SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K


  [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                     ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
                                       OR
[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

  For the transaction period from ___________________ to ______________________
                                  -------------------    ----------------------


                        Commission File Number: 000-23601

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

                      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.   [  ]

     Indicate  by  check mark whether the Registrant is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).
YES     NO       X
           --------

     As of June 30, 2003 there were 2,916,919 shares issued and 2,431,632 shares
outstanding of the Registrant's Common Stock.  The aggregate value of the voting
stock  held  by  non-affiliates  of the Registrant, computed by reference to the
average  bid  and  asked prices of the Common Stock as of June 30, 2003 ($14.20)
was  $8,130,892.


                       DOCUMENTS INCORPORATED BY REFERENCE

1.     Sections  of  Annual  Report  to  Stockholders  for the fiscal year ended
December  31,  2003  (Parts  II  and  IV).
2.    Proxy  Statement  for the 2003 Annual Meeting of Stockholders (Parts I and
III).

                                        1
<PAGE>


<TABLE>
<CAPTION>

                            PATHFINDER BANCORP, INC.
                            FORM 10-K ANNUAL REPORT
                                TABLE OF CONTENTS

<S>            <C>                                                                   <C>
                                                                                       Page

PART I.

Item 1... . . . .Business                                                              3-11

Item 2... . . . .Properties                                                              12

Item 3... . . . .Legal Proceedings                                                       12

Item 4..  .  .  .Submission of Matter to a Vote of Security Holders (This
                 item is omitted since no matters were submitted to a vote of
                 security  holders  during  the  fourth  quarter  of  2003)

PART II.
Item 5... . . . .Market for Registrant's Common Equity, Related Shareholder Matters
                 and  Issuer  Purchases  of  Equity  Securities                          13

Item 6... . . . .Selected Financial Data                                                 13

Item 7.. .  . . .Management's Discussion and Analysis of Financial Condition and
                 Results of Operations                                                   13

Item 7A. .  . .  Quantitative Disclosures about Market Risk                              13

Item 8.. .  . .  Financial Statement and Supplementary Data                           13-16

Item 9.. .  . .  Changes In and Disagreements with Accountants on Accounting
                 and Financial Disclosure                                             16-17

Item 9A. .  . .  Controls and Procedures                                                 17

PART III.

Item 10. .  . .  Directors and Executive Officers of the Registrant                      17

Item 11. .  . .  Executive Compensation                                                  17

Item 12. .  . .  Security Ownership of Certain Beneficial Owners and Management          17

Item 13. .  . .  Certain Relationships and Related Transactions                          18

Item 14. .  . .  Principal Accountant Fees and Services                                  18

PART IV.

Item 15. .  . .  Exhibits, Financial Statement Schedules and Reports
                 on Form 8-K                                                          18-19

Signatures                                                                               20

</TABLE>

                                        2
<PAGE>

                                     PART I
                                     ------

ITEM  1.     BUSINESS
--------------------------------------------------------------------------------
GENERAL

PATHFINDER  BANCORP,  INC.

     Pathfinder Bancorp, Inc. (the "Company") is a Federal corporation.  On July
19, 2001, the Company completed its conversion from a Delaware chartered company
to  a  federal  charter.  As  a  result  of the charter conversion the Company's
chartering  authority  and  primary  federal  regulator  is the Office of Thrift
Supervision.  References  to the Company include the Company before or after the
charter  conversion.  Upon completion of the charter conversion, the outstanding
shares  of  common  stock, par value $0.10 per share of Pathfinder Bancorp, Inc.
become,  by  operation  of  law,  common stock, par value $0.01 per share of the
Company  on  a  one-for-one  basis.  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,  2003  the  Mutual Holding Company held 1,583,239 shares of Common
Stock  and  the  public  held  848,860  shares  of  Common  Stock (the "Minority
Shareholders").  At December 31, 2003, Pathfinder Bancorp, Inc. had total assets
of  $277.9 million, total deposits of $206.9 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.  At December 31, 2003, the Bank had total
assets  of  $277.5  million, total deposits of $208.4 million, and shareholders'
equity  of  $24.9  million.

     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  (the  "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 acquisition reflects a premium on
deposit  liabilities  assumed  of approximately $2.4 million. As of December 31,
2003,  no  impairment  has  been  recognized.

     The  Bank  is primarily engaged in the business of attracting deposits from
the  general  public  in  the  Bank's  market area, and investing such deposits,
together  with  other  sources of funds, in loans secured by one- to four-family
residential  real  estate.  At  December 31, 2003, $173.2 million, or 90% of the
Bank's  total loan portfolio consisted of loans secured by real estate, of which
$129.0 million, or 67%, were loans secured by one- to four-family residences and
$31.3  million,  or  16%, were secured by commercial real estate.  Additionally,
$12.9  million,  or 7%, of total real estate loans, were secured by second liens
on  residential properties that are classified in consumer loans.  The Bank also
originates  commercial  and  consumer loans that totaled $15.1 and $3.9 million,
respectively,  or  10%,  of the Bank's total loan portfolio.  The Bank invests a
portion  of  its  assets  in  securities issued by the United States Government,
state  and  municipal  obligations, corporate debt securities, mutual funds, and
equity  securities.  The  Bank  also  invests  in  mortgage-backed  securities
                                        3
<PAGE>

primarily  issued  or  guaranteed  by  the  United States Government or agencies
thereof.  The  Bank's  principal  sources  of  funds are deposits, principal and
interest  payments  on  loans  and  borrowings  from  correspondent  financial
institutions.  The  principal  source  of  income  is  interest  on  loans  and
investment  securities.  The  Bank's  principal  expenses  are  interest paid on
deposits,  and  employee  compensation  and  benefits.

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

     In  April  1999,  the  Bank established Pathfinder REIT, Inc. as the Bank's
wholly-owned  real  estate  investment  trust subsidiary.  At December 31, 2003,
Pathfinder  REIT,  Inc.  held  $26.7  million  in  mortgage and mortgage related
assets.  All  disclosures  in  the  Form  10-K  relating to the Bank's loans and
investments  include loan 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 National Grid,
Alcan,  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

REGULATION

     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.  The  Bank  is  subject  to  extensive  regulation by 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 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  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.
                                        4
<PAGE>

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

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

     Under the New York State Banking Law, the Superintendent may issue an order
to  a  New  York  State  chartered  banking institution to appear and explain an
apparent  violation  of law, to discontinue unauthorized or unsafe practices and
to  keep  prescribed  books and accounts.  Upon a finding by the Department that
any  director,  trustee  or officer of any banking organization has violated any
law,  or  has  continued  unauthorized  or  unsafe  practices  in conducting the
business  of  the  banking  organization  after  having  been  notified  by  the
Superintendent  to discontinue such practices, such director, trustee or officer
may  be  removed  from  office  after  notice  and  an  opportunity to be heard.

     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.  As insurer, the FDIC imposes deposit insurance
premiums  and  is authorized to conduct examinations of and to require reporting
by FDIC-insured institutions.  It also may prohibit any FDIC-insured institution
from engaging in any activity the FDIC determines by regulation or order to pose
a  serious  risk  to  the  FDIC.  The  FDIC  also  has the authority to initiate
enforcement  actions  against  savings banks, after giving the Superintendent an
opportunity  to  take such action, and may terminate the deposit insurance if it
determines  that the institution has engaged or is engaging in unsafe or unsound
practices  or  is  in  an  unsafe  or  unsound  condition.

     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,  as of the reporting period ending six months before the
assessment  period,  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
                                        5
<PAGE>

subgroup  to  which  an  institution  is  assigned  is  based  on  a supervisory
evaluation  provided  to the FDIC by the institution'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.

     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 "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
                                        6
<PAGE>

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  is  currently  classified as a "well
capitalized"  savings  institution.

     TRANSACTIONS  WITH  AFFILIATES.  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.  As  such,  the Company and the Mutual Holding Company are registered
with  the  OTS and are subject to OTS regulations, examinations, supervision and
reporting requirements.  In addition, the OTS has enforcement authority over the
Company  and  the  Mutual  Holding Company, and their 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.
                                        7
<PAGE>

     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, 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 association, 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  association  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.  The OTS
reviews  dividend  waiver notices on a case-by-case basis, and, in general, does
not  object  to  any  such  waiver if: (i) the mutual holding company's board of
directors  determines  that  such  waiver  is  consistent  with  such directors'
fiduciary  duties  to  the mutual holding company's members; (ii) for as long as
the  savings association subsidiary is controlled by the mutual holding company,
the  dollar  amount  of  dividends  waived  by  the  mutual  holding company are
considered as a restriction on the retained earnings of the savings association,
which  restriction, if material, is disclosed in the public financial statements
of  the  savings  association  as  a note to the financial statements; (iii) the
amount  of  any  dividend  waived by the mutual holding company is available for
declaration  as  a  dividend  solely  to  the  mutual  holding  company, and, in
accordance  with  SFAS  5,  where  the  savings  association determines that the
payment  of  such  dividend  to  the  mutual  holding  company  is  probable, an
appropriate dollar amount is recorded as a liability; and (iv) the amount of any
waived  dividend is considered as having been paid by the savings association in
evaluating  any  proposed  dividend  under OTS capital distribution regulations.
The  Mutual  Holding  Company  generally  intends to waive dividends paid by the
Company  in  excess  of its operating cash requirements.  Under OTS regulations,
our  public 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.

     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  as  the  successor to the Company (the "New
                                        8
<PAGE>

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.  Under New York State Banking Law, the prior
approval  of  the Banking Board is required before: (1) any action is taken that
causes  any  company  to  become a bank holding company; (2) any action is taken
that  causes any banking institution to become or be merged or consolidated with
a  subsidiary  of  a bank holding company; (3) any bank holding company acquires
direct or indirect ownership or control of more than 5% of the voting stock of a
banking institution; (4) any bank holding company or subsidiary thereof acquires
all  or  substantially  all  of  the assets of a banking institution; or (5) any
action  is  taken  that  causes any bank holding company to merge or consolidate
with  another bank holding company.  Additionally, certain restrictions apply to
New  York  State  bank  holding  companies  regarding the acquisition of banking
institutions  which  have  been  chartered five years or less and are located in
smaller  communities.  Officers,  directors and employees of New York State bank
holding  companies  are  subject to limitations regarding their affiliation with
securities  underwriting or brokerage firms and other bank holding companies and
limitations  regarding  loans  obtained  from  its  subsidiaries.

     FEDERAL SECURITIES LAW.  The common stock of the Company is registered with
the  SEC  under  the  Exchange  Act,  prior  to  completion  of the Offering and
Reorganization.  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, 2003, the Bank was in compliance with
these  reserve  requirements.

     FEDERAL  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 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 REGULATION.  The Bank is also subject to provisions of the
New  York  State Banking Law which impose continuing and affirmative obligations
                                        9
<PAGE>

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

     In  response  to  the  events  of  September  11,  2001,  the  Uniting  and
Strengthening  America  by Providing Appropriate Tools Required to Intercept and
Obstruct  Terrorism  Act of 2001, or 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.  Financial institutions, such as the Bank,
have  had  a  federal anti-money laundering obligations for years.  As such, the
Bank  does  not  believe  the USA Patriot Act will have a material impact on its
operations.

SARBANES-OXLEY  ACT  OF  2002

     On  July  30, 2002, the President signed into law the Sarbanes-Oxley Act of
2002  ("Sarbanes-Oxley"),  which  implemented  legislative  reforms  intended to
address  corporate  and accounting fraud.  In addition to the establishment of a
new  accounting  oversight board that will enforce auditing, quality control and
independence  standards  and  will  be  funded  by fees from all publicly traded
companies,  Sarbanes-Oxley  places certain restrictions on the scope of services
that  may be provided by accounting firms to their public company audit clients.
Any  non-audit  services  being  provided  to a public company audit client will
require  preapproval  by  the  company's  audit  committee.  In  addition,
Sarbanes-Oxley  makes  certain  changes  to  the  requirements for audit partner
rotation  after  a  period  of  time.  Sarbanes-Oxley  requires  chief executive
officers  and  chief  financial officers, or their equivalent, to certify to the
accuracy  of periodic reports filed with the Securities and Exchange Commission,
subject  to  civil and criminal penalties if they knowingly or willingly violate
this certification requirement.  The Company's Chief Executive Officer and Chief
Financial  Officer  have  signed certifications to this Form 10-K as required by
Sarbanes-Oxley.  In  addition, under Sarbanes-Oxley, counsel will be required to
report  evidence  of  a material violation of the securities laws or a breach of
fiduciary  duty  by  a company to its chief executive officer or its chief legal
officer,  and,  if  such  officer does not appropriately respond, to report such
evidence  to  the  audit  committee  or  other similar committee of the board of
directors  or  the  board  itself.

     Under  Sarbanes-Oxley,  longer  prison  terms  will  apply  to  corporate
executives  who violate federal securities laws; the period during which certain
types of suits can be brought against a company or its officers is extended; and
bonuses  issued  to top executives prior to restatement of a company's financial
statements  are  now  subject  to  disgorgement  if  such restatement was due to
corporate misconduct.  Executives are also prohibited from trading the company's
securities  during  retirement  plan  "blackout"  periods,  and loans to company
executives  (other  than  loans  by  financial institutions permitted by federal
rules  and  regulations)  are restricted.  In addition, a provision directs that
civil  penalties levied by the Securities and Exchange Commission as a result of
any  judicial  or  administrative  action under Sarbanes-Oxley be deposited to a
fund  for  the  benefit  of harmed investors.  The Federal Accounts for Investor
Restitution  provision  also  requires the Securities and Exchange Commission to
develop  methods of improving collection rates.  The legislation accelerates the
time  frame  for  disclosures  by  public  companies,  as  they must immediately
disclose  any  material  changes  in  their  financial  condition or operations.
Directors  and executive officers must also provide information for most changes
in  ownership  in a company's securities within two business days of the change.

     Sarbanes-Oxley  also  increases  the  oversight  of,  and  codifies certain
requirements  relating  to  audit  committees  of  public companies and how they
interact  with  the  company's  "registered  public  accounting  firm."  Audit
committee  members  must be independent and are absolutely barred from accepting
consulting,  advisory  or other compensatory fees from the issuer.  In addition,
companies  must  disclose  whether  at  least  one  member of the committee is a
"financial  expert"  (as  such  term  is  defined by the Securities and Exchange
Commission)  and  if not, why not.  Under Sarbanes-Oxley, a company's registered
public  accounting firm is prohibited from performing statutorily mandated audit

                                       10
<PAGE>
services  for  a  company  if  such  company's  chief  executive  officer, chief
financial  officer,  comptroller, chief accounting officer or any person serving
in  equivalent  positions had been employed by such firm and participated in the
audit  of such company during the one-year period preceding the audit initiation
date.  Sarbanes-Oxley also prohibits any officer or director of a company or any
other person acting under their direction from taking any action to fraudulently
influence,  coerce,  manipulate or mislead any independent accountant engaged in
the audit of the company's financial statements for the purpose of rendering the
financial  statements  materially  misleading.  Sarbanes-Oxley also requires the
Securities and Exchange Commission to prescribe rules requiring inclusion of any
internal  control  report  and  assessment by management in the annual report to
shareholders.  Sarbanes-Oxley  requires  the  company's  registered  public
accounting  firm  that  issues  the  audit  report  to  attest  to and report on
management's  assessment  of  the  company's  internal  controls.

     Although  we  anticipate that we will incur additional expense in complying
with  the  provisions  of  the Sarbanes-Oxley Act and the resulting regulations,
management  does  not expect that such compliance will have a material impact on
our  results  of  operations  or  financial  condition.


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.  In addition, the federal legislation requires
the recapture (over a six year period) of the excess of tax bad debt reserves at
December  31,  1995  over  those  established  as  of  December  31,  1987.

     TAXABLE  DISTRIBUTIONS  AND  RECAPTURE.  Prior  to  the  1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable
income  should the Bank fail to meet certain thrift asset and definitionaltests.
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  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  availability  of  the  Company's  Annual  Report  on  Form 10-K may be
accessed  on  the  Company's  website  at  WWW.PATHFINDERBANK.COM.
                                       11
<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, 2003.  The aggregate net book
value  of  the  Bank's  premises  and equipment was $6.7 million at December 31,
2003.  For additional information regarding the Bank's properties, see Note 8 to
Notes  to  Financial  Statements.

<TABLE>
<CAPTION>




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

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

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

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

Fulton Branch . . . . . .          1994  Owned (2)                -
-------------------------
114 Oneida Street
Fulton, New York  13069

Lacona Branch . . . . . .          2002  Owned                    -
-------------------------
1897 Harwood Drive
Lacona, New York 13083

Fulton Branch . . . . . .          2003  Owned (3)                -
-------------------------
5 West First Street South
Fulton, New York  13069
</TABLE>

     (1)  The  building is owned; the underlying land is leased paying an annual
          rent  of  $20,000
     (2)  This branch closed in July of 2003 and the branch was relocated to the
          5  West  First  Street  South  location  in  Fulton
     (3)  The existing Fulton Branch was moved to this location in July of 2003.
          The  building is owned; the underlying land is leased paying 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.

                                       12
<PAGE>

                                     PART II

ITEM  5.     MARKET  FOR  COMPANY'S  COMMON  STOCK  AND  RELATED SECURITY HOLDER
MATTERS
--------------------------------------------------------------------------------
     The  "Market  for  Common  Stock" section of the Company's Annual Report to
Stockholders, except for information below, is incorporated herein by reference.

