George H. Groves, Chairman and CEO, announced first quarter 2006 financial results for The Legacy Bank (OTC Bulletin Board: LBOH). Earnings for the first quarter of 2006 totaled $445,000 or $.12 per dilutive share as compared to $431,000 or $.12 per dilutive share for the same period in 2005.

Legacy incurred $239,000 of merger expenses during the first quarter of 2006 associated with the Bank's previously announced merger with F.N.B. Corp., which is expected to close late in the second quarter of 2006. Legacy's core earnings totaled $630,000 or $.17 per dilutive share, representing record-high core earnings for the Bank. Legacy defines core earnings as net income after taxes, excluding the effect of merger expenses, non-recurring gains and losses, and tax benefits from net operating losses.

Mr. Groves also announced that The Legacy Bank was recognized this week, during ceremonies held at the White House and at the U. S. Department of State, as the only community bank in the nation to receive the Small / Community Bank Award from the U. S. Small Business Administration for its outstanding performance as an SBA Preferred Lender during 2005.

Returning to Legacy's financial results, net interest income after provision for loan losses totaled $2,926,000 for the first quarter of 2006 as compared to $2,582,000 in the first quarter 2005, an increase of $344,000 or 13%. The tax-effected net interest margin ratio for the current quarter was 3.76%, a significant increase over 3.39% for the first quarter of 2005 and 3.47% for the linked quarter ended December 31, 2005. Legacy attributed the increase in its net interest margin ratio in part to the Bank's previously- reported securities portfolio restructuring completed in December, 2005, and in part to the beneficial net effect of continued increases in short term interest rates on Legacy's asset-sensitive balance sheet. Specifically, yield increases on Legacy's variable-rate commercial and consumer loans outpaced increased funding costs during the quarter.

The provision for loan losses totaled $150,000 for the quarter ended March 31, 2006, as compared to $73,000 for the quarter ended March 31, 2005, and $242,000 for the linked quarter ended December 31, 2005. As of March 31, 2006, the allowance for loan losses expressed as a percentage of loans was 1.10%, non-performing loans to total loans equaled .51%, and the allowance for loan losses was 2.2 times the amount of non-performing loans.

Noninterest income for the first quarter of 2006 totaled $583,000, as compared to $768,000 for the first quarter of 2005, with the prior period including $203,000 of net gains on sales. There were no gains included in income during the current quarter. Of note, asset management fees were $292,000 for the current quarter, up $43,000 or 17% from the same period in 2005.

Noninterest expense totaled $2,867,000 for the first quarter of 2006 and included $239,000 of merger expenses. Excluding merger expenses, noninterest expense would have been $2,628,000, which compares favorably to total noninterest expenses of $2,725,000 for the same quarter in 2005. Legacy continues to improve its operating efficiency in advance of the merger closing expected to occur late in the second quarter of 2006.

Total assets were $370.5 million as of March 31, 2006, as compared to $366.6 million at December 31, 2005 and $341.2 million at March 31, 2005. As of March 31, 2006, the Bank reported net loans of $292.6 million, which were up $5.3 million or 7% on an annualized basis during the quarter, with most of the growth in both periods coming in commercial loans.

During the quarter ended March 31, 2006, Legacy replaced $27.3 million of matured national-market time deposits with short-term borrowings. This activity, conducted as part of Legacy's interest rate risk management efforts, lead to a decrease in total deposits of $26.2 million during the current quarter to $256.8 million as of March 31, 2006. In-market deposits were stable during the quarter.

Legacy continued to maintain a strong capital position, with total capital to assets of 10.1% as of March 31, 2006. Shareholders' equity was $37.5 million at March 31, 2006, as compared to $36.5 million at December 31, 2005. The increase in shareholders' equity during the current quarter included net income of $445,000, an aggregate increase of $522,000 from stock option exercises and conversions of convertible notes to common stock, and an increase in the market value of securities, net of tax, of $35,000.

