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|     |                                                                                  |   | Page   |   |
|----------|---------------------------------------------------------------------------------------|--------|--------|--------|
| PART I   |                                                                                  |   |   |   |
| Item 1.  | Business                                                                              |   |   | 3      |   |
| Item 1A. | Risk Factors                                                                          |   |   | 15     |   |
| Item 1B. | Unresolved Staff Comments                                                             |   |   | 15     |   |
| Item 2.  | Properties                                                                            |   |   | 16     |   |
| Item 3.  | Legal Proceedings                                                                     |   |   | 17     |   |
|     |                                                                                  |   |   |   |   |
| PART II  |                                                                                  |   |   |   |   |
| Item 5.  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer         |   |   | 17     |   |
|     | Purchases of Equity Securities                                                        |   |   |   |   |
| Item 6.  | Selected Financial Data                                                               |   |   | 18     |   |
| Item 7.  | Management's Discussion and Analysis of Financial Condition and Results of Operations |   |   | 19     |   |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                            |   |   | 35     |   |
| Item 8.  | Financial Statements and Supplementary Data                                           |   |   | 36     |   |
| Item 9.  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure  |   |   | 91     |   |
| Item 9A  | Controls and Procedures                                                               |   |   | 92     |   |
| Item 9B. | Other Information                                                                     |   |   | 92     |   |
|     |                                                                                  |   |   |   |   |
| PART III |                                                                                  |   |   |   |   |
| Item 10. | Directors, Executive Officers and Corporate Governance                                |   |   | 93     |   |
| Item 11. | Executive Compensation                                                                |   |   | 93     |   |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related            |   |   | 93     |   |
|     | Stockholder Matters                                                                   |   |   |   |   |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence             |   |   | 93     |   |
| Item 14. | Principal Accounting Fees and Services                                                |   |   | 93     |   |
|     |                                                                                  |   |   |   |   |
| PART IV  |                                                                                  |   |   |   |   |
| Item 15. | Exhibits and Financial Statement Schedules                                            |   |   | 94     |   |
|     |                                                                                  |   |   |   |   |

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| ·   | Credit quality and the effect of credit quality on the adequacy of our allowance for loan losses |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Deterioration in financial markets that may result in impairment charges relating to our securities portfolio |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | Competition in our primary market areas |
|--------------------|-----------------------------------------|

| ·   | Significant government regulations, legislation and potential changes thereto |
|--------------------|-------------------------------------------------------------------------------|

| ·   | A reduction in our ability to generate or originate revenue-producing assets as a result of compliance with heightened capital standards |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increased cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, and higher deposit insurance premiums |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Limitations on our ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other risks described herein and in the other reports and statements we file with the SEC |
|--------------------|-------------------------------------------------------------------------------------------|

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| LOCATION                                  |   | OPENING DATE |   | OWNED/LEASED                            |
|-------------------------------------------|--------|--------------|--------|-----------------------------------------|
| 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         |   |         |   |                                    |
|                                      |   |         |   |                                    |
| Lacona Branch                             |   | 2002         |   | Owned                                   |
| 1897 Harwood Drive                        |   |         |   |                                    |
| Lacona, New York 13083                    |   |         |   |                                    |
|                                      |   |         |   |                                    |
| Fulton Branch                             |   | 2003         |   |      Owned (2) |
| 5 West First Street South                 |   |         |   |                                    |
| Fulton, New York  13069         |   |         |   |                                    |
|                                      |   |         |   |                                    |
| Central Square Branch                     |   | 2005         |   | Owned                                   |
| 3025 East Ave                             |   |         |   |                                    |
| Central Square, New York  13036 |   |         |   |                                    |
|                                      |   |         |   |                                    |
| Cicero Branch                             |   | 2011         |   | Owned                                   |
| 6194 State Route 31                       |   |         |   |                                    |
| Cicero, New York 13039                    |   |         |   |                                    |

| (1)   | The building is owned; the underlying land is leased with an annual rent of $21,000 |
|-----------------|-------------------------------------------------------------------------------------|

| (2)   | The building is owned; the underlying land is leased with an annual rent of $30,000 |
|-----------------|-------------------------------------------------------------------------------------|

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|               |   |   |   |   |   |   |   | Dividend |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|
| Quarter Ended:     |   | High   |   |   | Low    |   |   | Paid     |   |
| December 31, 2011  |   | $      | 10.20  |   |   | $      | 8.01   |     |   | $ | 0.03 |   |
| September 30, 2011 |   | $      | 10.08  |   |   | $      | 8.33   |     |   | $ | 0.03 |   |
| June 30, 2011      |   | $      | 10.25  |   |   | $      | 8.87   |     |   | $ | 0.03 |   |
| March 31, 2011     |   | $      | 10.15  |   |   | $      | 8.18   |     |   | $ | 0.03 |   |
| December 31, 2010  |   | $      | 8.50   |   |   | $      | 7.75   |     |   | $ | 0.03 |   |
| September 30, 2010 |   | $      | 8.00   |   |   | $      | 6.03   |     |   | $ | 0.03 |   |
| June 30, 2010      |   | $      | 6.69   |   |   | $      | 6.00   |     |   | $ | 0.03 |   |
| March 31, 2010     |   | $      | 8.00   |   |   | $      | 5.60   |     |   | $ | 0.03 |   |

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|                                          |   | 2011   |    |   | 2010   |   |    | 2009   |   |   | 2008    |   |   | 2007   |    |
|-----------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| Year End (In thousands)                       |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Total assets                                  |   | $      | 442,980 |   |   | $      | 408,545 |   |   | $      | 371,692 |   |   | $      | 352,760 |   |   | $ | 320,691 |   |
| Loans receivable, net                         |   |   | 300,770 |   |   |   | 281,648 |   |   |   | 259,387 |   |   |   | 247,400 |   |   |   | 221,046 |   |
| Deposits                                      |   |   | 366,129 |   |   |   | 326,502 |   |   |   | 296,839 |   |   |   | 269,438 |   |   |   | 251,085 |   |
| Equity                                        |   |   | 37,841  |   |   |   | 30,592  |   |   |   | 29,238  |   |   |   | 19,495  |   |   |   | 21,704 |   |
|                                          |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| For the Year (In thousands)                   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Net interest income                           |   | $      | 14,263  |   |   | $      | 13,331  |   |   | $      | 11,777  |   |   | $      | 10,675  |   |   | $ | 8,667 |   |
| Core noninterest income (a)                   |   |   | 2,451   |   |   |   | 2,854   |   |   |   | 2,724   |   |   |   | 2,786   |   |   |   | 2,622 |   |
| Net gains/(losses) on sales, redemptions and  |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| impairment of investment securities           |   |   | 791     |   |   |   | 211     |   |   |   | 112     |   |   |   | (2,191  | ) |   |   | 378 |   |
| Net (losses) gains on sales of loans and      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| foreclosed real estate                        |   |   | (50     | )      |   |   | (45     | )      |   |   | 54      |   |   |   | (44     | ) |   |   | 42 |   |
| Noninterest expense (b)                       |   |   | 12,758  |   |   |   | 11,274  |   |   |   | 10,381  |   |   |   | 9,882   |   |   |   | 9,799 |   |
| Regulatory assessments                        |   |   | 390     |   |   |   | 515     |   |   |   | 745     |   |   |   | 53      |   |   |   | 39 |   |
| Net income                                    |   |   | 2,323   |   |   |   | 2,505   |   |   |   | 1,615   |   |   |   | 368     |   |   |   | 1,122 |   |
|                                          |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Per Share                                     |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Net income (basic)                            |   | $      | 0.53    |   |   | $      | 0.82    |   |   | $      | 0.61    |   |   | $      | 0.15    |   |   | $ | 0.45 |   |
| Net income (diluted)                          |   |   | 0.52    |   |   |   | 0.82    |   |   |   | 0.61    |   |   |   | 0.15    |   |   |   | 0.45 |   |
| Book value per common share                   |   |   | 9.49    |   |   |   | 9.81    |   |   |   | 9.31    |   |   |   | 8.04    |   |   |   | 8.74 |   |
| Tangible book value per common share (c)      |   |   | 8.02    |   |   |   | 8.26    |   |   |   | 7.77    |   |   |   | 6.50    |   |   |   | 7.19 |   |
| Cash dividends declared                       |   |   | 0.12    |   |   |   | 0.12    |   |   |   | 0.12    |   |   |   | 0.41    |   |   |   | 0.41 |   |
|                                          |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Ratios                                        |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Return on average assets                      |   |   | 0 .55   | %      |   |   | 0.64    | %      |   |   | 0.45    | %      |   |   | 0.11    | % |   |   | 0.36 | % |
| Return on average equity                      |   |   | 6.75    |   |   |   | 8.07    |   |   |   | 7.04    |   |   |   | 1.70    |   |   |   | 5.27 |   |
| Return on average tangible equity (c)         |   |   | 7.59    |   |   |   | 9.20    |   |   |   | 8.45    |   |   |   | 2.07    |   |   |   | 6.47 |   |
| Average equity to average assets              |   |   | 8.21    |   |   |   | 7.89    |   |   |   | 6.40    |   |   |   | 6.32    |   |   |   | 6.82 |   |
| Dividend payout ratio (d)                     |   |   | 12.87   |   |   |   | 11.90   |   |   |   | 18.45   |   |   |   | 232.61  |   |   |   | 62.03 |   |
| Allowance for loan losses to loans receivable |   |   | 1.31    |   |   |   | 1.28    |   |   |   | 1.17    |   |   |   | 0.99    |   |   |   | 0.76 |   |
| Net interest rate spread                      |   |   | 3.62    |   |   |   | 3.58    |   |   |   | 3.40    |   |   |   | 3.22    |   |   |   | 2.81 |   |
| Noninterest income to average assets          |   |   | 0.76    |   |   |   | 0.77    |   |   |   | 0.81    |   |   |   | 0.16    |   |   |   | 0.98 |   |
| Noninterest expense to average assets         |   |   | 3.14    |   |   |   | 3.00    |   |   |   | 3.10    |   |   |   | 2.91    |   |   |   | 3.15 |   |
| Efficiency ratio (e)                          |   |   | 77.56   |   |   |   | 71.95   |   |   |   | 76.36   |   |   |   | 73.02   |   |   |   | 85.89 |   |

| (a)   | Exclusive of net gains (losses) on sales and impairment of investment securities and net gains (losses) on sales of loans and foreclosed real estate. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Exclusive of regulatory assessments. |
|-----------------|--------------------------------------|

| (c)   | Tangible equity excludes intangible assets. |
|-----------------|---------------------------------------------|

| (d)   | The dividend payout ratio is calculated using dividends declared and not waived by the Mutual Holding Company, divided by net income. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | The efficiency ratio is calculated as noninterest expense, including regulatory assessments, divided by the sum of taxable-equivalent net interest income and noninterest income excluding net gains (losses) on sales, redemptions and impairment of investment securities and net (losses) gains on sales of loans and foreclosed real estate. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                         |   | For the Years Ended December 31, |    |
|----------------------------------------------|--------|----------------------------------|---------|
|                                         |   | 2011                             |    |   | 2010 |   |   | 2009 |   |
|                                         |   |                             |    |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                         |   | Average                          |    |   |   |   |   | Yield / |   |   | Average |   |   |   |   |   | Yield / |   |   | Average |   |   |   |   |   | Yield / |   |
| (Dollars in thousands)                       |   | Balance                          |    |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |
| Interest-earning assets:                     |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans residential                |   | $                                | 153,735 |   |   | $ | 8,029 |   |   |   | 5.22 | % |   | $ | 138,497 |   |   | $ | 7,672 |   |   |   | 5.54 | % |   | $ | 133,442 |   |   | $ | 7,463 |   |   |   | 5.59 | % |
| Real estate loans commercial                 |   |                             | 70,050  |   |   |   | 4,372 |   |   |   | 6.24 | % |   |   | 65,120 |   |   |   | 4,044 |   |   |   | 6.21 | % |   |   | 58,424 |   |   |   | 4,024 |   |   |   | 6.89 | % |
| Commercial loans                             |   |                             | 38,533  |   |   |   | 1,904 |   |   |   | 4.94 | % |   |   | 37,700 |   |   |   | 1,894 |   |   |   | 5.02 | % |   |   | 31,665 |   |   |   | 1,607 |   |   |   | 5.08 | % |
| Consumer loans                               |   |                             | 28,468  |   |   |   | 1,726 |   |   |   | 6.06 | % |   |   | 29,506 |   |   |   | 1,774 |   |   |   | 6.01 | % |   |   | 28,487 |   |   |   | 1,767 |   |   |   | 6.20 | % |
| Taxable investment securities                |   |                             | 79,236  |   |   |   | 2,231 |   |   |   | 2.82 | % |   |   | 75,660 |   |   |   | 2,549 |   |   |   | 3.37 | % |   |   | 71,455 |   |   |   | 2,942 |   |   |   | 4.12 | % |
| Tax-exempt investment securities             |   |                             | 11,716  |   |   |   | 571 |   |   |   | 4.87 | % |   |   | 8,587 |   |   |   | 399 |   |   |   | 4.65 | % |   |   | 1,464 |   |   |   | 65 |   |   |   | 4.44 | % |
| Interest-earning time deposit                |   |                             | 176     |   |   |   | 2 |   |   |   | 1.14 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Interest-earning deposits                    |   |                             | 4,147   |   |   |   | 5 |   |   |   | 0.12 | % |   |   | 8,140 |   |   |   | 7 |   |   |   | 0.09 | % |   |   | 7,511 |   |   |   | 6 |   |   |   | 0.08 | % |
| Total interest-earning assets                |   |                             | 386,061 |   |   |   | 18,840 |   |   |   | 4.88 | % |   |   | 363,210 |   |   |   | 18,339 |   |   |   | 5.05 | % |   |   | 332,448 |   |   |   | 17,874 |   |   |   | 5.38 | % |
| Noninterest-earning assets:                  |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other assets                                 |   |                             | 35,647  |   |   |   |   |   |   |   |   |   |   |   | 32,087 |   |   |   |   |   |   |   |   |   |   |   | 29,704 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                    |   |                             | (3,872  | ) |   |   |   |   |   |   |   |   |   |   | (3,420 | ) |   |   |   |   |   |   |   |   |   |   | (2,731 | ) |   |   |   |   |   |   |   |   |
| Net unrealized losses                        |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on available for sale securities             |   |                             | 1,293   |   |   |   |   |   |   |   |   |   |   |   | 1,513 |   |   |   |   |   |   |   |   |   |   |   | (620 | ) |   |   |   |   |   |   |   |   |
| Total assets                                 |   | $                                | 419,129 |   |   |   |   |   |   |   |   |   |   | $ | 393,390 |   |   |   |   |   |   |   |   |   |   | $ | 358,801 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                                 |   | $                                | 30,274  |   |   |   | 87 |   |   |   | 0.29 | % |   | $ | 29,816 |   |   |   | 79 |   |   |   | 0.26 | % |   | $ | 26,055 |   |   |   | 72 |   |   |   | 0.28 | % |
| Money management accounts                    |   |                             | 12,964  |   |   |   | 43 |   |   |   | 0.33 | % |   |   | 12,101 |   |   |   | 39 |   |   |   | 0.32 | % |   |   | 11,037 |   |   |   | 35 |   |   |   | 0.32 | % |
| MMDA accounts                                |   |                             | 64,352  |   |   |   | 438 |   |   |   | 0.68 | % |   |   | 50,722 |   |   |   | 336 |   |   |   | 0.66 | % |   |   | 35,571 |   |   |   | 246 |   |   |   | 0.69 | % |
| Savings and club accounts                    |   |                             | 60,713  |   |   |   | 78 |   |   |   | 0.13 | % |   |   | 57,810 |   |   |   | 84 |   |   |   | 0.15 | % |   |   | 53,726 |   |   |   | 87 |   |   |   | 0.16 | % |
| Time deposits                                |   |                             | 139,299 |   |   |   | 2,590 |   |   |   | 1.86 | % |   |   | 137,975 |   |   |   | 2,871 |   |   |   | 2.08 | % |   |   | 135,965 |   |   |   | 3,994 |   |   |   | 2.94 | % |
| Junior subordinated debentures               |   |                             | 5,155   |   |   |   | 163 |   |   |   | 3.16 | % |   |   | 5,155 |   |   |   | 164 |   |   |   | 3.18 | % |   |   | 5,155 |   |   |   | 149 |   |   |   | 2.89 | % |
| Borrowings                                   |   |                             | 31,255  |   |   |   | 942 |   |   |   | 3.01 | % |   |   | 34,102 |   |   |   | 1,235 |   |   |   | 3.62 | % |   |   | 37,340 |   |   |   | 1,446 |   |   |   | 3.87 | % |
| Total interest-bearing liabilities           |   |                             | 344,012 |   |   |   | 4,341 |   |   |   | 1.26 | % |   |   | 327,681 |   |   |   | 4,808 |   |   |   | 1.47 | % |   |   | 304,849 |   |   |   | 6,029 |   |   |   | 1.98 | % |
| Noninterest-bearing liabilities:             |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                              |   |                             | 35,971  |   |   |   |   |   |   |   |   |   |   |   | 29,479 |   |   |   |   |   |   |   |   |   |   |   | 26,114 |   |   |   |   |   |   |   |   |   |
| Other liabilities                            |   |                             | 4,722   |   |   |   |   |   |   |   |   |   |   |   | 5,173 |   |   |   |   |   |   |   |   |   |   |   | 4,888 |   |   |   |   |   |   |   |   |   |
| Total liabilities                            |   |                             | 384,705 |   |   |   |   |   |   |   |   |   |   |   | 362,333 |   |   |   |   |   |   |   |   |   |   |   | 335,851 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                         |   |                             | 34,424  |   |   |   |   |   |   |   |   |   |   |   | 31,057 |   |   |   |   |   |   |   |   |   |   |   | 22,950 |   |   |   |   |   |   |   |   |   |
| Total liabilities & shareholders' equity |   | $                                | 419,129 |   |   |   |   |   |   |   |   |   |   | $ | 393,390 |   |   |   |   |   |   |   |   |   |   | $ | 358,801 |   |   |   |   |   |   |   |   |   |
| Net interest income                          |   |                             |    |   |   | $ | 14,500 |   |   |   |   |   |   |   |   |   |   | $ | 13,531 |   |   |   |   |   |   |   |   |   |   | $ | 11,845 |   |   |   |   |   |
| Net interest rate spread                     |   |                             |    |   |   |   |   |   |   |   | 3.62 | % |   |   |   |   |   |   |   |   |   |   | 3.58 | % |   |   |   |   |   |   |   |   |   |   | 3.40 | % |
| Net interest margin                          |   |                             |    |   |   |   |   |   |   |   | 3.76 | % |   |   |   |   |   |   |   |   |   |   | 3.73 | % |   |   |   |   |   |   |   |   |   |   | 3.56 | % |
| Ratio of average interest-earning assets     |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to average interest-bearing liabilities      |   |                             |    |   |   |   |   |   |   |   | 112.22 | % |   |   |   |   |   |   |   |   |   |   | 110.84 | % |   |   |   |   |   |   |   |   |   |   | 109.05 | % |

