UNITED STATES
                       SECURITIES  AND  EXCHANGE  COMMISSION
                             WASHINGTON,  D.C.  20549
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                                    FORM  10-K

                [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
                                       OR
              [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
       FOR THE TRANSACTION PERIOD FROM ______________ TO ________________
                                  -------------------    ----------------------
                        COMMISSION  FILE  NUMBER:  000-23601

                            PATHFINDER  BANCORP,  INC.
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             (EXACT  NAME  OF  REGISTRANT  AS  SPECIFIED  IN  ITS  CHARTER)

                      FEDERAL                                16-1540137
-----------------------------------------------------------------------------
          (STATE  OR  OTHER  JURISDICTION OF     (I.R.S. EMPLOYER IDENTIFICATION
           INCORPORATION  OR  ORGANIZATION)     (NUMBER)

                    214 WEST FIRST STREET, OSWEGO, NY 13126
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)

                                 (315)  343-0057
               (REGISTRANT'S  TELEPHONE  NUMBER  INCLUDING  AREA  CODE)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES  REGISTERED  PURSUANT  TO  SECTION  12(G)  OF  THE  ACT:

                     COMMON  STOCK,  PAR  VALUE  $.01  PER  SHARE
                                (TITLE  OF  CLASS)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE  PRECEDING TWELVE MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED  TO FILE REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH REQUIREMENTS FOR THE
PAST  90  DAYS.
YES      X       NO
     --------

INDICATE  BY  CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF  REGULATION  S-K  IS  NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST  OF  REGISTRANT'S  KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED  BY  REFERENCE  IN  PART III OF THIS FORM 10-K OR ANY AMENDMENTS TO
THIS  FORM  10-K.  [  X  ]

INDICATE  BY  CHECK  MARK  WHETHER  THE  REGISTRANT  IS AN ACCELERATED FILER (AS
DEFINED  IN  RULE  12B-2  OF  THE  ACT).
YES     NO   X
         --------

The  aggregate  value  of  the  voting  stock  held  by  non-affiliates  of  the
Registrant,  computed  by  reference  to the average bid and asked prices of the
Common  Stock  as  of  June  30,  2004  ($15.175)  was  $8,689,175.

As  of  June  30,  2004  there were 2,935,419 shares issued and 2,448,132 shares
outstanding  of  the  Registrant's  Common  Stock.

Documents Incorporated by Reference: Proxy Statement for the 2004 Annual Meeting
of  Stockholders  (Parts  I  and  III).
<PAGE>

PART  I

ITEM  1:  BUSINESS

GENERAL

PATHFINDER  BANCORP,  INC.

Pathfinder  Bancorp,  Inc.  (the  "Company")  is  a Federally chartered mid-tier
holding  company headquartered in Oswego, New York.  The primary business of the
Company  is  its  investment  in  Pathfinder  Bank  (the  "Bank") and Pathfinder
Statutory Trust I.  The Company is majority owned by Pathfinder Bancorp, M.H.C.,
a  Federally-chartered  mutual  holding  company (the "Mutual Holding Company").
At December 31, 2004, the Mutual Holding Company held 1,583,239 shares of Common
Stock  and  the  public  held  866,893  shares  of  Common  Stock (the "Minority
Shareholders").  At December 31, 2004, Pathfinder Bancorp, Inc. had total assets
of  $302.0 million, total deposits of $236.7 million and shareholders' equity of
$21.8  million.

On  June  26,  2002,  the  Company  formed a wholly owned subsidiary, Pathfinder
Statutory Trust I, a Connecticut business trust.  The trust issued $5,000,000 of
30-year  floating rate Company-obligated pooled capital securities of Pathfinder
Statutory  Trust I.  The Company borrowed the proceeds of the capital securities
from  its  subsidiary  by  issuing  floating rate junior subordinated deferrable
interest  debentures having substantially similar terms.  The capital securities
mature  in  2032  and qualify as Tier 1 capital by the Federal Deposit Insurance
Company  and  the  Office of Thrift Supervision.   The capital securities of the
trust  are  a  pooled trust preferred fund of Preferred Term Securities VI, Ltd.
and  are  tied  to the 3-month LIBOR plus 3.45% with a five year call provision.
These  securities  are  guaranteed  by  the  Company.

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

PATHFINDER  BANK

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

The  Bank  is  primarily engaged in the business of attracting deposits from the
general  public in the Bank's market area, and investing such deposits, together
with other sources of funds, in loans secured by one- to four-family residential
real  estate  and commercial real estate.  At December 31, 2004, $168.8 million,
or  89%  of  the  Bank's total loan portfolio consisted of loans secured by real
estate,  of  which  $123.9  million,  or  66%,  were  loans  secured  by one- to
four-family  residences  and  $29.9  million, or 16%, were secured by commercial
real  estate.  Additionally,  $15.0  million, or 8%, of total real estate loans,
were  secured  by  second liens on residential properties that are classified as
consumer  loans.  The  Bank  also  originates commercial and consumer loans that
totaled  $16.8  and $3.5 million, respectively, or 11%, of the Bank's total loan
portfolio.  The Bank invests a portion of its assets in securities issued by the
United States Government agencies and sponsored enterprises, state and municipal
obligations,  corporate  debt  securities,  mutual funds, and equity securities.
The  Bank  also  invests  in  mortgage-backed  securities  primarily  issued  or
guaranteed  by  the  United States Government sponsored enterprises.  The Bank's
principal  sources  of  funds  are  deposits, principal and interest payments on
loans  and  borrowings from correspondent financial institutions.  The principal
source  of  income  is  interest on loans and investment securities.  The Bank's
principal  expenses are interest paid on deposits, and employee compensation and
benefits.

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                                     Page 1
<PAGE>

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

On  October  25,  2002, Pathfinder Bank completed the purchase of assets and the
assumption  of  non-municipal  deposits of the Lacona, New York branch of Cayuga
Bank  ("Branch  Acquisition").  In  addition,  Pathfinder  Bank formed a limited
purpose  commercial  bank  subsidiary,  Pathfinder  Commercial Bank.  Pathfinder
Commercial Bank was established to serve the depository needs of public entities
in  its market area and it assumed the municipal deposit liabilities acquired as
part  of  the  Branch  Acquisition. The transaction included approximately $26.4
million  in  deposits,  $2.3  million  in  loans  and $430,000 in vault cash and
facilities  and equipment.  The Branch Acquisition reflects a premium on deposit
liabilities  assumed  of approximately $2.4 million. As of December 31, 2004, no
impairment  has  been  recognized.

In  April  1999,  the  Bank  established  Pathfinder  REIT,  Inc.  as the Bank's
wholly-owned  real  estate  investment  trust subsidiary.  At December 31, 2004,
Pathfinder  REIT,  Inc.  held  $26.8  million  in mortgages and mortgage related
assets.  Recent  legislation  proposed  by  the New York State legislature would
eliminate the tax treatment accorded REITs.  Enactment of this legislation would
increase  the  state tax rate for the Company.  All disclosures in the Form 10-K
relating  to the Bank's loans and investments include loans and investments that
are  held  by  Pathfinder  REIT,  Inc.

MARKET  AREA  AND  COMPETITION

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

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

REGULATION  AND  SUPERVISION

GENERAL

The Bank is a New York-chartered stock savings bank and its deposit accounts are
insured  up  to  applicable  limits  by the FDIC through the Bank Insurance Fund
("BIF").  The  Bank  is  subject  to  extensive regulation by the New York State
Banking  Department  (the  "Department"),  as  its chartering agency, and by the
FDIC,  as  its  deposit  insurer  and  primary  federal  regulator.  The Bank is
required to file reports with, and is periodically examined by, the FDIC and the
Superintendent  of  the  Department  concerning  its  activities  and  financial
condition  and  must  obtain regulatory approvals prior to entering into certain
transactions,  including,  but  not  limited to, mergers with or acquisitions of
other banking institutions.  The Bank is a member of the FHLB of New York and is
subject  to  certain  regulations by the Federal Home Loan Bank System.  On July
19,  2001  the Company and the Mutual Holding Company completed their conversion
to  federal  charters.  Consequently,  they  are  subject  to regulations of the

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                                     Page 2
<PAGE>

Office of Thrift Supervision ("OTS") as savings and loan holding companies.  Any
change  in  such  regulations,  whether  by the Department, the FDIC, or the OTS
could  have  a  material  adverse  impact on the Bank, the Company or the Mutual
Holding  Company.

Regulatory  requirements  applicable  to  the  Bank,  the Company and the Mutual
Holding  Company  are  referred  to  below  or  elsewhere  herein.

NEW  YORK  BANK  REGULATION

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

The  Bank derives its lending, investment and other authority primarily from the
applicable  provisions  of New York State Banking Law and the regulations of the
Department,  as  limited by FDIC regulations.  Under these laws and regulations,
savings banks, including the Bank, may invest in real estate mortgages, consumer
and  commercial  loans,  certain  types  of  debt  securities, including certain
corporate  debt  securities  and  obligations  of  federal,  state  and  local
governments  and  agencies,  certain  types  of  corporate equity securities and
certain other assets.  New York State chartered savings banks may also invest in
subsidiaries  under  their  service corporation investment authority.  A savings
bank  may  use  this  power  to  invest  in  corporations that engage in various
activities  authorized  for savings banks, plus any additional activities, which
may  be  authorized  by  the  Banking  Board.  Under  FDICIA  and  the  FDIC's
implementing  regulations,  the  Bank's  investment  and  service  corporation
activities  are limited to activities permissible for a national bank unless the
FDIC  otherwise  permits  it.

The  FDIC and the Superintendent have broad enforcement authority over the Bank.
Under  this authority, the FDIC and the Superintendent have the ability to issue
formal  or  informal  orders  to  correct violations of law or unsafe or unsound
banking  practices.

INSURANCE  OF  ACCOUNTS  AND  REGULATION  BY  THE  FDIC

The  Bank  is  a member of the BIF, which is administered by the FDIC.  Deposits
are  insured up to applicable limits by the FDIC and such insurance is backed by
the  full  faith  and  credit  of  the  U.S.  Government.

The  FDIC  establishes  deposit  insurance  premiums  based  upon  the  risks  a
particular  bank  or  savings  association poses to its deposit insurance funds.
Under  the  risk-based  deposit insurance assessment system, the FDIC assigns an
institution  to  one  of  three  capital  categories  based on the institution's
financial  information  consisting  of:  (i)  well  capitalized; (ii) adequately
capitalized;  or  (iii)  undercapitalized  and  one  of  three  supervisory
subcategories  within  each  capital group.  With respect to the capital ratios,
institutions  are classified as well capitalized or adequately capitalized using
ratios  that  are  substantially similar to the prompt corrective action capital
ratios  discussed  above.  Any  institution  that  does  not  meet  these  two
definitions  is deemed to be undercapitalized for this purpose.  The supervisory
subgroup  to  which  an  institution  is  assigned  is  based  on  a supervisory
evaluation  provided  to  the FDIC by theinstitution's primary federal regulator
and  information  that  the  FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds (which may
include,  if  applicable,  information  provided  by  the  institution's  state
supervisor).  An  institution's  assessment rate depends on the capital category
and  supervisory  category  to which it is assigned.  Under the final risk-based
assessment  system,  there  are  nine  assessment  risk  classifications  (i.e.,
combinations  of  capital  groups  and supervisory subgroups) to which different
assessment rates are applied.  Assessments rates for deposit insurance currently
range  from  0  basis  points  to  27 basis points.  The capital and supervisory
subgroup to which an institution is assigned by the FDIC is confidential and may
not  be disclosed.  The Bank's rate of deposit insurance assessments will depend
upon  the  category  and  subcategory to which the Bank is assigned by the FDIC.
Any  increase  in  insurance  assessments  could  have  an adverse effect on the
earnings  of  the  Bank.

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<PAGE>

REGULATORY  CAPITAL  REQUIREMENTS

The FDIC has adopted risk-based capital guidelines to which the Bank is subject.
The guidelines establish a systematic analytical framework that makes regulatory
capital  requirements  more  sensitive  to  differences  in  risk profiles among
banking  organizations.  The  Bank  is  required  to  maintain certain levels of
regulatory  capital in relation to regulatory risk-weighted assets. The ratio of
such regulatory capital to regulatory risk-weighted assets is referred to as the
Bank's  "risk-based  capital ratio." Risk-based capital ratios are determined by
allocating  assets  and  specified off-balance sheet items to four risk-weighted
categories ranging from 0% to 100%, with higher levels of capital being required
for  the  categories  perceived  as  representing  greater  risk.

These  guidelines divide a savings bank's capital into two tiers. The first tier
("Tier  I")  includes  common  equity, retained earnings, certain non-cumulative
perpetual preferred stock (excluding auction rate issues) and minority interests
in  equity  accounts  of  consolidated  subsidiaries,  less  goodwill  and other
intangible  assets  (except  mortgage servicing rights and purchased credit card
relationships subject to certain limitations). Supplementary ("Tier II") capital
includes,  among  other  items,  cumulative perpetual and long-term limited-life
preferred  stock,  mandatory  convertible  securities,  certain  hybrid  capital
instruments, term subordinated debt and the allowance for loan and lease losses,
subject  to  certain  limitations,  less  required deductions. Savings banks are
required  to  maintain a total risk-based capital ratio of at least 8%, of which
at  least  4%  must  be  Tier  I  capital.

In  addition,  the FDIC has established regulations prescribing a minimum Tier I
leverage  ratio  (Tier  I  capital  to adjusted total assets as specified in the
regulations).  These  regulations provide for a minimum Tier I leverage ratio of
3%  for banks that meet certain specified criteria, including that they have the
highest  examination rating and are not experiencing or anticipating significant
growth.  All  other banks are required to maintain a Tier I leverage ratio of 3%
plus  an  additional  cushion of at least 100 to 200 basis points.  The FDIC and
the  other  federal banking regulators have proposed amendments to their minimum
capital  regulations  to  provide  that the minimum leverage capital ratio for a
depository  institution that has been assigned the highest composite rating of 1
under  the  Uniform Financial Institutions Rating System will be 3% and that the
minimum  leverage  capital ratio for any other depository institution will be 4%
unless  a  higher  leverage  capital  ratio  is  warranted  by  the  particular
circumstances  or  risk  profile  of  the depository institution.  The FDIC may,
however,  set  higher leverage and risk-based capital requirements on individual
institutions  when  particular circumstances warrant. Savings banks experiencing
or  anticipating  significant  growth  are  expected to maintain capital ratios,
including  tangible  capital  positions,  well  above  the  minimum  levels.

LIMITATIONS  ON  DIVIDENDS  AND  OTHER  CAPITAL  DISTRIBUTIONS

The  FDIC  has the authority to use its enforcement powers to prohibit a savings
bank  from  paying  dividends if, in its opinion, the payment of dividends would
constitute  an  unsafe  or  unsound  practice.  Federal  law  also prohibits the
payment  of dividends by a bank that will result in the bank failing to meet its
applicable  capital  requirements  on  a  pro  forma  basis.  New  York law also
restricts  the  Bank  from  declaring  a dividend which would reduce its capital
below  (i)  the amount required to be maintained by state law and regulation, or
(ii) the amount of the Bank's liquidation account established in connection with
the  Reorganization.

PROMPT  CORRECTIVE  ACTION

The  federal  banking  agencies  have  promulgated  regulations to implement the
system  of  prompt  corrective  action  required  by  federal  law.  Under  the
regulations, a bank shall be deemed to be (i) "well capitalized" if it has total
risk-based  capital  of  10.0% or more, has a Tier I risk-based capital ratio of
6.0%  or  more,  has  a Tier I leverage capital ratio of 5.0% or more and is not
subject to any written capital order or directive; (ii) "adequately capitalized"
if  it has a total risk-based capital ratio of 8.0% or more, a Tier I risk-based
capital  ratio  of  4.0%  or more and a Tier I leverage capital ratio of 4.0% or
more  (3.0%  under  certain  circumstances)  and does not meet the definition of

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"well  capitalized";  (iii)  "undercapitalized"  if  it  has  a total risk-based
capital  ratio  that is lessthan 8.0%, a Tier I risk-based capital ratio that is
less  than  4.0% or a Tier I leverage capital ratio that is less than 4.0% (3.0%
under  certain circumstances); (iv) "significantly undercapitalized" if it has a
total  risk-based  capital  ratio  that  is  less than 6.0%, a Tier I risk-based
capital  ratio that is less than 3.0% or a Tier I leverage capital ratio that is
less  than  3.0%;  and  (v)  "critically  undercapitalized" if it has a ratio of
tangible equity to total assets that is equal to or less than 2.0%.  Federal law
and  regulations also specify circumstances under which a federal banking agency
may  reclassify a well capitalized institution as adequately capitalized and may
require an adequately capitalized institution to comply with supervisory actions
as  if  it  were  in  the  next  lower  category  (except  that the FDIC may not
reclassify  a  significantly  undercapitalized  institution  as  critically
undercapitalized).

Based  on  the foregoing, the Bank currently meets the criteria to be classified
as  a  "well  capitalized"  savings  institution.

TRANSACTIONS  WITH  AFFILIATES  AND  INSIDERS

Under  current  federal  law,  transactions  between depository institutions and
their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act
and  its implementing regulations. An affiliate of a savings bank is any company
or  entity  that controls, is controlled by, or is under common control with the
savings  bank, other than a subsidiary of the savings bank. In a holding company
context,  at  a  minimum,  the  parent holding company of a savings bank and any
companies  which are controlled by such parent holding company are affiliates of
the  savings bank. Generally, Section 23A limits the extent to which the savings
bank  or  its  subsidiaries  may  engage  in "covered transactions" with any one
affiliate  to  an  amount  equal to 10% of such savings bank's capital stock and
surplus  and  contains  an  aggregate  limit  on  all such transactions with all
affiliates to an amount equal to 20% of such capital stock and surplus. The term
"covered transaction" includes the making of loans or other extensions of credit
to  an  affiliate; the purchase of assets from an affiliate, the purchase of, or
an  investment  in, the securities of an affiliate; the acceptance of securities
of  an  affiliate as collateral for a loan or extension of credit to any person;
or  issuance  of  a  guarantee,  acceptance, or letter of credit on behalf of an
affiliate.  Section  23A  also  establishes specific collateral requirements for
loans  or  extensions  of  credit  to,  or guarantees, acceptances on letters of
credit  issued  on  behalf  of  an  affiliate. Section 23B requires that covered
transactions  and  a  broad  list  of  other  specified transactions be on terms
substantially  the  same,  or  no  less  favorable,  to  the savings bank or its
subsidiary  as  similar  transactions  with  nonaffiliates.

Further,  Section  22(h)  of  the  Federal  Reserve  Act  and  its  implementing
regulations  restrict  a  savings  bank  with  respect  to  loans  to directors,
executive  officers,  and  principal stockholders. Under Section 22(h), loans to
directors,  executive  officers  and  stockholders  who  control,  directly  or
indirectly,  10%  or  more  of  voting  securities of a savings bank and certain
related  interests  of  any  of the foregoing, may not exceed, together with all
other  outstanding  loans  to  such persons and affiliated entities, the savings
bank's  total  capital  and  surplus.  Section  22(h) also prohibits loans above
amounts  prescribed  by  the  appropriate  federal  banking agency to directors,
executive  officers,  and  stockholders  who  control  10%  or  more  of  voting
securities  of  a  stock  savings  bank, and their respective related interests,
unless  such loan is approved in advance by a majority of the board of directors
of  the  savings  bank.  Any  "interested"  director  may not participate in the
voting.  The  loan  amount  (which  includes all other outstanding loans to such
person)  as  to  which such prior board of director approval is required, is the
greater  of  $25,000  or  5%  of capital and surplus or any loans over $500,000.
Further,  pursuant  to Section 22(h), loans to directors, executive officers and
principal stockholders must generally be made on terms substantially the same as
offered  in  comparable  transactions  to  other  persons.  Section 22(g) of the
Federal  Reserve  Act  places  additional  limitations  on  loans  to  executive
officers.

FEDERAL  HOLDING  COMPANY  REGULATION

GENERAL.  The  Company  and the Mutual Holding Company are nondiversified mutual
savings  and  loan holding companies within the meaning of the Home Owners' Loan
Act.  The Company and the Mutual Holding Company are registered with the OTS and
are  subject  to  OTS  regulations,  examinations,  supervision  and  reporting

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requirements.  As  such,  the OTS has enforcement authority over the Company and
the  Mutual  Holding  Company,  and  their non-savings institution subsidiaries.
Among  other  things,  this  authority  permits  the OTS to restrict or prohibit
activities  that  are  determined to be a serious risk to the subsidiary savings
institution.

PERMITTED ACTIVITIES.  Under OTS regulation and policy, a mutual holding company
and  a  federally  chartered  mid-tier holding company, such as the Company, may
engage  in  the  following  activities:  (i) investing in the stock of a savings
association;  (ii)  acquiring  a  mutual  association through the merger of such
association  into a savings association subsidiary of such holding company or an
interim  savings  association  subsidiary of such holding company; (iii) merging
with  or  acquiring  another  holding  company,  one  of whose subsidiaries is a
savings association; (iv) investing in a corporation, the capital stock of which
is  available  for  purchase by a savings association under federal law or under
the  law  of  any state where the subsidiary savings association or associations
share their home offices; (v) furnishing or performing management services for a
savings  association  subsidiary  of  such  company;  (vi)  holding, managing or
liquidating  assets owned or acquired from a savings subsidiary of such company;
(vii)  holding  or managing properties used or occupied by a savings association
subsidiary  of such company; (viii) acting as trustee under deeds of trust; (ix)
any  other  activity  (A)  that  the  Federal  Reserve Board, by regulation, has
determined  to  be  permissible for bank holding companies under Section 4(c) of
the  Bank  Holding  Company  Act  of  1956,  unless  the Director of the OTS, by
regulation,  prohibits  or limits any such activity for savings and loan holding
companies;  or  (B)  in  which  multiple savings and loan holding companies were
authorized (by regulation) to directly engage on March 5, 1987; (x) any activity
permissible  for  financial  holding  companies  under  Section 4(k) of the Bank
Holding  Company  Act, including securities and insurance underwriting; and (xi)
purchasing,  holding,  or  disposing  of  stock  acquired  in  connection with a
qualified  stock issuance if the purchase of such stock by such savings and loan
holding  company  is  approved  by  the  Director.  If  a mutual holding company
acquires or merges with another holding company, the holding company acquired or
the holding company resulting from such merger or acquisition may only invest in
assets  and  engage  in  activities  listed in (i) through (xi) above, and has a
period  of  two  years  to  cease any nonconforming activities and divest of any
nonconforming  investments.

The Home Owners' Loan Act prohibits a savings and loan holding company, directly
or  indirectly,  or  through  one  or  more subsidiaries, from acquiring another
savings  association  or holding company thereof, without prior written approval
of  the  OTS.  It  also  prohibits the acquisition or retention of, with certain
exceptions, more than 5% of a nonsubsidiary savings association, a nonsubsidiary
holding  company,  or  a  nonsubsidiary company engaged in activities other than
those  permitted by the Home Owners' Loan Act; or acquiring or retaining control
of  an institution that is not federally insured.  In evaluating applications by
holding  companies  to  acquire  savings associations, the OTS must consider the
financial  and  managerial  resources,  future  prospects  of  the  company  and
association involved, the effect of the acquisition on the risk to the insurance
fund,  the  convenience  and  needs  of  the  community and competitive factors.

The  Office  of  Thrift Supervision is prohibited from approving any acquisition
that  would  result  in  a multiple savings and loan holding company controlling
savings  associations in more than one state, subject to two exceptions: (i) the
approval  of  interstate  supervisory  acquisitions  by savings and loan holding
companies, and (ii) the acquisition of a savings institution in another state if
the laws of the state of the target savings institution specifically permit such
acquisitions.  The  states  vary  in  the extent to which they permit interstate
savings  and  loan  holding  company  acquisitions.

WAIVERS  OF  DIVIDENDS  BY MUTUAL HOLDING COMPANY.  Office of Thrift Supervision
regulations require the Mutual Holding Company to notify the OTS of any proposed
waiver  of  its  receipt  of  dividends  from  the  Company

CONVERSION  OF THE MUTUAL HOLDING COMPANY TO STOCK FORM.  OTS regulations permit
the  Mutual  Holding  Company to convert from the mutual form of organization to
the  capital stock form of organization (a "Conversion Transaction").  There can
be  no  assurance  when,  if  ever, a Conversion Transaction will occur, and the
Board  of  Directors  has no current intention or plan to undertake a Conversion
Transaction.  In  a Conversion Transaction a new holding company would be formed

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                                     Page 6
<PAGE>

as  the successor to the Company (the "New Holding Company"), the Mutual Holding
Company's  corporate  existence  would  end,  and certain depositors of the Bank
would  receive  the  right to subscribe for additional shares of the New Holding
Company.  In  a  Conversion  Transaction,  each  share  of  common stock held by
stockholders  other  than  the  Mutual Holding Company ("Minority Stockholders")
would  be automatically converted into a number of shares of common stock of the
New  Holding  Company  determined  pursuant  an exchange ratio that ensures that
Minority Stockholders own the same percentage of common stock in the New Holding
Company  as  they  owned  in  the  Company  immediately  prior to the Conversion
Transaction.  Under  OTS regulations, Minority Stockholders would not be diluted
because  of  any  dividends  waived  by  the  Mutual Holding Company (and waived
dividends would not be considered in determining an appropriate exchange ratio),
in  the  event  the  Mutual  Holding  Company converts to stock form.  The total
number  of  shares  held by Minority Stockholders after a Conversion Transaction
also  would  be increased by any purchases by Minority Stockholders in the stock
offering  conducted  as  part  of  the  Conversion  Transaction.

NEW  YORK  STATE  BANK  HOLDING  COMPANY  REGULATION

In  addition  to  the  federal regulation, a holding company controlling a state
chartered savings bank organized or doing business in New York State also may be
subject  to  regulation  under  the  New York State Banking Law.  The term "bank
holding company," for the purposes of the New York State Banking Law, is defined
generally  to  include  any person, company or trust that directly or indirectly
either controls the election of a majority of the directors or owns, controls or
holds  with  power  to  vote more than 10% of the voting stock of a bank holding
company  or,  if  the  Company  is  a  banking  institution,  another  banking
institution,  or  10% or more of the voting stock of each of two or more banking
institutions.  In  general,  a  bank  holding  company  controlling, directly or
indirectly, only one banking institution will not be deemed to be a bank holding
company  for  the  purposes of the New York State Banking Law.  As such, neither
the  Company  nor  the  Mutual  Holding Company is subject to supervision by the
Department.

FEDERAL  SECURITIES  LAW

The  common  stock  of the Company is registered with the SEC under the Exchange
Act.  The  Company  is  subject  to the information, proxy solicitation, insider
trading  restrictions  and other requirements of the SEC under the Exchange Act.

The Company Common Stock held by persons who are affiliates (generally officers,
directors  and  principal stockholders) of the Company may not be resold without
registration  or unless sold in accordance with certain resale restrictions.  If
the  Company  meets  specified  current  public  information  requirements, each
affiliate  of  the  Company  is  able  to  sell  in  the  public market, without
registration,  a  limited  number  of  shares  in  any  three-month  period.

FEDERAL  RESERVE  SYSTEM

The  Federal  Reserve  Board  requires  all  depository institutions to maintain
noninterest-bearing  reserves  at  specified  levels  against  their transaction
accounts (primarily checking,  money management and  NOW checking accounts).  At
December  31,  2004, the Bank was in compliance with these reserve requirements.