George H. Groves, Chairman and CEO of The Legacy Bank, stated: "We are very pleased that Legacy achieved record core earnings in the first quarter of 2006. Core earnings benefited from our improved net interest margin, which itself resulted from continued solid loan growth and disciplined funding and overall balance sheet management. These achievements are exemplary given the challenging interest rate environment facing our industry."

Mr. Groves continued: "Below the margin, the Asset Management business line continued to grow profitably and Legacy reduced operating expenses below the level in place a year ago. We improved our core efficiency ratio, which excludes merger expenses, to about 72% in the current quarter, down from about 80% a year ago. Our excellent core performance demonstrates that the Legacy franchise continues to strengthen as we approach the completion of our merger with F.N.B. Corp., expected to occur later in the second quarter of this year."

The Legacy Bank, with approximately $371 million in assets, is a Pennsylvania commercial bank with 8 offices in 5 counties throughout Central Pennsylvania including Dauphin, Cumberland, Lycoming, Luzerne, and Schuylkill counties. The Bank has received Preferred Lender program status granted by the U.S. Small Business Administration (SBA). Legacy Asset Management Services, which includes Legacy Trust Company, had approximately $228 million in total assets under management at quarter end. Legacy offers a full suite of banking and asset management products and services, for individuals, small- to medium- sized and privately held businesses, as well as professionals and professional practices - all designed to assist individuals, professionals and business owners in wealth creation and preservation. The Legacy Bank offers Pennsylvania's first Department of Banking approved business deposit courier service; and provides online banking for businesses and consumers. For more information, visit the Company's web site at http://www.thelegacybank.com.

Selected Ratios and Other Data (Unaudited)

As of or for the three months ended

March 31, December 31, September 30, June 30, March 31,

2006 2005 2005 2005 2005

Basic income

(loss) per

share $0.13 $(0.08) $0.13 $0.10 $0.12

Diluted income

(loss) per

share $0.12 $(0.08) $0.13 $0.10 $0.12

Return on

average equity

(ROE) 4.78% -2.93% 5.00% 3.89% 4.73%

Return on

average assets 0.48% -0.28% 0.50% 0.41% 0.51%

Net interest

margin (tax

equivalent) 3.76% 3.47% 3.47% 3.53% 3.39%

Noninterest

income divided

by average

assets 0.63% -0.09% 0.58% 0.64% 0.91%

Efficiency

ratio 78.35% 105.45% 75.35% 82.53% 79.61%

Diluted average

equivalent

shares 3,769,018 3,631,129 3,711,409 3,721,494 3,733,278

Book value

per share $10.49 $10.33 $10.35 $10.37 $10.22

Stockholders'

equity to

total assets 10.11% 9.95% 9.55% 10.20% 10.81%

Selected Financial Condition Data (Unaudited, amounts in thousands)

As of

March 31, December 31, September 30, June 30, March 31,

2006 2005 2005 2005 2005

Total

Assets $370,514 $366,614 $382,139 $368,516 $341,213

Loans

Receivable,

net 292,640 287,387 279,998 272,841 253,597

Marketable

Securities 44,021 44,617 70,541 63,721 57,470

Deposits 256,818 282,978 288,236 294,471 272,264

Borrowings 74,410 45,448 56,017 35,008 30,500

Stockholders'

equity 37,463 36,461 36,513 37,604 36,894

Selected Operating Data (Unaudited, amounts in thousands)

For the three months ended

March 31, December 31, September 30, June 30, March 31,

2006 2005 2005 2005 2005

Interest

income $5,427 $5,470 $5,237 $4,850 $4,414

Interest

expense 2,351 2,430 2,221 1,943 1,759

Net interest

income 3,076 3,040 3,016 2,907 2,655

Provision

for loan

losses 150 242 200 77 73

Net interest

income after

provision

for loan

losses 2,926 2,798 2,816 2,830 2,582

Noninterest

income (loss) 583 (86) 550 567 768

Noninterest

expense 2,867 3,115 2,687 2,867 2,725

Income (loss)

before taxes 642 (403) 679 530 625

Income tax

expense

(benefit) 197 (134) 208 168 194

Net income

(loss) $445 $(269) $471 $362 $431

The Legacy Bank

Consolidated Balance Sheets

March 31, December 31,

2006 2005

(Unaudited)

