<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

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

                   For the Fiscal Year Ended December 31, 2000

                                       OR

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

 For the transaction period from ___________________ to ______________________

                       Commission File Number: 000-23601

                            PATHFINDER BANCORP, INC.
          -------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

           Delaware                                    16-1540137
----------------------------------       ---------------------------------------
 (State or Other Jurisdiction            (I.R.S. Employer Identification Number)
of Incorporation or Organization)

   214 West First Street, Oswego, NY                     13126
---------------------------------------               ------------
(Address of Principal Executive Office)                (Zip Code)

                                 (315) 343-0057
               ---------------------------------------------------
               (Registrant's Telephone Number including area code)

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                      ----
           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.10 per share
                     --------------------------------------
                                (Title of Class)

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file reports) and (2) has been subject to such
requirements for the past 90 days. YES |X| NO |_|

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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 amendments to
this Form 10-K. |_|

      As of February 28, 2001, there were 2,884,720 shares issued and 2,601,495
shares outstanding of the Registrant's Common Stock. The aggregate value of the
voting stock held by non-affiliates of the Registrant, computed by reference to
the average bid and asked prices of the Common Stock as of February 28, 2001
($6.42) was $4,765,206.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.    Sections of Annual Report to Stockholders for the fiscal year ended
      December 31, 2000 (Parts II and IV).

2.    Proxy Statement for the 2001 Annual Meeting of Stockholders (Parts I and
      III).
<PAGE>

                                     PART I

ITEM 1. Business

General

Pathfinder Bancorp, Inc.

      Pathfinder Bancorp, Inc. (the "Company") is a Delaware corporation which
was organized in September 1997. The only significant asset of the Company is
its investment in Pathfinder Bank (the "Bank"). The Company is majority owned by
Pathfinder Bancorp, MHC, a New York-chartered mutual holding company (the
"Mutual Holding Company"). On December 30, 1997 the Company acquired all of the
issued and outstanding common stock of the Bank in connection with the Bank's
reorganization into the two-tier form of mutual holding company ownership. At
that time, each share of outstanding Bank common stock was automatically
converted into one share of Company common stock, par value $.l0 per share (the
"Common Stock"). At February 28, 2001 the Mutual Holding Company held 1,578,239
shares of Common Stock and the public held 1,023,256 shares of Common Stock (the
"Minority Shareholders").

      The Company's executive office is located at 214 West First Street,
Oswego, New York and the telephone number at that address is (315) 343-0057.

Pathfinder Bank

      The Bank is a New York-chartered savings bank headquartered in Oswego, New
York. The Bank has five full-service offices located in its market area
consisting of Oswego County and the contiguous counties. The Bank's deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank was
chartered as a New York savings bank in 1859 as Oswego City Savings Bank. The
Bank is a consumer-oriented institution dedicated to providing mortgage loans
and other traditional financial services to its customers. The Bank is committed
to meeting the financial needs of its customers in Oswego County, New York, the
county in which it operates. At December 31, 2000, the Bank had total assets of
$231.8 million, total deposits of $161.5 million, and shareholders' equity of
$21.0 million.

      The Bank is primarily engaged in the business of attracting deposits from
the general public in the Bank's market area, and investing such deposits,
together with other sources of funds, in loans secured by one- to four-family
residential real estate. At December 31, 2000, $134.6 million, or 90.3% of the
Bank's total loan portfolio consisted of loans secured by real estate, of which
$97.3 million, or 72.3%, were loans secured by one- to four-family residences,
$25.8 million, or 19.2%, were secured by commercial real estate, $1.6 million,
or 1.2%, were secured by multi-family properties and $10.0 million, or 7.3%, of
total real estate loans, were secured by second liens on residential properties.
The Bank also originates commercial and consumer loans which totaled $15.9
million, or 10.7%, of the Bank's total loan portfolio. The Bank invests a
portion of its assets in securities issued by the United States Government,
state and municipal obligations, corporate debt securities, mutual funds, and
equity securities. The Bank also invests in mortgage-backed securities primarily
issued or guaranteed by the United States Government or agencies thereof. The
Bank's principal sources of funds are deposits, principal and interest payments
on loans and borrowings from correspondent financial institutions. The principal
source of income is interest on loans and investment securities. The Bank's
principal expenses are interest paid on deposits, and employee compensation and
benefits.

      The Bank's executive office is located at 214 West First Street, Oswego,
New York, and its telephone number at that address is (315) 343-0057.

      In April 1999 the Bank established Pathfinder REIT, Inc. as the Bank's
wholly-owned real estate investment trust subsidiary. At December 31, 2000
Pathfinder REIT, Inc. held $27.4 million in mortgage and mortgage related
assets. All disclosures in the Form 10-K relating to the Bank's loans and
investments includes loan and investments that are held by Pathfinder REIT, Inc.
<PAGE>

Market Area and Competition

      The economy in the Bank's market area is manufacturing-oriented and is
also significantly dependent upon the State University of New York College at
Oswego. The major manufacturing employers in the Bank's market area are Niagara
Mohawk, Alcan, Entergy, Nestle and Sealright, a food container manufacturer. The
Bank is the second largest financial institution headquartered in Oswego County.
However, the Bank encounters competition from a variety of sources. The Bank's
business and operating results are significantly affected by the general
economic conditions prevalent in its market areas.

      The Bank encounters strong competition both in attracting deposits and in
originating real estate and other loans. Its most direct competition for
deposits has historically come from commercial and savings banks, savings
associations and credit unions in its market area. Competition for loans comes
from such financial institutions as well as mortgage banking companies. The Bank
expects continued strong competition in the foreseeable future, including
increased competition from "super-regional" banks entering the market by
purchasing large banks and savings banks. Many such institutions have greater
financial and marketing resources available to them than does the Bank. The Bank
competes for savings deposits by offering depositors a high level of personal
service and a wide range of competitively priced financial services. The Bank
competes for real estate loans primarily through the interest rates and loan
fees it charges and advertising, as well as by originating and holding in its
portfolio mortgage loans which do not necessarily conform to secondary market
underwriting standards.

Lending Activities

      Loan Portfolio Composition. The Bank's loan portfolio primarily consists
of one-to-four family mortgage loans secured by residential and investment
properties, as well as mortgage loans secured by multi-family residences and
commercial real estate. To a lesser extent the Bank's loan portfolio also
includes consumer and business loans. The Bank generally originates loans for
retention in its portfolio, however during 2000, the Bank sold approximately
$875,000 into the secondary market. The loan sales resulted in approximately
$8,000 in capitalized servicing rights. At December 31, 2000, $740,000, or 0.8%
of the Bank's total one-to-four family real estate portfolio consisted of loans
held for sale. In recent years, the Bank has not purchased loans originated by
other lenders.


                                       2
<PAGE>

      Analysis of Loan Portfolio. The following table sets forth the composition
of the Bank's loan portfolio in dollar amounts and in percentages of the
portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                  -----------------------------------------------------------------------------------------
                                          2000                    1999                   1998                   1997
                                  --------------------     -------------------    -------------------    ------------------
                                    Amount     Percent       Amount    Percent     Amount     Percent     Amount    Percent
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------
                                                                                      (Dollars in Thousands)
<S>                               <C>             <C>      <C>            <C>     <C>            <C>     <C>           <C>
Real estate loans:
  First mortgage loans(1)(3) ...  $ 124,636       83.6%    $ 110,374      84.4%   $ 109,372      85.3%   $ 102,403     84.2%

  Second mortgage loans(2) .....      9,978        6.7         9,492       7.3        9,631       7.5        9,561      7.9
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------
Total real estate loans ........    134,614       90.3       119,866      91.7      119,003      92.8      111,964     92.1
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------

Commercial and consumer loans:
  Consumer .....................      2,998        2.0         3,482       2.7        4,073       3.2        4,278      3.5
  Student ......................         11         --            12        --           12        --           13       --
  Lease financing ..............        237        .02           278       0.2          350       0.3          564      0.5
  Commercial business loans ....     12,636        8.5         8,357       6.4        5,900       4.6        5,908      4.9
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------
   Total commercial and consumer
      loans ....................     15,882       10.7        12,129       9.3       10,335       8.1       10,763      8.9
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------
   Total loans receivable ......    150,496      101.0       131,995     101.0      129,338     100.9      122,727    101.0

Less:
  Unearned discount and
   origination fees ............       (120)      (0.1)          (84)     (0.1)        (199)     (0.2)        (314)    (0.3)
  Allowance for loan losses ....     (1,274)      (0.9)       (1,150)     (0.9)        (939)     (0.7)        (828)    (0.7)
                                  ---------    -------     ---------   -------    ---------   -------    ---------  -------
   Total loans receivable, net .  $ 149,102      100.0%    $ 130,761     100.0%   $ 128,200     100.0%   $ 121,585    100.0%
                                  =========    =======     =========   =======    =========   =======    =========  =======

<CAPTION>
                                 Years Ended December 31,
                                  -------------------
                                          1996
                                  -------------------
                                    Amount    Percent
                                  ---------   -------
                                 (Dollars in Thousands)
Real estate loans:
<S>                               <C>            <C>
  First mortgage loans(1)(3) ...  $  90,761      83.5%

  Second mortgage loans(2) .....      9,082       8.3
                                  ---------   -------
Total real estate loans ........     99,843      91.8
                                  ---------   -------

Commercial and consumer loans:
  Consumer .....................      3,481       3.2
  Student ......................         58       0.1
  Lease financing ..............      1,153       1.1
  Commercial business loans ....      5,482       5.0
                                  ---------   -------
   Total commercial and consumer
      loans ....................     10,174       9.4
                                  ---------   -------
   Total loans receivable ......    110,017     101.2

Less:
  Unearned discount and
   origination fees ............       (368)     (0.4)
  Allowance for loan losses ....       (907)     (0.8)
                                  ---------   -------
   Total loans receivable, net .  $ 108,742    100.00%
                                  =========   =======
</TABLE>

(1)   Includes $96.5 million, $25.8 million and $1.6 million of one- to
      four-family residential loans, commercial real estate and multi-family
      loans, respectively, at December 31, 2000.

(2)   Includes $3.3 million and $6.6 million of home equity line of credit loans
      and home equity fixed rate, fixed term loans, respectively, at December
      31, 2000.

(3)   Includes $740,000 of mortgage loans held for sale at December 31, 2000.


                                        3
<PAGE>

      Loan Maturity Schedule. The following table sets forth certain information
as of December 31, 2000, regarding the dollar amount of loans maturing in the
Bank's portfolio based on their contractual terms to maturity. Demand loans
having no stated schedule of repayments and no stated maturity, and overdrafts
are reported as due in one year or less. Adjustable and floating rate loans are
included in the period in which interest rates are next scheduled to adjust
rather than the period in which they contractually mature, and fixed rate loans
are included in the period in which the final contractual repayment is due.

<TABLE>
<CAPTION>
                                                           One          Three        Five          Ten          Beyond
                                              Within     Through       Through      Through      Through        Twenty
                                             One Year  Three Years    Five Years   Ten Years    Twenty Years     Years      Total
                                            --------- --------------  ----------   ----------   ------------    -------    --------
                                                                                 (In Thousands)
<S>                                         <C>          <C>          <C>          <C>          <C>             <C>       <C>
Real estate loans:
   First mortgage loans...................  $  29,519    $   26,816   $   24,040   $   14,414   $   24,872      $  4,975  $  124,636
   Second mortgage loans..................      3,403           411        1,161        4,604          399            --       9,978
    Commercial and consumer loans.........      9,651         1,814        2,683        1,276          458            --      15,882
                                            ---------    ----------   ----------   ----------   ----------      --------  ----------
     Total loans..........................  $  42,573    $   29,041   $   27,884   $   20,294   $   25,729      $  4,975  $ 150,496
                                            =========    ==========   ==========   ==========   ==========      ========  ==========
</TABLE>

      The following table sets forth at December 31, 2000, the dollar amount of
all fixed rate and adjustable rate loans due or repricing after December 31,
2001.