FEDERAL  COMMUNITY  REINVESTMENT  REGULATION

Under  the Community Reinvestment Act, as amended (the "CRA"), as implemented by
FDIC  regulations,  a  savings bank has a continuing and affirmative obligation,
consistent  with  its safe and sound operation, to help meet the credit needs of
its  entire community, including low and moderate income neighborhoods.  The CRA
does  not  establish  specific  lending  requirements  or programs for financial
institutions  nor does it limit an institution's discretion to develop the types
of  products  and  services  that  it believes are best suited to its particular
community,  consistent  with  the CRA.  The CRA requires the FDIC, in connection
with  its  examination  of  a  savings  institution, to assess the institution's
record of meeting the credit needs of its community and to take such record into

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                                     Page 7
<PAGE>

account  in its evaluation of certain applications by such institution.  The CRA
requires  the  FDIC  to  provide  a  written  evaluation of an institution's CRA
performance  utilizing  a  four-tiered  descriptive  rating  system.  The Bank's
latest  CRA  rating  was  "outstanding."

NEW  YORK  STATE  COMMUNITY  REINVESTMENT  REGULATION

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

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

THE  USA  PATRIOT  ACT

The  USA  PATRIOT  Act was signed into law on October 26, 2001.  The USA PATRIOT
Act gives the federal government new powers to address terrorist threats through
enhanced  domestic  security  measures,  expanded surveillance powers, increased
information  sharing  and broadened anti-money laundering requirements.  The USA
PATRIOT  Act  also  requires  the  federal  banking  agencies  to  take  into
consideration  the effectiveness of controls designed to combat money laundering
activities  in  determining  whether  to  approve  a merger or other acquisition
application  of  a member institution.  Accordingly, if we engage in a merger or
other  acquisitions,  our  controls designed to combat money laundering would be
considered  as  part  of the application process.  We have established policies,
procedures  and  systems  designed  to  comply  with  these  regulations.

SARBANES-OXLEY  ACT  OF  2002

The  Sarbanes-Oxley  Act  of  2002  was  signed  into law on July 30, 2002.  The
Sarbanes-Oxley  Act  of  2002  is  a  law  that  addresses,  among other issues,
corporate  governance,  auditing  and  accounting,  executive  compensation, and
enhanced and timely disclosure of corporate information.  As directed by Section
302(a)  of  Sarbanes-Oxley Act of 2002, the Company Chief Executive Officers and
Chief  Financial  Officer  are  each  required  to  certify  that  the company's
quarterly  and  annual reports do not contain any untrue statement of a material
fact.  The  rules  have  several  requirements,  including having these officers
certify  that:  they are responsible for establishing, maintaining and regularly
evaluating  the  effectiveness  of our internal controls; they have made certain
disclosures  to  our  auditors and the audit committee of the Board of Directors
about our internal controls; and they have included information in our quarterly
an annual reports about their evaluation and whether there have been significant
changes  in  our  internal controls or in other factors that could significantly
affect  internal  controls  subsequent to the evaluation.  We will be subject to
further  reporting and audit requirements with the year ending December 31, 2006
under the requirements of Sarbanes-Oxley.  We have existing policies, procedures
and systems designed to comply with these regulations, and are further enhancing
and  documenting  such  policies,  procedures  and  systems  to ensure continued
compliance  with  these  regulations.

The  company  maintains an Internet website located at WWW.PATHFINDERBANK.COM on
which,  among other things, the Company makes available, free of charge, various
reports  that  it  files  with  or  furnishes  to  the  Securities  and Exchange
Commission,  including its Annual Report on Form 10-K, quarterly reports on Form
10-Q,  and  current  reports on Form 8-K. The Company has also made available on
its  website  its  Audit  Committee Charter and corporate governance guidelines.
These  reports  are made available as soon as reasonably practicable after these
reports  are  filed with or furnished to the Securities and Exchange Commission.

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                                     Page 8
<PAGE>

FEDERAL  AND  STATE  TAXATION

FEDERAL  TAXATION

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

BAD DEBT RESERVES.  Prior to the 1996 Act, the Bank was permitted to establish a
reserve  for  bad  debts  and  to  make  annual additions to the reserve.  These
additions could, within specified formula limits, be deducted in arriving at the
Bank's taxable income.  As a result of the 1996 Act, the Bank must use the small
bank  experience  method  in computing its bad debt deduction beginning with its
1996  Federal  tax  return.

TAXABLE  DISTRIBUTIONS  AND  RECAPTURE. Prior to the 1996 Act, bad debt reserves
created  prior  to January 1, 1988 were subject to recapture into taxable income
should  the  Bank  fail to meet certain thrift asset and definitional tests. New
federal  legislation  eliminated  these thrift related recapture rules. However,
under current law, pre-1988 reserves remain subject to recapture should the Bank
cease  to  retain  a  bank  or  thrift  charter  or  make  certain  non-dividend
distributions.

MINIMUM  TAX.   The  Internal  Revenue  Code  imposes an alternative minimum tax
("AMT")  at  a  rate of 20% on a base of regular taxable income plus certain tax
preferences  ("alternative  minimum  taxable  income"  or  "AMTI").  The  AMT is
payable  to  the  extent  such  AMTI  is  in excess of an exemption amount.  Net
operating  losses  can  offset  no  more  than 90% of AMTI.  Certain payments of
alternative  minimum  tax may be used as credits against regular tax liabilities
in  future  years.

NET  OPERATING  LOSS  CARRYOVERS.  A  financial  institution  may carry back net
operating  losses  to  the  preceding  two  taxable  years  and  forward  to the
succeeding  20  taxable  years.  This  provision  applies  to losses incurred in
taxable  years  beginning  after  August  5,  1997.

The  Internal Revenue Service has examined the federal income tax return for the
fiscal  year ended 1992; the New York State fiscal year-end tax returns for 1998
through 1999 are currently under examination by the New York State Department of
Taxation  and  Finance.  See  Note  13  to  the  Financial  Statements.

STATE  TAXATION

NEW  YORK  TAXATION.  The Bank is subject to the New York State Franchise Tax on
Banking Corporations in an annual amount equal to the greater of (i) 8.0% of the
Bank's  "entire net income" allocable to New York State during the taxable year,
or  (ii) the applicable alternative minimum tax.  The alternative minimum tax is
generally  the  greater of (a) 0.01% of the value of the Bank's assets allocable
to  New York State with certain modifications, (b) 3% of the Bank's "alternative
entire  net income" allocable to New York State, or (c) $250.  Entire net income
is  similar  to  federal  taxable  income,  subject to certain modifications and
alternative  entire  net  income  is  equal to entire net income without certain
modifications.  Net  operating  losses  arising in can be carried forward to the
succeeding  20  taxable  years.

The  Company's  Annual  Report  on  Form  10-K  may be accessed on the Company's
website  at  WWW.PATHFINDERBANK.COM.

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                                     Page 9
<PAGE>

ITEM  2:  PROPERTIES

The  Bank  conducts  its business through its main office located in Oswego, New
York,  and  five  full  service  branch  offices  located in Oswego County.  The
following  table  sets  forth certain information concerning the main office and
each  branch  office  of  the Bank at December 31, 2004.  The aggregate net book
value  of  the  Bank's  premises  and equipment was $7.6 million at December 31,
2004.  For additional information regarding the Bank's properties, see Note 8 to
Notes  to  Financial  Statements
<TABLE>
<CAPTION>

LOCATION                   OPENING DATE  OWNED/LEASED
-----------------------------------------------------
<S>                        <C>           <C>
Main Office . . . . . . .          1874     Owned
214 West First Street
Oswego, New York  13126

Plaza Branch. . . . . . .          1989     Owned (1)
Roue 104, Ames Plaza
Oswego, New York  13126

Mexico Branch . . . . . .          1978     Owned
Norman and Main Streets
Mexico, New York 13114

Oswego East Branch. . . .          1994     Owned
34 East Bridge Street
Oswego, New York  13126

Lacona Branch . . . . . .          2002     Owned
1897 Hardwood Drive
Lacona, New York  13083

Fulton Branch . . . . . .          2003     Owned (2)
5 West First Street South
Fulton, New York 13069
</TABLE>
--------------------------------------------------------------------------------
(1)  The building is owned; the underlying land is leased with an annual rent of
     $20,000
(2)  The building is owned; the underlying land is leased with an annual rent of
     $21,000

ITEM  3:  LEGAL  PROCEEDINGS

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

ITEM  4:  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

No  matters were submitted during the fourth quarter of fiscal 2004 to a vote of
our  shareholders.

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                                    Page 10
<PAGE>

PART  II

ITEM  5:  MARKET  FOR COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

Pathfinder  Bancorp, Inc.'s common stock currently trades on the Nasdaq SmallCap
market  under  the  symbol  "PBHC".  There were 348 shareholders of record as of
February  21, 2005.  The following table sets forth the high and low closing bid
prices  and  dividends paid per share of common stock for the periods indicated:

<TABLE>
<CAPTION>
                                           DIVIDEND
QUARTER ENDED:           HIGH      LOW         PAID
---------------------------------------------------
<S>                 <C>        <C>       <C>
December 31, 2004.  $  18.500   $16.250     $0.1025
September 30, 2004     16.630    14.770      0.1025
June 30, 2004. . .     19.070    15.050      0.100
March 31, 2004 . .     20.999    17.010      0.100
---------------------------------------------------
December 31, 2003.  $  18.459   $16.250     $0.100
September 30, 2003     17.000    14.000      0.100
June 30, 2003. . .     15.250    13.685      0.100
March 31, 2003 . .     14.890    13.200      0.100
---------------------------------------------------
</TABLE>

DIVIDENDS  AND  DIVIDEND  HISTORY

The Company has historically paid regular quarterly cash dividends on its common
stock,  and  the Board of Directors presently intends to continue the payment of
regular  quarterly  cash dividends, subject to the need for those funds for debt
service  and other purposes. Payment of dividends on the common stock is subject
to  determination and declaration by the Board of Directors and will depend upon
a  number  of factors, including capital requirements, regulatory limitations on
the  payment  of  dividends,  Pathfinder  Bank  and  its subsidiaries results of
operations  and  financial  condition,  tax considerations, and general economic
conditions.  The  Company's  mutual holding company, Pathfinder Bancorp, M.H.C.,
may  elect  to  waive  or  receive  dividends  each  time the Company declares a
dividend.  The  election  to  waive  the  dividend  receipt  requires  prior
non-objection  of  the  Office  of  Thrift  Supervision.

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                                    Page 11
<PAGE>

ITEM  6:  SELECTED  FINANCIAL  DATA

Pathfinder  Bancorp,  Inc.  ("the  Company") is the parent company of Pathfinder
Bank  and  Pathfinder  Statutory  Trust  I.  Pathfinder Bank has three operating
subsidiaries  - Pathfinder Commercial Bank, Pathfinder REIT Inc., and Whispering
Oaks  Development,  Inc.

The  following selected consolidated financial data sets forth certain financial
highlights  of  the  Company  and  should  be  read  in  conjunction  with  the
consolidated  financial  statements  and  related  notes,  and  "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations"
included  elsewhere  in  this  annual  report  on  Form  10-K.

<TABLE>
<CAPTION>
                                                    2004       2003       2002       2001       2000
-----------------------------------------------------------------------------------------------------
<S>                                             <C>        <C>        <C>        <C>        <C>
YEAR END (IN THOUSANDS)
Total assets . . . . . . . . . . . . . . . . .  $302,037   $277,940   $279,056   $244,514   $232,355
Loans receivable, net. . . . . . . . . . . . .   185,125    187,002    179,001    162,588    148,362
Deposits . . . . . . . . . . . . . . . . . . .   236,672    206,894    204,522    169,589    161,459
Equity . . . . . . . . . . . . . . . . . . . .    21,826     21,785     23,230     22,185     20,962

FOR THE YEAR (IN THOUSANDS)
Net interest income. . . . . . . . . . . . . .  $  8,905   $  9,337   $  8,789   $  7,853   $  7,393
Net income . . . . . . . . . . . . . . . . . .     1,405      1,652      1,156      1,602        356

PER SHARE
Net income (basic) . . . . . . . . . . . . . .  $   0.58   $   0.68   $   0.45   $   0.62   $   0.14
Book value . . . . . . . . . . . . . . . . . .      8.91       8.96       8.90       8.64       8.06
Tangible book value (a). . . . . . . . . . . .      7.04       7.03       7.02       7.63       7.04
Cash dividends declared. . . . . . . . . . . .     0.405       0.40       0.30       0.26       0.24

RATIOS
Return on average assets . . . . . . . . . . .      0.47%      0.59%      0.45%      0.68%      0.16%
Return on average equity . . . . . . . . . . .      6.45%      7.61%      5.01%      7.34%      1.79%
Return on average tangible equity (a). . . . .      8.17%      9.77%      7.03%      8.29%      2.08%
Average equity to average assets . . . . . . .      7.29%      7.77%      8.94%      9.22%      8.91%
Dividend payout ratio (b). . . . . . . . . . .     47.54%     39.41%     36.76%     28.37%    173.62%
Allowance for loan losses to loans receivable.      0.98%      0.91%      0.82%      1.03%      0.86%
Net interest rate spread . . . . . . . . . . .      3.22%      3.53%      3.47%      3.35%      3.34%
Noninterest income to average assets . . . . .      1.02%      0.93%      0.81%      0.79%      0.49%
Noninterest expense to average assets. . . . .      3.12%      3.26%      3.09%      2.90%      3.45%
Efficiency ratio (c) . . . . . . . . . . . . .     77.87%     76.13%     73.18%     70.61%     90.64%
</TABLE>

(a)  Tangible  equity  excludes  intangible  assets.
(b)  The  dividend  payout  ratio is calculated using dividends declared and not
     waived  by the Company's mutual holding company parent, Pathfinder Bancorp,
     M.H.C.,  divided  by  net  income.
(c)  The  efficiency  ratio  is calculated as noninterest expense divided by net
     interest  income  plus  noninterest  income.

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                                    Page 12
<PAGE>

ITEM  7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

INTRODUCTION

Throughout  the  Management's  Discussion  and  Analysis ("MD&A") the term, "the
Company",  refers  to  the  consolidated  entity  of  Pathfinder  Bancorp,  Inc.
Pathfinder  Bank  and Pathfinder Statutory Trust I are wholly owned subsidiaries
of  Pathfinder  Bancorp,  Inc.,  however,  Pathfinder  Statutory  Trust  I  is
deconsolidated for reporting purposes (see Note 10). Pathfinder Commercial Bank,
Pathfinder  REIT,  Inc.  and  Whispering Oaks Development, Inc. represent wholly
owned subsidiaries of Pathfinder Bank. At December 31, 2004, Pathfinder Bancorp,
M.H.C,  the  Company's  mutual  holding company parent, whose activities are not
included  in  the MD&A, held 64.6% of the Company's outstanding common stock and
the  public  held  35.4%.

When  used in this Annual Report the words or phrases "will likely result", "are
expected  to",  "will  continue",  "is  anticipated",  "estimate",  "project" or
similar  expression are intended to identify "forward-looking statements" within
the  meaning  of  the  Private  Securities  Litigation  Reform Act of 1995. Such
statements  are  subject  to  certain  risks and uncertainties, including, among
other  things,  changes  in  economic  conditions  in the Company's market area,
changes  in  policies  by  regulatory  agencies, fluctuations in interest rates,
demand for loans in the Company's market areas and competition, that could cause
actual results to differ materially from historical earnings and those presently
anticipated  or  projected.  The  Company wishes to caution readers not to place
undue  reliance  on  any such forward-looking statements, which speak only as of
the  date  made.  The  Company  wishes to advise readers that the factors listed
above  could  affect  the  Company's  financial  performance and could cause the
Company's  actual  results  for  future  periods  to  differ materially from any
opinions  or  statements expressed with respect to future periods in any current
statements.

The  Company  does  not  undertake, and specifically declines any obligation, to
publicly  release  the  results  of  any  revisions,  which  may  be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements  or  to  reflect the occurrence of anticipated or unanticipated
events.

The  Company's business strategy is to operate as a well-capitalized, profitable
and  independent  community bank dedicated to providing value-added products and
services  to  our customers. Generally, the Company has sought to implement this
strategy  by  emphasizing  retail  deposits  as  its primary source of funds and
maintaining  a  substantial part of its assets in locally-originated residential
first  mortgage  loans,  loans to business enterprises operating in its markets,
and  in  investment  securities.  Specifically,  the Company's business strategy
incorporates  the  following  elements:  (i)  operating  as  an independent com-
munity-oriented  financial  institution;  (ii)  maintaining capital in excess of
regulatory  requirements;  (iii)  emphasizing  investment  in one-to-four family
residential mortgage loans, loans to small businesses and investment securities;
and  (iv)  maintaining  a  strong  retail  deposit  base.

The  Company's  net  income  is  primarily dependent on its net interest income,
which  is  the  difference  between interest income earned on its investments in
mortgage  and  other loans, investment securities and other assets, and its cost
of  funds  consisting  of  interest  paid  on deposits and other borrowings. The
Company's  net income also is affected by its provision for loan losses, as well
as  by  the  amount  of  noninterest income, including income from fees, service
charges and servicing rights, net gains and losses on sales of securities, loans
and  foreclosed  real  estate,  and  noninterest  expense  such  as  employee
compensation  and benefits, occupancy and equipment costs, data processing costs
and  income  taxes.  Earnings  of the Company also are affected significantly by
general  economic  and  competitive  conditions,  particularly changes in market
interest rates, government policies and actions of regulatory authorities, which
events  are  beyond the control of the Company. In particular, the general level
of  market  rates  tends  to  be  highly  cyclical.

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                                    Page 13
<PAGE>

APPLICATION  OF  CRITICAL  ACCOUNTING  POLICIES

The  Company's consolidated financial statements are prepared in accordance with
accounting  principles  generally  accepted  in  the  United  States  and follow
practices  within the banking industry. Application of these principles requires
management  to make estimates, assumptions and judgments that affect the amounts
reported  in  the  financial statements and accompanying notes. These estimates,
assumptions  and  judgments are based on information available as of the date of
the  financial  statements;  accordingly,  as  this  information  changes,  the
financial  statements  could  reflect  different  estimates,  assumptions  and
judgments.  Certain  policies  inherently  have a greater reliance on the use of
estimates,  assumptions  and judgments and as such have a greater possibility of
producing  results  that could be materially different than originally reported.
Estimates,  assumptions  and judgments are necessary when assets and liabilities
are required to be recorded at fair value or when an asset or liability needs to
be  recorded  contingent upon a future event. Carrying assets and liabilities at
fair  value  inherently results in more financial statement volatility. The fair
values  and  information used to record valuation adjustments for certain assets
and  liabilities  are  based  on  quoted  market prices or are provided by other
third-party  sources,  when  available.  When  third  party  information  is not
available,  valuation  adjustments  are  estimated  in good faith by management.

The  most  significant accounting policies followed by the Company are presented
in  Note 1 to the consolidated financial statements.  These policies, along with
the  disclosures  presented  in  the other financial statement notes and in this
discussion,  provide  information  on how significant assets and liabilities are
valued  in  the financial statements and how those values are determined.  Based
on  the  valuation  techniques  used  and the sensitivity of financial statement
amounts  to  the  methods,  assumptions  and estimates underlying those amounts,
management  has identified the determination of the allowance for loan losses to
be  the accounting area that requires the most subjective and complex judgments,
and  as  such  could  be the most subject to revision as new information becomes
available.

The  allowance for loan losses represents management's estimate of probable loan
losses  inherent  in the loan portfolio. Determining the amount of the allowance
for loan losses is considered a critical accounting estimate because it requires
significant  judgment  and the use of estimates related to the amount and timing
of  expected  future  cash flows on impaired loans, estimated losses on pools of
homogeneous  loans  based  on  historical  loss experience, and consideration of
current  economic  trends  and  conditions,  all  of which may be susceptible to
significant  change.  The  loan portfolio also represents the largest asset type
on  the  consolidated  balance  sheet.  Note  1  to  the  consolidated financial
statements  describes  the  methodology used to determine the allowance for loan
losses,  and  a  discussion  of the factors driving changes in the amount of the
allowance  for  loan  losses  is  included  in  this  report.

The  Company  carries  all  of its investments at fair value with any unrealized
gains  or  losses  reported net of tax as an adjustment to shareholders' equity.
Based on management's assessment, at December 31, 2004, the Company did not hold
any  security  that  had  a  fair value decline that is currently expected to be
other  than temporary.  Consequently, any declines in a specific security's fair
value  below  amortized cost have not been provided for in the income statement.
The  Company's  ability  to fully realize the value of its investment in various
securities,  including corporate debt securities, is dependent on the underlying
creditworthiness  of  the  issuing  organization.

EXECUTIVE  SUMMARY

Total  deposits  increased by 14% during 2004, primarily driven by the growth of
municipal deposits.  The Company entered the municipal deposit market at the end
of  2002 and has since increased the number of municipal customers by 180%.  The
municipal  deposit market will be a continued focus in 2005 as well as continued
expansion  into  new  markets  in Oswego County.  The Company plans on opening a
branch  in  Central  Square,  New  York  in  the  second  quarter  of  2005.

Total  assets  increased  10%, primarily in the investment securities portfolio.
The  loan  portfolio  decreased 1% as loans sales, amortization and pre-payments

--------------------------------------------------------------------------------
                                    Page 14
<PAGE>

outpaced  loan  originations  during  2004.  Although  the Company experienced a
decline  in  the  loan  portfolio,  asset quality of the existing loans improved
during  2004.  Nonperforming  assets  to  total assets was 0.88% at December 31,
2004  compared  to 1.15% in the prior year.  The improvement in asset quality is
attributable  to  the  enhancement  of  collection procedures and the resolution
through  foreclosure  or  charge-off  of  three  significant  commercial lending
relationships.  The  Company  expects  to  concentrate  on  continued commercial
mortgage  and commercial loan growth during 2005.  In the first quarter of 2005,
the Company hired a Senior Commercial Lender, with over 22 year of experience in
small  business  lending.  The  increase  in  commercial  lending  staff and the
relocation  of  the  Business  Services  Division to a prime retail location are
primary  strategies  for  achieving  growth  in  commercial lending during 2005.

Net  income  for  2004 was $1.4 million, or $0.58 per share, as compared to $1.7
million,  or  $0.68  per  share,  in  2003.  Soft  loan  demand  combined with a
flattening  of  the  interest  rate  yield  curve resulted in compression of net
interest margin and a reduction in earnings.  Long-term interest rates remain at
historic  lows while the Federal Reserve Bank has increased short-term rates 100
basis  points  over  the  past  year.  The  Company  expects  continued  margin
compression  during  2005  as  a  result  of  monetary  policy, general economic
conditions,  and  the  Company's  asset-liability  management  modeling.

The Company plans to enhance other interest income during 2005 by increasing the
customer  deposit  base  and  increasing  overdraft,  returned  check  and  non-
sufficient  fund  charges  to  be  in  line  with local competitors. The Company
continues  to  focus  on  the  development  of  its  employees,  systems, branch
structure  and  product  offerings  to enhance customer service. During 2004 and
continuing  in  2005, the Company received New York State grant money to conduct
comprehensive  training  programs  for  all  employees  in  leadership  skills,
performance  management  and  business  metrics.

RESULTS  OF  OPERATIONS

Net  income  for 2004 was $1.4 million, a decrease of $247,000, or 15%, compared
to  net  income of $1.6 million for 2003.  Basic earnings per share decreased to
$0.58  per  share  for the year ended December 31, 2004 from $0.68 per share for
the  year  ended  December  31, 2003.  Return on average equity decreased 15% to
6.45%  in  2004  from  7.61%  in  2003.

Net  interest  income,  on  a  tax  equivalent basis, decreased $375,000, or 4%,
primarily  resulting from interest rate spread compression as longer term assets
have  repriced  at lower rates while shorter term cost of funds are repricing at
higher rates.  Provision for loans losses increased 23% due to the charge-off of
two  commercial  credit  relationships  during  the fourth quarter of 2004.  The
Company  experienced a 10% increase in other income, net of securities gains and
losses,  primarily  attributable  to  increased  deposit  levels and the related
service charges associated with checking accounts and other charges, commissions
and fees.  Operating expenses increased 2% due to the hiring of additional staff
and  an  increase  in  data  processing  expenses.  The  Company  expects higher
operating  costs  when  the  Central  Square  branch  opens  in  2005.

NET  INTEREST  INCOME

Net  interest  income  is  the  Company's primary source of operating income for
payment of operating expenses and providing for possible loan losses.  It is the
amount  by  which  interest  earned  on  interest-earning  deposits,  loans  and
investment  securities,  exceeds  the  interest  paid  on  deposits  and  other
interest-bearing  liabilities.  Changes  in net interest income and net interest
margin  ratios result from the interaction between the volume and composition of
earning  assets,  interest-bearing  liabilities,  related  yields and associated
funding  costs.

Net  interest  income,  on a tax-equivalent basis, decreased $376,000, or 4%, to
$9.1 million for the year ended December 31, 2004, as compared to the year ended
December 31, 2003. The Company's net interest margin for 2004 decreased to 3.35%
from  3.68%  in  2003.  The  decrease  in net interest income is attributable to
decreased  yields in interest earning assets and was offset by a decrease in the
costs  of interest bearing liabilities. The average balance of interest- earning
assets  grew  $14.6  million,  or  6%,  during  2004  and the average balance of

--------------------------------------------------------------------------------
                                    Page 15
<PAGE>

interest-bearing  deposits  increased  by $20.7 million, or 11%. The increase in
the  average  balance  of  interest-bearing  liabilities primarily resulted from
attracting new municipal deposit customers. The decrease in the average yield on
interest-earning  assets by 60 basis points resulted from the downward repricing
of  loans  from  refinancing  and  originations in the current low interest rate
environment  and the purchase of $35.6 million in investment securities at lower
yields  than  the  existing  portfolio.  The  decrease in the yield on interest-
earning assets was partially offset by the increase in the average balance. As a
result,  interest  income,  on a tax-equivalent basis, decreased $751,000 during
2004.  Interest  expense on deposits decreased $112,000, or 3%, resulting from a
decrease  in  the  cost  of  deposits  to  1.71%  in 2004 from 1.96% in 2003. In
addition to the decrease in the cost of deposits, interest expense on borrowings
also  decreased  by  $264,000,  or 12%, from the prior year. The decrease in the
cost  of  funds was partially offset by a $20.7 million, or 11%, increase in the
average  deposit  balance.

In  comparison,  net  interest  income  increased  $530,000,  or  6%,  on a tax-
equivalent  basis,  from  2002  to 2003. The increase in net interest income was
comprised  of  a  decrease  in  net  interest  expenses of $1.1 million, or 15%,
partially  offset  by  a  decrease  in  interest  income of $544,000, or 3%. The
increase  in net interest income is attributable to increased volumes in earning
asset  and  deposit  balances  and  the  maintenance  of  stable  spreads.

--------------------------------------------------------------------------------
                                    Page 16
<PAGE>

AVERAGE  BALANCES  AND  RATES

The  following  table sets forth information concerning average interest-earning
assets  and  interest-bearing  liabilities  and  the  yields  and rates thereon.
Interest  income  and  resultant  yield  information  in the table is on a fully
tax-equivalent  basis  using  marginal federal income tax rates of 34%. Averages
are  computed  on the daily average balance for each month in the period divided
by  the  number  of  days  in the period. Yields and amounts earned include loan
fees.  Non-accrual  loans  have  been  included  in  interest-earning assets for
purposes  of  these  calculations.