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|                              |   | Years Ended December 31,   |   |
|-----------------------------------|--------|----------------------------|--------|
|                              |   | 2011 vs. 2010              |   |   | 2010 vs. 2009 |   |
|                              |   | Increase/(Decrease) Due to |   |   | Increase/(Decrease) Due to |   |
|                              |   |                       |   |   |   |   |   | Total |   |   |   |   |   |   |   |   | Total |   |
|                              |   |                       |   |   |   |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
| (In thousands)                    |   | Volume                     |   |   | Rate |   |   | (Decrease) |   |   | Volume |   |   | Rate |   |   | (Decrease) |   |
| Interest Income:                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans residential     |   | $                          | 815    |   |   | $ | (458 | ) |   | $ | 357 |   |   | $ | 277 |   |   | $ | (68 | ) |   | $ | 209 |   |
| Real estate loans commercial      |   |                       | 308    |   |   |   | 20 |   |   |   | 328 |   |   |   | 438 |   |   |   | (418 | ) |   |   | 20 |   |
| Commercial loans                  |   |                       | 41     |   |   |   | (31 | ) |   |   | 10 |   |   |   | 306 |   |   |   | (19 | ) |   |   | 287 |   |
| Consumer loans                    |   |                       | (63    | ) |   |   | 15 |   |   |   | (48 | ) |   |   | 62 |   |   |   | (55 | ) |   |   | 7 |   |
| Taxable investment securities     |   |                       | 115    |   |   |   | (433 | ) |   |   | (318 | ) |   |   | 165 |   |   |   | (558 | ) |   |   | (393 | ) |
| Tax-exempt investment securities  |   |                       | 152    |   |   |   | 20 |   |   |   | 172 |   |   |   | 331 |   |   |   | 3 |   |   |   | 334 |   |
| Interest-earning time deposits    |   |                       | 2      |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Interest-earning deposits         |   |                       | (4     | ) |   |   | 2 |   |   |   | (2 | ) |   |   | 1 |   |   |   | 2 |   |   |   | 3 |   |
| Total interest income             |   |                       | 1,366  |   |   |   | (865 | ) |   |   | 501 |   |   |   | 1,580 |   |   |   | (1,113 | ) |   |   | 467 |   |
| Interest Expense:                 |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                      |   |                       | 1      |   |   |   | 7 |   |   |   | 8 |   |   |   | 12 |   |   |   | (5 | ) |   |   | 7 |   |
| Money management accounts         |   |                       | 3      |   |   |   | 1 |   |   |   | 4 |   |   |   | 4 |   |   |   | - |   |   |   | 4 |   |
| MMDA accounts                     |   |                       | 92     |   |   |   | 10 |   |   |   | 102 |   |   |   | 101 |   |   |   | (11 | ) |   |   | 90 |   |
| Savings and club accounts         |   |                       | 5      |   |   |   | (11 | ) |   |   | (6 | ) |   |   | 4 |   |   |   | (7 | ) |   |   | (3 | ) |
| Time deposits                     |   |                       | 27     |   |   |   | (308 | ) |   |   | (281 | ) |   |   | 58 |   |   |   | (1,181 | ) |   |   | (1,123 | ) |
| Junior subordinated debentures    |   |                       | -      |   |   |   | (1 | ) |   |   | (1 | ) |   |   | - |   |   |   | 15 |   |   |   | 15 |   |
| Borrowings                        |   |                       | (97    | ) |   |   | (197 | ) |   |   | (294 | ) |   |   | (121 | ) |   |   | (90 | ) |   |   | (211 | ) |
| Total interest expense            |   |                       | 31     |   |   |   | (499 | ) |   |   | (468 | ) |   |   | 58 |   |   |   | (1,279 | ) |   |   | (1,221 | ) |
| Net change in net interest income |   | $                          | 1,335  |   |   | $ | (366 | ) |   | $ | 969 |   |   | $ | 1,522 |   |   | $ | 166 |   |   | $ | 1,688 |   |

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|                                                        |   | Twelve Months Ended December 31, |   |
|-------------------------------------------------------------|--------|----------------------------------|--------|
| (in thousands)                                              |   | 2011                             |   |   | 2010 |   |   | Change |   |
| Service charges on deposit accounts                         |   | $                                | 1,131  |   |   | $ | 1,375 |   |   | $ | (244 | ) |   |   | -17.7 | % |
| Earnings on bank owned life insurance                       |   |                             | 224    |   |   |   | 434 |   |   |   | (210 | ) |   |   | -48.4 | % |
| Loan servicing fees                                         |   |                             | 196    |   |   |   | 206 |   |   |   | (10 | ) |   |   | -4.9 | % |
| Debit card interchange fees                                 |   |                             | 369    |   |   |   | 316 |   |   |   | 53 |   |   |   | 16.8 | % |
| Other charges, commissions and fees                         |   |                             | 531    |   |   |   | 523 |   |   |   | 8 |   |   |   | 1.5 | % |
| Noninterest income before gains (losses)                    |   |                             | 2,451  |   |   |   | 2,854 |   |   |   | (403 | ) |   |   | -14.1 | % |
| Net gains on sales and redemptions of investment securities |   |                             | 791    |   |   |   | 211 |   |   |   | 580 |   |   |   | 274.9 | % |
| Net losses on sales of loans and foreclosed real estate     |   |                             | (50    | ) |   |   | (45 | ) |   |   | (5 | ) |   |   | 11.1 | % |
| Total noninterest income                                    |   | $                                | 3,192  |   |   | $ | 3,020 |   |   | $ | 172 |   |   |   | 5.7 | % |

|                            |   | Twelve Months Ended December 31, |   |
|---------------------------------|--------|----------------------------------|--------|
| (In thousands)                  |   | 2011                             |   |   | 2010 |   |   | Change |   |
| Salaries and employee benefits  |   | $                                | 7,076  |   |   | $ | 6,126 |   |   | $ | 950 |   |   |   | 15.5 | % |
| Building occupancy              |   |                             | 1,395  |   |   |   | 1,281 |   |   |   | 114 |   |   |   | 8.9 | % |
| Data processing                 |   |                             | 1,398  |   |   |   | 1,372 |   |   |   | 26 |   |   |   | 1.9 | % |
| Professional and other services |   |                             | 681    |   |   |   | 563 |   |   |   | 118 |   |   |   | 21.0 | % |
| Advertising                     |   |                             | 437    |   |   |   | 268 |   |   |   | 169 |   |   |   | 63.1 | % |
| FDIC assessments                |   |                             | 390    |   |   |   | 515 |   |   |   | (125 | ) |   |   | -24.3 | % |
| Audits and exams                |   |                             | 162    |   |   |   | 257 |   |   |   | (95 | ) |   |   | -37.0 | % |
| Other expenses                  |   |                             | 1,609  |   |   |   | 1,407 |   |   |   | 202 |   |   |   | 14.4 | % |
| Total noninterest expenses      |   | $                                | 13,148 |   |   | $ | 11,789 |   |   | $ | 1,359 |   |   |   | 11.5 | % |

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|                                                    |   |   |    |
|---------------------------------------------------------|--------|--------|---------|
| (In Thousands)                                          |   | 2011   |    |   | 2010 |   |
| Investment Securities:                                  |   |   |    |   |   |   |
| US treasury, agencies and GSEs                          |   | $      | 5,073   |   |   | $ | 20,023 |   |
| State and political subdivisions                        |   |   | 20,304  |   |   |   | 18,979 |   |
| Corporate                                               |   |   | 20,434  |   |   |   | 5,600 |   |
| Residential mortgage-backed                             |   |   | 51,575  |   |   |   | 37,246 |   |
| Mutual funds                                            |   |   | 2,565   |   |   |   | 3,024 |   |
| Equity securities                                       |   |   | 444     |   |   |   | 455 |   |
|     Total investments in securities |   | $      | 100,395 |   |   | $ | 85,327 |   |

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|                             |   | One Year or Less |   |   | One to Five Years |   |   | Five to Ten Years |   |
|----------------------------------|--------|------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                             |   |             |   |   | Annualized        |   |   |              |   |   | Annualized |   |   |   |   |   | Annualized |   |
|                             |   | Amortized        |   |   | Weighted          |   |   | Amortized         |   |   | Weighted |   |   | Amortized |   |   | Weighted |   |
| (Dollars in thousands)           |   | Cost             |   |   | Avg Yield         |   |   | Cost              |   |   | Avg Yield |   |   | Cost |   |   | Avg Yield |   |
| Debt investment securities:      |   |             |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs   |   | $                | 1,002  |   |              |   | 0.44   | %                 |   | $ | 4,003 |   |   |   | 1.59 | % |   | $ | 20 |   |   |   | 3.38 | % |
| State and political subdivisions |   |             | 829    |   |              |   | 2.39   | %                 |   |   | 2,102 |   |   |   | 2.54 | % |   |   | 4,640 |   |   |   | 3.32 | % |
| Corporate                        |   |             | 2,534  |   |              |   | 3.75   | %                 |   |   | 15,101 |   |   |   | 1.89 | % |   |   | 1,200 |   |   |   | 1.97 | % |
| Total                            |   | $                | 4,365  |   |              |   | 2.73   | %                 |   | $ | 21,206 |   |   |   | 1.90 | % |   | $ | 5,860 |   |   |   | 3.04 | % |
| Mortgage-backed securities:      |   |             |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed      |   | $                | 75     |   |              |   | 4.47   | %                 |   | $ | 349 |   |   |   | 5.11 | % |   | $ | 15,674 |   |   |   | 2.48 | % |
| Total                            |   | $                | 75     |   |              |   | 4.47   | %                 |   | $ | 349 |   |   |   | 5.11 | % |   | $ | 15,674 |   |   |   | 2.48 | % |
| Other non-maturity investments:  |   |             |   |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds                     |   | $                | 2,374  |   |              |   | 3.12   | %                 |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | 0.00 | % |
| Equity securities                |   |             | 443    |   |              |   | 1.84   | %                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Total                            |   | $                | 2,817  |   |              |   | 2.63   | %                 |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | 0.00 | % |
| Total investment securities      |   | $                | 7,257  |   |              |   | 2.82   | %                 |   | $ | 21,555 |   |   |   | 1.95 | % |   | $ | 21,534 |   |   |   | 2.63 | % |

|                             |   | More Than Ten Years |   |   |       |   |   | Total Investment Securities |   |   |   |   |
|----------------------------------|--------|---------------------|--------|--------|------------|--------|--------|-----------------------------|--------|--------|--------|--------|
|                             |   |                |   |   | Annualized |   |   |                        |   |   |   |   |   | Annualized |   |
|                             |   | Amortized           |   |   | Weighted   |   |   | Amortized                   |   |   | Fair   |   |   | Weighted |   |
| (Dollars in thousands)           |   | Cost                |   |   | Avg Yield  |   |   | Cost                        |   |   | Value  |   |   | Avg Yield |   |
| Debt investment securities:      |   |                |   |   |       |   |   |                        |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs   |   | $                   | -      |   |       |   | 0.00   | %                           |   | $      | 5,025  |   |   | $ | 5,073 |   |   |   | 1.36 | % |
| State and political subdivisions |   |                | 11,937 |   |       |   | 3.43   | %                           |   |   | 19,508 |   |   |   | 20,304 |   |   |   | 3.26 | % |
| Corporate                        |   |                | 2,251  |   |       |   | 1.07   | %                           |   |   | 21,086 |   |   |   | 20,434 |   |   |   | 2.03 | % |
| Total                            |   | $                   | 14,188 |   |       |   | 3.05   | %                           |   | $      | 45,619 |   |   | $ | 45,811 |   |   |   | 2.50 | % |
| Mortgage-backed securities:      |   |                |   |   |       |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed      |   | $                   | 34,073 |   |       |   | 3.12   | %                           |   | $      | 50,171 |   |   | $ | 51,575 |   |   |   | 2.94 | % |
| Total                            |   | $                   | 34,073 |   |       |   | 3.12   | %                           |   | $      | 50,171 |   |   | $ | 51,575 |   |   |   | 2.94 | % |
| Other non-maturity investments:  |   |                |   |   |       |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds                     |   | $                   | -      |   |       |   | -      |                        |   | $      | 2,374  |   |   | $ | 2,565 |   |   |   | 3.12 | % |
| Equity securities                |   |                | -      |   |       |   | -      |                        |   |   | 443    |   |   |   | 444 |   |   |   | 1.84 | % |
| Total                            |   | $                   | -      |   |       |   | -      |                        |   | $      | 2,817  |   |   | $ | 3,009 |   |   |   | 2.93 | % |
| Total investment securities      |   | $                   | 48,261 |   |       |   | 3.10   | %                           |   | $      | 98,607 |   |   | $ | 100,395 |   |   |   | 2.74 | % |

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|                               |   | December 31, |    |
|------------------------------------|--------|--------------|---------|
| (In thousands)                     |   | 2011         |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
| Residential real estate (1)        |   | $            | 162,395 |   |   | $ | 147,722 |   |   | $ | 135,102 |   |   | $ | 136,218 |   |   | $ | 126,666 |   |
| Commercial real estate             |   |         | 73,628  |   |   |   | 69,060 |   |   |   | 62,250 |   |   |   | 55,061 |   |   |   | 45,490 |   |
| Commercial and municipal loans     |   |         | 40,336  |   |   |   | 39,833 |   |   |   | 35,447 |   |   |   | 30,685 |   |   |   | 25,288 |   |
| Home Equity and Junior liens       |   |         | 24,251  |   |   |   | 25,271 |   |   |   | 26,086 |   |   |   | 24,392 |   |   |   | 21,379 |   |
| Consumer loans                     |   |         | 4,140   |   |   |   | 3,410 |   |   |   | 3,580 |   |   |   | 3,516 |   |   |   | 3,926 |   |
|   Total loans receivable |   | $            | 304,750 |   |   | $ | 285,296 |   |   | $ | 262,465 |   |   | $ | 249,872 |   |   | $ | 222,749 |   |

|                         |   | Due Under |   |   | Due 1-5 |   |   | Due Over   |   |   |    |   |
|------------------------------|--------|-----------|--------|--------|---------|--------|--------|------------|--------|--------|---------|--------|
| (In thousands)               |   | One Year  |   |   | Years   |   |   | Five Years |   |   | Total   |   |
| Real estate:                 |   |      |   |   |    |   |   |       |   |   |    |   |
| Commercial real estate       |   | $         | 5,547  |   |    | $      | 4,117  |       |   | $      | 63,964  |   |   | $ | 73,628 |   |
| Residential real estate      |   |      | 56     |   |    |   | 2,788  |       |   |   | 159,551 |   |   |   | 162,395 |   |
|                         |   |      | 5,603  |   |    |   | 6,905  |       |   |   | 223,515 |   |   |   | 236,023 |   |
| Other Commercial             |   |      | 18,674 |   |    |   | 12,926 |       |   |   | 8,736   |   |   |   | 40,336 |   |
| Home Equity and junior liens |   |      | 79     |   |    |   | 863    |       |   |   | 23,309  |   |   |   | 24,251 |   |
| Consumer                     |   |      | 1,065  |   |    |   | 2,322  |       |   |   | 753     |   |   |   | 4,140 |   |
| Total loans                  |   | $         | 25,421 |   |    | $      | 23,016 |       |   | $      | 256,313 |   |   | $ | 304,750 |   |
|                         |   |      |   |   |    |   |   |       |   |   |    |   |   |   |   |   |
| Interest rates:              |   |      |   |   |    |   |   |       |   |   |    |   |   |   |   |   |
| Fixed                        |   | $         | 5,086  |   |    | $      | 13,933 |       |   | $      | 137,424 |   |   | $ | 156,443 |   |
| Variable                     |   |      | 20,335 |   |    |   | 9,083  |       |   |   | 118,889 |   |   |   | 148,307 |   |
| Total loans                  |   | $         | 25,421 |   |    | $      | 23,016 |       |   | $      | 256,313 |   |   | $ | 304,750 |   |

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|                                          |   | December 31, |   |
|-----------------------------------------------|--------|--------------|--------|
| (In thousands)                                |   | 2011         |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
| Nonaccrual loans:                             |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate and commercial         |   | $            | 2,594  |   |   | $ | 4,224 |   |   | $ | 1,021 |   |   | $ | 1,455 |   |   | $ | 521 |   |
| Consumer                                      |   |         | 706    |   |   |   | 365 |   |   |   | 111 |   |   |   | 254 |   |   |   | 150 |   |
| Residential real estate                       |   |         | 1,428  |   |   |   | 1,335 |   |   |   | 1,181 |   |   |   | 614 |   |   |   | 920 |   |
| Total nonaccrual loans                        |   |         | 4,728  |   |   |   | 5,924 |   |   |   | 2,313 |   |   |   | 2,323 |   |   |   | 1,591 |   |
| Total non-performing loans                    |   |         | 4,728  |   |   |   | 5,924 |   |   |   | 2,313 |   |   |   | 2,323 |   |   |   | 1,591 |   |
| Foreclosed real estate                        |   |         | 536    |   |   |   | 375 |   |   |   | 181 |   |   |   | 335 |   |   |   | 865 |   |
| Total non-performing assets                   |   | $            | 5,264  |   |   | $ | 6,299 |   |   | $ | 2,494 |   |   | $ | 2,658 |   |   | $ | 2,456 |   |
| Non-performing loans to total loans           |   |         | 1.55   | % |   |   | 2.08 | % |   |   | 0.88 | % |   |   | 0.93 | % |   |   | 0.71 | % |
| Non-performing assets to total assets         |   |         | 1.19   | % |   |   | 1.54 | % |   |   | 0.67 | % |   |   | 0.75 | % |   |   | 0.77 | % |
| Interest income that would have been recorded |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| under the original terms of the loans         |   | $            | 280    |   |   | $ | 260 |   |   | $ | 113 |   |   | $ | 131 |   |   | $ | 71 |   |

