2007 Interview with: J. Williar Dunlaevy, Chairman, and CEO and  Stephen M. Conleyals, CFO and featuring: their Legacy Bank, which is a community bank that provides a full line of financial services to individuonsumer finance, and investment management services..

Legacy Bancorp, Inc. (LEGC-NASDAQ)

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Legacy Bancorp is a strong, well managed community bank positioned for growth in western Massachusetts and beyond

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Regional-Northeast Banks

Legacy Bancorp, Inc.

99 North Street
Pittsfield, MA 01202

Phone: 413-443-4421

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J. Williar Dunlaevy
Chairman and CEO

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Stephen M. Conley
Chief Financial Officer

Interview conducted by:
Lynn Fosse, Senior Editor
Published – March 29, 2007

J. Williar Dunlaevy
Chairman and CEO

Mr. Dunlaevy has served as Chairman and CEO of Legacy Bancorp and Legacy Banks, as well as the predecessor institution, City Savings Bank, since 1996. Joining the Bank in 1969, he held a variety of positions of increasing responsibility throughout his career prior to becoming Chief Executive Officer. Mr. Dunlaevy has championed a growth strategy for the Bank, guiding it through two acquisitions and its mutual-to-stock conversion in October 2005.

A community leader, Mr. Dunlaevy has been active with a variety of organizations including Berkshire Business Roundtable, Berkshire Health Systems, The Colonial Theatre Restoration Campaign, Pittsfield Boys’ & Girls’ Club, Pittsfield Municipal Airport Expansion Task Force, and Berkshire Economic Development Corporation. Additionally, he was appointed by Massachusetts Governor A. Paul Cellucci to serve on the Berkshire Community College Board of Trustees, which he chaired. Mr. Dunlaevy is or has been a director of the following industry organizations: Depositors Insurance Fund, Massachusetts Bankers Association, and Savings Bank Life Insurance Company of Massachusetts (SBLI).

A Graduate of Bowdoin College (AB), the University of Massachusetts (MBA), Graduate School of Banking (Brown University), and The College for Financial Planning (CFP), Mr. Dunlaevy resides in Lenox, Massachusetts.

Stephen M. Conley
Chief Financial Officer

Mr. Conley has served as Chief Financial Officer, Senior Vice President and Treasurer of Legacy Bancorp and Legacy Banks, as well as its predecessor institution, City Savings Bank, since 1996. He has served in the Finance area since beginning his career with the Bank in 1975 as Controller. A key member of the executive leadership team at Legacy Banks, he helped guide the company through its mutual-to-stock conversion in October 2005.

Active within the community, Mr. Conley serves several important non-profit organizations such as the Berkshire United Way, the Rotary Club, Girls Incorporated and the Dalton Community Recreation Association.

A graduate of Bentley College of Accounting & Finance, the University of Massachusetts (MBA), and the National School of Banking, he resides in Dalton, Massachusetts.

Company Profile:

Berkshire County based Legacy Bancorp, Inc., is a stock holding company, headquartered at 99 North Street, Pittsfield, Massachusetts. It operates Legacy Banks as a wholly owned subsidiary. Legacy Banks is a community bank that provides a full line of financial services to individuals and businesses mainly in Berkshire County and surrounding areas, including retail banking, commercial banking, consumer finance, and investment management services. The mission of Legacy Bancorp, Inc., is to anticipate, understand and assist our customers in achieving their financial goals and dreams. Legacy Banks has offices located throughout Berkshire County, a network of ATMs, an extended-hours customer service call center, and a website, LegacyBanks.com, that provides account access and financial products 24 hours a day. The common stock of Legacy Bancorp, Inc., is listed on the NASDAQ and trades under the ticker symbol "LEGC."

: Mr. Dunlaevy, will you tell us about your background with the Legacy Bancorp?
Mr. Dunlaevy: “I have been with the bank for about 37 years, coming up through the finance side and I have been CEO since 1995.”

CEOCFO: What was your vision when you took over as CEO and where are you today?
Mr. Dunlaevy: “My vision was that we would be one of the great community banks and we are still on the path to doing that. We recognized that there needed to be a change in growth in a lot of respects for us to do that.”

CEOCFO: You do have a number of banks that are under Legacy Bancorp that have merged with Legacy, will you tell us about the territory that you cover and the type of customer that you focus on?
Mr. Dunlaevy: “The territory that we cover is Berkshire County, which is the western most part of Massachusetts. It goes from the Vermont border to the Connecticut border north to south. Our entire western border is New York and we are relatively close to the New York capital district.”

CEOCFO: What is the economy like in the area you serve today?
Mr. Dunlaevy: “It is a very beautiful area; a tourist destination. Berkshire County is the home of Boston Symphony in the summer and several theatres and dance companies. It is becoming increasingly a second and or retirement home market. Many years ago, it had a major manufacturing presence with The General Electric Company (NYSE: GE) and some of the major paper companies. However, that has wound down a lot and much of that has been replaced with the service industry. The population is modestly declining in Berkshire County although there are definitely pockets of boom.”

CEOCFO: Do you focus more on the consumer or more on the business area; will you give us a sense of the breakdown?
Mr. Dunlaevy: “We focus on both consumer and business customers. There is a lot of small business in the Berkshires and we serve that. We are probably ? in terms of consumer bank verses commercial bank. We are comfortable serving both of those markets. When you get into an area like we are, a small business is very much like the retail or consumer business.”

CEOCFO: Redefining the relevance of community banking is part of your vision; how do you continue on that path?
Mr. Dunlaevy: “I think we need to continue to invest in technology. We need to continue to be able to offer our customers out of the delivery systems what they need and expect. That requires a certain level of scale, which is why we thought it was so important to grow the bank. It will become increasingly important to do that so that we can continue to invest in the systems that would be important to our customers.”