<TABLE>
<CAPTION>
                                                        2004                            2003
------------------------------------------------------------------------------------------------------
                                                                   Average                     Average
                                            Average                Yield /   Average            Yield/
(Dollars in thousands)                      Balance    Interest     Cost     Balance   Interest   Cost
------------------------------------------------------------------------------------------------------
<S>                                        <C>        <C>         <C>       <C>       <C>        <C>
Interest-earning assets:
Real estate loans residential . . . . . .  $124,734   $   7,491      6.01%  $129,687  $   8,346  6.44%
Real estate loans commercial. . . . . . .    30,958       2,254      7.28%    31,122      2,480  7.97%
Commercial loans. . . . . . . . . . . . .    16,060         901      5.61%    14,181        798  5.62%
Consumer loans. . . . . . . . . . . . . .    17,427       1,194      6.85%    15,787      1,225  7.76%
Taxable investment securities . . . . . .    65,480       2,220      3.39%    54,115      2,193  4.05%
Tax-exempt investment securities. . . . .     8,603         488      5.67%     7,869        305  3.87%
Interest-earning deposits . . . . . . . .     7,338          81      1.10%     3,252         33  0.99%
------------------------------------------------------------------------------------------------------
Total interest-earning assets . . . . . .  $270,600   $  14,629      5.41%  $256,013  $  15,380  6.01%
Noninterest-earning assets:
Other assets. . . . . . . . . . . . . . .    30,236                           24,859
Allowance for loan losses . . . . . . . .    (1,792)                          (1,591)
 Net unrealized gains
  on available for sale securities. . . .      (515)                              52
------------------------------------------------------------------------------------------------------
Total  Assets . . . . . . . . . . . . . .  $298,529                         $279,333
======================================================================================================
Interest-bearing liabilities:
NOW accounts. . . . . . . . . . . . . . .  $ 20,808   $     135      0.65%  $ 17,663  $     140  0.79%
Money management accounts . . . . . . . .    40,775         567      1.39%    21,788        248  1.14%
Savings and club accounts . . . . . . . .    68,046         453      0.67%    66,481        511  0.77%
Time deposits . . . . . . . . . . . . . .    82,769       2,484      3.00%    85,751      2,852  3.33%
Junior subordinated debentures. . . . . .     5,155         251      4.80%     5,000        236  4.66%
Borrowings. . . . . . . . . . . . . . . .    37,674       1,683      4.47%    43,490      1,961  4.51%
------------------------------------------------------------------------------------------------------
Total Interest-bearing liabilities. . . .  $255,227   $   5,573      2.19%  $240,173  $   5,948  2.48%
------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits . . . . . . . . . . . . .    17,974                           16,345
Other liabilities . . . . . . . . . . . .     3,556                            1,098
------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . .   276,757                          257,616
------------------------------------------------------------------------------------------------------
Shareholders' equity. . . . . . . . . . .    21,772                           21,717
Total liabilities & shareholders' equity.  $298,529                         $279,333
======================================================================================================
Net interest income . . . . . . . . . . .              $  9,056                       $   9,432
Net interest rate spread. . . . . . . . .                            3.22%                       3.53%
Net interest margin . . . . . . . . . . .                            3.35%                       3.68%
------------------------------------------------------------------------------------------------------
Ratio of average interest-earning assets
to average interest-bearing liabilities .                          106.02%                     106.60%
------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                         2002
---------------------------------------------------------------------------
                                                                   Average
                                             Average                Yield/
                                             Balance   Interest     Cost
---------------------------------------------------------------------------
<S>                                         <C>        <C>        <C>
Interest-Earning Assets:
Real estate loans residential. . . . . . . $117,688    $  8,194      6.96%
Real estate loans commercial . . . . . . .   31,790       2,641      8.31%
Commercial loans . . . . . . . . . . . . .   14,774         984      6.66%
Consumer loans . . . . . . . . . . . . . .   12,795       1,117      8.73%
Taxable investment securities. . . . . . .   46,247       2,437      5.27%
Tax-exempt investment securities . . . . .    6,036         434      7.19%
Interest-earning deposits. . . . . . . . .    9,163         117      1.28%
---------------------------------------------------------------------------
Total interest-earning assets. . . . . . . $238,493    $ 15,924      6.68%
Noninterest-earning assets:
Other assets . . . . . . . . . . . .  . .    20,987
Allowance for loan losses. . . . . . .. .    (1,877)
 Net unrealized gains
  on available for sale securities . .. .       368
---------------------------------------------------------------------------
Total  Assets. . . . . . . . . . . . .. .  $257,971
===========================================================================
Interest-bearing liabilities:
NOW accounts . . . . . . . . . . . . .  .  $ 15,850    $    168      1.06%
Money management accounts. . . . . . .  .    11,571         242      2.09%
Savings and club accounts. . . . . . .  .    62,494         948      1.52%
Time deposits. . . . . . . . . . . . . . .   77,701       3,299      4.25%
Junior subordinated debentures                2,635         138      5.24%
 Borrowings. . . . . . . . . . . . . . .     48,626       2,228      4.58%
---------------------------------------------------------------------------
Total Interest-bearing liabilities . . . . $218,877    $  7,023      3.21%
---------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits. . . . . . . . . . . . . .   13,154
Other liabilities. . . . . . . . . . . . .    2,873
---------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . .  234,904
---------------------------------------------------------------------------
Shareholders' equity . . . . . . . . . . .   23,067
---------------------------------------------------------------------------
Total liabilities & shareholders' equity . $257,971
===========================================================================
Net interest income. . . . . . . . . . . .             $  8,901
Net interest rate spread . . . . . . . . .                           3.47%
Net interest margin. . . . . . . . . . . .                           3.73%
---------------------------------------------------------------------------
Ratio of average interest-earning assets
to average interest-bearing liabilities. .                         108.96%
---------------------------------------------------------------------------
</TABLE>

INTEREST  INCOME

Average  loans  decreased  1%  in 2004, with yields declining 48 basis points to
6.26%.  The Company's average residential mortgage loan portfolio decreased $5.0
million,  or 4%, when comparing the year 2004 to 2003.  The average yield on the
residential  mortgage  loan portfolio decreased 43 basis points to 6.01% in 2004
from  6.44% in 2003.  New loans were originated at lower rates than in the prior

--------------------------------------------------------------------------------
                                    Page 17
<PAGE>

period  and  a  large  volume  of  existing  mortgages  had their rates modified
downward  or were refinanced at lower rates.  An increase in the average balance
of  consumer  loans  of  $1.6 million, or 10%, resulted from an increase in home
equity loans. The average yield declined 91 basis points, to 6.85% from 7.76% in
2003,  primarily  resulting  from  the  increase in home equity loans, which are
based on the Bank's prime rate. Average commercial loans increased 13% while the
tax-equivalent  yield remained consistent at 5.61% in 2004 compared to 5.62%, in
2003.

Average  loans  increased  $13.7 million in 2003, with yields declining 57 basis
points  to  6.74%.  The  interest income on loans decreased $87,000, or 0.7%, in
2003 compared to 2002.  For the comparable periods, average residential mortgage
loans  increased  $12.0  million,  or 10%, average consumer loans increased $3.0
million,  or  23%, partially offset by a decrease in average commercial loans by
$593,000,  or  4%,  and  a  decrease  in  average  commercial  mortgage loans by
$668,000,  or  2%.

Interest  income  on investment securities increased 8% from 2003 resulting from
an  increase  in  the  average  balance  of  investment  securities (taxable and
tax-exempt)  by  $12.1  million,  or  20%,  to  $74.1 million in 2004 from $62.0
million in 2003.  The tax-equivalent yield decreased 37 basis points to 3.66% in
2004  from  4.03%  in  2003  resulting  primarily  from  significant  investment
purchases  in  the  current  year  at  lower yields than the existing investment
portfolio.

Average investment securities (taxable and tax-exempt) in 2003 increased by $9.7
million,  with  a decrease in tax-equivalent interest income from investments of
$373,000,  or  13%,  compared  to 2002.  The average tax-equivalent yield of the
portfolio  declined  146 basis points, to 4.03% from 5.49%.  The increase in the
average balance of investment securities resulted from the investment of the net
proceeds  received  in the purchase of assets and the assumption of the deposits
of  the  Lacona,  New York branch of Cayuga Bank (the "Branch Acquisition") into
the  investment  and  loan  portfolios.

INTEREST  EXPENSE

Interest expense decreased $375,000, or 6%, in 2004, when compared to 2003.  The
decrease  in  the cost of funds resulted from a reduction in the average cost of
interest-bearing  liabilities of 30 basis points, to 2.18% in 2004 from 2.48% at
2003.  The  decrease  in  the  cost  of  funds  was  partially offset by a $15.1
million,  or 6%, increase in the average balance of interest-bearing liabilities
during  2004.  The  cost  of  deposits decreased 25 basis points to 1.71% during
2004  from  1.96%  for 2003.  The decrease in the cost of deposits was partially
offset  by a $20.7 million, or 11%, increase in the average balance of deposits.
The cost of junior subordinated debentures increased 14 basis points, increasing
interest  expense  by  $15,000.

Interest  expense decreased $1.1 million, or 15%, in 2003 compared to 2002.  The
average cost of interest bearing liabilities declined 73 basis points during the
12  months  ended  December  31,  2003.

--------------------------------------------------------------------------------
                                    Page 18
<PAGE>

RATE/VOLUME  ANALYSIS

Net  interest  income  can  also  be analyzed in terms of the impact of changing
interest  rates  on interest-earning assets and interest-bearing liabilities and
changing  the  volume  or  amount of these assets and liabilities. The following
table  represents  the  extent to which changes in interest rates and changes in
the  volume  of  interest-earning  assets  and interest-bearing liabilities have
affected  the  Company's interest income and interest expense during the periods
indicated. Information is provided in each category with respect to: (i) changes
attributable  to  changes in volume (change in volume multiplied by prior rate);
(ii)  changes  attributable  to  changes  in rate (changes in rate multiplied by
prior  volume);  and  (iii) total increase or decrease.  Changes attributable to
both  rate  and  volume  have  been  allocated  ratably.

<TABLE>
<CAPTION>
                                                            Years Ended December 31,
-------------------------------------------------------------------------------------------------------
                                                2004 vs. 2003                     2003 vs. 2002
                                         Increase/(Decrease) Due to        Increase/(Decrease) Due to
-------------------------------------------------------------------------------------------------------
                                                                Total                           Total
                                                              Increase                         Increase
(In thousands)                         Volume       Rate     (Decrease)    Volume     Rate    (Decrease)
-------------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>         <C>          <C>       <C>       <C>
Interest Income:
Real estate loans residential. . .  $    (311)  $    (544)  $     (855)  $   794   $  (642)  $      152
Real estate loans commercial . . .        (13)       (213)        (226)      (55)     (106)        (161)
Commercial loans . . . . . . . . .         81          22          103       (38)     (148)        (186)
Consumer loans . . . . . . . . . .        120        (151)         (31)      241      (133)         108
Taxable investment securities. . .        417        (390)          27       331      (575)        (244)
Tax-exempt investment securities .         31         152          183       108      (237)        (129)
Interest-earning deposits. . . . .         45           3           48       (62)      (22)         (84)
-------------------------------------------------------------------------------------------------------
Total interest income. . . . . . .        370      (1,121)        (751)    1,319    (1,863)        (544)
Interest Expense:
NOW  accounts. . . . . . . . . . .         22         (27)          (5)       18       (46)         (28)
Money management accounts. . . . .        255          64          319       149      (143)           6
Savings and club accounts. . . . .         12         (70)         (58)       57      (494)        (437)
Time deposits. . . . . . . . . . .        (96)       (272)        (368)      318      (765)        (447)
Junior subordinated debentures . .          8           7           15       114       (16)          98
Borrowings . . . . . . . . . . . .       (262)        (16)        (278)     (232)      (34)        (266)
-------------------------------------------------------------------------------------------------------
Total interest expense . . . . . .        (61)       (314)        (375)      424    (1,498)      (1,074)
-------------------------------------------------------------------------------------------------------
Net change in net interest income.  $     431   $    (807)  $     (376)  $   895   $  (365)  $      530
========================================================================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 19
<PAGE>

NONINTEREST  INCOME

The  Company's  noninterest  income  is  primarily  comprised of fees on deposit
account balances and transactions, loan servicing, commissions, and net gains on
securities,  loans  and  foreclosed  real  estate.

The following table sets forth certain information on noninterest income for the
years  indicated.

<TABLE>
<CAPTION>
                                                   For the Years Ended December 31,
-----------------------------------------------------------------------------------
(In thousands)                                                2004    2003    2002
-----------------------------------------------------------------------------------
<S>                                                          <C>     <C>     <C>
Service charges on deposit accounts . . . . . . . . . . . .  $  967  $  818  $  629
Loan servicing fees . . . . . . . . . . . . . . . . . . . .     256     282     265
Increase in the value of bank owned life insurance. . . . .     175     171     179
Net gains on sales of loans/foreclosed real estate. . . . .     279     326     193
Other charges, commissions and fees . . . . . . . . . . . .     598     469     438
-----------------------------------------------------------------------------------
Core noninterest income . . . . . . . . . . . . . . . . . .   2,275   2,066   1,704
Net gains on sales and impairment of investment securities.     772     542     390
-----------------------------------------------------------------------------------
Total noninterest income. . . . . . . . . . . . . . . . . .  $3,047  $2,608  $2,094
===================================================================================
</TABLE>

Noninterest income in 2004 increased 17%, compared to 2003, as a result of a 10%
increase in core noninterest income and a 42% increase in the non-core item, net
gains  on  sales  and  impairment of investment securities.  The increase in the
number  of  deposit  accounts  and the introduction of new services to customers
primarily  accounted  for  the  $149,000  increase in service charges on deposit
accounts  when  compared  to  2003.  A  $129,000  increase  in  other  charges,
commissions and fees primarily resulted from recording $54,000 in New York State
grant  income  associated  with  a  company  wide Leadership Training initiative
program,  along  with  increased foreign ATM usage fees and fees associated with
the  company's  Visa debit card.  Net gains on the sale of loans/foreclosed real
estate  decreased  $47,000, or 14%, resulting primarily from a $40,000 reduction
in  the  gain  recognized  on  the  sale of loans to the secondary market as the
volume  of  loans  sold  decreased  47%.  Investment  security  gains  increased
$230,000,  or  42%,  when  compared to the 2003 period.  Investment security net
gains consist of net gains associated with the sale of equity and corporate debt
securities.

Noninterest  income  increased  $514,000,  or 25%, in 2003 compared to 2002. The
increase  was  primarily  attributable  to  a  $362,000  increase  in  the  core
noninterest income components: a $189,000 increase in service charges on deposit
accounts;  a  $17,000 increase in loan servicing fees due to the increase in our
servicing  portfolio  and  a  $133,000  increase  in  net  gains  on  sale  of
loans/foreclosed  real  estate  and  a  $31,000  increase  in  other  charges,
commissions  and fees. These increases in core noninterest income were partially
offset  by  an  $8,000  decrease  in the value of bank owned life insurance. The
increase  in  the  net  gains  on sale of loans/foreclosed real estate primarily
resulted  from  the  Company  recognizing an increase in the gain of $152,000 in
2003 related to the sale of loans to the secondary market. The $152,000 increase
in  net  gains  on sales of security investments when compared to 2002 primarily
resulted  from the Company recognizing a $275,000 impairment loss on a corporate
debt  security  in  the  fourth  quarter  of  2002.

--------------------------------------------------------------------------------
                                    Page 20
<PAGE>

NONINTEREST  EXPENSE

The  following  table  sets forth certain information on noninterest expense for
the  years  indicated.

<TABLE>
<CAPTION>
                           For the Years Ended December 31,
-----------------------------------------------------------
(In thousands)                      2004    2003    2002
-----------------------------------------------------------
<S>                                <C>     <C>     <C>
Salaries and employee benefits. .  $4,798  $4,455  $3,757
Building occupancy. . . . . . . .   1,031   1,004     796
Data processing expenses. . . . .     981     868     920
Professional and other services .     682     770     858
Amortization of intangible asset.     223     223      39
Other expenses. . . . . . . . . .   1,592   1,774   1,594
-----------------------------------------------------------
Total noninterest expense . . . .  $9,307  $9,094  $7,964
===========================================================
</TABLE>

Noninterest expenses increased $213,000, or 2%, for the 12 months ended December
31,  2004  when compared to 2003.    Salaries and employee benefits increased 8%
in  2004  primarily resulting from incremental salary raises and promotions, the
hiring  of  a  Human Resource Manager and increased pension and health insurance
costs.  The  13%  increase  in  data  processing expenses during 2004 related to
additional depreciation costs associated with a full year's operation of the new
Fulton  branch,  combined  with  a  15%  increase  in  internet  banking  usage,
additional check processing charges due to a 5% increase in customer volume from
a  checking  account  acquisition program, and additional ATM processing charges
related  to  the  installation  of  a  new ATM machine and products and supplies
resulting  from the increase in customer volume. Professional and other services
decreased 11% due to a reduction in legal fees relating to a foreclosed property
in  2003,  not  recurring in 2004 and a reduction in mortgage consulting fees as
in-house  personnel  were  used  to perform work that was originally contracted.
These  reductions  were offset by an increase in consulting fees associated with
the  checking  account  acquisition  program  and  expenses  associated  with  a
leadership  training  program.  Corresponding  grant  income  recorded  in other
income  offset  the  leadership  training program expenses.  The 10% decrease in
other  operating expenses during 2004 resulted primarily from a $164,000 expense
relating  to  personnel  realignment  in  2003.

Noninterest  expenses  increased  14%  for the 12 months ended December 31, 2003
when  compared  to 2002.    Salaries and employee benefits increased 19% in 2003
primarily  resulting  from  the  incremental salary and benefit costs associated
with  the  operation  of an additional branch location and increased pension and
health  insurance costs.  The 26% increase in building occupancy expenses during
2003 also related to additional costs associated with a full year's operation of
the  additional branch.  Amortization expense for 2003 increased $184,000 due to
the  amortization  of branch acquisition intangibles.  The 11% increase in other
operating  expenses  during  2003  resulted  primarily  from  a $164,000 expense
relating  to  personnel  realignment.

INCOME  TAX  EXPENSE

Income tax expense decreased $99,000 to $502,000 for the year ended December 31,
2004  as  compared  to  $601,000  in the prior year.  The decrease in income tax
expense reflected lower pre-tax income during the year.  The Company's effective
tax  rate  remained  at 27% in 2004.   The Company has reduced its tax rate from
the  statutory  rate  primarily  through  the ownership of tax-exempt investment
securities,  bank  owned  life  insurance  and  other  tax  saving  strategies.
Enactment  of  proposed  state  tax legislation regarding Real Estate Investment
Trusts  would  increase  the  state  tax  rate  for  the  Company.

Income  tax  expense  increased $213,000 to $601,000 for the year ended December
31,  2003 as compared to $388,000 in the prior year.  The increase in income tax
expense  reflected  higher  pre-tax  income  during  the  year.  The  Company's
effective  tax  rate increased to 27% in 2003 compared to 25% in the prior year.

--------------------------------------------------------------------------------
                                    Page 21
<PAGE>

CHANGES  IN  FINANCIAL  CONDITION

INVESTMENT  SECURITIES

The  investment  portfolio represents 28% of the Company's earning assets and is
designed  to  generate  a  favorable  rate  of  return consistent with safety of
principal while assisting the Company in meeting the liquidity needs of the loan
and deposit operations and managing the Company's interest rate risk strategies.
All  of  the  Company's  investments  are classified as available for sale.  The
Company invests in investment securities consisting primarily of mortgage-backed
securities, securities issued by United States Government agencies and sponsored
enterprises,  state  and municipal obligations, mutual funds, equity securities,
investment  grade  corporate  debt  instruments,  and common stock issued by the
Federal Home Loan Bank of New York (FHLB of NY).  By investing in these types of
assets,  the  Company reduces the credit risk of its asset base, but must accept
lower  yields  than would typically be available on commercial real estate loans
and  multi-family  real  estate  loans.

Investment  securities and Federal Home Loan Bank ("FHLB") stock increased $17.2
million,  or  29%,  to  $76.8 million at December 31, 2004 from $59.6 million at
December  31,  2003.  The  increase  in  investment  securities  was  primarily
attributable  to  the  acquisition  of  investment  securities  to collateralize
municipal  accounts.  In  comparison,  investment  securities  decreased  $2.9
million,  or  5%,  from 2002 to 2003.  The decrease in investment securities was
primarily  attributable  to  the  acceleration  of  principal  repayment  on
mortgaged-backed  securities,  reflecting refinancing activity in the underlying
loans.

The  following  table  sets forth the carrying value of the Company's investment
portfolio  and  Federal  Home  Loan  Bank  Stock  at  the  dates  indicated.

<TABLE>
<CAPTION>
                                                                        AT DECEMBER 31,
--------------------------------------------------------------------------------------------
<S>                                                      <C>                <C>      <C>
(In Thousands)                                                       2004      2003     2002
--------------------------------------------------------------------------------------------
Investment Securities:
  US treasury and agencies. . . . . . . . . . . . . . .  $         21,609   $ 6,354  $ 4,378
  State and political subdivisions. . . . . . . . . . .             8,881     7,359    8,549
  Corporate . . . . . . . . . . . . . . . . . . . . . .             5,919     6,421   15,375
  Mortgage-backed . . . . . . . . . . . . . . . . . . .            32,213    29,734   24,440
  Equity securities and FHLB stock. . . . . . . . . . .             2,800     2,932    6,225
  Mutual funds. . . . . . . . . . . . . . . . . . . . .             5,935     5,712    2,582
--------------------------------------------------------------------------------------------
                                                         $         77,357   $58,512  $61,549
Unrealized (loss) gain on available for sale portfolio.              (520)    1,095      957
--------------------------------------------------------------------------------------------
    Total investments in securities and FHLB stock. . .  $         76,837   $59,607  $62,506
============================================================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 22
<PAGE>

The  following  table  sets forth the scheduled maturities, amortized cost, fair
values  and  average  yields for the Company's investment securities and Federal
Home  Loan Bank ("FHLB") Stock at December 31, 2004.  Yield is calculated on the
amortized  cost  to  maturity  and  adjusted  to  a  fully tax-equivalent basis.

<TABLE>
<CAPTION>
                                             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     AVERAGE YIELD      COST     AVERAGE YIELD      COST     AVERAGE YIELD
-------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>             <C>         <C>             <C>         <C>
Debt investment securities:
US Treasury and agencies. . . . . . . .           -         -      $   14,679         2.64%     $    6,929        3.81%
State and political subdivisions. . . .  $      849      7.01%          3,582         5.52%          1,863        5.17%
Corporate . . . . . . . . . . . . . . .  $    1,998      1.52%            799         6.96%            986        4.93%
-------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . .  $    2,847      3.16%      $  19,060         3.37%      $   9,778        4.18%

Equity and mortgage-backed securities:
Mutual funds. . . . . . . . . . . . . .  $    5,935      1.48%           -              -               -            -
Mortgage-backed . . . . . . . . . . . .           -         -      $    2,534         4.80%     $   10,883        3.88%
Equity securities and FHLB stock. . . .       2,800      1.73%              -            -               -           -
-------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . .  $    8,735      1.56%     $    2,534         5.76%     $   10,883        3.83%
------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES . . . . . .  $   11,582      1.95%     $   21,594         3.53%     $   20,661        4.02%
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>

                                             MORE THAN TEN YEARS        TOTAL INVESTMENT SECURITIES
-------------------------------------------------------------------------------------------------------
                                                       ANNUALIZED                           ANNUALIZED
                                         AMORTIZED      WEIGHTED     AMORTIZED    FAIR       WEIGHTED
(Dollars in thousands)                      COST     AVERAGE YIELD      COST      VALUE   AVERAGE YIELD
-------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>             <C>         <C>      <C>
Debt investment securities:
US Treasury and agencies. . . . . . . .  $        -         -      $   21,608     $21,212       3.02%
State and political subdivisions. . . .       2,588      6.22%          8,882       9,012       5.80%
Corporate . . . . . . . . . . . . . . .       2,136      3.10%          5,919       5,959       4.83%
-------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . .       4,724      4.88%         36,409      36,183       3.99%

Equity and mortgage-backed securities:
Mutual funds. . . . . . . . . . . . . .           -         -           5,935       5,902       1.47%
Mortgage-backed . . . . . . . . . . . .      18,796      4.03%         32,213      32,027       4.04%
Equity securities and FHLB stock. . . .           -        -            2,800       2,725       1.73%
-------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . .      18,796      0.00%         40,948      40,654       3.51%
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES . . . . . .  $   23,520      4.18%     $   77,357     $76,837       3.74%
=======================================================================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 23
<PAGE>

LOANS  RECEIVABLE

Loans  receivable  represent 69% of the Company's earning assets and account for
the  greatest  portion  of  total  interest  income.  The  Company  emphasizes
residential  real  estate  financing  and  anticipates a continued commitment to
financing  the  purchase or improvement of residential real estate in its market
area.  The  Company  also  extends  credit  to businesses within its marketplace
secured  by  commercial  real  estate,  equipment,  inventories  and  accounts
receivable.  It  is  anticipated  that  small  business  lending  in the form of
mortgages,  term  loans,  leases,  and  lines  of  credit  will provide the most
opportunity  for balance sheet and revenue growth over the near term. Commercial
loans  comprise 9% of the total loan portfolio. At December 31, 2004, 89% of the
Company's  total  loan  portfolio  consisted of loans secured by real estate, of
which  16%  consisted  of  commercial  real  estate  loans.

<TABLE>
<CAPTION>
                                                  December 31,
-----------------------------------------------------------------------------
(In thousands)                 2004      2003      2002      2001      2000
-----------------------------------------------------------------------------
<S>                          <C>       <C>       <C>       <C>       <C>
Residential real estate (1)  $123,898  $128,989  $123,178  $112,110  $ 97,268
Commercial real estate. . .    29,874    31,278    32,657    30,455    27,367
Commercial loans. . . . . .    16,834    15,090    13,196    14,358    12,873
Consumer loans. . . . . . .    18,505    16,880    15,068    12,615    12,987
-----------------------------------------------------------------------------
Total Loans Receivable       $189,111  $192,237  $184,099  $169,538  $150,495
=============================================================================
</TABLE>
(1)  Includes  loans  held  for  sale.

The  following  table  shows  the amount of loans outstanding as of December 31,
2004 which, based on remaining scheduled repayments of principal, are due in the
periods  indicated.  Demand loans having no stated schedule of repayments and no
stated maturity, and overdrafts are reported as on year or less.  Adjustable and
floating  rate loans are included in the period on which interest rates are next
schedules  to  adjust rather than the period in which they contractually mature,
and  fixed  rate loans are included in the period in which the final contractual
repayment  is  due.

<TABLE>
<CAPTION>
                            Due Under   Due 1-5    Due Over
(In thousands)              One Year    Years     Five Years    Total
---------------------------------------------------------------------
<S>                       <C>         <C>       <C>          <C>
Real estate:
Commercial real estate .  $    5,683  $ 19,939  $     4,252  $ 29,874
Construction . . . . . .         419       332        4,179     4,930
Residential real estate.      39,755    59,365       19,848   118,968
---------------------------------------------------------------------
                          $   45,857  $ 79,636  $    28,279  $153,772
---------------------------------------------------------------------
Commercial . . . . . . .      12,726     3,673          435    16,834
Consumer . . . . . . . .       9,595     4,592        4,318    18,505
---------------------------------------------------------------------
Total loans. . . . . . .  $   68,178  $ 87,901  $    33,032  $189,111
---------------------------------------------------------------------
Interest rates:
Fixed. . . . . . . . . .      33,793    61,482       25,139   120,414
Variable . . . . . . . .      34,385    26,419        7,893    68,697
---------------------------------------------------------------------
Total Loans. . . . . . .  $   68,178  $ 87,901  $    33,032  $189,111
=====================================================================
</TABLE>

Total  loans  receivable decreased $3.1 million, or 2%, over the prior year.  By
comparison,  loans  receivable increased $8.1 million, or 4%, in 2003 from 2002.
The  decrease of the loan portfolio is primarily attributable to the decrease in
residential  and  commercial  mortgages  as  amortization, prepayments and sales
outpaced  loan  originations  of  $29.3  million  during 2004.  Decreases in the
mortgage  portfolios were partially offset by an increase in municipal loans and
consumer  loans.  The  growth  in  the consumer loan portfolio is primarily home
equity  loan  originations.

