiaries.

Community Reinvestment Act. The Community Reinvestment Act (the “CRA”) requires depository institutions to assist in meeting the credit needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practice. Under the CRA, each institution is required to adopt a statement for each of its marketing areas describing the depository institution’s efforts to assist in its communities’ credit needs. Depository institutions are examined periodically for compliance and are assigned ratings. Banking regulators consider these ratings when considering approval of a proposed transaction by an institution.

Privacy Provisions of Gramm-Leach-Bliley Act

Under the Gramm-Leach-Bliley Act, federal banking regulators were required to adopt rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party.

Patriot Act

In response to the terrorist events of September 11, 2001, the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) was signed into law in October 2001. The Patriot Act gives the United States Government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions. Among other requirements, Title III and related regulations require regulated financial institutions to establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity. The Company has established policies and procedures that are believed to be compliant with the requirements of the Patriot Act.

Transactions with Affiliates, Directors, Executive Officers and Shareholders

Section 23A and 23B of the Federal Reserve Act and Regulation W restrict transactions by banks and their subsidiaries with their affiliates. An affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank. Ohio Legacy, Excel Bancorp and the Bank are affiliates. Generally, Sections 23A and 23B and Regulation W: (i) limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of that bank’s capital stock and surplus (i.e., tangible capital); (ii) limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates to 20% of that bank’s capital stock and surplus; and (iii) require that all such transactions are on terms substantially the same, or at least as favorable to the bank subsidiary, as those provided to a non-affiliate.

The term “covered transaction” includes the making of loans to the affiliate, the purchase of assets from the affiliate, issuance of a guarantee on behalf of the affiliate, the purchase of securities issued by the affiliate, and other similar types of transactions.

A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the Federal Reserve Board. Among other things, these loans must be made on terms substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank’s capital position, and specified approval procedures must be followed in making loans which exceed specified amounts.

Effects of Government Monetary Policy

The earnings of the Company are affected by general and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the Federal Reserve Board regulates monetary policy, credit conditions and interest rates that may influence general economic conditions primarily through open market acquisitions or dispositions of United States government securities, varying the discount rate on member bank borrowings and setting reserve requirements against member and nonmember bank deposits. The Federal Reserve Board’s monetary policies have historically had a significant effect on the interest income and interest expense of commercial banks, including the Bank, and are expected to continue to do so in the future.

Future Regulatory Uncertainty

Federal regulation of bank holding companies and financial institutions changes regularly and is the subject of constant legislative debate. Future legislation and policies may have a significant influence on overall growth and distribution of loans, investments and deposits and may affect interest rates charged on loans or paid on time and savings deposits. Such legislation and policies have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. As a result of the continuous changes in legislation related to the financial services industry, the Company cannot forecast how federal regulation of financial institutions may change in the future or its impact on the Company’s operations and profitability.

Statistical Disclosures

The following schedules present, for the periods indicated, certain financial and statistical information of the Company as required under the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies.”

Industry Guide 3 - Item I. Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential

A. & B. Average Balance Sheets and Related Analysis of Net Interest Earnings

The following table sets forth information relating to the Company’s average balance sheet 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 by the average balances of interest-earning assets or interest-bearing liabilities for the periods presented.

	For the Year Ended December 31,
	2012							2011
			Interest							Interest
	Average		Earned/		Yield/			Average		Earned/		Yield/
(Dollars in Thousands)	Balance		Paid		Rate			Balance		Paid		Rate
Assets
Interest-earning assets:
Interest-bearing deposits in
other financial institutions and federal funds sold	$	12,116	$	25		0.21	%	$	34,159	$	80		0.23	%
Securities available for sale		11,898		272		2.29	%		15,682		426		2.72	%
Securities held to maturity		0		0		0.00	%		1,173		45		3.87	%
Federal agency stock		1,584		79		4.99	%		1,541		75		4.84	%
Loans (1)		128,643		5,951		4.63	%		105,136		5,529		5.26	%
Total interest-earning assets		154,241		6,327		4.10	%		157,691		6,155		3.90	%
Noninterest-earning assets		6,112							7,977
Total assets	$	160,353						$	165,668

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	6,143	$	16		0.27	%	$	8,695	$	25		0.29	%
Savings accounts		5,529		20		0.36	%		11,844		44		0.37	%
Money market accounts		33,432		152		0.46	%		46,341		272		0.59	%
Certificates of deposit		46,060		425		0.92	%		50,205		696		1.39	%
Total interest-bearing deposits		91,164		613		0.67	%		117,085		1,037		0.89	%
Other Borrowings		24,576		71		0.29	%		9,116		87		0.95	%
Total Interest-bearing liabilities		115,740		684		0.59	%		126,201		1,124		0.89	%
Noninterest-bearing demand deposits		25,139							22,129
Noninterest-bearing liabilities		921							768
Total liabilities		141,800							149,098
Shareholders' equity		18,553							16,570
Total liabilities and
shareholders' equity	$	160,353						$	165,668

Net interest income; interest rate spread (2)			$	5,643		3.51	%			$	5,031		3.01	%
Net earning assets	$	38,501						$	31,490
Net interest margin (3)						3.66	%						3.19	%

Average interest-earning assets to interest-bearing liabilities		1.33	X						1.25	X

(1)

Average loans are net of net deferred loan fees and costs and loans in process. Nonaccrual loans are included in noninterest-earning assets. Fee income is included in interest earned.

(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 divided by average interest-earning assets.

C. Interest Differential

The table below describes the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the years indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume (change in balances multiplied by prior year rate), (2) changes in rate (change in rates multiplied by prior year balance) and (3) total changes in rate and volume. The combined effects of changes in both volume and rate, which are not separately identified, have been allocated proportionately to the change due to volume and the change due to rate.

	For the Year Ended December 31,
	2012 vs. 2011			2011 vs. 2010
	Increase (Decrease) due to			Increase (Decrease) due to
(Dollars in thousands)	Volume	Rate	Total	Volume	Rate	Total
Change in interest income attributable to:
Interest-bearing deposits and federal funds sold	($46)	($8)	($54)	$3	$1	$4
Securities available for sale	(93)	(61)	(154)	(333)	(139)	(472)
Securities held to maturity	(23)	(23)	(46)	(71)	2	(69)
Federal bank stock	2	2	4	4	-	4
Loans	1,139	(717)	422	568	(785)	(217)
Total assets	$979	($807)	$172	$171	($921)	($750)

Change in interest expense attributable to:
Interest-bearing demand deposits	($7)	($2)	($9)	($3)	($24)	($27)
Savings accounts	(22)	(2)	(24)	(28)	(54)	(82)
Money market accounts	(66)	(54)	(120)	26	(119)	(93)
Certificates of deposit	(54)	(217)	(271)	(111)	(497)	(608)
Other borrowings	74	(90)	(16)	(86)	(194)	(280)
Total interest-bearing liabilities	($75)	($365)	($440)	($202)	($888)	($1,090)

Change in net interest income			$612			$340

Industry Guide 3 - Item II. Investment Portfolio

A. This information is contained in Note 2 to the consolidated financial statements, which is incorporated herein by reference.

B. Other securities consist of preferred stock issued by the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”) that has a stated rate and an initial call date of five years from the date of issuance. Based on actions taken by the Treasury Department on September 7, 2008, the dividend on the preferred stock has been suspended indefinitely.

Maturities of Investment Securities
	No Stated Maturity					Due after onethrough five years					Due after fivethrough ten years
	Amount		Weighted Average Yields			Amount		Weighted Average Yields			Amount		Weighted Average Yields
U.S. Government sponsored enterprises	$	0				$	0				$	1,006,655		0.30	%
Mortgage-backed securities issued by U.S. Government-sponsored enterprises: residential		0					0					5,607,814		1.28	%
Other residential mortgage-backed securities		0					0					0
State and political		0					861,103		5.85	%		2,012,701		5.78	%
Other securities		192,850		0.00	%		0					0
Total securities	$	192,850		0.00	%	$	861,103		1.82	%	$	8,627,170		3.49	%

	Due after ten years					Total
	Amount		Weighted Average Yields			Amount		Weighted Average Yields
U.S. Government sponsored enterprises	$	0				$	1,006,655		0.30	%
Mortgage-backed securities issued by U.S. Government-sponsored enterprises: residential		1,853,039		2.93	%		7,460,853		1.69	%
Other residential mortgage- backed securities		178,882		5.29	%		178,882		5.29	%
State and political		0					2,873,804		5.80	%
Other securities		0					192,850		0.00	%
Total securities	$	2,031,921		4.13	%	$	11,713,044		2.61	%

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

C. At December 31, 2012, there were no holdings of securities, other than securities issued by U.S. Government sponsored enterprises, in amounts greater than 10% of shareholders’ equity.

Industry Guide 3 - Item III. Loan Portfolio

A. Types of Loans

This information is contained in Note 3 to the consolidated financial statements, which is incorporated herein by reference.

B. Maturities and Sensitivities of Loans to Changes in Interest Rates

The following is a schedule of maturities of loans based on contractual terms and assuming no amortization or prepayments, excluding residential real estate and consumer loans, as of December 31, 2012:

	Maturing
			After one
	One year		through		After five
(Dollars in thousands)	or less		five years		years		Total
Commercial	$	7,441	$	7,625	$	187	$	15,253
Secured by trust assets		5,778		42		0		5,820
Commercial real estate:
Non-owner occupied		197		10,943		15,533		26,673
Owner occupied		3,213		9,139		16,187		28,539
Loans to nondepository financial institutions		7,346		0		0		7,346
Construction and development		1,885		2,216		3,501		7,602
Total	$	25,860	$	29,965	$	35,408	$	91,233

The amount of loans reported above due after one year was as follows (dollars in thousands):

Fixed Rate	$	12,982
Adjustable Rate		52,391
Total	$	65,373

C. Risk Elements

1. Nonaccrual, Past Due and Restructured Loans - This information is contained in Note 3 to the consolidated financial statements, which is incorporated herein by reference.

The Bank’s policy for placing loans on nonaccrual status is to cease accruing interest on loans when management believes that collection of interest is doubtful or when loans are past due as to principal and interest for 90 days or more, except that, in certain circumstances, interest accruals are continued on loans deemed by management to be fully collectible. In such cases, loans are evaluated individually in order to determine whether to continue income recognition after 90 days beyond the due dates. When loans are placed on nonaccrual status, any accrued interest is charged against interest income.

When an analysis of a borrower's operating results and financial condition indicates the borrower’s underlying cash flows are not adequate to meet debt service requirements and the collateral securing the loan may become the principal source of repayment, the loan is evaluated for impairment. Smaller-balance homogeneous loans are evaluated for impairment in total, however these loans are evaluated for impairment individually if placed on nonaccrual status. Homogeneous loans include residential first mortgage and construction loans secured by one- to four-family residences, consumer loans, credit card loans and home equity loans. Commercial, agricultural and commercial real estate loans are evaluated individually for impairment. In addition, loans held for sale and leases are excluded from consideration of impairment.

Loans individually considered impaired are carried at (a) the present value of expected cash flows, discounted at the loan’s effective interest rate, or (b) the fair value of collateral, if the loan is collateral dependent. A portion of the allowance for loan losses may be allocated to impaired loans. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

2. Potential Problem Loans - At December 31, 2012, management did not identify any loans with serious doubts about the borrowers’ ability to comply with present loan repayment terms other than those included above in Industry Guide 3 - Item III.C., except for $3,261,420 of loans not included in nonaccrual loan balances but classified as substandard assets for regulatory purposes that continue to accrue interest. This substandard and accruing interest classification includes $2,887,856 in loans identified as troubled debt restructurings.

3. Foreign Loans Outstanding - There were no foreign loans outstanding during any period presented.

4. Loan Concentrations – The table below depicts loans outstanding at December 31, 2012, by loan type:

	Total Loans		% of total
1-4 family residential mortgage	$	28,833,397		19.2	%
1-4 family rental property		4,390,713		2.9	%
Home equity		12,795,480		8.5	%
Consumer		2,687,368		1.8	%
Commercial		15,253,309		10.2	%
Secured by trust assets		5,820,705		3.9	%
Commercial real estate:
Non-owner occupied		26,672,937		17.8	%
Owner occupied		28,538,686		19.0	%
Multi-unit		9,998,614		6.7	%
Loans to nondepository financial institutions		7,345,540		4.9	%
Construction and development		7,601,563		5.1	%
Total	$	149,938,312		100.0	%

D. Other Interest-bearing Assets

At December 31, 2012, there were no other interest-bearing assets required to be disclosed under Industry Guide 3 - Items III.C.1. or 2 if such assets were loans.

Industry Guide 3 - Item IV. Summary of Loan Loss Experience

A. Analysis of the Allowance for Loan Losses

Activity in the allowance for loan losses for the years ended December 31 2012 and 2011 was as follows:

	2012			2011
Balance, January 1	$	2,484,478		$	3,055,766
Provision for loan losses		13,466			152,905
Reclassification for loans sold		0			(600,000	)
Loans charged-off:
Commercial		(1,100	)		(81,263	)
Commercial real estate		(33,817	)		(252,904	)
Residential real estate		(175,794	)		(180,512	)
Construction		(50,000	)		(1,205	)
Consumer and home equity		(55,104	)		(23,614	)
Total loans charged-off		(315,815	)		(539,498	)
Recoveries:
Commercial		118,267			38,276
Commercial real estate		12,737			95,387
Residential real estate		6,133			0
Construction		20,803			279,833
Consumer and home equity		7,595			1,809
Total recoveries		165,535			415,305
Balance, December 31	$	2,347,664		$	2,484,478


Balance as a percentage of total loans		1.57	%		2.24	%
Ratio of net charge offs during the period to average loans outstanding		0.12	%		0.12	%

The allowance for loan losses balance and the provision for loan losses charged to operating expense are determined by management based on periodic reviews of the Bank’s loan portfolio, economic conditions and various other circumstances that are subject to change over time. In making this judgment, management reviews selected large loans as well as loans individually considered impaired, other delinquent, nonaccrual and problem loans and loans to industries experiencing economic difficulties. The collectability of these loans is evaluated after considering the current operating results and financial position of the borrower, estimated market value of collateral, guarantees and the Company’s collateral position versus other creditors. Judgments, which are necessarily subjective, as to the probability of losses and the amounts of such losses are formed on these loans, as well as other loans taken together.

B. Allocation of the Allowance for Loan Losses

While management’s periodic analysis of the adequacy of the allowance for loan losses may allocate portions of the allowance to specific problem loan situations, the entire allowance is available for any loan charge-offs that occur. The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and related ratios at December 31 2012 and 2011:

	2012					2011
	Allowance Amount		% of loans in each category to total loans			Allowance Amount		% of loans in each category to total loans
Commercial	$	16,301		10.2	%	$	284,961		9.1	%
Secured by trust assets		11,641		3.9	%		13,600		6.1	%
Real estate loans:
Commercial real estate
Non-owner occupied		257,067		17.8	%		278,699		20.6	%
Owner occupied		744,981		19.0	%		662,269		17.9	%
Multi-family real estate		255,001		6.7	%		423,031		8.2	%
Residential real estate
1-4 family residential mortgage		306,425		19.2	%		202,699		21.5	%
1-4 family rental property		237,065		2.9	%		235,523		3.8	%
Construction and development		116,207		5.1	%		234,590		3.8	%
Loans to nondepository financial institutions		0		4.9	%		0		0.0	%
Home equity loans		339,723		8.5	%		139,419		8.1	%
Other consumer loans		63,253		1.8	%		9,687		0.9	%
Total	$	2,347,664		100.0	%	$	2,484,478		100.0	%

Industry Guide 3 - Item V. Deposits

Average Amount and Average Rate Paid On Deposits.

	2012			2011
(Dollars in thousands)	Average Balances		Average Rate	Average Balances		Average Rate
Noninterest-bearing demand deposits	$	25,139	N/A	$	22,129	N/A
Interest-bearing demand deposits		6,143	0.27%		8,695	0.29%
Savings accounts		5,529	0.36%		11,844	0.37%
Money market accounts		33,432	0.46%		46,341	0.59%
Certificates of deposit		46,060	0.92%		50,205	1.39%
Total deposits	$	116,303		$	139,214

B. Other categories – not applicable.

C. Foreign deposits – not applicable.

D. The following is a schedule of maturities of certificates of deposit in amounts of $100,000 or more as of December 31, 2012:

(Dollars in thousands)
Three months or less	$	3,061
Over three through six months		4,595
Over six through twelve months		24,021
Over twelve months		6,399
Total	$	38,076

E. Time deposits greater than $100,000 issued by foreign offices – not applicable.

Industry Guide 3 - Item VI. Return on Equity and Assets

	2012			2011
Return on average assets		0.07	%		1.10	%
Return on average equity		0.61	%		11.00	%
Dividend payout ratio		0.00	%		0.00	%
Average shareholders’ equity to average assets		11.57	%		10.00	%

Industry Guide 3 - Item VII. Short-Term Borrowings

During 2012, the Company entered into repurchase agreements as a funding source for its operations. The Company also has available credit with the Federal Home Loan Bank (“FHLB”) and advances from that will mature within the next twelve months. This information is contained in Notes 7 and 8 to the consolidated financial statements, which are incorporated herein by reference.

Item 1A. Risk Factors

Not required.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Bank currently owns or leases and operates three banking offices, including its main office, and an operations center:

North Canton Main Office, 600 South Main Street, North Canton, Ohio 44720 (own)

Belden Village Branch Office, 6141 Whipple Ave NW, North Canton, OH 44720 (operating lease)

St. Clairsville Wealth Office, 107 Plaza Drive, Suite J, St. Clairsville, OH 43950 (operating lease)

Wooster Operations Center, 2375 Benden Drive, Suite C, Wooster, Ohio, 44691 (operating lease)

The Bank considers the physical properties it occupies to be suitable and adequate for the purposes for which they are being used. See Note 5 to the consolidated financial statements for additional information regarding our properties.