<TABLE>
<CAPTION>
                                                                             Fixed              Adjustable            Total
                                                                           ----------           ----------          ----------
                                                                                             (In Thousands)
<S>                                                                        <C>                  <C>                 <C>
Real estate loans:
   First mortgage loans.................................................   $   52,675           $   42,442          $   95,117
   Second mortgage loans................................................        6,575                   --               6,575
    Commercial and consumer loans.......................................        6,231                   --               6,231
                                                                           ----------           ----------          ----------
      Total loans.......................................................   $   65,481           $   42,442          $  107,923
                                                                           ==========           ==========          ==========
</TABLE>

      One- to Four-Family Residential Mortgage Loans. The Bank's primary lending
activity is the origination of first mortgage loans secured by one- to
four-family residential properties. A portion of one- to four-family mortgage
loans originated by the Bank are secured by non-owner occupied homes which are
primarily used to furnish housing to students attending the SUNY College at
Oswego. The Bank generally retains in its portfolio all ARM loans that it
originates. However, the Bank generally underwrites its loans so as to be
eligible for resale in the secondary mortgage market. At December 31, 2000,
approximately 96.5% of the Bank's one- to four-family residential real estate
loans were secured by owner-occupied properties.

      Fixed-rate one- to four-family residential mortgage loans originated by
the Bank are originated with terms of up to 30 years (although fixed rate loans
held in portfolio are generally limited to terms of 20 years or less), amortize
on a monthly basis, and have principal and interest due each month. Such real
estate loans often remain outstanding for significantly shorter periods than
their contractual terms to maturity, particularly in a declining interest rate
environment. Borrowers may refinance or prepay loans at their option. One- to
four-family residential mortgage loans originated by the Bank customarily
contain "due-on-sale" clauses which permit the Bank to accelerate the
indebtedness of the loan upon transfer of ownership of the mortgaged property.
Due-on-sale clauses are an important means of increasing the interest rate on
existing mortgage loans during periods of rising interest rates. An origination
fee of up to 3% is charged on fixed-rate mortgage loans. As a result of the low
interest rate environment that has existed in recent years, many of the Bank's
borrowers have refinanced their mortgage loans with the Bank at lower interest
rates. During years ended December 31, 2000 and 1999, 12.8% and 43.9%,
respectively, of the Bank's one- to four-family mortgage loan originations
consisted of fixed-rate loans.

      The Bank also originates ARM loans which serve to reduce interest rate
risk. The Bank currently originates one-year ARM loans which adjust each year at
200 basis points (100 basis points equal 1%) above the adjusted six month moving
average of the six-month Treasury bill auction discount rate. The Bank also
offers a loan product whereby the


                                       4
<PAGE>

interest is fixed for the first five years and adjusts annually thereafter. This
loan product typically is originated with terms up to 30 years. ARM loans are
originated with terms ranging from 5 to 30 years. ARM loans originated by the
Bank provide for maximum periodic interest rate adjustment of 2 percent per year
and an overall maximum interest rate increase which is determined at the time
the loan is originated. However, ARM loans may not adjust to a level below the
initial rate. ARMs may be offered at an initial rate below the prevailing market
rate. The Bank's one- to four-family ARM loan originations totaled $20.0
million, $9.0 million and $11.6 million, during the years 2000, 1999 and 1998,
respectively. The Bank requires that borrowers qualify for ARM loans based upon
the loan's fully indexed rate.

      At December 31, 2000, $64.0 million, or 65.7%, of the Bank's one- to
four-family loan portfolio consisted of ARM loans. ARM loans generally pose a
credit risk in that as interest rates rise, the amount of a borrower's monthly
loan payment also rises, thereby increasing the potential for delinquencies and
loan losses. At the same time, the marketability of such loans may be adversely
affected by higher rates.

      The Bank also originates loans to finance the construction of one- to
four-family owner-occupied residences. Funds are disbursed as construction
progresses. Loans to finance one- to four-family construction typically provide
for a six-month construction phase during which interest accrues and which is
deducted from the funds disbursed. Upon completion of the construction phase the
loan automatically converts to permanent financing. At December 31, 2000, the
Bank held $2.5 million of one- to four-family construction loans.

      The Bank's lending policies require private mortgage insurance for loan to
value ratios in excess of 80%.

      Commercial Real Estate Loans. Loans secured by commercial real estate
constituted approximately $25.8 million, or 17.3%, of the Bank's total loan
portfolio at December 31, 2000. At December 31, 2000, substantially all of the
Bank's commercial real estate loans were secured by properties located within
the Bank's market area. At December 31, 2000, the Bank's commercial real estate
loans had an average principal balance of $176,000. At that date, the largest
commercial real estate loan had a principal balance of $1.2 million, and was
secured by a facility for a private, non-profit human services agency located in
Oswego, New York. This loan is currently performing in accordance with the
original terms. Commercial real estate loans are generally offered with
adjustable interest rates tied to a market index which currently is the adjusted
six month moving average of the six month Treasury bill auction discount rate,
with an overall interest rate cap which is determined at the time the loan is
originated. Commercial real estate loans may not adjust to a level below the
initial rate. The Bank generally offers commercial real estate loans with from
one to five year adjustment periods. The Bank generally makes commercial real
estate loans up to 75% of the appraised value of the property securing the loan.
An origination fee of up to 2% of the principal balance of the loan is typically
charged on commercial real estate loans. Commercial real estate loans originated
by the Bank generally are underwritten to mature between 5 and 20 years with an
amortization schedule of between 10 and 30 years. The Bank has in the past sold
loan participations to other financial institutions and expects to do so in the
future as opportunities arise.

      In underwriting commercial real estate loans the Bank reviews the expected
net operating income generated by the real estate to support debt service, the
age and condition of the collateral, the financial resources and income level of
the borrower and the borrower's experience in owning or managing similar
properties. The Bank generally obtains personal guarantees from all commercial
borrowers. Loans secured by commercial real estate generally involve a greater
degree of risk than one- to four-family residential mortgage loans and carry
larger loan balances. This increased credit risk is a result of several factors,
including the concentration of principal in a limited number of loans and
borrowers, the effects of general economic conditions on income producing
properties, and the increased difficulty of evaluating and monitoring these
types of loans. Furthermore, the repayment of loans secured by commercial real
estate is typically dependent upon the successful operation of the related real
estate. If the cash flow from the property is reduced, the borrower's ability to
repay the loan may be impaired.

      Multi-Family Real Estate Loans. Loans secured by multi-family real estate
(real estate containing five or more dwellings) constituted approximately $1.6
million, or 1.1%, of the Bank's total loan portfolio at December 31, 2000. At
December 31, 2000, the Bank had a total of 12 loans secured by multi-family real
estate properties. The Bank's multi-family real estate loans are secured by
multi-family rental properties (primarily townhouses and walk-up


                                       5
<PAGE>

apartments). At December 31, 2000, substantially all of the Bank's multi-family
real estate loans were secured by properties located within the Bank's market
area. At December 31, 2000, the Bank's multi-family real estate loans had an
average principal balance of approximately $133,500 and the largest multi-family
real estate loan had a principal balance of $237,000, and was performing in
accordance with its terms. Multi-family real estate loans generally are offered
with adjustable interest rates tied to the adjusted six month moving average of
the six month Treasury Bill auction discount rate index with an overall interest
rate cap which is determined at the time the loan is originated. Multi-family
real estate loans may not adjust below the initial rate. Multi-family real
estate loans are underwritten to mature between 5 and 20 years, and to amortize
over 10 to 30 years. An origination fee of 1% is generally charged on
multi-family real estate loans.

      In underwriting multi-family real estate loans, the Bank reviews the
expected net operating income generated by the real estate to support the debt
service, the age and condition of the collateral, the financial resources and
income level of the borrower and the borrower's experience in owning or managing
similar properties. The Bank generally requires a debt service coverage ratio of
at least 120% (net of operating expenses) of the monthly loan payment. The Bank
makes multi-family real estate loans up to 75% of the appraised value of the
property securing the loan. The Bank generally obtains personal guarantees from
all multi-family real estate borrowers.

      Loans secured by multi-family real estate generally involve a greater
degree of credit risk than one- to four-family residential mortgage loans and
carry larger loan balances. This increased credit risk is a result of several
factors, including the concentration of principal in a limited number of loans
and borrowers, the effects of general economic conditions on income producing
properties, and the increased difficulty of evaluating and monitoring these
types of loans. Furthermore, the repayment of loans secured by multi-family real
estate and commercial real estate is typically dependent upon the successful
operation of the related real estate property. If the cash flow from the project
is reduced, the borrower's ability to repay the loan may be impaired.

      Second Mortgage Loans. The Bank also offers home equity loans and equity
lines of credit collateralized by a second mortgage on the borrower's principal
residence. The Bank's home equity lines of credit are secured by the borrower's
principal residence with a maximum loan-to-value ratio, including the principal
balances of both the first and second mortgage loans of 80%, or up to 90% where
the Bank has made the first mortgage loan. At December 31, 2000, the disbursed
portion of home equity lines of credit totaled $3.3 million. Home equity lines
of credit are offered on an adjustable rate basis with interest rates tied to
the prime rate as published in The Wall Street Journal, plus up to 50 basis
points and with terms of up to 15 years.

      Home equity loans are fixed rate loans with terms generally up to 10
years, although on occasion the Bank may originate a home equity loan with a
term of up to 15 years.

      Consumer Loans. As of December 31, 2000, consumer loans totaled $3.0
million, or 2.0%, of the Bank's total loan portfolio. The principal types of
consumer loans offered by the Bank are unsecured personal loans, and loans
secured by deposit accounts. Other consumer loans are offered on a fixed rate
basis with maturities generally of less than five years.

      The underwriting standards employed by the Bank for consumer loans include
a determination of the applicant's credit history and an assessment of ability
to meet existing obligations and payments on the proposed loan. The stability of
the applicant's monthly income may be determined by verification of gross
monthly income from primary employment, and additionally from any verifiable
secondary income. Creditworthiness and the employment history of the applicant
are of primary consideration in originating consumer loans, and in the case of
home equity lines of credit, the Bank obtains a title guarantee, title search,
or an opinion as to the validity of title.

      Commercial Business Loans. The Bank currently offers commercial business
loans to businesses in its market area and to deposit account holders. At
December 31, 2000, the Bank had commercial business loans outstanding with an
aggregate balance of $12.9 million, of which $7.5 million consisted of
commercial lines of credit. The average commercial business loan balance was
approximately $62,000. Commercial business loans generally have fixed rates


                                       6
<PAGE>

of interest. The loans are generally of short duration with average terms of
five years, but which may range up to 15 years. Lease financing arrangements are
loans which are secured by pools of leases for medical or dental equipment or
leases to finance the acquisition of business equipment.

      Underwriting standards employed by the Bank for commercial business loans
include a determination of the applicant's ability to meet existing obligations
and payments on the proposed loan from normal cash flows generated by the
applicant's business. The financial strength of each applicant also is assessed
through a review of financial statements provided by the applicant.

      Commercial business loans generally bear higher interest rates than
residential loans, but they also may involve a higher risk of default since
their repayment is generally dependent on the successful operation of the
borrower's business. The Bank generally obtains guarantees from the borrower, a
third party, or the Small Business Administration, as a condition to originating
its commercial business loans.