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 consent from
the  Office  of  Thrift  Supervision.

ITEM  6.     SELECTED  FINANCIAL  DATA
--------------------------------------------------------------------------------
     The  selected financial information for the year ended December 31, 2003 is
filed as part of the Company's Annual Report to Stockholders and is incorporated
by  reference.

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

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

ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
--------------------------------------------------------------------------------
     The  information  required  by  this  item  is  set forth under the caption
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations" in the Annual Report to Stockholders which is incorporated herein by
reference.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA
--------------------------------------------------------------------------------
     The  financial  statements  are contained in the Company's Annual Report to
Stockholders  and  are  incorporated  herein  by  reference.

The  following  supplementary  data  schedules are not included in the Company's
Annual  Report.

LOAN  DATA

The  following  table  show  the amounts of loans outstanding as of December 31,
2003 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  due  in one year or less.
Adjustable  and floating rate loans are included in the period in which interest
rates  are  next  scheduled  to  adjust  rather  than  the  period in which they
contractually  mature,  and fixed rate loans are included in the period in which
the  final  contractual  repayment  is  due.
                                       13
<PAGE>

<TABLE>
<CAPTION>
                                    Due Under   Due 1-5    Due Over
                                     One Year    Years    Five Years    Total
                                    ----------  --------  -----------  --------
<S>                                 <C>         <C>       <C>          <C>
(In thousands)
Real estate:
Commercial mortgage. . . . . . . .  $    6,703  $ 18,437  $     6,138  $ 31,278
Construction and land development.       4,375         0            0     4,375
Residential mortgage . . . . . . .      31,254    46,588       43,252   121,094
                                        42,332    65,025       49,390   156,747
                                    ----------  --------  -----------  --------
Commercial . . . . . . . . . . . .       1,264     8,862        4,964    15,090
Consumer . . . . . . . . . . . . .      10,557     2,620        3,703    16,880
Total loans. . . . . . . . . . . .  $   54,153  $ 76,507  $    58,057  $188,717
----------------------------------  ----------  --------  -----------  --------
Interest rates:. . . . . . . . . .           0
Fixed. . . . . . . . . . . . . . .      11,770    51,091       55,570   118,431
Variable . . . . . . . . . . . . .      42,383    25,416        2,487    70,286
----------------------------------  ----------  --------  -----------  --------
Total Loans. . . . . . . . . . . .  $   54,153  $ 76,507  $    58,057  $188,717
----------------------------------  ----------  --------  -----------  --------
</TABLE>


ANALYSIS  OF  THE  RESERVE  FOR  LOAN  LOSSES  DATA

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

<TABLE>
<CAPTION>
<S>                                            <C>      <C>       <C>      <C>      <C>
                                                 2003      2002     2001     2000     1999
-------------------------------------------------------------------------------------------
(In thousands)
Balance at beginning of year. . . . . . . . .  $1,481   $ 1,679   $1,274   $1,150   $  939
Provisions charged to operating expenses. . .     598     1,375      708      244      373
-------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off
Commercial. . . . . . . . . . . . . . . . . .       3        56       53        0        0
Consumer. . . . . . . . . . . . . . . . . . .      17        33        9       19       28
Real estate . . . . . . . . . . . . . . . . .      17         0        0        0        0
-------------------------------------------------------------------------------------------
Total recoveries. . . . . . . . . . . . . . .      37        89       62       19       28
-------------------------------------------------------------------------------------------
Loans charged off:
Commercial. . . . . . . . . . . . . . . . . .    (128)   (1,285)     (72)     (38)       0
Consumer. . . . . . . . . . . . . . . . . . .    (189)     (291)    (184)     (61)    (190)
Real estate . . . . . . . . . . . . . . . . .     (84)      (86)    (109)     (40)       0
-------------------------------------------------------------------------------------------
Total charged-off . . . . . . . . . . . . . .    (401)   (1,662)    (365)    (139)    (190)
-------------------------------------------------------------------------------------------
Net charge-offs . . . . . . . . . . . . . . .    (364)   (1,573)    (303)    (120)    (162)
---------------------------------------------  -------  --------  -------  -------  -------
Balance at end of year. . . . . . . . . . . .  $1,715   $ 1,481   $1,679   $1,274   $1,150
===========================================================================================
Net charge-offs to average loans outstanding.    0.19%     0.89%    0.19%    0.08%    0.12%
Allowance for loan losses to year-end loans .    0.91%     0.82%    1.03%    0.86%    0.88%
---------------------------------------------  -------  --------  -------  -------  -------
</TABLE>

ALLOCATION  OF  ALLOWANCE  FOR  LOAN  LOSSES

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

<TABLE>
<CAPTION>




                            2003               2002              2001             2000             1999
----------------------------------------------------------------------------------------------------------
<S>               <C>       <C>       <C>       <C>       <C>     <C>      <C>     <C>      <C>     <C>
                            % Gross. .           % Gross           % Gross           % Gross         % Gross
                    Amount .  Loans     Amount    Loans     Amount   Loans   Amount   Loans   Amount   Loans
----------------------------------------------------------------------------------------------------------
Commercial loans    $1,218      8.0%    $1,042      7.3%   $1,083     8.8%  $  455     8.6%  $  392    6.5%
Consumer loans .       120      8.9%       136      8.3%      100     7.7%     353     8.6%     318    9.8%
Real estate. . .       377     83.1%       303     84.4%      496    83.5%     466    82.8%     440   83.7%
----------------------------------------------------------------------------------------------------------
Total. . . . . .    $1,715    100.0%    $1,481    100.0%   $1,679   100.0%  $1,274   100.0%  $1,150  100.0%
==========================================================================================================
</TABLE>
                                       14
<PAGE>

INVESTMENT  PORTFOLIO

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>
                                                    2003     2002       2001
--------------------------------------------------------------------------------
(In Thousands)
Investment Securities:
  US Government and agency obligations . . . . .  $ 6,354    $ 4,378  $ 5,971
  State and municipal obligations. . . . . . . .    7,359      8,549    6,012
  Corporate debt issues. . . . . . . . . . . . .    6,421     15,375   20,949
  Mortgage-backed securities . . . . . . . . . .   29,734     24,440   14,121
  Equity securities. . . . . . . . . . . . . . .    2,932      6,225    3,227
  Mutual funds . . . . . . . . . . . . . . . . .    6,200      3,070    3,007
--------------------------------------------------------------------------------
                                                   59,000     62,037   53,287
Unrealized loss on available for sale portfolio.      607        469      135
--------------------------------------------------------------------------------
    Total investments. . . . . . . . . . . . . .  $59,607    $62,506  $53,422
================================================================================
</TABLE>

SECURITIES  PORTFOLIO  MATURITIES

The following table sets forth the scheduled maturities, carrying values, market
values  and average yields for the Bank's investment securities and Federal Home
Loan  Bank  ("FHLB")  Stock  at  December  31, 2003.  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
                                         CARRYING       WEIGHTED      CARRYING       WEIGHTED     CARRYING      WEIGHTED
                                           VALUE     AVERAGE YIELD      VALUE     AVERAGE YIELD     VALUE    AVERAGE YIELD
------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>             <C>          <C>             <C>        <C>
(Dollars in Thousands)
Debt investment securities:
  U.S. Agency securities . . . . . . .   $     0          0.0%       $  5,590          2.7%       $   744         3.6%
  U.S. Treasury securities . . . . . .   $     0          0.0%       $      0          0.0%       $    20        10.8%
  State and political subdivision. . .   $   575          5.7%       $  2,661          6.6%       $ 1,328         6.2%
  Corporate debt issues. . . . . . . .   $     8          2.9%       $  3,791          5.8%       $   497        10.0%
------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . .   $   583          5.7%       $ 12,042          4.4%       $ 2,589         6.2%

  Equity and mortgage-backed securities:
  Mutual funds . . . . . . . . . . . .   $ 6,200          1.0%       $      0          0.0%       $     0         0.0%
  Mortgage-backed securities . . . . .   $     0          0.0%       $  2,413          5.8%       $ 7,290         3.8%
  Common stock and FHLB stock. . . . .   $ 2,932          3.7%       $      0          0.0%       $     0         0.0%
------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . .   $ 9,132          1.9%       $  2,413          5.8%       $ 7,290         3.8%

TOTAL INVESTMENT SECURITIES. . . . . .   $ 9,715          2.1%       $ 14,455          4.8%       $ 9,879         4.5%
======================================================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                          MORE THAN TEN YEARS          TOTAL INVESTMENT SECURITIES
-----------------------------------------------------------------------------------------------------
                                                      ANNUALIZED                           ANNUALIZED
                                         CARRYING       WEIGHTED     CARRYING   MARKET      WEIGHTED
                                           VALUE     AVERAGE YIELD     VALUE     VALUE   AVERAGE YIELD
-----------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>             <C>        <C>      <C>
(Dollars in Thousands)
Debt investment securities:
  U.S. Agency securities . . . . . . . .  $     -         0.0%       $ 6,334   $ 6,304        2.8%
  U.S. Treasury securities . . . . . . .        -         0.0%            20        22       10.8%
  State and political subdivisions . . .    2,795         6.4%         7,359     7,663        6.4%
  Corporate debt issues. . . . . . . . .    2,125         1.9%         6,421     6,696        5.0%
-----------------------------------------------------------------------------------------------------
Total                                       4,920         4.6%        20,134    20,685        4.8%

Equity and mortgage-backed securities:
  Mutual funds . . . . . . . . . . . . .        -         0.0%         6,200     5,715        1.0%
  Mortgage-backed securities . . . . . .   20,031         4.0%        29,734    29,934        4.1%
 Common stock and FHLB stock. . . . . .         -         0.0%         2,932     3,273        3.7%
-----------------------------------------------------------------------------------------------------
Total                                      20,031         4.0%        38,866    38,922        3.6%

                                        $  24,951         4.1%       $59,000   $59,607        4.0%
===================================================================================================
</TABLE>

                                       15
<PAGE>

DEPOSIT  STRUCTURE

The  following  table indicates the amount of the Bank's certificates of deposit
of  $100,000  or  more by time remaining until maturity as of December 31, 2003.

<TABLE>
<CAPTION>
                            Certificates of
                               Deposit of
Remaining Maturity          $100,000 or more
--------------------------  ----------------
                             (In Thousands)
<S>                         <C>
Three Months or less . . .  $          2,336
Three through Six months .             2,987
Six through twelve months.             3,536
Over twelve months . . . .             5,759
--------------------------------------------
    Total. . . . . . . . .  $         14,618
                            ================
</TABLE>

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.
                                       16
<PAGE>

     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.

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.


                                    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,  2003.

       NAME               AGE     POSITIONS  HELD  WITH  THE  COMPANY
--------------------------------------------------------------------------------
Thomas  W.  Schneider     42     President  and  Chief  Executive  Officer

James  A.  Dowd,  CPA     36     Vice  President,  Chief  Financial  Officer

Edward  A.  Mervine       47     Vice  President,  General  Counsel

John  F.  Devlin          39     Vice  President,  Senior  Commercial  Lender

Melissa  A.  Miller       46     Vice  President, Operations, Corporate,
                                 Secretary, Compliance  Officer

Gregory  L.  Mills        43     Vice  President,  Director  of  Marketing,
                                 Branch Administrator

ITEM  11.     EXECUTIVE  COMPENSATION
--------------------------------------------------------------------------------
     Information  with  respect  to  management  compensation  and  transactions
required under this item is incorporated by reference hereunder in the Company's
Proxy  Materials  for  the  Annual  Meeting  of  Stockholders  under the caption
"Compensation".

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
     The  information contained under the sections captioned "Stock Ownership of
Management"  is  incorporated  by reference to the Company's Proxy Materials for
its  Annual  Meeting  of  Stockholders.
                                       17
<PAGE>

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.

                                     PART IV

ITEM  15.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------
(a)(1)     Financial  Statements

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

          (A)  Independent  Auditors'  Report;

          (B)  Consolidated  Statements  of  Condition  -  December 31, 2003 and
               2002.

          (C)  Consolidated  Statements  of  Income  -  years ended December 31,
               2003,  2002  and  2001.

          (D)  Consolidated  Statements  of  Changes  in  Shareholders' Equity -
               years  ended  December  31,  2003,  2002  and  2001.

          (E)  Consolidated  Statements of Cash Flows - years ended December 31,
               2003,  2002  and  2001;  and

          (F)  Notes  to  Consolidated  Financial  Statements.

               (a)(2)  Financial  Statement  Schedules

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

(b)     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 Employment  Agreement  between  the  Bank  and  Thomas  W.  Schneider,
          President  and  Chief  Executive Officer (Incorporated by reference to
          the  Company's  S-4  file  no.  333-36051)
                                       18
<PAGE>

     13   Annual  Report  to  Stockholders

     14   Code  of  Ethics for Directors, Officers and Employees

     21   Subsidiaries  of  Company

     23.1 Consent  of  Beard  Miller  Company  LLP

     23.2 Consent  of  Pricewaterhouse  Coopers  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

     99.1 Report  of  PricewaterhouseCoopers  LLP

(c)     Reports  on  Form  8-K
        ----------------------

     The  Company  has two Current Reports on Form 8-K during the fourth quarter
of  the  fiscal year ended December 31, 2003 dated November 5, 2003 and November
3, 2003 reporting press releases relating to the fourth quarter earnings release
and  the  Board's approval of a change in auditors, respectively.  The 8-K filed
on  November 3, 2003 was a duplicate filing of the 8-K filed on August 19, 2003.

                                       19
<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,  2004         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, 2004


By:   /s/ Thomas W. Schneider                       By:   /s/ Chris R. Burritt
      ----------------------------------------            --------------------
      Thomas W. Schneider, President and Chief            Chris R. Burritt,
      Executive Officer                                   Director
Date: March 30, 2004                                Date: March 30, 2004


By:   /s/ James A. Dowd                             By:   /s/ Raymond W. Jung
      ----------------------------------------            --------------------
      James A. Dowd, Vice President and    . .            Raymond W. Jung,
      Chief Financial Officer                             Director
Date: March 30, 2004                                Date: March 30, 2004


By:   /s/ Bruce B. Manwaring                        By:   /s/ George P. Joyce
      ----------------------------------------            --------------------
      Bruce E. Manwaring.,           . . . .            . George P. Joyce,
      Director                                            Director
Date: March 30, 2004                                Date: March 30, 2004


By:   /s/ L. William Nelson, Jr.                    By:   /s/ Corte J. Spencer
      ----------------------------------------            --------------------
      L. William Nelson, Jr.,          . . . .            Corte J. Spencer,
      Director                                            Director
Date:.March 30, 2004                                Date: March 30, 2004


By:   /s/ Steven W. Thomas                          By:    /s/ Chris C. Gagas
      ----------------------------------------             -------------------
      Steven W. Thomas,          . . . . . . .             Chris C. Gagas,
      Director                                             Director
Date:.March 30, 2004                                 Date: March 30, 2004

                                       20
<PAGE>

                    EXHIBIT 13 ANNUAL REPORT TO STOCKHOLDERS

2003 ANNUAL REPORT

[PHOTOS]      IF IT'S IMPORTANT TO YOU,
                         IT'S IMPORTANT TO US.

                  [LOGO] PathFinder
                             BANCORP, INC.

<PAGE>

[PHOTOS]             [LOGO] PathFinder
                             BANCORP, INC.

<PAGE>

FINANCIAL  HIGHLIGHTS
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  Corporation.
The  following  table sets forth certain financial highlights of the Company for
the  years  ended  December  31:

<TABLE>
<CAPTION>
                                                  2003       2002       2001       2000       1999
-----------------------------------------------------------------------------------------------------
<S>                                            <C>        <C>        <C>        <C>        <C>
YEAR END (IN THOUSANDS)
Total assets . . . . . . . . . . . . . . . . .  $277,940   $279,056   $244,514   $232,355   $216,324
Loans receivable, net. . . . . . . . . . . . .   187,002    179,001    162,588    148,362    130,063
Deposits . . . . . . . . . . . . . . . . . . .   206,894    204,522    169,589    161,459    152,436
Equity . . . . . . . . . . . . . . . . . . . .    21,785     23,230     22,185     20,962     20,075

FOR THE YEAR (IN THOUSANDS)
Net interest income. . . . . . . . . . . . . .  $  9,337   $  8,789   $  7,853   $  7,393   $  7,629
Net income . . . . . . . . . . . . . . . . . .     1,652      1,156      1,602        356        930

PER SHARE
Net income (basic) . . . . . . . . . . . . . .  $   0.68   $   0.45   $   0.62   $   0.14   $   0.35
Book value . . . . . . . . . . . . . . . . . .      8.96       8.90       8.64       8.06       7.61
Cash dividends declared. . . . . . . . . . . .      0.40       0.30       0.26       0.24       0.24

RATIOS
Return on average assets . . . . . . . . . . .      0.59%      0.45%      0.68%      0.16%      0.44%
Return on average equity . . . . . . . . . . .      7.61%      5.01%      7.34%      1.79%      4.33%
Average equity to average assets . . . . . . .      7.77%      8.94%      9.22%      8.91%     10.24%
Dividend payout ratio (a). . . . . . . . . . .     39.41%     36.85%     28.37%    173.62%     67.65%
Net interest rate spread . . . . . . . . . . .      3.53%      3.47%      3.35%      3.34%      3.73%
Allowance for loan losses to loans receivable.      0.91%      0.82%      1.03%      0.86%      0.88%
Noninterest expense to total assets. . . . . .      3.27%      2.85%      2.81%      3.31%      3.30%
Efficiency ratio (b) . . . . . . . . . . . . .     76.13%     73.18%     70.61%     90.64%     80.54%
</TABLE>

     (a)  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.
     (b)  The  efficiency  ratio is calculated as noninterest expense divided by
          net  interest  income  plus  noninterest  income.