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|                         |   | 2011       |   |   | 2010        |   |   | 2009       |   |   | 2008        |   |   | 2007       |   |
|------------------------------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|
|                         |   | Allocation |   |   | Percent of  |   |   | Allocation |   |   | Percent of  |   |   | Allocation |   |   | Percent of |   |   | Allocation |   |   | Percent of |   |   | Allocation |   |   | Percent of |   |
|                         |   | of the     |   |   | Loans to    |   |   | of the     |   |   | Loans to    |   |   | of the     |   |   | Loans to |   |   | of the |   |   | Loans to |   |   | of the |   |   | Loans to |   |
| (Dollars in thousands)       |   | Allowance  |   |   | Total Loans |   |   | Allowance  |   |   | Total Loans |   |   | Allowance  |   |   | Total Loans |   |   | Allowance |   |   | Total Loans |   |   | Allowance |   |   | Total Loans |   |
| Residential real estate      |   | $          | 664    |   |        |   | 53.2   | %          |   | $      | 750         |   |   |       | 51.7   | % |   | $ | 763 |   |   |   | 51.5 | % |   | $ | 679 |   |   |   | 54.5 | % |   | $ | 464 |   |   |   | 56.8 | % |
| Commercial real estate       |   |       | 1,346  |   |        |   | 24.2   | %          |   |   | 1,204       |   |   |       | 24.2   | % |   |   | 1,009 |   |   |   | 23.7 | % |   |   | 907 |   |   |   | 22.0 | % |   |   | 614 |   |   |   | 20.4 | % |
| Commercial and municipal     |   |       | 1,114  |   |        |   | 13.2   | %          |   |   | 1,083       |   |   |       | 14.0   | % |   |   | 864 |   |   |   | 13.5 | % |   |   | 505 |   |   |   | 12.3 | % |   |   | 342 |   |   |   | 11.4 | % |
| Home equity and junior liens |   |       | 501    |   |        |   | 8.0    | %          |   |   | 424         |   |   |       | 8.9    | % |   |   | 390 |   |   |   | 9.9 | % |   |   | 333 |   |   |   | 9.8 | % |   |   | 239 |   |   |   | 9.6 | % |
| Consumer loans               |   |       | 162    |   |        |   | 1.4    | %          |   |   | 89          |   |   |       | 1.2    | % |   |   | 76 |   |   |   | 1.4 | % |   |   | 48 |   |   |   | 1.4 | % |   |   | 44 |   |   |   | 1.8 | % |
| Unallocated                  |   |       | 193    |   |        |   |   |       |   |   | 98          |   |   |       |   |   |   |   | (24 | ) |   |   |   |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   |   |   |
| Total                        |   | $          | 3,980  |   |        |   | 100.0  | %          |   | $      | 3,648       |   |   |       | 100.0  | % |   | $ | 3,078 |   |   |   | 100.0 | % |   | $ | 2,472 |   |   |   | 100.0 | % |   | $ | 1,703 |   |   |   | 100.0 | % |

| (In thousands)                               |   | 2011   |   |   | 2010   |   |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance at beginning of year                 |   | $      | 3,648  |   |   | $      | 3,078  |   |   | $      | 2,472  |   |   | $      | 1,703  |   |   | $ | 1,496 |   |
| Provisions charged to operating expenses     |   |   | 940    |   |   |   | 1,050  |   |   |   | 876    |   |   |   | 820    |   |   |   | 365 |   |
| Recoveries of loans previously charged-off:  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate and loans             |   |   | 1      |   |   |   | 55     |   |   |   | -      |   |   |   | 17     |   |   |   | - |   |
| Consumer                                     |   |   | 49     |   |   |   | 36     |   |   |   | 20     |   |   |   | 30     |   |   |   | 27 |   |
| Residential real estate                      |   |   | 49     |   |   |   | 19     |   |   |   | 3      |   |   |   | -      |   |   |   | 23 |   |
| Total recoveries                             |   |   | 99     |   |   |   | 110    |   |   |   | 23     |   |   |   | 47     |   |   |   | 50 |   |
| Loans charged off:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate and loans             |   |   | (304   | )      |   |   | (385   | )      |   |   | (74    | )      |   |   | (46    | ) |   |   | (85 | ) |
| Consumer                                     |   |   | (166   | )      |   |   | (157   | )      |   |   | (134   | )      |   |   | (52    | ) |   |   | (77 | ) |
| Residential real estate                      |   |   | (237   | )      |   |   | (48    | )      |   |   | (85    | )      |   |   | -      |   |   |   | (46 | ) |
| Total charged-off                            |   |   | (707   | )      |   |   | (590   | )      |   |   | (293   | )      |   |   | (98    | ) |   |   | (208 | ) |
| Net charge-offs                              |   |   | (608   | )      |   |   | (480   | )      |   |   | (270   | )      |   |   | (51    | ) |   |   | (158 | ) |
| Balance at end of year                       |   | $      | 3,980  |   |   | $      | 3,648  |   |   | $      | 3,078  |   |   | $      | 2,472  |   |   | $ | 1,703 |   |
| Net charge-offs to average loans outstanding |   |   | 0.21   | %      |   |   | 0.18   | %      |   |   | 0.11   | %      |   |   | 0.02   | % |   |   | 0.08 | % |
| Allowance for loan losses to year-end loans  |   |   | 1.31   | %      |   |   | 1.28   | %      |   |   | 1.17   | %      |   |   | 0.99   | % |   |   | 0.76 | % |

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| (In thousands)                |   |   |   |
|-------------------------------|--------|--------|--------|
| Remaining Maturity:           |   |   |   |
| Three months or less          |   | $      | 30,503 |   |
| Three through six months      |   |   | 5,203  |   |
| Six through twelve months     |   |   | 8,987  |   |
| Over twelve months            |   |   | 24,865 |   |
|     Total |   | $      | 69,558 |   |

| (Dollars in thousands)                     |   | 2011   |   |   | 2010   |   |   | 2009   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Maximum outstanding at any month end       |   | $      | 11,106 |   |   | $      | 13,000 |   |   | $ | 1,400 |   |
| Average amount outstanding during the year |   |   | 5,371  |   |   |   | 745    |   |   |   | 1,724 |   |
| Average interest rate during the year      |   |   | 0.50   | %      |   |   | 0.47   | %      |   |   | 1.84 | % |

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ITEM 

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ITEM

Index to 

|                                                                                                            |   |   | Page  |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
| Management’s Report on Internal Control Over Financial Reporting                                          |   |   | 37         |   |
| Report of Independent Registered Public Accounting Firm                                                         |   |   | 38         |   |
| Consolidated Statements of Condition – December 31, 2011 and 2010                                         |   |   | 40         |   |
| Consolidated Statements of Income – Years ended December 31, 2011 and 2010                                |   |   | 41         |   |
| Consolidated Statements of Changes in Shareholder’s Equity – Years ended December 31, 2011 and 2010 |   |   | 42         |   |
| Consolidated Statements of Cash Flow – Years ended December 31, 2011 and 2010                             |   |   | 43         |   |
| Notes to Consolidated Financial Statements                                                                      |   |   | 45         |   |

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MANAGEMEN

|                                         |   |   |   |                                              |   |   |
|----------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|--------|
|  /s/ Thomas W. Schneider           |   |   |   | /s/ James A. Dowd                            |   |   |
| Thomas W. Schneider                          |   |   |   | James A. Dowd                                     |   |   |
| President & Chief Executive Officer |   |   |   | Senior Vice President and Chief Financial Officer |   |   |

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Report of Independent 

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| PATHFINDER BANCORP, INC.                                                                      |   |
|----------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CONDITION                                                               |   |
|                                                                                               |   |
|                                                                                               |   |   |   |   |   |   |
|                                                                                               |   | December 31, |   |   | December 31, |   |
| (In thousands, except share data)                                                                  |   | 2011 |   |   | 2010 |   |
| ASSETS:                                                                                            |   |   |   |   |   |   |
| Cash and due from banks                                                                            |   | $ | 7,093 |   |   | $ | 6,366 |   |
| Interest earning deposits                                                                          |   |   | 3,125 |   |   |   | 7,397 |   |
| Total cash and cash equivalents                                                                    |   |   | 10,218 |   |   |   | 13,763 |   |
| Interest earning time deposits                                                                     |   |   | 2,000 |   |   |   | - |   |
| Investment securities, at fair value                                                               |   |   | 100,395 |   |   |   | 85,327 |   |
| Federal Home Loan Bank stock, at cost                                                              |   |   | 1,528 |   |   |   | 2,134 |   |
| Loans                                                                                              |   |   | 304,750 |   |   |   | 285,296 |   |
| Less: Allowance for loan losses                                                                    |   |   | 3,980 |   |   |   | 3,648 |   |
| Loans receivable, net                                                                              |   |   | 300,770 |   |   |   | 281,648 |   |
| Premises and equipment, net                                                                        |   |   | 10,697 |   |   |   | 9,432 |   |
| Accrued interest receivable                                                                        |   |   | 1,685 |   |   |   | 1,709 |   |
| Foreclosed real estate                                                                             |   |   | 536 |   |   |   | 375 |   |
| Goodwill                                                                                           |   |   | 3,840 |   |   |   | 3,840 |   |
| Bank owned life insurance                                                                          |   |   | 7,939 |   |   |   | 6,915 |   |
| Other assets                                                                                       |   |   | 3,372 |   |   |   | 3,402 |   |
| Total assets                                                                                       |   | $ | 442,980 |   |   | $ | 408,545 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY:                                                              |   |   |   |   |   |   |   |   |
| Deposits:                                                                                          |   |   |   |   |   |   |   |   |
| Interest-bearing                                                                                   |   | $ | 328,976 |   |   | $ | 295,786 |   |
| Noninterest-bearing                                                                                |   |   | 37,153 |   |   |   | 30,716 |   |
| Total deposits                                                                                     |   |   | 366,129 |   |   |   | 326,502 |   |
| Short-term borrowings                                                                              |   |   | - |   |   |   | 13,000 |   |
| Long-term borrowings                                                                               |   |   | 26,074 |   |   |   | 28,000 |   |
| Junior subordinated debentures                                                                     |   |   | 5,155 |   |   |   | 5,155 |   |
| Accrued interest payable                                                                           |   |   | 145 |   |   |   | 148 |   |
| Other liabilities                                                                                  |   |   | 7,636 |   |   |   | 5,148 |   |
| Total liabilities                                                                                  |   |   | 405,139 |   |   |   | 377,953 |   |
| Shareholders' equity:                                                                              |   |   |   |   |   |   |   |   |
| Preferred stock - CPP, par value $0.01 per share; $1,000 liquidation preference;                   |   |   |   |   |   |   |   |   |
| 1,000,000 shares authorized; 0 and 6,771 shares issued and outstanding, respectively               |   |   | - |   |   |   | 6,225 |   |
| Preferred stock - SBLF, par value $0.01 per share; $1,000 liquidation preference;                  |   |   |   |   |   |   |   |   |
| 13,000 shares authorized; 13,000 and 0 shares issued and outstanding, respectively                 |   |   | 13,000 |   |   |   | - |   |
| Common stock, par value $0.01; authorized 10,000,000 shares;                                       |   |   |   |   |   |   |   |   |
| 2,979,969 and 2,972,119 shares issued and 2,617,682 and 2,484,832 shares outstanding, respectively |   |   | 30 |   |   |   | 30 |   |
| Additional paid in capital                                                                         |   |   | 8,730 |   |   |   | 8,615 |   |
| Retained earnings                                                                                  |   |   | 24,618 |   |   |   | 24,163 |   |
| Accumulated other comprehensive loss                                                               |   |   | (2,664 | ) |   |   | (1,939 | ) |
| Unearned ESOP                                                                                      |   |   | (1,039 | ) |   |   | - |   |
| Treasury stock, at cost; 362,287 and 487,287 shares, respectively                                  |   |   | (4,834 | ) |   |   | (6,502 | ) |
| Total shareholders' equity                                                                         |   |   | 37,841 |   |   |   | 30,592 |   |
| Total liabilities and shareholders' equity                                                         |   | $ | 442,980 |   |   | $ | 408,545 |   |

| The accompanying notes are an integral part of the consolidated financial statements. |   |
|---------------------------------------------------------------------------------------|--------|

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| PATHFINDER BANCORP, INC.                                                                                   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF INCOME                                                                               |   |
|                                                                                                            |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |
|                                                                                                            |   | Years Ended |   |
| (In thousands, except per share data)                                                                           |   | December 31, 2011 |   |   | December 31, 2010 |   |
| Interest and dividend income:                                                                                   |   |   |   |   |   |   |
| Loans, including fees                                                                                           |   | $ | 15,988 |   |   | $ | 15,319 |   |
| Debt securities:                                                                                                |   |   |   |   |   |   |   |   |
| Taxable                                                                                                         |   |   | 2,080 |   |   |   | 2,329 |   |
| Tax-exempt                                                                                                      |   |   | 378 |   |   |   | 264 |   |
| Dividends                                                                                                       |   |   | 152 |   |   |   | 220 |   |
| Interest earning time deposits                                                                                  |   |   | 2 |   |   |   | - |   |
| Federal funds sold and interest earning deposits                                                                |   |   | 4 |   |   |   | 7 |   |
|        Total interest income                                                 |   |   | 18,604 |   |   |   | 18,139 |   |
| Interest expense:                                                                                               |   |   |   |   |   |   |   |   |
| Interest on deposits                                                                                            |   |   | 3,236 |   |   |   | 3,409 |   |
| Interest on short-term borrowings                                                                               |   |   | 27 |   |   |   | 4 |   |
| Interest on long-term borrowings                                                                                |   |   | 1,078 |   |   |   | 1,395 |   |
|        Total interest expense                                                |   |   | 4,341 |   |   |   | 4,808 |   |
|           Net interest income                                 |   |   | 14,263 |   |   |   | 13,331 |   |
| Provision for loan losses                                                                                       |   |   | 940 |   |   |   | 1,050 |   |
|           Net interest income after provision for loan losses |   |   | 13,323 |   |   |   | 12,281 |   |
| Noninterest income:                                                                                             |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                                                                             |   |   | 1,131 |   |   |   | 1,375 |   |
| Earnings on bank owned life insurance                                                                           |   |   | 224 |   |   |   | 434 |   |
| Loan servicing fees                                                                                             |   |   | 196 |   |   |   | 206 |   |
| Net gains on sales and redemptions of investment securities                                                     |   |   | 791 |   |   |   | 211 |   |
| Net (losses) on sales of loans and foreclosed real estate                                                       |   |   | (50 | ) |   |   | (45 | ) |
| Debit card interchange fees                                                                                     |   |   | 369 |   |   |   | 316 |   |
| Other charges, commissions & fees                                                                           |   |   | 531 |   |   |   | 523 |   |
|           Total noninterest income                            |   |   | 3,192 |   |   |   | 3,020 |   |
| Noninterest expense:                                                                                            |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                                                                  |   |   | 7,076 |   |   |   | 6,126 |   |
| Building occupancy                                                                                              |   |   | 1,395 |   |   |   | 1,281 |   |
| Data processing                                                                                                 |   |   | 1,398 |   |   |   | 1,372 |   |
| Professional and other services                                                                                 |   |   | 681 |   |   |   | 563 |   |
| Advertising                                                                                                     |   |   | 437 |   |   |   | 268 |   |
| FDIC assessments                                                                                                |   |   | 390 |   |   |   | 515 |   |
| Audits and exams                                                                                                |   |   | 162 |   |   |   | 257 |   |
| Other expenses                                                                                                  |   |   | 1,609 |   |   |   | 1,407 |   |
|           Total noninterest expenses                          |   |   | 13,148 |   |   |   | 11,789 |   |
| Income before income taxes                                                                                      |   |   | 3,367 |   |   |   | 3,512 |   |
| Provision for income taxes                                                                                      |   |   | 1,044 |   |   |   | 1,007 |   |
| Net income                                                                                                      |   |   | 2,323 |   |   |   | 2,505 |   |
| Preferred stock dividends and discount accretion                                                                |   |   | 1,003 |   |   |   | 462 |   |
| Net income available to common shareholders                                                                     |   | $ | 1,320 |   |   | $ | 2,043 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Earnings per common share - basic                                                                               |   | $ | 0.53 |   |   | $ | 0.82 |   |
| Earnings per common share - diluted                                                                             |   | $ | 0.52 |   |   | $ | 0.82 |   |
| Dividends per common share                                                                                      |   | $ | 0.12 |   |   | $ | 0.12 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements.                           |   |   |   |   |   |