      Loan Originations, Solicitation, Processing, and Commitments. Loan
originations are derived from a number of sources such as existing customers,
developers, walk-in customers, real estate broker referrals, and commissioned
mortgage loan originators. Upon receiving a loan application, the Bank obtains a
credit report and employment verification to verify specific information
relating to the applicant's employment, income, and credit standing. In the case
of a real estate loan, an independent appraiser approved by the Bank appraises
the real estate intended to secure the proposed loan. A loan processor in the
Bank's loan department checks the loan application file for accuracy and
completeness, and verifies the information provided. Mortgage loans of up to
$275,000 may be approved by any designated loan officer; mortgage loans in
excess of $275,000 must be approved by the Board of Directors. Commercial loans
of up to $50,000 unsecured, or $75,000 (if secured by other than real estate)
may be approved by the Bank's President or either of the Executive Vice
Presidents. These individuals may join their limits to a total approval amount
of $150,000 unsecured, and $250,000 secured. Loans in excess of these limits
must be approved by either the entire Board of Directors, or a subcommittee of
the Board of Directors. The Board of Directors, at their monthly meeting, will
review and verify that management's approvals of loans are made within the scope
of management's authority. Fire and casualty insurance is required at the time
the loan is made and throughout the term of the loan, and upon request of the
Bank, flood insurance may be required. After the loan is approved, a loan
commitment letter is promptly issued to the borrower. At December 31, 2000, the
Bank had commitments to originate $14.7 million of loans.

      If the loan is approved, the commitment letter specifies the terms and
conditions of the proposed loan including the amount of the loan, interest rate,
amortization term, a brief description of the required collateral, and required
insurance coverage. The borrower must provide proof of fire and casualty
insurance on the property (and, as required, flood insurance) serving as
collateral, which insurance must be maintained during the full term of the loan.
Title insurance, title search, or an opinion of counsel as to the validity of
title are required on all loans secured by real property. In recent years, the
Bank has not purchased loans originated by other lenders.


                                       7
<PAGE>

      Origination, Purchase and Sale of Loans. The table below shows the Bank's
loan origination, purchase and sales activity for the periods indicated.

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                     ------------------------------------------------------------------------
                                                        2000             1999          1998            1997          1996
                                                     ----------       ----------   -------------  -------------   -----------
                                                                                   (In Thousands)
<S>                                                 <C>               <C>            <C>           <C>             <C>
Loan receivable, beginning of period.............   $  131,995        $  129,338     $   122,727   $ 110,017       $ 100,850

Originations:
  Real estate:
   First mortgage(1)(3)..........................       30,627            26,987          34,908      26,281          23,496
   Second mortgage(2)............................        2,721             1,408           1,516       2,178           1,912
  Commercial and consumer loans:
   Consumer loans................................        1,784             1,299           2,412       2,306           3,442
   Student.......................................                             --              --          --              --
   Lease financing...............................                             --              --         300              --
   Commercial....................................        3,812             5,210           6,849       3,525           1,850
                                                    ----------        ----------     -----------   ---------       ---------
      Total originations.........................       38,944            34,904          45,685      34,590          30,700

  Transfer of mortgage loans to foreclosed
    real estate..................................          638                93             563         374             445
  Repayments.....................................       18,930            26,201          29,969      21,506          21,088
  Loan sales.....................................          875             5,993           8,542          --              --
                                                    ----------        ----------     -----------   ---------       ---------
Net loan activity................................       18,501             2,617           6,611      12,710           9,167
                                                    ----------        ----------     -----------   ---------       ---------
   Total loans receivable at end of period.......   $  150,496        $  131,995     $   129,338   $ 122,727       $ 110,017
                                                    ==========        ==========     ===========   =========       =========
</TABLE>

------------------------------------
(1)   Includes $22.9 million, and $7.8 million in one- to four-family
      residential loans and commercial real estate loans, respectively, for the
      year ended December 31, 2000.
(2)   Includes $2.5 million in home equity loans and a net change of $177,000 in
      home equity lines of credit for the year ended December 31, 2000.
(3)   Includes $350,000 of mortgage loans held for sale originated during the
      year ended December 31, 2000.

      Loan Origination Fees and Other Income. In addition to interest earned on
loans, the Bank generally receives loan origination fees. To the extent that
loans are originated or acquired for the Bank's portfolio, SFAS 91 requires that
the Bank defer loan origination fees and costs and amortize such amounts as an
adjustment of yield over the life of the loan by use of the level yield method.
ARM loans originated below the fully indexed interest rate will have a
substantial portion of the deferred amount recognized as income in the initial
adjustment period. Fees deferred under SFAS 91 are recognized into income
immediately upon prepayment or the sale of the related loan. At December 31,
2000, the Bank had $120,000 of net deferred loan origination fees. Loan
origination fees vary with the volume and type of loans and commitments made and
purchased, principal repayments, and competitive conditions in the mortgage
markets, which in turn respond to the demand for and availability of money.

      In addition to loan origination fees, the Bank also receives other fees,
service charges, and other income that consist primarily of deposit transaction
account service charges, late charges and income from REO operations. The Bank
recognized fees and service charges of $816,000, $993,000 and $775,000, for the
fiscal years ended December 31, 2000, 1999 and 1998, respectively.

      Loans-to-One Borrower. With certain limited exceptions, a New York
chartered savings bank may not make unsecured loans or extend unsecured credit
for commercial, corporate or business purposes (including lease financing) to a
single borrower, which in the aggregate exceed 15% of the Bank's net worth. At
December 31, 2000, the Bank's largest lending relationship totaled $3.2 million
and consisted of loans secured by retail businesses and properties. The Bank's
second largest lending relationship totaled $3.0 million and consisted of loans
secured by commercial retail businesses and properties. The Bank's third largest
lending relationship totaled $2.6 million and consisted of loans secured by
retail businesses and properties. The Bank's fourth largest lending relationship
totaled $1.4 million and was secured by a retail office plaza, retail business
property and residence. The Bank's fifth largest lending relationship totaled
$1.3 million and consisted of loans secured by bank letters of credit. All of
the above loans are also secured by


                                       8
<PAGE>

underlying personal guarantees. At December 31, 2000 all of the aforementioned
loans were performing in accordance with their terms.

Delinquencies and Classified Assets

      Delinquencies. The Bank's collection procedures provide that when a loan
is 15 days past due, a computer-generated late notice is sent to the borrower
requesting payment. If the delinquency continues, at 30 days a delinquent notice
is sent and personal contact efforts are attempted, either in person or by
telephone, to strengthen the collection process and obtain reasons for the
delinquency. Also, plans to arrange a repayment plan are made. If a loan becomes
60 days past due, and no progress has been made in resolving the delinquency,
the Bank will send a 10-day demand letter and personal contact is attempted, and
the loan becomes subject to possible legal action if suitable arrangements to
repay have not been made. When a loan continues in a delinquent status for 90
days or more, and a repayment schedule has not been made or kept by the
borrower, generally a notice of intent to foreclose is sent to the borrower for
mortgage loans, and a final demand letter is presented to the borrower of
non-real estate loans, giving 30 days to repay all outstanding interest and
principal. If not cured, foreclosure proceedings or other appropriate legal
actions are initiated to minimize any potential loss.

      Non-Performing Assets. Loans are reviewed on a regular basis and are
placed on a non-accrual status when, in the opinion of management, the
collection of additional interest is doubtful. Loans are placed on non-accrual
status when either principal or interest is 90 days or more past due or less
than 90 days, in the event the loan has been referred to the Bank's legal
counsel for foreclosure. Interest accrued and unpaid at the time a loan is
placed on non-accrual status is charged against interest income. At December 31,
2000, the Bank had non-performing assets of $2.7 million, and a ratio of
non-performing loans and real estate owned ("REO") of 1.2% total assets.
Non-performing assets decreased $483,000, or 15.1%, from $3.2 million in 1999.
While the changes in non-performing assets tend to be cyclical, the increase can
be attributed to longer workout or liquidation time lines, due primarily to a
larger volume of real estate foreclosures as well as a generally soft local
economy.

      Real estate acquired by the Bank as a result of foreclosure or by the deed
in lieu of foreclosure is classified as REO until such time as it is sold. These
properties are carried at the lower of their recorded amount or estimated fair
value less estimated costs to sell the property. REO totaled $884,000, $641,000
and $742,000 at December 31, 2000, 1999 and 1998, respectively.

      The largest component of REO consists of a real estate development project
which had a net book value of $458,000 at December 31, 2000. The Bank originally
entered into a $570,000 commercial real estate loan in 1988 for the development
of 49 single family residences. This loan was made under the "leeway provision"
of the New York State Banking Law. Under this provision of the Banking Law the
lending relationship was originally structured so that the Bank held title to
the property securing the loan subject to the fulfillment of the borrower's
obligations under the loan. In 1990, the developer became insolvent, was unable
to satisfy the terms of the loan and the Bank assumed control of the project. In
1998, the Bank established a wholly-owned subsidiary, whose sole business is the
ownership and final development of the Whispering Oaks real estate subdivision
in Baldwinsville, New York. This subsidiary was initially capitalized with
$50,000 in cash. It is anticipated that this capitalization, together with
interim financing to be provided by the Bank, will be sufficient to complete and
liquidate this asset. At December 31, 2000, the Bank had 15 lots remaining to be
sold. The proceeds from the sale of the lots are used to reduce the outstanding
balance of REO. The Bank believes it will fully recover its investment in this
property.


                                       9
<PAGE>

Delinquent Loans and Non-Performing Assets

      The following table sets forth information regarding the Bank's loans
delinquent 90 days or more, and real estate acquired or deemed acquired by
foreclosure at the dates indicated. When a loan is delinquent 90 days or more,
the Bank reverses all accrued interest thereon and ceases to accrue interest
thereafter. For all the dates indicated, the Bank did not have any material
restructured loans within the meaning of SFAS 15 and SFAS 114.

<TABLE>
<CAPTION>
                                                                                          At December 31,
                                                            --------------------------------------------------------------------
                                                              2000           1999           1998           1997           1996
                                                            --------       --------       --------       --------       --------
                                                                                   (Dollars In Thousands)
<S>                                                         <C>            <C>            <C>            <C>            <C>
Loans delinquent 90 days or more:
  Real estate loans ..................................      $  1,594       $  2,284       $  1,298       $  1,207       $  1,953
  Consumer loans .....................................           234            270            534            283             45
                                                                                ---            ---            ---             --
    Total delinquent loans ...........................         1,828          2,554          1,832          1,490          1,998

Total REO ............................................           884            641            742            767            700
                                                            --------       --------       --------       --------       --------
       Total nonperforming assets(1) .................      $  2,712       $  3,195       $  2,574       $  2,257       $  2,698
                                                            ========       ========       ========       ========       ========


Total loans delinquent 90 days or more
  to total loans receivable(2) .......................           1.2%           2.0%           1.4%           1.2%           1.8%
Total loans delinquent 90 days or more to total assets           .79%           1.2%           0.9%           0.8%           1.1%
Total nonperforming assets to total assets ...........          1.17%           1.5%           1.3%           1.2%           1.4%

Net loans receivable(3) ..............................       149,102        130,761        128,200        121,585        108,742
                                                            --------       --------       --------       --------       --------
Total assets .........................................      $231,847       $216,324       $203,252       $196,770       $189,937
                                                            ========       ========       ========       ========       ========
</TABLE>

-----------------------------------
(1)   Net of specific valuation allowances.
(2)   Net of unearned discount, and the allowance for loan losses.
(3)   Includes $740,000 of mortgage loans held for sale at December 31, 2000.

      During the year ended December 31, 2000, and year ended December 31, 1999,
respectively, additional gross interest income of $132,000 and $84,000 would
have been recorded on loans accounted for on a non-accrual basis if the loans
had been current throughout the period. No interest income on non-accrual loans
was included in income during the same periods.

The following table sets forth information with respect to loans past due 30-89
days in the Bank's portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                         At December 31,
                                     ------------------------------------------------------
                                      2000        1999        1998        1997        1996
                                     ------      ------      ------      ------      ------
                                                         (In Thousands)
<S>                                  <C>         <C>         <C>         <C>         <C>
Loans past due 30-89 days:
  Real estate loans ...........      $2,493      $1,619      $2,010      $2,232      $1,867

  Commercial and consumer loans         147         161         126         296         249
                                     ------      ------      ------      ------      ------
    Total past due 30-89 days .      $2,640      $1,780      $2,136      $2,528      $2,116
                                     ======      ======      ======      ======      ======
</TABLE>


                                       10
<PAGE>

The following table sets forth information regarding the Bank's delinquent loans
60 days and greater and REO at December 31, 2000.