MARKET  FOR  COMMON  STOCK
Pathfinder  Bancorp, Inc.'s common stock currently trades on the NASDAQ SmallCap
Market  under  the  symbol  "PBHC".  There were 359 shareholders of record as of
February  20, 2004.  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, 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
------------------  ---------  -------  ------
December 31, 2002.     15.000   11.910   0.080
September 30, 2002     12.850   10.380   0.080
June 30, 2002. . .     14.990   12.750   0.070
March 31, 2002 . .     13.500   12.050   0.070
</TABLE>

                                        1
<PAGE>
[PHOTOS]

                                        2
<PAGE>
                        [PHOTOS]
                                LETTER TOSHAREHOLDERS
      Janette Resnick, Chairman, Thomas W. Schneider, President and CFO

LETTER  TO  SHAREHOLDERS

On  behalf  of  the  Board of Directors and the employees of Pathfinder Bancorp,
Inc.,  we  are  pleased  to  present  our Annual Report to our shareholders.  We
invite  you  to attend our annual meeting on April 28, 2004 at 10:00 a.m. at the
Econo  Lodge  Riverfront  Hotel  in  Oswego.

2003  REVIEW The Company's activities during 2003 were primarily focused on:  1)
enhancing  the  breadth  and  capabilities of our delivery systems, 2) providing
core  banking  products  and services to our customers, and 3) ensuring enhanced
governance  processes  to  meet  regulatory  and  shareholder  expectations.

Pathfinder  Bank  is the leading depository institution in our market with a 41%
deposit  market  share  in  the city of Oswego and a 23% deposit market share in
Oswego  County.  We  are  strategically  focused on retaining and expanding that
leadership  position by differentiating ourselves through higher quality service
delivery.  To  accomplish  this  we are directing our development efforts toward
what  we  believe  are the core drivers of service delivery and market position:
1)  location  development,  2) systems enhancements, 3) product diversity and 4)
employee  training  and  education.

Toward  that  end  in  2003,  we  have  done  the  following:

     Relocated  our  Fulton branch to provide better access, parking, drive-thru
     capabilities,  and  a  superior  customer  experience  through  design,
     state-of-the-art  equipment  and  training.

     Redesigned the lobby in our Lacona branch to provide private offices and an
     ATM.

     Reconfigured  and expanded the parking and drive-thru in our Mexico branch.

     Acquired  prime  property  in  Central  Square  to  locate  our 7th branch.

     Installed  a new Windows based teller/platform system for enhanced customer
     service.

     Introduced  our  new  deposit  services to the municipalities in the county
     through  our  commercial  bank  subsidiary.

     Continued  our  focus on employee development through Pathfinder University
     and  other  training  and  education  forums.

We strongly believe that our focus in these areas will allow the Company to gain
market  share  through  superior  customer  service.

Residential  mortgage  lending  dominated our core banking activities in 2003 as
originations  exceeded  $50  million.  Total  loans grew $8.2 million with $23.4
million  sold  into  the  secondary  market.  The  Company's  mortgage servicing
portfolio  for loans sold is $47.6 million at December 31, 2003.  Deposit growth
for the year was nominal following a 21% increase in the prior year.  A stagnant
local  economy  has  precluded  the  flow  of  new funds into the market.  It is
anticipated  that in 2004, deposit growth through branch expansion and municipal
markets  will  be  more  robust,  while  commercial  lending  production through
Pathfinder  Business  Services  will  accelerate as residential mortgage lending
activity  slows.

Pathfinder Investment Services had a record year of growth in 2003 with revenues
increasing 22% over the prior year.  Our investment services division now serves
over  700  individuals,  families,  and  businesses  in  our  market.
                                        3
<PAGE>

The  Board  of  Directors  was  highly active and engaged in understanding their
evolving  responsibilities  resultant from adoption of the Sarbanes-Oxley Act of
2002.  The  Governance/Nominating  Committee  adopted  a  comprehensive  set  of
governance  guidelines in 2003.  The Audit Committee added meetings specifically
targeted for educational purposes.  The Board also successfully transitioned the
Chairman's  position  as  Chris C. Gagas stepped down after 17 years as Chairman
and  was replaced by unanimous decision with Janette Resnick as Chairman.  Chris
remains  on  the  Board  of  Directors  and  the  Directors  and  Company deeply
appreciate  his unparalleled leadership.  The Board of Directors is comprised of
9  independent  directors  and one inside director who are committed to ensuring
that  the  Company represents the best interests of its shareholders, customers,
and  community.

SHAREHOLDER  VALUE  Earnings  of  $1.7  million  in 2003 resulted in a return on
average  equity  of  7.61%  and  earnings  per  share of $.68.  Both performance
measures  were  more  than  a  50%  improvement  over  the prior year, while EPS
achieved  the  highest  level  in  the  Company's  history  as a public company.

The  Company  continued  to  use  share repurchases and increased dividends as a
means  to  provide  return  and  value to shareholders.  The Company repurchased
approximately  18%  of  the  shares  of common stock held by public shareholders
during  the  year  and  increased the dividend to $.40 per share, a 33% increase
over  the  prior  year.

The  Company's  common  stock  performance reflected both this positive trend in
earnings  and  dividends,  as  well  as the rising values of the bank and thrift
stock  sectors.  During  2003,  the common stock provided a total return of 28%.

LOOKING  AHEAD  In 2004, our strategic focus remains dedicated to the principles
we  have  outlined  above. Our management team is educated, experienced and well
positioned to execute the Company's business plans and lead our bank through the
turbulent  times  ahead.  In  an  industry  that  is constantly changing through
consolidation,  competition, and regulation, we believe a consistently improving
bank  dedicated  to the people, businesses, and organizations in the communities
we  serve, will garner the benefits of customer loyalty and the resultant market
share.  We  look forward to the challenges and opportunities that lay ahead, the
successful implementation of our business plan, and our continued service to the
market.




     /s/:  Janette  Resnick      /s/:  Thomas  W.  Schneider
     -----------------------     -------------------------------
     Janette  Resnick            Thomas  W.  Schneider
     Chairman                    President  and  CEO
                                        4
<PAGE>


MANAGEMENT  DISCUSSION  AND  ANALYSIS

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.  Pathfinder Commercial Bank, Pathfinder REIT, Inc.
and  Whispering  Oaks  Development  Corp. represent wholly owned subsidiaries of
Pathfinder Bank.  At December 31, 2003, Pathfinder Bancorp, M.H.C, the Company's
mutual  holding  company  parent, whose activities are not included in the MD&A,
held  65.1%  of  the  Company's  common  stock  and  the  public  held  34.9%.

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
community-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.

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  (the  "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 of the
Lacona, New York branch. 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 acquisition reflects a premium on deposit liabilities assumed of
approximately  $2.4  million.

On  January  13,  2003,  the Company completed the purchase of 160,114 shares of
common  stock  at  a  price  of $2.3 million, or $14.60 per share, from Jewelcor
Management  Inc.  ("JMI"),  which  is  owned  by  Mr.  Seymour  Holtzman  ("the
Repurchase").  The  Repurchase  represented  approximately 6.1% of the Company's
outstanding  common  stock  as  of  December  31,  2002.

As  part  of  the  repurchase  agreement, Mr. Holtzman and JMI, as well as those
persons  and entities who signed the Schedule 13D with Mr. Holtzman with respect
to  the  Company's  common stock, agreed in writing, that neither they nor their
affiliates  will  purchase  shares of the Company's common stock for a period of
five  years.  JMI  also agreed to stipulate to the discontinuance with prejudice
of the lawsuit entitled "Jewelcor Management, Inc. v. Pathfinder Bancorp, Inc.",
and  withdrew  a  shareholder  proposal  previously  submitted  by  JMI.

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
                                        5
<PAGE>

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, 2003, 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.

RESULTS  OF  OPERATIONS

Net  income for 2003 was $1.7 million, an increase of $495,000, or 43%, compared
to  net  income of $1.2 million for 2002.  Basic earnings per share increased to
$0.68  per  share  for the year ended December 31, 2003 from $0.45 per share for
the  year  ended  December  31, 2002.  Return on average equity increased 52% to
7.61%  in  2003  from  5.01%  in  2002.

In the current low interest rate environment, the Company was able to maintain a
strong  net  interest  margin  through  growth  in average earning assets of 7%,
resulting  in  an increase in net interest income, on a tax-equivalent basis, of
$530,000,  or  6%.  Provision for loans losses decreased 57% due to a prior year
charge-off  of  two  significant  credit  relationships.  The  Company  also
experienced  a 21% increase in other income, net of securities gains and losses,
primarily  attributable  to increased deposit levels, service charges associated
with  checking  accounts and mortgage servicing fees.  Earnings were hampered by
an  increase in other expenses of 14% primarily attributable to the operation of
a  new  branch  and  an  increase  in  employee  pension  and  healthcare costs.

SELECTED  PERFORMANCE  MEASURES

<TABLE>
<CAPTION>
                                   Years Ended December 31,
-----------------------------------------------------------
                                      2003   2002   2001
-----------------------------------------------------------
<S>                                   <C>    <C>    <C>
Return on average assets . . . . . .  0.59%  0.45%  0.68%
Return on average equity . . . . . .  7.61%  5.01%  7.34%
Net interest margin (1). . . . . . .  3.68%  3.73%  3.67%
Noninterest income to total assets .  0.94%  0.75%  0.76%
Noninterest expense to total assets.  3.27%  2.85%  2.81%
</TABLE>

(1)  net  interest  margin  is  calculated  on  a  tax-equivalent  basis

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  ratio  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, increased $530,000, or 6%, to
$9.4 million for the year ended December 31, 2003, as compared to the year ended
December  31,  2002.  The  Company's  net  interest  margin  for  2003 decreased
slightly  to  3.68%  from 3.73% in 2002.  The increase in net interest income is
attributable  to increased volumes in earning asset and deposit balances and the
maintenance  of  stable  spreads. The average balance of interest-earning assets
grew  $17.5  million,  or  7%,  during  2003  and  the  average  balance  of
interest-bearing  deposits  increased by $24.1 million, or 14%.  The increase in
the  average  balance of interest-bearing deposits is attributable to the Branch
Acquisition.  The Company invested the proceeds from the Branch Acquisition into
                                        6
<PAGE>

the  loan  and  investment  portfolio.  The  decrease  in  the  average yield on
interest-earning  assets  by  67  basis  points more than offset the increase in
average  balance  as  loans  were  refinanced  or  modified  and  new investment
securities  were  acquired  at lower yields.  As a result, interest income, on a
tax-equivalent  basis,  decreased  $544,000  during  2003.  Interest  expense on
deposits  decreased  $906,000,  or 19%, resulting from a decrease in the cost of
deposits  to  1.96%  in 2003 from 2.78% in 2002.  In addition to the decrease in
the cost of deposits, interest expense on borrowings also decreased by $168,000,
or  7%,  from  the  prior  year.

In  comparison,  net  interest  income  increased  $943,000,  or  12%,  on  a
tax-equivalent  basis,  from  2001 to 2002.  The increase in net interest income
was  comprised  of  a decrease in net interest expenses of $1.5 million, or 17%,
partially  offset  by  a  decrease  in  interest  income  of  $519,000,  or  3%.

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>
                                                        For the Years Ended December 31,
                                                            2003                          2002
                                                                     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 . . . . . . .  $129,687   $   8,346      6.44%  $117,688  $   8,194  6.96%
Real estate loans commercial. . . . . . . .    31,122       2,480      7.97%    31,790      2,641  8.31%
Commercial loans. . . . . . . . . . . . . .    14,181         798      5.62%    14,774        984  6.66%
Consumer loans. . . . . . . . . . . . . . .    15,787       1,225      7.76%    12,795      1,117  8.73%
Taxable investment securities . . . . . . .    54,115       2,193      4.05%    46,247      2,437  5.27%
Tax-exempt investment securities. . . . . .     7,869         305      3.87%     6,036        434  7.19%
Interest-earning deposits . . . . . . . . .     3,252          33      0.99%     9,163        117  1.28%
--------------------------------------------------------------------------------------------------------
Total interest-earning assets . . . . . . .  $256,013   $  15,380      6.01%  $238,493  $  15,924  6.68%
Noninterest-earning assets:
Other assets. . . . . . . . . . . . . . . .    24,859                           20,987
Allowance for loan losses . . . . . . . . .    (1,591)                          (1,877)
 Net unrealized gains
  on available for sale securities. . . . .        52                              368
--------------------------------------------------------------------------------------------------------
Total  Assets . . . . . . . . . . . . . . .  $279,333                         $257,971
========================================================================================================
Interest-bearing liabilities:
NOW accounts. . . . . . . . . . . . . . . .  $ 17,663   $     140      0.79%  $ 15,850  $     167  1.06%
Money management accounts . . . . . . . . .    21,788         248      1.14%    11,571        242  2.09%
Savings and club accounts . . . . . . . . .    66,481         511      0.77%    62,494        948  1.52%
Time deposits . . . . . . . . . . . . . . .    85,751       2,852      3.33%    77,701      3,299  4.25%
Mandatorily redeemable preferred securites.     5,000         236      4.66%     2,635        138  5.24%
 Borrowings . . . . . . . . . . . . . . . .    43,490       1,962      4.51%    48,626      2,228  4.58%
--------------------------------------------------------------------------------------------------------
Total Interest-bearing liabilities. . . . .  $240,173   $   5,949      2.48%  $218,877  $   7,023  3.21%
--------------------------------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits . . . . . . . . . . . . . .    16,345                           13,154
Other liabilities . . . . . . . . . . . . .     1,098                            2,873
--------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . .   257,616                          234,904
--------------------------------------------------------------------------------------------------------
Shareholders' equity. . . . . . . . . . . .    21,717                           23,067
--------------------------------------------------------------------------------------------------------
Total liabilities & shareholders' equity. .  $279,333                        $ 257,971
========================================================================================================
Net interest income . . . . . . . . . . . .  $  9,431                        $   8,901
Net interest rate spread. . . . . . . . . .                            3.53%                       3.47%
Net interest margin . . . . . . . . . . . .                            3.68%                       3.73%
========================================================================================================
Ratio of average interest-earning assets
to average interest-bearing liabilities . .                          106.60%                     108.96%
========================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                             For the Year Ended December 31,
--------------------------------------------------------------------------------
                                                            2001
--------------------------------------------------------------------------------
                                                                    Average
                                             Average                 Yield/
(Dollars in Thousands)                       Balance     Interest     Cost
--------------------------------------------------------------------------------
<S>                                         <C>        <C>        <C>
INTEREST-EARNING ASSETS
Real estate loans residential. . . . . . .   $101,363   $   7,678    7.58%
Real estate loans commercial . . . . . . .     27,847       2,487    8.93%
Commercial loans . . . . . . . . . . . . .     13,843       1,170    8.45%
Consumer loans . . . . . . . . . . . . . .     12,600       1,220    9.69%
Taxable investment securities. . . . . . .     53,581       3,382    6.31%
Tax-exempt investment securities . . . . .      6,192         441    7.12%
Interest-earning deposits. . . . . . . . .      1,418          65    4.58%
--------------------------------------------------------------------------------
Total interest-earning assets. . . . . . .   $216,844   $  16,443  7.58%
Noninterest-earning assets:
Other assets . . . . . . . . . . . . . . .     20,796
Allowance for loan losses. . . . . . . . .     (1,431)
 Net unrealized gains
  on available for sale securities . . . .        605
--------------------------------------------------------------------------------
Total  Assets. . . . . . . . . . . . . . .   $236,814
================================================================================
Interest-bearing liabilities:
NOW accounts . . . . . . . . . . . . . . .   $ 16,064   $     228    1.42%
Money management accounts. . . . . . . . .      1,080          41    3.80%
Savings and club accounts. . . . . . . . .     60,936       1,435    2.35%
Time deposits. . . . . . . . . . . . . . .     77,681       4,396    5.66%
Mandatorily redeemable preferred securites          -           -       -
 Borrowings. . . . . . . . . . . . . . . .     44,458       2,385    5.36%
--------------------------------------------------------------------------------
Total Interest-bearing liabilities . . . .   $200,219   $   8,485    4.24%
--------------------------------------------------------------------------------
Noninterest-bearing liabilities:
Demand deposits. . . . . . . . . . . . . .     11,175
Other liabilities. . . . . . . . . . . . .      3,592
--------------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . .    214,986
--------------------------------------------------------------------------------
Shareholders' equity . . . . . . . . . . .     21,828
--------------------------------------------------------------------------------
Total liabilities & shareholders' equity .   $236,814
================================================================================
Net interest income. . . . . . . . . . . .               $  7,958
Net interest rate spread . . . . . . . . .                           3.35%
Net interest margin. . . . . . . . . . . .                           3.67%
================================================================================
Ratio of average interest-earning assets
to average interest-bearing liabilities. .                         108.30%
================================================================================
</TABLE>
                                        7
<PAGE>

INTEREST  INCOME
Average  loans  increased  $13.7 million in 2003, with yields declining 57 basis
points  to  6.74%.  The  Company's residential mortgage loan portfolio increased
$12.0  million, or 10%, when comparing the year 2003 to 2002.  The average yield
on the residential mortgage loan portfolio decreased 52 basis points to 6.44% in
2003  from  6.96% in 2002.  New loans were originated at lower rates than in the
prior  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  $3.0 million, or 23%, resulted from an increase in home
equity loans. The average yield declined 97 basis points, to 7.76% from 8.73% in
2002.  Average  commercial  loans remained relatively constant and experienced a
decline  in  the average tax-equivalent yield of 104 basis points, to 5.62% from
6.66%,  in 2002.  The decrease in the yield on commercial loans was affected, in
part,  by  the offering of short-term notes to municipalities beginning in 2003.
The  average  balance  of loans to municipal entities was $2.3 million, having a
tax-equivalent  yield  of  3.00%.