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| PATHFINDER BANCORP, INC.                                   |   |
|------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY |   |
| YEARS ENDED DECEMBER 31, 2011 AND DECEMBER 31, 2010        |   |
|                                                       |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Other Com- |   |   |   |   |   |   |   |   |   |   |
|                                                       |   | Preferred |   |   | Common |   |   | Paid in |   |   | Retained |   |   | prehensive |   |   | Unearned |   |   | Treasury |   |   |   |   |
|  (In thousands, except share data)                    |   | Stock |   |   | Stock |   |   | Capital |   |   | Earnings |   |   | Loss |   |   | ESOP |   |   | Stock |   |   | Total |   |
|  Balance, January 1, 2011                             |   | $ | 6,225 |   |   | $ | 30 |   |   | $ | 8,615 |   |   | $ | 24,163 |   |   | $ | (1,939 | ) |   | $ | - |   |   | $ | (6,502 | ) |   | $ | 30,592 |   |
|  Comprehensive income:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net income                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,323 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,323 |   |
|  Other comprehensive income (loss), net of tax:       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Unrealized holding gains on securities               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  available for sale (net of $607 tax expense)         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 908 |   |   |   |   |   |   |   |   |   |   |   | 908 |   |
|  Unrealized holding loss on financial                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  derivative (net of $36 tax benefit)                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (54 | ) |   |   |   |   |   |   |   |   |   |   | (54 | ) |
|  Retirement plan net losses                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   not recognized in plan expenses                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (net of $1,053 tax benefit)                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (1,579 | ) |   |   |   |   |   |   |   |   |   |   | (1,579 | ) |
|  Total comprehensive income                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,598 |   |
|  Sale of preferred stock - SBLF                       |   |   | 13,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 13,000 |   |
|  Redemption of CPP Preferred stock                    |   |   | (6,771 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (6,771 | ) |
|  Preferred stock discount accretion                   |   |   | 546 |   |   |   |   |   |   |   |   |   |   |   | (546 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
|  Preferred stock dividends - CPP and SBLF             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (457 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (457 | ) |
|  Sale of treasury stock to ESOP                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (566 | ) |   |   |   |   |   |   | (1,102 | ) |   |   | 1,668 |   |   |   | - |   |
|  ESOP shares earned (7,105 shares)                    |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   |   |   |   |   |   |   |   |   | 63 |   |   |   |   |   |   |   | 65 |   |
|  Stock based compensation                             |   |   |   |   |   |   |   |   |   |   | 47 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 47 |   |
|  Stock options exercised                              |   |   |   |   |   |   |   |   |   |   | 66 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 66 |   |
|  Common stock dividends declared ($0.12 per share)    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (299 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (299 | ) |
|  Balance, December 31, 2011                           |   | $ | 13,000 |   |   | $ | 30 |   |   | $ | 8,730 |   |   | $ | 24,618 |   |   | $ | (2,664 | ) |   | $ | (1,039 | ) |   | $ | (4,834 | ) |   | $ | 37,841 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance, January 1, 2010                             |   | $ | 6,101 |   |   | $ | 30 |   |   | $ | 8,615 |   |   | $ | 22,419 |   |   | $ | (1,425 | ) |   | $ | - |   |   | $ | (6,502 | ) |   | $ | 29,238 |   |
|  Comprehensive income:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net income                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,505 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,505 |   |
|  Other comprehensive loss, net of tax:                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Unrealized holding losses on securities              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  available for sale (net of $56 tax benefit)          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (85 | ) |   |   |   |   |   |   |   |   |   |   | (85 | ) |
|  Unrealized holding loss on financial                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  derivative (net of $44 tax benefit)                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (66 | ) |   |   |   |   |   |   |   |   |   |   | (66 | ) |
|  Retirement plan net losses not                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  recognized in plan expenses                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (net of $242 tax benefit)                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (363 | ) |   |   |   |   |   |   |   |   |   |   | (363 | ) |
|  Total comprehensive income                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,991 |   |
|  Preferred stock discount accretion                   |   |   | 124 |   |   |   |   |   |   |   |   |   |   |   | (124 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
|  Preferred stock dividends - CPP                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (339 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (339 | ) |
|  Common stock dividends declared ($0.12 per share)    |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (298 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (298 | ) |
|  Balance, December 31, 2010                           |   | $ | 6,225 |   |   | $ | 30 |   |   | $ | 8,615 |   |   | $ | 24,163 |   |   | $ | (1,939 | ) |   | $ | - |   |   | $ | (6,502 | ) |   | $ | 30,592 |   |

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|                                                                                |   |                     |    |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------|
| PATHFINDER BANCORP, INC.                                                            |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                               |   |
|                                                                                |   |                     |    |   |   |   |
|                                                                                |   |                     |    |   |   |   |
|                                                                                |   | Years Ended December 31, |    |
| (In thousands)                                                                      |   | 2011                     |    |   | 2010   |   |
| OPERATING ACTIVITIES                                                                |   |                     |    |   |   |   |
| Net income                                                                          |   | $                        | 2,323   |   |   | $      | 2,505 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:   |   |                     |    |   |   |   |   |   |
| Provision for loan losses                                                           |   |                     | 940     |   |   |   | 1,050 |   |
| Deferred income tax expense                                                         |   |                     | 1,193   |   |   |   | 263 |   |
| Proceeds from sales of loans                                                        |   |                     | -       |   |   |   | 264 |   |
| Originations of loans held-for-sale                                                 |   |                     | -       |   |   |   | (256 | ) |
| Realized losses (gains) on sales and redemptions of:                                |   |                     |    |   |   |   |   |   |
| Real estate acquired through foreclosure                                            |   |                     | 50      |   |   |   | 53 |   |
| Loans                                                                               |   |                     | -       |   |   |   | (8 | ) |
| Premises and equipment                                                              |   |                     | -       |   |   |   | 1 |   |
| Available-for-sale investment securities                                            |   |                     | (791    | )      |   |   | (211 | ) |
| Depreciation                                                                        |   |                     | 723     |   |   |   | 644 |   |
| Amortization of mortgage servicing rights                                           |   |                     | 27      |   |   |   | 28 |   |
| Amortization of deferred loan costs                                                 |   |                     | 160     |   |   |   | 230 |   |
| Earnings on bank owned life insurance                                               |   |                     | (224    | )      |   |   | (279 | ) |
| Realized gain on proceeds from bank owned life insurance                            |   |                     | -       |   |   |   | (155 | ) |
| Net amortization of premiums and discounts on investment securities                 |   |                     | 614     |   |   |   | 319 |   |
| Stock based compensation and ESOP expense                                           |   |                     | 112     |   |   |   | - |   |
| Decrease (increase) in accrued interest receivable                                  |   |                     | 24      |   |   |   | (227 | ) |
| Net change in other assets and liabilities                                          |   |                     | (1,141  | )      |   |   | 163 |   |
| Net cash provided by operating activities                                           |   |                     | 4,010   |   |   |   | 4,384 |   |
| INVESTING ACTIVITIES                                                                |   |                     |    |   |   |   |   |   |
| Purchase of interest earning time deposits                                          |   |                     | (2,000  | )      |   |   | - |   |
| Purchase of investment securities available-for-sale                                |   |                     | (60,641 | )      |   |   | (60,459 | ) |
| Net proceeds from the redemption of (purchases of ) of Federal Home Loan Bank stock |   |                     | 606     |   |   |   | (235 | ) |
| Proceeds from maturities and principal reductions of                                |   |                     |    |   |   |   |   |   |
| investment securities available-for-sale                                            |   |                     | 32,172  |   |   |   | 37,431 |   |
| Proceeds from sales and redemptions of:                                             |   |                     |    |   |   |   |   |   |
| Available-for-sale investment securities                                            |   |                     | 15,091  |   |   |   | 10,206 |   |
| Real estate acquired through foreclosure                                            |   |                     | 750     |   |   |   | 210 |   |
| Premises and equipment                                                              |   |                     | 5       |   |   |   | 24 |   |
| Purchase of bank owned life insurance                                               |   |                     | (800    | )      |   |   | - |   |
| Proceeds from bank owned life insurance                                             |   |                     | -       |   |   |   | 474 |   |
| Net increase in loans                                                               |   |                     | (20,985 | )      |   |   | (24,001 | ) |
| Purchase of premises and equipment                                                  |   |                     | (1,993  | )      |   |   | (2,928 | ) |
| Net cash used in investing activities                                               |   |                     | (37,795 | )      |   |   | (39,278 | ) |
| FINANCING ACTIVITIES                                                                |   |                     |    |   |   |   |   |   |
| Net increase in demand deposits, NOW accounts, savings accounts,                    |   |                     |    |   |   |   |   |   |
| money management deposit accounts, MMDA accounts and escrow deposits                |   |                     | 42,410  |   |   |   | 36,753 |   |
| Net decrease in time deposits                                                       |   |                     | (2,783  | )      |   |   | (7,090 | ) |
| Net repayments of short-term borrowings                                             |   |                     | (13,000 | )      |   |   | 13,000 |   |
| Payments on long-term borrowings                                                    |   |                     | (6,000  | )      |   |   | (12,000 | ) |
|                                                                                |   |                     |    |   |   |   |   |   |
|                                                                                |   |                     |    |   |   |   |   |   |

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|                                                                                  |   |                     |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
| PATHFINDER BANCORP, INC.                                                              |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                 |   |
|                                                                                  |   |                     |   |   |   |   |
|                                                                                  |   |                     |   |   |   |   |
|                                                                                  |   | Years Ended December 31, |   |
| (In thousands)                                                                        |   | 2011                     |   |   | 2010   |   |
| Proceeds from long-term borrowings                                                    |   |                     | 4,074  |   |   |   | 4,000 |   |
| Proceeds from sale of preferred stock – SBLF                                    |   |                     | 13,000 |   |   |   | - |   |
| Proceeds from exercise of stock options                                               |   |                     | 66     |   |   |   | - |   |
| Redemption of preferred stock – CPP                                             |   |                     | (6,771 | )      |   |   | - |   |
| Cash dividends paid to preferred shareholder – CPP and SBLF                     |   |                     | (457   | )      |   |   | (339 | ) |
| Cash dividends paid to common shareholders                                            |   |                     | (299   | )      |   |   | (298 | ) |
| Net cash provided by financing activities                                             |   |                     | 30,240 |   |   |   | 34,026 |   |
| Decrease in cash and cash equivalents                                                 |   |                     | (3,545 | )      |   |   | (868 | ) |
| Cash and cash equivalents at beginning of period                                      |   |                     | 13,763 |   |   |   | 14,631 |   |
| Cash and cash equivalents at end of period                                            |   | $                        | 10,218 |   |   | $      | 13,763 |   |
| CASH PAID DURING THE PERIOD FOR:                                                      |   |                     |   |   |   |   |   |   |
| Interest                                                                              |   | $                        | 4,344  |   |   | $      | 4,845 |   |
| Income taxes                                                                          |   |                     | 1,507  |   |   |   | 403 |   |
| NON-CASH INVESTING ACTIVITY                                                           |   |                     |   |   |   |   |   |   |
| Transfer of loans to foreclosed real estate                                           |   |                     | 1,083  |   |   |   | 460 |   |
| Transfer of loans to repossessed assets                                               |   |                     | 258    |   |   |   | - |   |
|                                                                                  |   |                     |   |   |   |   |   |   |
| The accompanying notes are an integral part of the consolidated financial statements. |   |                     |   |   |   |   |   |   |

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| §   | Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| §   | National, regional and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Nature and volume of the portfolio and terms of the loans |
|--------------------|-----------------------------------------------------------|

| §   | Experience, ability and depth of the lending management and staff |
|--------------------|-------------------------------------------------------------------|

| §   | Volume and severity of past due, classified and non-accrual loans, as well as other loan modifications |
|--------------------|--------------------------------------------------------------------------------------------------------|

| §   | Quality of the Company’s loan review system and the degree of oversight by the Company’s Board of Directors |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

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|                                               |   | Three months ended |   |   | Years ended  |   |
|----------------------------------------------------|--------|--------------------|--------|--------|--------------|--------|
| (In thousands, except per share data)              |   | December 31,       |   |   | December 31, |   |
|                                               |   | 2011               |   |   | 2010         |   |   | 2011 |   |   | 2010 |   |
| Basic Earnings Per Common Share                    |   |               |   |   |         |   |   |   |   |   |   |   |
| Net income available to common shareholders        |   | $                  | 249    |   |         | $      | 570 |   |   | $ | 1,320 |   |   | $ | 2,043 |   |
| Weighted average common shares outstanding         |   |               | 2,496  |   |         |   | 2,485 |   |   |   | 2,490 |   |   |   | 2,485 |   |
| Basic earnings per common share                    |   | $                  | 0.10   |   |         | $      | 0.23 |   |   | $ | 0.53 |   |   | $ | 0.82 |   |
|                                               |   |               |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Diluted Earnings Per Common Share                  |   |               |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders        |   | $                  | 249    |   |         | $      | 570 |   |   | $ | 1,320 |   |   | $ | 2,043 |   |
|                                               |   |               |   |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding         |   |               | 2,496  |   |         |   | 2,485 |   |   |   | 2,490 |   |   |   | 2,485 |   |
| Effect of assumed exercise of stock options        |   |               | -      |   |         |   | - |   |   |   | 3 |   |   |   | - |   |
| Effect of assumed exercise of stock warrants       |   |               | 40     |   |         |   | 23 |   |   |   | 43 |   |   |   | 4 |   |
| Diluted weighted average common shares outstanding |   |               | 2,536  |   |         |   | 2,508 |   |   |   | 2,536 |   |   |   | 2,489 |   |
| Diluted earnings per common share                  |   | $                  | 0.10   |   |         | $      | 0.23 |   |   | $ | 0.52 |   |   | $ | 0.82 |   |

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|                                        |   | December 31, 2011 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   |              |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                        |   | Amortized         |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| (In thousands)                              |   | Cost              |   |   | Gains |   |   | Losses |   |   | Value |   |
| Debt investment securities:                 |   |              |   |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs              |   | $                 | 5,025  |   |   | $ | 48 |   |   | $ | - |   |   | $ | 5,073 |   |
| State and political subdivisions            |   |              | 19,508 |   |   |   | 797 |   |   |   | (1 | ) |   |   | 20,304 |   |
| Corporate                                   |   |              | 21,086 |   |   |   | 38 |   |   |   | (690 | ) |   |   | 20,434 |   |
| Residential mortgage-backed - US agency     |   |              | 49,665 |   |   |   | 1,395 |   |   |   | (4 | ) |   |   | 51,056 |   |
| Residential mortgage-backed - private label |   |              | 505    |   |   |   | 14 |   |   |   | - |   |   |   | 519 |   |
| Total                                       |   |              | 95,789 |   |   |   | 2,292 |   |   |   | (695 | ) |   |   | 97,386 |   |
| Equity investment securities:               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds:                               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ultra short mortgage fund                   |   |              | 1,286  |   |   |   | 12 |   |   |   | - |   |   |   | 1,298 |   |
| Large cap equity fund                       |   |              | 905    |   |   |   | 119 |   |   |   | - |   |   |   | 1,024 |   |
| Other mutual funds                          |   |              | 183    |   |   |   | 60 |   |   |   | - |   |   |   | 243 |   |
| Common stock - financial services industry  |   |              | 443    |   |   |   | 2 |   |   |   | (1 | ) |   |   | 444 |   |
| Total                                       |   |              | 2,817  |   |   |   | 193 |   |   |   | (1 | ) |   |   | 3,009 |   |
| Total investment securities                 |   | $                 | 98,606 |   |   | $ | 2,485 |   |   | $ | (696 | ) |   | $ | 100,395 |   |

|                                        |   | December 31, 2010 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   |              |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                        |   | Amortized         |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| (In thousands)                              |   | Cost              |   |   | Gains |   |   | Losses |   |   | Value |   |
| Debt investment securities:                 |   |              |   |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs              |   | $                 | 20,137 |   |   | $ | 139 |   |   | $ | (253 | ) |   | $ | 20,023 |   |
| State and political subdivisions            |   |              | 19,227 |   |   |   | 174 |   |   |   | (422 | ) |   |   | 18,979 |   |
| Corporate                                   |   |              | 5,865  |   |   |   | 228 |   |   |   | (493 | ) |   |   | 5,600 |   |
| Residential mortgage-backed - US agency     |   |              | 35,714 |   |   |   | 934 |   |   |   | (239 | ) |   |   | 36,409 |   |
| Residential mortgage-backed - private label |   |              | 816    |   |   |   | 21 |   |   |   | - |   |   |   | 837 |   |
| Total                                       |   |              | 81,759 |   |   |   | 1,496 |   |   |   | (1,407 | ) |   |   | 81,848 |   |
| Equity investment securities:               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds:                               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ultra short mortgage fund                   |   |              | 1,532  |   |   |   | 26 |   |   |   | - |   |   |   | 1,558 |   |
| Large cap equity fund                       |   |              | 1,129  |   |   |   | 93 |   |   |   | - |   |   |   | 1,222 |   |
| Other mutual funds                          |   |              | 183    |   |   |   | 61 |   |   |   | - |   |   |   | 244 |   |
| Common stock - financial services industry  |   |              | 450    |   |   |   | 5 |   |   |   | - |   |   |   | 455 |   |
| Total                                       |   |              | 3,294  |   |   |   | 185 |   |   |   | - |   |   |   | 3,479 |   |
| Total investment securities                 |   | $                 | 85,053 |   |   | $ | 1,681 |   |   | $ | (1,407 | ) |   | $ | 85,327 |   |

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|                                   |   | Amortized |   |   | Estimated  |   |
|----------------------------------------|--------|-----------|--------|--------|------------|--------|
|                                   |   | Cost      |   |   | Fair Value |   |
| (In thousands)                         |   |      |   |   |       |   |
| Due in one year or less                |   | $         | 4,365  |   |       | $      | 4,384 |   |
| Due after one year through five years  |   |      | 21,206 |   |       |   | 21,210 |   |
| Due after five years through ten years |   |      | 5,860  |   |       |   | 6,223 |   |
| Due after ten years                    |   |      | 14,188 |   |       |   | 13,994 |   |
| Mortgage-backed securities             |   |      | 50,170 |   |       |   | 51,575 |   |
| Totals                                 |   | $         | 95,789 |   |       | $      | 97,386 |   |

|                                     |   | December 31, 2011       |   |
|------------------------------------------|--------|-------------------------|--------|
|                                     |   | Less than Twelve Months |   |   | Twelve Months or More |   |   | Total |   |
|                                     |   | Unrealized              |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |
|                                     |   | Losses                  |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |
| (In thousands)                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| State and political subdivisions         |   | $                       | (1     | ) |   | $ | 412 |   |   | $ | - |   |   | $ | - |   |   | $ | (1 | ) |   | $ | 412 |   |
| Corporate                                |   |                    | (131   | ) |   |   | 13,489 |   |   |   | (559 | ) |   |   | 1,410 |   |   |   | (690 | ) |   |   | 14,899 |   |
| Residential mortgage-backed - US agency  |   |                    | (4     | ) |   |   | 1,896 |   |   |   | - |   |   |   | - |   |   |   | (4 | ) |   |   | 1,896 |   |
| Common stock-financial services industry |   |                    | -      |   |   |   | - |   |   |   | (1 | ) |   |   | 3 |   |   |   | (1 | ) |   |   | 3 |   |
|                                     |   | $                       | (136   | ) |   | $ | 15,797 |   |   | $ | (560 | ) |   | $ | 1,413 |   |   | $ | (696 | ) |   | $ | 17,210 |   |

|                                    |   | December 31, 2010       |   |
|-----------------------------------------|--------|-------------------------|--------|
|                                    |   | Less than Twelve Months |   |   | Twelve Months or More |   |   | Total |   |
|                                    |   | Unrealized              |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |
|                                    |   | Losses                  |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |
| (In thousands)                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs          |   | $                       | (253   | ) |   | $ | 9,260 |   |   | $ | - |   |   | $ | - |   |   | $ | (253 | ) |   | $ | 9,260 |   |
| State and political subdivisions        |   |                    | (422   | ) |   |   | 10,173 |   |   |   | - |   |   |   | - |   |   |   | (422 | ) |   |   | 10,173 |   |
| Corporate                               |   |                    | -      |   |   |   | - |   |   |   | (493 | ) |   |   | 1,473 |   |   |   | (493 | ) |   |   | 1,473 |   |
| Residential mortgage-backed - US agency |   |                    | (239   | ) |   |   | 8,861 |   |   |   | - |   |   |   | - |   |   |   | (239 | ) |   |   | 8,861 |   |
|                                    |   | $                       | (914   | ) |   | $ | 28,294 |   |   | $ | (493 | ) |   | $ | 1,473 |   |   | $ | (1,407 | ) |   | $ | 29,767 |   |