<TABLE>
<CAPTION>
                                                                     At December 31, 2000
                                                                     ---------------------
                                                                      Balance      Number
                                                                     --------     --------
                                                                     (Dollars In Thousands)
<S>                                                                    <C>             <C>
Residential real estate:
  Loans 60 to 89 days delinquent ................................      $  610          17
  Loans more than 90 days delinquent ............................       1,594          40
Consumer and commercial business loans 60 days or more delinquent         292          47
Real estate owned ...............................................         884          12
                                                                       ------      ------
    Total .......................................................      $3,380         116
                                                                       ======      ======
</TABLE>

      Classification of Assets. Federal regulations provide for the
classification of loans and other assets such as debt and equity securities
considered to be of lesser quality as "substandard," "doubtful," or "loss"
assets. An asset is considered "substandard" if it is inadequately protected by
the current net worth and paying capacity of the obligor or of the collateral
pledged, if any. "Substandard" assets include those characterized by the
"distinct possibility" that the savings institution will sustain "some loss" if
the deficiencies are not corrected. Assets classified as "doubtful" have all of
the weaknesses inherent in those classified "substandard," with the added
characteristic that the weaknesses present make "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable and improbable." Assets classified as "loss" are those considered
"uncollectible" and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not warranted. Assets
that do not expose the savings institution to risk sufficient to warrant
classification in one of the aforementioned categories, but which possess some
weaknesses, are required to be designated "special mention" by management.

      When a savings institution classifies problem assets as either substandard
or doubtful, it is required to establish general allowances for loan losses in
an amount deemed prudent by management. General allowances represent loss
allowances that have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When a savings institution classifies
problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of the amount of the assets so classified, or
to charge off such amount. A savings institution's determination as to the
classification of its assets and the amount of its valuation allowances is
subject to review by federal and state regulatory authorities, which can order
the establishment of additional general or specific loss allowances. The Bank
regularly reviews the problem loans in its portfolio to determine whether any
loans require classification in accordance with applicable regulations.

      The following table sets forth the aggregate amount of the Bank's
internally classified assets at the dates indicated.

<TABLE>
<CAPTION>
                                                    At December 31,
                                ------------------------------------------------------
                                 2000        1999        1998        1997        1996
                                ------      ------      ------      ------      ------
                                                    (In Thousands)
<S>                             <C>         <C>         <C>         <C>         <C>
Substandard assets(1) ....      $1,770      $2,668      $2,482      $1,719      $1,980
Doubtful assets ..........          34         110         103          55          59
Loss assets ..............          44           7          90          16           6
                                ------      ------      ------      ------      ------
   Total classified assets      $1,848      $2,785      $2,675      $1,790      $2,045
                                ======      ======      ======      ======      ======
</TABLE>

------------------------------------
(1)   Includes$458,000, $510,000, $638,000, $483,000 and $250,000 for a real
      estate development project classified as REO at December 31, 2000, 1999,
      1998, 1997 and 1996, respectively.

      Allowance for Loan Losses. Management's policy is to provide for estimated
losses on the Bank's loan portfolio based on management's evaluation of the
potential losses that may be incurred. The Bank reviews on a quarterly basis the
loans in its portfolio which have demonstrated delinquencies, including problem
loans, to determine whether any loans require classification or the
establishment of appropriate reserves or allowances for losses. Such evaluation,
which


                                       11
<PAGE>

includes a review of all loans of which full collectibility of interest and
principal may not be reasonably assured, considers, among other matters, past
loss experience, present economic conditions and other factors deemed relevant
by management. Management calculates the general allowance for loan losses on
past experience as well as current delinquencies and the composition of the
Bank's loan portfolio. While both general and specific loss allowances are
charged against earnings, general loan loss allowances are included, subject to
certain limitations, as capital in computing risk-based capital under federal
regulations.

      In accordance with SFAS 114, a loan is considered impaired when each of
the following criteria are met: the loan is of a material size, the loan is
considered to be non-performing, and a loss is probable. The measurement of
impaired loans is generally based upon the present value of expected future cash
flows discounted at the historic effective interest rate, except that all
collateral-dependent loans are measured for impairment based on the fair value
of the collateral.

      Management will continue to review the entire loan portfolio to determine
the extent, if any, to which further additional loan loss provisions may be
deemed necessary. Management believes that the Bank's current allowance for loan
losses is adequate, however, there can be no assurance that the allowance for
loan losses will be adequate to cover losses that may in fact be realized in the
future or that additional provisions for loan losses will not be required.

      Analysis of the Allowance for Loan Losses. The following table sets forth
the analysis of the allowance for loan losses at or for the periods indicated.

<TABLE>
<CAPTION>
                                                                            At or for the Period Ended December 31,
                                                               --------------------------------------------------------------------
                                                                 2000           1999           1998           1997           1996
                                                               --------       --------       --------       --------       --------
<S>                                                            <C>            <C>            <C>            <C>            <C>
                                                                                        (Dollars In Thousands)

Total loans receivable, net .............................      $149,102       $130,761       $128,200       $121,585       $108,742
Average loans outstanding ...............................       139,258        130,728        126,931        113,651        104,354
Allowance balance (at beginning of period) ..............         1,150            939            828            907            346
Provision for losses:
  Real estate ...........................................            65            135             83            121             90
  Commercial and consumer loans .........................           179            238            298            140            547
Charge-offs:
  Real estate ...........................................            40             --            141             --             --
  Commercial and consumer loans .........................            99            190            140            358             93
Recoveries:
  Real estate ...........................................            --             --             --             --             --
  Commercial and consumer loans .........................            19             28             11             18             17
                                                               --------       --------       --------       --------       --------
Allowance balance (at end of period) ....................      $  1,274       $  1,150       $    939       $    828       $    907
                                                               ========       ========       ========       ========       ========

Allowance for loan losses as a percent of net loans
  receivable at end of period ...........................           0.9%           0.9%           0.7%           0.7%           0.8%
Loans charged off as a percent of average loans
  outstanding ...........................................           0.1%           0.2%           0.1%           0.3%           0.1%
Ratio of allowance for loan losses to total nonperforming
  loans at end of period(1) .............................          69.7%          45.0%          51.3%          55.6%          45.3%
Ratio of allowance for loan losses to total nonperforming
 assets at end of period(1) .............................          47.0%          36.0%          36.5%          36.7%          33.6%
</TABLE>

------------------------------------
(1)   Net of specific reserves.


                                       12
<PAGE>

      Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of allowance for loan losses by loan category for the periods
indicated. The allocation of the allowance by category is not necessarily
indicative of future losses and does not restrict the use of the allowance to
absorb losses in any category.

<TABLE>
<CAPTION>
                                                                                At December 31,
                                         -------------------------------------------------------------------------------------------
                                                2000              1999               1998              1997              1996
                                         ----------------- ------------------ ------------------ ----------------- -----------------
                                                % of Loans        % of Loans         % of Loans        % of Loans        % of Loans
                                                 In Each            In Each           In Each           In Each            In Each
                                               Category to        Category to        Category to       Category to       Category to
                                                  Total              Total              Total             Total              Total
                                         Amount   Loans    Amount    Loans    Amount    Loans    Amount   Loans    Amount   Loans
                                         ------   -----    ------    -----    ------    -----    ------   -----    ------   -----
                                                                          (Dollars in Thousands)
<S>                                      <C>       <C>     <C>       <C>      <C>       <C>      <C>       <C>     <C>      <C>
Balance at end of period applicable to:
  Real estate loans ...................  $  466    89.39%  $  440    90.81%   $  380    92.01%   $  462    91.23%  $  340   90.75%
  Commercial and consumer loans .......     808    10.61      710     9.19       559     7.99       366     8.77      567    9.25
                                         ------   ------   ------   ------    ------   ------    ------   ------   ------  ------

    Total allowance for loan losses (1)  $1,274    100.0%  $1,150   100.00%   $  939   100.00%   $  828   100.00%  $  907  100.00%
                                         ======   ======   ======   ======    ======   ======    ======   ======   ======  ======
</TABLE>

------------------------------------
(1)   Percentages include unearned discount and origination fees.


                                       13
<PAGE>

Investment Activities

      The investment policy of the Bank established by the Board of Directors
attempts to provide for the overall asset/liability management needs of the
Bank, and maintain liquidity, maintain a high quality diversified investment
portfolio in order to obtain a favorable return on investment without incurring
undue interest rate and credit risk, provide collateral for pledging
requirements, and to complement the Bank's lending activities. At December 31,
2000, the Bank had investment securities with an aggregate amortized cost of
$63.7 million and a market value of $63.8 million. At December 31, 2000, the
Bank's amortized cost value of investment securities consisted of $22.9 million
of corporate debt issues and $16.1 million of securities issued or guaranteed by
the United States Government or agencies thereof and state and municipal
obligations. The corporate debt issues primarily consist of financial
corporation debt and industrial debentures (the largest single issuer was $3.5
million). These issues generally have maturities ranging up to 20 years. All
corporate debt investments have been rated as investment grade by either Moody's
or Standard & Poor's. Typically, such investments yield 60-70 basis points more
than Treasury securities with comparable maturities. To a lesser extent, the
Bank also invests in mutual funds and equity securities. At December 31, 2000,
the Bank held $2.3 million in common stock, of which $2.1 million was Federal
Home Loan Bank Stock, and $2.9 million in an equity mutual fund. At December 31,
2000, the Bank had invested $19.5 million in mortgage-backed securities, net.
Mortgage-backed securities, like mortgage loans, amortize over the life of the
security as the underlying mortgages are paid down. The speed at which principal
payments above normally scheduled amortization occurs, is generally
unpredictable. Historically, the securities have paid down more rapidly in a
falling interest rate environment, thereby shortening the life of the security.
Likewise, in a rising interest rate environment, the life of the mortgage-backed
security tends to extend. The result is that, generally, the Bank will receive
more investable funds in lower interest rate environments and less investable
funds during periods of higher interest rates. The embedded option on the part
of the underlying mortgagee to prepay the loan, therefore, tends to impact the
value of the security and can adversely impact the Bank's net interest margin.
The Bank's investments are, generally, liquid, and therefore allow the Bank to
respond more readily to changing market conditions. The investment portfolio is
accounted for in accordance with FASB Statement 115. At December 31, 2000, the
Bank's available-for-sale and held-to-maturity portfolios had amortized cost of
$63.6 million and $129,000, respectively, and market values of $63.6 million and
$129,000, respectively.

      The Bank generally has maintained a portfolio of liquid assets that
exceeds regulatory requirements. Liquidity levels may be increased or decreased
depending upon the yields on investment alternatives and upon management's
judgment as to the attractiveness of the yields then available in relation to
other opportunities and its expectation of the yield that will be available in
the future, as well as management's projections as to the short term demand for
funds to be used in the Bank's loan origination and other activities. For
further information regarding the Bank's investments see Note 2 to the Notes to
Financial Statements.

      At December 31, 2000, the Company holds the following corporate debt
investments which exceed 10% of total capital.

                 Issuer              Book Value       Fair Market Value
            ----------------         ----------       -----------------

            Lehman Brothers          $3,475,000          $3,504,000
            CNA Financial            $3,000,000          $2,745,000


                                       14
<PAGE>

      Investment Portfolio. The following table sets forth the carrying value of
the Bank's investment portfolio at the dates indicated. At December 31, 2000,
the market value of the Bank's investments was approximately $63.8 million. The
market value of investments includes interest-earning deposits, and
mortgage-backed securities.