Average  loans  in  2002 increased $21.4 million compared to 2001, while average
loan  yields  declined  76  basis  points.  Interest  income  on loans increased
$381,000,  or  3% in 2002 compared to 2001.  For the comparable periods, average
residential  mortgage  loans  increased  $16.3 million, or 16%, average consumer
loans increased $195,000, or 2%, and average commercial mortgage loans increased
$3.9  million,  or  14%.

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  Branch  Acquisition  into  the  investment and loan
portfolios.  The  net proceeds as well as proceeds from maturities and principal

payments  received  on  existing  investment securities were reinvested into the
portfolio  at  lower  interest  rates.

Average  investment  securities (taxable and tax-exempt) decreased $7.5 million,
or  13%,  in  2002  compared  to  2001, with tax-equivalent interest income down
$952,000,  or 25%, for the comparative period.  The average tax-equivalent yield
on  the  portfolio  had declined 91 basis points in 2002, when compared to 2001.
Proceeds  from  maturities  and  principal  repayments  of investment securities
funded  the  loan  growth  in  2002.

INTEREST  EXPENSE
Interest expense decreased $1.1 million, or 15%, in 2003, when compared to 2002.
Average  interest-bearing  liabilities increased $21.3 million, or 10%, in 2003.
This  increase  was  more  than  offset  by  a  reduction in the average cost of
interest-bearing  liabilities of 73 basis points, to 2.48% in 2003 from 3.21% at
2002.

Interest  expense decreased $1.5 million, or 17%, in 2002 compared to 2001.  The
average  cost  of  interest bearing liabilities declined 103 basis points during
the  12  months  ended  December  31,  2002.

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.
                                        8
<PAGE>

<TABLE>
<CAPTION>
                                                             Years Ended December 31,
----------------------------------------------------------------------------------------------------
                                                     2003 vs. 2002               2002 vs. 2001
                                             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 . . . . . . .  $  794   $  (642)  $   152   $1,176   $  (659)  $   517
Real estate loans commercial. . . . . . . .     (55)     (106)     (161)     334      (181)      153
Commercial loans. . . . . . . . . . . . . .     (38)     (148)     (186)      75      (261)     (186)
Consumer loans. . . . . . . . . . . . . . .     241      (133)      108       19      (122)     (103)
Mortgage-backed securities. . . . . . . . .     553      (357)      196     (197)     (148)     (345)
Taxable investment securities . . . . . . .    (222)     (218)     (440)    (234)     (366)     (600)
Tax-exempt investment securities. . . . . .     108      (237)     (129)     (11)        4        (7)
Interest-earning deposits . . . . . . . . .     (62)      (22)      (84)     129       (77)       52
----------------------------------------------------------------------------------------------------
Total interest income . . . . . . . . . . .   1,319    (1,863)     (544)   1,291    (1,810)     (519)
Interest Expense:
NOW  accounts . . . . . . . . . . . . . . .      18       (46)      (28)      (3)      (58)      (61)
Money management accounts . . . . . . . . .     149      (143)        6      227       (26)      201
Savings and club accounts . . . . . . . . .      57      (494)     (437)      35      (522)     (487)
Time deposits . . . . . . . . . . . . . . .     318      (765)     (447)       1    (1,098)   (1,097)
Mandatorily redeemable preferred securities     114       (16)       98      138         -       138
 Borrowings . . . . . . . . . . . . . . . .    (232)      (34)     (266)     210      (367)     (157)
----------------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . .     424    (1,498)   (1,074)     608    (2,071)   (1,463)
----------------------------------------------------------------------------------------------------
Net change in net interest income . . . . .  $  895   $  (365)  $   530   $  683   $   261   $   944
=====================================================================================================
</TABLE>

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)                                                  2003    2002    2001
---------------------------------------------------------------------------------------
<S>                                                           <C>     <C>     <C>
Service charges on deposit accounts. . . . . . . . . . . . .  $  818  $  629  $  520
Loan servicing fees. . . . . . . . . . . . . . . . . . . . .     282     265     175
Increase in the value of bank owned life insurance . . . . .     171     179     246
Net gains (losses) on sales of loans/foreclosed real estate.     326     193    (240)
Other charges, commissions and fees. . . . . . . . . . . . .     469     438     414
---------------------------------------------------------------------------------------
Core noninterest income. . . . . . . . . . . . . . . . . . .   2,066   1,704   1,115
Net gains on sales and impairment of investment securities .     542     390     749
---------------------------------------------------------------------------------------
Total noninterest income . . . . . . . . . . . . . . . . . .  $2,608  $2,094  $1,864
=======================================================================================
</TABLE>

Noninterest income in 2003 increased 25%, compared to 2002, as a result of a 21%
increase in core noninterest income and a 39% 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  $189,000  increase in service charges on deposit
accounts  when compared to 2002.  Net gains on the sale of loans/foreclosed real
estate  increased $133,000, or 69%, resulting from a $151,000 gain recognized on
the sale of loans to the secondary market, partially offset by a net loss on the
sale  of foreclosed real estate of $18,000.  Investment security gains increased
$152,000,  or  39%,  when  compared to the 2002 period.  Investment security net
gains consist of net gains associated with the sale of equity and corporate debt
securities.

Noninterest  income  increased  $230,000, or 12%, in 2002 compared to 2001.  The
increase  is  primarily  attributable  to  a  $589,000  increase  in  the  core
noninterest  income  components:  a  $109,000  increase  in  service  charges on
deposit  accounts; a $90,000 increase in loan servicing fees due to the increase
in  our  servicing  portfolio  and  a  $433,000 increase in net gains on sale of
loans/foreclosed  real  estate.  These increases in core noninterest income were
partially  offset  by  a  $67,000  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 a loss of $187,000 in
2001  related  to  forward  sale loan commitments.  The $359,000 decrease in net
gains  on sales of security investments when compared to 2001 primarily resulted
from  the  Company  recognizing  a  $275,000 impairment loss on a corporate debt
security  in  the  fourth  quarter  of  2002.
                                        9
<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)                      2003    2002    2001
-----------------------------------------------------------
<S>                                <C>     <C>     <C>
Salaries and employee benefits. .  $4,455  $3,757  $2,983
Building occupancy. . . . . . . .   1,004     796     820
Data processing expenses. . . . .     868     920     782
Professional and other services .     770     858     719
Amortization of intangible asset.     223      39     316
Other expenses. . . . . . . . . .   1,774   1,594   1,243
-----------------------------------------------------------
Total noninterest expense . . . .  $9,094  $7,964  $6,863
===========================================================
</TABLE>

Noninterest  expenses  increased  $1.1  million, or 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.

Noninterest expenses increased 16% when comparing 2002 to 2001.  The increase in
operating  expenses  resulted  primarily  from  a  26%  increase in salaries and
employee  benefits,  an  18%  increase  in  data  processing  expenses and a 28%
increase  in  other  operating  expenses.  The increase in salaries and employee
benefits  was  attributable  to the hiring of a senior commercial credit officer
and  chief  legal counsel and staff, an increase in branch hours, an increase in
the  cost  of  health  insurance  and  employee pension costs and an increase in
personnel  expenses resulting from the Branch Acquisition.  The increase in data
processing  expenses  primarily resulted from nonrecurring costs associated with
the  Branch Acquisition.  The increase in other operating expenses resulted from
expenses  associated with the operation of a foreclosed real estate property and
legal  costs  incurred  in  the litigation between the Company and a significant
shareholder.  These  increases were offset by a decrease in amortization expense
of  $277,000  in  2002  as  compared  to  2001  due to the adoption of Financial
Accounting  Standard  No.  147,  which  resulted  in  goodwill  no  longer being
amortized,  but  rather  evaluated  at  least  annually  for  impairment.

INCOME  TAX  EXPENSE
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.
The  increase  in  the  effective  tax  rate was attributable to the decrease in
tax-exempt  interest income, resulting from a decline in the yield of tax-exempt
securities.  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.

CHANGES  IN  FINANCIAL  CONDITION

INVESTMENT  SECURITIES

The  investment  portfolio represents 23% of the Company's earning assets and is
designed  to  generate  a favorable rate of return consistent with the safety of
principle 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 investment
grade  corporate  debt  instruments,  securities  issued  by  the  United States
Government,  state  and  municipal obligations, mutual funds, equity securities,
and  mortgage-backed  securities.  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 decreased $2.9
million,  or  5%,  to  $59.6  million at December 31, 2003 from $62.5 million at
December  31,  2002.  The  decrease  in  investment  securities  was  primarily
attributable  to  the  acceleration  of principal repayments on mortgaged-backed
securities,  reflecting  refinancing  activity in the underlying loans, combined
with  $9.2  million in proceeds on sales of investment securities, of which $4.3
million  were  sales  of  corporate bonds.  Proceeds from principal payments and
sales  of  investment  securities were reinvested into the investment securities
portfolio  and  the  loan  portfolio.  In  comparison,  investment  securities
increased  $9.1  million,  or  17%,  from  2001  to  2002.  The increase in 2002
primarily resulted from the investment of a portion of the net proceeds received
from  the  Branch Acquisition into the Company's investment portfolio, partially
offset  by  maturities  and  principal repayments on mortgage-backed securities.
                                       10
<PAGE>

LOANS  RECEIVABLE

Loans  receivable  represent 75% 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 8% of the total loan portfolio.  At December 31, 2003, 90% of the
Company's  total  loan  portfolio  consisted of loans secured by real estate, of
which  18%  consisted  of  commercial  real  estate  loans.

<TABLE>
<CAPTION>
                                                 December 31,
-----------------------------------------------------------------------------
(In thousands)                 2003      2002      2001      2000      1999
-----------------------------------------------------------------------------
<S>                          <C>       <C>       <C>       <C>       <C>
Residential real estate (1)  $128,989  $123,178  $112,110  $ 97,268  $ 87,851
Commercial real estate. . .    31,278    32,657    30,455    27,367    22,570
Commercial loans. . . . . .    15,090    13,196    14,358    12,873     8,635
Consumer loans. . . . . . .    16,880    15,068    12,615    12,987    12,939
-----------------------------------------------------------------------------
                             $192,237  $184,099  $169,538  $150,495  $131,995
=============================================================================
</TABLE>

(1)  residential  real  estate  includes  mortgage  loans  held-for-sale.

Total  loans  receivable increased $8.1 million, or 4%, over the prior year.  By
comparison,  loans  receivable  increased  $14.6  million,  or 9%, in 2002.  The
growth  of  the loan portfolio is primarily attributable to the continued growth
in  the  residential  real estate portfolio and home equity loan products, which
are  included  in  the  consumer  loan  portfolio.

Residential  real  estate loans increased $5.8 million, or 5%, during 2003.  The
residential  real  estate  portfolio consists of 68% in fixed-rate mortgages and
32%  in  adjustable-rate mortgages.  The increase in the residential real estate
portfolio  is  principally due to a net increase in 15-year fixed rate mortgages
of $16.0 million, partially offset by a decrease in the adjustable rate mortgage
portfolio.  Customers  continued  to  refinance  their  higher  fixed  rate  and
adjustable  rate mortgages into the fixed rate portfolio products.  During 2003,
the  Company  originated  $23.0  million  of  30-year  fixed  rate mortgages and
subsequently  sold  them into the secondary market, as compared to $14.1 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.
By  comparison,  commercial  real  estate  loans  increased $2.2 million, or 7%,
during  2002.  During  2003,  the  Company focused on enhancing the underwriting
standards  and collection procedures to improve the overall asset quality of the
commercial  loan  portfolio,  resulting  in  a  decreased  emphasis  on  loan
originations  for  2003.

Consumer  loans,  which  include  second  mortgage  loans,  home equity lines of
credit,  direct  installment  and revolving credit loans, increased 12% to $16.9
million  at  December  31, 2003.  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 2004.  During 2002,
consumer loans increased $2.4 million, or 19%, resulting from the acquisition of
consumer  loans  from  the Branch Acquisition occurring in the fourth quarter of
2002.

Commercial  loans increased 11% over the prior year to $15.1 million at December
31, 2003.  The increase in commercial loans primarily relates to the origination
of  short-term  loans  to  the  Company's  municipal  customers.  The balance of
municipal  loans  at  December  31,  2003  was  $2.6  million.  In  comparison,
commercial  loans  decreased  8%  during  2002.

                                       11
<PAGE>

NONPERFORMING  LOANS  AND  ASSETS

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

<TABLE>
<CAPTION>
                                                                  December 31,
----------------------------------------------------------------------------------------------
(In thousands)                                      2003     2002     2001     2000     1999
----------------------------------------------------------------------------------------------
<S>                                                <C>      <C>      <C>      <C>      <C>
Nonaccrual loans:
Commercial. . . . . . . . . . . . . . . . . . . .  $1,677   $  603   $  488   $  169   $  203
Consumer. . . . . . . . . . . . . . . . . . . . .     172      166       56       65       67
Real estate -  Construction . . . . . . . . . . .     270        0        0        0        0
               Mortgage .       . . . . . . . . .     873      942    1,576    1,594    2,284
----------------------------------------------------------------------------------------------
Total nonaccrual loans. . . . . . . . . . . . . .  $2,992   $1,711   $2,120   $1,828   $2,554
Loans past due 90 days or more and still accruing       0        0        0        0        0
----------------------------------------------------------------------------------------------
Total non-performing loans. . . . . . . . . . . .  $2,992   $1,711   $2,120   $1,828   $2,554
Foreclosed real estate. . . . . . . . . . . . . .     202    1,396      632      884      641
----------------------------------------------------------------------------------------------
Total non-performing assets . . . . . . . . . . .  $3,194   $3,107   $2,752   $2,712   $3,195
==============================================================================================
Non-performing loans to total loans . . . . . . .    1.59%    0.95%    1.30%    1.23%    1.96%
Non-performing assets to total assets . . . . . .    1.15%    1.11%    1.13%    1.17%    1.48%
----------------------------------------------------------------------------------------------
Interest income received on nonaccrual loans. . .       0        0        0        0        0
----------------------------------------------------------------------------------------------
Interest income that would have been recorded
under the original terms of the loans . . . . . .  $   75   $  141   $  118   $  132   $   84
----------------------------------------------------------------------------------------------
</TABLE>

Total  nonperforming  assets (nonperforming loans and foreclosed real estate) at
December  31,  2003  were  1.15%  of  total assets as compared to 1.11% of total
assets  at  December  31,  2002.  Total nonperforming loans (past due 90 days or
more)  increased  $1.3 million, or 75%, during 2003.  The total delinquent loans
(those  30 days or more delinquent) as a percentage of total loans were 3.46% at
December  31, 2003 compared to 2.28% at December 31, 2002.  Approximately 49% of
the  Company's  nonperforming  loans  at  December  31,  2003  are  secured  by
residential real estate with loss potential expected to be manageable within the
allocated  reserves.  Nonperforming  loans  increased  due  to  an  increase  in
commercial real estate and residential mortgage delinquencies.  The higher level
of  nonperforming  loans  at  December  31, 2003 is partially caused by the time
period  required  to  foreclose  on  the  underlying  real  estate  collateral.
Management  believes  that adequate reserves exist for any potential losses that
may  occur  from the remediation process, and that the increase in nonperforming
loans  is  temporary in nature. Of the $3.0 million in total nonperforming loans
at  year  end,  22%,  or  $637,000 has either paid off or returned to performing
status  during  the  first  quarter  of  2004.  Management  anticipates  that an
additional  21%,  or  $618,000  of  the  nonperforming  assets  will  return  to
performing  status or be transferred to foreclosed real estate during the second
quarter  of  2004.  Management  believes  that  the  quality  of  the underlying
collateral is marketable and that any resulting losses will be manageable within
the allocated reserves.   Foreclosed real estate decreased $1.2 million, or 86%,
from  2002.  The  Company  foreclosed on a large commercial real estate property
during  2002  and  subsequently sold the property in 2003, recognizing a $78,000
gain  on  the  sale.

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 2003.  At
December 31, 2003, the Company had $3.8 million in loans which were deemed to be
impaired having a valuation allowance of $527,000.  $2.7 million of the impaired
loan balance represents one commercial credit relationship that was restructured
during  2003.  A  $388,000  impairment reserve is recorded on this relationship.
The  customer  has  been  able  to  make  payments under 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

                                       12
<PAGE>
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 loans pools.  The allowance for
loan  losses  reflects  management's  best  estimate  of probable loan losses at
December  31,  2003.

The  allowance  for  loans  losses  was  $1.7  million  at  December 31, 2003, a
$234,000,  or  16%,  increase  from  December 31, 2002.  The allowance for loans
losses  as  a  percentage of total loans increased to 0.91% at December 31, 2003
from  0.82%  in  the prior year.  Net loan charge-offs were $363,000 during 2003
compared  to  $1.6  million  in  2002.  The  Company experienced a high level of
charge-offs  during  2002  resulting  from  the  charge-off  of  two significant
commercial  lending  relationships.  The current year charge-off levels are more
consistent  with  years  previous  to  2002.