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| (In thousands)                      |   | 2011   |   |   | 2010   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| Beginning balance – January 1 |   | $      | 875    |   |   | $      | 875 |   |
| Reductions for securities sold      |   |   | (875   | )      |   |   | - |   |
| Ending balance - December 31        |   | $      | -      |   |   | $      | 875 |   |

| (In thousands)  |   | 2011   |   |   | 2010   |   |
|-----------------|--------|--------|--------|--------|--------|--------|
| Realized gains  |   | $      | 796    |   |   | $      | 212 |   |
| Realized losses |   |   | (5     | )      |   |   | (1 | ) |
|            |   | $      | 791    |   |   | $      | 211 |   |

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|                                        |   | December 31, |    |   | December 31, |   |
|---------------------------------------------|--------|--------------|---------|--------|--------------|--------|
| (In thousands)                              |   | 2011         |    |   | 2010         |   |
| Residential mortgage loans:                 |   |         |    |   |         |   |
| 1-4 family first-lien residential mortgages |   | $            | 158,384 |   |         | $      | 143,661 |   |
| Construction                                |   |         | 3,935   |   |         |   | 3,569 |   |
|                                        |   |         | 162,319 |   |         |   | 147,230 |   |
|                                        |   |         |    |   |         |   |   |   |
| Commercial loans:                           |   |         |    |   |         |   |   |   |
| Real estate                                 |   |         | 73,420  |   |         |   | 69,042 |   |
| Lines of credit                             |   |         | 13,791  |   |         |   | 14,122 |   |
| Other commercial and industrial             |   |         | 22,701  |   |         |   | 20,779 |   |
| Municipal                                   |   |         | 3,619   |   |         |   | 4,826 |   |
|                                        |   |         | 113,531 |   |         |   | 108,769 |   |
|                                        |   |         |    |   |         |   |   |   |
| Consumer loans:                             |   |         |    |   |         |   |   |   |
| Home equity and junior liens                |   |         | 24,171  |   |         |   | 25,168 |   |
| Other consumer                              |   |         | 4,140   |   |         |   | 3,411 |   |
|                                        |   |         | 28,311  |   |         |   | 28,579 |   |
|                                        |   |         |    |   |         |   |   |   |
| Total loans                                 |   |         | 304,161 |   |         |   | 284,578 |   |
| Net deferred loan costs                     |   |         | 589     |   |         |   | 718 |   |
| Less allowance for loan losses              |   |         | (3,980  | )      |         |   | (3,648 | ) |
| Loans receivable, net                       |   | $            | 300,770 |   |         | $      | 281,648 |   |

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| 1.   | Prime:  A loan that is fully secured by properly margined Pathfinder Bank deposit account(s) or an obligation of the US Government.  It may also be unsecured if it is supported by a very strong financial condition and, in the case of a commercial loan, excellent management.  There exists an unquestioned ability to repay the loan in accordance with its terms. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Strong:  Desirable relationship of somewhat less stature than Prime grade.  Possesses a sound documented repayment source, and back up, which will allow repayment within the terms of the loan.  Individual loans backed by solid assets, character and integrity.  Ability of individual or company management is good and well established.  Probability of serious financial deterioration is unlikely. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Satisfactory:  Stable financial condition with cash flow sufficient for debt service coverage.  Satisfactory loans of average strength having some deficiency or vulnerability to changing economic or industry conditions but performing as agreed with documented evidence of repayment capacity.  May be unsecured loans to borrowers with satisfactory credit and financial strength.  Satisfactory provisions for management succession and a secondary source of repayment exists. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Satisfactory Watch:  A four is not a criticized or classified credit. These credits do not display the characteristics of a criticized asset as defined by the regulatory definitions. A credit is given a Satisfactory Watch designation if there are matters or trends observed deserving attention somewhat beyond normal monitoring.  Borrowing obligations may be handled according to agreement but could be adversely impacted by developing factors such as industry conditions, operating problems, litigation pending of a significant nature or declining collateral quality and adequacy.                                       |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 5.   | Special Mention:  A warning risk grade that portrays one or more weaknesses that may be tolerated in the short term.  Assets in this category are currently protected but are potentially weak.  This loan would not normally be booked as a new credit, but may have redeeming characteristics persuading the Bank to continue working with the borrower.  Loans accorded this classification have potential weaknesses which may, if not checked or corrected, weaken the company’s assets, inadequately protect the Bank’s position or effect the orderly, scheduled reduction of the debt at some future time. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Substandard:  The relationship is inadequately protected by the current net worth and cash flow capacity of the borrower, guarantor/endorser, or of the collateral pledged.  Assets have a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt.  The relationship shows deteriorating trends or other deficient areas.  The loan may be non-performing and expected to remain so for the foreseeable future.  Relationship balances may be adequately secured by asset value; however a deteriorated financial condition may necessitate collateral liquidation to effect repayment.  A relationship with an unacceptable financial condition requiring excessive attention of the officer due to the nature of the credit risk or lack of borrower cooperation.  All loans on non-accrual or in a bankruptcy are not graded higher than Substandard. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Doubtful:  The relationship has all the weaknesses inherent in a credit graded 5 with the added characteristic that the weaknesses make collection on the basis of currently existing facts, conditions and value, highly questionable or improbable.  The possibility of some loss is extremely high, however its classification as an anticipated loss is deferred until a more exact determination of the extent of loss is determined.  Loans in this category must be on non-accrual. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.   | Loss:  Loans are considered uncollectible and of such little value that continuance as bankable assets is not warranted.  It is not practicable or desirable to defer writing off this basically worthless asset even though partial recovery may be possible in the future. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Special Mention: All loans sixty days past due are classified Special Mention. The loan is not upgraded until it has been current for six consecutive months. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Substandard: All loans 90 days past due are classified Substandard. The loan is not upgraded until it has been current for six consecutive months. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Doubtful:  The relationship has all the weaknesses inherent in a credit graded 5 with the added characteristic that the weaknesses make collection on the basis of currently existing facts, conditions and value, highly questionable or improbable.  The possibility of some loss is extremely high, |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                        |   | December 31, 2011 |    |
|---------------------------------------------|--------|-------------------|---------|
|                                        |   |              |    |   | Special |   |   |   |   |   |   |   |   |   |   |
| (In thousands)                              |   | Pass              |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Residential mortgage loans:                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 153,049 |   |   | $ | 1,050 |   |   | $ | 4,285 |   |   | $ | - |   |   | $ | 158,384 |   |
| Construction                                |   |              | 3,935   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,935 |   |
|                                        |   |              | 156,984 |   |   |   | 1,050 |   |   |   | 4,285 |   |   |   | - |   |   |   | 162,319 |   |
| Commercial loans:                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 69,737  |   |   |   | 212 |   |   |   | 3,471 |   |   |   | - |   |   |   | 73,420 |   |
| Lines of credit                             |   |              | 12,579  |   |   |   | 49 |   |   |   | 1,163 |   |   |   | - |   |   |   | 13,791 |   |
| Other commercial and industrial             |   |              | 21,978  |   |   |   | 89 |   |   |   | 591 |   |   |   | 43 |   |   |   | 22,701 |   |
| Municipal                                   |   |              | 3,619   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,619 |   |
|                                        |   |              | 107,913 |   |   |   | 350 |   |   |   | 5,225 |   |   |   | 43 |   |   |   | 113,531 |   |
| Consumer loans:                             |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 22,500  |   |   |   | 162 |   |   |   | 1,456 |   |   |   | 53 |   |   |   | 24,171 |   |
| Other consumer                              |   |              | 3,922   |   |   |   | 61 |   |   |   | 123 |   |   |   | 34 |   |   |   | 4,140 |   |
|                                        |   |              | 26,422  |   |   |   | 223 |   |   |   | 1,579 |   |   |   | 87 |   |   |   | 28,311 |   |
| Total loans                                 |   | $                 | 291,319 |   |   | $ | 1,623 |   |   | $ | 11,089 |   |   | $ | 130 |   |   | $ | 304,161 |   |

|                                        |   |              |    |   |    |   |   |        |   |   |     |   |   |   |   |
|---------------------------------------------|--------|-------------------|---------|--------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                        |   | December 31, 2010 |    |
|                                        |   |              |    |   | Special |   |   |        |   |   |     |   |   |   |   |
| (In thousands)                              |   | Pass              |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
| Residential mortgage loans:                 |   |              |    |   |    |   |   |        |   |   |     |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 138,435 |   |    | $      | 1,725  |        |   | $      | 3,501    |   |   | $      | -      |   |   | $ | 143,661 |   |
| Construction                                |   |              | 3,569   |   |    |   | -      |        |   |   | -        |   |   |   | -      |   |   |   | 3,569 |   |
|                                        |   |              | 142,004 |   |    |   | 1,725  |        |   |   | 3,501    |   |   |   | -      |   |   |   | 147,230 |   |
| Commercial loans:                           |   |              |    |   |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 63,834  |   |    |   | 524    |        |   |   | 4,684    |   |   |   | -      |   |   |   | 69,042 |   |
| Lines of credit                             |   |              | 13,280  |   |    |   | 28     |        |   |   | 814      |   |   |   | -      |   |   |   | 14,122 |   |
| Other commercial and industrial             |   |              | 19,857  |   |    |   | 163    |        |   |   | 759      |   |   |   | -      |   |   |   | 20,779 |   |
| Municipal                                   |   |              | 4,826   |   |    |   | -      |        |   |   | -        |   |   |   | -      |   |   |   | 4,826 |   |
|                                        |   |              | 101,797 |   |    |   | 715    |        |   |   | 6,257    |   |   |   | -      |   |   |   | 108,769 |   |
| Consumer loans:                             |   |              |    |   |    |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 23,559  |   |    |   | 316    |        |   |   | 1,293    |   |   |   |   |   |   |   | 25,168 |   |
| Other consumer                              |   |              | 3,271   |   |    |   | 30     |        |   |   | 110      |   |   |   |   |   |   |   | 3,411 |   |
|                                        |   |              | 26,830  |   |    |   | 346    |        |   |   | 1,403    |   |   |   | -      |   |   |   | 28,579 |   |
| Total loans                                 |   | $                 | 270,631 |   |    | $      | 2,786  |        |   | $      | 11,161   |   |   | $      | -      |   |   | $ | 284,578 |   |

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Table of Contents

|                                        |   | December 31, 2011 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | 30-59 Days        |   |   | 60-89 Days |   |   | 90 Days |   |   | Total |   |   |   |   |   | Total Loans |   |
| (In thousands)                              |   | Past Due          |   |   | Past Due |   |   | and Over |   |   | Past Due |   |   | Current |   |   | Receivable |   |
| Residential mortgage loans:                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 2,870  |   |   | $ | 934 |   |   | $ | 1,428 |   |   | $ | 5,232 |   |   | $ | 153,152 |   |   | $ | 158,384 |   |
| Construction                                |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,935 |   |   |   | 3,935 |   |
|                                        |   |              | 2,870  |   |   |   | 934 |   |   |   | 1,428 |   |   |   | 5,232 |   |   |   | 157,087 |   |   |   | 162,319 |   |
| Commercial loans:                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 2,015  |   |   |   | 4 |   |   |   | 1,623 |   |   |   | 3,642 |   |   |   | 69,778 |   |   |   | 73,420 |   |
| Lines of credit                             |   |              | 337    |   |   |   | 75 |   |   |   | 467 |   |   |   | 879 |   |   |   | 12,912 |   |   |   | 13,791 |   |
| Other commercial and industrial             |   |              | 356    |   |   |   | 392 |   |   |   | 504 |   |   |   | 1,252 |   |   |   | 21,449 |   |   |   | 22,701 |   |
| Municipal                                   |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,619 |   |   |   | 3,619 |   |
|                                        |   |              | 2,708  |   |   |   | 471 |   |   |   | 2,594 |   |   |   | 5,773 |   |   |   | 107,758 |   |   |   | 113,531 |   |
| Consumer loans:                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 357    |   |   |   | 182 |   |   |   | 550 |   |   |   | 1,089 |   |   |   | 23,082 |   |   |   | 24,171 |   |
| Other consumer                              |   |              | 55     |   |   |   | 2 |   |   |   | 156 |   |   |   | 213 |   |   |   | 3,927 |   |   |   | 4,140 |   |
|                                        |   |              | 412    |   |   |   | 184 |   |   |   | 706 |   |   |   | 1,302 |   |   |   | 27,009 |   |   |   | 28,311 |   |
| Total loans                                 |   | $                 | 5,990  |   |   | $ | 1,589 |   |   | $ | 4,728 |   |   | $ | 12,307 |   |   | $ | 291,854 |   |   | $ | 304,161 |   |

|                                        |   | December 31, 2010 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | 30-59 Days        |   |   | 60-89 Days |   |   | 90 Days |   |   | Total |   |   |   |   |   | Total Loans |   |
| (In thousands)                              |   | Past Due          |   |   | Past Due |   |   | and Over |   |   | Past Due |   |   | Current |   |   | Receivable |   |
| Residential mortgage loans:                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 2,045  |   |   | $ | 1,078 |   |   | $ | 1,335 |   |   | $ | 4,458 |   |   | $ | 139,203 |   |   | $ | 143,661 |   |
| Construction                                |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,569 |   |   |   | 3,569 |   |
|                                        |   |              | 2,045  |   |   |   | 1,078 |   |   |   | 1,335 |   |   |   | 4,458 |   |   |   | 142,772 |   |   |   | 147,230 |   |
| Commercial loans:                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 238    |   |   |   | 908 |   |   |   | 3,680 |   |   |   | 4,826 |   |   |   | 64,216 |   |   |   | 69,042 |   |
| Lines of credit                             |   |              | 205    |   |   |   | - |   |   |   | 69 |   |   |   | 274 |   |   |   | 13,848 |   |   |   | 14,122 |   |
| Other commercial and industrial             |   |              | 734    |   |   |   | 301 |   |   |   | 475 |   |   |   | 1,510 |   |   |   | 19,269 |   |   |   | 20,779 |   |
| Municipal                                   |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,826 |   |   |   | 4,826 |   |
|                                        |   |              | 1,177  |   |   |   | 1,209 |   |   |   | 4,224 |   |   |   | 6,610 |   |   |   | 102,159 |   |   |   | 108,769 |   |
| Consumer loans:                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 586    |   |   |   | 371 |   |   |   | 303 |   |   |   | 1,260 |   |   |   | 23,908 |   |   |   | 25,168 |   |
| Other consumer                              |   |              | 15     |   |   |   | 7 |   |   |   | 62 |   |   |   | 84 |   |   |   | 3,327 |   |   |   | 3,411 |   |
|                                        |   |              | 601    |   |   |   | 378 |   |   |   | 365 |   |   |   | 1,344 |   |   |   | 27,235 |   |   |   | 28,579 |   |
| Total loans                                 |   | $                 | 3,823  |   |   | $ | 2,665 |   |   | $ | 5,924 |   |   | $ | 12,412 |   |   | $ | 272,166 |   |   | $ | 284,578 |   |

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Table of Contents

|                                        |   | December 31, |   |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|--------|--------------|--------|
| (In thousands)                              |   | 2011         |   |   | 2010         |   |
| Residential mortgage loans:                 |   |         |   |   |         |   |
| 1-4 family first-lien residential mortgages |   | $            | 1,428  |   |         | $      | 1,335 |   |
| Construction                                |   |         | -      |   |         |   | - |   |
|                                        |   |         | 1,428  |   |         |   | 1,335 |   |
| Commercial loans:                           |   |         |   |   |         |   |   |   |
| Real estate                                 |   |         | 1,623  |   |         |   | 3,680 |   |
| Lines of credit                             |   |         | 467    |   |         |   | 69 |   |
| Other commercial and industrial             |   |         | 504    |   |         |   | 475 |   |
| Municipal loans                             |   |         | -      |   |         |   | - |   |
|                                        |   |         | 2,594  |   |         |   | 4,224 |   |
| Consumer loans:                             |   |         |   |   |         |   |   |   |
| Home equity and junior liens                |   |         | 550    |   |         |   | 303 |   |
| Other consumer                              |   |         | 156    |   |         |   | 62 |   |
|                                        |   |         | 706    |   |         |   | 365 |   |
| Total nonaccrual loans                      |   | $            | 4,728  |   |         | $      | 5,924 |   |