Item 3. Legal Proceedings.

The Company is not a party to any material pending legal proceedings, other than ordinary routine litigation incidental to the business of the Company. No routine litigation in which the Company is involved is expected to have a material adverse impact on the financial position or results of operations of the Company.

Item 4. Mine Safety Disclosures

Not applicable

PART II

Market for the Company’s Common Stock

Ohio Legacy’s common stock is currently quoted on the over-the-counter market. Prior to October 8, 2012 the stock was listed on the NASDAQ Capital Market under the symbol “OLCB.” As of March 21, 2013, there were 1,971,431 shares of Ohio Legacy’s common stock issued and outstanding and there were 272 holders of record. The following table summarizes the highest and lowest sales prices for Ohio Legacy’s common stock for each quarter during 2012 and 2011. The Company completed a One for Ten reverse stock split effective September 17, 2012. For periods prior to September 18, 2012, the stock prices are restated to reflect the effect of the reverse stock split.

	2012				2011
	HIGH		LOW		HIGH		LOW
First Quarter	$	17.70	$	8.52	$	19.80	$	16.00
Second Quarter		12.20		7.80		18.20		12.20
Third Quarter		11.00		7.00		16.80		9.22
Fourth Quarter		7.87		2.00		16.40		10.20

No cash dividends were declared or paid by Ohio Legacy during 2012 or 2011. The payment of dividends by the Bank to Ohio Legacy and by Ohio Legacy to its shareholders is subject to restrictions by regulatory agencies. The Company is currently not able to declare or pay dividends without prior approval from its regulators. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources” and Note 12 to the consolidated financial statements for information regarding the restrictions on the Company’s ability to pay dividends.

Issuer Purchases of Equity Securities

There were no purchases made by or on behalf of the Company or any affiliated purchaser of shares of Ohio Legacy’s common stock during the fourth quarter of 2012.

Item 6. Selected Financial Data

Not required.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 7. Management’s Discussion and Analysis.

In the following section, management presents an analysis of Ohio Legacy Corp's financial condition and results of operations as of and for the years ended December 31, 2012 and 2011. This discussion is provided to give shareholders a more comprehensive review of the issues facing management 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 the accompanying notes included in this Form 10-K.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act which can be identified by the use of forward-looking terminology, such as “may”, “might”, “could”, “would”, “believe”, “expect”, “intend”, “plan”, “seek”, “anticipate”, “estimate”, “project“, or “continue” or the negative version of such terms or comparable terminology. All statements other than statements of historical fact included in this Form 10-K, including statements regarding our outlook, financial position, results of operation, liquidity, capital resources and interest rate sensitivity are forward-looking statements.

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the forward-looking statements. We desire to take advantage of the “safe harbor” provisions of that Act.

Forward-looking statements speak only as of the date on which they are made and, except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date on which the statement is made.

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 assumptions, judgments and expectations reflected in such forward-looking statements are reasonable, we can give no assurance such assumptions, judgments and 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 in this Form 10-K include, but are not limited to:

competition in the industry and markets in which we operate;

rapid changes in technology affecting the financial services industry;

changes in government regulation;

general economic and business conditions and real estate valuations in our primary market areas could adversely impact results of operations, financial condition and cash flows;

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

changes in 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;

our ability to retain existing customers and attract new customers;

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

the adequacy of our allowance for loan losses;

deposit insurance premiums assessed on the Bank may increase and have a negative impact on earnings;

our ability to seek additional capital in the future;

our anticipated loan and deposit account growth, expense levels, liquidity and capital resources and projections of earnings; and

our potential acquisitions of assets or whole banks and the related assumptions of deposits and other liabilities, which may increase the demands on our financial, management, and other resources and may accelerate or magnify the consequences of other factors listed above.

OVERVIEW OF STRATEGIC DEVELOPMENTS

The Company’s management focused on a number of initiatives during 2012 and 2011 including the following:

Improve the Company’s criticized asset levels.

Improve core earnings.

Evaluate opportunities to expand or reposition the Bank’s branch network to areas where the demographics fit the Bank’s business plan. As a result, the following events occurred:

Following discussions begun in 2012, on February 1, 2013 the Bank announced a definitive agreement with another financial institution to acquire its Fairlawn office located in Akron, Ohio. Under the terms of the agreement, the Bank will purchase $10 million to $12 million in loans and will assume $13 million to $16 million in deposits. The transaction is expected to close in the second quarter of 2013.

The Bank sold two branch offices located in Wayne County, Ohio during 2011. The sale included deposits of $74.3 million and net loans of $9.1 million including $2.3 million in criticized loans.

Develop fee-based revenue through the wealth management business started by the Bank in 2010.

Assets under management by the trust department totaled $109 million at year-end 2012 and $105 million at year-end 2011.

The Utica and Marcellus shale exploration and drilling activities located within the Bank’s market and surrounding areas are providing opportunities to attract new wealth attained by landowners through lease agreements with energy companies.

Completion of a core processing system conversion in April 2012 to reduce costs while expanding product offerings to remain technologically competitive.

Deliver efficient and premier service and products for current and prospective clients and develop a sales culture throughout the Company.

The following key factors summarize the Company’s financial condition at year-end 2012 compared to year-end 2011:

Total assets increased by $28.1 million from $146.6 million to $174.7 million;

Total deposits increased by $27.5 million from $104.0 million to $131.5 million;

Total shareholders’ equity increased $324,000 to $18.9 million; and

Net loans increased $39.4 million to $147.7 million;

The following key factors summarize our results of operations for 2012 compared to 2011:

Net income for 2012 was approximately $114,000, an increase of $1.8 million from 2011 results excluding the impact of the branch sale. The Company would have incurred a net loss for 2011 of approximately $1.7 million excluding the gains and related expenses generated by the 2011 branch sale which netted $3.5 million. Net income for 2011 was $1.8 million.

Net interest income increased by $612,460 to $5.6 million for 2012;

Trust and brokerage revenue increased $159,524, or 21.5%, to $903,374 in 2012 from $743,850 in 2011;

Loan loss provision expense for 2012 totaled $13,466 compared to provision expense of $152,905 for 2011;

Gains on the sale of available-for-sale securities totaled $55,016 for 2012 compared to $358,030 for 2011;

The realized loss and direct write-down of assets acquired in settlement of loans totaled $205,417 for 2012 compared to $268,117 for 2011;

Total noninterest expenses decreased $1.7 million to $6.7 million in 2012 from $8.4 million in 2011.

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

Margins may decline as interest earning assets continue to adjust to lower rates given the Federal Open Market Committee’s expectation to maintain a highly accommodative stance for monetary policy to support a stronger economic recovery. The FOMC has maintained the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least as long as the unemployment rate remains above 6-1/2 percent. The FOMC also has the ability to influence longer term interest rates through its open market operations.

It will be difficult to reduce our cost of funds significantly below current levels.

Commercial lending, with an emphasis on commercial and industrial lending, and new services in trust, brokerage and wealth management are expected to expand;

Credit quality will remain a primary focus of the Company, and costs associated with credit administration and collection efforts could remain high.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements and related disclosures in accordance with U.S. generally accepted accounting principles requires us to make judgments, assumptions and estimates at a specific point in time that affect the amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, we have utilized available information including our past history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments of certain amounts included in the consolidated financial statements, giving due consideration to materiality. It is possible that the ultimate outcome as anticipated by management in formulating our estimates inherent in these financial statements may not materialize. Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operation to similar businesses.

Allowance for loan losses. The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and recoveries and decreased by charge-offs. We estimate the allowance balance by considering 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 our judgment, should be charged off. Loan losses are charged against the allowance when we believe the loan balance cannot be collected.

We consider various factors, including portfolio risk, historical loan losses, the economic environment and loan delinquencies, when determining the level of the provision for loan losses. We monitor loan quality monthly and engage an independent third party each quarter to help monitor and confirm our loan grading conclusions.

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 $8,405,000 will expire as follows: $1,257,000 on December 31, 2027, $132,000 on December 31, 2028, $1,532,000 on December 31, 2029, $5,105,000 on December 31, 2030, and $379,000 on December 31, 2032. 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. Additional information is included in Notes 1 and 10 to our audited consolidated financial statements.

FINANCIAL CONDITION – DECEMBER 31, 2012, COMPARED TO DECEMBER 31, 2011

Assets. At December 31, 2012, assets totaled $174.7 million, up $28.1 million from $146.6 million at December 31, 2011. The increase in assets was funded by an increase deposits.

Cash and Cash Equivalents. Cash and Cash Equivalents decreased $14.3 million to $5.7 million at year-end 2012 compared to $20.0 million at year-end 2011. The Company deployed liquidity during 2012 to fund loan growth.

Securities. The securities portfolio increased $1.0 million to $11.7 million at year-end 2012 compared to year-end 2011. At December 31, 2012, the effective duration of the portfolio excluding equity investments was approximately 1.9 compared to 1.6 at December 31, 2011. At year-end 2012, the net unrealized gain on the securities portfolio was $465,575 compared to a net unrealized gain of $452,816 at year-end 2011. Investment purchases during 2012 totaled $6.2 million and consisted of $5.2 million in 10 year, fixed rate U.S. Government-sponsored agency residential mortgage-backed securities and a $1.0 million callable U.S. agency bond. A GNMA 5.0% mortgage-backed bond was sold during 2012 netting proceeds of $806,000 and a gain on sale of approximately $55,000. Cash flow from the portfolio also included approximately $2.6 million in called bonds.

Loans. Total portfolio loans, net of the allowance for loan loss and deferred loan fees, increased $39.4 million at December 31, 2012 to $147.7 million, compared to $108.3 million at year-end 2011. Loans classified by management as special mention, substandard or doubtful and not deemed impaired represented 2.0% of total loans at December 31, 2012 compared to 5.0% of total loans at December 31, 2011. Impaired loans totaled $6.1 million and represented 4.0% of total loans at December 31, 2012 compared to $4.1 million, or 3.7% of total loans, at year-end 2011. Impaired loans included $2.9 million of trouble debt restructurings (TDRs) that accrue interest at year-end 2012 and $2.7 million of accruing TDRs at year-end 2011. Improving asset quality is a prime objective for management. Outstanding loan balances are expected to increase through business development efforts.

Allowance for Loan Losses and Asset Quality. The allowance for loan losses totaled $2.3 million at December 31, 2012, a decrease of $137,000 compared to $2.5 million at December 31, 2011. The amount of the allowance is based on a combination of actual experiential factors such as historical losses for each category of loans and information about specific borrowers as well as considerations of various other factors, including delinquencies, general economic conditions and the outlook for specific industries, which are more subjective in nature. During 2012, the Company recognized loan charge-offs totaling $316,000 and recoveries totaling $166,000. The provision for loan loss was $13,000 for 2012.

During 2011, the Company recognized loan charge-offs totaling $539,000 and recoveries totaling $415,000. A reclassification of $600,000 reduced the Allowance for Loan Losses for those loans transferred to held-for-sale as part of the Disposal Group in connection with the branch sale. The provision for loan loss was $153,000 for 2011.

As a percentage of total loans, the allowance for loan losses decreased from 2.24% at year-end 2011 to 1.57% at the end of 2012. We continue to closely monitor credit quality and delinquencies as our loan portfolio ages, and will increase the allowance for loan losses if we believe losses have been incurred.

Nonperforming loans consist of loans on nonaccrual status. Nonperforming loans, excluding overdrafts, totaled $3.2 million at December 31, 2012 compared to $1.3 million at December 31, 2011. At year-end 2012, nonperforming loans included one loan with a recorded investment of $2.3 million representing the Bank’s 2.45% participation interest. Sixty-six participants share in the credit. At December 31, 2012, the loan had matured and was included as an impaired, nonaccrual loan because it was more than ninety days past its maturity date. The participating banks agreed to extend the maturity date of the loan with new terms for the borrower. The closing for the loan extension was completed during March 2013, and the Bank has reinstated the loan to accrual status with a loan grade of a pass credit.

During 2012, reductions to nonaccrual loans included transfers to assets acquired through settlement of loans of $324,000, principal payments and payoffs of $903,000, charge-offs of $220,000 and upgrades of $173,000. Additions to nonaccrual loans totaled $3,473,000 including the $2.3 million participation loan discussed above. During 2011, reductions to nonaccrual loans included transfers to assets acquired through settlement of loans of $745,000, principal payments and payoffs of $1,492,000, and charge-offs of $479,000. Additions to nonaccrual loans totaled $642,000.

Assets acquired in settlement of loans. These assets include OREO and an interest in a limited liability company acquired during 2010 that owns the real estate and operations of an indoor waterpark and resort obtained through a U.S. Bankruptcy Code 363 sale. The limited liability company was formed by the lead bank for the banks participating in the project financing to acquire title to the real estate, conduct the operation of the facility, and market the real estate and the operations of the business for sale. The carrying value of its interest is $1.2 million and is based upon the estimated fair value of the real estate less costs to sell. OREO consisted of eight properties and totaled $809,000 at year-end 2012 compared to $757,000 and nine properties at year-end 2011. During 2012, eight properties were sold from OREO for sales proceeds of $326,000. During 2011, nine properties were sold from OREO for sales proceeds of $820,000.

Deposits. Total deposits decreased $27.6 million from year-end 2011 to $131.5 million at December 31, 2012. Branch deposits sold during the fourth quarter of 2011 totaled $74.3 million resulting in a gain on the deposit sale totaling $3.5 million. During 2011, the Company began using a national certificate of deposit listing service to gather deposits from other financial institutions as a source of additional funding and liquidity. Individual deposits raised through this program typically are issued for amounts that approximate the FDIC insurance limit of $250,000 and at rates usually less than certificates issued through its retail offices. Certificates of deposits issued through the listing service totaled $20.8 million and $15.5 million at year-end 2012 and 2011, respectively.

Federal Home Loan Bank Advances. The balance of outstanding advances at year-end 2012 were unchanged from year-end 2011. The advances, totaling $19 million, were borrowed to partially fund the sale of branch deposits in the fourth quarter of 2011.

RESULTS OF OPERATIONS – YEARS ENDED DECEMBER 31, 2012 AND 2011

The Company recorded net income of $114,180, or $.06 per share for the year ended 2012 compared to $1,820,122, or $0.92 per share, for the year ended 2011. Average common shares outstanding were 1,971,449 for 2012 and 1,971,456 for 2011. Outstanding shares and per share amounts for 2011 were adjusted to reflect the effect of the One for Ten reverse stock split effected during September 2012.

Net income for 2011 included a gain for the sale of two banking offices in Wayne County, Ohio in October 2011 which netted $3.5 million. Excluding the impact of the gain on the sale of the banking offices and costs related to the transaction, the Company would have incurred a loss of approximately $1.7 million.

Net interest income. Net interest income increased $612,000 in 2012 compared to 2011, and the Company’s net interest margin increased to 3.66% for 2012 compared to 3.19% for 2011. Low interest rates prevailed during 2012 and 2011 as the Federal Reserve Bank used various measures to reduce interest rates across the yield curve to assist an economic recovery.

Interest income. Interest income increased $173,000 from $6.2 million in 2011 to $6.3 million in 2012 on a slightly smaller average earning asset base of $154.2 million in 2012 compared to $157.7 million in 2011. The yield on earning assets increased from 3.90% in 2011 to 4.10% in 2012. Average balances for loans increased $23.5 million, the securities portfolio decreased $3.8 million and interest-bearing deposits and federal funds sold decreased by $22.0 million. The increase in interest income was driven by higher loan balances, although declining yields in the loan portfolio and other interest-earning assets reduced the positive impact of higher loan balances.

Interest expense. Total interest expense declined $440,000 from $1.1 million in 2011 to $684,000 in 2012, a decrease of 39.1%. The cost of interest bearing funds averaged 0.59% for 2012 compared to 0.89% for 2011. Interest expense on deposits decreased $424,000 to $613,000 in 2012 compared to $1.0 million in 2011. Average deposit balances decreased in 2012 for all deposit categories due to the sale of branch deposits during the fourth quarter of 2011. The lower deposit volumes caused interest expense to decline by approximately $149,000. Lower rates paid on deposits caused interest expense to decline by approximately $275,000 with $217,000 of this reduction from lower rates paid on time deposits. Other borrowing costs declined by $16,000 even as the average balance for other borrowings increased to $24.6 million in 2012 compared to $9.1 million in 2011. It is unlikely that the Company will be able to continue to reduce its cost of funds significantly particularly at the pace realized during the past two years of declining interest rates.

Provision for loan losses. The allowance for loan loss is composed of components for homogenous and pass-rated loans, classified loans, impaired loans, and other subjective factors that may influence expected losses. Provision expense is recorded to increase the allowance for loan loss, and a negative provision for loan loss reflects a decrease in the estimate of loan losses in the loan portfolio.

Provision expense of $13,466 was recorded for 2012. The change in the balance of the allowance for loan loss from 2011 to 2012 that impacted provision expense consisted of a decrease of approximately $249,000 in the allowance for loan losses for pass-rated and homogeneous loan pools estimated based on the three year historical average charge off rate, a decrease of approximately $58,000 in the allowance allocated to impaired loans, a decrease of $488,000 in the allowance for classified loan balances, and an increase of approximately $658,000 for other factors used to estimate the allowance for loan losses. The decrease in the allowance for pass-rated and homogeneous loan pools was principally driven by lower three year historical average charge off rates for commercial and construction and development loan categories and for lower charge off rates for criticized assets. These reductions were offset by the allowance required to support a larger loan portfolio as well as the increase in the allowance allocated to other subjective factors. The increase in the allowance allocated to other factors is consistent with loan growth, changes to delinquency and charge-off trends within portfolio classes, the economic climate in which the Company operates including unemployment trends, and portfolio management.