<TABLE>
<CAPTION>
                                                                                  At December 31,
                                                                ----------------------------------------------
                                                                  2000               1999               1998
                                                                --------           --------           --------
                                                                                 (In Thousands)
<S>                                                             <C>                <C>                <C>
Investment securities:
   U.S. Government and agency obligations ............          $  9,667           $ 11,167           $  1,471
   State and municipal obligations ...................             6,405              6,695              5,906
   Corporate debt issues .............................            23,027             21,302             20,347
   Equity securities .................................             2,340              2,015              1,230
   Mutual funds ......................................             2,861              2,656              2,298
                                                                --------           --------           --------
                                                                  44,300             43,835             31,252

Unrealized (loss)/gain on available for sale portfolio               (26)              (786)             1,413
                                                                --------           --------           --------
     Total investment securities .....................            44,274             43,049             32,665
                                                                --------           --------           --------
Interest-earning deposits in other institutions ......                --                 --                 --
Federal funds sold ...................................                --                 --              1,800
                                                                --------           --------           --------
       Total investments .............................          $ 44,274           $ 43,048           $ 34,465
                                                                ========           ========           ========
Mortgage-backed securities, net:
   Adjustable rate ...................................             1,284              1,602              2,505
   Fixed rate ........................................            18,122             22,453             17,976
                                                                --------           --------           --------
                                                                  19,406             24,055             20,481
Unrealized gain (loss) on available for sale portfolio                78               (707)               297
                                                                --------           --------           --------
       Total mortgage-backed securities, net .........          $ 19,484           $ 23,348           $ 20,778
                                                                ========           ========           ========
</TABLE>

      Investment Portfolio Maturities. The following table sets forth the
amortized cost, market value, average life in years, and annualized weighted
average yield of the Bank's investment portfolio at December 31, 2000.

<TABLE>
<CAPTION>
                                                                                                                        Annualized
                                                                                                         Average         Weighted
                                                                 Amortized          Market                Life            Average
                                                                   Cost              Value                Years            Yield
                                                                 ---------         ---------            ---------       ----------
                                                                                       (Dollars in Thousands)
<S>                                                              <C>               <C>                       <C>             <C>
Investment securities:
   U.S. Government treasury...............................       $      19         $      18                 8.88            10.9%
   U.S. Government agency.................................           9,647             9,613                 7.00             6.89
   State and municipal obligations........................           6,405             6,622                 6.23             5.53
   Corporate debt issues..................................          22,899            20,946                 8.27             6.69
   Marketable equity securities...........................           5,201             5,201                   --               --
                                                                 ---------         ---------               ------           ------
     Total................................................       $  44,171         $  42,400
                                                                 =========         =========
   Unrealized loss on available for sale portfolio........             (26)
                                                                 ---------
Carrying value of investment securities...................       $  44,145
                                                                 =========
Investment securities held to maturity: (1)
   Corporate debt obligations.............................       $     129               129                   --             6.66%
                                                                 =========         =========               ======           ======
</TABLE>

--------------------------------
(1)   The information is included above as a component of corporate debt issues.


                                       15
<PAGE>

      Securities Portfolio Maturities. The following table sets forth the
scheduled maturities, carrying values, market values and average yields for the
Bank's investment securities at December 31, 2000. Yield is calculated on the
amortized cost to maturity, and does not reflect adjustments to a fully
tax-equivalent basis.

<TABLE>
<CAPTION>
                                                                                 At December 31, 2000
                                                ------------------------------------------------------------------------------------
                                                 One Year or Less     One to Five Years     Five to Ten Years    More than Ten Years
                                                -------------------  -------------------  ---------------------  -------------------
                                                         Annualized            Annualized             Annualized          Annualized
                                                          Weighted              Weighted               Weighted             Weighted
                                                Carrying   Average    Carrying   Average   Carrying     Average   Carrying   Average
                                                 Value     Yield       Value     Yield      Value       Yield      Value     Yield
                                                -------- ----------   --------  --------   ---------  ----------  --------  --------
                                                                                     (Dollars in Thousands)
<S>                                              <C>         <C>      <C>         <C>     <C>            <C>     <C>         <C>
Investment Securities Available for Sale:
Debt investment securities:
   U.S. Agency securities .....................  $    250    6.662%   $ 1,000     6.399%  $   8,377      6.945%  $     19    11.376%
   U.S. Government securities .................        --       --         --        --          19     10.902         --        --
   State and municipal obligations ............       380    6.488      3,262     5.557       1,502      5.612      1,261     5.009
   Corporate debt issues ......................       750    6.093      4,583     7.343      10,444      6.779      7,121     6.954
                                                 --------    -----    -------     -----   ---------      -----   --------    ------
       Total ..................................  $  1,380    6.297%   $ 8,845     6.578%  $  20,343      6.765%  $  8,402     6.672%
                                                 ========    =====    =======     =====   =========      =====   ========     =====
Equity and mortgage-backed securities:
   Mutual funds ...............................  $  2,861     .488%   $    --       --%   $      --        --%   $     --       --%
   Mortgage-backed securities .................        23    6.779      8,550     8.487       5,074      6.682     14,300     6.803
   Common stock ...............................     2,340    7.210         --        --          --         --         --        --
                                                 --------    -----    -------     -----   ---------      -----   --------    ------
       Total ..................................  $  5,224    3,527%   $ 8,550     8.487%  $   5,074      6.682%  $ 14,300     6.803
                                                 ========    =====    =======     =====   =========      =====   ========     =====

       Total investment securities ............  $  6,604    4.106%    $8,853     7.516%  $  25,417      6.749%  $ 22,703     6.755%
                                                 ========    =====     ======     =====   =========      =====   ========     =====

Unrealized gain on available for sale portfolio
       Total carrying value ...................

Investment securities held to maturity:(1)
   Corporate debt obligations .................  $     --      --%    $    --       --%   $      --        --%   $    129     6.657%
                                                 --------    -----    -------     -----   ---------      -----   --------    ------
     Total securities .........................  $     --      --%    $    --       --%   $      --        --%   $    129     6.657%
                                                 ========    =====    =======     =====   =========      =====   ========    ======

<CAPTION>
                                                   -----------------------------------
                                                       Total Investment Securities
                                                   -----------------------------------
                                                                            Annualized
                                                                              Weighted
                                                   Carrying       Market       Average
                                                     Value        Value        Yield
                                                   ----------   ----------  -----------
                                                          (Dollars in Thousands)
<S>                                                 <C>         <C>             <C>
Investment Securities Available for Sale:
Debt investment securities:
   U.S. Agency securities .....................     $   9,647   $    9,613      6.890%
   U.S. Government securities .................            19           18     10.902
   State and municipal obligations ............         6,405        6,622      5.527
   Corporate debt issues ......................        22,898       20,946      6.689
                                                    ---------   ----------      -----
       Total ..................................     $  38,970   $   37,199      6.549%
                                                    =========   ==========      =====
Equity and mortgage-backed securities:
   Mutual funds ...............................     $   2,861   $    2,861       .488%
   Mortgage-backed securities .................        19,406       19,511      6.789
   Common stock ...............................         2,340        2,340      7.210
                                                    ---------   ----------      -----
       Total ..................................     $  24,607   $   24,712      6.091%
                                                    =========   ==========      =====
       Total investment securities ............     $  63,577   $   61,912      6.358%
                                                    =========   ==========      =====
Unrealized gain on available for sale portfolio           52
                                                    ---------
       Total carrying value ...................     $ 63,629    $   61,912      6.353%
                                                    =========   ==========      =====
Investment securities held to maturity:(1)
   Corporate debt obligations .................     $     129   $      129      6.657%
                                                    ---------   ----------      -----
     Total securities .........................     $  63,758   $   62,040      6.354%
                                                    =========   ==========      =====
</TABLE>

------------------------------------

(1)   The information is included as a component of debt investment securities.


                                       16
<PAGE>

Sources of Funds

      General. Deposits are the primary source of the Bank's funds for lending
and other investment purposes. In addition to deposits, the Bank derives funds
from the amortization and prepayment of loans and mortgage-backed securities,
the maturity of investment securities and operations and from other borrowings.
Scheduled loan principal repayments are a relatively stable source of funds,
while deposit inflows and outflows and loan prepayments are influenced
significantly by general interest rates and market conditions. Borrowings may be
used on a short-term basis to compensate for reductions in the availability of
funds from other sources or on a longer term basis for general business
purposes.

      Deposits. Consumer and commercial deposits are attracted principally from
within the Bank's market area through the offering of a broad selection of
deposit instruments including noninterest-bearing demand accounts, NOW accounts,
passbook and club accounts, money market deposit, term certificate accounts and
individual retirement accounts. While the Bank accepts deposits of $100,000 or
more, it generally does not currently offer premium rates for such deposits.
Deposit account terms vary according to the minimum balance required, the period
of time during which the funds must remain on deposit, and the interest rate,
among other factors. The Bank has a committee which meets weekly to evaluate the
Bank's internal cost of funds, surveys rates offered by competing institutions,
reviews the Bank's cash flow requirements for lending and liquidity and the
number of certificates of deposit maturing in the upcoming week. This committee
executes rate changes when deemed appropriate. The Bank does not obtain funds
through brokers, nor does it solicit funds outside its market area.

      Deposit Portfolio. The following table sets forth information regarding
interest rates, terms, minimum amounts and balances of the Bank's savings and
other deposits as of December 31, 2000:

<TABLE>
<CAPTION>
     Weighted                                                                                                    Percentage
      Average                                                                  Minimum                            of Total
   Interest Rate     Minimum Term      Checking and Savings Deposits           Amount           Balances          Deposits
   -------------     ------------      -----------------------------           -------          --------         ----------
                                                                                             (In Thousands)

<S>                  <C>                    <C>                               <C>               <C>                    <C>
          0.000%     None                   Non-interest demand account       $      50         $     9,896              6.17%
          1.606      None                   NOW accounts                            500              15,511              9.67
          2.174      None                   Savings Accounts - Fixed Rate           100              41,711             26.01
          3.589      None                   Savings Account- Tiered Rate            100              16,121             10.05
          3.312      None                   Money market accounts                 2,500                 126              0.08

                                            Certificates of Deposit
                                            -----------------------
          6.559      6 months               Fixed term, fixed rate                2,500              11,743              7.32
          6.427      12 months              Fixed term, fixed rate                1,000              25,891             16.15
          6.430      15 months              Fixed term, fixed rate                1,000               4,331              2.70
          6.247      18 months              Fixed term, variable rate             1,000               1,388              0.87
          6.263      18 months              Fixed term, fixed rate                1,000               4,573              2.85
          6.013      24 months              Fixed term, fixed rate                1,000               5,578              3.48
          5.776      30 months              Fixed term, fixed rate                1,000               3,072              1.92
          6.485      36 months              Fixed term, fixed rate (1)            1,000               7,111              4.43
          6.334      48 months              Fixed term, fixed rate (1)            1,000               4,292              2.68
          6.294      60 months              Fixed term, fixed rate                1,000               1,929              1.20
          6.538      84 months              Fixed term, fixed rate                1,000               7,086              4.42
          2.995      60 through 120 months  Fixed term, fixed rate                1,000                   5              0.00
                                                                                                -----------            ------
                     TOTAL                                                                      $   160,364 (2)        100.00%
                                                                                                ===========            ======
</TABLE>

------------------------------------
(1)   This deposit product allows the depositor to elect to adjust the interest
      rate paid once during the initial term of the deposit to the then
      prevailing rate.
(2)   Tables excludes escrow accounts totalling $1,095,000 at December 31, 2000.


                                       17
<PAGE>

      The following table sets forth the change in dollar amount of savings
deposits in the various types of savings accounts offered by the Bank between
the dates indicated.