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. At December 31, 2003, 59% of the Company's
average  deposit  base  of  $208.0  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  will  allow  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 $10.7 million in
municipal deposits in 2003, primarily concentrated in money management accounts.

Average  deposits  increased  $27.3  million,  or  15%,  when  compared to 2002.
Deposit  growth  in 2003 primarily resulted from the assumption of $26.4 million
in  deposits  through  the Branch Acquisition and the consumers' continued shift
from  equity  markets  into  insured  bank  deposits.

The  Company's  average  deposit  mix  in 2003, as compared to 2002, reflected a
slight  shift from savings and time deposits to money management accounts.   The
Company's average demand deposits, interest and noninterest bearing, represented
16%  of  total  average deposits, which was comparable with 2002.  The Company's
money  management  accounts  represented  10% of total deposits, up 4 percentage
points  for  the same period in 2002.  The Company promotes its money management
account  by  offering  competitive  rates  to  retain  existing  and attract new
customers.

At December 31, 2003, time deposits in excess of $100,000 totaled $14.6 million,
or  18%, of time deposits and 7% of total deposits.  At December 31, 2002, these
deposits  totaled  $15.8  million,  or  18%  of  time  deposits  and 8% of total
deposits.

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,
--------------------------------------------------------------------------------------------------------------
                                         2003                       2002                        2001
--------------------------------------------------------------------------------------------------------------
                                         Avg    Percent              Avg    Percent              Avg   Percent
                              Avg       Rate      of        Avg     Rate      of        Avg     Rate      of
($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 . . . .  $ 16,345    0.00%    7.86%  $ 13,154    0.00%    7.28%  $ 11,175    0.00%   6.69%
NOW accounts . . . . . . .    17,663    0.79%    8.49%    15,850    1.06%    8.77%    16,064    1.42%   9.62%
Money management accounts.    21,788    1.14%   10.47%    11,571    2.09%    6.40%     1,080    3.80%   0.65%
Savings and club accounts.    66,481    0.77%   31.96%    62,494    1.52%   34.57%    60,936    2.35%  36.50%
Time deposits. . . . . . .    85,751    3.33%   41.22%    77,701    4.25%   42.98%    77,681    5.66%  46.53%
--------------------------------------------------------------------------------------------------------------
Total average deposits . .  $208,028    1.96%  100.00%  $180,770    2.78%  100.00%  $166,936    3.65% 100.00%
==============================================================================================================
</TABLE>

                                       13
<PAGE>

CAPITAL

Shareholders' equity decreased $1.4 million, or 6%, to $21.8 million at December
31,  2003.  The  decrease  in  shareholders'  equity primarily resulted from the
Company  purchasing  $2.7 million of its common stock.  The increase in treasury
stock  resulted  from  the  Company's  privately  negotiated purchase of 160,114
shares  of  its  common  stock for a price of $2.3 million, or $14.60 per share,
during the first quarter of 2003 and other treasury stock purchases of $349,000.
The  Company  added  $1.7  million  to  retained earnings through net income and
returned  $651,000  to  its  shareholders  in  the  form of cash dividends.  The
Company's  mutual  holding company parent, Pathfinder Bancorp, M.H.C, waived its
right  to  receive  the  dividend  for the quarters ended September 30, 2003 and
December  31,  2003.

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, 2003, 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 footnote 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.

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,  2003,  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, 2003:

<TABLE>
<CAPTION>
                               1 Year     Over 1     Over 3    Over 5
(In thousands)                or Less   to 3 Years to 5 years   Years     Total
--------------------------------------------------------------------------------
<S>                         <C>      <C>      <C>      <C>      <C>
Time deposits. . . . . . .    $47,230    $25,537    $ 5,218    $ 5,061   $ 83,046
Trust preferred securities          -          -          -      5,000      5,000
Borrowings . . . . . . . .      7,600     12,000     17,960      3,400     40,960
Operating leases . . . . .         40         87         97        215        439
--------------------------------------------------------------------------------
Total. . . . . . . . . . .    $54,870    $37,624    $23,275    $13,676   $129,445
================================================================================
</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,  2003,  the Company had $19.4 million in
outstanding  commitments  to  extend  credit and standby letters of credit.  See
footnote  15.

                                       14
<PAGE>

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 past three years, the Federal Reserve lowered interest rates thirteen
times  by  a  total  of  550  basis points.  These interest rate reductions have
caused  significant  repricing  of  the  bank's  interest-earning  assets  and
interest-bearing  liabilities.  With  the  overnight borrowing rate at a 40 year
low,  the  Company is positioning itself for anticipated interest rate increases
in  the future.  Efforts are being made to shorten the repricing duration of its
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.  In addition, the Company is extending 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.

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  on-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.

The  following  table  shows the GAP position for the Company as of December 31,
2003:

<TABLE>
<CAPTION>
                                                                            Amounts Maturing or Repricing
--------------------------------------------------------------------------------------------------------------------------------
                                                        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 . . . . . . . . . . . . . .  $  2,911   $      -   $      -   $      -   $     -   $     -   $  2,911
Investment securities and FHLB stock. . . . . . . . .    15,126      2,802     11,922     15,009    10,640     4,108     59,607
Loans receivable. . . . . . . . . . . . . . . . . . .    27,995     29,677     45,277     31,231    39,591    18,466    192,237
--------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets . . . . . . . . . . . .  $ 46,032   $ 32,479   $ 57,199   $ 46,240   $50,231   $22,574   $254,755
================================================================================================================================
Interest-bearing liabilities:
Transaction deposit accounts (1). . . . . . . . . . .  $ 32,221   $  4,200   $  2,886   $      -   $     -   $     -   $ 39,307
Savings deposits (1). . . . . . . . . . . . . . . . .    29,392      5,682      8,648      6,187     9,309     9,533     68,751
Certificates of deposit . . . . . . . . . . . . . . .    14,162     33,035     25,551      5,222     5,076         -     83,046
Borrowings. . . . . . . . . . . . . . . . . . . . . .     2,000      5,600     13,000     16,960     3,400         -     40,960
Trust preferred obligations . . . . . . . . . . . . .     5,000          -          -          -         -         -      5,000
--------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities. . . . . . . . . .  $ 82,775   $ 48,517   $ 50,085   $ 28,369   $17,785   $ 9,533   $237,064
================================================================================================================================
Interest-earning assets less interest-
bearing liabilities ("interest rate sensitivity gap")  $(36,743)  $(16,038)  $  7,114   $ 17,871   $32,446   $13,041
Cumulative excess (deficiency) of interest-
sensitive assets over interest-sensitive liabilities.  $(36,743)  $(52,781)  $(45,667)  $(27,796)  $ 4,650   $17,691
Interest sensitivity gap to total assets. . . . . . .    -13.22%     -5.77%      2.56%      6.43%    11.67%     4.69%
Cumulative interest sensitivity gap to total assets .    -13.22%    -18.99%    -16.43%    -10.00%     1.67%     6.37%
Ratio of interest-earning assets to interest-
bearing liabilities . . . . . . . . . . . . . . . . .     55.61%     66.94%    114.20%    162.99%   282.43%   236.80%
Cumulative ratio of interest-earning assets to
interest-bearing liabilities. . . . . . . . . . . . .     55.61%     59.80%     74.82%     86.75%   102.04%   107.46%
================================================================================================================================
</TABLE>

     (1)  The  following  assumptions have been used when analyzing non-maturity
          deposits  for  GAP Table purposes: 16% of savings deposits are assumed
          to  reprice or mature within one year, 23% within 1 to 3 years and 20%
          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.

                                       15
<PAGE>
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 at a record low, the Company's ALCO believed it was
a better measure of current risk assuming a minus 100 point scenario, as a minus
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 . . .        9.03%        -11.44%         -24.87%
200 . . .        9.91%         -7.38%         -15.33%
100 . . .       10.65%         -3.45%          -6.50%
0               11.11%          ----            ----
-100. . .       11.04%          1.43%           1.42%
</TABLE>

                                       16
<PAGE>

INDEPENDENT  AUDITOR'S  REPORT

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

     We  have  audited  the  accompanying consolidated statement of condition of
Pathfinder  Bancorp,  Inc.  and  subsidiaries  as  of December 31, 2003, and the
related  consolidated  statements of income, changes in shareholders' equity and
cash flows for the year then ended.  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
audit.  The  December  31,  2002 and 2001 consolidated financial statements were
audited  by  other  auditors  whose report, dated January 31, 2003, expressed an
unqualified  opinion  on  those  statements.

     We  conducted  our  audit  in  accordance with auditing standards generally
accepted  in  the United States of America. 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  audit  provides  a
reasonable  basis  for  our  opinion.

     In  our  opinion,  the  2003  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, 2003, and the
results  of  their  operations  and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

     As  discussed in Note 1, "Intangible Assets", to the consolidated financial
statements,  effective  January  1,  2002,  the  Company  adopted  Statement  of
Financial  Accounting Standards No. 147, "Accounting for Certain Acquisitions of
Bank  or  Thrift  Institutions."





                                                 /s/: Beard Miller Company LLP
Harrisburg,  Pennsylvania
February  6,  2004

                                       17
<PAGE>
<TABLE>
<CAPTION>

                                           STATEMENTS OF CONDITION

                                                                                        December 31,
------------------------------------------------------------------------------------------------------------
                                                                                    2003           2002
------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>
ASSETS:
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,802,613   $  7,026,126
Interest earning deposits. . . . . . . . . . . . . . . . . . . . . . . . . . .     2,911,169      6,714,279
------------------------------------------------------------------------------------------------------------
    Total cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . .     8,713,782     13,740,405
Investment securities, at fair value . . . . . . . . . . . . . . . . . . . . .    57,558,696     60,262,544
Mortgage loans held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . .     3,520,211      3,616,711
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   188,717,017    180,482,284
   Less: Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . .     1,715,213      1,480,874
------------------------------------------------------------------------------------------------------------
     Loans receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . .   187,001,804    179,001,410
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . .     6,650,442      5,622,171
Accrued interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . .     1,273,501      1,334,126
Foreclosed real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . .       201,649      1,395,714
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,840,226      3,840,226
Intangible asset, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       849,882      1,073,182
Federal Home Loan Bank stock, at cost. . . . . . . . . . . . . . . . . . . . .     2,048,000      2,243,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     6,281,636      6,926,378
------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $277,939,829   $279,055,867
============================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $191,103,854   $188,757,723
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    15,789,957     15,764,382
------------------------------------------------------------------------------------------------------------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   206,893,811    204,522,105
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2,100,000        700,000
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    38,860,000     42,160,000
Company obligated mandatorily redeemable preferred securities of subsidiary,
Pathfinder Statutory Trust I, holding solely junior subordinated debentures of
the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5,000,000      5,000,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,301,209      3,443,740
------------------------------------------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   256,155,020    255,825,845

Shareholders' equity:
Preferred stock, authorized shares 1,000,000; no shares issued or outstanding
Common stock, par value $.01; authorized 10,000,000 shares;
2,919,386 and 2,914,669 shares issued; and 2,432,099 and
2,610,496 shares outstanding, respectively.. . . . . . . . . . . . . . . . . .        29,194         29,146
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . .     7,224,772      7,113,811
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    20,746,545     19,745,651
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . .       364,178        280,905
Unearned ESOP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (77,922)      (124,467)
Treasury Stock, at cost; 487,287 and 304,173 shares, respectively. . . . . . .    (6,501,958)    (3,815,024)
------------------------------------------------------------------------------------------------------------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . .    21,784,809     23,230,022
------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . .  $277,939,829   $279,055,867
============================================================================================================
</TABLE>

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

                                       18
<PAGE>
                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                         Years Ended December 31,
-------------------------------------------------------------------------------------------------------
                                                                     2003           2002       2001
-------------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>          <C>
INTEREST AND DIVIDEND INCOME:
  Loans, including fees . . . . . . . . . . . . . . . . . . . .  $12,832,605  $12,935,710  $12,555,321
  Debt securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2,033,991    2,256,550    3,201,319
Tax-exempt. . . . . . . . . . . . . . . . . . . . . . . . . . .      226,131      322,091      335,619
 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . .      159,203      180,494      181,099
 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       32,821      116,927       64,585
-------------------------------------------------------------------------------------------------------
       Total interest income. . . . . . . . . . . . . . . . . .   15,284,751   15,811,772   16,337,943
-------------------------------------------------------------------------------------------------------

INTEREST EXPENSE:
Interest on deposits. . . . . . . . . . . . . . . . . . . . . .    3,750,654    4,656,015    6,099,776
Interest on short-term borrowings . . . . . . . . . . . . . . .       31,236      331,962      697,945
Interest on long-term borrowings. . . . . . . . . . . . . . . .    1,930,333    1,896,473    1,687,218
Interest on company obligated mandatorily redeemable preferred
securities of subsidiary. . . . . . . . . . . . . . . . . . . .      235,723      138,119            -
-------------------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . . . . . . . . . . . .    5,947,946    7,022,569    8,484,939
-------------------------------------------------------------------------------------------------------

Net interest income . . . . . . . . . . . . . . . . . . . . . .    9,336,805    8,789,203    7,853,004
PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . .      597,766    1,374,989      707,899
-------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses . . . . . .    8,739,039    7,414,214    7,145,105
-------------------------------------------------------------------------------------------------------

NONINTEREST INCOME:
Service charges on deposit accounts . . . . . . . . . . . . . .      817,661      628,633      520,483
Increase in value of bank owned life insurance. . . . . . . . .      170,879      179,246      245,909
Loan servicing fees . . . . . . . . . . . . . . . . . . . . . .      281,898      265,465      174,784
Net gains on sales and impairment of investment securities. . .      542,501      389,779      749,237
Net gains (losses) on sales of loans and foreclosed real estate      326,164      192,853     (240,241)
Other charges, commissions & fees . . . . . . . . . . . . . . .      468,830      438,394      413,589
-------------------------------------------------------------------------------------------------------
Total other income. . . . . . . . . . . . . . . . . . . . . . .    2,607,933    2,094,370    1,863,761
-------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSE:
Salaries and employee benefits. . . . . . . . . . . . . . . . .    4,454,931    3,756,961    2,982,879
Building occupancy. . . . . . . . . . . . . . . . . . . . . . .    1,004,079      795,957      820,085
Data processing expenses. . . . . . . . . . . . . . . . . . . .      867,957      920,364      781,495
Professional and other services . . . . . . . . . . . . . . . .      770,266      857,866      719,122
Amortization of intangible asset. . . . . . . . . . . . . . . .      223,300       39,258      315,755
Other expenses. . . . . . . . . . . . . . . . . . . . . . . . .    1,773,853    1,593,838    1,243,301
-------------------------------------------------------------------------------------------------------
Total other expenses. . . . . . . . . . . . . . . . . . . . . .    9,094,386    7,964,244    6,862,637
-------------------------------------------------------------------------------------------------------

Income before income taxes. . . . . . . . . . . . . . . . . . .    2,252,586    1,544,340    2,146,229
Provision for income taxes. . . . . . . . . . . . . . . . . . .      600,923      388,061      543,739
-------------------------------------------------------------------------------------------------------
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 1,651,663  $ 1,156,279  $ 1,602,490
=======================================================================================================
NET INCOME PER SHARE - BASIC. . . . . . . . . . . . . . . . . .  $      0.68  $      0.45  $      0.62
=======================================================================================================
NET INCOME PER SHARE - DILUTED. . . . . . . . . . . . . . . . .  $      0.67  $      0.44  $      0.62
=======================================================================================================
</TABLE>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.
                                       19
<PAGE>

<TABLE>
<CAPTION>

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                          Common Stock Issued   Additional
                                          -------------------    Paid-in     Retained
                                           Shares     Amount    Capital     Earnings
--------------------------------------------------------------------------------------
<S>                                      <C>         <C>       <C>         <C>
BALANCE, DECEMBER 31, 2000. . . . . . .  2,884,720   $288,472  $6,562,085  $17,859,388
Comprehensive income:
Net income. . . . . . . . . . . . . . .                                      1,602,490
Reduction in par value of common stock.              (259,625)    259,625
ESOP shares earned. . . . . . . . . . .                            33,692
Stock option exercised. . . . . . . . .      9,500         95      62,415
Treasury stock purchased
Dividends declared ($.26 per share) . .                                       (446,239)
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001. . . . . . .  2,894,220     28,942   6,917,817   19,015,639
Comprehensive income:
Net income. . . . . . . . . . . . . . .                                      1,156,279
ESOP shares earned. . . . . . . . . . .                            57,340
Stock option exercised. . . . . . . . .     20,449        204     138,654
Treasury stock purchased
Dividends declared ($.30 per share) . .                                       (426,267)
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002. . . . . . .  2,914,669     29,146   7,113,811   19,745,651
Comprehensive income:
Net income. . . . . . . . . . . . . . .                                      1,651,663
ESOP shares earned. . .                        . . . . . . . .     75,635
Stock option exercised. . . . . . . . .      4,717         48      35,326
Treasury stock purchased
Dividends declared ($.40 per share) . .                                       (650,769)
--------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003. . . . . . .  2,919,386   $ 29,194  $7,224,772  $20,746,545
=======================================================================================
</TABLE>
                                     20
<PAGE>