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Table of Contents

|                                        |   | December 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                        |   |              |   |   | Unpaid            |   |   |   |   |   |   |   |   | Unpaid |   |   |   |   |
|                                        |   | Recorded          |   |   | Principal         |   |   | Related |   |   | Recorded |   |   | Principal |   |   | Related |   |
| (In thousands)                              |   | Investment        |   |   | Balance           |   |   | Allowance |   |   | Investment |   |   | Balance |   |   | Allowance |   |
| With no related allowance recorded:         |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 442    |   |              | $      | 442 |   |   | $ | - |   |   | $ | 185 |   |   | $ | 185 |   |   | $ | - |   |
| Residential construction mortgage           |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |              | 968    |   |              |   | 1,096 |   |   |   | - |   |   |   | 1,919 |   |   |   | 1,919 |   |   |   | - |   |
| Commercial lines of credit                  |   |              | 74     |   |              |   | 74 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other commercial and industrial             |   |              | 257    |   |              |   | 257 |   |   |   | - |   |   |   | 96 |   |   |   | 96 |   |   |   | - |   |
| Municipal                                   |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |              | 312    |   |              |   | 312 |   |   |   | - |   |   |   | 411 |   |   |   | 411 |   |   |   | - |   |
| Other consumer                              |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| With an allowance recorded:                 |   |              |   |   |              |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   |              | 856    |   |              |   | 856 |   |   |   | 149 |   |   |   | 1,215 |   |   |   | 1,215 |   |   |   | 255 |   |
| Residential construction mortgage           |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |              | 735    |   |              |   | 735 |   |   |   | 109 |   |   |   | 2,233 |   |   |   | 2,322 |   |   |   | 352 |   |
| Commercial lines of credit                  |   |              | 378    |   |              |   | 378 |   |   |   | 178 |   |   |   | 300 |   |   |   | 300 |   |   |   | 300 |   |
| Other commercial and industrial             |   |              | 122    |   |              |   | 122 |   |   |   | 122 |   |   |   | 346 |   |   |   | 346 |   |   |   | 78 |   |
| Municipal                                   |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |              | 136    |   |              |   | 136 |   |   |   | 61 |   |   |   | 252 |   |   |   | 252 |   |   |   | 110 |   |
| Other consumer                              |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total:                                      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   |              | 1,298  |   |              |   | 1,298 |   |   |   | 149 |   |   |   | 1,400 |   |   |   | 1,400 |   |   |   | 255 |   |
| Residential construction mortgage           |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |              | 1,703  |   |              |   | 1,831 |   |   |   | 109 |   |   |   | 4,152 |   |   |   | 4,241 |   |   |   | 352 |   |
| Commercial lines of credit                  |   |              | 452    |   |              |   | 452 |   |   |   | 178 |   |   |   | 300 |   |   |   | 300 |   |   |   | 300 |   |
| Other commercial and industrial             |   |              | 379    |   |              |   | 379 |   |   |   | 122 |   |   |   | 442 |   |   |   | 442 |   |   |   | 78 |   |
| Municipal                                   |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |              | 448    |   |              |   | 448 |   |   |   | 61 |   |   |   | 663 |   |   |   | 663 |   |   |   | 110 |   |
| Other consumer                              |   |              | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                        |   | $                 | 4,280  |   |              | $      | 4,408 |   |   | $ | 619 |   |   | $ | 6,957 |   |   | $ | 7,046 |   |   | $ | 1,095 |   |

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Table of Contents

| (In thousands)                  |   | 2011   |   |   | 2010   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|
| Residential mortgage            |   | $      | 1,156  |   |   | $      | 1,123 |   |
| Commercial real estate          |   |   | 2,447  |   |   |   | 3,550 |   |
| Commercial lines of credit      |   |   | 207    |   |   |   | 275 |   |
| Other commercial and industrial |   |   | 712    |   |   |   | 298 |   |
| Home equity and junior liens    |   |   | 554    |   |   |   | 178 |   |
| Consumer                        |   |   | -      |   |   |   | - |   |
|                            |   | $      | 5,075  |   |   | $      | 5,424 |   |

| (In thousands)                  |   | 2011   |   |   | 2010   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|
| Residential mortgage            |   | $      | 64     |   |   | $      | 75 |   |
| Commercial real estate          |   |   | 86     |   |   |   | 109 |   |
| Commercial lines of credit      |   |   | 31     |   |   |   | 10 |   |
| Other commercial and industrial |   |   | 12     |   |   |   | 17 |   |
| Home equity and junior liens    |   |   | 9      |   |   |   | 24 |   |
| Consumer                        |   |   | -      |   |   |   | - |   |
|                            |   | $      | 202    |   |   | $      | 235 |   |

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Table of Contents

|                                  | 2011                                                                                                    |
|---------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                  | 1-4 family                                                                                              |   |   |   |   |
|                                  | first-lien                                                                                              | Residential |   |   | Other |
|                                  | residential                                                                                             | construction | Commercial | Commercial | commercial |
| (In thousands)                        | mortgage                                                                                                | mortgage | real estate | lines of credit | and industrial |
| Allowance for loan losses:            |                                                                                                    |   |   |   |   |
| Beginning Balance                     |  $          750                                  |  $                      - |  $        1,204 |  $              579 |  $               501 |
|    Charge-offs         |            (237)                                 |                          - |             (205) |                   (65) |                   (34) |
|    Recoveries          |                49            |                          - |                   - |                      1 |                       - |
|    Provisions          |              102                       |                          - |               347 |                   (52) |                   182 |
| Ending balance                        |  $          664                                  |  $                      - |  $        1,346 |  $              463 |  $               649 |
| Ending balance: related to loans      |                                                                                                    |   |   |   |   |
| individually evaluated for impairment |  $          149                                  |  $                      - |  $           109 |  $              178 |  $               122 |
| Ending balance: related to loans      |                                                                                                    |   |   |   |   |
| collectively evaluated for impairment |  $          515                                  |  $                      - |  $        1,237 |  $              285 |  $               527 |
|                                  |                                                                                                    |   |   |   |   |
| Loans receivables:                    |                                                                                                    |   |   |   |   |
| Ending balance                        |  $   158,384                                                                        |  $               3,935 |  $      73,420 |  $         13,791 |  $          22,701 |
| Ending balance: individually          |                                                                                                    |   |   |   |   |
| evaluated for impairment              |  $       1,298                                                  |  $                      - |  $        1,703 |  $              452 |  $               379 |
| Ending balance: collectively          |                                                                                                    |   |   |   |   |
| evaluated for impairment              |  $   157,086                                                                        |  $               3,935 |  $      71,717 |  $         13,339 |  $          22,322 |
|                                  |                                                                                                    |   |   |   |   |
|                                  |                                                                                                    |   |   |   |   |
|                                  |                                                                                                    | Home equity | Other |   |   |
|                                  | Municipal                                                                                               | and junior liens | Consumer | Unallocated | Total |
| Allowance for loan losses:            |                                                                                                    |   |   |   |   |
| Beginning Balance                     |  $              3            |  $                  424 |  $             89 |  $                98 |  $            3,648 |
|    Charge-offs         |                  - |                      (43) |             (123) |                       - |                 (707) |
|    Recoveries          |                  - |                        10 |                 39 |                       - |                     99 |
|    Provisions          |                (1)           |                      110 |               157 |                    95 |                   940 |
| Ending balance                        |  $              2            |  $                  501 |  $           162 |  $              193 |  $            3,980 |
| Ending balance: related to loans      |                                                                                                    |   |   |   |   |
| individually evaluated for impairment |  $              -            |  $                    61 |  $               - |  $                   - |  $               619 |
| Ending balance: related to loans      |                                                                                                    |   |   |   |   |
| collectively evaluated for impairment |  $              2            |  $                  440 |  $           162 |  $              193 |  $            3,361 |
|                                  |                                                                                                    |   |   |   |   |
| Loans receivables:                    |                                                                                                    |   |   |   |   |
| Ending balance                        |  $       3,619                                                  |  $             24,171 |  $        4,140 |  $                   - |  $        304,161 |
| Ending balance: individually          |                                                                                                    |   |   |   |   |
| evaluated for impairment              |  $              -            |  $                  448 |  $               - |  $                   - |  $            4,280 |
| Ending balance: collectively          |                                                                                                    |   |   |   |   |
| evaluated for impairment              |  $       3,619                                                  |  $             23,723 |  $        4,140 |  $                   - |  $        299,881 |

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|                                  |   | 2010        |    |
|---------------------------------------|--------|-------------|---------|
|                                  |   | 1-4 family  |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | first-lien  |    |   | Residential |   |   |   |   |   |   |   |   | Other |   |
|                                  |   | residential |    |   | mortgage |   |   | Commercial |   |   | Commercial |   |   | commercial |   |
|                                  |   | mortgage    |    |   | construction |   |   | real estate |   |   | lines of credit |   |   | and industrial |   |
| Allowance for loan losses:            |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $           | 763     |   |   | $ | - |   |   | $ | 1,009 |   |   | $ | 376 |   |   | $ | 486 |   |
|    Charge-offs         |   |        | (48     | ) |   |   | - |   |   |   | (162 | ) |   |   | (196 | ) |   |   | (27 | ) |
|    Recoveries          |   |        | 19      |   |   |   | - |   |   |   | 55 |   |   |   |   |   |   |   | - |   |
|    Provisions          |   |        | 16      |   |   |   | - |   |   |   | 302 |   |   |   | 399 |   |   |   | 42 |   |
| Ending balance                        |   | $           | 750     |   |   | $ | - |   |   | $ | 1,204 |   |   | $ | 579 |   |   | $ | 501 |   |
| Ending balance: related to loans      |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   | $           | 255     |   |   | $ | - |   |   | $ | 352 |   |   | $ | 300 |   |   | $ | 78 |   |
| Ending balance: related to loans      |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $           | 495     |   |   | $ | - |   |   | $ | 852 |   |   | $ | 279 |   |   | $ | 423 |   |
|                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $           | 143,661 |   |   | $ | 3,569 |   |   | $ | 69,042 |   |   | $ | 14,122 |   |   | $ | 20,779 |   |
| Ending balance: individually          |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $           | 1,400   |   |   | $ | - |   |   | $ | 4,152 |   |   | $ | 300 |   |   | $ | 442 |   |
| Ending balance: collectively          |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $           | 142,261 |   |   | $ | 3,569 |   |   | $ | 64,890 |   |   | $ | 13,822 |   |   | $ | 20,337 |   |
|                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |        |    |   |   | Home equity |   |   | Other |   |   |   |   |   |   |   |   |   |
|                                  |   | Municipal   |    |   | and junior liens |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for loan losses:            |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $           | 2       |   |   | $ | 390 |   |   | $ | 76 |   |   | $ | (24 | ) |   | $ | 3,078 |   |
|    Charge-offs         |   |        | -       |   |   |   | (76 | ) |   |   | (81 | ) |   |   | - |   |   |   | (590 | ) |
|    Recoveries          |   |        | -       |   |   |   | 5 |   |   |   | 31 |   |   |   | - |   |   |   | 110 |   |
|    Provisions          |   |        | 1       |   |   |   | 105 |   |   |   | 63 |   |   |   | 122 |   |   |   | 1,050 |   |
| Ending balance                        |   | $           | 3       |   |   | $ | 424 |   |   | $ | 89 |   |   | $ | 98 |   |   | $ | 3,648 |   |
| Ending balance: related to loans      |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   | $           | -       |   |   | $ | 110 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,095 |   |
| Ending balance: related to loans      |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $           | 3       |   |   | $ | 314 |   |   | $ | 89 |   |   | $ | 98 |   |   | $ | 2,553 |   |
|                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $           | 4,826   |   |   | $ | 25,168 |   |   | $ | 3,411 |   |   |   |   |   |   | $ | 284,578 |   |
| Ending balance: individually          |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $           | -       |   |   | $ | 663 |   |   | $ | - |   |   |   |   |   |   | $ | 6,957 |   |
| Ending balance: collectively          |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $           | 4,826   |   |   | $ | 24,505 |   |   | $ | 3,411 |   |   |   |   |   |   | $ | 277,621 |   |

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| (In thousands)                        |   | 2011 |   |   | 2010   |   |
|---------------------------------------|--------|------|--------|--------|--------|--------|
| Mortgage servicing rights capitalized |   | $    | -      |   |   | $      | 2 |   |
| Mortgage servicing rights amortized   |   | $    | 27     |   |   | $      | 28 |   |

| (In thousands)                    |   | 2011   |   |   | 2010   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Land                              |   | $      | 1,544  |   |   | $      | 1,226 |   |
| Buildings                         |   |   | 10,056 |   |   |   | 7,181 |   |
| Furniture, fixtures and equipment |   |   | 8,703  |   |   |   | 7,531 |   |
| Construction in progress          |   |   | 353    |   |   |   | 2,761 |   |
|                              |   |   | 20,656 |   |   |   | 18,699 |   |
| Less: Accumulated depreciation    |   |   | 9,959  |   |   |   | 9,267 |   |
|                              |   | $      | 10,697 |   |   | $      | 9,432 |   |

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| (In thousands)                     | 2011                                                                    | 2010                                                                                |
|------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------------------|
| Savings accounts                   |  $       58,689                 |  $         55,966                 |
| Time accounts                      |          83,786            |            85,240            |
| Time accounts over $100,000        |          69,558            |            57,395            |
| Money management accounts          |          14,249            |            12,593            |
| MMDA accounts                      |          70,588            |            54,799            |
| Demand deposit interest-bearing    |          28,625            |            26,449            |
| Demand deposit noninterest-bearing |          37,153            |            30,716            |
| Mortgage escrow funds              |            3,481 |              3,344 |
|                               |  $     366,129                            |  $       326,502                            |

|  (In thousands) |                                                                    |
|----------------------|-------------------------------------------------------------------------|
| Year of Maturity:    |                                                                    |
| 2012                 |  $       85,341                 |
| 2013                 |          28,543            |
| 2014                 |          27,088            |
| 2015                 |            5,870 |
| 2016                 |            2,067 |
| Thereafter           |            4,435 |
|                 |  $     153,344                            |

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| (In thousands)                  |   | 2011   |   |   | 2010   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|
| Short-term:                     |   |   |   |   |   |   |
| FHLB Advances                   |   | $      | -      |   |   | $      | 13,000 |   |
| Long-term:                      |   |   |   |   |   |   |   |   |
| FHLB advances                   |   | $      | 20,000 |   |   | $      | 23,000 |   |
| ESOP loan payable               |   |   | 1,074  |   |   |   | - |   |
| Citigroup Repurchase agreements |   |   | 5,000  |   |   |   | 5,000 |   |
| Total long-term borrowings      |   | $      | 26,074 |   |   | $      | 28,000 |   |

| Term                                |   | Principal |   |   | Rates  |   |
|-------------------------------------|--------|-----------|--------|--------|--------|--------|
| (Dollars in thousands)              |   |      |   |   |   |   |
|                                |   |      |   |   |   |   |
| Long-term:                          |   |      |   |   |   |   |
| Repurchase agreements (due in 2013) |   | $         | 5,000  |   |   |   | 2.95 | % |
| Advances with FHLB                  |   |      |   |   |   |   |   |   |
| due within 1 year                   |   |      | 4,000  |   |   |   | 2.70%-4.91 | % |
| due within 2 years                  |   |      | 4,000  |   |   |   | 4.46%-4.53 | % |
| due within 3 years                  |   |      | 5,000  |   |   |   | 2.85%-3.07 | % |
| due within 4 years                  |   |      | 2,000  |   |   |   | 2.79 | % |
| due within 5 years                  |   |      | 3,000  |   |   |   | 2.12 | % |
| due within 6 years                  |   |      | 2,000  |   |   |   | 2.56 | % |
| Total advances with FHLB            |   |      | 20,000 |   |   |   |   |   |
| Total                               |   | $         | 25,000 |   |   |   |   |   |

|       |   |   |   |
|------------|--------|--------|--------|
| 2012       |   | $      | 4,110  |   |
| 2013       |   |   | 9,110  |   |
| 2014       |   |   | 5,110  |   |
| 2015       |   |   | 2,110  |   |
| 2016       |   |   | 3,110  |   |
| Thereafter |   |   | 2,524  |   |
|       |   | $      | 26,074 |   |

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|                                           |   | Pension Benefits |   |   | Postretirement Benefits |   |
|------------------------------------------------|--------|------------------|--------|--------|-------------------------|--------|
| (In thousands)                                 |   | 2011             |   |   | 2010                    |   |   | 2011 |   |   | 2010 |   |
| Change in benefit obligations:                 |   |             |   |   |                    |   |   |   |   |   |   |   |
| Benefit obligations at beginning of year       |   | $                | 7,539  |   |                    | $      | 6,095 |   |   | $ | 364 |   |   | $ | 332 |   |
| Service cost                                   |   |             | 328    |   |                    |   | 261 |   |   |   | - |   |   |   | - |   |
| Interest cost                                  |   |             | 414    |   |                    |   | 376 |   |   |   | 19 |   |   |   | 20 |   |
| Actuarial loss                                 |   |             | 2,085  |   |                    |   | 954 |   |   |   | 47 |   |   |   | 37 |   |
| Benefits paid                                  |   |             | (199   | )      |                    |   | (147 | ) |   |   | (29 | ) |   |   | (25 | ) |
| Benefit obligations at end of year             |   |             | 10,167 |   |                    |   | 7,539 |   |   |   | 401 |   |   |   | 364 |   |
| Change in plan assets:                         |   |             |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   |             | 7,890  |   |                    |   | 6,252 |   |   |   | - |   |   |   | - |   |
| Actual return on plan assets                   |   |             | (142   | )      |                    |   | 722 |   |   |   | - |   |   |   | - |   |
| Benefits paid                                  |   |             | (199   | )      |                    |   | (147 | ) |   |   | (29 | ) |   |   | (25 | ) |
| Employer contributions                         |   |             | -      |   |                    |   | 1,063 |   |   |   | 29 |   |   |   | 25 |   |
| Fair value of plan assets at end of year       |   |             | 7,549  |   |                    |   | 7,890 |   |   |   | - |   |   |   | - |   |
| Funded Status - (liability) asset              |   | $                | (2,618 | )      |                    | $      | 351 |   |   | $ | (401 | ) |   | $ | (364 | ) |

|                               | Pension Benefits                                                                                                           | Postretirement Benefits                                        |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
| (In thousands)                     | 2011                                                                                                                       | 2010                                                           | 2011 | 2010 |
| Unrecognized transition obligation |  $                   - |  $         - |  $                   2 |  $      20 |
| Net loss                           |                5,940                            |     3,335                                  |                     86 |          40 |
|                               |                5,940                            |     3,335                                  |                     88 |          61 |
| Tax Effect                         |                2,376                            |     1,334                                  |                     36 |          25 |
|                               |  $            3,564                                       |  $ 2,001                                                  |  $                 53 |  $      36 |

|                                           | Pension Benefits | Postretirement Benefits |
|------------------------------------------------|------------------|-------------------------|
|                                           | 2011             | 2010                    | 2011 | 2010 |
| Weighted average discount rate                 | 4.40%            | 5.54%                   | 4.40% | 5.54% |
| Rate of increase in future compensation levels | 3.50%            | 3.50%                   |                    - |                       - |