<TABLE>
<CAPTION>
                                 Balance   Percent            Balance    Percent             Balance   Percent             Balance
                                   at        of      Incr.      at          of      Incr.       at        of       Incr.      at
                                12/31/00  Deposits  (Decr)   12/31/99    Deposits  (Decr)    12/31/98  Deposits   (Decr)   12/31/97
                                --------  --------  ------   --------    --------  ------    --------  --------  --------  --------
                                                                             (In Thousands)
<S>                             <C>         <C>        <C>    <C>           <C>    <C>       <C>          <C>   <C>        <C>
Club accounts ...............   $    958    0.60%      (44)   $  1,002      0.66%  $    94   $    908     0.57% $    115   $    792

Noninterest accounts ........      9,896    6.17       150       9,746      6.43       273      9,473     5.94     1,829      7,644
NOW accounts ................     15,511    9.67%    1,515      13,996      9.24    (2,331)    16,327    10.23     3,021     13,306
Passbooks ...................     56,874   35.47    (1,555)     58,429     38.56    (4,893)    63,322    39.70       177     63,145
Money market deposit accounts        126    0.08      (292)        418      0.28       343         75     0.05       (38)       113
Time deposits which mature:
  Within 12 months ..........     51,650   32.21     5,980      45,670     30.14    (6,059)    51,729    32.43    12,869     38,860
  Within 12-36 months .......     18,270   11.39     2,080      16,190     10.68     2,799     13,391     8.40    (9,220)    22,611
  Beyond 36 months ..........      7,079    4.41       994       6,085      4.02     1,801      4,284     2.68     1,303      5,588
                                --------   -----  --------    --------    ------  --------   --------   ------  --------   --------
    Total ...................   $160,364   100.0% $  8,828    $151,536    100.00% $ (7,973)  $159,509   100.00% $  7,450   $152,059
                                ========   =====  ========    ========    ======  ========   ========   ======  ========   ========

<CAPTION>
                                    Percent              Balance
                                       of        Incr.      at
                                    Deposits    (Decr)   12/31/96
                                    --------   --------  --------
                                             (In Thousands)
<S>                                   <C>    <C>         <C>
Club accounts ...............         0.52%  $    131    $    661

Noninterest accounts ........         5.03        303       7,341
NOW accounts ................         8.75        224      13,082
Passbooks ...................        41.53     (1,828)     64,973
Money market deposit accounts         0.07        (61)        174
Time deposits which mature:
  Within 12 months ..........        25.56    (14,075)     52,935
  Within 12-36 months .......        14.87      7,679      14,933
  Beyond 36 months ..........         3.67        990       4,598
                                    ------   --------    --------
    Total ...................       100.00%  $ (6,637)   $158,697
                                    ======   ========    ========
</TABLE>

(1)   Excludes escrow accounts totalling $1,095,000 of December 31, 2000.


                                       18
<PAGE>

      The following table sets forth the certificates of deposit in the Bank
classified by rates as of the dates indicated:

<TABLE>
<CAPTION>
                                                                                  At December 31,
                                                                 ---------------------------------------------
                                                                    2000              1999              1998
                                                                 ---------         ---------         ---------
                                                                                   (In Thousands)
<S>                                                              <C>               <C>               <C>
Rate

3.00% or less.................................................   $       6         $      46         $       8
3.01 - 3.99%..................................................          14                20                94
4.00 - 4.99%..................................................       1,133            20,410            10,730
5.00 -5.99%...................................................      20,353            43,059            48,888
6.00 -6.99%...................................................      54,324             3,643             5,033
7.00 -7.99%...................................................       1,169               767             4,532
8..00 + above.................................................          --                --               119
                                                                 ---------         ---------         ---------
                                                                 $  76,999         $  67,945         $  69,404
                                                                 =========         =========         =========
</TABLE>

      The following table sets forth the amount and maturities of certificates
of deposit at December 31, 2000.

<TABLE>
<CAPTION>
                                                                 Amount Due
                     --------------------------------------------------------------------------------------------------
                     Less Than        1-2             2-3           3-4            4-5          After 5
                      One Year        Years          Years          Years          Years          Years          Total
                     ---------       -------        -------        -------        -------        -------        -------
<S>                   <C>            <C>            <C>            <C>            <C>            <C>            <C>
Rate                                                           (In Thousands)
3.00% or less         $     6        $    --        $    --        $    --        $    --        $    --        $     6
3.01 - 3.99% .              7              7             --             --             --             --             14
4.00 - 4.99% .            915            124             94             --             --             --          1,133
5.00 - 5.99% .         11,722          4,951          1,257          1,006            538            879         20,353
6.00 - 6.99% .         36,453          8,350          4,653          1,624            685          2,559         54,324
7.00 and above             --            944            142             83             --             --          1,169
                      -------        -------        -------        -------        -------        -------        -------
                      $49,103        $14,376        $ 6,146        $ 2,713        $ 1,223        $ 3,438        $76,999
                      =======        =======        =======        =======        =======        =======        =======
</TABLE>

      The following table indicates the amount of the Bank's certificates of
deposit of $100,000 or more by time remaining until maturity as of December 31,
2000.

<TABLE>
<CAPTION>
                                                                                                     Certificates
                                                                                                      of Deposit
                                                                                                      of $100,000
                     Remaining Maturity                                                                 or More
                     ------------------                                                             --------------
                                                                                                    (In Thousands)
<S>                                                                                                    <C>
                     Three months or less....................................................          $   6,098
                     Three through six months................................................              1,724
                     Six through twelve months...............................................              2,996
                     Over twelve months......................................................              3,111
                                                                                                       ----------
                         Total...............................................................          $   13,929
                                                                                                       ==========
</TABLE>

      The following table sets forth the net changes in the deposit activities
of the Bank for the periods indicated:

<TABLE>
<CAPTION>
                                                          At December 31,
                                           --------------------------------------------
                                              2000             1999              1998
                                           ---------        ---------         ---------
                                                          (In Thousands)
<S>                                        <C>              <C>               <C>
Balance at beginning of period ....        $ 151,536        $ 159,509         $ 152,059
Net deposits (withdrawals) ........            2,975          (13,322)            1,367
Interest credited .................            5,853            5,349             6,083
                                           =========        =========         =========
Ending balance ....................        $ 160,364          151,536           159,509
                                           =========        =========         =========
Net increase (decrease) in deposits        $   8,828        $  (7,973)        $   7,450
                                           =========        =========         =========
</TABLE>

Borrowings

      Savings deposits are the primary source of funds of the Bank's lending and
investment activities and for its general business purposes. At December 31,
2000, the Bank had $6.4 million in funds obtained from repurchase


                                       19
<PAGE>

agreements outstanding and $35.2 million in term advances. The Bank is a member
of the Federal Home Loan Bank System.

      The following table summarizes the outstanding balance of short-term
borrowing of the Bank for the years indicated.

<TABLE>
<CAPTION>
                                                          At December 31,
                                             ---------------------------------------
                                               2000            1999            1998
                                             -------         -------         -------
                                                         (In thousands)
<S>                                          <C>             <C>             <C>
Overnight Line of Credit ............        $ 5,600         $ 4,350         $    --
Term borrowings (original term)
   90 days or less ..................         16,407           9,612           1,587
   1 year ...........................         11,000          10,995           8,404
   2 year ...........................          3,000           2,700           1,000
                                             -------         -------         -------
      Balance at end of period ......        $36,007         $27,657         $10,991
                                             =======         =======         =======

Daily average during the year .......         32,911          18,148          15,077
Maximum month-end balance ...........         40,388          27,657          18,691
Weighted average rate during the year           6.29%           5.42%           5.64%
Year-end average rate ...............           6.50%           5.06%           5.32%
</TABLE>

Personnel

      As of December 31, 2000, the Bank had 75 full-time and 16 part-time
employees. None of the Bank's employees is represented by a collective
bargaining group. The Bank believes its relationship with its employees to be
good.

REGULATION AND SUPERVISION

General

      The Bank is a New York State chartered stock savings bank and its deposit
accounts are insured up to applicable limits by the FDIC. The Bank is subject to
extensive regulation by the State of New York Banking Department (the
"Department") as its chartering agency, and by the FDIC, as the deposit insurer.
The Bank must file reports with the Department and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering into certain transactions such as establishing
branches and mergers with, or acquisitions of, other depository institutions.
There are periodic examinations by the Department and the FDIC to assess the
Bank's compliance with various regulatory requirements. This regulation and
supervision establishes a comprehensive framework of activities in which a
savings bank may engage, and is intended primarily for the protection of the
insurance fund and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulation, whether by
the Department, the FDIC or through legislation, could have a material adverse
impact on the Holding Company, the Bank, and their operations and stockholders.
The Company is also required to file certain reports with, and otherwise comply
with the rules and regulations of, the FRB and the Department and the FDIC which
administers the provisions of the Securities Exchange Act of 1934. Certain of
the regulatory requirements applicable to the Bank and to the Company are
referred to below or elsewhere herein.

      The exercise by an FDIC-insured savings bank of the lending and investment
powers of a savings bank under the New York State Banking Law is limited by FDIC
regulations and other federal law and regulations. In particular, the applicable
provisions of New York State Banking Law and regulations governing the
investment authority and activities of an FDIC insured state-chartered savings
bank have been substantially limited by the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and the FDIC regulations issued
pursuant thereto.


                                       20
<PAGE>

      The Bank derives its lending, investment and other authority primarily
from the applicable provisions of New York State Banking Law and the regulations
of the Banking Department, as limited by FDIC regulations. Under these laws and
regulations, savings banks, including the Bank, may invest in real estate
mortgages, consumer and commercial loans, certain types of debt securities,
including certain corporate debt securities and obligations of federal, state
and local governments and agencies, certain types of corporate equity securities
and certain other assets. Under the statutory authority for investing in equity
securities, a savings bank may invest up to 7.5% of its assets in corporate
stock, with an overall limit of 5% of its assets invested in common stock.
Investment in the stock of a single corporation is limited to the lesser of 2%
of the outstanding stock of such corporation or 1% of the savings bank's assets,
except as set forth below. Such equity securities must meet certain earnings
ratios and other tests of financial performance. A savings bank's lending powers
are not subject to percentage of assets limitations, although there are limits
applicable to single borrowers. A savings bank may also, pursuant to the
"leeway" power, make investments not otherwise permitted under the New York
State Banking Law. This power permits investments in otherwise impermissible
investments of up to 1% of assets in any single investment, subject to certain
restrictions and to an aggregate limit for all such investments of up to 5% of
assets. Additionally, in lieu of investing in such securities in accordance with
and reliance upon the specific investment authority set forth in the New York
State Banking Law, savings banks are authorized to elect to invest under a
"prudent person" standard in a wider range of debt and equity securities as
compared to the types of investments permissible under such specific investment
authority. However, in the event a savings bank elects to utilize the "prudent
person" standard, it will be unable to avail itself of the other provisions of
the New York State Banking Law and regulations which set forth specific
investment authority. The Bank has not elected to conduct its investment
activities under the "prudent person" standard. A savings bank may also exercise
trust powers upon approval of the Department.

      New York State chartered savings banks may also invest in subsidiaries
under their service corporation investment authority. A savings bank may use
this power to invest in corporations that engage in various activities
authorized for savings banks, plus any additional activities which may be
authorized by the Banking Department. Investment by a savings bank in the stock,
capital notes and debentures of its service corporations is limited to 3% of the
bank's assets, and such investments, together with the bank's loans to its
service corporations, may not exceed 10% of the savings bank's assets.
Furthermore, New York banking regulations impose requirements on loans which a
bank may make to its executive officers and directors and to certain
corporations or partnerships in which such persons have equity interests. These
requirements include, but are not limited to, requirements that (i) certain
loans must be approved in advance by a majority of the entire board of directors
and the interested party must abstain from participating directly or indirectly
in the voting on such loan, (ii) the loan must be on terms that are not more
favorable than those offered to unaffiliated third parties, and (iii) the loan
must not involve more than a normal risk of repayment or present other
unfavorable features.

      Under the New York State Banking Law, the Superintendent of Banks (the
"Superintendent") may issue an order to a New York State chartered banking
institution to appear and explain an apparent violation of law, to discontinue
unauthorized or unsafe practices and to keep prescribed books and accounts. Upon
a finding by the Department that any director, trustee or officer of any banking
organization has violated any law, or has continued unauthorized or unsafe
practices in conducting the business of the banking organization after having
been notified by the Superintendent to discontinue such practices, such
director, trustee or officer may be removed from office after notice and an
opportunity to be heard. The Bank does not know of any past or current practice,
condition or violation that might lead to any proceeding by the Superintendent
or the Department against the Bank or any of its directors or officers.