<TABLE>
<CAPTION>

                                                        Accumulated
                                                        Other Com-     Unearned
                                         Comprehensive  prehensive       ESOP        Treasury
                                            Income        Income        Shares        Stock         Total
-----------------------------------------------------------------------------------------------------------
<S>                                      <C>           <C>           <C>           <C>          <C>
BALANCE, DECEMBER 31, 2000. . . . . . .                     $ 30,919   $(227,230)  $(3,551,159)  $20,962,475
Comprehensive income:
Net income. . . . . . . . . . . . . . .    $1,602,490                                              1,602,490
Unrealized gains on securities:
Unrealized holding gains arising
during period . . . . . . . . . . . . .       832,429
Reclassification adjustment for
gains included in net income. . . . . .      (749,237)
                                         ------------
Other comprehensive income, before tax.        83,192
Income tax provision. . . . . . . . . .       (33,459)
                                         ------------
Other comprehensive income, net of tax
and reclassification adjustment . . . .        49,733         49,733                                  49,733
                                         ------------
Comprehensive income: . . . . . . . . .    $1,652,223
                                         ============

Reduction in par value of common stock.                                                                    -
ESOP shares earned. . . . . . . . . . .                                   54,088                      87,780
Stock option exercised. . . . . . . . .                                                               62,510
Treasury stock purchased. . . . . . . .                                               (134,000)     (134,000)
Dividends declared ($.26 per share) . .                                                             (446,239)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001. . . . . . .                       80,652    (173,142)   (3,685,159)   22,184,749
Comprehensive income:
Net income. . . . . . . . . . . . . . .    $1,156,279                                              1,156,279
Unrealized gains on securities:
Unrealized holding gains arising
during period . . . . . . . . . . . . .       723,235
Reclassification adjustment for
gains included in net income. . . . . .      (389,779)
                                         ------------
Other comprehensive income, before tax.       333,456
Income tax provision. . . . . . . . . .      (133,203)
                                         ------------
Other comprehensive income, net of tax
and reclassification adjustment . . . .       200,253        200,253                                 200,253
                                         ------------
Comprehensive income: . . . . . . . . .    $1,356,532
                                         ============

ESOP shares earned. . . . . . . . . . .                                   48,675                     106,015
Stock option exercised. . . . . . . . .                                                              138,858
Treasury stock purchased. . . . . . . .                                               (129,865)     (129,865)
Dividends declared ($.30 per share) . .                                                             (426,267)
-----------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002. . . . . . .                      280,905    (124,467)   (3,815,024)   23,230,022
Comprehensive income:
Net income. . . . . . . . . . . . . . .    $1,651,663                                              1,651,663
Unrealized gains on securities:
Unrealized holding gains arising
during period . . . . . . . . . . . . .       681,290
Reclassification adjustment for
gains included in net income. . . . . .      (542,501)
                                         ------------
Other comprehensive income, before tax.       138,789
Income tax provision. . . . . . . . . .       (55,516)
                                         ------------
Other comprehensive income, net of tax
and reclassification adjustment . . . .        83,273         83,273                                  83,273
                                         ------------
Comprehensive income: . . . . . . . . .    $1,734,936
                                         ============

ESOP shares earned. . . . . . . . . . .                                   46,545                     122,180
Stock option exercised. . . . . . . . .                                                               35,374
Treasury stock purchased. . . . . . . .                                             (2,686,934)   (2,686,934)
Dividends declared ($.40 per share) .                                                        .      (650,769)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003. . . . . . .                     $364,178   $ (77,922)  $(6,501,958)  $21,784,809
=============================================================================================================
</TABLE>
                                       21
<PAGE>

<TABLE>
<CAPTION>

                                                   STATEMENTS OF CASH FLOWS
                                                                                           Years Ended December 31,
---------------------------------------------------------------------------------------------------------------------------
                                                                                         2003           2002           2001
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>            <C>            <C>
OPERATING ACTIVITIES:
 Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,651,663   $  1,156,279   $  1,602,490
 Adjustments to reconcile net income to net cash provided by (used in) operating
     activities
 Provision for loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . .       597,766      1,374,989        707,899
 ESOP shares earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       122,180        106,015         87,780
 Deferred income tax expense (benefit). . . . . . . . . . . . . . . . . . . . . .       306,924        292,546       (296,228)
 Proceeds from sale of loans. . . . . . . . . . . . . . . . . . . . . . . . . . .    23,380,281     19,611,815     14,109,043
 Originations of loans held-for-sale. . . . . . . . . . . . . . . . . . . . . . .   (23,049,083)   (17,759,391)   (20,102,155)
 Realized (gains) losses on sales of:
 Foreclosed real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (91,466)         5,283        133,451
 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (234,698)      (198,136)       106,790
 Available-for-sale investment securities . . . . . . . . . . . . . . . . . . . .      (542,501)      (389,779)      (749,237)
 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       542,250        469,474        465,591
 Amortization of intangible asset . . . . . . . . . . . . . . . . . . . . . . . .       223,300         39,258        315,755
 Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . . .        30,204         15,100              -
 Increase in surrender value of life insurance. . . . . . . . . . . . . . . . . .      (170,879)      (179,246)      (245,909)
 Net accretion of premiums and discounts on investment securities . . . . . . . .       287,759        (27,369)        (4,185)
 Decrease in interest receivable. . . . . . . . . . . . . . . . . . . . . . . . .        60,625        131,221        213,242
 Net change in other assets and liabilities . . . . . . . . . . . . . . . . . . .       280,761       (624,017)       426,772
------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . .     3,395,086      4,024,042     (3,228,901)
------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
 Purchase of investment securities available-for-sale and
Federal Home Loan Bank Stock. . . . . . . . . . . . . . . . . . . . . . . . . . .   (25,780,354)   (21,452,772)    (2,152,878)
 Proceeds from maturities and principal reductions of
 investment securities available-for-sale . . . . . . . . . . . . . . . . . . . .    19,898,202     11,272,921      5,078,515
 Proceeds from sale:
 Available-for-sale investment securities . . . . . . . . . . . . . . . . . . . .     9,174,531      1,847,060      9,601,934
 Real estate acquired through foreclosure . . . . . . . . . . . . . . . . . . . .     1,890,486        369,768        466,517
 Net cash received in branch acquisition. . . . . . . . . . . . . . . . . . . . .             -     21,324,109              -
 Net increase in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (9,203,115)   (16,723,674)   (15,281,529)
 Purchase of premises and equipment . . . . . . . . . . . . . . . . . . . . . . .    (1,570,521)      (911,275)      (783,326)
------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . .    (5,590,771)    (4,273,863)    (3,070,767)
------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
 Net increase in demand deposits, NOW accounts, savings accounts,
money management deposit accounts and escrow deposits . . . . . . . . . . . . . .     5,429,106      6,423,999     10,485,060
 Net (decrease) increase in time deposits . . . . . . . . . . . . . . . . . . . .    (3,057,400)     2,109,923     (2,355,203)
 Net proceeds from (repayments on) short-term borrowings. . . . . . . . . . . . .     1,400,000    (16,518,000)     6,096,000
 Payments on long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . .    (9,000,000)    (3,912,500)   (21,885,000)
 Proceeds from long-term borrowings . . . . . . . . . . . . . . . . . . . . . . .     5,700,000     13,850,000     18,000,000
 Proceeds from issuance of mandatorily redeemable preferred securities. . . . . .             -      4,849,000              -
 Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . .        35,374        138,858         62,510
 Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (651,084)      (415,145)      (531,086)
 Treasury stock purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (2,686,934)      (129,865)      (134,000)
-----------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . .    (2,830,938)     6,396,270      9,738,281
------------------------------------------------------------------------------------------------------------------------------
(Decrease) Increase in cash and cash equivalents. . . . . . . . . . . . . . . . .    (5,026,623)     6,146,449      3,438,613
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . .    13,740,405      7,593,956      4,155,343
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . . . .  $  8,713,782   $ 13,740,405   $  7,593,956
==============================================================================================================================
CASH PAID DURING THE PERIOD FOR:
 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,990,930   $  7,122,065   $  8,555,605
 Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       250,000        850,000        632,500
NON-CASH INVESTING ACTIVITY:
 Transfer of loans to foreclosed real estate. . . . . . . . . . . . . . . . . . .       604,955      1,138,300        348,113
 Securitization of loans and held as an investment security . . . . . . . . . . .             -              -      1,355,095
</TABLE>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements
                                       22
<PAGE>

NOTE  1:  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

NATURE  OF  OPERATIONS
The  accompanying  consolidated  financial  statements  include  the accounts of
Pathfinder  Bancorp,  Inc.  (the  "Company")  and its wholly owned subsidiaries,
Pathfinder  Bank  (the  "Bank")  and  Pathfinder  Statutory Trust I.  Pathfinder
Statutory  Trust  I  was  formed  in 2002 for the purpose of issuing mandatorily
redeemable  convertible  securities,  which  are considered Tier I capital under
regulatory  capital  adequacy  requirements  (See  Note 17).  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  65.1%  of the outstanding common stock of the Company.  Salaries,
employee  benefits  and  rent approximating $124,000, $115,000 and $101,000 were
allocated  from  the Company to Pathfinder Bancorp, M.H.C. during 2003, 2002 and
2001,  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 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 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.

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
by  analyzing  security  credit  ratings  and  related fair market values.  When
significant  declines  in fair market values or credit ratings are determined to
be  other  than  temporary,  appropriate  action  is  taken.

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, 2003, the Company
had  approximately $2.1 million of mortgage loan forward commitments outstanding
to  hedge  interest  rate  risk  on certain committed and originated loans.  The
difference  between the settlement value of the forward commitments and the fair
value  of  these  commitments  at  December 31, 2003 was not significant.  As of
December  31,  2002,  the  Company  had  no  outstanding  mortgage  loan forward
commitments.

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.
                                       23
<PAGE>

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
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.

The  allowance  consists  of  specific, 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.

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.

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  the  fair  value less estimated disposal costs. Write downs of, and
expenses  related  to,  foreclosed  real estate holdings included in noninterest
expense  were  $124,000,  $155,000  and  $99,000  in  2003,  2002  and  2001,
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.  On
January  1,  2002,  the Company adopted SFAS 142, "Goodwill and Other Intangible
Assets,"  and  SFAS  147,  "Accounting  for  Certain Acquisitions of Banking and
Thrift  Institutions."  Under the provisions of SFAS 142 and SFAS 147, effective
January  1,  2002,  goodwill  is  no  longer  ratably  amortized into the income
statement  over  an  estimated  life, but rather is tested at least annually for
                                       24
<PAGE>

impairment  using  fair  value methodologies.  Prior to the adoption of SFAS 142
and SFAS 147, the Company's goodwill was amortized on a straight-line basis over
15  years  resulting  in amortization expense of $193,000 in 2001.  Amortization
expense related to core deposit intangibles is estimated to be $850,000 for 2004
through  2008.

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.

Pro  forma  amounts  of  net  income  and  earnings per share under Statement of
Financial  Accounting  Standards  No.  123  are  as  follows:

<TABLE>
<CAPTION>
                                          2003        2002        2001
-------------------------------------------------------------------------
<S>                                    <C>         <C>         <C>
Net Income:
As reported . . . . . . . . . . . . .  $1,651,663  $1,156,279  $1,602,490
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      28,278     108,766     146,009
-------------------------------------------------------------------------
Pro forma . . . . . . . . . . . . . .  $1,623,385  $1,047,513  $1,456,481
=========================================================================
</TABLE>

<TABLE>
<CAPTION>
                            2003            2002               2001
-------------------------------------------------------------------------
Earnings per share:  Basic   Diluted   Basic   Diluted   Basic   Diluted
-------------------  ------  --------  ------  --------  ------  --------
<S>                  <C>     <C>       <C>     <C>       <C>     <C>
As reported . . . .  $ 0.68  $   0.67  $ 0.45  $   0.44  $ 0.62  $   0.62
Pro forma . . . . .  $ 0.67  $   0.66  $ 0.41  $   0.40  $ 0.57  $   0.56
</TABLE>

The  fair  value  of  these options was estimated at the date of grant 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.  Therefore, the foregoing pro forma
results  are  not  likely  to  be  representative of the effects of reported net
income  of  future  periods due to additional years of vesting.  No options were
granted  during  2003  and  2002.  The  weighted-average fair value per share of
granted  options  during  2001  was  $3.90.

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.  In 2003, 2002 and 2001, the
Company  purchased  183,114,  11,000  and  10,000 shares of treasury stock at an
average  cost  of $14.67,  $11.86 and 13.40 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.

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.

                                       25
<PAGE>

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
balance  sheet,  such  items,  along  with  net  income,  are  components  of
comprehensive  income.

RECLASSIFICATIONS
Certain  amounts  from  2002  and  2001 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  November  2002,  the Financial Accounting Standards Board (FASB) issued FASB
Interpretation  No.  45  (FIN  45),  "Guarantor's  Accounting  and  Disclosure
Requirements  for  Guarantees,  Including Indirect Guarantees of Indebtedness of
Others."  This  Interpretation expands the disclosures to be made by a guarantor
in  its  financial statements about its obligations under certain guarantees and
requires  the  guarantor  to  recognize  a  liability  for  the fair value of an
obligation  assumed  under  certain  specified  guarantees.  Under  FIN  45, the
Company  does  not issue any guarantees that would require liability recognition
or  disclosure,  other  than its standby letters of credit, as discussed in Note
15.  Adoption  of  FIN  45  did  not  have a significant impact on the Company's
financial  condition  or  results  of  operations.

In  January  2003,  the  Financial  Accounting  Standards  Board  issued  FASB
Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities,  an
Interpretation  of  ARB  No.  51."  FIN  46  was revised in December 2003.  This
Interpretation  provides new guidance for the consolidation of variable interest
entities ("VIEs") and requires such entities to be consolidated by their primary
beneficiaries  if  the  entities  do not effectively disperse risk among parties
involved.  The  Interpretation  also  adds disclosure requirements for investors
that  are  involved with unconsolidated VIEs.  The disclosure requirements apply
to  all  financial statements issued after December 31, 2003.  The consolidation
requirements  apply to companies that have interests in special-purpose entities
for periods ending after December 15, 2003. Consolidation of other types of VIEs
is  required  in  financial  statements for periods ending after March 15, 2004.
The adoption of this Interpretation did not have, and is not expected to have, a
material  impact  on the Company's financial condition or results of operations.

In  its  current  form,  FIN  46  will  require the Company to deconsolidate its
investment  in  Pathfinder Statutory Trust I (the "Trust") on the March 15, 2004
effective  date.  The  deconsolidation  will  result  in an additional asset and
borrowings  of  $155,000.  The  deconsolidation  of  subsidiary  trusts  of bank
holding  companies  formed  in  connection  with the issuance of trust preferred
securities,  like  the Trust, appears to be an unintended consequence of FIN 46.
In  July  2003,  the  Board  of Governors of the Federal Reserve System issued a
supervisory letter instructing bank holding companies to continue to include the
trust  preferred  securities  in  their  Tier  1  capital for regulatory capital
purposes  until notice is given to the contrary.  The Federal Reserve intends to
review  the  regulatory implications of any accounting treatment changes and, if
necessary or warranted, provide further appropriate guidance.  When the Trust is
no  longer  included  in  consolidated  results, the Company will still meet all
regulatory  capital  requirements  to  which  it  is  subject.

In April 2003, the Financial Accounting Standards Board (FASB) issued Statement
No.  149, "Amendment of Statement No. 133, Accounting for Derivative Instruments
and  Hedging  Activities."  This  Statement  clarifies  the  definition  of  a
derivative  and  incorporates certain decisions made by the Board as part of the
Derivatives  Implementation  Group  process.  This  Statement  is  effective for
contracts  entered  into  or  modified  and for hedging relationships designated
after  June 30, 2003 and should be applied prospectively.  The provisions of the
Statement  that  relate  to  implementation  issues addressed by the Derivatives
Implementation  Group  that have been effective should continue to be applied in
accordance  with their respective dates.  Adoption of this standard did not have
an  impact  on  the  Company's  financial  condition  or  results of operations.

In  May 2003, the Financial Accounting Standards Board issued Statement No. 150,
"Accounting  for  Certain  Financial  Instruments  with  Characteristics of both
Liabilities  and  Equity."  This  Statement  requires  that an issuer classify a
financial  instrument  that  is  within its scope as a liability.  Many of these
instruments  were previously classified as equity.  This Statement was effective
for  financial  instruments  entered  into  or  modified  after May 31, 2003 and
otherwise was effective beginning July 1, 2003 and did not have an impact on the
Company's  financial  condition  or  results  of  operations.

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.
                                       26
<PAGE>

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

<TABLE>
<CAPTION>
<S>                          <C>
Cash. . . . . . . . . . . .  $21,558,800
Loans receivable. . . . . .    2,260,000
Allowance for loan losses .      (56,500)
-----------------------------------------
Net loans receivable. . . .    2,203,500
Bank premises and equipment      251,000
Other assets. . . . . . . .        9,700
Intangible assets . . . . .    2,376,000
Total assets. . . . . . . .  $26,399,000
=========================================
Deposits. . . . . . . . . .   26,399,000
-----------------------------------------
 Total liabilities. . . . .  $26,399,000
=========================================
</TABLE>

Intangible  assets include $1,100,000 in core deposit intangibles amortized over
a weighted-average useful life of 5 years. Accumulated amortization approximated
$262,000  and $39,000 at December 31, 2003 and 2002, respectively. The remaining
$1,300,000  in  intangible assets represents goodwill.  Amortization of goodwill
and  the  core  deposit  intangible  is  deductible  for  tax  purposes.