Provision expense of $152,905 was recorded for 2011. The change in the balance of the allowance for loan loss from 2010 to 2011 that impacted provision expense consisted of an increase of approximately $284,000 in the allowance for loan losses for pass-rated and homogeneous loan pools estimated based on the three year historical average charge off rate, an increase of approximately $113,000 in the allowance allocated to impaired loans, a decrease of $786,000 in the allowance for classified loan balances, and a decrease of approximately $182,000 for other factors used to estimate the allowance for loan losses.

Noninterest income. Noninterest income for 2011 was $5,297,086 compared to $1,241,781 for 2012. The sale of deposits in the Wayne County, Ohio market contributed a total of $3,743,602 toward noninterest income based on the gain on the sale of branch deposits of $3,526,070 and a gain on the assignment of a capital lease agreement for one of the branch offices for $217,532. Noninterest income in 2011 also included deposit-related fee income for $74.3 million in deposits until the sale closed in October 2011.

Service charges and other fees decreased $265,935 to $285,426 in 2012 compared to $551,361 for 2011. The decrease was principally caused by the reduced number of accounts following the sale of branch deposits in the fourth quarter of 2011. Those accounts generated approximately $284,000 in service charges and other fees during 2011. Overdraft fee income has also been pressured due to changes in customer behavior and legislation enacted during 2010 requiring banks to ensure that customers “opt in” to bank-offered overdraft protection programs.

Trust and brokerage fee income increased $159,524 to $903,374 for 2012 compared to $743,850 for 2011. Managed trust assets increased to $109 million at year-end 2012 compared to $105 million at year-end 2011.

Securities gains recorded for 2011 totaled $55,016, down from $358,030 in securities gains for 2011. The gain recorded during 2012 was for the sale of a GNMA mortgage-backed security with an original maturity of 30 years. The Company sold half of its position in this 5% coupon bond to realize some gain and mitigate prepayment risk due to refinancing activity. The gains recorded during 2011 were principally for sales of GNMA mortgage-backed securities with an original maturity of 30 years. The sales were completed to raise funds to complete the disposition of branch deposits during the fourth quarter of 2011 and to reduce the price sensitivity of the investment portfolio.

Gains on the sale of loans increased $50,244 to $159,873 from $109,629 in 2011. Refinance activity in the mortgage market contributed to the improvement in mortgage lending volumes, and purchase activity showed signs of improvement during 2012.

In 2012 and 2011, the Company recognized loss on the disposition or direct write-down of assets acquired in settlement of loans. For 2012, the loss on disposition or direct write-down of assets acquired in settlement of loans totaled $205,417 on eight properties. For 2011, the loss on disposition or direct write-down of assets acquired in settlement of loans totaled $268,117 on twelve properties.

Noninterest expense. Total noninterest expenses decreased $1,621,988, or 19.4%, to $6,732,871 during 2012 compared to $8,354,859 for 2011. Lower expenses were principally the result of the reduction in overhead associated with the banking offices sold during the fourth quarter of 2011 and the absence of branch disposal expenses totaling $212,383 in 2011. Other changes are described below.

Compensation costs, excluding severance benefits classified as part of branch disposal expenses, decreased $552,687 to $3,675,562 in 2012, or a decrease of 13.1%, compared to $4,228,249 in 2011. Incentive compensation costs paid or accrued during the fourth quarter of 2011 totaled approximately $322,000 and was principally related to the successful completion of the branch deposit and loan sale during the fourth quarter. Salaries and benefits costs associated with the sold banking offices totaled approximately $290,000 in 2011. Compensation cost deferrals increased $102,300 based on higher lending volumes for the comparative periods; these expenses are deferred and reflected as a component of loan yield over the loan term in accordance with ASC 310-20-25, Receivables-Nonrefundable Fees and Other Costs.

Occupancy and equipment costs decreased $173,647, or 18.2%, in 2012. Costs associated with the banking offices sold in 2011 totaled approximately $257,000 for 2011. Occupancy and equipment costs associated with the St. Clairsville branch opened in early 2012 totaled approximately $120,000.

Professional fees decreased $76,259 or 13.2%, in 2012. These costs include legal, accounting and auditing, regulatory examination and consulting fees. Legal expenses declined by approximately $57,000, accounting and audit fees decreased $31,000 and consulting expenses increased $12,000.

Franchise tax increased $24,801 to $234,625 for 2012. Ohio franchise tax for financial institutions for the current year is based on the Bank’s net worth on the last day of the prior calendar year-end; higher capital levels at year-end 2011 compared to year-end 2010 resulted in higher costs for 2012.

Marketing and advertising expenses increased by $18,251 to $92,920, or an increase of 24.4% for 2012. The Bank participates in business development activities through sponsorships, special events, speaking engagements, print articles, and other advertisements promoting the experience and expertise of its staff and the advantages of community banking for its clients.

Data processing expenses include costs for internet banking, core systems data processing and courier charges. This expense decreased $233,601 to $494,642 for 2012. This cost is principally driven by the costs associated with core processing and is largely driven by transaction volumes which declined as a result of the branch sale in October 2011. The Bank converted its core systems processing to a different provider during 2012 to reduce costs and expand products used by the Bank.

Deposit expense and insurance fees decreased $97,550, or 25.0%, in 2012. The change in methodology in FDIC assessments implemented in April 1, 2011 and the reduction in the Bank’s asset size related to the branch deposit sale during the fourth quarter of 2011 contributed to the reduction in FDIC insurance cost by approximately $40,000. Lower costs were also realized for cash letter processing, check printing, and other deposit account related expenses.

Non-recurring costs incurred for the completed sale of the Wayne County, Ohio branch offices totaled $212,383 in 2011. These costs included severance costs associated with terminated employees in the market totaling $134,078, legal expenses of $40,771, data processing costs of $21,168, and other costs of $16,366.

Other expenses decreased $310,877, or 34.3%, in 2012. Loan-related expenses decreased $148,238 including lower legal expense of $75,847. OREO expenses decreased $125,354. Insurance for fidelity bond and directors and officers insurance decreased $27,751.

Income tax expense for 2012 totaled $24,524 for estimated alternative minimum tax. No income tax expense was recorded for 2011 because the valuation allowance for deferred tax assets was relieved to the extent that federal income taxes were applied to net income before taxes.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2012 the Company had no unconsolidated, related special purpose entities, nor did the Company 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. The investment policy prohibits engaging in derivatives contracts for speculative trading purposes; however, in the future, the Company may pursue certain contracts, such as interest rate swaps, in an effort to execute a sound and defensive interest rate risk management policy.

LIQUIDITY

Liquidity refers to the 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 financial commitments and to capitalize on opportunities for business expansion in the context of managing interest rate risk exposure. This ability depends on the financial strength, asset quality and the types of deposit and loan instruments offered to our customers.

The Company’s principal sources of funds are deposits, repurchase agreements, loan and security repayments and maturities, sales of securities, capital transactions and borrowings from the FHLB. 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. Investments in liquid assets are maintained based upon our assessment of the need for funds, expected deposit flows, yields available on short-term liquid assets and the objectives of the asset/liability management program.

The Company’s liquidity contingency funding plan identifies liquidity thresholds and raises red flags that may evidence liquidity issues. The 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 the Company encounter a liquidity crisis. Liquidity risk is actively monitored and various scenarios are analyzed that could impact the Company’s ability to access emergency funding in conjunction with asset/liability and interest rate risk management activities.

Cash and cash equivalents decreased $14.3 million from $20.0 million at December 31, 2011 to $5.7 million at December 31, 2012. Cash and cash equivalents represented 3.3% of total assets at year-end 2012, compared to 13.7% of total assets at year-end 2011. The decrease was due to the use of cash to fund loan growth. Total loans, including loans held for sale, increased by approximately $40.4 million from year-end 2011 to year-end 2012. Loan growth was also funded by deposit growth. Non-maturity core deposits increased $10.8 million to $76.5 million at year-end 2012. Retail time deposits increased $11.6 million to $34.3 million at year-end 2012, and time deposits collected through an internet CD listing service increased $5.2 million to $20.8 million at year-end 2012.

The Company monitors the liquidity position on a regular basis in conjunction with asset/liability and interest rate risk management activities. Our current liquidity level, including contingency funding available through borrowing facilities at the Federal Home Loan Bank and the Federal Reserve Bank, is sufficient to meet anticipated future growth in loans and general liquidity needs.

CAPITAL RESOURCES

Total shareholders’ equity was $18.9 million at December 31, 2012, compared to $18.6 million at December 31, 2011. Comprehensive income of $127,000 and the adjustment to equity for stock-based compensation expense of approximately $198,000 increased equity during 2012.

During 2012 the Company’s shareholders approved an amendment to the Articles of Incorporation to effect a one-for-ten reverse stock split. The purpose of the amendment was to increase the market value of the Company’s stock above $1.00 per share to make the shares more attractive to a broader range of institutional and other investors. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. The amendment was effective with the close of business on September 17, 2012.

Banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory action.

Current regulations require a total risk-based capital ratio of 8.0%, at least half of which must be Tier 1 capital, and a leverage ratio of 4.0%. The Bank’s total risk-based capital is made up of Tier 1 capital and Tier 2 capital. Tier 1 capital is total shareholders’ equity, less any intangible assets. Tier 2 capital includes the allowance for loan losses up to a maximum of 1.25% of risk-weighted assets.

The payment of dividends by the Bank to Ohio Legacy and by Ohio Legacy to its shareholders is subject to restrictions by regulatory agencies. These restrictions generally limit the Bank’s dividends to the sum of its current year and the prior two years of retained earnings. In addition, dividends may not reduce capital levels below the minimum regulatory requirements as described above. The Company is not able to declare dividends without prior approval from its regulators.

INTEREST RATE SENSITIVITY

The following table details the variable rate composition of our interest-earning assets at December 31, 2012 and 2011:

	Percent variable rate
	2012			2011
Interest-bearing deposits and federal funds sold		100	%		100	%
Securities		11	%		14	%
Loans		82	%		73	%
Federal bank stock		100	%		100	%
Total interest-earning assets		73	%		72	%

The Company performs regular liquidity risk analysis and quarterly interest rate risk analysis. This information is used to assist in managing the balance sheet to reduce the impact of changes in interest rates on earnings and equity. Approximately 50.4% of the interest-earning assets and 89.4% of the interest-bearing liabilities on our balance sheet at December 31, 2012 were scheduled to mature or subject to repricing during 2012.

We believe that the Bank is "asset" sensitive over a twelve-month horizon at December 31, 2012. Usually, this would mean an increasing interest rate environment would cause an increase in net interest income and a falling interest rate scenario would have the inverse effect. However, we cannot be certain that our net interest income would contract if interest rates increased because the composition of our assets and liabilities is constantly changing due to the variability of our loan prepayment experience, the behavior of core deposit customers and other factors.

IMPACT OF INFLATION AND CHANGING PRICES

The majority of our assets and liabilities are monetary in nature; therefore, we differ greatly from most commercial and industrial companies that have significant investments in fixed assets or inventories. However, inflation does have an important impact on the growth of total assets in the banking industry and the resulting need to increase equity capital at higher than normal rates in order to maintain appropriate capital ratios. Inflation significantly affects noninterest expense, which tends to rise during periods of general inflation. Deflation, or a decrease in overall prices from one period to the next, could have a negative impact on the Company’s operations and financial condition. Deflationary periods impute a higher borrowing cost to debtors as the purchasing power of a dollar increases with time. This may decrease the demand for loan products offered by the Bank.

We believe the most significant impact on our financial results is our ability to react to changes in interest rates. While we seek to maintain a fairly balanced position between interest rate sensitive assets and liabilities and to actively manage our balance sheet in order to protect against the effects of wide interest rate fluctuations on our net income and shareholders’ equity, constraints on capital and other factors may also affect our ability to minimize the impact of changes in interest rates.

Item 8. Financial Statements and Supplementary Data.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2012 and 2011

	2012			2011
ASSETS
Cash and due from banks	$	1,103,974		$	778,689
Federal funds sold and interest-bearing deposits in financial institutions		4,603,077			19,267,467
Cash and cash equivalents		5,707,051			20,046,156
Certificate of deposit in financial institution		100,000			100,000
Securities available for sale		11,713,044			10,677,644
Loans held for sale		2,040,395			895,610
Loans, net of allowance of $2,347,664 and $2,484,478 at December 31, 2012 and December 31, 2011		147,684,318			108,277,319
Federal bank stock		1,577,750			1,597,850
Premises and equipment, net		2,429,076			2,452,627
Assets acquired in settlement of loans		1,980,755			2,012,752
Accrued interest receivable and other assets		1,508,788			541,409
Total assets	$	174,741,177		$	146,601,367

LIABILITIES
Deposits:
Noninterest-bearing demand	$	24,765,857		$	21,017,215
Interest-bearing demand		9,290,531			6,190,520
Savings		42,457,581			38,537,916
Certificates of deposit, net		55,028,379			38,216,813
Total deposits		131,542,348			103,962,464
Repurchase agreements		4,359,837			4,213,612
Short-term Federal Home Loan Bank advances		13,000,000			13,000,000
Long-term Federal Home Loan Bank advances		6,000,000			6,000,000
Accrued interest payable and other liabilities		926,524			837,203
Total liabilities		155,828,709			128,013,279

Commitments and contingent liabilities		0			0

SHAREHOLDERS' EQUITY
Preferred stock, no par value, 500,000 shares authorized, none outstanding		0			0
Common stock, no par value;
December 31, 2012 and December 31, 2011: 22,500,000 shares authorized, 1,971,431 shares issued and outstanding at December 31, 2012 and 1,971,456 issued and outstanding at December 31, 2011		36,004,103			35,806,662
Accumulated deficit		(17,354,709	)		(17,468,889	)
Accumulated other comprehensive income		263,074			250,315
Total shareholders' equity		18,912,468			18,588,088
Total liabilities and shareholders' equity	$	174,741,177		$	146,601,367

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2012 and 2011

	2012			2011
Interest and dividend income:
Loans, including fees	$	5,951,183		$	5,529,061
Securities, taxable		164,911			363,817
Securities, tax-exempt		107,308			107,608
Interest-bearing deposits, federal funds sold and other		25,049			79,554
Dividends on federal bank stock		79,089			74,566
Total interest and dividend income		6,327,540			6,154,606

Interest expense:
Deposits		613,168			1,037,267
Short-term Federal Home Loan Bank advances		25,293			4,381
Long-term Federal Home Loan Bank advances		34,199			21,156
Repurchase agreements and federal funds purchased		11,620			11,036
Capital leases		0			49,966
Total interest expense		684,280			1,123,806
Net interest income		5,643,260			5,030,800
Provision for loan losses		13,466			152,905
Net interest income after provision for loan losses		5,629,794			4,877,895
Noninterest income:
Service charges and other fees		285,426			551,361
Trust and brokerage fee income		903,374			743,850
Gain on sales of securities available for sale, net		55,016			358,030
Gain on sale of loans		159,873			109,629
Gain on sale of branch deposits		0			3,526,070
Gain on assignment of branch lease		0			217,532
Loss on disposition or direct write-down of assets acquired in settlement of loans		(205,417	)		(268,117	)
Loss on disposition of fixed assets		(441	)		(3,818	)
Other income		43,950			62,549
Total noninterest income		1,241,781			5,297,086

Noninterest expense:
Salaries and benefits		3,675,562			4,228,249
Occupancy and equipment		781,225			954,872
Professional fees		503,232			579,491
Franchise tax		234,625			209,824
Data processing		494,642			728,243
Marketing and advertising		92,920			74,669
Stationery and supplies		63,326			71,362
Deposit expense and insurance		291,959			389,509
Branch disposal expenses		0			212,383
Other expenses		595,380			906,257
Total noninterest expense		6,732,871			8,354,859
Net income before income taxes		138,704			1,820,122
Income tax expense		24,524			0

Net income	$	114,180		$	1,820,122

Basic income per share	$	0.06		$	0.92
Diluted income per share	$	0.06		$	0.92

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2012 and 2011

	2012			2011
Net income	$	114,180		$	1,820,122

Other comprehensive income:
Unrealized gains on securities:
Unrealized holding gains arising during the period		67,775			452,621
Reclassification adjustment for gains included in net income		(55,016	)		(358,030	)
Tax effect		0			0
Total other comprehensive income		12,759			94,591

Comprehensive income	$	126,939		$	1,914,713

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the years ended December 31, 2012 and 2011

	Outstanding Shares of Common Stock			Common Stock			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Shareholders' Equity

Balance, January 1, 2010		19,714,564		$	35,603,803		$	(19,289,011	)	$	155,724	$	16,470,516

Stock based compensation expense					202,859								202,859

Net income								1,820,122					1,820,122
Other comprehensive income											94,591		94,591
Balance, December 31, 2011		19,714,564			35,806,662			(17,468,889	)		250,315		18,588,088

Stock based compensation expense					197,692						197,692

One for ten reverse stock split		(17,743,107.6	)
and cash paid for fractions shares		(25.4	)		(251	)							(251	)

Net income								114,180					114,180
Other comprehensive income											12,759		12,759
Balance, December 31, 2012		1,971,431		$	36,004,103		$	(17,354,709	)	$	263,074	$	18,912,468