      Standards for Safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe regulatory standards for all insured depository
institutions and depository institution holding companies relating to: (i)
internal controls, information systems and audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) interest rate risk exposure; (v)
asset growth; and (vi) compensation, fees and benefits. The compensation
standards would prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that provide excessive compensation, fees or benefits or could lead
to material financial loss. In addition the federal banking regulatory agencies
are required to prescribe by regulation standards specifying:


                                       21
<PAGE>

(i) maximum classified assets to capital ratios; (ii) minimum earnings
sufficient to absorb losses without impairing capital; and (iii) to the extent
feasible, a minimum ratio of market value to book value for publicly traded
shares of depository institutions and depository institution holding companies.
In November 1993, the federal banking agencies, including the FDIC, proposed
regulations regarding the implementation of these standards.

      Other Deposit Insurance Reforms. FDICIA amended the FDI Act to prohibit
insured depository institutions that are not well-capitalized from accepting
brokered deposits unless a waiver has been obtained from the FDIC. Deposit
brokers are required to register with the FDIC.

      Consumer Protection Provisions. FDICIA enacted consumer oriented
provisions including a requirement of notice to regulators and customers for any
proposed branch closing and provisions intended to encourage the offering of
"lifeline" banking accounts and lending in distressed communities. FDICIA also
requires depository institutions to make additional disclosures to depositors
with respect to the rate of interest and the terms of their deposit accounts.

      Uniform Lending Standard. Under FDICIA, the federal banking agencies are
required to adopt uniform regulations prescribing standards for extensions of
credit that are secured by liens on interests in real estate or made for the
purpose of financing the construction of a building or other improvements to
real estate. Insured depository institutions must adopt and maintain written
policies that establish appropriate limits and standards for extensions of
credit that are secured by liens or interests in real estate or are made for the
purpose of financing permanent improvements to real estate. These policies must
establish loan portfolio diversification standards, prudent underwriting
standards (including loan-to-value limits) that are clear and measurable, loan
administration procedures, and documentation, approval and reporting
requirements. The real estate lending policies must reflect consideration of the
Interagency Guidelines for Real Estate Lending Policies (the "Interagency
Guidelines") that have been adopted by the federal banking regulators.

      The Interagency Guidelines, among other things, require depository
institutions to establish internal loan-to-value limits for real estate loans
that are not in excess of the following supervisory limits: (i) for loans
secured by undeveloped land, the supervisory loan-to-value limit is 65% of the
value of the collateral; (ii) for land development loans, the supervisory limit
is 75%; (iii) for loans for the construction of commercial, multi-family or
other nonresidential property, the supervisory limit is 80%; (iv) for loans for
the construction of one- to four- family properties, the supervisory limit is
85%; and (v) for loans secured by other improved property (e.g. farmland,
commercial property and other income-producing property including
non-owner-occupied, one- to four- family property) the supervisory limit is 85%.

      The Interagency Guidelines indicate that on a case-by-case basis it may be
appropriate to originate or purchase loans with loan-to-value ratios in excess
of the supervisory loan-to-value limits, based on the support provided by other
credit factors. The aggregate amount of loans in excess of the supervisory
loan-to-value limits, however, should not exceed 100% of total capital and the
total of such loans secured by commercial, agricultural, multi-family and other
non-one- to four- family residential properties should not exceed 30% of total
capital.

      The supervisory loan-to-value limits do not apply to certain categories of
loans including loans insured or guaranteed by the United States Government and
its agencies or by financially capable state, local or municipal governments or
agencies, loans backed by the full faith and credit of state governments, loans
that are to be sold promptly after origination without recourse to a financially
responsible party, loans that are renewed, refinanced or restructured in
connection with a workout, loans to facilitate sales of real estate acquired by
the institution in the ordinary course of collecting a debt previously
contracted and loans where the real estate is not the primary collateral.

Insurance of Deposit Accounts

      The Bank is a member of the Bank Insurance Fund ("BIF"). The BIF has
achieved the required reserve ratio of 1.25% of insured reserve deposits. At
December 31, 2000 the Bank held $25.3 million in deposits which are insured


                                       22
<PAGE>

by the Savings Association Insurance Fund. The Bank paid $32,000 in federal
deposit insurance premiums for the fiscal year ended December 31, 2000, as
compared to $31,000 in 1999.

      Under the FDI Act, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC. The
management of the Bank does not know of any practice, condition or violation
that might lead to termination of deposit insurance. At December 31, 2000, the
Bank's capital exceeded the capital requirements imposed by the FDIC.

Capital Maintenance

      The FDIC has issued regulations that require BIF-insured banks, such as
the Bank, to maintain minimum levels of capital. The regulations establish a
minimum leverage capital ratio requirement of not less than 3.0% for banks in
the strongest financial and managerial condition, with a CAMEL Rating of 1 (the
highest examination rating of the FDIC for banks). For all other banks, the
minimum leverage capital requirement is 3% plus additional capital of at least
100 to 200 basis points. Core capital (also referred to as "Tier 1 capital") is
comprised of the sum of common stockholders' equity, non-cumulative perpetual
preferred stock (including any related surplus) and minority interests in
consolidated subsidiaries, minus all intangible assets (other than qualifying
servicing rights).

      The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard requires the maintenance of total
capital (which is defined as core capital and supplementary capital) to
risk-weighted assets of at least 8% and core capital to risk-weighted assets of
at least 4%. In determining the amount of risk-weighted assets, all assets, plus
certain off-balance sheet items, are multiplied by a risk-weight of 0% to 100%,
based on the risks the FDIC believes are inherent in the type of asset or
off-balance sheet item. The components of core capital are equivalent to those
discussed above under the leverage capital ratio requirement. The components of
supplementary capital currently include cumulative perpetual preferred stock,
perpetual preferred stock, mandatory convertible securities, subordinated debt,
intermediate preferred stock and allowance for possible loan and lease losses.
Allowance for possible loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.

Loans-to-One-Borrower Limitations

      With certain limited exceptions, a New York State chartered savings bank
may not make unsecured loans or extend credit for commercial, corporate or
business purposes (including lease financing) to a single borrower, the
aggregate amount of which would be in excess of 15% of the bank's net worth. In
addition, the Bank may make secured loans or extensions of credit to a single
borrower which aggregate 25% of the Bank's net worth provided that the
underlying collateral is valued in an amount equal to at least 10% of the Bank's
net worth. The Bank currently complies with all applicable loans-to-one-borrower
limitations.

Community Reinvestment Act

      Federal Regulation. Under the Community Reinvestment Act ("CRA"), as
implemented by FDIC regulations, a savings institution has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the FDIC, in connection with its examination of a savings institution,
to assess the institution's record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications
by such institution. The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 ("FIRREA") amended the CRA to require, effective July 1, 1990,
public disclosure of an institution's CRA rating and require the FDIC to provide
a written evaluation of an institution's CRA performance utilizing a four-tiered
descriptive rating system which replaced the five-tiered numerical rating
system.


                                       23
<PAGE>

      New York State Regulation. The Bank is also subject to provisions of the
New York State Banking Law which impose continuing and affirmative obligations
upon banking institutions organized in New York State to serve the credit needs
of its local community ("NYCRA") which are substantially similar to those
imposed by the CRA. Pursuant to the NYCRA, a bank must file an annual NYCRA
report and copies of all federal CRA reports with the Banking Department. The
NYCRA requires the Banking Department to make an annual written assessment of a
bank's compliance with the NYCRA, utilizing a four-tiered rating system, and
make such assessment available to the public. The NYCRA also requires the
Superintendent to consider a bank's NYCRA rating when reviewing a bank's
application to engage in certain transactions, including mergers, asset
purchases and the establishment of branch offices or automated teller machines,
and provides that such assessment may serve as a basis for the denial of any
such application. At December 31, 2000, the Bank complied with its NYCRA
requirements.

      The Bank's CRA rating as of its latest examination was satisfactory.

Federal Reserve System

      Under Federal Reserve Board regulations, the Bank is required to maintain
noninterest-earning reserves against its transaction accounts (primarily NOW and
regular checking accounts). At December 31, 2000, the Bank complied with these
requirements.

Holding Company Regulation

      The Company is a registered bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "BHCA"). The Company is subject to
examination, regulation and periodic reporting under the BHCA, as administered
by the FRB. The FRB has adopted capital adequacy guidelines for bank holding
companies (on a consolidated basis) substantially similar to those of the FDIC
for the Bank. The Company's consolidated capital exceeds these requirements.

      A bank holding company is generally prohibited from engaging in, or
acquiring direct or indirect control of any company engaged in, non-banking
activities. One of the principal exceptions to this prohibition is for
activities found by the FRB to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Some of the principal
activities that the FRB has determined by regulation to be so closely related to
banking are: (i) making or servicing loans; (ii) performing certain data
processing services: (iii) providing securities brokerage services; (iv) acting
as fiduciary, investment or financial advisor; (v) leasing personal or real
property; (vi) making investments in corporations or projects designed primarily
to promote community welfare; and (vii) acquiring a savings and loan
association.

      Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the FRA on any extension of credit to the bank holding
company or its subsidiaries, and on the acceptance of stocks or securities of
such holding company or its subsidiaries as collateral, and on the acceptance of
such stocks or securities as collateral for loans. In addition, related
provisions of the FRA and FRB regulations limit the amount of, and establish
required procedures and credit standards with respect to, loans and other
extensions of credit to officers, directors and principal stockholders of the
Bank, the Company, any subsidiary of the Company and related interests of such
persons. Moreover, subsidiaries of bank holding companies are prohibited from
engaging in certain tie-in arrangements (with the Company or any of its
subsidiaries) in connection with any extension of credit, lease or sale of
property or furnishing of services.

      The Company and the Bank will be affected by the monetary and fiscal
policies of various agencies of the United States Government, including the
Federal Reserve System. In view of changing conditions in the national economy
and in the money markets, it is impossible for management of the Company to
accurately predict future changes in monetary policy or the effect of such
changes on the business or financial condition of the Company.


                                       24
<PAGE>

      New York State Bank Holding Company Regulation. In addition to the federal
bank holding company regulations, a bank holding company organized or doing
business in New York State also may be subject to regulation under the New York
State Banking Law. The term "bank holding company," for the purposes of the New
York State Banking Law, is defined generally to include any person, company or
trust that directly or indirectly either controls the election of a majority of
the directors or owns, controls or holds with power to vote more than 10% of the
voting stock of a bank holding company or, if the Company is a banking
institution, another banking institution, or 10% or more of the voting stock of
each of two or more banking institutions. In general, a bank holding company
controlling, directly or indirectly, only one banking institution will not be
deemed to be a bank holding company for the purposes of the New York State
Banking Law. Under New York State Banking Law, the prior approval of the Banking
Department is required before: (1) any action is taken that causes any company
to become a bank holding company; (2) any action is taken that causes any
banking institution to become or be merged or consolidated with a subsidiary of
a bank holding company; (3) any bank holding company acquires direct or indirect
ownership or control of more than 5% of the voting stock of a banking
institution; (4) any bank holding company or subsidiary thereof acquires all or
substantially all of the assets of a banking institution; or (5) any action is
taken that causes any bank holding company to merge or consolidate with another
bank holding company. Additionally, certain restrictions apply to New York State
bank holding companies regarding the acquisition of banking institutions which
have been chartered five years or less and are located in smaller communities.
Officers, directors and employees of New York State bank holding companies are
subject to limitations regarding their affiliation with securities underwriting
or brokerage firms and other bank holding companies and limitations regarding
loans obtained from its subsidiaries. Although the Company will not be a bank
holding company for purposes of New York State law, any future acquisition of
ownership, control, or the power to vote 10% or more of the voting stock of
another bank or bank holding company would cause it to become such.