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, 2003
-------------------------------------------------------------------------------------------
                                                        Gross         Gross      Estimated
                                      Amortized       Unrealized    Unrealized      Fair
                                         Cost            Gains        Losses        Value
-------------------------------------------------------------------------------------------
<S>                               <C>                 <C>          <C>           <C>
Bond investment securities:
US treasury and agencies . . . .     $     6,353,640  $    47,942  $   (75,559)  $ 6,326,023
State and political subdivisions           7,359,256      304,166         (323)    7,663,099
Corporate. . . . . . . . . . . .           6,420,909      344,674      (70,025)    6,695,558
Mortgage-backed. . . . . . . . .          29,733,939      387,836     (187,937)   29,933,838
-------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . .          49,867,744    1,084,618     (333,844)   50,618,518
Equity investments . . . . . . .           7,083,988      347,300     (491,110)    6,940,178
-------------------------------------------------------------------------------------------
Total investment securities. . .     $    56,951,732  $ 1,431,918  $  (824,954)  $57,558,696
============================================================================================
</TABLE>

<TABLE>
<CAPTION>

                                                        December 31, 2002
-------------------------------------------------------------------------------------------
                                                        Gross         Gross      Estimated
                                      Amortized       Unrealized    Unrealized      Fair
                                         Cost            Gains        Losses        Value
-------------------------------------------------------------------------------------------
<S>                               <C>          <C>          <C>           <C>
Bond investment securities:
US treasury and agencies . . . .     $     4,378,243  $    87,728  $    (1,514)  $ 4,464,457
State and political subdivisions           8,549,215      337,409      (22,719)    8,863,905
Corporate. . . . . . . . . . . .          15,375,316      429,445     (534,501)   15,270,260
Mortgage-backed. . . . . . . . .          24,439,493      727,012       (6,676)   25,159,829
-------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . .          52,742,267    1,581,594     (565,410)   53,758,451
Equity investments . . . . . . .           7,052,102            -     (548,009)    6,504,093
-------------------------------------------------------------------------------------------
Total investment securities. . .    $     59,794,369  $ 1,581,594  $(1,113,419)  $60,262,544
============================================================================================
</TABLE>

Gross  gains  of  $581,000,  $665,000  and  $759,000  for  2003,  2002 and 2001,
respectively and gross losses of $38,000, $275,000 and $9,000 for 2003, 2002 and
2001, respectively were realized on sales and calls of securities.  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 $12,477,000 at December 31, 2003
were  pledged  to  collateralize  certain  deposit  and  borrowing arrangements.

The  amortized cost and estimated fair value of debt investments at December 31,
2003  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
                                           Cost      Fair Value
----------------------------------------------------------------
<S>                                     <C>          <C>
Due in one year or less. . . . . . . .  $   582,606  $   598,562
Due after one year through five years.   12,041,628   12,406,059
Due after five years through ten years    2,589,202    2,758,978
Due after ten years. . . . . . . . . .    4,920,369    4,921,081
Mortgage-backed securities . . . . . .   29,733,939   29,933,838
----------------------------------------------------------------
Totals . . . . . . . . . . . . . . . .  $49,867,744  $50,618,518
================================================================
</TABLE>
                                       27
<PAGE>

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,  2003.

<TABLE>
<CAPTION>
                                                                     December 31, 2003
--------------------------------------------------------------------------------------------------------------------------
                                                Less than Twelve            Twelve Months
                                                     Months                    or More                   Total
--------------------------------------------------------------------------------------------------------------------------
                                             Unrealized      Fair       Unrealized      Fair      Unrealized      Fair
                                               Losses        Value        Losses       Value        Losses        Value
--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>           <C>          <C>           <C>         <C>           <C>
US treasury and agency securities. . . . .  $   (60,390)  $ 3,835,398  $   (15,169)  $  165,387  $   (75,559)  $ 4,000,785
State and political subdivision securities         (323)      114,677            -            -         (323)      114,677
Corporate securities . . . . . . . . . . .            -             -      (70,025)   1,879,020      (70,025)    1,879,020
Mortgage-backed securities . . . . . . . .     (137,459)   10,076,014      (50,478)   3,220,434     (187,937)    5,642,191
Equity investment securities . . . . . . .      (16,601)    3,115,467     (474,509)   2,633,952     (491,110)    5,749,419
--------------------------------------------------------------------------------------------------------------------------
                                            $  (214,773)  $17,141,556  $  (610,181)  $7,898,793  $  (824,954)  $17,386,092
==========================================================================================================================
</TABLE>

The  above  noted declines in fair value relating to 36 mortgage-backed and debt
securities  are  considered  temporary  by  management,  as  the  collection  of
contractual  amounts  of  principal  and  interest  are deemed probable, and the
company  has  the  intent  and  ability  to  hold  the  individual securities to
maturity.

The  Company's  equity  investment  holdings  with  fair  values less than their
carrying  amounts  for a period in excess of twelve months represent investments
in  a  fund  consisting  primarily  of  dividend  paying  common stocks of large
capitalization  companies  with  market  capitalization in excess of $5 billion,
representing  investment  grade  corporate securities.  The fund performance has
historically  closely  correlated  to  overall  market  trends and management is
confident  that  this  close  correlation  will  continue.  Over the past twelve
months,  the  overall  fund value has increased in excess of 25% and a review of
the  underlying  securities  that  comprise  the  fund  indicates  no individual
impaired  holdings  and  there  is no indication that the profitability of these
corporations is impaired beyond the economic cycle. Thus, the unrealized loss is
considered  temporary.

NOTE  5:  LOANS
Major  classifications  of  loans  at  December  31,  are  as  follows:

<TABLE>
<CAPTION>
                                    2003           2002
------------------------------------------------------------
<S>                             <C>            <C>
Real estate mortgages:
Conventional . . . . . . . . .  $120,657,337   $114,880,488
Construction . . . . . . . . .     4,374,721      4,388,792
Commercial . . . . . . . . . .    31,278,158     32,657,177
------------------------------------------------------------
                                 156,310,216    151,926,457
------------------------------------------------------------
Other loans:
Consumer . . . . . . . . . . .     3,833,743      3,718,774
Home Equity/2nd Mortgage . . .    12,948,290     11,151,317
Passbook loans . . . . . . . .        97,798        198,113
Lease financing. . . . . . . .        50,825        431,555
Commercial . . . . . . . . . .    15,039,129     12,764,633
------------------------------------------------------------
                                  31,969,785     28,264,392
------------------------------------------------------------
Total loans. . . . . . . . . .   188,280,001    180,190,849
------------------------------------------------------------
Net deferred loan costs. . . .       437,016        291,435
Less allowance for loan losses    (1,715,213)    (1,480,874)
------------------------------------------------------------
Loans receivable, net. . . . .  $187,001,804   $179,001,410
============================================================
</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, 2003:

<TABLE>
<CAPTION>
<S>                           <C>
Balance at beginning of year  $ 5,341,000
Originations . . . . . . . .    1,089,000
Principal payments . . . . .   (1,120,000)
------------------------------------------
Balance at end of year . . .  $ 5,310,000
==========================================
</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>
                                 2003          2002         2001
--------------------------------------------------------------------
<S>                           <C>          <C>           <C>
Balance at beginning of year  $1,480,874   $ 1,679,215   $1,273,707
Recoveries credited. . . . .      37,323        31,916       62,330
Provision for loan losses. .     597,766     1,374,989      707,899
Allowance on acquired loans.           -        56,500            -
Loans charged-off. . . . . .    (400,750)   (1,661,746)    (364,721)
--------------------------------------------------------------------
Balance at end of year . . .  $1,715,213   $ 1,480,874   $1,679,215
====================================================================
</TABLE>

The  following  is  a  summary  of  information  pertaining  to  impaired loans.
<TABLE>
<CAPTION>

For the Year Ended December 31, 2003
---------------------------------------------------------
<S>                                            <C>
Impaired loans without a valuation allowance.  $        -
Impaired loans with a valuation allowance . .   3,804,000
---------------------------------------------------------
Total impaired loans. . . . . . . . . . . . .  $3,804,000
=========================================================
Valuation allowance related to impaired loans  $  527,000

Average investment in impaired loans. . . . .  $3,446,000
Interest income recognized on impaired loans.  $  139,000
Interest income recognized on a cash basis on
impaired loans. . . . . . . . . . . . . . . .  $   93,000
</TABLE>

As  of  December  31,  2003, no additional funds are committed to be advanced in
connection  with impaired loans.  At December 31, 2002 and 2001, the Company had
no  loans  classified  as  impaired.

The amount of loans on which the Company has ceased accruing interest aggregated
approximately  $2,992,000  and  $1,711,000  at  December  31,  2003  and  2002,
respectively.  There  were  no  loans  past  due  ninety  days or more and still
accruing  interest  at  December  31,  2003,  2002  or  2001.
                                       28
<PAGE>

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 $47.6 million and $41.4 million at December 31,
2003  and  2002,  respectively.

The balance of capitalized servicing rights included in other assets at December
31,  2003  and  2002,  was  $257,000  and  $200,000,  respectively.

The  following  summarizes  mortgage-servicing rights capitalized and amortized:

<TABLE>
<CAPTION>
                                       2003   2002   2001
----------------------------------------------------------
<S>                                    <C>    <C>    <C>
Mortgage servicing rights capitalized  $ 179  $ 152  $ 131
----------------------------------------------------------
Mortgage servicing rights amortized .  $ 122  $  84  $  39
----------------------------------------------------------
</TABLE>

NOTE  8:  PREMISES  AND  EQUIPMENT
A  summary  of  premises  and  equipment  at  December  31,  is  as  follows:

<TABLE>
<CAPTION>
                                     2003         2002
 --------------------------------------------------------
<S>                               <C>          <C>
Land . . . . . . . . . . . . . .  $   674,773  $  674,773
Buildings. . . . . . . . . . . .    5,171,939   4,287,046
Furniture, fixture and equipment    5,057,003   4,606,257
Construction in progress . . . .      471,364     309,279
 --------------------------------------------------------
                                   11,375,079   9,877,355
Less: Accumulated depreciation .    4,724,637   4,255,184
 --------------------------------------------------------
                                  $ 6,650,442  $5,622,171
=========================================================
</TABLE>

NOTE  9:  DEPOSITS
A  summary  of  deposits  at  December  31,  is  as  follows:

<TABLE>
<CAPTION>
                                        2003          2002
--------------------------------------------------------------
<S>                                 <C>           <C>
Savings accounts . . . . . . . . .  $ 66,683,019  $ 65,843,713
Time accounts. . . . . . . . . . .    68,428,288    70,276,112
Time accounts over $100,000. . . .    14,618,101    15,827,677
Money management accounts. . . . .    22,337,225    19,765,014
Demand deposit interest-bearing. .    16,968,962    15,404,423
Demand deposit noninterest-bearing    15,789,957    15,764,382
Mortgage escrow funds. . . . . . .     2,068,259     1,640,784
--------------------------------------------------------------
                                    $206,893,811  $204,522,105
==============================================================
</TABLE>

At  December 31, 2003, the schedules maturities of time deposits are as follows:

<TABLE>
<CAPTION>
Year of Maturity    Amount
-----------------------------
<S>               <C>
2004 . . . . . .  $47,228,000
2005 . . . . . .   14,289,000
2006 . . . . . .   11,249,000
2007 . . . . . .    4,048,000
2008 . . . . . .    1,171,000
Thereafter . . .    5,061,000
-----------------------------
                  $83,046,000
=============================
</TABLE>

NOTE  10:  BORROWED  FUNDS
The  composition  of  borrowings  at  December  31  is  as  follows:

<TABLE>
<CAPTION>
                                                            2003          2002
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
Short-term:
FHLB Advances . . . . . . . . . . . . . . . . . . . .  $ 2,100,000  $    700,000
Total short-term. . . . . . . . . . . . . . . . . . .    2,100,000       700,000
--------------------------------------------------------------------------------
Long-term:
FHLB Repurchase agreements. . . . . . . . . . . . . .    3,400,000     3,400,000
FHLB advances . . . . . . . . . . . . . . . . . . . .   35,460,000    38,760,000
--------------------------------------------------------------------------------
Total long-term . . . . . . . . . . . . . . . . . . .   38,860,000    42,160,000
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely junior
subordinated debentures of the Company. . . . . . . .    5,000,000     5,000,000
--------------------------------------------------------------------------------
Total borrowings. . . . . . . . . . . . . . . . . . .  $45,960,000  $ 47,860,000
================================================================================

The  principal  balance,  interest  rate and maturity of the above borrowings at
December  31,  2003  is  as  follows:

Term. . . . . . . . . . . . . . . . . . . . . . . . .  Principal    Rates
--------------------------------------------------------------------------------
Short-term:
Advances with FHLB
due within 3-6 months . . . . . . . . . . . . . . . .  $ 1,100,000          1.30%
due within 6 months to 1 year . . . . . . . . . . . .    1,000,000          1.27%
--------------------------------------------------------------------------------
Total short-term borrowings . . . . . . . . . . . . .  $ 2,100,000
================================================================================
Long-term:
Repurchase agreements (due in 2006 and 2009). . . . .    3,400,000   5.56% -5.85%
--------------------------------------------------------------------------------
Advances with FHLB
due within 2 years. . . . . . . . . . . . . . . . . .   10,500,000    2.07%-5.43%
due within 3 years. . . . . . . . . . . . . . . . . .    7,000,000    4.13%-5.32%
due within 4 years. . . . . . . . . . . . . . . . . .   11,350,000    3.00%-5.04%
due after 5 years . . . . . . . . . . . . . . . . . .    6,610,000    2.67%-6.00%
--------------------------------------------------------------------------------
Total advances with FHLB. . . . . . . . . . . . . . .   35,460,000
------------------------------------------------------------------
Company obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely junior
subordinated debentures of the Company. . . . . . . .    5,000,000  LIBOR+3.45%
--------------------------------------------------------------------------------
Total long-term borrowings. . . . . . . . . . . . . .  $43,860,000
================================================================================
</TABLE>

Other  information  related  to  short  term  borrowings  is  as  follows:

<TABLE>
<CAPTION>
                                                2003          2002          2001
------------------------------------------------------------------------------------
<S>                                         <C>           <C>           <C>
Maximum outstanding at any month end . . .  $12,000,000   $20,668,000   $20,218,000
Average amount outstanding during the year    2,660,000     7,164,000    15,240,000
Average interest rate during the year. . .         1.17%         4.63%         4.56%
</TABLE>

The  repurchase  agreements  with  the  Federal  Home  Loan  Bank  ("FHLB")  are
collateralized by certain investment securities, real estate mortgages and cash,
which  had  a carrying value of $3,400,000 at December 31, 2003.  The collateral
                                       29
<PAGE>

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  2003
approximated  0.97%.  At  December 31, 2003, $14,104,000 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 $101,940,000 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% (4.62% at December 31, 2003)
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.

NOTE  11:  EMPLOYEE  BENEFITS, 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
a  December  31  measurement  date  for  the  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,  2003  and  2002:

<TABLE>
<CAPTION>
                                                      Pension Benefits     Postretirement Benefits
--------------------------------------------------------------------------------------------------
                                                    2003         2002         2003        2002
--------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>          <C>         <C>
Change in benefit obligations:
Benefit obligation at beginning of year . . . .  $3,031,096   $2,479,215   $ 367,576   $ 362,456
Service cost. . . . . . . . . . . . . . . . . .     153,883      118,697       1,939       1,708
Interest cost . . . . . . . . . . . . . . . . .     200,169      183,781      20,795      22,461
Actuarial gain. . . . . . . . . . . . . . . . .     165,360      402,687         453      14,762
Plan participants' contributions. . . . . . . .           -            -       7,208           -
Benefit paid. . . . . . . . . . . . . . . . . .    (150,558)    (157,424)    (27,915)    (33,811)
Settlements . . . . . . . . . . . . . . . . . .     (17,615)           -           -           -
Plan amendment. . . . . . . . . . . . . . . . .           -        4,140      (3,081)          -
--------------------------------------------------------------------------------------------------
Benefit obligation at end of year . . . . . . .  $3,382,335   $3,031,096   $ 366,975   $ 367,576
--------------------------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of year.  $2,492,524   $2,598,427   $       -   $       -
Actual return (loss) on plan assets . . . . . .     266,103     (328,553)          -           -
Plan participants' contributions. . . . . . . .           -            -       7,208           -
Benefits paid . . . . . . . . . . . . . . . . .    (150,558)    (157,424)    (27,915)    (33,811)
Employer contributions. . . . . . . . . . . . .     201,840      380,074      20,707      33,811
Settlements . . . . . . . . . . . . . . . . . .     (17,615)           -           -           -
--------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year. . . .  $2,792,294   $2,492,524   $       -   $       -
--------------------------------------------------------------------------------------------------
Components of prepaid/accrued benefit cost
Unfunded status . . . . . . . . . . . . . . . .  $ (590,041)  $ (538,572)  $(366,975)  $(367,576)
Unrecognized prior service cost . . . . . . . .           -          121           -           -
Unrecognized transition obligation. . . . . . .           -            -     152,197     173,546
Unrecognized actuarial net loss . . . . . . . .   1,400,677    1,380,111      45,401      45,604
--------------------------------------------------------------------------------------------------
Prepaid/(accrued) benefit/(cost). . . . . . . .  $  810,636   $  841,660   $(169,377)  $(148,426)
==================================================================================================
</TABLE>
                                       30
<PAGE>

The  accumulated  benefit obligation for the defined benefit plan was $2,735,000
and  $2,434,000  at  December  31,  2003  and  2002,  respectively.