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2012 and 2011

	2012			2011

Cash flows from operating activities:
Net Income	$	114,180		$	1,820,122
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		13,466			152,905
Depreciation and amortization		277,738			334,529
Loss on disposition of fixed assets		441			3,818
Gain on sale of branch deposits		0			(3,526,070	)
Securities amortization and accretion, net		125,582			210,426
Gain on lease assignment		0			(217,532	)
Origination of loans held for sale		(19,132,413	)		(9,196,955	)
Proceeds from sales of loans held for sale		18,133,831			9,947,343
Loss on disposition or direct write-down of assets acquired in settlement of loans		205,417			268,117
Gain on sale of securities available for sale		(55,016	)		(358,030	)
Gain on sale of loans held for sale		(159,873	)		(109,629	)
Stock based compensation expense		197,692			202,859
Net change in:
Accrued interest receivable and other assets		(967,379	)		117,370
Accrued interest payable and other liabilities		89,321			(294,760	)
Deferred loan fees		(62,113	)		104,001
Net cash from operating activities		(1,219,126	)		(541,486	)

Cash flows from investing activities:
Purchases of securities available for sale		(6,209,677	)		(6,539,002	)
(Purchases) or redemptions of federal bank stock		20,100			(40,150	)
Maturities, calls and paydowns of securities available for sale		4,310,301			13,355,600
Sales of securities available for sale		806,170			10,770,482
Proceeds from sale of assets acquired in settlement of loans		326,041			820,055
Participation loans sold		9,278,619			5,099,496
Participation loans purchased		(6,829,351	)		(1,674,216	)
Net change in loans		(42,293,412	)		(12,462,508	)
Proceeds from sale of premises and equipment		6,722			1,250,464
Acquisition of premises and equipment		(261,350	)		(362,451	)
Net cash from investing activities		(40,845,837	)		10,217,770

Cash flows from financing activities
Net change in deposits		27,579,884			38,583,982
Sale of branch deposits		0			(74,311,095	)
Net change in repurchase agreements		146,225			(177,640	)
Repayment of capital lease obligations		0			(38,126	)
Assignment of capital lease obligation		0			(369,467	)
Proceeds from short term FHLB advances, net of repayments		0			13,000,000
Proceeds from long term FHLB advances		0			6,000,000
Repayments of long term FHLB advances		0			(5,000,000	)
Cash paid in lieu of fractional shares for reverse stock split		(251	)		0
Net cash from financing activities		27,725,858			(22,312,346	)

Net change in cash and cash equivalents		(14,339,105	)		(12,636,062	)
Cash and cash equivalents at beginning of period		20,046,156			32,682,218

Cash and cash equivalents at end of period	$	5,707,051		$	20,046,156

- continued -

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2012 and 2011

	2012		2011
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	679,166	$	1,185,674
Federal income taxes		40,000		0
Non-cash transactions:
Transfer of loans to assets acquired in settlement of loans		499,461		749,624
Transfer of securities to available-for-sale from held-to-maturity		0		2,816,058

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: The consolidated financial statements include Ohio Legacy Corp (“Ohio Legacy”) and its wholly-owned subsidiary, Premier Bank & Trust, National Association (the “Bank”, formerly Ohio Legacy Bank, N.A.). Intercompany transactions and balances are eliminated in consolidation. References to the “Company” include Ohio Legacy, consolidated with its subsidiary, the Bank. The Company is 76.09% owned by Excel Bancorp, LLC.

Ohio Legacy is a bank holding company, incorporated in July 1999 under the laws of the State of Ohio. The Bank provides financial services through three full-service banking offices in North Canton and St. Clairsville, Ohio. The Bank provides trust, private banking, investment and other banking services to its clients. Its primary deposit products are checking, savings and certificate of deposit accounts, and its primary lending products are residential mortgage, commercial real estate, commercial and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by residential and commercial real estate. Concentrations of credit are evaluated based on the North American Industry Classification System (“NAICS”) code assignments. At December 31, 2012, concentrations of credit risk exceeding 25% of Tier 1 capital plus the Allowance for Loan Losses included the following:

	Recorded Investment ($000s)		% of Tier 1 Capital plus the Allowance for Loan Loss
Commercial Real Estate/ Rental & Leasing	$	26,803		129.16	%
Residential Real Estate/ Rental & Leasing		17,180		82.79	%
Retail Trade		7,222		34.80	%
Contractors/Developers		6,085		29.32	%

The Bank’s credit policy includes various concentration limits expressed as a percentage of Tier 1 capital plus the Allowance for Loan Loss and as a percentage of total loans. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and federal funds sold.

Use of Estimates: To prepare financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses, judgments about the other than temporary impairment of securities, fair value of financial instruments, valuation of deferred tax assets and the fair value of other real estate owned are particularly subject to change.

Cash Flows: Cash and cash equivalents includes cash, deposits with other financial institutions with original maturities of less than 90 days and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, repurchase agreements, and short term FHLB advances.

Interest–Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank of $550,000 and $1,514,000 was required to meet regulatory reserve and clearing requirements at December 31, 2012 and 2011, respectively.

Securities: Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax when appropriate.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

In order to determine OTTI for purchased beneficial interests that, on the purchase date, were not highly rated, the Company compares the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Mortgage loans held for sale are sold with servicing rights released. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs and an allowance for loan losses.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

Interest income on loans is generally discontinued at the time the loan becomes 90 days delinquent unless the credit is well-secured and in process of collection. For 1-4 family owner occupied mortgages or home equity lines of credit where the loan balance is 60% or less of the appraised value, the Bank may maintain accrual status. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Delinquency status is based on contractual payment due date.

All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status upon approval of the Credit Committee or the Asset Quality Committee when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan and Lease Losses: The allowance for loan and lease losses (“ALLL”) 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 and assigned a probable loss amount. 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 all loans other than consumer loans and residential mortgage 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 unless the loan is on nonaccrual status.

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The Company divides loans not individually evaluated for impairment by risk into four grades: pass, special mention, substandard, and doubtful. Loans with a pass grade and loans not rated are divided into ten separate segments. Total charge-offs for a specified time period, currently three years, are divided into the same segments and used as a starting point to estimate credit losses in each segment. Other subjective factors, such as industry conditions, local economic trends and similar items are assigned a numeric value by segment and are also applied to the balances in the pass grade. Historic loss percentages are applied separately to the special mention and substandard pools of loans based on actual charge-offs for each pool in total regardless of the segment.

A description of each segment of the loan portfolio, along with the risk characteristics of each segment, is included below

One to Four Family Residential Mortgages: The Company defines residential real estate loans as first mortgages on individuals’ primary residence. Credit approval for residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment, an established credit record and an appropriately appraised value of the real estate securing the loan that generally requires that the residential real estate loan amount be no more than 85% of the purchase price or the appraised value of the real estate securing the loan, whichever is less, unless private mortgage insurance is obtained by the borrower. Loans made for the Bank’s portfolio are generally adjustable rate, fully amortized mortgages. The rates used are generally fully-indexed rates and are not priced using low introductory “teaser” rates.

Home Equity Loans: These loans are either lines of credit or closed-end loans secured by second mortgages. The maximum amount of a home equity line of credit is generally limited to 95% (with acceptable credit scores) of the appraised value of the property less the balance of the first mortgage.

One to Four Family Rental Property: These loans are secured by residential real estate rental properties. The principal source of repayment generally is dependent upon satisfactory occupancy of the building by tenants.

Multi-family Real Estate: These loans consist of residential rental properties and generally consist of buildings with rental units for five or more families. The principal source of repayment generally is dependent upon satisfactory occupancy of the building by tenants.

Consumer Loans: The Company originates direct consumer loans, primarily automobile loans, personal lines of credit, and unsecured consumer loans in its primary market areas. Credit approval for consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

Commercial Loans: Commercial loans are made for a wide variety of general corporate purposes, including financing for industrial and commercial properties, financing for equipment, inventories and accounts receivable. The term of each commercial loan varies by its purpose. Repayment terms are structured such that commercial loans will be repaid within the economic useful life of the underlying asset. The commercial loan portfolio includes loans to a wide variety of corporations and businesses across many industrial classifications in the areas where the Bank operates.

Loans Secured by Trust Assets: These loans, principally used for commercial activities, are secured by cash or marketable securities and have substantially less credit risk than other types of commercial loans.

Commercial Real Estate: Commercial real estate loans (“CRE loans”) are divided into two classes—owner occupied and non-owner occupied—and include mortgage loans to developers and owners of commercial real estate. The collateral for these CRE loans is the underlying commercial real estate. The Bank generally requires that the CRE loan amount be no more than 90% of the purchase price or 80% of the appraised value of the commercial real estate securing the CRE loan, whichever is less. Non-owner occupied CRE loans typically exhibit higher risk.

Construction and Development: Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost (including interest) of construction. If the estimate of construction cost proves to be inaccurate, the Bank may be required to advance funds beyond the amount originally committed to permit completion of the project. If the estimate of value proves inaccurate, the Bank may be confronted, at or prior to the maturity of the loan, with a project having a value insufficient to assure full repayment, should the borrower default. In the event a default on a construction loan occurs and foreclosure follows, the Bank must take control of the project and attempt either to arrange for completion of construction or to dispose of the unfinished project. Additional risk exists with respect to loans made to developers who do not have a buyer for the property, as the developer may lack funds to pay the loan if the property is not sold upon completion. Generally the Bank attempts to reduce such risks on loans to developers by requiring personal guarantees and reviewing current personal financial statements and tax returns.

Loans to Nondepository Financial Institutions: Loans to nondepository financial institutions consist of indirect financing provided to a nationwide network of qualified mortgage brokers that originate mortgage loans for sale to third-party investors. The Bank has a loan participation agreement with another financial institution (the “Direct Lender”) which purchases mortgage loans from the mortgage brokers. The Bank purchases a 75% interest in each mortgage loan offered to the Bank by the Direct Lender for purchase subject to appropriate underwriting requirements up to a an aggregate limit of $10 million. Since the loans are returned to the mortgage broker for sale to the third party investor, the transactions do not meet the definition of a participating interest under generally accepted accounting principles and the financing arrangement is classified as loans to nondepository financial institutions (the originating mortgage brokers). The financing arrangement is collateralized by first mortgages on single family homes. If the loan has not been sold to the third-party investor within 120 days, the mortgage broker must repurchase the mortgage loan from the Direct Lender. The mortgage broker must pay the Direct Lender an amount equal to 10% of the mortgage loan purchase price sixty days after the purchase date and an equal amount ninety days after the purchase date. The mortgage broker, at the Direct Lender’s sole discretion, must repurchase each mortgage loan from the Direct Lender within 120 days after the date of purchase. There is no agreement between the investor and the Direct Lender or the Bank. The Bank receives interest on the mortgage loans equivalent to the fixed coupon rates of the underlying mortgage loans. The Direct Lender and the Bank review each underlying mortgage loan to reasonably ensure conformity with U.S. Agency-sponsored underwriting qualifications prior to the advancement of funds. The underwriting package includes an approved investor commitment to purchase the loan.

Management utilizes past due information as a credit quality indicator across the loan portfolio. The past due information is the primary credit quality indicator within both the 1-4 family residential real estate loan portfolio (including first liens, home equity loans, and construction loans in the 1-4 family real estate segment) and consumer loans.

The primary credit quality indicator for loans to nondepository financial institutions, loans secured by trust assets, commercial and commercial real estate loans (including non-owner occupied, owner occupied, multi-family real estate, 1-4 family rental property, and construction and development loans not included in the residential real estate segment) is based on an internal grading system. Credit grades are monitored regularly by the respective loan officer and independently by credit administration, and adjustments are made when appropriate. The frequency of loan review with respect to credit grades is dependent upon the size and grade of the loan. A description of credit quality indicators is included in Note 3.

Commercial and commercial real estate loans that are graded “doubtful” are shown as nonperforming and management generally charges these loans down to their fair value by taking a partial charge-off or recording a specific allocation of the allowance. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Any commercial loan graded “loss” is immediately charged-off.

When collection of principal and interest is in doubt or a loan is 90-days past due, the loan is placed on non-accrual status and is specifically reviewed for impairment. Impairment is measured based on one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) at the observable market price of the loan; or (3) the fair value of the collateral less estimated disposal costs. Individually impaired loans include all nonaccrual and restructured loans. U.S. generally accepted accounting principles (“GAAP”) require a specific allocation to be established as a component of the allowance for loan losses for certain loans when it is probable that all amounts due pursuant to the contractual terms of the loans will not be collected, and the recorded investment exceeds fair value.

For all loan segments, the Bank will initiate a charge-off or a partial charge-off based on the status of the loan. If the loan is not fully collateralized and is in the process of collection, the Bank will charge off the amount of the uncollectable account balance as a loss. The designated workout officer is generally responsible for calculating and recommending the charge-off amount. All charge-offs must be approved by the Credit Committee whose members consist of the Chief Credit Officer, the Chief Executive Officer, the Chief Operating Officer, the Workout Officer, and the Senior Lending Officer.

Charge offs are recorded when consumer loans are 120 days past due and real estate loans are 180 days past due. This may be extended if management believes that the risk of loss is minimal, and the Bank is in the process of collection with a reasonable prospect of full collection. Management conducts reviews of impaired loans regularly and assesses the requirement for specific allocations or charge-offs. When a loss has not been confirmed and payments are current, a specific allocation is generally recorded. Charge-offs (either full or partial) are recognized when loss is confirmed (for example, upon receipt of a current appraisal) and is generally based on the amount that the loan balance exceeds the estimated net realizable value of the collateral. For unsecured loans, the full balance is charged-off at the time the loan is deemed impaired. The Company did not revise its charge-off policy during the periods presented.

The amount and timing of full or partial charge-offs is important since charge-offs are factored into the calculation of the three-year historical loan loss experience rates used to estimate the adequacy of the allowance for loan losses. Failure to record charge-offs in a timely manner could result in lower historical loss rates and potentially understate the estimate of the amount of probable incurred losses within the portfolio and distort coverage ratios such as the allowance for loan losses to nonaccrual loans used by management to evaluate the adequacy of the allowance for loan losses.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Federal Bank Stock: The Bank is a member of the Federal Home Loan Bank (the “FHLB”) system. Members are required to own a certain amount of stock based on the level of borrowing and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as federal bank stock on the balance sheet, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Federal Reserve Bank stock is also carried at cost. Cash dividends are reported as income. At December 31, 2012, federal bank stock consisted of Federal Home Loan Bank stock of $1,021,000 and Federal Reserve Bank stock of $556,750. As of December 31, 2011, federal bank stock consisted of Federal Home Loan Bank stock of $1,021,000 and Federal Reserve Bank stock of $576,850.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed over an asset’s useful life, primarily using the straight line method. Leasehold improvements and office buildings under a capital lease are amortized over the original term of the lease or the life of the asset, whichever is shorter. Furniture, fixture and equipment have useful lives ranging from 3 to 7 years. Buildings have useful lives ranging from 15 to 20 years. Premises and equipment and other long-lived assets are reviewed for impairment when events indicate their carrying amount may not be recoverable through future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Assets Acquired in Settlement of Loans: These assets include other real estate owned and a limited liability interest in an indoor waterpark and resort obtained through a U.S. Bankruptcy Code 363 sale. The limited liability company was formed by the lead bank for the banks participating in the project financing to acquire title to the real estate, conduct the operation of the facility, and market the real estate and the operations of the business for sale. The carrying value of its interest is based upon the estimated fair value of the real estate less costs to sell.

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, direct write-downs are recorded through expense to the carrying amount of the asset. Costs incurred after acquisition are expensed. Improvements that improve the fair value of the property are capitalized.

Long-Term Assets: Premises and equipment, intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

The issuance of common stock to Excel Bancorp during 2010 resulted in an “ownership change” of the Company, as broadly defined in Section 382 of the Internal Revenue Code. As a result of the ownership change, utilization of the Company’s net operating loss carryforwards and certain built-in losses under federal income tax laws will be subject to annual limitation. The annual limitation placed on the Company’s ability to utilize these potential tax deductions will equal the product of an applicable interest rate mandated under federal income tax laws and the Company’s value immediately before the ownership change. The annual limitation imposed under Section 382 would limit the deduction for both the carryforward tax attributes and the built-in losses realized within five years of the date of the ownership change to approximately $91,683 per year. Given the limited carryforward period assigned to these tax deductions in excess of this annual limit, some portion of these potential deductions will be lost and, consequently, the related tax benefits will not be recorded in the financial statements. See Note 10 for additional information regarding net operating loss carryforwards.

Earnings Per Share: Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of additional potential common shares that may be issued upon the exercise of stock options. On September 17, 2012, the Company completed a one for ten reverse stock split approved by its shareholders at the annual shareholders’ meeting in May 2012. Outstanding shares and per share amounts for 2011 were retroactively restated for the reverse stock split. The following table details the calculation of basic and diluted earnings per share for the years ended December 31:

	2012		2011
BASIC:
Net income	$	114,180	$	1,820,122
Weighted average common shares outstanding		1,971,449		1,971,456
Basic income per share	$	0.06	$	0.92

DILUTED:
Net income	$	114,180	$	1,820,122
Weighted average common shares outstanding		1,971,449		1,971,456
Dilutive effect of stock options		-		-
Total common shares and dilutive potential common shares		1,971,449		1,971,456
Diluted income per common share	$	0.06	$	0.92

The computation of diluted income per share excludes potential dilutive common shares if the effect of their exercise would be anti-dilutive. Potential dilutive common shares which were excluded totaled 128,025 for 2012 and 131,120 for 2011.

Stock-Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The face amount for these items represents the exposure to loss before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale, which are also recognized as a separate component of equity, net of tax.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Dividend Restriction: Banking regulations require the Bank to maintain certain capital levels and may limit the dividends paid by the Bank to Ohio Legacy and by Ohio Legacy to shareholders. See Note 12 for a further description of regulatory restrictions.

Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 9. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or market conditions could significantly affect the estimates.

Operating Segments: While the Company’s chief decision-makers monitor the revenue streams of the Company’s various products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s financial services operations are considered by management to be aggregated into one reportable operating segment.