(In thousands, except share amounts)

Assets

Cash and due from banks $8,644 $6,562

Federal funds sold 430 3,015

Short-term investments - 22

Cash and Cash Equivalents 9,074 9,599

Securities:

Available for sale 35,056 35,271

Held to maturity 8,965 9,346

Total Securities 44,021 44,617

Total loans 295,904 290,731

Less: Allowance for loan losses (3,264) (3,344)

Net Loans 292,640 287,387

Premises and equipment, net 5,526 5,669

Goodwill 6,481 6,481

Other intangible assets 1,279 1,331

Accrued interest receivable 1,965 1,922

Bank owned life insurance 7,919 7,845

Other assets 1,609 1,763

Total Assets $370,514 $366,614

Liabilities and Shareholders' Equity

Liabilities

Deposits:

Non-interest bearing $34,679 $31,979

Interest-bearing 222,139 250,999

Total Deposits 256,818 282,978

Short-term borrowings 33,180 2,000

Long-term FHLB borrowings 37,000 39,000

Convertible subordinated debentures 4,230 4,448

Other liabilities 1,823 1,727

Total Liabilities 333,051 330,153

Shareholders' Equity

Preferred stock, $5 par value;

authorized 1,000,000 shares;

none issued and outstanding - -

Common stock, $5 par value;

authorized 5,000,000

shares; 3,681,832

Shares issued and 3,572,205

outstanding at March 31, 2006;

3,639,282 shares issued and

3,529,655 outstanding at

December 31, 2005 18,409 18,196

Surplus 19,830 19,521

Retained earnings 987 542

Accumulated other comprehensive loss (201) (236)

Treasury stock, 109,627 shares

at March 31, 2006 and

December 31, 2005 (1,562) (1,562)

Total Shareholders' Equity 37,463 36,461

Total Liabilities and

Shareholders' Equity $370,514 $366,614

The Legacy Bank

Consolidated Statements of Income

(Unaudited)

Three Months Ended

March 31,

2006 2005

(In thousands, except

per share amounts)

Interest Income

Loans receivable, including fees $4,971 $3,874

Securities 450 529

Other 6 11

Total Interest Income 5,427 4,414

Interest Expense

Deposits 1,694 1,419

Short-term borrowings 205 56

Convertible subordinated debentures 55 56

Long-term FHLB borrowings 397 228

Total Interest Expense 2,351 1,759

Net Interest Income 3,076 2,655

Provision for Loan Losses 150 73

Net Interest Income After Provision

for Loan Losses 2,926 2,582

Noninterest Income

Service charges on deposit accounts 158 153

Asset management fees 292 249

Service charges on loans 52 95

Loss on sale of securities - (11)

Gain on sales of loans - 214

Income from Bank owned life insurance 74 66

Other 7 2

Total Noninterest Income 583 768

Noninterest Expenses

Salaries and employee benefits 1,501 1,467

Occupancy and equipment 283 237

Data processing 244 233

Advertising, marketing and

business development 36 18

Other 803 770

Total Noninterest Expenses 2,867 2,725

Income Before Income Tax Expense 642 625

Income Tax Expense 197 194

Net Income $445 $431

Earnings Per Share

Basic $0.13 $0.12

Diluted $0.12 $0.12

FORWARD-LOOKING STATEMENTS

Certain statements appearing herein which are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements refer to future periods, reflecting management's current views as to likely future developments, and include the words "may," "will," "expect," "believe," "estimate," "anticipate," or similar terms. Because such forward-looking statements involve certain risks, uncertainties and other factors over which the Bank has no direct control, actual results could differ materially from those contemplated in such statements. These factors include, but are not limited to the following: general economic conditions, changes in interest rates, changes in the Bank's cost of funds, changes in government monetary policy, changes in government regulation and taxation of financial institutions, changes in the rate of inflation, changes in technology, the intensification of competition within the Bank's market area, and other similar factors. The Bank undertakes no obligation to publicly revise or update these forward-looking statements to reflect events that arise after this press release.

Source: prnewswire