Gramm-Leach-Bliley Financial Services Modernization Act of 1999

      In November 1999, President Clinton signed into law the Gramm-Leach-Bliley
Financial Services Modernization Act of 1999, federal legislation intended to
modernize the financial services industry by establishing a comprehensive
framework to permit affiliations among commercial banks, insurance companies,
securities firms and other financial service providers. To the extent the
legislation permits banks, securities firms and insurance companies to
affiliate, the financial services industry may experience further consolidation.
This could result in a growing number of larger financial institutions that
offer a wider variety of financial services than the Bank currently offers and
that can aggressively compete in the markets the Bank currently serves.

FEDERAL AND STATE TAXATION

      Federal Taxation. The following discussion of federal taxation is intended
only to summarize certain pertinent federal income tax matters and is not a
comprehensive description of the tax rules applicable to the Company or the
Bank.

      Bad Debt Reserves. Prior to the 1996 Act, the Bank was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in arriving
at the Bank's taxable income. As a result of the 1996 Act, the Bank must use the
specific charge off method in computing its bad debt deduction beginning with
its 1996 Federal tax return. In addition, the federal legislation requires the
recapture (over a six year period) of the excess of tax bad debt reserves at
December 31, 1995 over those established as of December 31, 1987.

      Taxable Distributions and Recapture. Prior to the 1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable
income should the Bank fail to meet certain thrift asset and definitional tests.
New federal legislation eliminated these thrift related recapture rules.
However, under current law, pre-1988 reserves remain subject to recapture should
the Bank make certain non-dividend distributions.

      Minimum Tax. The Code imposes an alternative minimum tax ("AMT") at a rate
of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable


                                       25
<PAGE>

to the extent such AMTI is in excess of an exemption amount. Net operating
losses can offset no more than 90% of AMTI. Certain payments of alternative
minimum tax may be used as credits against regular tax liabilities in future
years.

      Net Operating Loss Carryovers. A financial institution may carry back net
operating losses to the preceding two taxable years and forward to the
succeeding 20 taxable years. This provision applies to losses incurred in
taxable years beginning after August 5, 1997.

      The Internal Revenue Service has examined the federal income tax return
for the fiscal year ended 1992; the fiscal year-end tax returns for 1997 through
1999. See Note 12 to the Financial Statements.

State Taxation

      New York Taxation. The Bank is subject to the New York State Franchise Tax
on Banking Corporations in an annual amount equal to the greater of (i) 9% of
the Bank's "entire net income" allocable to New York State during the taxable
year, or (ii) the applicable alternative minimum tax. The alternative minimum
tax is generally the greater of (a) 0.01% of the value of the Bank's assets
allocable to New York State with certain modifications, (b) 3% of the Bank's
"alternative entire net income" allocable to New York State, or (c) $250. Entire
net income is similar to federal taxable income, subject to certain
modifications (including the fact that net operating losses cannot be carried
back or carried forward) and alternative entire net income is equal to entire
net income without certain modifications.

      Delaware State Taxation. As a Delaware holding company not earning income
in Delaware, the Company is exempt from Delaware corporate income tax but is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware.

ITEM 2. Properties

      The Bank conducts its business through its main office located in Oswego,
New York, and four full service branch offices located in Oswego County. The
following table sets forth certain information concerning the main office and
each branch office of the Bank at December 31, 2000. The aggregate net book
value of the Bank's premises and equipment was $4.6 million at December 31,
2000. For additional information regarding the Bank's properties, see Note 5 to
Notes to Financial Statements.

<TABLE>
<CAPTION>
LOCATION                                OPENING DATE            OWNED/LEASED          ANNUAL RENT

<S>                                            <C>                 <C>                    <C>
Main Office                                    1874                Owned                  --

214 West First Street
Oswego, New York  13126

Plaza Branch                                   1989                Owned (1)              --

Route 104, Ames Plaza
Oswego, New York  13126

Mexico Branch                                  1978                Owned                  --

Norman & Main Streets
Mexico, New York  13114

Oswego East Branch                             1994                Owned                  --

34 East Bridge Street
Oswego, New York  13126

Fulton Branch                                  1994                Owned                  --

114 Oneida Street
Fulton, New York  13068
</TABLE>

------------------------------------
(1)   The property is owned; the underlying land is leased.


                                       26
<PAGE>

ITEM 3. Legal Proceedings

      There are various claims and lawsuits to which the Company is periodically
involved incident to the Company's business. In the opinion of management, such
claims and lawsuits in the aggregate are immaterial to the Company's
consolidated financial condition and results of operations.

ITEM 4. Submission of Matters to a Vote of Security Holders

      No matters were submitted to a vote of stockholders during the fourth
quarter of the year under report.

                                     PART II

ITEM 5. Market for Company's Common Stock and Related Security Holder Matters

      The "Market for Common Stock" section of the Company's Annual Report to
Stockholders is incorporated herein by reference.

ITEM 6. Selected Financial Data

      The selected financial information for the year ended December 31, 2000 is
filed as part of the Company's Annual Report to Stockholders and is incorporated
by reference.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

      The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section of the Company's Annual Report to Stockholders is
incorporated herein by reference.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

      The information required by this item is set forth under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report to Stockholders which is incorporated herein by
reference.

ITEM 8. Financial Statements and Supplementary Data

      The financial statements are contained in the Company's Annual Report to
Stockholders and are incorporated herein by reference.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

      None.


                                       27
<PAGE>

                                    PART III

ITEM 10. Directors and Executive Officers of the Company

      (a) Information concerning the directors of the Company is incorporated by
reference hereunder in the Company's Proxy Materials for the Annual Meeting of
Stockholders.

      (b) Set forth below is information concerning the Principal Officers of
the Company at December 31, 2000.

<TABLE>
<CAPTION>
       Name                        Age                  Positions Held With the Company
-----------------------            ---         ---------------------------------------------------------------
<S>                                <C>         <C>
Chris C. Gagas                     70          Chairman of the Board

Thomas W. Schneider(1)             39          President and Chief Executive Officer

W. David Schermerhorn              40          Executive Vice President-Lending

James A. Dowd, CPA                 33          Vice President--Treasurer

Melissa A. Miller                  43          Vice President, Secretary

Gregory L. Mills                   40          Vice President, Director of Marketing, Branch Administrator

Anita J. Austin                    51          Internal Auditor
</TABLE>

-------------------
(1)   Effective January 15, 2000, Mr. Schneider was named President and Chief
      Executive Officer of the Company.

ITEM 11. Executive Compensation

      Information with respect to management compensation and transactions
required under this item is incorporated by reference hereunder in the Company's
Proxy Materials for the Annual Meeting of Stockholders under the caption
"Compensation".

ITEM 12. Security Ownership of Certain Beneficial Owners and Management

      The information contained under the sections captioned "Stock Ownership of
Management" is incorporated by reference to the Company's Proxy Materials for
its Annual Meeting of Stockholders.

ITEM 13. Certain Relationships and Related Transactions

      The information required by this item is set forth under the caption
"Certain Transactions" in the Definitive Proxy Materials for the Annual Meeting
of Stockholders and is incorporated herein by reference.


                                       28
<PAGE>

                                     PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

      (a)(1) Financial Statements

The exhibits and financial statement schedules filed as a part of this Form 10-K
are as follows:

            (A)   Independent Auditors' Report;

            (B)   Consolidated Statements of Condition - December 31, 2000 and
                  1999.

            (C)   Consolidated Statements of Income - years ended December 31,
                  2000, 1999 and 1998.

            (D)   Consolidated Statements of Stockholders' Equity - years ended
                  December 31, 2000, 1999 and 1998.

            (F)   Consolidated Statements of Cash Flows - years ended December
                  31, 2000, 1999 and 1998; and

            (G)   Notes to Consolidated Financial Statements.

      (a)(2) Financial Statement Schedules

      All financial statement schedules have been omitted as the required
information is inapplicable or has been included in the Notes to Consolidated
Financial Statements.

      (b)   Reports on Form 8-K

      The Company has not filed a Current Report on Form 8-K during the fourth
quarter of the fiscal year ended December 31, 2000.

      (c)   Exhibits

      3.1         Certificate of Incorporation of Pathfinder Bancorp, Inc.
                  Incorporated herein by reference to the Company's
                  Registration Statement on S-4, file no. 333-36051 (the
                  "S-4")

      3.2         Bylaws of Pathfinder Bancorp, Inc. (Incorporated herein
                  by reference to the Company's S-4

      4           Form of Stock Certificate of Pathfinder Bancorp, Inc.

      10.1        Form of Pathfinder Bank 2000 Stock Option Plan
                  Incorporated by reference to the Company's S-4

      10.2        Form of Pathfinder Bank 2000 Recognition and Retention
                  Plan Incorporated by reference to the Company's S-4


                                       29
<PAGE>

      10.3        Employment Agreement between the Bank and Thomas W.
                  Schneider, President and Chief Executive Officer
                  Incorporated by reference to the Company's S-4

      10.4        Employment Agreement between the Bank and W. David
                  Schermerhorn, Executive Vice President - Loan
                  Administration Incorporated by reference to the
                  Company's S-4

      13          Annual Report to Stockholders

      21          Subsidiaries of Company


                                       30
<PAGE>

                                   Signatures

      Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                     Pathfinder Bancorp, Inc.


Date: March 21, 2001                 By: /S/ Thomas W. Schneider
                                         --------------------------------------
                                         Thomas W. Schneider
                                         President and Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


                                     By: /S/ Chris C. Gagas
                                         --------------------------------------
                                         Chris C. Gagas, Chairman of the Board

                                     Date: March 21, 2001

<TABLE>
<S>                                                   <C>
By: /S/ Thomas W. Schneider                           By: /S/ Chris R. Burritt
    ----------------------------------------              --------------------------------
    Thomas W. Schneider, President and Chief              Chris R. Burritt, Director
    Executive Officer

Date: March 21, 2001                                  Date: March 21, 2001


By: /S/ James A. Dowd                                 By: /S/ Raymond W. Jung
    ----------------------------------------              --------------------------------
    James A. Dowd, Vice President and Treasurer           Raymond W. Jung, Director
    (Principal Accounting Officer)

Date: March 21, 2001                                  Date: March 21, 2001


By: /S/ Bruce E. Manwaring                            By: /S/ George P. Joyce
    ----------------------------------------              --------------------------------
    Bruce E. Manwaring., Director                         George P. Joyce,  Director

Date: March 21, 2001                                  Date: March 21, 2001


By: /S/ L. William Nelson, Jr.                        By: /S/ Corte J. Spencer
    ----------------------------------------              --------------------------------
    L. William Nelson, Jr., Director                      Corte J. Spencer, Director

Date: March 21, 2001                                  Date: March 21, 2001


By:   /S/ Steven W. Thomas
    ----------------------------------------
      Steven W. Thomas, Director

Date: March 21, 2001


By:   /S/ Janette Resnick
    ----------------------------------------
      Janette Resnick, Director

Date: March 21, 2001
</TABLE>
<PAGE>

                                  Exhibit Index

3.1         Certificate of Incorporation of Pathfinder Bancorp, Inc.
            Incorporated herein by reference to the Company's registration
            statement on S-4, file no. 333-36051 (the "S-4")

3.2         Bylaws of Pathfinder Bancorp, Inc. (Incorporated herein by reference
            to the Company's S-4

4           Form of Stock Certificate of Pathfinder Bancorp, Inc.

10.1        Form of Pathfinder Bank 2000 Stock Option Plan Incorporated by
            reference to the Company's S-4

10.2        Form of Pathfinder Bank 2000 Recognition and Retention Plan
            Incorporated by reference to the Company's S-4

10.3        Employment Agreement between the Bank and Thomas W. Schneider,
            President and Chief Executive Officer Incorporated by reference to
            the Company's S-4

10.4        Employment Agreement between the Bank and W. David Schermerhorn,
            Executive Vice President - Loan Administration Incorporated by
            reference to the Company's S-4

13          Annual Report to Stockholders

21          Subsidiaries of Company