Reclassifications: Some items in the prior-year financial statements were reclassified to conform to the current year’s presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Adoption of New Accounting Pronouncements:

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that began after December 15, 2011. The adoption of this amendment changed the presentation of the components of comprehensive income for the Company as part of the consolidated statement of changes in shareholders’ equity.

In May 2011, the FASB issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance were effective for interim and annual reporting periods beginning after December 15, 2011. The effect of adopting this standard did not have a material effect on the Company’s operating results or financial condition.

NOTE 2 – SECURITIES

The fair values of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale, carried at fair value:
December 31, 2012
U.S. Government-sponsored enterprises	$	1,006,648	$	7	$	0		$	1,006,655
Mortgage-backed securities issued by U.S. Government-sponsored enterprises		7,309,579		151,274		0			7,460,853
Other mortgage-backed securities-residential		188,430		0		(9,548	)		178,882
Municipal securities		2,702,912		170,892		0			2,873,804
Equity securities		39,900		152,950		0			192,850
Total	$	11,247,469	$	475,123	$	(9,548	)	$	11,713,044

December 31, 2011
U.S. Government-sponsored enterprises	$	2,514,982	$	952	$	(28	)	$	2,515,906
Mortgage-backed securities issued by U.S. Government-sponsored enterprises		4,663,733		201,434		0			4,865,167
Other mortgage-backed securities-residential		250,748		0		(60,877	)		189,871
Municipal decurities		2,755,465		205,885		0			2,961,350
Equity securities		39,900		105,450		0			145,350
Total	$	10,224,828	$	513,721	$	(60,905	)	$	10,677,644

At June 30, 2011, the Company reclassified its municipal securities to the available-for-sale category from held-to-maturity since management no longer intends to hold these securities to maturity. At the time of the transfer, the municipal securities were carried at amortized cost totaling $2,816,058 and the estimated fair value was $2,950,608. The unrealized gain included as a component of accumulated other comprehensive income related to the reclassification was $134,550. The securities were reclassified because management considered selling the municipal securities to assist in funding the sale of two branch offices in October 2011. No purchases will be classified as held-to-maturity before June 30, 2013.

Proceeds from sales of securities available for sale were $806,170 for 2012 and $10.8 million for 2011. Gross gains of $55,016 and $358,030 and no gross losses were realized on the sales during 2012 and 2011, respectively.

Securities with unrealized losses for less than one year and one year or more were as follows:

	Less than 12 months				12 Months or More					Total
	Fair		Unrealized		Fair		Unrealized			Fair		Unrealized
December 31, 2012:	Value		Loss		Value		Loss			Value		Loss
Available for sale:
Other mortgage-backed securities-residential	$	0	$	0	$	178,882	$	(9,548	)	$	178,882	$	(9,548	)

	Less than 12 months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2011:	Value		Loss			Value		Loss			Value		Loss
Available for sale:
U.S. Government-sponsored enterprises	$	1,003,318	$	(28	)	$	-	$	-		$	1,003,318	$	(28	)
Other mortgage-backed securities		-		-			189,871		(60,877	)		189,871		(60,877	)
Total	$	1,003,318	$	(28	)	$	189,871	$	(60,877	)	$	1,193,189	$	(60,905	)

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) in the fair value of its securities portfolio at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. As of December 31, 2012, the Company’s security portfolio consisted of twenty-seven securities. One security was in an unrealized loss position, discussed below under “Mortgage-backed securities”, for twelve months or longer.

Mortgage-backed securities

At December 31, 2012, 19% of the mortgage-backed securities held by the Company were issued by the Government National Mortgage Association (“GNMA”), which are backed by the full faith and credit of the U.S. government, and 79% were issued by the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”), institutions which the government has affirmed its commitment to support.

The Company’s mortgage-backed securities portfolio includes one non-agency security with a fair value of $178,882 which represents an unrealized loss of $9,548 at December 31, 2012 and $60,877 at December 31, 2011. The estimated fair value has been less than its amortized cost for twelve months or more. This non-agency mortgage-backed security is rated Caa2 by Moody’s rating service on December 4, 2012 and BB- by Standard & Poor’s rating service on October 16, 2012. It is senior to two subordinate classes of securities that together are collateralized by a pool of residential mortgages. No losses incurred on the mortgages in the pool have been assigned to the senior classes. Although the borrowers are not required to make principal payments during the initial 10 year period, 81% of the original principal has been repaid as of December 31, 2012. There are no negative amortization loans in the pool and none of the loans are subprime, Alt A or similar type of high-default product. Based on these factors, as of December 31, 2012, the Company believes there is no OTTI and does not have the intent to sell this security and it is not likely that it will be required to sell the security before its anticipated recovery.

The fair value of debt securities available for sale at year-end 2012 by contractual maturity were as follows. Securities not due at a single maturity date (mortgage-backed securities) are shown separately.

	Available for Sale
	Fair Value

Due in one year or less	$	0
Due from one to five years		861,103
Due from five to ten years		2,270,108
Due after ten years		749,248
Mortgage-backed securities-residential		7,639,735
Total	$	11,520,194

Available for sale securities with a fair value of $7,177,000 and $7,002,000 were pledged as collateral for repurchase agreements (see Note 7) as of December 31, 2012 and 2011, respectively. No securities were pledged as collateral to the Federal Home Loan Bank or for public fund deposits at December 31, 2012 and 2011.

At December 31, 2012 and at December 31, 2011, there were no holdings of securities of specific issuers, other than mortgage backed securities and debentures issued by U.S. Government-sponsored enterprises, in an amount greater than 10% of shareholders’ equity.

NOTE 3 – LOANS

Loans, by collateral type, were as follows:

	December 31, 2012						December 31, 2011
	Balance			Percent			Balance			Percent
Residential real estate	$	33,224,110			22.1	%	$	27,985,517			25.3	%
Multifamily real estate		9,998,614			6.7	%		9,140,672			8.2	%
Commercial real estate		55,211,623			36.8	%		42,622,961			38.5	%
Construction and development		7,601,563			5.1	%		4,219,420			3.8	%
Commercial		15,253,309			10.2	%		10,031,094			9.1	%
Secured by trust assets		5,820,705			3.9	%		6,798,929			6.1	%
Loans to nondepository financial institutions		7,345,540			4.9	%		0			0.0	%
Consumer and home equity		15,482,848			10.3	%		9,931,647			9.0	%
Total Loans		149,938,312			100.0	%		110,730,240			100.0	%
Less: Allowance for loan losses		(2,347,664	)					(2,484,478	)
Net deferred loan costs		93,670						31,557
Loans, net	$	147,684,318					$	108,277,319

Approximately $30,231,000 and $24,475,000 of residential real estate loans were pledged as collateral for FHLB advances at December 31, 2012 and 2011, respectively. Commercial and multi-family real estate loans pledged to the FHLB as of December 31, 2012 and 2011 totaled $39,117,000 and $23,827,000, respectively. Approximately $20,289,000 and $16,553,000 of commercial and home equity loans were pledged as collateral at the Federal Reserve Bank of Cleveland for available discount window borrowing at December 31, 2012 and 2011.

Activity in the allowance for loan loss by portfolio class for 2012 is depicted in the following two tables:

	1-4 Family Residential			1-4 Family Rental			Multi-Family Real Estate			Home Equity			Consumer			Commercial
Balance, January 1	$	202,699		$	235,523		$	423,031		$	139,419		$	9,687		$	284,961
Provision for loan losses		244,123			30,806			(168,030	)		247,178			54,201			(385,827	)
Charge-offs		(145,657	)		(30,137	)		0			(52,842	)		(2,262	)		(1,100	)
Recoveries		5,260			873			0			5,968			1,627			118,267
Balance, December 31, 2012	$	306,425		$	237,065		$	255,001		$	339,723		$	63,253		$	16,301

				Commercial real estate									Loans to Nondepository
	Secured by Trust Assets			Non-owner Occupied			Owner Occupied			Construction			Financial Institutions		Total
Balance, January 1	$	13,600		$	278,699		$	662,269		$	234,590		$	0	$	2,484,478
Provision for loan losses		(1,959	)		(552	)		82,712			(89,186	)		0		13,466
Charge-offs		0			(31,412	)		(2,405	)		(50,000	)		0		(315,815	)
Recoveries		0			10,332			2,405			20,803			0		165,535
Balance, December 31, 2012	$	11,641		$	257,067		$	744,981		$	116,207		$	0	$	2,347,664

Activity in the allowance for loan loss by portfolio class for 2011 is depicted in the following two tables:

	1-4 family residential			1-4 family rental			Multi-family real state			Home Equity			Consumer			Commercial
Balance, December 31, 2010	$	183,507		$	331,184		$	454,670		$	93,187		$	10,818		$	275,473
Provision for loan losses		73,014			(57,006	)		207,025			48,068			21,588			142,735
Charge-offs		(48,077	)		(26,737	)		(105,698	)		-			(23,614	)		(81,263	)
Recoveries		-			-			-			-			1,809			38,276
Reclassification of allowance for loans disposed of through branch sale		(5,745	)		(11,918	)		(132,966	)		(1,836	)		(914	)		(90,260	)
Balance, December 31, 2011	$	202,699		$	235,523		$	423,031		$	139,419		$	9,687		$	284,961

	Secured by Trust Assets		Non-owner occupied			Owner Occupied			Construction			Total
Balance, December 31, 2010	$	12,095	$	509,739		$	1,043,458		$	141,635		$	3,055,766
Provision for loan losses		1,505		(138,828	)		40,477			(185,673	)		152,905
Charge-offs		-		(86,246	)		(166,658	)		(1,205	)		(539,498	)
Recoveries		-		-			95,387			279,833			415,305
Reclassification of allowance for loans disposed of through branch sale		-		(5,966	)		(350,395	)		-			(600,000	)
Balance, December 31, 2011	$	13,600	$	278,699		$	662,269		$	234,590		$	2,484,478

The unpaid principal balance of loans reflects the borrowers’ principal balance and is not reduced by partial charge-offs previously recorded by the Company. For nonaccrual loans, the recorded investment in loans is reduced by the full amount of payments received from the borrower, whereas the unpaid principal balance will continue to reflect an allocation of the borrower’s payment between principal and interest. Generally accepted accounting principles define the recorded investment in loans as the sum of unpaid principal balance, accrued interest receivable, and deferred fees and costs minus partial charge-offs. Because accrued interest receivable, deferred fees and deferred costs are not material, the recorded investment in loans presented in the accompanying tables does not include these balances.

The following tables present the balance in the allowance for loan losses and the recorded investment of loans by portfolio class and based on impairment method.

	Loans Collectively Evaluated for Impairment				Loans Individually Evaluated for Impairment				Total
December 31, 2012	Allowance for Loan Loss		Recorded Investment		Allowance for Loan Loss		Recorded Investment		Allowance for Loan Loss		Recorded Investment
1-4 family residential mortgage	$	306,425	$	28,166,315	$	0	$	667,082	$	306,425	$	28,833,397
1-4 family rental property		230,376		4,340,427		6,689		50,286		237,065		4,390,713
Multi-family real estate		255,001		9,707,328		0		291,286		255,001		9,998,614
Home equity		303,860		12,531,704		35,863		263,776		339,723		12,795,480
Consumer		63,253		2,687,368		0		0		63,253		2,687,368
Commercial		15,252		15,252,260		1,049		1,049		16,301		15,253,309
Secured by trust assets		11,641		5,820,705		0		0		11,641		5,820,705
Commercial real estate:
Non-owner occupied		241,359		24,257,442		15,708		2,415,495		257,067		26,672,937
Owner occupied		743,758		25,831,947		1,223		2,706,739		744,981		28,538,686
Loans to nondepository financial institutions		0		7,345,540		0		0		0		7,345,540
Construction and development		116,207		7,601,563		0		0		116,207		7,601,563
Total	$	2,287,132	$	143,542,599	$	60,532	$	6,395,713	$	2,347,664	$	149,938,312

	Loans Collectively Evaluated for Impairment				Loans Individually Evaluated for Impairment				Total
December 31, 2011	Allowance for Loan Loss		Recorded Investment		Allowance for Loan Loss		Recorded Investment		Allowance for Loan Loss		Recorded Investment
1-4 family residential mortgage	$	202,699	$	23,645,009	$	0	$	108,877	$	202,699	$	23,753,886
1-4 family rental property		235,523		4,068,998		0		162,633		235,523		4,231,631
Multi-family real estate		423,031		9,132,775		0		7,897		423,031		9,140,672
Home equity		98,944		8,711,640		40,475		189,603		139,419		8,901,243
Consumer		9,687		1,030,404		0		0		9,687		1,030,404
Commercial		284,347		9,838,175		614		192,919		284,961		10,031,094
Commercial secured by trust assets		13,600		6,798,929		0		0		13,600		6,798,929
Commercial real estate:
Non-owner occupied		212,153		20,279,967		66,546		2,522,791		278,699		22,802,758
Owner occupied		650,824		19,208,688		11,445		611,515		662,269		19,820,203
Construction and development		234,590		3,931,523		0		287,897		234,590		4,219,420
Total	$	2,365,398	$	106,646,108	$	119,080	$	4,084,132	$	2,484,478	$	110,730,240

The following tables present loans individually evaluated for impairment by loan class:

	As of December 31, 2012						As of December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
1-4 family residential mortgage	$	757,684	$	667,082	$	0	$	197,637	$	108,877	$	0
1-4 family rental property		62,552		13,323		0		288,674		162,633		0
Multi-family real estate		322,098		291,286		0		36,952		7,897		0
Home equity		66,273		66,273		0		32,337		32,337		0
Commercial		0		0		0		371,177		192,305		0
Commercial real estate:
Non-owner occupied		2,386,167		2,386,167		0		1,836,578		1,754,214		0
Owner occupied		2,750,965		2,705,516		0		613,495		533,746		0
Construction and development		0		0		0		716,657		287,897		0
Subtotal		6,345,738		6,129,647		0		4,093,506		3,079,906		0

With an allowance recorded:
1-4 family residential mortgage		0		0		0		0		0		0
1-4 family rental property		60,949		36,963		6,689		0		0		0
Multi-family real estate		0		0		0		0		0		0
Home equity		197,560		197,503		35,863		157,266		157,266		40,475
Commercial		1,140		1,049		1,049		2,849		614		614
Commercial real estate:
Non-owner occupied		61,518		29,328		15,708		773,028		768,577		66,546
Owner occupied		7,042		1,223		1,223		82,517		77,769		11,445
Subtotal		328,209		266,066		60,532		1,015,660		1,004,226		119,080

Total	$	6,673,947	$	6,395,713	$	60,532	$	5,109,166	$	4,084,132	$	119,080

	For the Year Ended December 31, 2012						For the Year Ended December 31, 2011
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With no related allowance recorded:
1-4 family residential mortgage	$	452,767	$	0	$	0	$	210,111	$	590	$	590
1-4 family rental property		63,897		1,344		1,344		118,228		10,861		10,861
Multi-family real estate		100,417		17,337		14,889		28,081		0		0
Home equity		60,920		2,426		2,240		8,375		0		0
Commercial		118,406		8,004		7,486		164,449		20,874		20,874
Commercial real estate:
Non-owner occupied		2,445,154		142,465		137,741		524,417		4,490		4,490
Owner occupied		775,053		10,732		10,732		863,249		1,712		1,712
Construction and development		119,957						779,650		1,666		1,666
Subtotal		4,136,571		182,308		174,432		2,696,560		40,193		40,193

With an allowance recorded:
1-4 family residential mortgage		0		0		0		36,158		0		0
1-4 family rental property		35,012		0		0		76,017		0		0
Multi-family real estate		811		0		0		0		0		0
Home equity		121,703		7,699		7,174		12,011		0		0
Consumer		0		0		0		0		0		0
Commercial		0		0		0		22,158		0		0
Commercial real estate:
Non-owner occupied		9,170		0		0		133,958		0		0
Owner occupied		374,117		0		0		46,331		0		0
Subtotal		540,813		7,699		7,174		326,633		0		0

Total	$	4,677,384	$	190,007	$	181,606	$	3,023,193	$	40,193	$	40,193

The following tables present the aging of the recorded investment in loans by loan class:

			Days Past Due
December 31, 2012	Loans Not Past Due		30-59 Days		60-89 Days		90 Days or Greater		Total Past Due		Total
1-4 family residential mortgage	$	27,180,242	$	960,868	$	180,021	$	512,266	$	1,653,155	$	28,833,397
1-4 family rental property		4,340,427		6,143		7,180		36,963		50,286		4,390,713
Multi-family real estate		9,995,173		0		3,441		0		3,441		9,998,614
Home equity loans		12,676,103		39,802		29,643		49,932		119,377		12,795,480
Consumer		2,685,058		719		642		949		2,310		2,687,368
Commercial		15,252,260		1,049		0		0		1,049		15,253,309
Secured by trust assets		5,820,705		0		0		0		0		5,820,705
Commercial real estate:		0		0		0		0
Non-owner occupied		26,643,609		0		0		29,328		29,328		26,672,937
Owner occupied		26,048,546		0		191,894		2,298,246		2,490,140		28,538,686
Loans to nondepository financial institutions		7,345,540		0		0		0		0		7,345,540
Construction and development		7,601,563		0		0		0		0		7,601,563
Total	$	145,589,226	$	1,008,581	$	412,821	$	2,927,684	$	4,349,086	$	149,938,312

Loans past due 90 days or greater included one commercial real estate, owner occupied loan with a recorded investment of $2.3 million representing the Bank’s 2.45% participation interest. Sixty-six participants share in the credit. The loan has matured and the participating banks have agreed to extend the maturity date of the loan with new terms for the borrower. The closing for the loan extension was completed during March 2013, and the Bank has reinstated the loan to accrual status with a loan grade of a pass credit.