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|                                  |                Pension Benefits                           | Postretirement Benefits                                                                                                         |
|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
|                                  | 2011                                                                                                                            | 2010                                                                                                                            | 2011 | 2010 |
| (In thousands)                        |                                                                                                                            |                                                                                                                            |   |   |
| Service cost                          |  $             328                                        |  $             261                                        |  $                  - |  $                     - |
| Interest cost                         |                 414                             |                 376                             |                   19 |                      20 |
| Expected return on plan assets        |               (625)                                       |               (554)                                       |                      - |                         - |
| Amortization of transition obligation |                      - |                      - |                   18 |                      18 |
| Amortization of net losses            |                 247                             |                 200                             |                     1 |                         - |
| Net periodic benefit plan cost        |  $             364                                        |  $             283                                        |  $               38 |  $                  38 |

|                                             | Pension Benefits | Postretirement Benefits |
|--------------------------------------------------|------------------|-------------------------|
|                                             | 2011             | 2010                    | 2011 | 2010 |
| Weighted average discount rate                   | 5.54%            | 6.25%                   | 5.54% | 6.25% |
| Expected long term rate of return on plan assets | 8.00%            | 8.00%                   |                    - |                       - |
| Rate of increase in future compensation levels   | 3.50%            | 3.50%                   |                    - |                       - |

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|                                    |   | At December 31, 2011 |   |
|-----------------------------------------|--------|----------------------|--------|
|                                    |   |                 |   |   |   |   |   |   |   |   | Total Fair |   |
| (In thousands)                          |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Value |   |
| Asset Category:                         |   |                 |   |   |   |   |   |   |   |   |   |   |
| Mutual funds - equity                   |   |                 |   |   |   |   |   |   |   |   |   |   |
| Large-cap value (a)                     |   | $                    | 675    |   |   | $ | - |   |   | $ | - |   |   | $ | 675 |   |
| Small-cap core (b)                      |   |                 | 895    |   |   |   | - |   |   |   | - |   |   |   | 895 |   |
| Common/collective trusts - equity       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Large-cap core (c)                      |   |                 | -      |   |   |   | 798 |   |   |   | - |   |   |   | 798 |   |
| Large-cap value (d)                     |   |                 | -      |   |   |   | 393 |   |   |   | - |   |   |   | 393 |   |
| Large-cap growth (e)                    |   |                 | -      |   |   |   | 1,087 |   |   |   | - |   |   |   | 1,087 |   |
| International core (f)                  |   |                 | -      |   |   |   | 830 |   |   |   | - |   |   |   | 830 |   |
| Common/collective trusts - fixed income |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Market duration fixed (g)               |   |                 | -      |   |   |   | 2,871 |   |   |   | - |   |   |   | 2,871 |   |
|                                    |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                   |   | $                    | 1,570  |   |   | $ | 5,979 |   |   | $ | - |   |   | $ | 7,549 |   |

|                                    |   | At December 31, 2010 |   |
|-----------------------------------------|--------|----------------------|--------|
|                                    |   |                 |   |   |   |   |   |   |   |   | Total Fair |   |
| (In thousands)                          |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Value |   |
| Asset Category:                         |   |                 |   |   |   |   |   |   |   |   |   |   |
| Mutual funds - equity                   |   |                 |   |   |   |   |   |   |   |   |   |   |
| Large-cap value (a)                     |   | $                    | 711    |   |   | $ | - |   |   | $ | - |   |   | $ | 711 |   |
| Small-cap core (b)                      |   |                 | 949    |   |   |   | - |   |   |   | - |   |   |   | 949 |   |
| Common/collective trusts - equity       |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Large-cap core (c)                      |   |                 | -      |   |   |   | 810 |   |   |   | - |   |   |   | 810 |   |
| Large-cap value (d)                     |   |                 | -      |   |   |   | 411 |   |   |   | - |   |   |   | 411 |   |
| Large-cap growth (e)                    |   |                 | -      |   |   |   | 1,164 |   |   |   | - |   |   |   | 1,164 |   |
| International core (f)                  |   |                 | -      |   |   |   | 1,081 |   |   |   | - |   |   |   | 1,081 |   |
| Common/collective trusts - fixed income |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Market duration fixed (g)               |   |                 | -      |   |   |   | 2,764 |   |   |   | - |   |   |   | 2,764 |   |
| Total                                   |   | $                    | 1,660  |   |   | $ | 6,230 |   |   | $ | - |   |   | $ | 7,890 |   |

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| (a)   | This category consists of investments whose sector and industry exposures are maintained within a narrow band around Russell 1000 index.  The portfolio holds approximately 150 stocks. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 index.  The portfolio will typically hold more than 150 stocks. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | This fund tracks the performance of the S&P 500 Index by purchasing the securities represented in the Index in approximately the same weightings as the Index. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | This category contains large-cap stocks with above-average yields.  The portfolio typically holds between 60 and 70 stocks. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | This category consists of a portfolio of between 45 and 65 stocks that will typically overweight technology and health care. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

| (f)   | This category consists of a broadly diversified portfolio of non-U.S. domiciled stocks.  The portfolio will typically hold more than 200 stocks, with 0% - 35% invested in emerging markets securities. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | This category consists of an index fund that tracks the Barclays Capital U.S. Aggregate Bond Index.  The fund invests in Treasury, agency, corporate, mortgage-backed and asset-backed securities. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      | Pension                                                                     |   | Postretirement                                                                         |   |                                                                        |
|---------------------------|-----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
|                      | Benefits                                                                    |   | Benefits                                                                               |   | Total                                                                       |
| Years ending December 31: |                                                                        |   |                                                                                   |   |                                                                        |
| (In thousands)            |                                                                        |   |                                                                                   |   |                                                                        |
| 2012                      |  $         212            |   |  $           28            |   |  $         240            |
| 2013                      |             220 |   |               30 |   |             250 |
| 2014                      |             230 |   |               33 |   |             263 |
| 2015                      |             241 |   |               33 |   |             274 |
| 2016                      |             254 |   |               33 |   |             287 |
| Years 2017 - 2021         |           1,715           |   |             156            |   |           1,871           |

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| (In thousands)                                                          |   | 2011                                                                                                                 |   | 2010                                                                                                                 |
|-------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|
| Unrealized holding (losses) gains on securities available for sale:     |   |                                                                                                                 |   |                                                                                                                 |
| Unrealized holding gains arising during the period                      |   |  $           2,306                                       |   |  $                70            |
| Reclassification adjustment for net gains included in net income        |   |                (791)                      |   |                (211)                      |
| Net unrealized gains (losses) on securities available for sale          |   |               1,515                            |   |                (141)                      |
| Unrealized holding loss on financial derivative:                        |   |                                                                                                                 |   |                                                                                                                 |
| Unrealized holding loss arising during the period                       |   |                (151)                      |   |                (170)                      |
| Reclassification adjustment for interest expense included in net income |   |                    61 |   |                    60 |
| Net unrealized loss on financial derivative                             |   |                  (90)           |   |                (110)                      |
| Defined benefit pension and post retirement plans:                      |   |                                                                                                                 |   |                                                                                                                 |
| Additional plan losses                                                  |   |             (2,899)                                      |   |                (823)                      |
| Reclassification adjustment for amortization of benefit plans' net loss |   |                                                                                                                 |   |                                                                                                                 |
| and transition obligation recognized in net periodic expense            |   |                  267            |   |                  218            |
| Net change in retirement plans                                          |   |             (2,632)                                      |   |                (605)                      |
| Other comprehensive loss before tax                                     |   |             (1,207)                                      |   |                (856)                      |
| Tax effect                                                              |   |                  482            |   |                  342            |
| Other comprehensive loss                                                |   |  $            (725)                                 |   |  $            (514)                                 |

| (In thousands)                                       |   | 2011   |   |   | 2010   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Unrealized gains on securities available for sale    |   |   |   |   |   |   |
| (net of tax expense 2011 - $716; 2010 - $110)        |   | $      | 1,073  |   |   | $      | 164 |   |
| Unrealized losses on financial derivative            |   |   |   |   |   |   |   |   |
| (net of tax benefit 2011 - $80; 2010 - $44)          |   |   | (120   | )      |   |   | (66 | ) |
| Net pension losses                                   |   |   |   |   |   |   |   |   |
| (net of tax benefit 2011 - $2,376; 2010 - $1,334)    |   |   | (3,564 | )      |   |   | (2,001 | ) |
| Net post-retirement losses and transition obligation |   |   |   |   |   |   |   |   |
| (net of tax benefit 2011 - $36; 2010 - $25)          |   |   | (53    | )      |   |   | (36 | ) |
|                                                 |   | $      | (2,664 | )      |   | $      | (1,939 | ) |

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|                             |   |        |   |   | Weighted       |   |   |        |   |
|----------------------------------|--------|-------------|--------|--------|----------------|--------|--------|-------------|--------|
|                             |   | Options     |   |   | Average        |   |   | Shares      |   |
| (Shares in thousands)            |   | Outstanding |   |   | Exercise Price |   |   | Exercisable |   |
| Outstanding at January 1, 2010   |   |        | 19     |   |           | $      | 8.34   |        |   |   | 19 |   |
| Exercised                        |   |        | -      |   |           |   | -      |        |   |   |   |   |
| Expired                          |   |        | -      |   |           |   | -      |        |   |   |   |   |
| Outstanding at December 31, 2010 |   |        | 19     |   |           | $      | 8.34   |        |   |   | 19 |   |
| Granted                          |   |        | 120    |   |           | $      | 9.00   |        |   |   | - |   |
| Exercised                        |   |        | (8     | )      |           |   | 8.34   |        |   |   | (8 | ) |
| Expired                          |   |        | (11    | )      |           |   | 8.34   |        |   |   | (11 | ) |
| Outstanding at December 31, 2011 |   |        | 120    |   |           | $      | 9.00   |        |   |   | - |   |

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| (In thousands) |   | 2011   |   |   | 2010   |   |
|----------------|--------|--------|--------|--------|--------|--------|
| Current        |   | $      | (149   | )      |   | $      | 744 |   |
| Deferred       |   |   | 1,193  |   |   |   | 263 |   |
|           |   | $      | 1,044  |   |   | $      | 1,007 |   |

| (In thousands)               |   | 2011   |   |   | 2010   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|
| Federal Income Tax           |   | $      | 968    |   |   | $      | 911 |   |
| New York State Franchise Tax |   |   | 76     |   |   |   | 96 |   |
|                         |   | $      | 1,044  |   |   | $      | 1,007 |   |

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| (In thousands)                                 |   | 2011   |   |   | 2010   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Assets:                                        |   |   |   |   |   |   |
| Deferred compensation                          |   | $      | 832    |   |   | $      | 825 |   |
| Allowance for loan losses                      |   |   | 1,540  |   |   |   | 1,411 |   |
| Postretirement benefits                        |   |   | 156    |   |   |   | 141 |   |
| Mortgage recording tax credit carryforward     |   |   | 277    |   |   |   | 242 |   |
| Impairment losses on investment securities     |   |   | 342    |   |   |   | 686 |   |
| Capital loss carryforward                      |   |   | 307    |   |   |   | - |   |
| AMT credit carryforward                        |   |   | 59     |   |   |   | - |   |
| Pension liability                              |   |   | 85     |   |   |   | - |   |
| Other                                          |   |   | 106    |   |   |   | 165 |   |
|                                           |   |   | 3,704  |   |   |   | 3,470 |   |
| Liabilities:                                   |   |   |   |   |   |   |   |   |
| Pension asset                                  |   |   | -      |   |   |   | (136 | ) |
| Depreciation                                   |   |   | (749   | )      |   |   | (359 | ) |
| Accretion                                      |   |   | (45    | )      |   |   | (48 | ) |
| Loan origination fees                          |   |   | (221   | )      |   |   | (278 | ) |
| Intangible assets                              |   |   | (1,409 | )      |   |   | (1,220 | ) |
| Investment securities and financial derivative |   |   | (636   | )      |   |   | (52 | ) |
| Prepaid expenses                               |   |   | (114   | )      |   |   | (168 | ) |
|                                           |   |   | (3,174 | )      |   |   | (2,261 | ) |
|                                           |   |   | 530    |   |   |   | 1,209 |   |
| Less: deferred tax asset valuation allowance   |   |   | (458   | )      |   |   | (458 | ) |
| Net deferred tax asset                         |   | $      | 72     |   |   | $      | 751 |   |

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|                                                              |   | 2011   |   |   | 2010   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Federal statutory income tax rate                                 |   |   | 34.0   | %      |   |   | 34.0 | % |
| State tax, net of federal benefit                                 |   |   | 1.5    |   |   |   | 1.8 |   |
| Tax-exempt interest income                                        |   |   | (4.4   | )      |   |   | (3.4 | ) |
| Increase in value of bank owned life insurance less premiums paid |   |   | (1.9   | )      |   |   | (2.3 | ) |
| Gain on proceeds from bank owned life insurance                   |   |   | -      |   |   |   | (1.5 | ) |
| Other                                                             |   |   | 1.8    |   |   |   | 0.1 |   |
| Effective income tax rate                                         |   |   | 31.0   | %      |   |   | 28.7 | % |

|                                       |   | Contract Amount |   |
|--------------------------------------------|--------|-----------------|--------|
| (In thousands)                             |   | 2011            |   |   | 2010 |   |
| Commitments to grant loans                 |   | $               | 9,010  |   |   | $ | 9,591 |   |
| Unfunded commitments under lines of credit |   |            | 17,174 |   |   |   | 18,950 |   |
| Standby letters of credit                  |   |            | 1,595  |   |   |   | 1,524 |   |

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| Years Ending December 31:    |   |                                                                                   |
|------------------------------|--------|----------------------------------------------------------------------------------------|
| (In thousands)               |   |                                                                                   |
| 2012                         |   |  $           65            |
| 2013                         |   |               30 |
| Total minimum lease payments |   |  $           95            |

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|                                         |                                                                                                                                                                |              |                      |         | Minimum                   |
|----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|---------------------------|--------------|---------------------------|
|                                         |                                                                                                                                                                |              |                      |         | To Be "Well-              |
|                                         |                                                                                                                                                                |              | Minimum                   | Capitalized" |
|                                         |                                                                                                                                                                |              | For Capital               | Under Prompt |
|                                         |                            Actual | Adequacy Purposes | Corrective Provisions     |
| (Dollars in thousands)                       | Amount                                                                                                                                                              | Ratio             | Amount                    | Ratio        | Amount                    | Ratio |
| As of December 31, 2011:                     |                                                                                                                                                                |              |                      |         |                      |   |
| Total Core Capital (to Risk-Weighted Assets) |  $    43,670                                                                                                                               | 14.9%             |  $  23,386 | 8.0%         |  $  29,233 | 10.0% |
| Tier 1 Capital (to Risk-Weighted Assets)     |  $    39,917                                                                                                                               | 13.7%             |  $  11,693 | 4.0%         |  $  17,540 | 6.0% |
| Tier 1 Capital (to Average Assets)           |  $    39,917                                                                                                                               | 9.4%              |  $  17,041 | 4.0%         |  $  21,301 | 5.0% |
| As of December 31, 2010                      |                                                                                                                                                                |              |                      |         |                      |   |
| Total Core Capital (to Risk-Weighted Assets) |  $    35,837                                                                                                                               | 13.5%             |  $  21,197 | 8.0%         |  $  26,496 | 10.0% |
| Tier 1 Capital (to Risk-Weighted Assets)     |  $    32,440                                                                                                                               | 12.2%             |  $  10,598 | 4.0%         |  $  15,898 | 6.0% |
| Tier 1 Capital (to Average Assets)           |  $    32,440                                                                                                                               | 8.1%              |  $  16,001 | 4.0%         |  $  20,002 | 5.0% |

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|                   |                    |                                                                                                                                                             |                                                                                                                                                             |
|------------------------|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  (In thousands)   |                    | 2011                                                                                                                                                             | 2010                                                                                                                                                             |
|  Cash flow hedge: |                    |                                                                                                                                                             |                                                                                                                                                             |
|                   |  Other liabilities |  $                         200 |  $                         110 |

| (In thousands)                                                   |                                                                                                                    | 2011                                                                                                                                   | 2010                                                                                                                                   |
|------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| Balance as of January 1:                                         |                                                                                                                    |  $                (110)                           |  $                    -       |
| Amount of losses recognized in other comprehensive income        |                    (151) |                    (170)                |
| Amount of loss reclassified from other comprehensive income      |                                                                                                                    |                                                                                                                                   |
|      and recognized as interest expense |                                                                                                                    |                       61 |                       60 |
| Balance as of December 31:                                       |                                                                                                                    |  $                (200)                           |  $                (110)                           |

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|                                          |  2011                                                                                                                |
|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                      |   |   | Total Fair |
| (In thousands)                                |          Level 1                                                             |        Level 2 |      Level 3 | Value |
| Debt investment securities:                   |                                                                                                                      |   |   |   |
| US Treasury, agencies and GSEs                |  $                 -            |  $        5,073 |  $             - |  $     5,073 |
| State and political subdivisions              |                     - |          20,304 |                 - |       20,304 |
| Corporate                                     |                     - |          20,434 |                 - |       20,434 |
| Residential mortgage-backed – US agency |                     - |          51,056 |                 - |       51,056 |
| Residential mortgage-backed - private label   |                     - |               519 |                 - |            519 |
| Equity investment securities:                 |                                                                                                                      |   |   |   |
| Mutual funds:                                 |                                                                                                                      |   |   |   |
| Ultra short mortgage fund                     |             1,298                                             |                    - |                 - |         1,298 |
| Large cap equity fund                         |             1,024                                             |                    - |                 - |         1,024 |
| Other mutual funds                            |                     - |               243 |                 - |            243 |
| Common stock - financial services industry    |                  25                  |               419 |                 - |            444 |
| Total investment securities                   |  $         2,347                                                        |  $      98,048 |  $             - |  $ 100,395 |
|                                          |                                                                                                                      |   |   |   |
| Interest rate swap derivative                 |  $                 -            |  $         (200) |  $             - |  $      (200) |
|                                          |                                                                                                                      |   |   |   |
|                                          |                                                                                                                      |   |   |   |
|                                          | 2010                                                                                                                      |
|                                          |                                                                                                                      |   |   | Total Fair |
| (In thousands)                                |          Level 1                                                             |        Level 2 |      Level 3 | Value |
| Debt investment securities:                   |                                                                                                                      |   |   |   |
| US Treasury, agencies and GSEs                |  $                 -            |  $      20,023 |  $             - |  $   20,023 |
| State and political subdivisions              |                     - |          18,979 |                 - |       18,979 |
| Corporate                                     |                     - |            5,600 |                 - |         5,600 |
| Residential mortgage-backed – US agency |                     - |          36,409 |                 - |       36,409 |
| Residential mortgage-backed - private label   |                     - |               837 |                 - |            837 |
| Equity investment securities:                 |                                                                                                                      |   |   |   |
| Mutual funds:                                 |                                                                                                                      |   |   |   |
| Ultra short mortgage fund                     |             1,558                                             |                    - |                 - |         1,558 |
| Large cap equity fund                         |             1,222                                             |                    - |                 - |         1,222 |
| Other mutual funds                            |                     - |               244 |                 - |            244 |
| Common stock - financial services industry    |                  36                  |               419 |                 - |            455 |
| Total investment securities                   |  $         2,816                                                        |  $      82,511 |  $             - |  $   85,327 |
|                                          |                                                                                                                      |   |   |   |
| Interest rate swap derivative                 |  $                 -            |  $         (110) |  $             - |  $      (110) |