--------------------------------------------------------------------------------
                                    Page 24
<PAGE>

Residential  real  estate loans decreased $5.1 million, or 4%, during 2004.  The
residential  real  estate  portfolio consists of 64% in fixed-rate mortgages and
36%  in  adjustable-rate mortgages.  The decrease in the residential real estate
portfolio  is  principally due to a net decrease in 15-year fixed rate mortgages
of $7.5 million and a $1.3 million decrease in 30-year fixed rate loans held for
sale, partially offset by an increase in the adjustable rate mortgage portfolio.
The  Company  focused  its  mortgage marketing efforts on hybrid adjustable rate
mortgages ("ARM"s).  Hybrid ARMs have rates that are fixed for an initial period
(principally  3,  5, 7 or 10 years) and then convert to one-year adjustable rate
mortgages.  During  2003,  the Company originated $23.0 million of 30-year fixed
rate mortgages and subsequently sold them into the secondary market as customers
continued  to  refinance  their  higher fixed rate and adjustable rate mortgages
into  the  fixed  rate  portfolio  products,  as  compared  to  $17.1 million in
originations  of  30-year  fixed  rate  mortgages  in  2002.

Commercial  real estate loans decreased $1.4 million, or 4%, from the prior year
as  amortization  and  pre-payments  outpaced  loan  originations  during  2004.
Commercial  real  estate  loans  decreased  $1.4  million,  or  4%, during 2003.

Consumer  loans,  which  include  second  mortgage  loans,  home equity lines of
credit,  direct  installment  and revolving credit loans, increased 10% to $18.5
million  at  December  31, 2004.  The increase resulted from an increase in home
equity  lines of credit and second mortgage loans.  The Company has promoted its
home  equity  products  by offering the customer loans with no closing costs and
competitive market rates.  Management feels these loans are an attractive use of
funds  and  will continue to promote home equity products in 2005.  During 2003,
consumer  loans  increased  $1.8  million,  or  12%, resulting primarily from an
increase  in  home  equity  products.

Commercial  loans,  including  loans  to  municipalities, increased 12% over the
prior  year  to  $16.8 million at December 31, 2004.  The increase in commercial
loans  resulted  from  a  $900,000 increase in short-term loans to the Company's
municipal  customers  and an $800,000 net increase in small business loans.  The
balance  of  municipal  loans  at  December  31,  2003  was  $2.6  million.  In
comparison,  commercial  loans,  including municipal loans, increased 14% during
2003  primarily  due  to  the  origination  of  municipal  loans.

NONPERFORMING  LOANS  AND  ASSETS

The  following  table  represents information concerning the aggregate amount of
nonperforming  assets:

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                       2004     2003     2002     2001    2000
------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>      <C>      <C>      <C>
Nonaccrual loans:
Commercial real estate and commercial. . . . . . .  $         776   $1,677   $  603   $  488   $  169
Consumer . . . . . . . . . . . . . . . . . . . . .            122      172      166       56       65
Real estate - construction . . . . . . . . . . . .              -      270        -        -        -
              mortgage. . . . . . . . . .                     953      873      942    1,576    1,594
------------------------------------------------------------------------------------------------------
Total nonaccrual loans . . . . . . . . . . . . . .  $       1,851   $2,992   $1,711   $2,120   $1,828
Loans past due 90 days or more and still accruing.              -        -        -        -        -
------------------------------------------------------------------------------------------------------
Total non-performing loans . . . . . . . . . . . .  $       1,851   $2,992   $1,711   $2,120   $1,828
Foreclosed real estate . . . . . . . . . . . . . .            798      202    1,396      632      884
------------------------------------------------------------------------------------------------------
Total non-performing assets. . . . . . . . . . . .  $       2,649   $3,194   $3,107   $2,752   $2,712
======================================================================================================
Non-performing loans to total loans. . . . . . . .           0.98%    1.59%    0.95%    1.30%    1.23%
Non-performing assets to total assets. . . . . . .           0.88%    1.15%    1.11%    1.13%    1.17%
------------------------------------------------------------------------------------------------------
Interest income received on nonaccrual loans . . .              -        -        -        -        -
------------------------------------------------------------------------------------------------------
Interest income that would have been recorded
under the original terms of the loans. . . . . . .  $          64   $   75   $  141   $  118   $  132
------------------------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                    Page 25
<PAGE>

Total  nonperforming  assets (nonperforming loans and foreclosed real estate) at
December  31,  2004  were  0.88%  of  total assets as compared to 1.15% of total
assets  at  December  31,  2003.  Total nonperforming loans (past due 90 days or
more)  decreased  $1.1 million, or 38%, during 2004.  The total delinquent loans
(those  30 days or more delinquent) as a percentage of total loans were 1.93% at
December  31, 2004 compared to 3.46% at December 31, 2003.  Approximately 51% of
the  Company's  nonperforming  loans  at  December  31,  2004  are  secured  by
residential real estate with loss potential expected to be manageable within the
allocated  reserves.  Nonperforming  loans  decreased  38%  primarily due to the
resolution  of  certain  commercial  credit  relationships  through  payment,
foreclosure  and  transfer  into  foreclosed  real  estate  or the charge-off of
unrecoverable  amounts.  In  addition,  the Bank has instituted a more stringent
collection  policy  that  has  successfully  reduced  consumer  and  residential
mortgage  delinquencies  by  18%.  Foreclosed  real  estate  increased  $596,000
primarily due to the foreclosure of three commercial properties during 2004 that
are presently being marketed and are carried at their expected realizable value.

The  Company  generally  places  a loan on nonaccrual status and ceases accruing
interest  when loan payment performance is deemed unsatisfactory and the loan is
past  due 90 days or more.  The Company considers a loan impaired when, based on
current  information  and events, it is probable that the Company will be unable
to  collect  the scheduled payments of principal and interest when due according
to  the  contractual  terms  of  the  loan.

The  measurement  of impaired loans is generally based upon the present value of
future  cash  flows discounted at the historical effective interest rate, except
that  all  collateral-dependent  loans are measured for impairment based on fair
value  of  the  collateral.  The  Company  used  the fair value of collateral to
measure  impairment  on commercial and commercial real estate loans in 2004.  At
December  31, 2004 the Company had $3.1 million in loans which were deemed to be
impaired having a valuation allowance of $760,000.  $2.6 million of the impaired
loan balance represents one commercial credit relationship that was restructured
during  2004.  A  $600,000  impairment reserve is recorded on this relationship.
The  customer  has  been  making  payments  according to the restructured terms.

ALLOWANCE  FOR  LOAN  LOSSES

The  allowance  for  loan  losses  is  a  reserve established through charges to
expense  in  the  form  of  a  provision  for  loan  losses  and reduced by loan
charge-offs  net of recoveries.  Allowance for loan losses represents the amount
available  for  probable  credit  losses  in  the  Company's  loan  portfolio as
estimated  by  management.  The  Company  maintains an allowance for loan losses
based  upon  a  monthly  evaluation  of  known  and  inherent  risks in the loan
portfolio,  which  includes a review of the balances and composition of the loan
portfolio as well as analyzing the level of delinquencies in each segment of the
loan  portfolio.  The  Company  uses  a  general  allocation  method  for  the
residential  real  estate  and  the consumer loan pools based upon a methodology
that  uses  loss  factors  applied  to  loan  balances  and reflects actual loss
experience,  delinquency  trends  and  current economic conditions.  The Company
reviews  individually,  commercial real estate and commercial loans greater than
$150,000,  on  nonaccrual and risk rated under the Company's risk rating system,
as  special mention, substandard, doubtful or loss to determine if the loans are
impaired.  If  loans  are  determined  to be impaired, the Company establishes a
specific reserve allocation.  The specific allocation is determined based on the
most  recent  valuation  of  the loan's collateral and the customer's ability to
pay.  For  all  other  commercial  real estate and commercial loans, the Company
uses the general allocation methodology that establishes a reserve for each risk
rating  category.  The general allocation methodology for commercial real estate
and  commercial  loans  considers  the  same  factors  that  are considered when
evaluating  residential  real estate and consumer loan pools.  The allowance for
loan  losses  reflects  management's  best  estimate  of probable loan losses at
December  31,  2004.

The  allowance  for  loans  losses  was  $1.8 million at December 31, 2004, a 7%
increase from December 31, 2003.  The allowance for loans losses as a percentage
of  total  loans increased to 0.98% at December 31, 2004 from 0.91% in the prior
year.  Net  loan  charge-offs  were $626,000 during 2004 compared to $364,000 in
2003.  The  Company  experienced  a  higher  level  of  charge-offs  during 2004
resulting  from  the  charge-off  of  portions  of  three  commercial  lending
relationships.

--------------------------------------------------------------------------------
                                    Page 26
<PAGE>

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

<TABLE>
<CAPTION>
                                       2004            2003            2002           2001            2000
-----------------------------------------------------------------------------------------------------------------
                                          % GROSS        % GROSS         % GROSS        % GROSS          % GROSS
(Dollars in thousands)            AMOUNT   LOANS  AMOUNT   LOANS  AMOUNT   LOANS  AMOUNT  LOANS   AMOUNT   LOANS
-----------------------------------------------------------------------------------------------------------------
<S>                               <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Commercial real estate and loans  $1,483    9.0%  $1,218    8.0%  $1,042    7.3%  $1,083    8.8%  $  455    8.6%
Consumer loans . . . . . . . . .     270    9.9%     120    8.9%     136    8.3%     100    7.7%     353    8.6%
Residential real estate. . . . .      74   81.1%     377   83.1%     303   84.4%     496   83.5%     466   82.8%
-----------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . .  $1,827  100.0%  $1,715  100.0%  $1,481  100.0%  $1,679  100.0%  $1,274  100.0%
=================================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>
(Dollars in thousands)                           2004     2003      2002     2001     2000
-------------------------------------------------------------------------------------------
<S>                                            <C>      <C>      <C>       <C>      <C>
Balance at beginning of year. . . . . . . . .  $1,715   $1,481   $ 1,679   $1,274   $1,150
Allowance acquired in branch purchase . . . .       -        -        57        -        -
Provisions charged to operating expenses. . .     738      598     1,375      708      244
-------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off
Commercial real estate and loans. . . . . . .      41        3        26       53        -
Consumer. . . . . . . . . . . . . . . . . . .      20       17         6        9       19
Residential real estate . . . . . . . . . . .       -       17         -        -        -
-------------------------------------------------------------------------------------------
Total recoveries. . . . . . . . . . . . . . .      61       37        32       62       19
-------------------------------------------------------------------------------------------
Loans charged off:
Commercial real estate and loans. . . . . . .    (439)    (128)   (1,285)     (72)     (38)
Consumer. . . . . . . . . . . . . . . . . . .    (126)    (189)     (291)    (184)     (61)
Residential real estate . . . . . . . . . . .    (122)     (84)      (86)    (109)     (40)
-------------------------------------------------------------------------------------------
Total charged-off . . . . . . . . . . . . . .    (687)    (401)   (1,662)    (365)    (139)
-------------------------------------------------------------------------------------------
Net charge-offs . . . . . . . . . . . . . . .    (626)    (364)   (1,630)    (303)    (120)
-------------------------------------------------------------------------------------------
Balance at end of year. . . . . . . . . . . .  $1,827   $1,715   $ 1,481   $1,679   $1,274
===========================================================================================
Net charge-offs to average loans outstanding.    0.33%    0.19%     0.92%    0.19%    0.08%
Allowance for loan losses to year-end loans .    0.98%    0.91%     0.82%    1.03%    0.86%
===========================================================================================
</TABLE>

DEPOSITS

The  Company's retail deposit base is drawn from six full-service offices in its
market  area.  The  deposit  base  consists of demand deposits, money management
accounts,  savings  and time deposits. During 2004, 64% of the Company's average
deposit  base  of  $230.4 million consisted of core deposits.  Core deposits are
considered  to  be more stable and provide the Company with a low-cost source of
funds.  The  Company  will  continue to emphasize retail deposits by maintaining
its  network  of full service offices and providing depositors with a full range
of  deposit  product offerings.  Pathfinder Commercial Bank, the limited-purpose
commercial  banking  subsidiary  of  Pathfinder  Bank,  assumed $11.6 million in
municipal  deposits as part of the Branch Acquisition.   The Commercial Bank has
allowed the Company to serve the depository needs of the various municipalities,
school  districts,  and other public funding sources throughout its market area.
The  Commercial  Bank  will  seek  business  growth  by  focusing  on  its local
identification  and  service  excellence.  The  Commercial  Bank  had an average
balance  of  $27.6 million in municipal deposits in 2004, primarily concentrated
in  money  market  accounts.

Average  deposits  increased  $22.3  million,  or  11%,  when  compared to 2003.
Deposit  growth in 2004 resulted from the growth both in retail and in municipal
deposits.  The Commercial Bank increased the number of municipal customers to 20
in  2004  from  11  in  2003.  The  new  municipal  customers  account  balances
represented $20.2 million of the $30.0 million in municipal deposits outstanding
at  December  31,  2004.

--------------------------------------------------------------------------------
                                    Page 27
<PAGE>

The  Company's  average  deposit  mix  in 2004, as compared to 2003, reflected a
slight  shift  from  time deposits to money management accounts.   The Company's
average  demand  deposits,  interest and noninterest bearing, represented 17% of
total  average  deposits,  which  was comparable with 2003.  The Company's money
management  accounts  represented  18% of total deposits, up 8 percentage points
for  the same period in 2003.  The Company promotes its money management account
by  offering  competitive  rates  to  retain existing and attract new customers.

The average amount of deposits, average rate paid and percentage of deposits are
summarized  below  for  the  years  indicated.

<TABLE>
<CAPTION>
                                                     For the Years Ended December 31,
-------------------------------------------------------------------------------------------------------------
                                      2004                         2003                       2002
-------------------------------------------------------------------------------------------------------------
                                       Avg    Percent              Avg   Percent               Avg   Percent
                              Avg     Rate      of        Avg     Rate      of        Avg     Rate      of
(Dollars in thousands)      Balance   Paid   Deposits   Balance   Paid   Deposits   Balance   Paid   Deposits
-------------------------------------------------------------------------------------------------------------
<S>                         <C>       <C>    <C>        <C>       <C>    <C>        <C>       <C>    <C>
Noninterest bearing
   demand accounts . . . .  $ 17,974  0.00%      7.80%  $ 16,345  0.00%      7.86%  $ 13,154  0.00%      7.28%
NOW accounts . . . . . . .    20,808  0.65%      9.03%    17,663  0.79%      8.49%    15,850  1.06%      8.77%
Money management accounts.    40,775  1.39%     17.70%    21,788  1.14%     10.47%    11,571  2.09%      6.40%
Savings and club accounts.    68,046  0.67%     29.54%    66,481  0.77%     31.96%    62,494  1.52%     34.57%
Time deposits. . . . . . .    82,769  3.00%     35.93%    85,751  3.33%     41.22%    77,701  4.25%     42.98%
-------------------------------------------------------------------------------------------------------------
Total average deposits . .  $230,372  1.71%    100.00%  $208,028  1.96%    100.00%  $180,770  2.78%    100.00%
==============================================================================================================
</TABLE>

At December 31, 2004, time deposits in excess of $100,000 totaled $18.3 million,
or  22%, of time deposits and 8% of total deposits.  At December 31, 2003, these
deposits  totaled  $14.6  million,  or  18%  of  time  deposits  and 7% of total
deposits.

The  following  table indicates the amount of the Bank's certificates of deposit
of  $100,000  or  more  time  remaining  until maturity as of December 31, 2004:

<TABLE>
<CAPTION>
                            Certificates of
                               Deposit of
(In thousands)              $100,000 or more
--------------------------  ----------------
Remaining Maturity:
<S>                         <C>
Three Months or less . . .  $          3,770
Three through Six months .             3,798
Six through twelve months.             2,803
Over twelve months . . . .             7,879
--------------------------------------------
    Total. . . . . . . . .  $         18,250
                            ================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 28
<PAGE>

BORROWINGS

Short-term  borrowings  are  comprised  primarily  of  advances  and  overnight
borrowing at the Federal Home Loan Bank in New York.  There were $1.0 million in
short-term  borrowings  outstanding  at  December  31,  2004 as compared to $2.1
million  in  2003.

Information  regarding  short-term  borrowings  during 2004, 2003 and 2002 is as
follows:

<TABLE>
<CAPTION>
(Dollars in thousands)                         2004      2003      2002
--------------------------------------------------------------------------------
<S>                                          <C>      <C>       <C>
Maximum outstanding at any month end. . . .  $3,100   $12,000   $20,668
Average amount outstanding during the year.   1,400     2,660     7,164
Average interest rate during the year . . .    1.31%     1.17%     4.63%
================================================================================
</TABLE>

Long-term borrowed funds consist of advances from the Federal Home Loan Bank and
junior  subordinated debentures.  Long-term borrowed funds totaled $49.5 million
at  December  31,  2004  as  compared  to  $43.9  million  at December 31, 2003.

CAPITAL

Shareholders'  equity  remained  constant at $21.8 million at December 31, 2004.
The  Company  added  $1.4  million  to  retained  earnings  through  net income,
partially  offset  by  cash  dividends returned to its shareholders of $664,000.
The  Company's mutual holding company parent, Pathfinder Bancorp, M.H.C., waived
its  right  to  receive  the  dividend  for the quarters ended June 30, 2004 and
December  31,  2004.

Risk-based capital provides the basis for which all banks are evaluated in terms
of  capital  adequacy.  Capital  adequacy  is  evaluated primarily by the use of
ratios  which  measure  capital  against  total assets, as well as against total
assets  that  are weighted based on defined risk characteristics.  The Company's
goal  is to maintain a strong capital position, consistent with the risk profile
of  its  subsidiary banks that supports growth and expansion activities while at
the  same time exceeding regulatory standards.  At December 31, 2004, Pathfinder
Bank  exceeded  all  regulatory  required  minimum  capital  ratios  and met the
regulatory  definition  of  a  "well-capitalized"  institution,  i.e. a leverage
capital ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6% and a
total risk-based capital ratio exceeding 10%.  See Note 17 for the Company's and
the  Bank's  ratios.

LIQUIDITY

Liquidity  management  involves  the  Company's  ability  to  generate  cash  or
otherwise  obtain  funds  at reasonable rates to support asset growth and reduce
assets  to  meet  deposit  withdrawals, to maintain reserve requirements, and to
otherwise  operate  the  Company  on  an  ongoing  basis.  The Company's primary
sources  of  funds  are deposits, borrowed funds, amortization and prepayment of
loans  and maturities of investment securities and other short-term investments,
and  earnings  and  funds  provided  from operations.  While scheduled principal
repayments  on loans are a relatively predictable source of funds, deposit flows
and  loan prepayments are greatly influenced by general interest rates, economic
conditions  and  competition.  The  Company  manages  the pricing of deposits to
maintain  a  desired  deposit  balance.  In addition, the Company invests excess
funds  in  short-term interest-earning and other assets, which provide liquidity
to  meet  lending  requirements.

The  Company's liquidity has been enhanced by its membership in the Federal Home
Loan  Bank  of  New York, whose competitive advance programs and lines of credit
provide  the  Company  with  a safe, reliable and convenient source of funds.  A
significant  decrease  in  deposits  in  the  future could result in the Company
having  to  seek  other  sources  of funds for liquidity purposes.  Such sources
could  include,  but  are not limited to, additional borrowings, trust preferred
security  offerings,  brokered  deposits,  negotiated time deposits, the sale of
"available-for-sale"  investment  securities,  the sale of securitized loans, or
the  sale  of whole loans.  Such actions could result in higher interest expense
costs  and/or  losses  on  the  sale  of  securities  or  loans.

--------------------------------------------------------------------------------
                                    Page 29
<PAGE>

The  Asset  Liability  Management Committee (ALCO) of the Company is responsible
for  implementing  the  policies  and  guidelines for the maintenance of prudent
levels  of  liquidity.  As  of  December  31,  2004,  management  believes  that
liquidity  as  measured  by  the  Company  is  in  compliance  with  its  policy
guidelines.

AGGREGATE  CONTRACTUAL  OBLIGATIONS

The  following table represents the Company's on and off-balance sheet aggregate
contractual  obligations  to  make  future  payments  as  of  December 31, 2004:

<TABLE>
<CAPTION>
                                           OVER 1 OVER 3
                                  1 YEAR     TO     TO     OVER 5
(In thousands)                   OR LESS  3 YEARS 5 YEARS   YEARS     TOTAL
----------------------------------------------------------------------------
<S>                             <C>      <C>      <C>      <C>      <C>
Time deposits. . . . . . . . .  $44,257  $26,512  $ 7,506  $ 6,108  $ 84,383
Junior subordinated debentures        -        -        -    5,155     5,155
Borrowings . . . . . . . . . .    6,000   19,350   10,010        0    35,360
Operating leases . . . . . . .       42       93      100      166       401
Payments under benefit plans .      251      638      537    5,365     6,792
----------------------------------------------------------------------------
Total. . . . . . . . . . . . .  $50,550  $46,593  $18,153  $16,794  $132,091
============================================================================
</TABLE>

In  addition,  the  Company,  in  the  conduct  of ordinary business operations,
routinely  enters  into  contracts  for  services.  These  contracts may require
payment  for  services to be provided in the future and may also contain penalty
clauses  for  the early termination of the contract.  Management is not aware of
any  additional commitments or contingent liabilities, which may have a material
adverse  impact  on  the  liquidity  or  capital  resources  of  the  Company.

OFF-BALANCE  SHEET  ARRANGEMENTS

The  Company  is also party to financial instruments with off-balance sheet risk
in  the  normal course of business to meet the financing needs of its customers.
These  financial  instruments  include  commitments to extend credit and standby
letters  of  credit.  At  December  31,  2004,  the Company had $18.2 million in
outstanding  commitments  to  extend  credit and standby letters of credit.  See
Note  15.

--------------------------------------------------------------------------------
                                    Page 30
<PAGE>

ITEM  7A:  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company's  risk  of  loss arising from adverse changes in the fair value of
financial  instruments,  or  market risk, is composed primarily of interest rate
risk.  The  management  of  interest rate sensitivity seeks to avoid fluctuating
net  interest  margins  and  to  provide  consistent net interest income through
periods  of  changing  interest  rates.  The  primary objective of the Company's
asset-liability  management  activities is to maximize net interest income while
maintaining  acceptable  levels  of  interest  rate  risk.  The  Company  has an
Asset-Liability  Management  Committee  (ALCO)  which  is  responsible  for
establishing  policies  to  limit  exposure to interest rate risk, and to ensure
procedures  are  established  to  monitor  compliance with those policies. Those
procedures  include  reviewing  the  Company's  assets  and  liability policies,
setting  prices  and  terms  on  rate-sensitive  products,  and  monitoring  and
measuring  the  impact  of  interest  rate changes on the Company's earnings and
capital.  The Company's Board of Directors reviews the guidelines established by
ALCO.

During  the 2001 through 2003 period, the Federal Reserve lowered interest rates
thirteen  times  by  a total of 550 basis points.  During 2004, short-term rates
have  increased  100 basis points while longer-term interest rates have remained
relatively  stable.  Efforts have been made to shorten the repricing duration of
rate sensitive assets by purchasing investment securities with maturities within
the next 3 to 5 years and promoting portfolio ARM (adjustable rate mortgage) and
hybrid  ARM  products.  During  the  three-year  period  of  rapid interest rate
reductions  the  Company's  interest-earning  assets  and  interest-bearing
liabilities  repriced  significantly.  The  short-term  interest  rate increases
during  2004  have caused net interest margin compression as short-term deposits
and  borrowings on the Company's liability sensitive balance sheet have repriced
into  the  current  rate  environment  while  security  purchases  and  new loan
originations  and  refinances  were being done at the stable longer-term yields.
During  this  period  the  Company  has  practiced  conservative  balance  sheet
management strategies in anticipation of an upward shift of the yield curve.  In
addition,  the  Company  has  extended  the  duration  of  its  rate  sensitive
liabilities  by  lengthening  the  maturities  of  its  existing  borrowings and
offering  certificates  of  deposit  with  three and four year terms which allow
depositors  to  make  a  one-time  election,  at any time during the term of the
certificate  of  deposit,  to  adjust  the  rate  of  the instrument to the then
prevailing  rate  for  the  certificate  of  deposit  with  the same term.  This
conservative balance sheet management strategy has resulted in additional margin
pressure  and  reduction  in  net  interest  income  during  the  current  year.
Management  believes that this balance sheet strategy best positions the Company
and  lessons  its  risk  against  future  interest  rate  changes.

An interest rate sensitive asset or liability is one that, within a defined time
period,  either  matures  or  experiences  an  interest rate change in line with
general  market  interest  rates.  Historically,  the  most  common  method  of
estimating  interest  rate  risk  was  to  measure  the  maturity  and repricing
relationships  between  interest-earning assets and interest-bearing liabilities
at  specific  point  in  time  ("GAP") typically one year.  Under this method, a
company  is  considered  liability  sensitive  when  the  amount  of  its
interest-bearing  liabilities  exceeds the amount of its interest-earning assets
within  the  one-year  horizon.  However,  assets  and  liabilities with similar
repricing  characteristics  may  not  reprice  at  the  same time or to the same
degree.  As  a result, the Company's GAP does not necessarily predict the impact
of  changes  in  general  levels  of  interest  rates  on  net  interest income.

--------------------------------------------------------------------------------
                                    Page 31
<PAGE>

The  following  table  shows the GAP position for the Company as of December 31,
2004.

<TABLE>
<CAPTION>
                                                        Within     3 to 12     1 to 3    3 to 5    5 to 10   More than
(Dollars in thousands)                                  3 Months     Months     Years     Years     Years    10 Years   Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>        <C>        <C>        <C>       <C>       <C>       <C>
Interest-earning assets:
Interest earning deposits . . . . . . . . . . . . . .  $  7,584   $      -   $      -   $     -   $     -   $     -   $  7,584
Investment securities and FHLB stock. . . . . . . . .    12,422      6,491     15,579    19,893    18,755     3,697     76,837
Loans receivable. . . . . . . . . . . . . . . . . . .    31,452     36,726     55,166    32,735    26,312     6,720    189,111
-----------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets . . . . . . . . . . . .  $ 51,458   $ 43,217   $ 70,745   $52,628   $45,067   $10,417   $273,532
-----------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Transaction deposit accounts (1). . . . . . . . . . .  $ 47,544   $ 10,068   $  6,916   $     -   $     -   $     -   $ 64,528
Savings deposits (1). . . . . . . . . . . . . . . . .       945      8,544     14,945    11,311    16,234    16,623     68,602
Certificates of deposit . . . . . . . . . . . . . . .    14,097     30,108     26,512     7,506     6,109        51     84,383
Borrowings. . . . . . . . . . . . . . . . . . . . . .     3,000      3,000     19,350    10,010         -         -     35,360
Junior subordinated debentures. . . . . . . . . . . .     5,155          -          -         -         -         -      5,155
-----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . .  $ 70,741   $ 51,720   $ 67,723   $28,827   $22,343   $16,674   $258,028
=============================================================================================================================
Interest-earning assets less interest-
bearing liabilities ("interest rate sensitivity gap")  $(19,283)  $ (8,503)  $  3,022   $23,801   $22,724   $(6,257)
Cumulative excess (deficiency) of interest-
sensitive assets over interest-sensitive liabilities.  $(19,283)  $(27,786)  $(24,764)  $  (963)  $21,761   $15,504
Interest sensitivity gap to total assets. . . . . . .    -12.17%     -2.82%      1.00%     7.88%     7.52%    -2.07%
Cumulative interest sensitivity gap to total assets .     -6.38%     -9.20%     -8.20%    -0.32%     7.20%     5.13%
Ratio of interest-earning assets to interest-
bearing liabilities . . . . . . . . . . . . . . . . .     72.74%     83.56%    104.46%   182.56%   201.71%    62.47%
Cumulative ratio of interest-earning assets to
interest-bearing liabilities. . . . . . . . . . . . .     72.74%     77.31%     86.98%    99.56%   109.02%   106.01%
=============================================================================================================================
</TABLE>

(1)  The  following  assumptions  have  been  used  when  analyzing non-maturity
     deposits  for  GAP  Table  purposes: 14% of savings deposits are assumed to
     reprice or mature within one year, 22% within 1 to 3 years, 16% within 3 to
     5  years,  and  24%  within each of the remaining time periods. Transaction
     deposits - 66% of the NOW account balances are assumed to reprice or mature
     within  one  year,  and  the  remaining 34% is assumed to reprice or mature
     within  the  1  to 3 year time frame. 100% of the money management accounts
     are  assumed  to  reprice  within  the  first  three  months

Management believes the simulation of net interest income (Earnings at Risk) and
net  portfolio  value  (Value  at  Risk) in different interest rate environments
provides  a  more  meaningful  measure of interest rate risk.  Income simulation
analysis  captures both the potential of all assets and liabilities to mature or
reprice  and  the  probability  that  they  will  do so.  Income simulation also
attends to the relative interest rate sensitivities of these items, and projects
their  behavior  over  an  extended  period of time.  Finally, income simulation
permits  management to assess the probable effects on the balance sheet not only
of  changes in interest rates, but also of proposed strategies for responding to
them.  Net  portfolio  value represents the fair value of net assets (determined
as  the  market  value  of  assets minus the market value of liabilities using a
discounted  cash  flow  technique).