			Days Past Due
December 31, 2011	Loans Not Past Due		30-59 Days		60-89 Days		90 Days or Greater		Total Past Due		Total
1-4 family residential mortgage	$	23,161,060	$	454,167	$	138,659	$	0	$	592,826	$	23,753,886
1-4 family rental property		3,924,394		144,603		31,975		130,659		307,237		4,231,631
Multi-family real estate		9,132,775		0		0		7,897		7,897		9,140,672
Home equity loans		8,809,248		25,161		34,497		32,337		91,995		8,901,243
Consumer		1,017,062		0		11,670		1,672		13,342		1,030,404
Commercial		10,005,369		3,848		6,692		15,185		25,725		10,031,094
Secured by trust assets		6,798,929		0		0		0		0		6,798,929
Commercial real estate:
Non-owner occupied		22,762,810		0		0		39,948		39,948		22,802,758
Owner occupied		19,581,686		0		0		238,517		238,517		19,820,203
Construction and development		3,881,837		49,686		0		287,897		337,583		4,219,420
Total	$	109,075,170	$	677,465	$	223,493	$	754,112	$	1,655,070	$	110,730,240

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by loan class:

December 31, 2012	Nonaccrual Loans		90 Days or Greater & Still Accruing		Total
1-4 family residential mortgage	$	347,582	$	197,353	$	544,935
1-4 family rental property		50,286		0		50,286
Multi-family real estate		3,441		0		3,441
Home equity loans		49,932		0		49,932
Consumer		17,320		948		18,268
Commercial		1,049		0		1,049
Secured by trust assets		0		0		0
Commercial real estate:
Non-owner occupied		29,328		0		29,328
Owner occupied		2,706,739		0		2,706,739
Construction and development		0		0		0
Total	$	3,205,677	$	198,301	$	3,403,978

December 31, 2011	Nonaccrual loans		90 Days or Greater & Still Accruing		Total
1-4 family residential mortgage	$	108,877	$	-	$	108,877
1-4 family rental property		162,633		-		162,633
Multi-family real estate		7,897		-		7,897
Home equity loans		38,612		-		38,612
Consumer		6,309		1,672		7,981
Commercial		77,919		-		77,919
Commercial real estate:
Non-owner occupied		39,948		-		39,948
Owner occupied		611,515		-		611,515
Construction and development		287,897		-		287,897
Total	$	1,341,607	$	1,672	$	1,343,279

Troubled Debt Restructurings:

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”) and classified as impaired. TDRs are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For TDRs that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The following tables depict TDR activity for 2012 and 2011:

			For the Year Ended December 31, 2012
	Number of Loans		Pre-Modification		Post-Modification
Home equity		1	$	66,272	$	66,272
Commercial		0		0		0
Commercial real estate:
Non-owner occupied		1		253,218		290,500
Owner occupied		1		238,517		229,519
Total		3	$	558,007	$	586,291

			For the Year Ended December 31, 2011
	Number of Loans		Pre-Modification		Post-Modification
Home equity		1	$	150,991	$	150,991
Commercial		3		145,294		195,761
Commercial real estate:
Non-owner occupied		4		2,222,984		2,490,647
Owner occupied		2		120,403		120,403
Total		10	$	2,639,672	$	2,957,802

The home equity modifications related to a change in payment through the re-amortization of the remaining balance and an increase in the interest rate.

The modifications of the commercial class generally relate to maturity date extensions as well as rate and payment modifications. The payment modifications adjusted the remaining amortization of the outstanding loan balance. Generally, interest rates are either maintained at the same rate or increased for modifications in the Commercial class. The advance of funds “post-modification” related to equipment purchases.

The modifications of the non-owner occupied commercial real estate class related to a restructuring of payment, interest rate, term and amortization. For each loan, the interest rate was either increased or was unchanged. The loan term was left unchanged or shortened. The amortization period was lengthened up to 7 years with the loan-to-value of each loan remaining within Bank credit policy limits. The increase in balances “post-modification” related to the advance of new funds to pay delinquent real estate taxes.

The Owner-Occupied Commercial Real Estate modifications were the result of shortening the maturity of loans so that the expiration date of the real estate holding company debt and the operating entity debt were the same.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The following table reports the balance of TDRs outstanding and related information as of year-end:

	December 31, 2012				December 31, 2011
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment

Home equity		2	$	213,844		1	$	150,991
Commercial real estate:
Non-owner occupied		5		2,674,012		4		2,482,844
Owner occupied		1		215,377		2		110,627
Commercial		1		78,990		3		177,120

TDR allocated specific reserves			$	30,780			$	100,746
TDR loan commitments outstanding				0				6,000

No loans were modified during the year ending December 31, 2012 or 2011 that had a significant payment delay and did not meet the definition of a troubled debt restructuring.

A loan is typically considered to be in payment default once it is eleven days contractually past due under the modified terms. During 2012, there was one non-owner occupied commercial real estate loan identified as a TDR with a balance of $287,845 as of December 31, 2012 for which a payment default occurred during the prior twelve months following the modification. The payment default did not result in a charge off or a change in the allowance for loan and lease losses.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within the twelve months following the modification during the year ending December 31, 2011:

Troubled Debt Restructurings That Subsequently Defaulted		Number of Loans				Recorded Investment
Commercial			1			$	6,692

The troubled debt restructuring that subsequently defaulted described above did not increase the allowance for loan losses or result in any loan charge offs during the period ending December 31, 2011.

Credit Quality Indicators:

The Company classifies all non-homogeneous loans such as commercial and commercial real estate loans into risk classes based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk into four non-classified categories (i.e. passing grade loans) and three categories of classified loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings for classified loans:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans not analyzed as part of homogeneous groups include commercial, commercial real estate, multi-family real estate, most one to four family rental properties, construction and development loans (except for consumer construction loans for single family owner-occupied homes included as part of a homogeneous group), loans secured by trust assets, and loans to nondepository financial institutions. Loans secured by one to four family rental properties are not risk rated when the borrower owns less than four rental properties or units. Homogeneous groups of loans are not typically risk rated unless the loan is placed on nonaccrual status. A loan may also be separated from the homogeneous pool and individually risk rated due to recurrent delinquency problems, typically 60 to 89 days past due. Based on the most recent analysis performed, the risk category of loans by class of loans was as follows:

December 31, 2012	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
1-4 family residential mortgage	$	28,181,932	$	187,140	$	116,743	$	347,582	$	0	$	28,833,397
1-4 family rental property		949,631		3,307,577		62,659		70,846		0		4,390,713
Multi-family real estate		279,367		8,387,924		907,951		423,372		0		9,998,614
Home equity loans		12,473,534		58,170		0		231,439		32,337		12,795,480
Consumer		2,687,368		0		0		0		0		2,687,368
Commercial		0		15,252,260		0		1,049		0		15,253,309
Secured by trust assets		0		5,820,705		0		0		0		5,820,705
Commercial real estate:
Non-owner occupied		0		22,949,712		1,307,730		2,415,495		0		26,672,937
Owner occupied		0		25,437,889		173,139		2,927,658		0		28,538,686
Loans to nondepository financial institutions		0		7,345,540		0		0		0		7,345,540
Construction and development		2,776,423		4,825,140		0		0		0		7,601,563
Total	$	47,348,255	$	93,572,057	$	2,568,222	$	6,417,441	$	32,337	$	149,938,312

December 31, 2011	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
1-4 family residential mortgage	$	23,441,682	$	-	$	203,327	$	1,680	$	107,197	$	23,753,886
1-4 family rental property		494,363		2,872,069		513,544		351,655		-		4,231,631
Multi-family real estate		303,587		7,240,618		254,823		1,341,644		-		9,140,672
Home equity loans		8,637,268		72,895		1,477		150,991		38,612		8,901,243
Consumer		1,030,404		-		-		-		-		1,030,404
Commercial		-		9,823,849		14,326		130,799		62,120		10,031,094
Secured by trust assets		675,626		6,123,303		-		-		-		6,798,929
Commercial real estate:
Non-owner occupied		5,000		19,005,683		759,562		3,032,513		-		22,802,758
Owner occupied		1,795		17,493,719		1,506,489		707,573		110,627		19,820,203
Construction and development		1,867,195		2,037,504		26,824		287,897		-		4,219,420
Total	$	36,456,920	$	64,669,640	$	3,280,372	$	6,004,752	$	318,556	$	110,730,240

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the current principal balance of residential and consumer loans based on payment activity:

	Residential
December 31, 2012	1-4 family		Home Equity		Consumer		Total
Performing	$	28,485,815	$	12,745,548	$	2,670,048	$	43,901,411
Nonperforming		347,582		49,932		17,320		414,834
Total	$	28,833,397	$	12,795,480	$	2,687,368	$	44,316,245

	Residential
December 31, 2011	1-4 Family		Home Equity		Consumer		Total
Performing	$	23,645,009	$	8,862,631	$	1,024,095	$	33,380,744
Nonperforming		108,877		38,612		6,309		304,789
Total	$	23,753,886	$	8,901,243	$	1,030,404	$	33,685,533

Loans to principal officers, directors and their affiliates in 2012 were as follows:

Balance, January 1	$	5,387,226
New loans or advances		197,813
Repayments		(700,571	)
Balance, December 31	$	4,884,468

NOTE 4 – ASSETS ACQUIRED IN SETTLEMENT OF LOANS

Assets acquired in settlement of loans were as follows for the years ended December 31, 2012 and 2011:

	2012		2011
Interest in limited liability company	$	1,171,620	$	1,255,437
Residential real estate		51,690		201,154
Commercial real estate		251,000		292,251
Construction and development		506,445		263,910
Total	$	1,980,755	$	2,012,752

Direct write-downs of assets acquired in settlement of loans totaled $209,453 and $192,882 for the years ended December 31, 2012 and 2011, respectively.

The interest in the limited liability company was obtained through a U.S. Bankruptcy Code 363 sale. The limited liability company was formed by the lead bank for the banks participating in the project financing to acquire title to the real estate, conduct the operation of the facility, and market the real estate and the operations of the business for sale. The carrying value of its interest is based upon the estimated fair value of the real estate less costs to sell.

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment were as follows at December 31 2012 and 2011:

	2012			2011
Land	$	524,559		$	524,559
Office building		996,183			996,183
Leasehold improvements		824,130			520,223
Furniture, fixtures and equipment		1,780,201			1,942,534
Premises and equipment, cost		4,125,073			3,983,499
Less: Accumulated depreciation		(1,695,997	)		(1,530,872	)
Premises and equipment, net	$	2,429,076		$	2,452,627

The North Canton banking office is located at 600 South Main Street in North Canton, Ohio. The Bank owns the land and building, which was constructed during 2005. During 2010, the Company changed its main office to this location.

During the years ended December 31, 2012 and 2011, depreciation expense was $277,738 and $334,529, respectively. Depreciation expense includes amortization of assets leased under capital leases.

In October 2011, the lease for the Company’s former banking office located at 305 West Liberty Street was assigned to the purchaser of the deposits associated with the Bank’s former branch offices located in Wooster, Ohio. Prior to the lease assignment, the building portion of the lease was accounted for as a capital lease while the land portion of the lease was accounted for as an operating lease, due to the land exceeding 25% of the total fair value of the property. The Company recognized a gain of $217,532 on the assignment of this lease based on the difference between the obligation for the lease payments for the remainder of the lease term and the net book value of the leasehold improvements for the office.

In October 2011, the Company also sold its Milltown banking office located at 3562 Commerce Parkway in Wooster, Ohio, in connection with the sale of branch deposits associated with its former Wooster, Ohio banking offices. The sales price for the building and real estate was equivalent to the Company’s net book value at the time of the sale.

The Bank’s operations center is located at 2375 Benden Drive, Suite C, Wooster, Ohio. The initial term of the current lease was three years beginning August 1, 2011 with an option to renew the lease for an additional three year term. The annual rent is $43,125.

The Belden banking office is located at 6141 Whipple Ave NW, North Canton, Ohio. The landlord for the Belden office is a related party. The original term of the current lease is twenty years commencing October 1, 2010. The rent for the first six months was $22,752 and increased to $45,396 for the second six months. Annual rent in year two through five is $90,792 increasing to $102,144 in year six through year ten, $114,912 in year eleven through year fifteen, and $129,276 in year sixteen through year twenty. The Company has the option to renew the lease for six successive periods of five years each.

In September 2011, the Bank entered into a lease agreement for office space located at 107 Plaza Drive, Suite A, St. Clairsville, Ohio, to expand the space previously leased under a separate agreement for purposes of opening a full service branch to complement the wealth services including trust and brokerage services offered at this location since 2010. The lease commenced following completion of construction on January 13, 2012. The initial lease term is ten years with annual rent of $38,040 for the first two years, $55,860 for years three through five, and $52,668 for years six through ten with additional rent in the amount of the tenant’s proportionate share of building operating expenses which includes real estate taxes, insurance, utilities, maintenance, and other costs associated with the maintenance and operation of the building.

A lease for office space for wealth services is located at 107 Plaza Drive, Suite J, St. Clairsville, Ohio. The initial term of the lease was three years beginning March 1, 2010. The minimum annual rent is $20,496 with additional rent in the amount of the tenant’s proportionate share of building operating expenses which includes real estate taxes, insurance, utilities, maintenance, and other costs associated with the maintenance and operation of the building. The lease provides for options to renew the lease for two additional one year terms. The lease was renewed in March 2013 for an annual rent of $21,521.

Rent expense was $232,615 and $215,264 for the years ended December 31, 2012 and 2011, respectively. Estimated rental commitments under all leases for their non-cancelable periods were as follows as of December 31, 2012:

	Operating Leases

2013	$	193,222
2014		177,188
2015		149,490
2016		158,004
2017		154,812
Thereafter		1,712,508
Total minimum lease payments	$	2,545,224

NOTE 6 - DEPOSITS

Certificates of deposit in denominations of $100,000 or more were $38,075,582 and $25,383,342 at December 31, 2012 and 2011, respectively.

Scheduled maturities of certificates of deposit were as follows at December 31, 2012:

2013	$	41,190,195
2014		7,988,060
2015		5,625,702
2016		212,922
2017		11,500
	$	55,028,379

NOTE 7 – REPURCHASE AGREEMENTS

Repurchase agreements are financing arrangements that mature daily. Under the agreements, customers agree to maintain funds on deposit with the Bank and in return acquire an interest in a pool of securities pledged as collateral against the funds. The securities are held in a segregated safekeeping account at the Federal Home Loan Bank. Information concerning the repurchase agreements for 2012 and 2011 is summarized as follows:

	2012			2011
Average daily balance during the year	$	4,591,173		$	4,056,358
Average interest rate during the year		0.25	%		0.26	%
Maximum month-end balance during the year		5,845,256			6,978,179
Interest rate at year-end		0.25	%		0.25	%

NOTE 8 - FEDERAL HOME LOAN BANK ADVANCES

The following table details FHLB short term borrowings as of December 31, 2012 and 2011.

	2012		2011
Cash management interest only advance
.14% variable rate, maturing January 14, 2013	$	5,000,000	$	0
Cash management interest only advance
.18% fixed rate, maturing January 4, 2013		8,000,000		0
Cash management interest only advance
.14% variable rate, maturing January 11, 2012		0		5,000,000
Cash management interest only advance
.04% fixed rate, maturing January 6, 2012		0		8,000,000

Total	$	13,000,000	$	13,000,000

The cash management advances are prepayable without penalty.

The following table details FHLB long term advances as of December 31, 2012 and 2011:

	2012		2011
Two-year interest-only advance
.59% fixed rate, maturing November 27,2013	$	3,000,000	$	3,000,000
18-month interest-only advance
.55% fixed rate, maturing April 12, 2013		3,000,000		3,000,000
Total advances	$	6,000,000	$	6,000,000

Each interest-only advance is payable at its maturity date and has a prepayment penalty if repaid prior to maturity. The advances are collateralized by a blanket pledge of eligible residential real estate loans and a specific pledge of commercial and commercial real estate loans. At December 31, 2012, the Bank had approximately $21,055,000 in additional borrowing capacity available for future advances based upon current collateral and the Company’s holdings of FHLB stock. As of December 31, 2012, required principal payments on all FHLB advances are due during 2013.

NOTE 9 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial asset:

Securities: The fair values for securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Impaired Loans: The fair value of collateral dependent impaired loans with specific allocations of the allowance for loan losses and other real estate is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets Acquired in Settlement of Loans: The fair value of assets acquired in settlement of loans is generally based on real estate appraisals. Appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Annual appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. For commercial impaired loans and other real estate owned, if the carrying value is less than $250,000, the Company may obtain a property evaluation by an independent company instead of an appraisal. The Company uses an independent third party appraisal management company for the management of appraisal ordering and review. The appraisal management company reviews the assumptions and approaches, utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics and provides a written review report to the Company. On an annual basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraised value to arrive at fair value. The most recent analysis performed indicated that a discount of 10% should be applied. In some cases, and when justified through appropriate documentation, additional discounting is reflected to allow for changing market conditions, property condition or increasing vacancy.