CEOCFO: Tell us insurance and investment services, and what you would like to add to the mix?
Mr. Dunlaevy: “We have an investment management or trust division that probably has about $150 million under management and it is a key fee income producer for us. In addition, this area is going to become increasingly important as baby boomers get into their retirement and estate planning phases. We think that it will be a key contributor for us financially and a key way that we can contribute to our customers successes. Insurance is part of that and we have been in the insurance business since 1910. We were one of the original SBLIs (Savings Bank Life Insurance) issuing banks in Massachusetts. We do not own any insurance agencies in the context of going out and buying commercial agencies. However, we do have an agency subsidiary and our focus there is mostly life insurance and life insurance products.”

CEOCFO: Is the long history of Legacy Bank meaningful in today’s market?
Mr. Dunlaevy: “I think it is meaningful to the extent that we can make it meaningful. We have been leaders in the community and we continue to be, but we absolutely have to be relevant to our customers today, we need to offer the products and the services that are going to be important to them and we need to anticipate those. Our history can be important as long as we continue to do those things. Is somebody going to come in and bank with us because we have been here for 170 years? No, but if we are competitive and we continue to have the great service that we do, then that does make a difference.”

CEOCFO: What does a customer find at Legacy Bank that they may not find elsewhere?
Mr. Conley: “When a customer comes into our bank they are going to find a friendly bank and probably a person that they have known in the community or have seen and associated with the bank employee through a community event. They know the person, a neighbor and a friend they can trust. That is very valuable to us. Our customers can also rely on the expertise of the bank staff that are well trained and have substantial experience. They not only get a good product but good service.”

CEOCFO: Do you see new branches or acquisitions in the future?
Mr. Dunlaevy: “We definitely do and we are always going to be very thoughtful on opening new branches. We will be opening a couple this year (2007); one is a replacement in North Adams and the other is an additional office on the north side Great Barrington. We definitely are looking for opportunities to acquire offices and more banks.”

CEOCFO: How do you get new customers?
Mr. Dunlaevy: “We get new customers mostly by referrals and word-of-mouth; our existing customers are our best source of new customers. We do put an emphasis on sales and sales training in the bank. It is not like we have to sell so many cars this week, but it is an emphasis on being able to talk with customers, have a dialogue and understand their needs and recommend he right products and services.”

CEOCFO: Are many of your customers taking advantage of the variety of services or do you need to do some work in that area?
Mr. Dunlaevy: “I think we always need to do work in that area since the more services you provide a customer, the more profitable the relationship is going to be and the stronger it is going to be. We have what we call a Life Path product, which is built around having multiple services and rewarding the customer for multiple relationships. We have been very successful with that product. We have about 5 services per Life Path customer, which is about twice what our overall average would be.”

CEOCFO: How have you fared under the current interest rate environment and how do you prepare or compensate for these kinds of events?
Mr. Conley: “Like most of the banks, we see the margin pressure continue as the yield curve has remained inverted for the last six months. We are trying to deal with that in two ways. One is to grow and we are putting an emphasis on growing through loans and commercial loans. At the end of December (2006) we also took the action to restructure our bond portfolio, which had some low yielding investments in it which were sold at a loss and the proceeds were reinvested in bonds with much higher rates to improve our interest income in 2007 and growing forward to give us help toward our interest margin.”

CEOCFO: Why should investors consider Legacy Bancorp?
Mr. Dunlaevy: “Investors should consider Legacy Bancorp because we are a very strong community bank and well managed. We are not going to be just a survivor, but one of the institutions that grows and prospers. The big problem with many community banks is that they just want to hang around and survive, but we are a bank that wants to grow and be one of the great community banks going forward.”

CEOCFO: What defines a great community bank for you?
Mr. Dunlaevy: “Great customer experiences, good financial performance, a track record of growth, the ability to generate dividends and returns for stock holders.”

Mr. Conley: “We have a very good diversified arrangement of products for our customers and we can satisfy their financial needs electronically right here at the branch. Therefore, we have all avenues to help the customers.”

CEOCFO: In closing, is there anything about Legacy Bank that might not jump off the page at first glance?
Mr. Conley: “The company is Legacy Bancorp and the bank is Legacy Banks. What people might not realize is that we are nestled up here in the western part of Massachusetts. We are about 120 miles from Boston, and about 120 miles from New York City. For those who want to come up here as tourists, it is only a car ride away and could be a day-trip or a weekend trip. We have a lot to offer in the Berkshires for tourism. We are also a growing company with a vision of growth. We have Berkshire County well covered and we are starting to expand west into New York Sate with a loan-production office in Albany. We have a pretty good customer base over the New York border and we will continue to see some good growth potential in our overall footprint.”

Mr. Dunlaevy: “Another thing I think is interesting for investors is that we have a national commercial real estate lending program that is a strong part of our loan portfolio and good asset diversification and certainly a unique thing for a community bank. It is built on a life insurance company, real estate lending platform. We work with mortgage correspondents throughout the country and we have about twelve or fifteen correspondents. They bring us the loans, but we underwrite them ourselves. It is a rigorous process and an excellent portfolio and this is our sixth year with that particular program.”


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“Investors should consider Legacy Bancorp because we are a very strong community bank and well managed. We are not going to be just a survivor, but one of the institutions that grows and prospers. The big problem with many community banks is that they just want to hang around and survive, but we are a bank that wants to grow and be one of the great community banks going forward.” - J. Williar Dunlaevy

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