The  following table measures the Company's interest rate risk exposure in terms
of the percentage change in its net interest income and net portfolio value as a
result  of hypothetical changes in 100 basis point increments in market interest
rates.  The  table  quantifies  the  changes  in  net  interest  income  and net
portfolio  value  to parallel shifts in the yield curve.  The column "Percentage
Change  in  Net  Interest Income" measures the change to the next twelve month's
projected  net  interest income, due to parallel shifts in the yield curve.  The
column  "Percentage  Change  in  Net  Portfolio  Value"  measures changes in the
current  fair  value  of  assets and liabilities to parallel shifts in the yield
curve.  The  column  "NPV Capital Ratio" measures the ratio of the fair value of
net  assets  to the fair value of total assets at the base case and in 100 basis
point incremental interest rate shocks.  Currently, the Company's model projects
a  300 basis point increase and a 100 basis point decrease during the next year.
With the federal funds rate near record lows, the Company's ALCO believed it was
a better measure of current risk assuming a minus 100 point scenario, as a minus

--------------------------------------------------------------------------------
                                    Page 32
<PAGE>

300 basis point reduction would be unlikely given that current short-term market
interest  rates  are  already  below  3.00%.  The  Company uses these percentage
changes  as  a means to measure interest rate risk exposure and quantifies those
changes  against  guidelines  set  by  the  Board  of  Directors  as part of the
Company's  Interest  Rate Risk policy.  The Company's current interest rate risk
exposure  is  within  those  guidelines  set  forth.

<TABLE>
<CAPTION>
                          Percentage      Percentage
Change in      NPV        Change in       Change in
Interest     Capital    Net Interest   Net Portfolio
Rates         Ratio        Income          Value
-----------------------------------------------------
<S>        <C>          <C>            <C>
300 . . .        7.74%        -14.77%         -30.05%
200 . . .        8.72%         -9.66%         -19.18%
100 . . .        9.61%         -4.69%          -8.55%
0               10.26%          ----            ----
-100. . .       10.33%          2.28%           2.63%
=====================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 33
<PAGE>

ITEM  8:  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
PATHFINDER  BANCORP,  INC
                                                                    Page

Report  of  Independent  Registered  Public  Accounting  Firm        35
Consolidated  Statements  of  Condition                              36
Consolidated  Statements  of  Income                                 37
Consolidated  Statements  of  Changes  in  Shareholders'  Equity     38
Consolidated  Statements  of  Cash  Flows                            39
Notes  to  Consolidated  Financial  Statements                       40

--------------------------------------------------------------------------------
                                    Page 34
<PAGE>

REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM

To  the  Board  of  Directors  and  Shareholders
Pathfinder  Bancorp,  Inc.
Oswego,  New  York

We  have  audited  the  accompanying  consolidated  statements  of  condition of
Pathfinder  Bancorp, Inc. and subsidiaries as of December 31, 2004 and 2003, and
the  related  consolidated statements of income, changes in shareholders' equity
and  cash  flows  for  each  of the three years in the period ended December 31,
2004.  These  consolidated  financial  statements  are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
consolidated  financial  statements  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance about whether the
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial statement presentation.  We believe that our
audits  provide  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in all material respects, the financial position of Pathfinder Bancorp,
Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their
operations  and their cash flows for each of the three years in the period ended
December  31,  2004, in conformity with accounting principles generally accepted
in  the  United  States  of  America.


                                                    /s/ BEARD MILLER COMPANY LLP

Harrisburg,  Pennsylvania
March  9,  2005

--------------------------------------------------------------------------------
                                    Page 35
<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION
                                                                                         December 31,
----------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                    2004         2003
----------------------------------------------------------------------------------------------------------
<S>                                                                              <C>             <C>
ASSETS:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       6,741   $  5,803
Interest earning deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .          7,584      2,911
----------------------------------------------------------------------------------------------------------
    Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .         14,325      8,714
Investment securities, at fair value. . . . . . . . . . . . . . . . . . . . . .         75,069     57,559
Federal Home Loan Bank stock, at cost . . . . . . . . . . . . . . . . . . . . .          1,768      2,048
Mortgage loans held-for-sale. . . . . . . . . . . . . . . . . . . . . . . . . .          2,159      3,520
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        186,952    188,717
   Less: Allowance for loan losses. . . . . . . . . . . . . . . . . . . . . . .          1,827      1,715
----------------------------------------------------------------------------------------------------------
     Loans receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . .        185,125    187,002
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . .          7,580      6,650
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . .          1,505      1,273
Foreclosed real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .            798        202
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,840      3,840
Intangible asset, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            627        850
Bank owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,768      4,493
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,473      1,789
----------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     302,037   $277,940
==========================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     217,513   $191,104
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         19,159     15,790
----------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        236,672    206,894
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,000      2,100
Long-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         34,360     38,860
Junior subordinated debentures. . . . . . . . . . . . . . . . . . . . . . . . .          5,155          -
Company obligated mandatorily redeemable preferred securities of subsidiary,
Pathfinder Statutory Trust I, holding solely junior subordinated debentures of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -      5,000
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,024      3,301
----------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        280,211    256,155

Shareholders' equity:
Preferred stock, authorized shares 1,000,000; no shares issued or outstanding
Common stock, par value $.01; authorized 10,000,000 shares;
2,937,419 and 2,919,386 shares issued; and 2,450,132 and
2,432,099 shares outstanding, respectively. . . . . . . . . . . . . . . . . . .             29         29
Additional paid-in-capital. . . . . . . . . . . . . . . . . . . . . . . . . . .          7,453      7,225
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         21,186     20,449
Accumulated other comprehensive (loss) income . . . . . . . . . . . . . . . . .           (307)       662
Unearned ESOP shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (33)       (78)
Treasury Stock, at cost; 487,287 shares . . . . . . . . . . . . . . . . . . . .         (6,502)    (6,502)
----------------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . .         21,826     21,785
----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . . .  $     302,037   $277,940
==========================================================================================================
</TABLE>

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

--------------------------------------------------------------------------------
                                    Page 36
<PAGE>

CONSOLIDATED STATEMENTS  OF  INCOME

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
-------------------------------------------------------------------------------------
(In thousands,  except  per  share  data)                     2004     2003     2002
-------------------------------------------------------------------------------------
<S>                                                         <C>      <C>      <C>
INTEREST AND DIVIDEND INCOME:
  Loans, including fees. . . . . . . . . . . . . . . . . .  $11,815  $12,833  $12,936
  Debt securities:
     Taxable. .. . . . . . . . . . . . . . . . . . . . . .    2,075    2,034    2,257
     Tax-exempt .. . . . . . . . . . . . . . . . . . . . .      362      226      322
 Dividends . . . . . . . . . . . . . . . . . . . . . . . .      145      159      180
 Other . . . . . . . . . . . . . . . . . . . . . . . . . .       81       33      117
-------------------------------------------------------------------------------------
       Total interest income . . . . . . . . . . . . . . .   14,478   15,285   15,812
-------------------------------------------------------------------------------------

INTEREST EXPENSE:
Interest on deposits . . . . . . . . . . . . . . . . . . .    3,639    3,751    4,656
Interest on short-term borrowings. . . . . . . . . . . . .       17       31      332
Interest on long-term borrowings . . . . . . . . . . . . .    1,917    2,166    2,035
-------------------------------------------------------------------------------------
Total interest expense . . . . . . . . . . . . . . . . . .    5,573    5,948    7,023
-------------------------------------------------------------------------------------

Net interest income. . . . . . . . . . . . . . . . . . . .    8,905    9,337    8,789
PROVISION FOR LOAN LOSSES. . . . . . . . . . . . . . . . .      738      598    1,375
-------------------------------------------------------------------------------------
Net interest income after provision for loan losses. . . .    8,167    8,739    7,414
-------------------------------------------------------------------------------------

NONINTEREST INCOME:
Service charges on deposit accounts. . . . . . . . . . . .      967      818      629
Increase in value of bank owned life insurance . . . . . .      175      171      179
Loan servicing fees. . . . . . . . . . . . . . . . . . . .      256      282      265
Net gains on sales and impairment of investment securities      772      542      390
Net gains on sales of loans and foreclosed real estate . .      279      326      193
Other charges, commissions & fees. . . . . . . . . . . . .      598      469      438
-------------------------------------------------------------------------------------
Total other income . . . . . . . . . . . . . . . . . . . .    3,047    2,608    2,094
-------------------------------------------------------------------------------------

NONINTEREST EXPENSE:
Salaries and employee benefits . . . . . . . . . . . . . .    4,798    4,455    3,757
Building occupancy . . . . . . . . . . . . . . . . . . . .    1,031    1,004      796
Data processing expenses . . . . . . . . . . . . . . . . .      981      868      920
Professional and other services. . . . . . . . . . . . . .      682      770      858
Amortization of intangible asset . . . . . . . . . . . . .      223      223       39
Other expenses . . . . . . . . . . . . . . . . . . . . . .    1,592    1,774    1,594
-------------------------------------------------------------------------------------
Total other expenses . . . . . . . . . . . . . . . . . . .    9,307    9,094    7,964
-------------------------------------------------------------------------------------

Income before income taxes . . . . . . . . . . . . . . . .    1,907    2,253    1,544
Provision for income taxes . . . . . . . . . . . . . . . .      502      601      388
-------------------------------------------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,405  $ 1,652  $ 1,156
=====================================================================================
NET INCOME PER SHARE - BASIC . . . . . . . . . . . . . . .  $  0.58  $  0.68  $  0.45
=====================================================================================
NET INCOME PER SHARE - DILUTED . . . . . . . . . . . . . .  $  0.57  $  0.67  $  0.44
=====================================================================================
DIVIDENDS PER SHARE. . . . . . . . . . . . . . . . . . . .  $  0.405 $  0.40  $  0.30
=====================================================================================
</TABLE>

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

--------------------------------------------------------------------------------
                                    Page 37
<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS  OF  CHANGES  IN  SHAREHOLDERS'  EQUITY

                                                                                Accumulated
                                                                                 Other Com  Un-
                                             Common        Additional          prehensive earned
                                          Stock Issued      Paid-In   Retained  Income     ESOP  Treasury
(In thousands, except per share data)     Shares    Amount   Capital   Earnings   (Loss)   Shares    Stock     Total
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>       <C>     <C>      <C>     <C>     <C>       <C>
BALANCE, DECEMBER 31, 2001. . . . . . .  2,894,220   $    29  $6,918   $18,717   $ 379    $(173)  $(3,685)  $22,185
Comprehensive income:
Net income. . . . . . . . . . . . . . .                                  1,156                                1,156
Other comprehensive income, net of tax
Unrealized net gains on securities. . .                                            200                          200
                                                                                                              ______
TOTAL COMPREHENSIVE INCOME: . . . . . .                                                                       1,356

ESOP shares earned. . . . . . . . . . .                           57                         49                 106
Stock option exercised. . . . . . . . .     20,449         -     139                                            139
Treasury stock purchased. . . . . . . .                                                              (130)     (130)
Dividends declared ($.30 per share) . .                                   (425)                                (425)
--------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002. . . . . . .  2,914,669        29   7,114    19,448    579      (124)   (3,815)   23,231
Comprehensive income:
Net income. . . . . . . . . . . . . . .                                  1,652                                1,652
Other comprehensive income, net of tax
Unrealized net gains on securities. . .                                            83                            83
                                                                                                              ______
TOTAL COMPREHENSIVE INCOME: . . . . . .                                                                       1,735

ESOP shares earned. . . . . . . . . . .                           76                         46                 122
Stock option exercised. . . . . . . . .      4,717         -      35                                             35
Treasury stock purchased. . . . . . . .                                                            (2,687)   (2,687)
Dividends declared ($.40 per share) . .                                   (651)                                (651)
---------------------------------------  ----------  --------
BALANCE, DECEMBER 31, 2003. . . . . . .  2,919,386        29   7,225    20,449    662       (78)   (6,502)   21,785

Net income. . . . . . . . . . . . . . .                                  1,405                                1,405
Other comprehensive loss, net of tax
Unrealized net losses on securities                                              (969)                         (969)
                                                                                                              ______
TOTAL COMPREHENSIVE INCOME: . . . . . .                                                                         436

ESOP shares earned. . . . . . . . . . .                           88                         45                 133
Stock option exercised. . . . . . . . .     18,033         -     140                                            140
Dividends declared ($.405 per share). .                                  (668)                                 (668)
--------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2004. . . . . . .  2,937,419   $    29  $7,453  $21,186  $(307)    $ (33)   $(6,502)  $21,826
====================================================================================================================
</TABLE>
The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.

--------------------------------------------------------------------------------
                                    Page 38
<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH  FLOWS

                                                                                     Years Ended December 31,
-----------------------------------------------------------------------------------------------------------------
(In thousands)                                                                        2004       2003        2002
-----------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>        <C>        <C>
OPERATING ACTIVITIES:
 Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,405   $  1,652   $  1,156
 Adjustments to reconcile net income to net cash provided by (used in) operating
     activities:
 Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . .       738        598      1,375
 ESOP shares earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       133        122        106
 Deferred income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . .       502        307        293
 Proceeds from sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . .    12,440     23,380     19,612
 Originations of loans held-for-sale . . . . . . . . . . . . . . . . . . . . . .   (10,884)   (23,049)   (17,759)
 Realized (gains) losses on sales of:
   Foreclosed real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . .       (84)       (91)         5
   Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (195)      (235)      (198)
   Available-for-sale investment securities. . . . . . . . . . . . . . . . . . .      (772)      (542)      (390)
 Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       590        542        469
 Amortization of intangible asset. . . . . . . . . . . . . . . . . . . . . . . .       223        223         39
 Amortization of deferred financing costs. . . . . . . . . . . . . . . . . . . .        30         30         15
 Amortization of mortgage servicing rights . . . . . . . . . . . . . . . . . . .       158        122         84
 Increase in value of bank owned life insurance. . . . . . . . . . . . . . . . .      (175)      (171)      (179)
 Net amortization (accretion) of premiums and discounts on investment securities       358        288        (27)
 (Increase) decrease in interest receivable. . . . . . . . . . . . . . . . . . .      (231)        61        131
 Net change in other assets and liabilities. . . . . . . . . . . . . . . . . . .    (1,855)       159       (708)
-----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . .     2,381      3,396      4,024
--------------------------------------------------------------------------------  ---------  ---------  ---------
INVESTING ACTIVITIES:
 Purchase of investment securities available-for-sale and
  Federal Home Loan Bank Stock . . . . . . . . . . . . . . . . . . . . . . . . .   (35,610)   (25,780)   (21,453)
 Proceeds from maturities and principal reductions of
 investment securities available-for-sale. . . . . . . . . . . . . . . . . . . .     9,897     19,898     11,273
 Proceeds from sale:
 Available-for-sale investment securities. . . . . . . . . . . . . . . . . . . .     7,282      9,175      1,847
 Real estate acquired through foreclosure. . . . . . . . . . . . . . . . . . . .       382      1,890        370
 Purchase of bank owned life insurance. . . . . . . . . . . . . . . . . . . . . .   (1,100)         -          -
 Net cash received in branch acquisition . . . . . . . . . . . . . . . . . . . .         -          -     21,324
 Net decrease (increase) in loans. . . . . . . . . . . . . . . . . . . . . . . .       245     (9,203)   (16,724)
 Purchase of premises and equipment. . . . . . . . . . . . . . . . . . . . . . .    (1,520)    (1,571)      (911)
-----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . .   (20,424)    (5,591)    (4,274)
-----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
 Net increase in demand deposits, NOW accounts, savings accounts,
  money management deposit accounts and escrow deposits. . . . . . . . . . . . .    28,441      5,429      6,424
 Net increase (decrease) in time deposits. . . . . . . . . . . . . . . . . . . .     1,337     (3,057)     2,110
 Net (repayments on) proceeds from short-term borrowings . . . . . . . . . . . .    (1,100)     1,400    (16,518)
 Payments on long-term borrowings. . . . . . . . . . . . . . . . . . . . . . . .    (4,500)    (9,000)    (3,913)
 Proceeds from long-term borrowings. . . . . . . . . . . . . . . . . . . . . . .         -      5,700     13,850
 Proceeds from issuance of mandatorily redeemable preferred securities . . . . .         -          -      4,849
 Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . .       140         35        139
 Cash dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (664)      (651)      (415)
 Treasury stock purchased. . . . . . . . . . . . . . . . . . . . . . . . . . . .         -     (2,687)      (130)
-----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities. . . . . . . . . . . . . . .    23,654     (2,831)     6,396
-----------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . .     5,611     (5,026)     6,146
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . .     8,714     13,740      7,594
-----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . .  $ 14,325   $  8,714   $ 13,740
=================================================================================================================
CASH PAID DURING THE PERIOD FOR:
 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,639   $  5,991   $  7,122
 Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       312        250        850
NON-CASH INVESTING ACTIVITY:
 Transfer of loans to foreclosed real estate . . . . . . . . . . . . . . . . . .       894        605      1,138
</TABLE>

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

--------------------------------------------------------------------------------
                                    Page 39
<PAGE>

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

NOTE  1:  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

NATURE  OF  OPERATIONS

The  accompanying 2004 consolidated financial statements include the accounts of
Pathfinder  Bancorp,  Inc.  (the  "Company")  and  its  wholly owned subsidiary,
Pathfinder  Bank  (the  "Bank").  The  2003  and  2002  consolidated  financial
statements  also  include  the  Company's other subsidiary, Pathfinder Statutory
Trust  I (the "Trust").  The Trust was formed in 2002 for the purpose of issuing
mandatorily  redeemable  convertible  securities,  which  are  considered Tier I
capital  under  regulatory  capital  adequacy  requirements.  The  Trust  was
deconsolidated  upon  adoption  of  Financial  Accounting  Standards  Board
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities," and
Interpretation  of  ARB  No 51 (FIN 46), which was revised in December 2003 (See
Note  10).  The  Bank  has three wholly owned operating subsidiaries, Pathfinder
Commercial  Bank, Whispering Oaks Development Inc. and Pathfinder REIT, Inc. All
inter-company  accounts and activity have been eliminated in consolidation.  The
Company  has  six full service offices located in Oswego County.  The Company is
primarily engaged in the business of attracting deposits from the general public
in  the  Company's market area, and investing such deposits, together with other
sources  of  funds,  in  loans  secured  by  one-to-four family residential real
estate,  commercial  real  estate,  business  assets  and investment securities.

Pathfinder  Bancorp,  M.H.C.,  (the  "Holding Company") a mutual holding company
whose  activity  is  not included in the accompanying financial statements, owns
approximately  64.6%  of the outstanding common stock of the Company.  Salaries,
employee  benefits  and rent approximating $130,200, $124,000, and $115,000 were
allocated  from  the Company to Pathfinder Bancorp, M.H.C. during 2004, 2003 and
2002,  respectively.

USE  OF  ESTIMATES  IN  THE  PREPARATION  OF  FINANCIAL  STATEMENTS

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during  the  reporting period. Actual results could differ from those estimates.
Management  has  identified  the allowance for loan losses and the evaluation of
securities  for  other than temporary impairment to be the accounting areas that
require  the  most  subjective  and complex judgments, and as such, could be the
most  subject  to  revision  as  new  information  becomes  available.

The Company is subject to the regulations of various governmental agencies.  The
Company  also  undergoes  periodic examinations by the regulatory agencies which
may  subject  it to further changes with respect to asset valuations, amounts of
required  loss  allowances,  and  operating  restrictions  resulting  from  the
regulators'  judgments  based  on  information  available to them at the time of
their  examinations.

SIGNIFICANT  GROUP  CONCENTRATIONS  OF  CREDIT  RISK

Most  of the Company's activities are with customers located primarily in Oswego
and parts of Onondaga counties of New York State.  Note 4 discusses the types of
securities  that  the Company invests in.  Note 5 discusses the types of lending
that  the  Company  engages  in.  The  Company  does  not  have  any significant
concentrations  to  any  one  industry  or  customer.

ADVERTISING

The  Company  follows the policy of charging the costs of advertising to expense
as  incurred.

--------------------------------------------------------------------------------
                                    Page 40
<PAGE>

CASH  AND  CASH  EQUIVALENTS

Cash  and  cash  equivalents  include  cash  on hand, amounts due from banks and
interest-bearing  deposits  (with  original  maturity  of three months or less).

INVESTMENT  SECURITIES

The  Company  classifies  investment  securities  as  available-for-sale.
Available-for-sale  securities  are  reported at fair value, with net unrealized
gains  and losses reflected as a separate component of shareholders' equity, net
of the applicable income tax effect. None of the Company's investment securities
have  been  classified  as  trading  or  held-to-maturity  securities.

Gains  or  losses on investment security transactions are based on the amortized
cost  of the specific securities sold.  Premiums and discounts on securities are
amortized  and accreted into income using the interest method over the period to
first  call  or  maturity.

The  Company monitors investment securities for impairment on a quarterly basis.
Declines  in  the fair value of investment securities below cost that are deemed
to  be  other-than-temporary  are  reflected in earnings as realized losses.  In
estimating  other-than-temporary impairment losses, management considers (1) the
length  of  time and the extent to which the fair value has been less than cost,
(2)  the  financial condition and near-term prospects of the issuer, and (3) the
intent  and  ability of the Company to retain its investment in the issuer for a
period  of  time sufficient to allow for any anticipated recovery in fair value.

FEDERAL  HOME  LOAN  BANK  STOCK

Federal law requires a member institution of the Federal Home Loan Bank ("FHLB")
system  to hold stock of its district FHLB according to a predetermined formula.
The  stock  is  carried  at  cost.

MORTGAGE  LOANS  HELD-FOR-SALE

Mortgage  loans  held-for-sale  are  carried at the lower of cost or fair value.
Fair  value  is  determined in the aggregate.  As of December 31, 2004 and 2003,
the  Company  had  approximately  $1,000,000  and  $1,200,000,  respectively, of
mortgage  loan  forward  commitments  outstanding to hedge interest rate risk on
certain  committed and originated loans.  The differences between the settlement
value  of  the  forward commitments and the fair value of these commitments were
not  significant  at  December  31,  2004  and  2003.

TRANSFERS  OF  FINANCIAL  ASSETS

Transfers of financial assets, including sales of loans and loan participations,
are  accounted  for as sales, when control over the assets has been surrendered.
Control  over transferred assets is deemed to be surrendered when (1) the assets
have  been isolated from the Company, (2) the transferee obtains the right (free
of  conditions  that constrain it from taking advantage of that right) to pledge
or  exchange  the  transferred  assets,  and  (3)  the Company does not maintain
effective control over the transferred assets through an agreement to repurchase
them  before  their  maturity.

LOANS

Loans  are  stated  at  unpaid  principal  balances, less the allowance for loan
losses  and  net  deferred  loan  origination fees and costs. Interest income is
generally  recognized  when  income  is  earned  using  the  interest  method.
Nonrefundable  loan  fees received and related direct origination costs incurred

--------------------------------------------------------------------------------
                                    Page 41
<PAGE>

are  deferred and amortized over the life of the loan using the interest method,
resulting  in  a  constant effective yield over the loan term. Deferred fees are
recognized into income and deferred costs are charged to income immediately upon
prepayment  of  the  related  loan.

ALLOWANCE  FOR  LOAN  LOSSES

The  allowance  for  loan  losses is established as losses are estimated to have
occurred  through  a provision for loan losses charged to earnings.  Loan losses
are  charged against the allowance when management believes the uncollectibility
of  a loan balance is confirmed.  Subsequent recoveries, if any, are credited to
the  allowance.
The Company periodically evaluates the adequacy of the allowance for loan losses
in  order  to  maintain  the  allowance  at a level that is sufficient to absorb
probable  credit  losses.  Management's  evaluation  of  the  adequacy  of  the
allowance  is  based  on  a  review of the Company's historical loss experience,
known and inherent risks in the loan portfolio and an analysis of the levels and
trends  of  delinquencies  and  charge-offs.  This  evaluation  is  inherently
subjective as it requires estimates that are susceptible to significant revision
as  more  information  becomes  available.

The  allowance consists of specific and general and unallocated components.  The
specific  component  relates  to  loans  that  are  classified as impaired.  For
impaired  loans,  an allowance is established when the discounted cash flows (or
collateral  value or observable market price) of the impaired loan is lower than
the  carrying  value  of that loan.  The general component covers non-classified
loans  and  is  based  on  historical  loss  experience adjusted for qualitative
factors.  An  unallocated  component  is  maintained to cover uncertainties that
could  affect  management's  estimate  of  probable  losses.  The  unallocated
component  of  the  allowance reflects the margin of imprecision inherent in the
underlying  assumptions  used  in  the methodologies for estimating specific and
general  losses  in  the  portfolio.

A loan is considered impaired, based on current information and events, if it is
probable  the  Company  will  be  unable  to  collect  the scheduled payments of
principal  or  interest  when due according to the contractual terms of the loan
agreement.  The  measurement  of  impaired  loans  is  generally  based upon the
present  value of future cash flows discounted at the historical effective rate,
except  that all collateral-dependent loans are measured for impairment based on
fair  values  of  collateral.

Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment.  Accordingly,  the  Company  does not separately identify individual
consumer and residential loans for impairment disclosures, unless such loans are
the  subject  of  a  restructuring  agreement.

INCOME  RECOGNITION  ON  IMPAIRED  AND  NON-ACCRUAL  LOANS

Loans, including impaired loans, are generally classified as non-accrual if they
are  past due as to maturity or payment of principal or interest for a period of
more  than  90  days.  When  a  loan is classified as non-accrual and the future
collectibility of the recorded loan balance is doubtful, collections of interest
and  principal  are  generally  applied as a reduction to principal outstanding.