Assets measured at fair value on a recurring basis are summarized in the following table:

	Fair Value Measurements Using
			Significant
	Quoted Prices in		Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
December 31, 2012:
Equity securities	$	192,850	$	0	$	0	$	192,850
U.S. government sponsored enterprises		0		1,006,655		0		1,006,655
Mortgage-backed securities issued by U.S. Government-sponsored enterprises		0		7,460,853		0		7,460,853
Other mortgage backed securities-residential		0		178,882		0		178,882
Municipal securities		0		2,873,804		0		2,873,804
Total securities available for sale	$	192,850	$	11,520,194	$	0	$	11,713,044

December 31, 2011:
Equity securities	$	145,350	$	0	$	0	$	145,350
U.S. government sponsored enterprises		0		2,515,906		0		2,515,906
Mortgage-backed securities issued by U.S. Government-sponsored enterprises		0		4,865,167		0		4,865,167
Other mortgage backed securities-residential		0		189,871		0		189,871
Municipal securities		0		2,379,836		581,514		2,961,350
Total securities available for sale	$	145,350	$	9,950,780	$	581,514	$	10,677,644

Level 3 securities are priced by a third party vendor and consist of non-rated municipal bonds of a single issuer. The vendor uses internal quality ratings that are a proprietary, internal data management tool to group municipal securities into sectors by perceived credit quality and correlation to the overall municipal market. Data gathered can be categorized as indicative data (terms and conditions data) and market data which are inputs used in price generation. Market data is comprised of various inputs needed to generate or adjust the variables required by the vendors pricing system. Examples of these market inputs are trades, bid price or spread, two-sided markets, quotes, benchmark curves including but not limited to Treasury benchmarks and LIBOR and swap curves, market data feeds such as MSRB, new issues, financial statements, discount rate, capital rates, and trustee reports. They rely on the expertise and judgment of its pricing analysts to gather and identify relevant information to use in formulating pricing opinions.

The Company’s policy is to recognize transfers into or out of a level as of the end of the reporting period. There were no transfers between Level 1 and Level 2 securities during 2012 or 2011.

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31.

	Municipal Securities
	2012			2011
Balance of recurring Level 3 assets at January 1	$	581,514		$	537,577
Total gains or losses (realized/unrealized):
Included in earnings – realized		0			0
Included in earnings – unrealized		0			0
Included in other comprehensive income		(17,794	)		43,937
Purchases		0			0
Sales		0			0
Issuances		0			0
Settlements		0			0
Transfers in and/or out of Level 3		(563,720	)		0
Balance of recurring Level 3 assets at December 31	$	0		$	581,514

The fair value for two municipal bonds with a fair value of $563,720 as of December 31, 2012 was transferred from Level 3 to Level 2 because observable market data was available for the securities.

The following table summarizes changes in unrealized gains and losses recorded in earnings for the year ended December 31, 2011 for Level 3 assets and liabilities that are still held at December 31.

	2011
Interest income on securities	$	152
Other changes in fair value		43,785
Total	$	43,937

The following table depicts assets measured at fair value on a non-recurring basis.

	Fair Value Measurements Using
			Significant
	Quoted Prices in		Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
December 31, 2012:
Impaired loans:
1-4 family residential mortgage	$	0	$	0	$	471,501	$	471,501
1-4 family rental property		0		0		43,597		43,597
Home equity		0		0		161,640		161,640
Multi-family real estate		0		0		3,441		3,441
Commercial real estate:
Non-owner occupied		0		0		13,620		13,620

Assets acquired in settlement of loans:
Residential		0		0		25,989		25,989
Commercial real estate		0		0		150,000		150,000
Construction and development		0		0		145,684		145,684
Interest in limited liability company		0		0		1,171,620		1,171,620

December 31, 2011:
Impaired loans:
1-4 family residential mortgage	$	0	$	0	$	107,197	$	107,197
1-4 family rental property		0		0		130,659		130,659
Home equity		0		0		116,791		116,791
Multi-family real estate		0		0		7,897		7,897
Commercial		0		0		62,120		62,120
Commercial real estate:
Non-owner occupied		0		0		741,979		741,979
Owner occupied		0		0		66,324		66,324
Construction and development		0		0		287,897		287,897

Assets acquired in settlement of loans:
Residential		0		0		55,989		55,989
Commercial real estate		0		0		292,251		292,251
Construction and development		0		0		263,910		263,910
Interest in limited liability company		0		0		1,255,437		1,255,437

The above impaired loans, which are measured for impairment using the fair value of the collateral, had a carrying amount of $754,331 with a specific allocation of the allowance for loan losses of $60,532 at December 31, 2012. Provisions for loan losses as a result of charge-offs or write-downs to the fair value of collateral were $127,075 in 2012.

The above impaired loans, which are measured for impairment using the fair value of the collateral, had a carrying amount of $1,639,944 with a specific allocation of the allowance for loan losses of $119,080 at December 31, 2011. Provisions for loan losses as a result of charge-offs or write-downs to the fair value of collateral were $628,530 in 2011.

The above assets acquired in settlement of loans, measured at fair value less costs to sell, had a carrying value of $1,493,293 at December 31, 2012. Gross write-downs totaling $209,453 were recorded on these assets during the year ended December 31, 2012. Gross write-downs totaling $192,882 were recorded on these assets during the year ended December 31, 2011.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2012:

Fair value

Valuation
Technique

Unobservable
Inputs

Range

Weighted
Average

Impaired loans

1-4 family residential

471,501

Sales comparison approach

Adjustment for differences between the comparable sales

8.56% to 9.03%

8.71

1-4 family rental property

43,597

Sales comparison approach

Adjustment for differences between the comparable sales

-32.00% to 1.00%

-9.43

Home equity

161,640

Sales comparison approach

Adjustment for differences between the comparable sales

-7.17% to -1.70%

-4.20

Multi-family real estate

3,441

Sales comparison approach

Adjustment for differences between the comparable sales

2.10% to 2.10%

2.10

Commercial real estate:

Non-owner occupied

13,620

Income approach

Capitalization rate

12.00% to 12.00%

12.00

Assets Acquired in Settlement of Loans

Residential

25,989

Sales comparison approach

Adjustment for differences between the comparable sales

-26.00% to -26.00%

-26.00

Commercial real estate

150,000

Sales comparison approach

Adjustment for differences between the comparable sales

-7.00% to -7.00%

-7.00

Construction and development

145,684

Sales comparison approach

Adjustment for differences between the comparable sales

0.00% to 0.00%

0.00

Interest in limited liability company

1,171,620

Income approach

Capitalization rate

10.25% to 10.25%

10.25

The carrying amounts and estimated fair values of financial assets and liabilities at December 31 are as follows:

				Fair Value Measurements Using:
December 31, 2012	Carrying Value			Level 1			Level 2			Level 3		Total
Financial assets
Cash and cash equivalents	$	5,707,000		$	5,707,000		$	0		$	0	$	5,707,000
Certificate of deposit in financial institution		100,000			0			100,000			0		100,000
Securities available for sale		11,713,000			193,000			10,956,000			564,000		11,713,000
Loans held for sale		2,040,000			0			2,066,000			0		2,066,000
Loans, net		147,684,000			0			0			149,843,000		149,843,000
Federal bank stock		1,578,000			NA			NA			NA		NA
Accrued interest receivable		422,000			0			51,000			371,000		422,000

Financial liabilities
Deposits		(131,542,000	)		(76,514,000	)		(55,213,000	)		0		(131,727,000	)
Repurchase agreements		(4,360,000	)		0			(4,360,000	)		0		(4,360,000	)
Federal Home Loan Bank advances		(19,000,000	)		0			(19,003,000	)		0		(19,003,000	)
Accrued interest payable		(29,000	)		(1,000	)		(28,000	)		0		(29,000	)

December 31, 2011	Carrying Value			Estimated Fair Value
Financial assets
Cash and cash equivalents	$	20,046,000		$	20,046,000
Certificate of deposit in financial institution		100,000			100,000
Securities available for sale		10,678,000			10,678,000
Loans held for sale		896,000			928,000
Loans, net		108,277,000			110,428,000
Federal bank stock		1,598,000			NA
Accrued interest receivable		340,000			340,000

Financial liabilities
Deposits		(103,962,000	)		(104,100,000	)
Repurchase agreements		(4,214,000	)		(4,214,000	)
Federal Home Loan Bank advances		(19,000,000	)		(19,055,000	)
Accrued interest payable		(24,000	)		(24,000	)

The methods and assumptions used to estimate fair value, not previously presented, are described as follows:

Cash and Cash Equivalents: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Certificate of Deposit in Financial Institution: The fair value of certificates of deposit maintained with financial institutions is based upon discounted cash analyses, using interest rates currently offered for similar time deposits resulting in a Level 2 classification.

Loans: Fair values of loans, excluding loans held for sale, are estimated as follows: Fair values for loans are estimated using discounted cash flow analyses, using interest rates currently offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as previously described. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Loans Held For Sale: The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan resulting in Level 2 classification.

Federal Bank Stock: It is not practical to determine the fair value of federal bank stock due to restrictions placed on their transferability.

Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

Short-term Borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values resulting in a Level 2 classification.

Other Borrowings: The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable/Payable: The carrying amounts of accrued interest approximate fair value and its classification is correlated to the underlying financial instrument.

Off-balance Sheet Instruments: Fair values for off-balance sheet commitments are nominal and are not material.

NOTE 10 - INCOME TAXES

Income tax expense was as follows for the years ended December 31, 2012 and 2011:

	2012			2011
Current federal	$	24,524		$	-
Deferred federal		96,290			1,030,624
Change in valuation allowance		(96,290	)		(1,030,624	)
Total income tax expense	$	24,524		$	-

Effective tax rates differ from federal statutory rates applied to financial statement earnings due to the following:

	2012			2011
Federal statutory rate (34%) times financial statement income	$	47,159		$	618,841

Effect of:
Tax exempt income net of disallowed interest expense		(35,298	)		(35,292	)
Stock based compensation		67,215			68,972
Write-off of deferred tax benefits		0			376,753
Change in valuation allowance		(96,920	)		(1,030,624	)
Other, net		42,368			1,350
Total income tax expense	$	24,524		$	0

Deferred tax assets and liabilities were due to the following at December 31, 2012 and 2011:

	2012			2011
Deferred Tax Assets
Allowance for loan losses	$	202,594		$	425,824
Deferred and accrued compensation		6,154			30,306
Intangible asset amortization		113,275			130,266
REO valuation allowance		246,623			197,640
Net operating loss carryforward		2,857,894			2,729,009
Other than temporary impairment of securities		982,608			982,608
Depreciation		40,412			21,010
Tax credit carryforward		58,754			61,092
Nonaccrual interest adjustment		93,986			82,968
Other		22,950			16,563
Total deferred tax assets		4,625,250			4,677,286

Deferred tax liabilities
Unrealized gain on securities available for sale		(158,296	)		(153,957	)
Net deferred loan costs		(35,706	)		(9,976	)
Prepaid expense		(14,802	)		(23,511	)
Federal Home Loan Bank stock dividend		(58,480	)		(58,480	)
Partnership adjustments		(68,056	)		(40,245	)
Other		(292	)		(240	)
Total deferred tax liabilities		(335,632	)		(286,409	)

Net deferred tax assets		4,289,618			4,390,877
Less: valuation allowance		(4,289,618	)		(4,390,877	)
Net deferred tax assets (liabilities)	$	0		$	0

A valuation allowance of $4,289,618 was recorded to reduce the carrying amount of the Company’s net deferred tax assets to zero due primarily to losses sustained in prior years.

Internal Revenue Code section 382 places a limitation on the amount of taxable income that can be offset by net operating loss carryforwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Accordingly, utilization of net operating loss carryforwards may be subject to an annual limitation regarding their utilization against future taxable income upon change in control.

At February 19, 2010, a Stock Purchase Agreement between Ohio Legacy Corp and Excel Bancorp resulted in a section 382 limitation against pre-transaction Ohio Legacy Corp net operating loss carryforwards. The Company reduced the deferred tax asset related to net operating loss carryforwards and the valuation allowance by $1,039,000 at December 31, 2010. At December 31, 2011, the Company further reduced the deferred tax asset related to net operating loss carryforwards and the valuation allowance by an additional $377,000 as a result of changes in the realizable amount of such net operating loss.

At December 31, 2012, after consideration of the reduction to pre-transaction net operating losses due to the section 382 limitation, the Company had net operating loss carryforwards of approximately $8,405,000 that will expire as follows: $1,257,000 on December 31, 2027, $132,000 on December 31, 2028, $1,532,000 on December 31, 2029, $5,105,000 on December 31, 2030 and $379,000 on December 31, 2032.

In addition, the Company has approximately $59,000 of alternative minimum tax credits that may be carried forward indefinitely.

At December 31, 2012 and 2011, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to change significantly within the next twelve months.

The Company and the Bank are subject to U.S. federal income tax. The Company is no longer subject to examination by federal taxing authorities for tax years prior to 2009. The tax years 2009, 2010 and 2011 remain open to examination by the U.S. taxing authorities.

NOTE 11 - STOCK-BASED COMPENSATION

Shareholders adopted the Ohio Legacy Corp 2010 Cash and Equity Incentive Plan in May 2010. The Plan permits the grant of share-based awards for a maximum of 200,000 shares of common stock. The Plan provides for awards of options, restricted stock, stock appreciation rights, and other stock-based awards to employees, directors and consultants. Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. Option awards have vesting periods as determined by the Compensation Committee of the Board of Directors. All options currently outstanding have an original vesting period of five years and a ten year contractual term.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted in 2010 was determined using the following weighted-average assumptions as of the grant date:

Risk-free interest rate	1.11% - 1.83%
Expected term (years)	6.5
Expected stock price volatility	0.298
Dividend yield	0	%

No options were granted during 2012 or 2011. Options and the related exercise price were adjusted for the 1 for 10 reverse stock split completed during September 2012. Options outstanding, exercise price and option activity occurring prior to the reverse stock split have been restated accordingly. The Company has a policy of using authorized but unissued common shares to satisfy option exercises.

The following table depicts the activity under the Plan:

	2012
	Options			Weighted Average Exercise Price
Outstanding, January 1		128,185		$	22.98
Granted		0			0
Forfeited or expired		(160	)		23.00
Exercised		0			0
Outstanding, December 31		128,025		$	22.98

Exercisable at December 31		51,910		$	22.98

The weighted average remaining contractual life of the options outstanding at December 31, 2012 was 7.53 years. The intrinsic value of options outstanding was $0. All nonvested options outstanding are expect to vest.

The follow table depicts vesting activity under the Plan.

	2012
	Options			Weighted Average Exercise Price
Nonvested at January 1, 2012		101,660		$	22.98
Granted		0			0
Vested		(25,385	)		23.00
Forfeited or expired		(160	)		23.00
Nonvested at December 31, 2012		76,115		$	22.98

As of December 31, 2012, there was $492,499 of total unrecognized compensation cost related to nonvested shares granted under the Plan. The cost is expected to be recognized over a weighted average period of 2.5 years. The total fair value of shares vested during the years ended December 31, 2012 and 2011 was $158,656 and $275,860.

NOTE 12 – REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of December 31, 2012, the Company and Bank meet all capital adequacy requirements to which they are subject. The consolidated capital amounts and ratios for the Company are materially similar to the Bank.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

At year-end 2012, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

Actual and required capital amounts and ratios are presented below at December 31, 2012 and 2011:

											To Be Well-
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2012
Total capital to risk-weighted assets
Premier Bank & Trust	$	20,307		13.4	%	$	12,146		8.0	%	$	15,182		10.0	%

Tier 1 capital to risk-weighted assets
Premier Bank & Trust		18,404		12.1	%		6,073		4.0	%		9,109		6.0	%

Tier 1 capital to average assets
Premier Bank & Trust		18,404		10.6	%		6,930		4.0	%		8,662		5.0	%

December 31, 2011:
Total capital to risk-weighted assets
Premier Bank & Trust	$	19,501		17.6	%	$	8,841		8.0	%	$	11,051		10.0	%

Tier 1 capital to risk-weighted assets
Premier Bank & Trust		18,106		16.4	%		4,420		4.0	%		6,631		6.0	%

Tier 1 capital to average assets
Premier Bank & Trust		18,106		12.1	%		5,965		4.0	%		7,457		5.0	%

The payment of dividends by the Bank to Ohio Legacy is subject to restrictions by regulatory agencies. These restrictions generally limit dividends to the sum of the current year and prior two years retained earnings. In addition, dividends may not reduce capital levels below the minimum regulatory requirements as described above. The Company is not able to declare dividends without prior approval from its regulators.

NOTE 13 - LOAN COMMITMENTS AND RELATED ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies used to make loans are also used to make such commitments, including obtaining collateral upon exercise of the commitment.