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|                   | 2011                                                          |
|------------------------|---------------------------------------------------------------|
|                   |                                                          |   |   | Total Fair |
| (In thousands)         |          Level 1 |        Level 2 |      Level 3 | Value |
| Impaired loans         |  $    -                              |  $    - |  $     1,608 |  $     1,608 |
| Foreclosed real estate |  -                                                       |  - |  $        165 |  $        165 |
|                   |                                                          |   |   |   |
|                   | 2010                                                          |
|                   |                                                          |   |   | Total Fair |
| (In thousands)         |          Level 1 |        Level 2 |      Level 3 | Value |
| Impaired loans         |  $    -                              |  $    - |  $     3,251 |  $     3,251 |
|                   |                                                          |   |   |   |

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|                           |   | 2011     |    |   | 2010        |   |
|--------------------------------|--------|----------|---------|--------|-------------|--------|
|                           |   | Carrying |    |   | Estimated   |   |   | Carrying |   |   | Estimated |   |
| (In thousands)                 |   | Amounts  |    |   | Fair Values |   |   | Amounts |   |   | Fair Values |   |
| Financial assets:              |   |     |    |   |        |   |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $        | 10,218  |   |        | $      | 10,218 |   |   | $ | 13,763 |   |   | $ | 13,763 |   |
| Interest earning time deposits |   |     | 2,000   |   |        |   | 2,000 |   |   |   | - |   |   |   | - |   |
| Investment securities          |   |     | 100,395 |   |        |   | 100,395 |   |   |   | 85,327 |   |   |   | 85,327 |   |
| Federal Home Loan Bank stock   |   |     | 1,528   |   |        |   | 1,528 |   |   |   | 2,134 |   |   |   | 2,134 |   |
| Net loans                      |   |     | 300,770 |   |        |   | 310,218 |   |   |   | 281,648 |   |   |   | 290,049 |   |
| Accrued interest receivable    |   |     | 1,685   |   |        |   | 1,685 |   |   |   | 1,709 |   |   |   | 1,709 |   |
| Mortgage servicing rights      |   |     | 8       |   |        |   | 8 |   |   |   | 35 |   |   |   | 35 |   |
| Financial liabilities:         |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                       |   | $        | 366,129 |   |        | $      | 369,154 |   |   | $ | 326,502 |   |   | $ | 328,963 |   |
| Borrowings                     |   |     | 26,074  |   |        |   | 27,322 |   |   |   | 41,000 |   |   |   | 41,984 |   |
| Junior subordinated debentures |   |     | 5,155   |   |        |   | 5,155 |   |   |   | 5,155 |   |   |   | 5,155 |   |
| Accrued interest payable       |   |     | 145     |   |        |   | 145 |   |   |   | 148 |   |   |   | 148 |   |
| Interest rate swap derivative  |   |     | 200     |   |        |   | 200 |   |   |   | 110 |   |   |   | 110 |   |
| Off-balance sheet instruments: |   |     |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Standby letters of credit      |   | $        | -       |   |        | $      | - |   |   | $ | - |   |   | $ | - |   |
| Commitments to extend credit   |   | $        | -       |   |        | $      | - |   |   | $ | - |   |   | $ | - |   |

| Statements of Condition                    |   | 2011   |   |   | 2010   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
| (In thousands)                             |   |   |   |   |   |   |
| Assets                                     |   |   |   |   |   |   |
| Cash                                       |   | $      | 1,729  |   |   | $      | 1,199 |   |
| Investments                                |   |   | 23     |   |   |   | 24 |   |
| Investment in bank subsidiary              |   |   | 41,213 |   |   |   | 34,408 |   |
| Investment in non-bank subsidiary          |   |   | 155    |   |   |   | 155 |   |
| Other assets                               |   |   | 328    |   |   |   | 166 |   |
| Total assets                               |   | $      | 43,448 |   |   | $      | 35,952 |   |
| Liabilities and Shareholders' Equity       |   |   |   |   |   |   |   |   |
| Accrued liabilities                        |   | $      | 452    |   |   | $      | 205 |   |
| Junior subordinated debentures             |   |   | 5,155  |   |   |   | 5,155 |   |
| Shareholders' equity                       |   |   | 37,841 |   |   |   | 30,592 |   |
| Total liabilities and shareholders' equity |   | $      | 43,448 |   |   | $      | 35,952 |   |

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| Statements of Income                                                              | 2011                                                                                                    | 2010                                                                                                          |
|-----------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|
| (In thousands)                                                                    |                                                                                                    |                                                                                                          |
| Income                                                                            |                                                                                                    |                                                                                                          |
| Dividends from bank subsidiary                                                    |  $               -      |  $           700                                  |
| Dividends from non-bank subsidiary                                                |                  4 |                   4 |
| Total income                                                                      |                  4 |               704                       |
| Expenses                                                                          |                                                                                                    |                                                                                                          |
| Interest                                                                          |               163                 |               164                       |
| Operating                                                                         |               200                 |               171                       |
| Total expenses                                                                    |               363                 |               335                       |
| (Loss)/income before taxes and equity in undistributed net income of subsidiaries |             (359)                           |               369                       |
| Tax benefit                                                                       |               108                 |                 98            |
| (Loss)/income before equity in undistributed net income of subsidiaries           |             (251)                           |               467                       |
| Equity in undistributed net income of subsidiaries                                |            2,574                                 |             2,038                                 |
| Net income                                                                        |  $        2,323                                            |  $         2,505                                            |

| Statements of Cash Flows                            | 2011                                                                                         | 2010                                                                                                                            |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| (In thousands)                                      |                                                                                         |                                                                                                                            |
| Operating Activities                                |                                                                                         |                                                                                                                            |
| Net Income                                          |  $        2,323                                 |  $         2,505                                                              |
| Equity in undistributed net income of subsidiaries  |           (2,574)                          |           (2,038)                                                             |
| Stock based compensation and ESOP expense           |               112      |                      - |
| Net change in other assets and liabilities          |                29 |               127                                         |
| Net cash (used in) provided by operating activities |             (110)                |               594                                         |
| Investing Activities                                |                                                                                         |                                                                                                                            |
| Capital contributed to wholly-owned bank subsidiary |           (4,900)                          |                   -                   |
| Net cash used in investing activities               |           (4,900)                          |                 -                               |
| Financing activities                                |                                                                                         |                                                                                                                            |
| Proceeds from sale of preferred stock -SBLF         |          13,000                                 |                   -                   |
| Proceeds from exercise of stock options             |                66 |                   -                   |
| Redemption of preferred stock - CPP                 |           (6,771)                          |                   -                   |
| Cash dividends paid to preferred shareholders       |             (457)                |              (339)                                             |
| Cash dividends paid to common shareholders          |             (298)                |              (298)                                             |
| Net cash provided by (used in) financing activities |            5,540                      |              (637)                                             |
| Increase (decrease) in cash and cash equivalents    |               530      |               (43)                                        |
| Cash and cash equivalents at beginning of year      |            1,199                      |             1,242                                                   |
| Cash and cash equivalents at end of year            |  $        1,729                                 |  $         1,199                                                              |

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| (In thousands)                       |   |                                                                          |
|--------------------------------------|--------|-------------------------------------------------------------------------------|
| Balance at the beginning of the year |   |  $         5,810            |
| Originations                         |   |             1,453 |
| Principal payments                   |   |           (1,274)           |
| Decrease due to Director attrition   |   |           (2,236)           |
| Balance at the end of the year       |   |  $         3,753            |

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| (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 Executive Officers of the Company at December 31, 2011. |
|-----------------|-------------------------------------------------------------------------------------------------------|

| Name                    | Age      | Positions Held With the Company                |
|-------------------------|----------|------------------------------------------------|
| Thomas W. Schneider     | 50       | President and Chief Executive Officer          |
| James A. Dowd, CPA      | 44       | Senior Vice President, Chief Financial Officer |
| Edward A. Mervine       | 55       | Senior Vice President, General Counsel         |
| Melissa A. Miller       | 54       | Senior Vice President, Chief Operating Officer |
| Ronald Tascarella  | 53  | Senior Vice President, Chief Credit Officer    |

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|  (a)(1)     |  Financial Statements - The Company’s consolidated financial statements, for the years ended December 31, 2011 and 2010, together with the Report of Independent Registered Public Accounting Firm are filed as part of this Form 10-K report.  See “Item 8: Financial Statements and Supplementary Data.”                                                                         |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)(2)           | Financial Statement Schedules - All financial statement schedules have been omitted as the required information is inapplicable or has been included in “Item 7: Management Discussion and Analysis.”                                                                                                                                                                                                   |
| (b)              | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                            |
| 3.1              | Certificate of Incorporation of Pathfinder Bancorp, Inc. (Incorporated herein by reference to the Company's Current Report on Form 8-K filed on June 25, 2001)                                                                                                                                                                                                                                                      |
| 3.2              | Bylaws of Pathfinder Bancorp, Inc. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q filed on August 15, 2005 and November 28, 2007)                                                                                                                                                                                                                                                 |
| 4                | Form of Stock Certificate of Pathfinder Bancorp, Inc. (Incorporated herein by reference to the Company's Current Report on Form 8-K dated June 25, 2001)                                                                                                                                                                                                                                                            |
| 10.1             | Form of Pathfinder Bank 1997 Stock Option Plan (Incorporated herein by reference to the Company's S-8 file no. 333-53027)                                                                                                                                                                                                                                                                                           |
| 10.2             | Form of Pathfinder Bank 1997 Recognition and Retention Plan (Incorporated by reference to the Company's S-8 file no. 333-53027)                                                                                                                                                                                                                                                                                     |
| 10.3             | 2003 Executive Deferred Compensation Plan (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601)                                                                                                                                                                                                                              |
| 10.4             | 2003 Trustee Deferred Fee Plan (Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601)                                                                                                                                                                                                                                         |
| 10.5             | Employment Agreement between the Bank and Thomas W. Schneider, President and Chief Executive Officer (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601)                                                                                                                                                                                |
| 10.6   | Employment Agreement between the Bank and Edward A. Mervine, Vice President, General Counsel and Secretary (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601)                                                                                                                                                                          |
| 10.7 10.8   | Change of Control Agreement between the Bank and Ronald Tascarella (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601) Change of Control Agreement between the Bank and James A. Dowd (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601)  |

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| 10.9 10.10 10.11                                                                                                                                                                                                                                             | Change of Control Agreement between the Bank and Melissa A. Miller (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601) Executive Supplemental Retirement Agreement between the Bank and Chris C. Gagas (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601) Executive Supplemental Retirement Agreement between the Bank and Thomas W. Schneider (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 file no. 000-23601  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 14                                                                                                                                                                                                                                                                     | Code of Ethics (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| 21                                                                                                                                                                                                                                                                     | Subsidiaries of Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| 23                                                                                                                                                                                                                                                                     | Consent of Bonadio & Co., LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 23.1                                                                                                                                                                                                                                                                   | Consent of ParenteBeard LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.1                                                                                                                                                                                                                                                                   | Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.2                               Rule 13a-14(a) / 15d-14(a) Certification of the Chief Financial Officer  |

| 99.1   |  Certification of Chief Executive Officer Pursuant to Section 111(b)(4) of the Emergency Economic |
|------------------|--------------------------------------------------------------------------------------------------------|

| 99.2   |                             Certification of Chief Financial Officer Pursuant to Section 111(b)(4) of the Emergency Economic                             Stabilization Act of 2008 |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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 28, 2012 | By: | /s/ Thomas W. SchneiderThomas W. SchneiderPresident 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/ Thomas W. Schneider            | By:    |   | /s/ James A. Dowd                        |
|--------|--------|------------------------------------|--------|--------|------------------------------------------|
|   |   | Thomas W. Schneider, President and |   |   | James A. Dowd, Senior Vice President and |
|   |   | Chief Executive Officer            |   |   | Chief Financial Officer                  |
|   |   | (Principal Executive Officer)      |   |   | (Principal Financial Officer)            |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
|   |   |                               |   |   |                                     |
| By:    |   | /s/ Janette Resnick                | By:    |   | /s/ Richard M. Jablonka                  |
|   |   | Janette Resnick, Director          |   |   | Richard M. Jablonka, Vice President and  |
|   |   | Chairman of the Board              |   |   | Controller                               |
|   |   |                               |   |   | (Principal Accounting Officer)           |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
|   |   |                               |   |   |                                     |
| By:    |   | /s/ Bruce E. Manwaring             | By:    |   | /s/ William A. Barclay                   |
|   |   | Bruce E. Manwaring, Director       |   |   | William A. Barclay, Director             |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
|   |   |                               |   |   |                                     |
| By:    |   | /s/ L. William Nelson              | By:    |   | /s/ Chris R. Burritt                     |
|   |   | L. William Nelson, Director        |   |   | Chris R. Burritt, Director               |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
|   |   |                               |   |   |                                     |
| By:    |   | /s/ Corte J. Spencer               | By:    |   | /s/ George P. Joyce                      |
|   |   | Corte J. Spencer, Director         |   |   | George P. Joyce, Director                |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
|   |   |                               |   |   |                                     |
| By:    |   | /s/ Lloyd Stemple                  | By:    |   | /s/ David A. Ayoub                       |
|   |   | Lloyd Stemple, Director            |   |   | David Ayoub, Director                    |
| Date:  |   | March 28, 2012                     | Date:  |   | March 28, 2012                           |
|   |   |                               |   |   |                                     |
| By:    |   | /s/John P. Funiciello              |   |   |                                     |
|   |   | John Funiciello, Director          |   |   |                                     |
| Date:  |   | March 28, 2012                     |   |   |                                     |

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|  Company                         |  Percent Owned | Jurisdiction or State of Incorporation |
|---------------------------------------|---------------------|----------------------------------------|
| Pathfinder Bank                       | 100%                | New York                               |
| Pathfinder Statutory Trust II         | 100%                | Delaware                               |
| Pathfinder Commercial Bank (1)        | 100%                | New York                               |
| Pathfinder REIT, Inc. (1)             | 100%                | New York                               |
| Whispering Oaks Development Corp. (1) | 100%                | New York                               |

| CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                                                                                                                                                                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Pathfinder Bancorp, Inc.Oswego, New York                                                                                                                                                                                                                                                                           |   |
| We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-178590) and Form S-8 (No. 333-53027) of Pathfinder Bancorp, Inc. of our report, dated March 28, 2012, relating to the consolidated financial statements, which appear in this Annual Report on Form 10-K.  |
|    Bonadio & Co., LLPSyracuse, New YorkMarch 28, 2012                                                                                                                                                                                                                                                | /s/ BONADIO & CO., LLP  |

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| Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| I, Thomas W. Schneider, President and Chief Executive Officer, certify that:                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 1. I have reviewed this Annual report on Form 10-K of Pathfinder Bancorp, Inc.;                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                               | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|                                                                                                                                                                                                                                                                                                                                               | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                               | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and                                                                                                                                                                                                                                                                                                                                                                                 |
| 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                               | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                               | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| March 28, 2012                                                                                                                                                                                                                                                                                                                                     | /s/ Thomas W. SchneiderThomas W. SchneiderPresident and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |

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| Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| I,  James A. Dowd, Senior Vice President and Chief Financial Officer, certify that:                                                                                                                                                                                                                                                 |
| 1. I have reviewed this Annual report on Form 10-K of Pathfinder Bancorp, Inc.;                                                                                                                                                                                                                                                          |   |
| 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a   material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;           |   |
| 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                     |   |
| 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  |   |
|                                                                                                                                                                                                                                                                                                                                               | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|                                                                                                                                                                                                                                                                                                                                               | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|                                                                                                                                                                                                                                                                                                                                               | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  |
| 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                               | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|                                                                                                                                                                                                                                                                                                                                               | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  |
| March 28, 2012                                                                                                                                                                                                                                                                                                                                     | /s/ James A. DowdJames A. DowdSenior Vice President and Chief Financial Officer |   |

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| Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Thomas W. Schneider, President and Chief Executive Officer, and James A. Dowd, Senior Vice President and Chief Financial Officer of Pathfinder Bancorp, Inc. (the "Company"), each certify in his capacity as an officer of the Company that he has reviewed the Annual Report of the Company on Form 10-K for the year ended December 31, 2011 and that to the best of his knowledge:  |
| 1. the report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and                                                                                                                                                                                                                                                                   |
| 2. the information contained in the report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.                                                                                                                                                                                                               |
| The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                       |
| March 28, 2012                                                                                                                                                                                                                                                                                                                                                                               | /s/ Thomas W. SchneiderThomas W. SchneiderPresident and Chief Executive Officer  |
| March 28, 2012                                                                                                                                                                                                                                                                                                                                                                               | /s/ James A. DowdJames A. DowdSenior Vice President and Chief Financial Officer |

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| (A)   | SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Pathfinder Bancorp, Inc.; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (B)   | Employee compensation plans that unnecessarily expose Pathfinder Bancorp, Inc. to risks; and |
|-----------------|----------------------------------------------------------------------------------------------|

| (C)   | Employee compensation plans that could encourage the manipulation of reported earnings of Pathfinder Bancorp, Inc. to enhance the compensation of an employee; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (A)   | SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Pathfinder Bancorp, Inc.; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (B)   | Employee compensation plans that unnecessarily expose Pathfinder Bancorp, Inc. to risks; and |
|-----------------|----------------------------------------------------------------------------------------------|

| (C)   | Employee compensation plans that could encourage the manipulation of reported earnings of Pathfinder Bancorp, Inc. to enhance the compensation of an employee; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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