When  future  collectibility  of the recorded loan balance is expected, interest
income  may  be recognized on a cash basis. In the case where a non-accrual loan
had  been  partially  charged  off,  recognition  of interest on a cash basis is
limited to that which would have been recognized on the recorded loan balance at
the  contractual  interest rate. Cash interest receipts in excess of that amount
are  recorded  as  recoveries  to  the  allowance  for  loan  losses until prior
charge-offs  have  been  fully  recovered.

OFF-BALANCE  SHEET  CREDIT  RELATED  FINANCIAL  INSTRUMENTS

In  the ordinary course of business, the Company has entered into commitments to
extend  credit,  including  commitments  under  standby letters of credit.  Such
financial  instruments  are  recorded  when  they  are  funded.

--------------------------------------------------------------------------------
                                    Page 42
<PAGE>

PREMISES  AND  EQUIPMENT

Premises  and  equipment  are  stated  at  cost,  less accumulated depreciation.
Depreciation  is  computed  on  a  straight-line basis over the estimated useful
lives  of  the  related assets, ranging up to 39 years for premises and 10 years
for  equipment.  Maintenance  and  repairs  are charged to operating expenses as
incurred.  The  asset  cost  and  accumulated  depreciation are removed from the
accounts  for  assets sold or retired and any resulting gain or loss is included
in  the  determination  of  income.

FORECLOSED  REAL  ESTATE

Properties  acquired through foreclosure, or by deed in lieu of foreclosure, are
carried  at  their fair value less estimated disposal costs. Write downs of, and
expenses  related  to,  foreclosed  real estate holdings included in noninterest
expense  were  $49,000,  $124,000  and  $155,000  in  2004,  2003  and  2002,
respectively.

INTANGIBLE  ASSETS

Intangible  assets  represent core deposit intangibles and goodwill arising from
acquisitions.  Core  deposit  intangibles  represent the premium the Company has
paid  for  deposits  acquired  in excess of the cost incurred had the funds been
purchased  in  the capital markets.  Core deposit intangibles are amortized on a
straight-line basis over a period of five years.  Goodwill represents the excess
cost  of  an  acquisition  over  the  fair  value  of  the  net assets acquired.
Amortization  expense  related to core deposit intangibles is estimated to total
$223,000  in  each  year  of  2005  and  2006  and  $169,000  in  2007.

MORTGAGE  SERVICING  RIGHTS

Originated  mortgage  servicing  rights  are recorded at their fair value at the
time  of  transfer  and  are  amortized  in proportion to and over the period of
estimated  net  servicing  income or loss.  The carrying value of the originated
mortgage  servicing  rights  is  periodically  evaluated  for  impairment.

STOCK-BASED  COMPENSATION

The  Company  accounts  for  stock  awards issued to directors, officers and key
employees  using  the  intrinsic  value  method  in  accordance  with Accounting
Principles Board Opinion No. 25.  This method requires that compensation expense
be  recognized  to  the  extent  that  the  fair  value of the stock exceeds the
exercise price of the stock award at the grant date.  The Company generally does
not  recognize  compensation  expense  related to stock awards because the stock
awards  generally  have  fixed  terms  and  exercise prices that are equal to or
greater  than  the  fair  value of the Company's common stock at the grant date.

--------------------------------------------------------------------------------
                                    Page 43
<PAGE>

There  is  no  pro  forma  expense reported for 2004 as stock options were fully
vested  during  2003.  Pro  forma  amounts  of net income and earnings per share
under  Statement  of  Financial  Accounting  Standards  No.  123 are as follows:

<TABLE>
<CAPTION>
(Dollars in thousands)                  2003                2002
-----------------------------------------------------------------
<S>                                     <C>              <C>
Net Income:
As reported. . . . . . . . . . . . . .  $1,652            $1,156
Total stock-based compensation
cost, net of tax, that would have
been included in the determination
of net income if the fair value based
method had been applied to all awards.      28               109
----------------------------------------------------------------
Pro forma. . . . . . . . . . . . . . .  $1,624            $1,047
================================================================
</TABLE>
<TABLE>
<CAPTION>

Earnings per share:           Basic    Diluted   Basic   Diluted
----------------------------------------------------------------
<S>                          <C>      <C>       <C>     <C>
As reported . . . .          $ 0.68   $   0.67  $ 0.45  $   0.44
Pro forma . . . . .          $ 0.67   $   0.66  $ 0.41  $   0.40
================================================================
</TABLE>

The  fair value of these options was estimated at the date of grant in July 2001
using  the  Black-Scholes  options pricing model with the following assumptions:
risk free interest rate - 5.0%; dividend yield - 2.0%; market price volatility -
52.4%.  An  assumed  weighted  average option life of 6 years has been utilized.
For  purposes  of pro forma disclosures, the estimated fair value of the options
is  amortized  to  expense  over  the  options' vesting period.  No options were
granted  during  2004,  2003  and  2002.

RETIREMENT  BENEFITS

The  Company  has  established  tax  qualified  retirement  plans  covering
substantially  all full-time employees and certain part-time employees.  Pension
expense  under  these  plans  is  charged  to current operations and consists of
several  components  of  net pension cost based on various actuarial assumptions
regarding  future  experience  under  the  plans.  In  addition, the Company has
unfunded  deferred  compensation and supplemental executive retirement plans for
selected  current  and  former employees and officers that provide benefits that
cannot  be  paid  from  a qualified retirement plan due to Internal Revenue Code
restrictions.  These plans are nonqualified under the Internal Revenue Code, and
assets used to fund benefit payments are not segregated from other assets of the
Company,  therefore,  in  general,  a  participant's  or  beneficiary's claim to
benefits  under  these  plans  is  as  a  general  creditor.

TREASURY  STOCK

Treasury  stock  purchases  are  recorded at cost.  There were no treasury stock
purchases  in 2004.  In 2003, and 2002, the Company purchased 183,114 and 11,000
shares  of  treasury  stock  at  an average cost of $14.67 and $11.86 per share,
respectively.  160,114 of the shares purchased by the Company in 2003 related to
a  privately  negotiated  stock  repurchase  from  Jewelcor Management Inc.  The
shares  were purchased at $14.60 per share and represented approximately 6.1% of
the  Company's  outstanding common stock as of December 31, 2002.  The privately
negotiated  transaction  was  not part of the share repurchase program in effect
for  that  period.  The  Company  believes repurchase programs to be in the best
interest of its shareholders as a method to enhance long-term shareholder value.

INCOME  TAXES

Provisions  for  income taxes are based on taxes currently payable or refundable
and  deferred  income  taxes  on  temporary differences between the tax basis of
assets  and  liabilities and their reported amounts in the financial statements.
Deferred  tax assets and liabilities are reported in the financial statements at
currently  enacted  income  tax  rates  applicable  to  the  period in which the
deferred  tax  assets  and  liabilities  are expected to be realized or settled.

--------------------------------------------------------------------------------
                                    Page 44
<PAGE>

EARNINGS  PER  SHARE

Basic  earnings  per  share  are computed by dividing net income by the weighted
average  number  of  common  shares  outstanding  throughout each year.  Diluted
earnings  per  share  gives  effect  to  weighted  average  shares that would be
outstanding  assuming  the  exercise  of issued stock options using the treasury
stock  method.

COMPREHENSIVE  INCOME

Accounting principles generally require that recognized revenue, expenses, gains
and  losses  be  included in net income.  Although certain changes in assets and
liabilities,  such  as  unrealized  gains  and  losses  on  available-for-sale
securities,  are  reported  as a separate component of the equity section of the
statement  of  condition,  such  items, along with net income, are components of
comprehensive  income.

The  components of other comprehensive income (loss) and related tax effects for
the  years  ended:

<TABLE>
<CAPTION>
                                            For the years
                                          ended December 31,
---------------------------------------------------------------
(In thousands)                            2004     2003    2002
---------------------------------------------------------------
<S>                                     <C>       <C>     <C>
Gross change in unrealized gains on
  securities available for sale. . . .  $  (843)  $ 681   $ 723
Reclassification adjustment for gains
  included in net income . . . . . . .     (772)   (542)   (390)
---------------------------------------------------------------
                                         (1,615)    139     333
Tax effect . . . . . . . . . . . . . .      646     (56)   (133)
---------------------------------------------------------------
Net of tax amount. . . . . . . . . . .  $  (969)  $  83   $ 200
================================================================
</TABLE>

RECLASSIFICATIONS

Certain amounts in the 2003 and 2002 consolidated financial statements have been
reclassified  to  conform  to  the  current  year  presentation.  These
reclassifications  had  no  effect  on  net  income  as  previously  reported.

NOTE  2:  NEW  ACCOUNTING  PRONOUNCEMENTS

In  December  2004, the FASB issued Statement No. 123(R), "Share-Based Payment."
Statement  No.  123(R)  revised  Statement  No. 123, "Accounting for Stock-Based
Compensation,"  and  supersedes APB Opinion No. 25, "Accounting for Stock Issued
to  Employees,"  and  its related implementation guidance.  Statement No. 123(R)
will  require  compensation costs related to share-based payment transactions to
be recognized in the financial statements (with limited exceptions).  The amount
of  compensation cost will be measured based on the grant-date fair value of the
equity  or  liability  instruments issued.  Compensation cost will be recognized
over  the  period  that  an employee provides service in exchange for the award.
This  statement  is effective as of the beginning of the first interim or annual
reporting  period  that begins after June 15, 2005.  Since the Company's options
are  fully granted and vested, the Company does not anticipate the adoption will
have  any  impact  on  consolidated  financial  statements.

In  March 2004, the Securities and Exchange Commission released Staff Accounting
Bulletin  (SAB)  No.  105,  "Application  of  Accounting  Principles  to  Loan
Commitments."  SAB  105  provides  guidance  about  the  measurements  of  loan
commitments  recognized  at fair value under FASB Statement No. 133, "Accounting
for  Derivative  Instruments  and  Hedging  Activities."  SAB  105 also requires
companies  to  disclose  their  accounting  policy  for  those  loan commitments
including  methods  and  assumptions  used to estimate fair value and associated
hedging strategies.  SAB 105 is effective for all loan commitments accounted for
as  derivatives that are entered into after March 31, 2004.  The adoption of SAB
105  did  not  have  a material effect on our consolidated financial statements.

--------------------------------------------------------------------------------
                                    Page 45
<PAGE>

In  December 2003, the Accounting Standards Executive Committee issued Statement
of  Position  03-3  (SOP 03-3), "Accounting for Certain Loans or Debt Securities
Acquired  in a Transfer."  SOP 03-3 addresses accounting for differences between
contractual  cash  flows  and  cash  flows  expected  to  be  collected  from an
investor's  initial  investment  in  loans  or  debt  securities  acquired  in a
transfer,  including  business  combinations,  if  those  differences  are
attributable,  at  least  in part, to credit quality.  SOP 03-3 is effective for
loans  for debt securities acquired in fiscal years beginning after December 15,
2004.  The Company adopted the provisions of SOP 03-3 effective January 1, 2005,
and  the  initial  implementation  did  not  have  any  effect  on the Company's
consolidated  financial  statements.

NOTE  3:  ACQUISITION

On  October  25,  2002,  the Company's subsidiary, Pathfinder Bank, acquired the
Lacona,  New  York  branch of Cayuga Bank.  In conjunction with the acquisition,
the  Bank  formed  a  limited-purpose  commercial  bank  subsidiary,  Pathfinder
Commercial  Bank, to serve the depository needs of public entities in its market
area  and  to assume the municipal deposit liabilities of the Lacona branch. The
transaction  included approximately $26,400,000 in deposits, $2,300,000 in loans
and  $430,000  in  vault  cash  and  facilities  and equipment.  The acquisition
reflects  a premium on deposits liabilities assumed of approximately $2,400,000.
The  results  of  the  Lacona  branch  operation  have  been  included  in  the
consolidated financial statements since the date of acquisition.  As a result of
the  acquisition,  the  Company  has  expanded  its service area and now has the
ability  to  serve  the  needs  of  public  entities  in  the  market  area.

The  following table summarizes the estimated fair values of the assets acquired
and  liabilities  assumed  as  of  the  acquisition  date:

<TABLE>
<CAPTION>
<S>                           <C>
(In thousands)
--------------------------------------
Cash . . . . . . . . . . . .  $21,559
Loans receivable . . . . . .    2,260
Allowance for loan losses. .      (57)
--------------------------------------
Net loans receivable . . . .    2,203
Bank premises and equipment.      251
Other assets . . . . . . . .       10
Intangible assets. . . . . .    2,376
--------------------------------------
Total assets . . . . . . . .  $26,399
======================================
Deposits . . . . . . . . . .  $26,399
--------------------------------------
 Total liabilities . . . . .  $26,399
======================================
</TABLE>

Intangible  assets include $1,100,000 in core deposit intangibles amortized over
a weighted-average useful life of 5 years. Accumulated amortization approximated
$485,000 and $262,000 at December 31, 2004 and 2003, respectively. The remaining
$1,276,000  in intangible assets represents goodwill, which is not amortized but
is evaluated at least annually for impairment.  Amortization of goodwill and the
core  deposit  intangible  is  deductible  for  tax  purposes.

--------------------------------------------------------------------------------
                                    Page 46
<PAGE>

NOTE  4:  INVESTMENT  SECURITIES  -  AVAILABLE-FOR-SALE

The  amortized  cost  and  estimated  fair  value  of  investment securities are
summarized  as  follows:

<TABLE>
<CAPTION>
                                                     December 31, 2004
--------------------------------------------------------------------------------------
                                                     Gross        Gross      Estimated
                                     Amortized     Unrealized   Unrealized      Fair
(In thousands)                         Cost          Gains        Losses       Value
--------------------------------------------------------------------------------------
<S>                                <C>            <C>           <C>          <C>
Bond investment securities:
US Treasury and agencies. . . . .  $      21,609  $       4     $   (401)    $21,212
State and political subdivisions.          8,881        162          (31)      9,012
Corporate . . . . . . . . . . . .          5,919         92          (52)      5,959
Mortgage-backed . . . . . . . . .         32,213         92         (278)     32,027
--------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . .         68,622        350         (762)     68,210
Equity investments. . . . . . . .          6,967          5         (113)      6,859
--------------------------------------------------------------------------------------
Total investment securities . . .  $      75,589  $     355     $   (875)    $75,069
======================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                                    December 31, 2003
--------------------------------------------------------------------------------------
                                                     Gross        Gross      Estimated
                                     Amortized     Unrealized   Unrealized      Fair
(In thousands)                         Cost          Gains        Losses       Value
--------------------------------------------------------------------------------------
<S>                                <C>            <C>           <C>          <C>
Bond investment securities:
US Treasury and agencies. . . . .  $       6,354  $      48     $    (76)    $ 6,326
State and political subdivisions.          7,359        304            -       7,663
Corporate . . . . . . . . . . . .          6,421        345          (70)      6,696
Mortgage-backed . . . . . . . . .         29,734        388         (188)     29,934
--------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . .         49,868      1,085         (334)     50,619
Equity investments. . . . . . . .          6,596        347           (3)      6,940
--------------------------------------------------------------------------------------

Total investment securities . . .  $      56,464  $   1,432     $   (337)    $57,559
======================================================================================
</TABLE>

Gross  gains  of  $828,000,  $581,000  and  $665,000  for  2004,  2003 and 2002,
respectively  and  gross  losses of $56,000, $38,000 and $275,000 for 2004, 2003
and  2002,  respectively  were  realized  on sales and calls of securities.  Tax
expense related to net gains on investment securities was $300,700, $211,100 and
$151,900  for  2004,  2003  and  2002,  respectively.  The $275,000 loss in 2002
represented  an  impairment  loss recognized on a corporate debt security.  This
security  was  sold  during  2003  and  a  gain of $178,000 was recognized after
reversal  of  the  2002  impairment  reserve.

Investment  securities  with  a  carrying  value of approximately $37,500,000 at
December  31,  2004  were pledged to collateralize certain deposit and borrowing
arrangements.

--------------------------------------------------------------------------------
                                    Page 47
<PAGE>

The  amortized cost and estimated fair value of debt investments at December 31,
2004  by  contractual  maturity  are shown below. Expected maturities may differ
from  contractual  maturities  because  borrowers  may have the right to call or
prepay  obligations  with  or  without  penalties.

<TABLE>
<CAPTION>
                                        Amortized    Estimated
(In thousands)                             Cost      Fair Value
---------------------------------------------------------------
<S>                                     <C>         <C>
Due in one year or less. . . . . . . .  $    2,847  $     2,887
Due after one year through five years.      19,060       18,932
Due after five years through ten years       9,778        9,636
Due after ten years. . . . . . . . . .       4,724        4,728
Mortgage-backed securities . . . . . .      32,213       32,027
---------------------------------------------------------------
Totals . . . . . . . . . . . . . . . .  $   68,622  $    68,210
===============================================================
</TABLE>

The  following table shows the Company's investment securities' gross unrealized
losses and fair value, aggregated by investment category and length of time that
individual  securities  have  been  in  a continuous unrealized loss position at
December  31,  2004.

<TABLE>
<CAPTION>
                                                 Less Than          Twelve
                                               Twelve Months      Months or More      Total
---------------------------------------------------------------------------------------------------
                                            Unrealized  Fair   Unrealized  Fair  Unrealized   Fair
(In thousands)                                Losses    Value    Losses    Value   Losses     Value
---------------------------------------------------------------------------------------------------
<S>                                          <C>       <C>      <C>       <C>     <C>       <C>
US Treasury and agency securities . . . . .  $  (370)  $18,903  $   (31)  $  981  $  (401)  $19,884
State and political subdivision securities.      (31)    2,411        -       56      (31)    2,467
Corporate securities. . . . . . . . . . . .      (11)      976      (41)     936      (52)    1,912
Mortgage-backed securities. . . . . . . . .     (215)   19,949      (63)   3,301     (278)   23,250
Equity investment securities. . . . . . . .      (10)      240     (103)   3,547     (113)    3,787
---------------------------------------------------------------------------------------------------
                                             $  (637)  $42,479  $  (238)  $8,821  $  (875)  $51,300
===================================================================================================
</TABLE>

At  December  31,  2004,  40  mortgage-backed  and  30  US  treasury  and agency
securities  have unrealized losses, and only 11 of the securities have been in a
continuous  loss position for 12 months or more.  These unrealized losses relate
principally  to  changes  in  interest  rates  subsequent  to the acquisition of
specific  securities.  None of the securities in this category had an unrealized
loss  that  exceeded  4%  of  book  value  and  a majority had unrealized losses
totaling  less than 1% of book value.  The Company has the intent and ability to
hold  the  individual  securities  to  maturity  or  market  price  recovery.

At  December  31,  2004,  9  state  and  political  subdivision securities and 2
corporate  securities  have  unrealized losses, and only 1 of the securities has
been  in  a  continuous  loss  position for 12 months or more.  In analyzing the
issuer's  financial  condition,  management  considers  the  industry  analyst's
reports,  financial  performance  and  projected  target  prices  of  investment
analysts  within a one-year time frame.  None of the securities in this category
had  an  unrealized  loss  that  exceeded  5%  of  book value and a majority had
unrealized  losses  totaling  less  than  1% of book value.  The Company has the
intent and ability to hold the individual securities to maturity or market price
recovery.

At  December  31, 2004, 4 equity securities had unrealized losses.  The security
in  the  less than 12 months unrealized loss category is a mutual fund backed by
adjustable rate mortgage-backed securities and has an unrealized loss of only 1%
of  book  value.  The unrealized loss relates principally to changes in interest
rates  subsequent  to  the acquisition of the mutual fund.  Since the underlying
securities  have  variable  interest  rates  and  management  has the intent and
ability  to  hold  until  recovery,  the  decline  is  not  deemed  to  be
other-than-temporary.  There  are  3  securities  that have been in a continuous
loss  position  for  12  months or more.  One of the securities in this category
represents  an  investment  in  the  stock of a government agency.  However, the
unrealized  loss  at  December  31,  2004 was less than the loss at December 31,
2003.  Since  the  unrealized  loss  at  December  31,  2004 is only $58,000 and
management  has  the intent and ability to hold the security until recovery, the

--------------------------------------------------------------------------------
                                    Page 48
<PAGE>

decline  is  not deemed to be other than temporary.  The other 2 securities have
unrealized losses totaling only $15,000, which is deemed to be immaterial to the
consolidated  financial  statements.

NOTE  5:  LOANS

Major  classifications  of  loans  at  December  31,  are  as  follows:

<TABLE>
<CAPTION>
(In thousands)                     2004       2003
-----------------------------------------------------
<S>                              <C>        <C>
Real estate mortgages:
Conventional. . . . . . . . . .  $117,608   $120,657
Construction. . . . . . . . . .     3,497      4,375
Commercial. . . . . . . . . . .    29,874     31,278
-----------------------------------------------------
                                  150,979    156,310
-----------------------------------------------------
Other loans:
Consumer. . . . . . . . . . . .     3,484      3,932
Home Equity/2nd Mortgage. . . .    15,021     12,948
Lease financing . . . . . . . .       715      1,206
Commercial. . . . . . . . . . .    12,605     11,305
Municipal loans . . . . . . . .     3,514      2,579
-----------------------------------------------------
                                   35,339     31,970
-----------------------------------------------------
Total loans . . . . . . . . . .   186,318    188,280
-----------------------------------------------------
Net deferred loan costs . . . .       634        437
Less allowance for loan losses.    (1,827)    (1,715)
-----------------------------------------------------
Loans receivable, net . . . . .  $185,125   $187,002
=====================================================
</TABLE>

The  Company  grants  mortgage and consumer loans to customers throughout Oswego
and  parts  of  Onondaga  counties.  Although the Company has a diversified loan
portfolio,  a  substantial  portion  of  its  debtor's  ability  to  honor their
contracts  is  dependent  upon the counties' employment and economic conditions.

The  following  represents  the  approximate  activity  associated with loans to
officers  and  directors  during  the  fiscal  year  ending  December  31, 2004:

<TABLE>
<CAPTION>
<S>                            <C>
(In thousands)
---------------------------------------
Balance at beginning of year.  $ 5,310
Originations. . . . . . . . .    3,319
Principal payments. . . . . .   (3,719)
---------------------------------------
Balance at end of year. . . .  $ 4,910
=======================================
</TABLE>

NOTE  6:  ALLOWANCE  FOR  LOAN  LOSSES

Changes  in  the  allowance  for loan losses for the year ended December 31, are
summarized  as  follows:

<TABLE>
<CAPTION>
(In thousands)                  2004     2003      2002
---------------------------------------------------------
<S>                            <C>      <C>      <C>
Balance at beginning of year.  $1,715   $1,481   $ 1,679
Recoveries credited . . . . .      61       37        32
Provision for loan losses . .     738      598     1,375
Allowance on acquired loans .       -        -        57
Loans charged-off . . . . . .    (687)    (401)   (1,662)
---------------------------------------------------------
Balance at end of year. . . .  $1,827   $1,715   $ 1,481
=========================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 49
<PAGE>

The  following  is a summary of information pertaining to impaired loans for the
years  ending  December  31,:

<TABLE>
<CAPTION>
(In thousands)                                   2004    2003
--------------------------------------------------------------
<S>                                             <C>     <C>
Impaired loans without a valuation allowance .  $    -  $    -
Impaired loans with a valuation allowance. . .   3,110   3,804
--------------------------------------------------------------
Total impaired loans . . . . . . . . . . . . .  $3,110  $3,804
--------------------------------------------------------------
Valuation allowance related to impaired loans.  $  760  $  527
--------------------------------------------------------------
Average investment in impaired loans . . . . .  $3,611  $3,446
--------------------------------------------------------------
Interest income recognized on impaired loans .  $  153  $  139
--------------------------------------------------------------
Interest income recognized on a cash basis on
impaired loans . . . . . . . . . . . . . . . .  $    -  $   93
--------------------------------------------------------------
</TABLE>

As  of  December  31,  2004, no additional funds are committed to be advanced in
connection  with  impaired  loans.  During  2002,  the  Company  had  no  loans
classified  as  impaired.

The amount of loans on which the Company has ceased accruing interest aggregated
approximately  $1,851,000  and  $2,992,000  at  December  31,  2004  and  2003,
respectively.  There  were  no  loans  past  due  ninety  days or more and still
accruing  interest  at  December  31,  2004  or  2003.

NOTE  7:  SERVICING

Loans  serviced  for  others  are  not included in the accompanying consolidated
statements  of  condition.  The  unpaid principal balances of mortgage and other
loans  serviced  for others were $53.0 million and $47.6 million at December 31,
2004  and  2003,  respectively.

The balance of capitalized servicing rights included in other assets at December
31,  2004  and  2003,  was  $198,000  and  $257,000,  respectively.

The  following  summarizes  mortgage-servicing rights capitalized and amortized:

<TABLE>
<CAPTION>
(In thousands)                          2004   2003   2002
-----------------------------------------------------------
<S>                                     <C>    <C>    <C>
Mortgage servicing rights capitalized.  $  99  $ 179  $ 152
Mortgage servicing rights amortized. .  $ 158  $ 122  $  84
===========================================================
</TABLE>

NOTE  8:  PREMISES  AND  EQUIPMENT

A  summary  of  premises  and  equipment  at  December  31,  is  as  follows:

<TABLE>
<CAPTION>
(In thousands)                      2004     2003
---------------------------------------------------
<S>                                <C>      <C>
Land. . . . . . . . . . . . . . .  $ 1,150  $   675
Buildings . . . . . . . . . . . .    5,587    5,172
Furniture, fixture and equipment.    5,597    5,057
Construction in progress. . . . .      508      471
---------------------------------------------------
                                    12,842   11,375
Less: Accumulated depreciation. .    5,262    4,725
---------------------------------------------------
                                   $ 7,580  $ 6,650
===================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 50
<PAGE>

NOTE  9:  DEPOSITS

A  summary  of  deposits  at  December  31,  is  as  follows:

<TABLE>
<CAPTION>
(In thousands)                         2004      2003
-------------------------------------------------------
<S>                                  <C>       <C>
Savings accounts. . . . . . . . . .  $ 66,265  $ 66,683
Time accounts . . . . . . . . . . .    66,133    68,428
Time accounts over $100,000 . . . .    18,250    14,618
Money management accounts . . . . .    44,189    22,337
Demand deposit interest-bearing . .    20,339    16,969
Demand deposit noninterest-bearing.    19,159    15,790
Mortgage escrow funds . . . . . . .     2,337     2,069
-------------------------------------------------------
                                     $236,672  $206,894
=======================================================
</TABLE>

At  December 31, 2004, the schedules maturities of time deposits are as follows:

<TABLE>
<CAPTION>
(In thousands)
--------------------------
Year of Maturity
<S>                <C>
2005. . . . . . .  $44,257
2006. . . . . . .   17,428
2007. . . . . . .    9,084
2008. . . . . . .    3,616
2009. . . . . . .    3,890
Thereafter. . . .    6,108
--------------------------
                   $84,383
==========================
</TABLE>

NOTE  10:  BORROWED  FUNDS

The  composition  of  borrowings  at  December  31  is  as  follows:

<TABLE>
<CAPTION>
(In thousands)                                   2004         2003
-----------------------------------------------------------------------
<S>                                           <C>         <C>
Short-term FHLB advances:
FHLB Advances. . . . . . . . . . . . . . . .  $    1,000  $      2,100
-----------------------------------------------------------------------
Total short-term borrowings. . . . . . . . .  $    1,000  $      2,100
-----------------------------------------------------------------------
Long-term:
FHLB Repurchase agreements . . . . . . . . .       3,400         3,400
FHLB advances. . . . . . . . . . . . . . . .      30,960        35,460
-----------------------------------------------------------------------
Total long-term borrowings . . . . . . . . .  $   34,360  $     38,860
=======================================================================

The  principal  balance,  interest  rate and maturity of the above borrowings at
December  31,  2004  is  as  follows:

Term . . . . . . . . . . . . . . . . . . . .  Principal          Rates
-----------------------------------------------------------------------
(Dollars in thousands)
Short-term advances with FHLB. . . . . . . .  $    1,000          2.63%
-----------------------------------------------------------------------
Long-term:
Repurchase agreements (due in 2006 and 2009)       3,400   5.56% -5.85%
-----------------------------------------------------------------------
Advances with FHLB
due within 2 years . . . . . . . . . . . . .      12,000    2.07%-5.32%
due within 3 years . . . . . . . . . . . . .      11,350    3.00%-5.04%
due within 4 years . . . . . . . . . . . . .       6,610    2.67%-5.98%
due after 5 years. . . . . . . . . . . . . .       1,000          6.00%
-----------------------------------------------------------------------
Total advances with FHLB . . . . . . . . . .  $   30,960
-----------------------------------------------------------------------
Toal long-term borrowings. . . . . . . . . .  $   34,360
=======================================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 51
<PAGE>

The  repurchase  agreements  with  the  Federal  Home  Loan  Bank  ("FHLB")  are
collateralized  by  certain  investment  securities  having  a carrying value of
$3,700,000 at December 31, 2004.  The collateral is under the Company's control.
The  line  of  credit  agreement  with  the FHLB is used for liquidity purposes.
Interest  on this line is determined at the time of borrowing.  The average rate
paid  on  the  overnight  line  during 2004 approximated 2.00%.  At December 31,
2004,  $15,081,000  was  available under the line of credit.  In addition to the
overnight line of credit program, the Company also has access to the FHLB's Term
Advance  Program  under which it can borrow at various terms and interest rates.
Residential  mortgage  loans with a carrying value of $98,269,000 and FHLB stock
with  a  carrying  value  of $1,768,000 have been pledged by the Company under a
blanket  collateral  agreement  to  secure the Company's line of credit and term
borrowings.