Commitments to make loans are generally made for periods of 30 days or less. The contractual amount of loan commitments with off-balance sheet risk was as follows at December 31 2012 and 2011:

	2012		2011
Commitments to make loans:
Variable rate	$	4,994,469	$	2,061,725
Fixed rate		2,387,864		696,800

Unused lines of credit, variable-rate		42,043,782		34,106,820
Standby letters of credit		615,232		194,856

NOTE 14 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS
As of December 31
	2012		2011
ASSETS
Cash and cash equivalents	$	52,924	$	60,058
Investment in subsidiary, Premier Bank & Trust, N.A.		18,869,489		18,557,939
Other assets		4,795		5,414
Total assets	$	18,927,208	$	18,623,411

LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities	$	14,740	$	35,323
Shareholders' equity		18,912,468		18,588,088
Total liabilities and shareholders' equity	$	18,927,208	$	18,623,411

CONDENSED STATEMENTS OF OPERATIONS
For the year ended December 31
	2012			2011
Dividends received from subsidiary	$	100,000		$	200,000

Professional fees		(11,575	)		(9,360	)
Other expense		(75,345	)		(65,526	)
Income before undistributed earnings of subsidiary		13,080			125,114
Equity in undistributed income of subsidiary		101,100			1,695,008
Income before income taxes		114,180			1,820,122
Income tax expense		0			0
Net income	$	114,180		$	1,820,122
Other comprehensive income		12,759			94,591
Comprehensive income	$	126,939		$	1,914,713

CONDENSED STATEMENT OF CASH FLOWS
For the year ended December 31,	2012			2011

Cash flows from operating activities:
Net income	$	114,180		$	1,820,122
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed income of subsidiary		(101,100	)		(1,695,008	)
Net change in other assets and other liabilities		(19,963	)		(79,532	)
Net cash used for operating activities		(6,883	)		45,582

Cash flows from financing activities:
Reverse stock split - cash paid for fractional shares		(251	)		0
Net change in cash and cash equivalents		(7,134	)		45,582
Beginning cash and cash equivalents		60,058			14,476

Ending cash and cash equivalents	$	52,924		$	60,058

NOTE 15 – SUBSEQUENT EVENTS - BRANCH PURCHASE (UNAUDITED)

On February 1, 2013, the Bank entered into a Branch Office Purchase and Assumption Agreement (the “Agreement”), with First National Bank, N.A. located in Orrville, Ohio (“FNB”), and a wholly owned subsidiary of National Bancshares Corporation and with NBOH Properties, LLC, an Ohio limited liability company, for the purchase of certain assets and the assumption of certain liabilities of FNB’s Fairlawn branch located at 3085 West Market Street, Akron, Ohio. Under the terms of the Agreement, the Bank will purchase $10 million to $12 million in loans and will assume $13 million to $16 million in deposits. The Bank will pay a deposit premium of approximately 5.25% based on the average amount of assumed deposits during a specified period prior to the closing, with a minimum premium of $682,500. The Bank will also purchase real estate owned by NBOH Properties, LLC for $1.1 million and other assets including fixtures and equipment associated with the branch location. The transaction, which is subject to regulatory approvals and certain closing conditions, is expected to be completed during the second quarter of 2013.

Crowe Horwath LLP

Independent Member Crowe Horwath International

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Ohio Legacy Corp

North Canton, Ohio

We have audited the accompanying consolidated balance sheets of Ohio Legacy Corp as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, changes in shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ohio Legacy Corp at December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/Crowe Horwath LLP

Crowe Horwath LLP

Cleveland, Ohio

April 1, 2013

EXECUTIVE OFFICERS OF OHIO LEGACY CORP AND OHIO LEGACY BANK, NATIONAL ASSOCIATION

Rick L. Hull, President and Chief Executive Officer

Denise M. Penz, Executive Vice President and Chief Operating Officer

Jane Marsh, Senior Vice President, Chief Financial Officer and Treasurer

DIRECTORS OF OHIO LEGACY CORP

Louis Altman

Co-Managing Partner, A. Altman Company

Canton, Ohio

Bruce A. Cassidy, Sr.

Retired Business Executive

Sarasota, Florida

Rick L. Hull

Executive Officer

North Canton, Ohio

Brian C. Layman

Principal, Layman, D’Atri & Associates, LLC

Canton, Ohio

Denise M. Penz

Executive Officer

St. Clairsville, Ohio

Wilbur R. Roat, Chairman

Retired Bank Executive

Kennett Square, Pennsylvania

James P. Tressel

Vice President for Strategic Engagement, University of Akron

Akron, Ohio

Francis P. Wenthur

Retired Business Executive

North Canton, Ohio

David B. Wurster

CEO, BookMasters, Inc.

Ashland, Ohio

CORPORATE AND BANK LOCATIONS

Belden Village Banking Center

6141 Whipple Ave NW

North Canton, Ohio 44720

North Canton Corporate Office and Banking Center

600 South Main Street

North Canton, Ohio 44720

St. Clairsville Wealth Office

107 Plaza Drive, Suite J

St. Clairsville, Ohio 43950

St. Clairsville Banking Center

107 Plaza Drive, Suite A

St. Clairsville, Ohio 43950

Operations Center

2375 Benden Drive Suite C

Wooster, Ohio 44691

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management of Ohio Legacy Corp is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As of the end of the period covered by this report, an evaluation was performed under the supervision, and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures as of December 31, 2012, were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (1) accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and (2) recorded, processed, summarized and reported within the time period required by the Securities and Exchange Commission's rules and forms.

Management’s Report on Internal Control Over Financial Reporting

Management of Ohio Legacy Corp is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation or assessment of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The Company’s internal control over financial reporting system is designed to provide reasonable assurance of achieving its objectives.

Management of Ohio Legacy Corp, including the Chief Executive Officer and the Chief Financial Officer, has assessed the Company’s internal control over financial reporting as of December 31, 2012, based on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2012, based on the specified criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit non-accelerated filers to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

There are no matters to be reported under this item.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

Class II Directors – Terms ending in 2013 and Nominees for Re-Election to Terms ending in 2016

RICK L. HULL (age 60)

Director since February 2010

Mr. Hull was appointed as President and Chief Executive of the Company and the Bank effective February 20, 2010. From August 2009 until February 2010, Mr. Hull served as a consultant for Excel Financial and Excel Bancorp and assisted them in evaluating opportunities to directly or indirectly acquire a financial institution. From January 2006 to August 2009, Mr. Hull served as the President of the Akron/Canton Region of Huntington National Bank (formerly Sky Bank). From January 1999 to December 2005, Mr. Hull served as the President of the Ohio Valley Region of Sky Bank. Mr. Hull is admitted to practice law in the State of Ohio, and previously served as General Counsel of The Citizens Banking Company and maintained a private real estate and commercial law practice. Mr. Hull provides the Board with nearly 30 years of experience in the commercial banking industry, including experience in an executive management capacity, and has extensive knowledge of legal compliance and corporate governance issues within the banking industry. Mr. Hull is also a director of the Bank.

DENISE M. PENZ (age 44)

Director since February 2010

Ms. Penz was appointed as Executive Vice President and Chief Operating Officer of the Company and the Bank effective February 20, 2010. From July 2008 until February 2010, Ms. Penz served as a consultant for Excel Financial and Excel Bancorp and assisted them in evaluating opportunities to directly or indirectly acquire a financial institution. From September 2000 to July 2008, Ms. Penz served as the Senior Vice President, Manager of Trust and Investment Services for the Ohio Valley Region of Huntington National Bank (formerly Belmont National Bank and Sky Bank), where she managed a staff of investment, trust and operational professionals in addition to maintaining client relationships. Ms. Penz provides the Board with several years of experience in the financial institutions and investment services industries, including experience in wealth management and strategic acquisitions. Ms. Penz is also a director of the Bank.

WILBUR R. ROAT (age 66)

Director and Chairman of the Board since February 2010, Independent, Member of the Compensation Committee (Chairman), the Corporate Governance and Nominating Committee (Chairman) and the Executive Committee (Chairman)

Since June 2005, Mr. Roat has been a private investor and consultant in the banking industry. From December 1999 to June 2005, Mr. Roat served as President and Chief Executive Officer and as a director of Belmont Bancorp. and Belmont National Bank. From September 1994 to March 1999, Mr. Roat served as President and Chief Executive Officer of First Lehigh Bancorp and First Lehigh Bank. From September 2009 until December 2010, Mr. Roat served on the board of directors of Northpointe Bank and Northpointe Bancshares. Mr. Roat, who has served as President and Chief Executive Officer of three financial institutions, provides the Board with more than 30 years of management experience in the banking industry. Mr. Roat is also a director of the Bank.

Class I Directors – Terms ending in 2014

LOUIS ALTMAN (age 44)

Director since February 2010, Independent, Member of the Compensation Committee, the Corporate Governance and Nominating Committee, the Executive Committee and the Trust Committee of the Bank (Chairman)

Mr. Altman is currently a co-managing partner of the A. Altman Company, a full service real estate development firm for commercial, residential, office, medical and hotel properties. He has been a partner of A. Altman Company since 1991 and a co-managing partner since 1999, where he is directly involved in all aspects of the business including acquisitions, site selection, development, financing, leasing, management and property disposition. From 2002 to 2007, Mr. Altman served as a Regional Director for the Western Reserve Region of Sky Bank. From 2006 to 2007, Mr. Altman served as a director of Sky Bank. Mr. Altman provides the Board with a strong background in managing, developing and financing commercial real estate ventures as well as experience in having served as a director of a financial institution. Mr. Altman is also a director of the Bank.

BRUCE A. CASSIDY, SR. (age 62)

Director since February 2010, Independent, Member of the Compensation Committee, the Corporate Governance and Nominating Committee, the Executive Committee, and the Audit Committee

Mr. Cassidy, who is currently retired, was the founder of Excel Mining Systems LLC (“EMS”), a manufacturer of roof support systems for the mining industry located in Bowerston, Ohio. Mr. Cassidy served as Chief Executive Officer of EMS from 1991 until its sale in 2007 to Orica Mining Services (“Orica”), an Australian-based company. In 2008, Mr. Cassidy became President and Chief Executive Officer of Minova North & South Americas, a subsidiary of Orica, and served in that position until his retirement in December 2009. Mr. Cassidy provides the Board with years of business management and governance experience. Mr. Cassidy is also a director of the Bank.

FRANCIS P. WENTHUR (age 67)

Director since March 2010, Independent, Member the of Audit Committee (Chairman)

Mr. Wenthur, who is currently retired, has four decades of experience in financial and accounting positions with different industries, during which time he has held various positions in the field. In 2009, Mr. Wenthur served as a consultant for Minova North & South Americas. Prior to that time, from 1995 to July 2008, Mr. Wenthur was the Vice President and Chief Financial Officer for EMS. Mr. Wenthur provides the Board with experience in a key financial role for a commercial business and with previous loan workout experience for a bank and several companies prior to his employment with EMS. Mr. Wenthur is also a director of the Bank.

Class III Directors – Terms ending in 2015

BRIAN C. LAYMAN (age 38)

Director since May 2012, Independent, Member of the Audit Committee, Financial Expert

Mr. Layman is a principal with the law firm, Layman, D’Atri & Associates, LLC. He has held this position since November 2007. Mr. Layman is admitted to practice law in Ohio and Florida and is also a licensed CPA in Ohio. Mr. Layman's practice focuses primarily on estate, tax, asset protection and business succession planning, corporate law, and trust and estate administration, and he is certified as a Specialist in Estate Planning, Trust and Probate Law by the Ohio State Bar Association. Mr. Layman earned his B.S. in Accounting, Master of Taxation and Juris Doctor from the University of Akron. Mr. Layman is a member of the American Bar Association, Ohio State Bar Association, Florida State Bar Association and Stark County Bar Association, the American Institute of Certified Public Accountants, and the Ohio Society of Certified Public Accountants. Mr. Layman provides the board with legal and accounting expertise and experience as a practicing attorney and businessman. Mr. Layman is also a director of the Bank.

JAMES P. TRESSEL (age 60)

Director since May 2012, Independent, Member of the Trust Committee

Mr. Tressel is the Vice President for Strategic Engagement for The University of Akron, a position he has held since May 2012. From September 2011 to January, 2012, Mr. Tressel was a consultant for the Indianapolis Colts. From 2001 through May 2011, Mr. Tressel was the Head Football Coach for The Ohio State University. A sought after public speaker, he is also the author of two books, Life Promises for Success published in 2011, and The Winners Manual: For the Game of Life published in 2008. Mr. Tressel has participated in numerous events in support of the United States Armed Forces, and is currently involved in fundraising activities for many charitable and philanthropic causes both locally and nationally. Mr. Tressel earned a M.A. degree in Education from the University of Akron and a B.A. degree in Education from Baldwin-Wallace College. Mr. Tressel is also a director of the Bank.

DAVID B. WURSTER (age 37)

Director since March 2010, Independent, Member of the Audit Committee

Since 1994, Mr. Wurster has served as the Chief Executive Officer of BookMasters, Inc., a leading book manufacturing and distribution company. Mr. Wurster has many years of experience in handling financial matters for companies that he owns and provides the Board with a strong business background, extensive financial management experience and a unique perspective as an entrepreneur and businessman. Mr. Wurster is also a director of the Bank.

Executive Officers

The current executive officers of the Company are Rick L. Hull, Denise M. Penz and Jane Marsh. Biographical information and business experience with respect to each of the executive officers is set forth below. The Company’s executive officers are elected by, and serve at the pleasure of, the Board.

RICK L. HULL, age 60, was appointed as the President and Chief Executive Officer of the Company and the Bank effective February 20, 2010. Mr. Hull also serves as a director of the Company and the Bank. His biographical information and business experience appear above under “Board of Directors.”

DENISE M. PENZ, age 44, was appointed as the Executive Vice President and Chief Operating Officer of the Company and the Bank effective February 20, 2010. Ms. Penz also serves as a director of the Company and the Bank. Her biographical information and business experience appear above under “Board of Directors.”

JANE MARSH, age 51, was appointed as the Secretary, Treasurer and Chief Financial Officer of the Company and the Bank effective February 20, 2010. From December 2009 until February 20, 2010, Ms. Marsh served as a consultant for Excel Financial and Excel Bancorp and assisted them in evaluating opportunities to directly or indirectly acquire a financial institution. From August 2005 until December 2009, Ms. Marsh served as the Controller of Health Care Management Services, Inc., a private company that operates residential treatment and outpatient healthcare facilities. From 2003 until June 2005, Ms. Marsh served as the Chief Financial Officer of Belmont Bancorp and Belmont National Bank. Ms. Marsh is a certified public accountant and has over 26 years of experience in accounting and bank services, including extensive experience in corporate strategic direction, finance and accounting.

Section 16(a) Beneficial Ownership Reporting compliance

Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than 10% of the Company’s common shares to file reports of ownership and changes in ownership of the common shares with the SEC. Based solely on a review of the reports filed on behalf of these persons and written representations from our executive officers and directors that no additional reports were required to be filed, the Company believes that, during 2012, its executive officers, directors and greater than 10% beneficial owners complied with such filing requirements.

Code of Business Conduct and Ethics

The Board has adopted and implemented a Code of Business Conduct and Ethics for all directors, officers, and employees of the Company and the Bank. This document was adopted to assist our employees and directors in understanding and carrying out our mandate for honesty, integrity and high standards of ethical conduct. It is available, free of charge, on the “Corporate Governance” page of the Company’s website at www.ohiolegacycorp.com. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of these documents that relate to elements listed under Item 406(b) of Regulation S-K and apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website discussed above.

Corporate Governance

Director Independence

Although the Company is no longer subject to the rules of The NASDAQ Stock Market LLC (“NASDAQ”), the Company has chosen, as permitted by SEC rules, to apply the rules of NASDAQ in evaluating the independence of its directors. The Board has determined that seven of its nine members (Messrs. Altman, Cassidy, Layman, Tressel, Roat, Wenthur and Wurster) qualify as independent directors under applicable rules of NASDAQ. When determining whether a director meets the criteria for independence required by NASDAQ rules, the Board broadly considers all relevant facts and circumstances to determine whether the director has any relationship which, in the Board’s opinion, interferes with the exercise of independent judgment in carrying out the responsibilities of a director. With respect to the seven independent directors, there are no transactions, relationships or arrangements requiring disclosure pursuant to Item 404(a) of Regulation S-K that were considered by the Board in determining that these individuals are independent under NASDAQ rules, except as described below.

In reviewing the independence of Messrs. Cassidy, Wenthur, Wurster and Altman, the Board considered that (1) Mr. Cassidy is the sole member of an entity that owns approximately 32% of the outstanding membership interests in Excel Bancorp, (2) Mr. Wenthur owns approximately 10% of the outstanding membership interests in Excel Bancorp, (3) Mr. Wurster owns approximately 6.7% of the outstanding membership interests in Excel Bancorp, (4) Mr. Altman is a member of an entity that owns approximately 7.0% of the outstanding membership interests in Excel Bancorp, and (5) Mr. Layman is a member of an entity that owns approximately 10% of the outstanding membership interests in Excel Bancorp. The Board also considered that each of Messrs. Cassidy, Wenthur, Wurster, Altman, and Layman serves on the board of managers of Excel Bancorp. The Board concluded that, at this time, such directors’ relationships with, and/or ownership of, Excel Bancorp do not interfere with the exercise of their independent judgment in carrying out the responsibilities of a director of the Company.

Mr. Hull, who serves as our President and Chief Executive Officer, and Ms. Penz, who serves as our Executive Vice President and Chief Operating Officer, do not qualify as independent directors as a result of their service as executive officers of the Company.

Audit and Compliance Committee Independence and Financial Expert

Each member of the Audit and Compliance Committee qualifies as independent and is financially literate under applicable SEC rules and NASDAQ rules. The Board has determined that Mr. Layman qualifies as an audit committee financial expert under applicable SEC rules by virtue of his background and experience as a certified public accountant and attorney, and as independent under NASDAQ rules. The Audit and Compliance Committee held twelve meetings during 2012.

The Audit and Compliance Committee is responsible for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for maintaining a process for receiving and investigating confidential, anonymous submission by employees of the Company or the Bank of concerns regarding questionable accounting or auditing matters. Any such submissions, as well as any other communications from shareholders, may be made to the Chairperson of the Audit and Compliance Committee at the following address and phone number: Ohio Legacy Corp, 600 South Main Street, North Canton, OH 44720, Attn: Audit and Compliance Committee Chairperson, (330) 499-1900.

Item 11. Executive Compensation.

COMPENSATION OF EXECUTIVE OFFICERS

2012 Summary Compensation Table

The following table summarizes the total compensation for 2012, 2011 and 2010 for the Company’s current principal executive officer, and two other most highly compensated executive officers (the “named executive officers”):

(a)	(b)	(c)	(d)	(f)	(i)	(j)

	Year	Salary	Bonus	Option awards	All other compensation	Total
Name and principal position		($)	($)(1)	($)(2)	($)(3)	($)
Current executive officers:
Rick L. Hull, President & Chief Executive Officer	2012	225,000	0	0	17,379	242,379
	2011	225,000	100,000	0	15,458	340,458
	2010	189,309	50,000	390,000	12,029	641,339

OHIO LEGACY CORP 10-K