On  June  26,  2002,  the  Company  formed a wholly owned subsidiary, Pathfinder
Statutory Trust I, a Connecticut business trust.  The Trust issued $5,000,000 of
30  year floating rate Company-obligated pooled capital securities of Pathfinder
Statutory  Trust I.  The Company borrowed the proceeds of the capital securities
from  its  subsidiary  by  issuing  floating rate junior subordinated deferrable
interest  debentures having substantially similar terms.  The capital securities
mature  in  2032  and  are  treated  as  Tier  1  capital by the Federal Deposit
Insurance  Company and the Office of Thrift Supervision.  The capital securities
of  the trust are a pooled trust preferred fund of Preferred Term Securities VI,
Ltd.  and  are tied to the 3-month LIBOR plus 3.45% (6.00% at December 31, 2004)
with  a  five-year  call  provision.  The  Company  guarantees  all  of  these
securities.  The  Company  capitalized  $151,000  of  deferred  financing  costs
associated  with the debt issuance, which are being amortized on a straight-line
basis  over  the  5-year  period  to  call  date.

In  January  2003,  the  Financial  Accounting  Standards  Board  issued  FASB
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of  ARB  No.  51"  which  was  revised  in  December 2003.  This
Interpretation  provides  guidance  for  the  consolidation of variable interest
entities  (VIEs).  Pathfinder Statutory Trust I qualifies as a variable interest
entity under FIN 46.  Pathfinder Statutory Trust I issued mandatorily redeemable
preferred  securities  (Trust Preferred Securities) to third-party investors and
loaned  the  proceeds to the Company.  Pathfinder Statutory Trust I holds, as it
sole  asset,  subordinated  debentures  issued  by  the  Company.

FIN  46  required the Company to deconsolidate Pathfinder Statutory Trust I from
the  consolidated  financial statements as of March 31, 2004.  There has been no
restatement of prior periods. The impact of this deconsolidation was to increase
junior subordinated debentures by $5,155,000 and reduce the mandatory redeemable
preferred  securities  line  item  by  $5,000,000,  which  represented the trust
preferred  securities  of the trust.  The Company's equity interest in the trust
subsidiary  of  $155,000, which had previously been eliminated in consolidation,
is  now  reported  in  "Other  assets".  For  regulatory reporting purposes, the
Federal  Reserve Board has indicated that the preferred securities will continue
to  qualify as Tier 1 Capital subject to previously specified limitations, until
further  notice.  If  regulators  make  a  determination  that  Trust  Preferred
Securities  can  no  longer  be considered in regulatory capital, the securities
become callable and the Company may redeem them.  The adoption of FIN 46 did not
have  an  impact  on  the  Company's  results  of  operations  or  liquidity.

--------------------------------------------------------------------------------
                                    Page 52
<PAGE>

NOTE  11:  EMPLOYEE  BENEFITS  AND  DEFERRED  COMPENSATION  AND  SUPPLEMENTAL
RETIREMENT  PLANS

The  Company  has  a  noncontributory  defined  benefit  pension  plan  covering
substantially  all  employees. The plan provides defined benefits based on years
of  service  and final average salary. In addition, the Company provides certain
health  and  life  insurance  benefits  for  eligible  retired  employees.  The
healthcare  plan  is  contributory  with  participants'  contributions  adjusted
annually;  the life insurance plan is noncontributory.  Employees with less than
14  years  of service as of January 1, 1995, are not eligible for the health and
life  insurance  retirement  benefits.

The  Company uses an October 1 measurement date for the defined benefit plan and
postretirement  benefit  plan.

The  following  tables  set  forth the changes in the plan's benefit obligation,
fair  value  of  plan assets and prepaid (accrued) benefit (cost) as of December
31:

<TABLE>
<CAPTION>
                                                    Pension        Postretirement
                                                    Benefits          Benefits
---------------------------------------------------------------------------------
(In thousands)                                    2004     2003     2004    2003
---------------------------------------------------------------------------------
<S>                                              <C>      <C>      <C>     <C>
Change in benefit obligations:
Benefit obligation at beginning of year . . . .  $3,382   $3,031   $ 367   $ 368
Service cost. . . . . . . . . . . . . . . . . .     155      154       2       2
Interest cost . . . . . . . . . . . . . . . . .     207      200      19      21
Actuarial gain. . . . . . . . . . . . . . . . .     153      166     (58)      -
Plan participants' contributions. . . . . . . .       -        -      12       7
Benefit paid. . . . . . . . . . . . . . . . . .    (152)    (151)    (33)    (28)
Settlements . . . . . . . . . . . . . . . . . .       -      (18)      -       -
Plan amendment. . . . . . . . . . . . . . . . .       -        -       -      (3)
---------------------------------------------------------------------------------
Benefit obligation at end of year . . . . . . .  $3,745   $3,382   $ 309   $ 367
---------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of year.  $2,792   $2,493   $   -   $   -
Actual return on plan assets. . . . . . . . . .     236      266       -       -
Plan participants' contributions. . . . . . . .       -        -      12       7
Benefits paid . . . . . . . . . . . . . . . . .    (152)    (151)    (33)    (28)
Employer contributions. . . . . . . . . . . . .     278      202      21      21
Settlements . . . . . . . . . . . . . . . . . .       -      (18)      -       -
---------------------------------------------------------------------------------
Fair value of plan assets at end of year. . . .  $3,154   $2,792   $   -   $   -
---------------------------------------------------------------------------------
Components of prepaid/accrued benefit cost
Unfunded status . . . . . . . . . . . . . . . .  $ (591)  $ (590)  $(309)  $(367)
Unrecognized transition obligation. . . . . . .       -        -     134     152
Unrecognized actuarial net loss/(gain). . . . .   1,478    1,401     (13)     46
---------------------------------------------------------------------------------
Prepaid/(accrued) benefit/(cost). . . . . . . .  $  887   $  811   $(188)  $(169)
=================================================================================
</TABLE>

The  accumulated  benefit obligation for the defined benefit plan was $3,042,000
and  $2,735,000  at  December  31,  2004  and  2003,  respectively.

--------------------------------------------------------------------------------
                                    Page 53
<PAGE>

The  significant  assumptions  used  in determining the benefit obligation as of
December  31,  2004  and  2003  are  as  follows:

<TABLE>
<CAPTION>
                                                         Pension         Postretirement
                                                        Benefits           Benefits
---------------------------------------------------------------------------------------
                                                  2004   2003   2002   2004   2003   2002
---------------------------------------------------------------------------------------
<S>                                               <C>    <C>    <C>    <C>    <C>    <C>
Weighted average discount rate . . . . . . . . .  6.25%  6.50%  7.25%  6.25%  6.00%  6.50%
Expected long term rate of return on plan assets  9.00%  9.00%  9.00%     -      -      -
Rate of increase in future compensation levels .  3.50%  4.00%  4.50%     -      -      -
</TABLE>

Assumed  health  care  cost trend rates have a significant effect on the amounts
reported  for  the  postretirement  health  care  plans.   The  annual  rates of
increase  in  the  per  capita  cost  of  covered  medical and prescription drug
benefits  for  year-end  calculations  were  assumed  to  be  10.0%  and  8.5%,
respectively.  The rates were assumed to decrease gradually to 3.75% in 2010 and
remain  at  that  level thereafter.  A one-percentage point change in the health
care  cost  trend  rates  would  have  the  following  effects:

<TABLE>
<CAPTION>
                                             1 Percentage     1 Percentage
                                                 Point            Point
(In thousands)                                 Increase          Decrease
--------------------------------------------------------------------------------
<S>                                            <C>              <C>
Effect on total of service and interest
cost components . . . . . . . . . . . . . . .  $       1        $      (1)
Effect on post retirement benefit obligation.         12              (11)
</TABLE>

The  composition  of  the  net  periodic  benefit  plan cost for the years ended
December  31,  2004,  2003  and  2002  is  as  follows:

<TABLE>
<CAPTION>
                                                 Pension         Postretirement
                                                Benefits           Benefits
--------------------------------------------------------------------------------
(In thousands)                          2004    2003    2002   2004  2003  2002
--------------------------------------------------------------------------------
<S>                                    <C>     <C>     <C>     <C>  <C>  <C>
Service cost. . . . . . . . . . . . .  $ 155   $ 154   $ 119   $ 2  $ 2   $  2
Interest cost . . . . . . . . . . . .    207     200     183    19   21     22
Amortization of transition obligation      -       -       -    18   18     19
Amortization of gains and losses. . .     94     106      27     -    1      -
Expected return on plan assets. . . .   (254)   (227)   (235)    -    -      -
--------------------------------------------------------------------------------
Net periodic benefit plan cost. . . .  $ 202   $ 233   $  94   $39  $42    $43
================================================================================
</TABLE>

The  significant  assumptions  used in determining the net periodic benefit plan
cost  for  years  ended  December  31:

<TABLE>
<CAPTION>
                                                         Pension         Postretirement
                                                        Benefits           Benefits
---------------------------------------------------------------------------------------
                                                  2004   2003   2002   2004   2003   2002
---------------------------------------------------------------------------------------
<S>                                               <C>    <C>    <C>    <C>    <C>    <C>
Weighted average discount rate . . . . . . . . .  6.25%  6.50%  7.25%  6.25%  6.00%  6.50%
Expected long term rate of return on plan assets  9.00%  9.00%  9.00%     -      -      -
Rate of increase in future compensation levels .  3.50%  4.00%  4.50%     -      -      -
</TABLE>

The  long-term  rate-of-return-on-assets  assumption was set based on historical
returns  earned  by  equities  and  fixed income securities, adjusted to reflect
expectations  of  future  returns  as applied to the plan's target allocation of
asset  classes.  Equities  and fixed income securities were assumed to earn real
rates of return in the ranges of 5-9.0% and 2-6.0%, respectively.  The long-term
inflation rate was estimated to be 3.0%.  When these overall return expectations
are  applied  to  the  plan's  target allocation, the expected rate of return is
determined  to  be  9.0%, which is roughly the midpoint of the range of expected
return.

--------------------------------------------------------------------------------
                                    Page 54
<PAGE>

The  Company's pension plan weighted-average asset allocations at October 1, the
measurement  date,  by  asset  category  are  as  follows:

<TABLE>
<CAPTION>
Asset Category     2004   2003
--------------------------------
<S>                <C>    <C>
Cash. . . . . . .     0%     0%
Equity securities    69%    67%
Debt securities .    31%    33%
--------------------------------
Total . . . . . .   100%   100%
================================
</TABLE>

Plan  assets  are  invested  in  six  diversified  investment  funds  of the RSI
Retirement  Trust  (the  "Trust"), a no load series open-ended mutual fund.  The
investment  funds  include  four  equity mutual funds and two bond mutual funds,
each  with  its  own  investment objectives, investment strategies and risks, as
detailed  in the Trust's prospectus.  The Trust has been given discretion by the
Plan Sponsor to determine the appropriate strategic asset allocation versus plan
liabilities,  as  governed by the Trust's Statement of Investment Objectives and
Guidelines  (the  "Guidelines").

The  long-term  investment  objective is to be invested 65% in equity securities
(equity  mutual  funds)  and 35% in debt securities (bond mutual funds).  If the
plan  is  underfunded  under  the  Guidelines,  the  bond  fund  portion will be
temporarily  increased  to  50% in order to lessen asset value volatility.  When
the  plan is no longer underfunded, the bond fund portion will be decreased back
to  35%.  Asset  rebalancing  is  performed  at  least  annually,  with  interim
adjustments  made  when  the  investment mix varies more than 5% from the target
(i.e.,  a  10%  target  range).

The investment goal is to achieve investment results that will contribute to the
proper  funding  of the pension plan by exceeding the rate of inflation over the
long-term.  In  addition,  investment  managers  for  the  Trust are expected to
provide  above  average  performance  when  compared  to  their  peer  managers.
Performance volatility is also monitored.  Risk/volatility is further managed by
the  distinct  investment  objectives  of  each  of  the  Trust  funds  and  the
diversification  within  each  fund.

For  the  fiscal  year  ending December 31, 2005, the Bank expects to contribute
approximately  $190,000  to  the  Plan.

The  following  benefit  payments,  which  reflect  expected  future service, as
appropriate,  are  expected  to  be  paid.

<TABLE>
<CAPTION>
Years ending December 31:
---------------------------------
<S>                         <C>
(In thousands)
2005 . . . . . . . . . . .  $152
2006 . . . . . . . . . . .   150
2007 . . . . . . . . . . .   150
2008 . . . . . . . . . . .   147
2009 . . . . . . . . . . .   150
Years 2010 - 2014. . . . .   853
================================
</TABLE>

The  Company  also offers a 401(k) plan to its employees.  Contributions to this
plan  by  the Company were $92,000, $84,000 and $74,000 for 2004, 2003 and 2002,
respectively.

The  Company  maintains  optional  deferred compensation plans for its directors
whereby fees normally received are deferred and paid by the Company based upon a
payment  schedule  commencing  at  age  65  and  continue  monthly for 10 years.
Directors  must  serve  on the board for a minimum of 5 years to be eligible for
the Plan. At December 31, 2004 and 2003, other liabilities include approximately
$1,276,000  and  $1,172,000,  respectively,  relating  to deferred compensation.
Deferred  compensation  expense  for the years ended December 31, 2004, 2003 and
2002  amounted  to approximately $185,000, $116,000 and  $113,000, respectively.

--------------------------------------------------------------------------------
                                    Page 55
<PAGE>

The  Company  has  a  supplemental  executive retirement plan for the benefit of
certain  executive  officers.  At  December 31, 2004 and 2003, other liabilities
include  approximately  $449,000  and  $473,000  accrued  under  these  plans.
Compensation  expense  includes  approximately  $53,000,  $68,000  and  $74,000
relating  to the supplemental executive retirement plan for 2004, 2003 and 2002,
respectively.

To  fund  the  benefits  under  these  plans, the Company is the owner of single
premium  life insurance policies on participants in the non-qualified retirement
plans.  At  December  31,  2004  and  2003, the cash value of these policies was
$5,768,000  and  $4,493,000,  respectively.

NOTE  12:  STOCK  BASED  COMPENSATION  PLANS

In  February  1997,  the  Board of Directors approved an option plan and granted
options  thereunder  with  an  exercise  price  equal to the market value of the
Company's  shares  at  the  date  of  grant.  Under the Stock Option Plan, up to
132,249  options  have  been authorized for grant of incentive stock options and
nonqualified  stock  options.

In  July 2001, the Board approved the issuance of 38,499 stock options remaining
in  the 1997 Stock Option Plan.  The exercise price is equal to the market value
of the Company's shares at the date of grant ($8.34).  The options granted under
the  issuance have a 10-year term with one-third vesting upon grant date and the
remaining  vesting  and  becoming  exercisable  ratably  over  a  2-year period.

Activity  in  the  Stock  Option  Plan  is  as  follows:

<TABLE>
<CAPTION>
                                                    Weighted
                                     Options         Average        Shares
(Shares in thousands)              Outstanding   Exercise Price   Exercisable
-----------------------------------------------------------------------------
<S>                                <C>           <C>              <C>
Outstanding at December 31, 2001.          113   $          7.18           87
Exercised . . . . . . . . . . . .          (20)             6.79
-----------------------------------------------------------------------------
Outstanding at December 31, 2002.           93   $          7.27           80
Exercised . . . . . . . . . . . .           (5)             7.49
-----------------------------------------------------------------------------
Outstanding at December 31, 2003.           88   $          7.25           88
Exercised . . . . . . . . . . . .          (18)             7.75
-----------------------------------------------------------------------------
Outstanding at December 31, 2004.           70   $          7.12           70
=============================================================================
</TABLE>

The Bank sponsors an Employee Stock Ownership Plan (ESOP) for employees who have
attained  the  age  of 21 and who have completed a 12 month period of employment
with the Bank during which they worked at least 1,000 hours.  The Bank purchased
92,574 shares of common stock on behalf of the ESOP.  The purchase of the shares
was  funded  by  a  loan from the Company and the unearned shares are pledged as
collateral for the borrowing.  As the loan is repaid, earned shares are released
from  collateral  and  are allocated to the participants.  As shares are earned,
the  Bank records compensation expense at the average market price of the shares
during  the  period.  Cash  dividends  received on unearned shares are allocated
among  the  participants  and  are  reported  as  compensation  expense.  ESOP
compensation  expense,  including  cash  dividends  received on unearned shares,
approximated  $136,000,  $129,000  and $113,000 for the years ended December 31,
2004,  2003  and 2002, respectively.   Total earned shares at December 31, 2004,
2003  and 2002 were 86,998, 79,367 and 71,478, respectively.  The estimated fair
value  of  the  remaining 5,576 unearned shares at December 31, 2004 is $93,000.
Unearned  ESOP  shares  are not considered outstanding for purposes of computing
earnings  per  share.

--------------------------------------------------------------------------------
                                    Page 56
<PAGE>

NOTE  13:  INCOME  TAXES

The  provision  for income taxes for the years ended December 31, is as follows:

<TABLE>
<CAPTION>
(In thousands)  2004   2003   2002
-----------------------------------
<S>             <C>    <C>    <C>
Current. . . .  $   -  $ 294  $  95
Deferred . . .    502    307    293
-----------------------------------
                $ 502  $ 601  $ 388
===================================
</TABLE>

The provision for income taxes includes the following:

<TABLE>
<CAPTION>
(In thousands)                  2004    2003    2002
-----------------------------------------------------
<S>                            <C>     <C>     <C>
Federal Income Tax. . . . . .  $ 520   $ 631   $ 399
New York State Franchise Tax.    (18)    (30)    (11)
-----------------------------------------------------
                               $ 502   $ 601   $ 388
=====================================================
</TABLE>

The  components  of net deferred tax asset (liability), included in other assets
for  the  years  ended  December  31,  are  as  follows:

<TABLE>
<CAPTION>
(In thousands)                                 2004      2003
---------------------------------------------------------------
<S>                                          <C>       <C>
Assets:
Deferred compensation . . . . . . . . . . .  $   672   $   641
Allowance for loan losses . . . . . . . . .      712       668
Postretirement benefits . . . . . . . . . .       74        66
Mortgage recording tax credit carryforward.      304       263
Investment securities . . . . . . . . . . .      213         -
Other . . . . . . . . . . . . . . . . . . .       49        45
---------------------------------------------------------------
                                               2,024     1,683
---------------------------------------------------------------
Liabilities:
Prepaid pension . . . . . . . . . . . . . .     (345)     (316)
Depreciation. . . . . . . . . . . . . . . .     (671)     (360)
Accretion . . . . . . . . . . . . . . . . .      (47)      (49)
Loan origination fees . . . . . . . . . . .     (236)     (167)
Intangible assets . . . . . . . . . . . . .     (328)     (224)
Prepaid expenses. . . . . . . . . . . . . .     (119)        -
Investment securities . . . . . . . . . . .        -      (433)
---------------------------------------------------------------
                                              (1,746)   (1,549)
---------------------------------------------------------------
Net deferred tax asset. . . . . . . . . . .  $   278   $   134
===============================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 57
<PAGE>

The Company has a New York State mortgage recording tax credit that has no carry
forward  limitations.  The Company has determined that no valuation allowance is
necessary  as  it  is  more likely than not deferred tax assets will be realized
through carryback to taxable income in prior years, future reversals of existing
temporary  differences  and  through future taxable income.  A reconciliation of
the  federal  statutory income tax rate to the effective income tax rate for the
years  ended  December  31,  is  as  follows:

<TABLE>
<CAPTION>
                                          2004   2003   2002
---------------------------------------------------------------
<S>                                       <C>    <C>    <C>
Federal statutory income tax rate. . . .  34.0%  34.0%  34.0%
State tax. . . . . . . . . . . . . . . .  (0.9)  (0.6)  (0.7)
Tax-exempt interest income, net of TEFRA  (6.0)  (5.1)  (6.4)
Increase in value of life insurance. . .  (3.1)  (2.6)  (3.9)
Other. . . . . . . . . . . . . . . . . .   2.3    1.0    2.1
---------------------------------------------------------------
Effective income tax rate. . . . . . . .  26.3%  26.7%  25.1%
===============================================================
</TABLE>

NOTE  14:  EARNINGS  PER  SHARE

The following is a reconciliation of basic to diluted earnings per share for the
years  ended  December  31:

<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)  Earnings   Shares   EPS
-------------------------------------------------------------------------
<S>                                            <C>        <C>     <C>
2004  Net Income. . . . . . . . . . . . . . .  $   1,405
Basic EPS . . . . . . . . . . . . . . . . . .      1,405   2,435  $0.58
-------------------------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . . . . . . . . . .          -      44
Diluted EPS . . . . . . . . . . . . . . . . .  $   1,405   2,479  $0.57
-------------------------------------------------------------------------
2003  Net Income. . . . . . . . . . . . . . .  $   1,652
Basic EPS . . . . . . . . . . . . . . . . . .      1,652   2,424  $0.68
-------------------------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . . . . . . . . . .          -      48
Diluted EPS . . . . . . . . . . . . . . . . .  $   1,652   2,472  $0.67
-------------------------------------------------------------------------
2002  Net Income. . . . . . . . . . . . . . .  $   1,156
Basic EPS . . . . . . . . . . . . . . . . . .      1,156   2,578  $0.45
-------------------------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . . . . . . . . . .          -      45
Diluted EPS . . . . . . . . . . . . . . . . .  $   1,156   2,623  $0.44
=========================================================================
</TABLE>

NOTE  15:  COMMITMENTS  AND  CONTINGENCIES

The  Company  is a party to financial instruments with off-balance sheet risk in
the  normal  course  of  business  to meet the financing needs of its customers.
These  financial  instruments  include  commitments to extend credit and standby
letters  of  credit.  Such  commitments involve, to varying degrees, elements of
credit  risk in excess of the amount recognized in the consolidated statement of
condition. The contractual amount of those commitments to extend credit reflects
the  extent  of  involvement  the  commitment  has  in  this particular class of
financial  instrument.  The  Company's  exposure  to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend  credit  is  represented  by  the  contractual  amount of the instrument.

The  Company's  exposure to credit loss is represented by the contractual amount
of  these  commitments.   The  Company  uses  the same credit policies in making
commitments  as  it  does  for  on-balance  sheet  instruments.

--------------------------------------------------------------------------------
                                    Page 58
<PAGE>

At  December  31,  2004  and  2003,  the  following  financial  instruments were
outstanding  whose  contract  amounts  represent  credit  risk:

<TABLE>
<CAPTION>
                                                     Contract Amount
-----------------------------------------------------------------------
(In thousands)                                     2004         2003
-----------------------------------------------------------------------
<S>                                          <C>               <C>
Commitments to grant loans. . . . . . . . .  $          5,120  $ 7,163
Unfunded commitments under lines of credit.            12,021   11,554
Standby letters of credit . . . . . . . . .             1,106      665
=======================================================================
</TABLE>

Commitments  to  extend  credit  are agreements to lend to a customer as long as
there  is no violation of any condition established in the contract. Commitments
generally  have  fixed  expiration  dates  or  other termination clauses and may
require  payment  of a fee. Since some of the commitment amounts are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash  requirements.  The  Company  evaluates  each customer's
creditworthiness  on a case-by-case basis. The amount of collateral obtained, if
deemed  necessary  by  the  Company  upon  extension  of  credit,  is  based  on
management's  credit evaluation of the counter party. Collateral held varies but
may  include residential real estate and income-producing commercial properties.

Unfunded commitments under standby letters of credit, revolving credit lines and
overdraft  protection  agreements are commitments for possible future extensions
of credit to existing customers.  These lines of credit usually do not contain a
specified  maturity  date and may not be drawn upon to the total extent to which
the  Company  is  committed.

Outstanding  letters of credit written are conditional commitments issued by the
Bank  to guarantee the performance of a customer to a third party.  The majority
of  these  standby  letters of credit expire within the next twelve months.  The
credit  risk  involved  in  issuing letters of credit is essentially the same as
that involved in extending other loan commitments.  The Bank requires collateral
supporting  these  letters  of  credit as deemed necessary.  Management believes
that  the  proceeds  obtained  through a liquidation of such collateral would be
sufficient  to  cover  the  maximum potential amount of future payments required
under  the corresponding guarantees.  The amount of the liability as of December
31,  2004  and 2003 for guarantees under standby letters of credit issued is not
material.

The  Company leases land and leasehold improvements under agreements that expire
in  various  years with renewal options over the next 30 years.  Rental expense,
included  in  operating  expenses,  amounted  to $41,000, $41,000 and $21,000 in
2004,  2003 and 2002, respectively.  In October 2002, the Company entered into a
land  lease with one of its directors on an arms-length basis.  The rent expense
paid  to  the  related party during 2004, 2003 and 2002 was $21,000, $21,000 and
$5,000,  respectively.  Approximate  minimum  rental  commitments  for  the
noncancelable  operating  leases  are  as  follows:

<TABLE>
<CAPTION>
Years Ending December 31:
-----------------------------------
<S>                            <C>
(In thousands)
2005. . . . . . . . . . . . .  $ 42
2006. . . . . . . . . . . . .    46
2007. . . . . . . . . . . . .    47
2008. . . . . . . . . . . . .    50
2009. . . . . . . . . . . . .    50
Thereafter. . . . . . . . . .   166
-----------------------------------
Total minimum lease payments.  $401
===================================
</TABLE>

NOTE  16:  DIVIDENDS  AND  RESTRICTIONS

The  board  of  directors  of Pathfinder Bancorp, M.H.C., determines whether the
Holding  Company  will  waive  or receive dividends declared by the Company each
time  the  Company  declares  a dividend, which is expected to be on a quarterly

--------------------------------------------------------------------------------
                                    Page 59
<PAGE>

basis. The Holding Company may elect to receive dividends and utilize such funds
to  pay  expenses  or  for  other  allowable  purposes.  The  Office  of  Thrift
Supervision ("OTS") has indicated that (i) the Holding Company shall provide the
OTS  annually  with written notice of its intent to waive its dividends prior to
the  proposed  date  of  the  dividend,  and the OTS shall have the authority to
approve  or  deny  any  dividend  waiver  request;  (ii) if a waiver is granted,
dividends  waived  by  the  Holding  Company will be excluded from the Company's
capital  accounts  for  purposes  of  calculating  dividend payments to minority
shareholders;  (iii) the Company shall establish a restricted capital account in
the amount of any dividends waived by the Holding Company, and the amount of any
dividend  waived  by the Holding Company shall be available for declaration as a
dividend  solely  to  the  Holding  Company.  During 2004, the Company paid cash
dividends  totaling  $321,000  to the Holding Company. For the second and fourth
quarters  ending  June 30, 2004 and December 31, 2004, respectively, the Holding
Company  waived  the right to receive its portion of the cash dividends declared
on  June  29,  2004 and December 22, 2004, respectively, which totaled $320,000.
The  Company  maintains  a restricted capital account with a $1,207,000 balance,
representing  the  Holding  Company's portion of dividends waived as of December
31,  2004.  During  2003 and 2002, the Holding Company waived dividends totaling
$317,000  and  $348,000,  respectively.

The  Company's ability to pay dividends to its shareholders is largely dependent
on the Bank's ability to pay dividends to the Company.  In addition to state law
requirements and the capital requirements discussed in Note 17 the circumstances
under  which  the  Bank  may  pay  dividends  are  limited  by federal statutes,
regulations  and  policies.  The  amount  of retained earnings legally available
under  these  regulations  approximated  $3,134,000  as  of  December  31, 2004.
Dividends  paid  by  the  Bank  to the Company would be prohibited if the effect
thereof  would  cause  the Bank's capital to be reduced below applicable minimum
capital  requirements.

NOTE  17:  REGULATORY  MATTERS

The  Company  (on  a  consolidated  basis)  and  the Bank are subject to various
regulatory  capital  requirements  administered by the federal banking agencies.
Failure  to meet minimum capital requirements can initiate certain mandatory and
possibly  additional  discretionary  actions  by regulators that, if undertaken,
could  have  a  direct material effect on the Bank's financial statements. Under
capital  adequacy  guidelines and the regulatory framework for prompt corrective
action,  the  Company  and  the  Bank must meet specific capital guidelines that
involve  quantitative  measures  of  the  their assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices. The
capital amounts and classifications are also subject to qualitative judgments by
the  regulators  about  components,  risk weightings, and other factors.  Prompt
corrective  action  provisions  are  not  applicable  to bank holding companies.

Quantitative  measures  established  by  regulation  to  ensure capital adequacy
require  the  Bank to maintain amounts and ratios (set forth in the table below)
of  total  and  Tier  1 capital (as defined in the regulations) to risk-weighted
assets  (as  defined),  and of Tier 1 capital (as defined) to average assets (as
defined).  Management believes, as of December 31, 2004, that the Bank meets all
capital  adequacy  requirements  to  which  it  is  subject.

As  of  December  31, 2004, the Bank's most recent notification from the Federal
Deposit  Insurance Corporation categorized the Bank as "well-capitalized", under
the  regulatory  framework  for  prompt corrective action.  To be categorized as
"well-capitalized",  the  Bank must maintain total risk based, Tier 1 risk-based
and  Tier  1  leverage  ratios  as  set  forth in the tables below. There are no
conditions  or  events  since  that  notification  that management believes have
changed  the  Bank's  category.  The  Company's  and  the  Bank's actual capital
amounts  and  ratios  as of December 31, 2004 and 2003 are also presented in the
following  table.

--------------------------------------------------------------------------------
                                    Page 60
<PAGE>

<TABLE>
<CAPTION>
                                                                                   To Be "Well-
                                                                                   Capitalized"
                                                               For Capital         Under Prompt
                                                  Actual       Adequacy Purposes Corrective Provisions
------------------------------------------------------------------------------------------------------
(Dollars in thousands)                        Amount   Ratio   Amount     Ratio    Amount      Ratio
------------------------------------------------------------------------------------------------------
<S>                                           <C>      <C>     <C>       <C>      <C>        <C>
COMPANY
As of December 31, 2004:
Total Core Capital (to Risk-Weighted Assets)  $24,493  13.5%   $14,472    8.0%     N/A       N/A
Tier 1 Capital (to Risk-Weighted Assets) . .  $22,666  12.5%   $ 7,236    4.0%     N/A       N/A
Tier 1 Capital (to Average Assets) . . . . .  $22,666   7.7%   $11,775    4.0%     N/A       N/A
------------------------------------------------------------------------------------------------------
BANK
As of December 31, 2004:
Total Core Capital (to Risk-Weighted Assets)  $22,974  12.8%   $14,416    8.0%   $18,020    10.0%
Tier 1 Capital (to Risk-Weighted Assets) . .  $21,147  11.7%   $ 7,208    4.0%   $10,812     6.0%
Tier 1 Capital (to Average Assets) . . . . .  $21,147   7.1%   $11,947    4.0%   $14,934     5.0%
------------------------------------------------------------------------------------------------------
COMPANY
As of December 31, 2003:
Total Core Capital (to Risk-Weighted Assets)  $18,446  10.8%   $13,704    8.0%     N/A       N/A
Tier 1 Capital (to Risk-Weighted Assets) . .  $16,731   9.8%   $ 6,852    4.0%     N/A       N/A
Tier 1 Capital (to Average Assets) . . . . .  $16,731   6.6%    10,117    4.0%     N/A       N/A
------------------------------------------------------------------------------------------------------
BANK
As of December 31, 2003:
Total Core Capital (to Risk-Weighted Assets)  $21,282  12.5%   $13,626    8.0%   $17,032    10.0%
Tier 1 Capital (to Risk-Weighted Assets) . .  $19,567  11,5%   $ 6,813    4.0%   $10,219     6.0%
Tier 1 Capital (to Average Assets) . . . . .  $19,567   6.9%   $11,389    4.0%   $14,237     5.0%
======================================================================================================
</TABLE>

The  Bank  is  required to maintain average balances on hand or with the Federal
Reserve Bank.  At December 31, 2004 and 2003, these reserve balances amounted to
$2,419,000  and  $2,098,000,  respectively.

NOTE  18:  FAIR  VALUES  OF  FINANCIAL  INSTRUMENTS

SFAS  No.  107, "Disclosure About Fair Value of Financial Instruments," requires
disclosure  of  fair  value information of financial instruments, whether or not
recognized  in  the  consolidated  statement  of  condition,  for  which  it  is
practicable  to estimate that value. In cases where quoted market prices are not
available,  fair  values  are  based  on  estimates using present value or other
valuation  techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used,  including  the  discount  rate  and estimates of future cash
flows.  In that regard, the derived fair value estimates cannot be substantiated
by  comparison  to independent markets and, in many cases, could not be realized
in  immediate  settlement  of  the  instrument.

Management  uses its best judgment in estimating the fair value of the Company's
financial  instruments; however, there are inherent weaknesses in any estimation
technique.  Therefore,  for  substantially  all  financial instruments, the fair
value estimates herein are not necessarily indicative of the amounts the Company
could  have  realized  in  a  sales  transaction  on  the  dates indicated.  The
estimated  fair  value  amounts  have  been  measured  as  of  their  respective
year-ends,  and  have  not  been  re-evaluated  or updated for purposes of these
financial  statements  subsequent  to  those  respective  dates.  As  such,  the
estimated  fair  values  of  these  financial  instruments  subsequent  to  the
respective  reporting  dates  may be different than the amounts reported at each
year-end.

The  following  information should not be interpreted as an estimate of the fair
value  of the entire Company since a fair value calculation is only provided for
a  limited portion of the Company's assets and liabilities.  Due to a wide range

--------------------------------------------------------------------------------
                                    Page 61
<PAGE>

of  valuation  techniques  and  the  degree  of  subjectivity used in making the
estimates,  comparisons  between  the  Company's  disclosures and those of other
companies  may  not  be  meaningful.  The  company, in estimating its fair value
disclosures  for  financial  instruments,  used  the  following  methods  and
assumptions:

CASH  AND  CASH  EQUIVALENTS  -  the  carrying  amounts  approximate fair value.

INVESTMENT  SECURITIES  -  fair  values of securities are based on quoted market
prices, where available.  If quoted market prices are not available, fair values
are  based  on  quoted  market  prices  of  comparable  instruments.

LOANS  AND  MORTGAGE  LOANS HELD-FOR-SALE - for variable rate loans that reprice
frequently and with no significant credit risk, fair values approximate carrying
values.  Fair  values  for  fixed rate loans are estimated using discounted cash
flow  analysis,  using  interest  rates  currently  being offered for loans with
similar  terms  to  borrowers  of  similar  credit  quality.

FEDERAL  HOME  LOAN  BANK STOCK - the carrying amounts reported approximate fair
value.

MORTGAGE  SERVICING  RIGHTS  -  the  carrying  amount  approximates  fair value.

ACCRUED  INTEREST  RECEIVABLE  AND  PAYABLE  -  the  carrying amounts of accrued
interest  receivable  and  payable  approximate  their  fair  values.

DEPOSIT  LIABILITIES  -  The  fair  values  disclosed for demand deposits (e.g.,
interest-bearing  and noninterest-bearing checking, passbook savings and certain
types  of  money  management  accounts)  are, by definition, equal to the amount
payable  on  demand  at the reporting date (i.e., their carrying amounts).  Fair
values  for  fixed-rate certificates of deposit are estimated using a discounted
cash  flow  calculation  that  applies interest rates currently being offered on
certificates of deposits to a schedule of aggregated expected monthly maturities
on  time  deposits.

BORROWINGS  -  the fair values for short-term borrowings and junior subordinated
debentures  approximate  the  carrying  amounts.  The  fair values for long-term
borrowings  were  estimated  using  discounted  cash  flow analysis based on the
Company's  current  incremental  borrowing  rates for similar types of borrowing
arrangements.

OFF-BALANCE  SHEET INSTRUMENTS - Fair values for the Company's off-balance sheet
instruments  are  based  on  fees  currently  charged  to  enter  into  similar
agreements,  taking  into  account the remaining terms of the agreements and the
counterparties'  credit  standing.

--------------------------------------------------------------------------------
                                    Page 62
<PAGE>

The  carrying  amounts and fair values of the Company's financial instruments as
of  December  31  are  presented  in  the  following  table:

<TABLE>
<CAPTION>
                                           2004                    2003
--------------------------------------------------------------------------------
                                 Carrying    Estimated    Carrying    Estimated
(Dollars in thousands)            Amounts   Fair Values    Amounts   Fair Values
--------------------------------------------------------------------------------
<S>                              <C>        <C>           <C>        <C>
Financial assets:
Cash and cash equivalents . . .  $  14,325  $     14,325  $   8,714  $      8,714
Investment securities . . . . .     75,069        75,069     57,559        57,559
Mortgage loans held-for-sale. .      2,159         2,329      3,520         3,743
Net Loans . . . . . . . . . . .    185,125       190,034    187,002       192,392
Federal Home Loan Bank Stock. .      1,768         1,768      2,048         2,048
Accrued interest receivable . .      1,505         1,505      1,273         1,273
Mortgage servicing rights . . .        198           198        257           257
--------------------------------------------------------------------------------
Financial liabilities:
Deposits. . . . . . . . . . . .  $ 236,672  $    237,410  $ 206,894  $    208,560
Borrowed funds. . . . . . . . .     35,360        36,360     40,960        42,749
Junior subordinated debentures.      5,155         5,155      5,000         5,000
Accrued interest payable. . . .        143           143        209           209
--------------------------------------------------------------------------------
Off-balance sheet instruments:
Standby letter of credit. . . .  $       -  $          -  $       -  $          -
Commitments to extend credit. .          -             -          -             -
Forward rate lock commitments            -             -          -             -
=================================================================================
</TABLE>

NOTE  19:  PARENT  COMPANY  -  FINANCIAL  INFORMATION

The  following  represents  the  condensed  financial  information of Pathfinder
Bancorp,  Inc.  for  years  ended  December  31:

<TABLE>
<CAPTION>
STATEMENTS OF CONDITION                                 2004      2003
--------------------------------------------------------------------------------
(In thousands)
<S>                                                  <C>       <C>       <C>
ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . .  $   982   $ 1,543
Investments . . . . . . . . . . . . . . . . . . . .        -       447
Receivable from bank subsidiary . . . . . . . . . .       41        97
Investment in subsidiaries. . . . . . . . . . . . .   25,698    25,085
Due from subsidiaries . . . . . . . . . . . . . . .      240         -
Other assets. . . . . . . . . . . . . . . . . . . .      243       135
--------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . . . .  $27,204   $27,307
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued liabilities . . . . . . . . . . . . . . . .      223       367
Junior subordinated debentures. . . . . . . . . . .    5,155     5,155
Shareholders' equity. . . . . . . . . . . . . . . .   21,826    21,785
--------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . .  $27,204   $27,307
================================================================================

--------------------------------------------------------------------------------
                                    Page 63
<PAGE>

STATEMENTS OF INCOME. . . . . . . . . . . . . . . .     2004      2003      2002
--------------------------------------------------------------------------------
(In thousands)
Interest income . . . . . . . . . . . . . . . . . .  $     9   $    16   $    46
Interest expense. . . . . . . . . . . . . . . . . .      259       243       142
--------------------------------------------------------------------------------
Net interest expense. . . . . . . . . . . . . . . .     (250)     (227)      (96)
Operating expense . . . . . . . . . . . . . . . . .     (130)     (106)      (73)
Realized gain on sale of investment security. . . .      330       104         -
Amortization of deferred financing costs. . . . . .      (30)      (30)      (15)
--------------------------------------------------------------------------------
Loss before tax benefit and equity in
undistributed net income of subsidiaries. . . . . .      (80)     (259)     (184)
--------------------------------------------------------------------------------
Tax benefit . . . . . . . . . . . . . . . . . . . .       20        73        72
--------------------------------------------------------------------------------
Loss before equity in undistributed net
income of subsidiaries. . . . . . . . . . . . . . .  $   (60)  $  (186)  $  (112)
--------------------------------------------------------------------------------
Equity in undistributed net income of subsidiaries.  $ 1,465   $ 1,837   $ 1,268
Net income. . . . . . . . . . . . . . . . . . . . .  $ 1,405   $ 1,652   $ 1,156
================================================================================



STATEMENTS OF CASH FLOWS. . . . . . . . . . . . . .     2004      2003      2002
--------------------------------------------------------------------------------
(In thousands)
OPERATING ACTIVITIES
Net Income. . . . . . . . . . . . . . . . . . . . .  $ 1,405   $ 1,652   $ 1,156
Equity in undistributed
earnings of subsidiaries. . . . . . . . . . . . . .   (1,465)   (1,837)   (1,268)
Realized gain on sale of investment security. . . .     (330)     (104)        -
ESOP shares earned. . . . . . . . . . . . . . . . .      133       122       106
Amortization of deferred financing costs. . . . . .       30        30        15
Other operating activities. . . . . . . . . . . . .     (304)       80      (123)
--------------------------------------------------------------------------------
Net cash used in
operating activities. . . . . . . . . . . . . . . .     (531)      (57)     (114)
--------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from loan to
subsidiary. . . . . . . . . . . . . . . . . . . . .       56        56        56
Dividends receivable. . . . . . . . . . . . . . . .        8         7         4
Purchase of investments . . . . . . . . . . . . . .        -         -      (155)
Proceeds from sale of investments . . . . . . . . .      430       154         -
--------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . . . . .      494       217       (95)
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from exercise of
stock options . . . . . . . . . . . . . . . . . . .      140        35       139
Proceeds from trust preferred obligation. . . . . .        -         -     5,004
Investment in Bank subsidiary . . . . . . . . . . .        -         -    (2,000)
Dividend received from subsidiary . . . . . . . . .        -     1,500         -
Cash dividends. . . . . . . . . . . . . . . . . . .     (664)     (651)     (415)
Treasury stock purchased. . . . . . . . . . . . . .        -    (2,687)     (130)
--------------------------------------------------------------------------------
Net cash (used in) provided by
financing activities. . . . . . . . . . . . . . . .     (524)   (1,803)    2,598
--------------------------------------------------------------------------------
(Decrease) Increase in cash and
cash equivalents. . . . . . . . . . . . . . . . . .     (561)   (1,643)    2,389
Cash and cash equivalents at
beginning of year . . . . . . . . . . . . . . . . .    1,543     3,186       797
--------------------------------------------------------------------------------
Cash and cash equivalents
at end of year. . . . . . . . . . . . . . . . . . .  $   982   $ 1,543   $ 3,186
================================================================================
</TABLE>

--------------------------------------------------------------------------------
                                    Page 64
<PAGE>

ITEM  9:  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE

During  2003,  the Company analyzed the service provided by and associated costs
of  its  external  auditing  firm.  After  reviewing  proposals from a number of
independent accounting firms, the Board of Directors approved the appointment of
Beard  Miller  Company  LLP  as  auditors for the fiscal year ended December 31,
2003.  The  Company's  previous auditor, PricewaterhouseCoopers, LLP ("PwC") was
engaged  for  the examination of the first two quarters Form 10-Q filings during
2003.  PwC performed audits of the consolidated financial statements for the two
years  ended  December  31,  2002  and  2001.  Their  reports  on  the financial
statements  did  not  contain  an adverse opinion or a disclaimer of opinion and
were  not  qualified  or  modified as to uncertainty, audit scope, or accounting
principles.  During  the two years ended December 31, 2002 and from December 31,
2002  through  the  effective  date  of  the PwC termination, there have been no
disagreements  between  the  Registrant  and  PwC  on  any  matter of accounting
principles  or  practice,  financial  statement disclosure, or auditing scope or
procedure,  which  disagreements,  if  not  resolved to the satisfaction of PwC,
would  have  caused  PwC  to  make  reference  to  the  subject  matter  of such
disagreements  in  connection with their reports on the financial statements for
such  years.

During  the  two years ended December 31, 2002, and from December 31, 2002 until
the effective date of the dismissal of PwC, PwC did not advise the Registrant of
any  of  the  following  matters:

     1.   That  the  internal  controls  necessary for the Registrant to develop
          reliable  financial  statements  did  not  exist.

     2.   That  information  had  come to PwC's attention that had lead it to no
          longer  be  able  to rely on management's representations, or that had
          made  it  unwilling  to  be  associated  with the financial statements
          prepared  by  management;

     3.   That  there  was a need to expand significantly the scope of the audit
          of  the  Registrant,  or  that information had come to PwC's attention
          that  if  further investigated: (i) may materially impact the fairness
          or  reliability  of  either  a  previously-issued  audit  report  or
          underlying financial statements, or the financial statements issued or
          to be issued covering the fiscal periods subsequent to the date of the
          most  recent financial statement covered by an audit report (including
          information  that  may  prevent it from rendering an unqualified audit
          report  on  those  financial  statements)  or  (ii) may cause it to be
          unwilling to rely on management's representation or be associated with
          the  Registrant's financial statements and that, due to its dismissal,
          PwC  did  not so expand the scope of its audit or conduct such further
          investigation;

     4.   That  information  had  come  to PwC's attention that it had concluded
          materially  impacted  the  fairness  or  reliability  of either: (i) a
          previously-issued  audit report or the underlying financial statements
          or  (ii)  the financial statements issued or to be issued covering the
          fiscal  period  subsequent  to  the  date of the most recent financial
          statements  covered  by  an  audit report (including information that,
          unless  resolved  to  the  accountant's satisfaction, would prevent it
          from  rendering  an unqualified report on those financial statements),
          or that, due to its dismissal, there were no such unresolved issues as
          of  the  date  of  its  dismissal.

During the two years ended December 31, 2002, and from December 31, 2002 through
the  engagement  of  Beard  Miller  Company  LLP as the Registrant's independent
accountant,  neither the Registrant nor anyone on its behalf had consulted Beard
Miller  Company  LLP  with  respect  to  any  accounting,  auditing or financial
reporting  issues  involving  the  Registrant.  In  particular,  there  was  no
discussion  with  the  Registrant  regarding  the  application  of  accounting
principles  to  a specified transaction, the type of audit opinion that might be
rendered  on  the  financial  statement,  or  any  related  item.

--------------------------------------------------------------------------------
                                    Page 65
<PAGE>

ITEM  9A:  CONTROLS  AND  PROCEDURES

Under  the  supervision  and with the participation of the Company's management,
including  our  Chief Executive Officer and Chief Financial Officer, the Company
has  evaluated  the  effectiveness of the design and operation of its disclosure
controls  and  procedures  (as defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange  Act) as of the end of the period covered by this annual report.  Based
upon  that  evaluation,  the Chief Executive Officer and Chief Financial Officer
concluded  that,  as  of  the  end  of  the  period  covered by this report, the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information  required  to  be disclosed in the reports that the Company files or
submits  under  the  Securities  Exchange  Act  of  1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules  and  forms.  There  has  been  no  change  in the
Company's  internal  control  over  financial  reporting  during the most recent
fiscal  quarter  that  has  materially  affected,  or  is  reasonable  likely to
materially  affect,  the  Company's  internal  control over financial reporting.

ITEM  9B:  OTHER  INFORMATION

None


PART  III

ITEM  10:  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  COMPANY

     (a)  Information concerning the directors of the Company is incorporated by
          reference  hereunder  in  the Company's Proxy Materials for the Annual
          Meeting  of  Stockholders.
     (b)  Set  forth  below  is information concerning the Executive Officers of
          the  Company  at  December  31,  2004.

NAME                     AGE     POSITIONS  HELD  WITH  THE  COMPANY
--------------------------------------------------------------------------------
Thomas  W.  Schneider     43     President  and  Chief  Executive  Officer
James  A.  Dowd,  CPA     37     Vice  President,  Chief  Financial  Officer
Edward  A.  Mervine       48     Vice  President,  General  Counsel
John  F.  Devlin          40     Vice  President,  Senior  Commercial  Lender
Melissa  A.  Miller       47     Vice  President,  Chief  Operating  Officer
Gregory  L.  Mills        44      Vice  President,  Market  Development

--------------------------------------------------------------------------------
                                    Page 66
<PAGE>

ITEM  11:  EXECUTIVE  COMPENSATION

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

ITEM  12:  SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS

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

ITEM  13:  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

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

ITEM  14:  PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

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

--------------------------------------------------------------------------------
                                    Page 67
<PAGE>

PART  IV

ITEM  15.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
---------     ------------------------------------------------------------------

(a)(1)    Financial  Statements  -  The  Company's  consolidated  financial
          statements,  for  the  years  ended  December 31, 2004, 2003 and 2002,
          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."  The  supplemental
          financial information listed and appearing hereafter should be read in
          conjunction  with  the  financial  statements included in this report.

(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 dated
          June  25,  2001)

3.2       Bylaws  of  Pathfinder Bancorp, Inc. (Incorporated herein by reference
          to  the  Company's  Current  Report  on  Form 8-K dated June 25, 2001)

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 by herein by
          reference  to  the  Company's  Quarterly  Report  on Form 10-Q for the
          quarter  ended  March  31,  2004  file  no.  000-23601)

10.4      2003 Trustee Deferred Fee Plan (Incorporated by herein by reference to
          the  Company's  Quarterly  Report  on  Form 10-Q for the quarter ended
          March  31,  2004  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 Quarterly Report on Form 10-Q for the quarter ended June
          30,  2004  file  no.  000-23601)

10.6      Employment Agreement between the Bank and Edward A. Mervine, Corporate
          Counsel  (Incorporated  by reference to the Company's Quarterly Report
          on  Form  10-Q for the quarter ended June 30, 2004 file no. 000-23601)

21        Subsidiaries  of  Company

23        Consent  of  Beard  Miller  Company  LLP

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

32.1      Section  1350 Certification of the Chief Executive and Chief Financial
          Officer

--------------------------------------------------------------------------------
                                    Page 68
<PAGE>

SIGNATURES

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


                               PATHFINDER  BANCORP,  INC.


Date: March  30,  2005         By:    /s/  Thomas  W. Schneider
                                      Thomas  W.  Schneider
                                      President  and  Chief  Executive Officer

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

                                              By:    /s/  Janette Resnick
                                                     Janette Resnick,
                                                     Chairman of the Board
                                              Date:  March 30, 2005

By:    /s/ Thomas W. Schneider                By:    /s/  Chris Burritt
       Thomas W. Schneider, President                Chris B. Burritt, Director
       and Chief Executive Officer
Date:  March 30, 2005                         Date:  March 30, 2005

By:    /s/ James A. Dowd                      By:    /s/  George P. Joyce
       James A. Dowd, Vice President                 George P. Joyce, Director
       Chief Financial Officer, Trust Officer
Date:  March 30, 2005                         Date:  March 30, 2005

By:    /s/ Bruce E. Manwaring                 By:    /s/  Corte J. Spencer
       Bruce E. Manwaring, Director                  Corte J. Spencer, Director
Date:  March 30, 2005                         Date:  March 30, 2005

By:    /s/ L. William Nelson, Jr.             By:    /s/  Chris C. Gagas
       L. William Nelson, Jr. Director               Chris C. Gagas, Director
Date:  March 30, 2005                         Date:  March 30, 2005

By:    /s/ Steven W. Thomas
       Steven W. Thomas, Director
Date:  March 30, 2005

--------------------------------------------------------------------------------
                                    Page 69
<PAGE>


EXHIBIT  21:  SUBSIDIARIES  OF  THE  COMPANY

Company                                       Percent  Owned
------------------------------------------------------------
Pathfinder  Bank  (1)                             100%
Pathfinder  Statutory  Trust                      100%

(1)  Pathfinder  Commercial  Bank,  Pathfinder  REIT,  Inc.  and Whispering Oaks
     Development  Corporation,  100%  owned  by  Pathfinder  Bank


EXHIBIT  23:  CONSENT  OF  BEARD  MILLER  COMPANY  LLP

CONSENT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM

We  hereby  consent  to  the  incorporation  by  reference  in  the Registration
Statement  on Form S-8 (No. 333-53027) of Pathfinder Bancorp, Inc. of our report
dated  March  9,  2005,  relating to the consolidated financial statements which
appear  in  this  Form  10-K.

                                            /s/  Beard  Miller  Company  LLP
     Harrisburg,  Pennsylvania
     March  25,  2005
<PAGE>

EXHIBIT  31.1:  RULE  13A-14(A) / 15D-14(A) CERTIFICATION OF THE CHIEF EXECUTIVE
OFFICER

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  financial  statements,  and other financial
     information  included  in  this  report,  fairly  present  in  all material
     respects  the  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  officers  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)) 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)  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
     (c)  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 30, 2005                     /s/  Thomas  W.  Schneider
                                   Thomas  W.  Schneider
                                   President  and  Chief  Executive  Officer
<PAGE>

EXHIBIT  31.2RULE  13A-14(A)  /  15D-14(A)  CERTIFICATION OF THE CHIEF FINANCIAL
OFFICER

Certification  of  Chief  Financial  Officer

Pursuant  to  Section  302  of  the  Sarbanes-Oxley  Act  of  2002

I,   James  A.  Dowd,  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  financial  statements,  and other financial
     information  included  in  this  report,  fairly  present  in  all material
     respects  the  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  officers  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)) 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)  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
     (c)  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 30, 2005                 /s/  James  A.  Dowd
                               James  A.  Dowd
                               Vice  President  and  Chief  Financial  Officer
<PAGE>

EXHIBIT  32.1  SECTION  1350  CERTIFICATION  OF  THE  CHIEF  EXECUTIVE AND CHIEF
FINANCIAL  OFFICER

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,
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,  2004  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 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 30, 2005                 /s/  Thomas  W.  Schneider
                               Thomas  W.  Schneider
                               President  and  Chief  Executive  Officer

March  30,  2005              /s/  James  A.  Dowd
                              James  A.  Dowd
                              Vice  President  and  Chief  Financial  Officer