The  significant  assumptions  used  in determining the benefit obligation as of
December  31,  2003  and  2002  is  as  follows:

<TABLE>
<CAPTION>
                                                Pension Benefits    Postretirement Benefits
-------------------------------------------------------------------------------------------
                                                2003      2002         2003      2002
-------------------------------------------------------------------------------------------
<S>                                             <C>       <C>          <C>       <C>
Weighted average discount rate . . . . . . . .  6.25%     6.50%        6.00%     6.00%
Rate of increase in future compensation levels  3.50%     4.00%           -         -
</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  8.5%  and  12.0%,
respectively.  The  rates were assumed to decrease gradually to 5.0% 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
                                                       Increase         Decrease
---------------------------------------------------------------------------------
<S>                                               <C>               <C>
Effect on total of service and interest
cost components. . . . . . . . . . . . . .       .  $   1,900       $  (1,728)
Effect on post retirement benefit obligation           28,064         (25,793)
</TABLE>

The  composition  of  the net periodic benefit plan cost (benefit) for the years
ended  December  31,  2003,  2002  and  2001  is  as  follows:

<TABLE>
<CAPTION>
                                                            Pension Benefits          Postretirement Benefits
---------------------------------------------------------------------------------------------------------------
                                                     2003        2002        2001      2003     2002     2001
---------------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>         <C>         <C>      <C>      <C>
Service cost . . . . . . . . . . . . . . . . . .  $ 153,883   $ 118,697   $  85,697   $ 1,939  $ 1,708  $ 1,538
Interest cost. . . . . . . . . . . . . . . . . .    200,169     183,781     171,492    20,795   22,461   21,323
Amortization of transition obligation. . . . . .          -           -           -    18,265   18,519   18,522
Amortization of unrecognized prior service cost.        121         959         959         -        -        -
Amortization of gains and losses . . . . . . . .    105,536      26,542     (11,922)      656      162      158
Expected return on plan assets . . . . . . . . .   (226,845)   (234,761)   (280,516)        -        -        -
---------------------------------------------------------------------------------------------------------------
Net periodic benefit plan cost (benefit) . . . .  $ 232,864   $  95,218   $ (34,290)  $41,655  $42,850  $41,541
===============================================================================================================

</TABLE>
The  significant  assumptions  used in determining the net periodic benefit plan
cost  (benefit)  for  years  ended  December  31:

<TABLE>
<CAPTION>
                                                       Pension Benefits        Postretirement Benefits
--------------------------------------------------------------------------------------------------------
                                                  2003      2002      2001     2003      2002      2001
--------------------------------------------------------------------------------------------------------
<S>                                               <C>       <C>       <C>       <C>       <C>       <C>
Weighted average discount rate . . . . . . . . .  6.50%     7.25%     8.00%     6.00%     6.50%    6.50%
Expected long term rate of return on plan assets  9.00%     9.00%     9.00%        -         -         -
Rate of increase in future compensation levels .  4.00%     4.50%     5.50%        -         -         -
</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% and 2-6%, respectively.  The long-term
inflation  rate  was estimated to be 3%.  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.

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     2003   2002
-------------------------------
<S>                <C>    <C>
Cash. . . . . . .     -      9%
Equity securities    67%    57%
Debt securities .    33%    34%
-------------------------------
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.  In
addition,  a  small portion of the assets (less than 1%) is invested in RS Group
common  stock.  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).
                                       31
<PAGE>

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, 2004, the Bank expects to contribute
approximately  $250,000  to  the  Plan.

The  Company  also offers a 401(k) plan to its employees.  Contributions to this
plan  were  $84,000,  $74,000 and $52,000 for 2003, 2002 and 2001, 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, 2003 and 2002, other liabilities include approximately
$1,172,000  and  $1,143,000,  respectively,  relating  to deferred compensation.
Deferred  compensation  expense  for the years ended December 31, 2003, 2002 and
2001  amounted  to  approximately  $116,000, $113,000 and $94,000, respectively.

The  Company  has  a  supplemental  executive retirement plan for the benefit of
certain  executive  officers.  At  December 31, 2003 and 2002, other liabilities
include  approximately  $473,000  and  $495,000  accrued  under  these  plans.
Compensation  expense  includes  approximately  $68,000,  $74,000  and  $110,000
relating  to the supplemental executive retirement plan for 2003, 2002 and 2001,
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,  2003  and  2002, the cash value of these policies was
$4,493,000  and  $4,322,000,  respectively.

NOTE  12:  STOCK  BASED  COMPENSATION  PLANS
In  February  1997,  the  Board of Directors approved an option plan and granted
options  there  under  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
                                  Outstanding   Exercise Price   Exercisable
-----------------------------------------------------------------------------
<S>                               <C>           <C>              <C>
Outstanding at December 31, 2000       84,000   $          6.58       84,000
Granted. . . . . . . . . . . . .       38,499              8.34
Exercised. . . . . . . . . . . .       (9,500)             6.58
-----------------------------------------------------------------------------
Outstanding at December 31, 2001      112,999   $          7.18       87,333
Exercised. . . . . . . . . . . .      (20,449)             6.79
-----------------------------------------------------------------------------
Outstanding at December 31, 2002       92,550   $          7.27       79,717
Exercised. . . . . . . . . . . .       (4,717)             7.49
-----------------------------------------------------------------------------
Outstanding at December 31, 2003       87,833   $          7.25       87,833
=============================================================================

</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  $129,000,  $113,000  and  $88,000 for the years ended December 31,
2003,  2002  and 2001, respectively.   Total earned shares at December 31, 2003,
2002  and 2001 were 79,367, 71,478 and 63,228, respectively.  The estimated fair
value  of the remaining 13,207 unearned shares at December 31, 2003 is $242,000.
Unearned  ESOP  shares  are not considered outstanding for purposes of computing
earnings  per  share.
                                       32
<PAGE>

NOTE  13:  INCOME  TAXES

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

<TABLE>
<CAPTION>
            2003      2002       2001
----------------------------------------
<S>       <C>       <C>       <C>
Current   $293,999  $ 95,515  $ 839,967
Deferred   306,924   292,546   (296,228)
----------------------------------------
          $600,923  $388,061  $ 543,739
========================================
</TABLE>

The  provision  for  income  taxes  includes  the  following:

<TABLE>
<CAPTION>
                                2003      2002      2001
----------------------------------------------------------
<S>                           <C>       <C>       <C>
Federal Income Tax . . . . .  $600,923  $388,061  $520,379
New York State Franchise Tax         -         -    23,360
----------------------------------------------------------
                              $600,923  $388,061  $543,739
==========================================================
</TABLE>

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

<TABLE>
<CAPTION>
                                                2003          2002
----------------------------------------------------------------------
<S>                                         <C>           <C>
ASSETS:
Deferred compensation. . . . . . . . . . .  $   640,805   $   637,607
Allowance for loan losses. . . . . . . . .      668,075       576,801
Postretirement benefits. . . . . . . . . .       65,759        59,904
AMT tax credit carryforward. . . . . . . .            -        71,079
Mortgage recording tax credit carryforward      263,227       202,111
NOL carryforward . . . . . . . . . . . . .            -        14,815
Investment impairment loss . . . . . . . .            -       107,113
Other. . . . . . . . . . . . . . . . . . .       45,287        16,266
----------------------------------------------------------------------
                                              1,683,153     1,685,696
Liabilities:
Prepaid pension. . . . . . . . . . . . . .     (315,743)     (327,826)
Mutual fund reserve. . . . . . . . . . . .     (190,235)     (190,235)
Depreciation . . . . . . . . . . . . . . .     (360,056)     (194,022)
Accretion. . . . . . . . . . . . . . . . .      (48,854)      (65,267)
Loan origination fees. . . . . . . . . . .     (166,856)     (100,715)
Intangible assets. . . . . . . . . . . . .     (223,773)     (123,071)
Investment securities. . . . . . . . . . .     (242,786)     (187,270)
----------------------------------------------------------------------
                                             (1,548,303)   (1,188,406)
----------------------------------------------------------------------
Net deferred tax asset . . . . . . . . . .  $   134,850   $   497,290
======================================================================
</TABLE>

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>
                                          2003   2002   2001
-------------------------------------------------------------
                                          -----  -----  -----
<S>                                       <C>    <C>    <C>
Federal statutory income tax rate. . . .  34.0%  34.0%  34.0%
State tax. . . . . . . . . . . . . . . .  (0.6)  (0.7)  (1.2)
Tax-exempt interest income, net of TEFRA  (5.1)  (6.4)  (4.6)
Increase in value of life insurance. . .  (2.6)  (3.9)  (3.9)
Other. . . . . . . . . . . . . . . . . .   1.0    2.1    1.0
-------------------------------------------------------------
Effective income tax rate. . . . . . . .  26.7%  25.1%  25.3%
=============================================================
</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>
                                Earnings    Shares     EPS
-----------------------------------------------------------
<S>                            <C>         <C>        <C>
2003  Net Income. . . . . . .  $1,651,663
Basic EPS . . . . . . . . . .   1,651,663  2,423,966  $0.68
-----------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . .           -     47,805
Diluted EPS . . . . . . . . .  $1,651,663  2,471,771  $0.67
===========================================================
2002  Net Income. . . . . . .  $1,156,279
Basic EPS . . . . . . . . . .   1,156,279  2,577,857  $0.45
-----------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . .           -     45,491
Diluted EPS . . . . . . . . .  $1,156,279  2,623,348  $0.44
===========================================================
2001  Net Income. . . . . . .  $1,602,490
Basic EPS . . . . . . . . . .   1,602,490  2,567,048  $0.62
-----------------------------------------------------------
Effect of dilutive securities
Stock options . . . . . . . .           -     28,358
Diluted EPS . . . . . . . . .  $1,602,490  2,595,406  $0.62
===========================================================

</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.

At  December  31,  2003  and  2002,  the  following  financial  instruments were
outstanding  whose  contract  amounts  represent  credit  risk:

<TABLE>
<CAPTION>
                                                Contract Amount
-------------------------------------------------------------------
                                               2003         2002
-------------------------------------------------------------------
<S>                                         <C>          <C>
Commitments to grant loans . . . . . . . .  $ 7,163,000  $9,099,000
Unfunded commitments under lines of credit   11,554,000   6,203,000
Standby letters of credit. . . . . . . . .      665,000     783,000
===================================================================
</TABLE>

Commitments  to  extend  credit  are agreements to lend to a customer as long as
                                       33
<PAGE>

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 current amount of the liability as of
December  31,  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, $21,000 and $18,000 in
2003,  2002 and 2001, 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  2003  and  2002  was  $21,000 and $5,250,
respectively.  Approximate  minimum  rental  commitments  for  the noncancelable
operating  leases  are  as  follows:

<TABLE>
<CAPTION>
           Years  Ending  December  31:
---------------------------------------
<S>                           <C>
2004 . . . . . . . . . . . .  $ 40,000
2005 . . . . . . . . . . . .    41,500
2006 . . . . . . . . . . . .    46,000
2007 . . . . . . . . . . . .    46,750
2008 . . . . . . . . . . . .    50,000
Thereafter . . . . . . . . .   214,500
--------------------------------------
Total minimum lease payments  $438,750
======================================
</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
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 2003, the Company paid cash
dividends  totaling  $317,000  to  the Holding Company. For the third and fourth
quarters  ending  September  30,  2003  and December 31, 2003, respectively, the
Holding  Company  waived  the right to receive its portion of the cash dividends
declared on September 16, 2003 and December 23, 2003, respectively.  During 2002
and  2001,  the Holding Company waived $348,000 and $222,000, respectively.  The
Company  maintains  a  restricted  capital  account  with  an  $887,000 balance,
representing  the  Holding  Company's portion of dividends waived as of December
31,  2003.

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 $2,833,000 as of December 31,
2003.

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 Company's and 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  Company  and 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, 2003, that the Bank
meets  all  capital  adequacy  requirements  to  which  it  is  subject.
                                       34
<PAGE>

As  of  December  31, 2003, 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, 2003 and 2002 are also presented in the
following  table:

<TABLE>
<CAPTION>
                                                                                                      To Be "Well-
                                                                                                      Capitalized"
                                                                         For Capital                  Under Prompt
                                                      Actual          Adequacy Purposes          Corrective Provisions
----------------------------------------------------------------------------------------------------------------------
                                                  Amount   Ratio     Amount     Ratio          Amount       Ratio
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>    <C>          <C>   <C>  <C>          <C>
COMPANY
As of December 31, 2003:
Total Core Capital (to Risk-Weighted Assets)  $18,446,000  10.8%  $13,704,000     8.0%          N/A         N/A
Tier 1 Capital (to Risk-Weighted Assets) . .  $16,731,000   9.8%  $ 6,852,000     4.0%          N/A         N/A
Tier 1 Capital (to Average Assets) . . . . .  $16,731,000   6.6%  $10,117,000     4.0%          N/A         N/A
----------------------------------------------------------------------------------------------------------------------
BANK
As of December 31, 2003:
Total Core Capital (to Risk-Weighted Assets)  $21,282,000  12.5%  $13,626,000     8.0%       $17,032,000  10.0%
Tier 1 Capital (to Risk-Weighted Assets) . .  $19,567,000  11.5%  $ 6,813,000     4.0%       $10,219,000   6.0%
Tier 1 Capital (to Average Assets) . . . . .  $19,567,000   6.9%  $11,389,000     4.0%       $14,237,000   5.0%
----------------------------------------------------------------------------------------------------------------------
COMPANY
As of December 31, 2002:
Total Core Capital (to Risk-Weighted Assets)  $24,517,000  13.7%  $14,283,000     8.0%          N/A         N/A
Tier 1 Capital (to Risk-Weighted Assets) . .  $23,036,000  12.9%  $ 7,141,000     4.0%          N/A         N/A
Tier 1 Capital (to Average Assets) . . . . .  $23,036,000   9.1%  $10,111,000     4.0%          N/A         N/A
----------------------------------------------------------------------------------------------------------------------
BANK
As of December 31, 2002:
Total Core Capital (to Risk-Weighted Assets)  $20,957,000  11.8%  $14,166,000     8.0%       $17,708,000  10.0%
Tier 1 Capital (to Risk-Weighted Assets) . .  $19,476,000  11.0%  $ 7,083,000     4.0%       $10,625,000   6.0%
Tier 1 Capital (to Average Assets) . . . . .  $19,476,000   7.2%  $10,816,000     4.0%       $13,520,000   5.0%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

The  Bank  is  required to maintain average balances on hand or with the Federal
Reserve Bank.  At December 31, 2003 and 2002, these reserve balances amounted to
$2,098,000  and  1,550,000,  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
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 approximates 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.

                                       35
<PAGE>

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

MORTGAGE  SERVICING  RIGHTS  -  the  carrying  value  approximates  fair  value.

ACCRUED  INTEREST  RECEIVABLE  AND  PAYABLE  -  the  carrying  amount 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  mandatorily
redeemable  preferred  securities  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.

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

<TABLE>
<CAPTION>
                                           2003                        2002
--------------------------------------------------------------------------------------
                                  Carrying     Estimated      Carrying     Estimated
                                  Amounts     Fair Values     Amounts     Fair Values
--------------------------------------------------------------------------------------
<S>                             <C>           <C>           <C>           <C>
Financial assets:
Cash and cash equivalents. . .  $  8,714,000  $  8,714,000  $ 13,740,000  $ 13,740,000
Investment securities. . . . .    57,559,000    57,559,000    60,263,000    60,263,000
Mortgage loans held-for-sale .     3,520,000     3,743,000     3,617,000     4,004,000
Net Loans. . . . . . . . . . .   187,002,000   192,392,000   179,001,000   186,978,000
Federal Home Loand Bank Stock.     2,048,000     2,048,000     2,243,000     2,243,000
Accrued interest receivable. .     1,274,000     1,274,000     1,334,000     1,334,000
Mortgage servicing rights. . .       257,000       257,000       200,000       200,000
--------------------------------------------------------------------------------------
Financial liabilities:
Deposits . . . . . . . . . . .  $206,894,000  $208,560,000  $204,522,000  $206,885,000
Borrowed funds . . . . . . . .    40,960,000    42,749,000    42,860,000    45,361,000
Trust preferred obligation . .     5,000,000     5,000,000     5,000,000     5,000,000
Accrued interest payable . . .       209,000       209,000       167,000       167,000
--------------------------------------------------------------------------------------
Off-balance sheet instruments:
Standby letter of credit . . .  $          -  $          -  $          -  $          -
Commitments to extend credit .             -             -             -             -
--------------------------------------------------------------------------------------
</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                                  2003          2002
-------------------------------------------------------------------------------
<S>                                                 <C>           <C>           <C>
ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . .  $ 1,543,488   $ 3,185,445
Investments . . . . . . . . . . . . . . . . . . . .      447,300       450,450
Receivable from bank subsidiary . . . . . . . . . .       96,919       152,415
Investment in subsidiaries. . . . . . . . . . . . .   25,084,981    24,616,171
Due from subsidiaries . . . . . . . . . . . . . . .            -        63,608
Other assets. . . . . . . . . . . . . . . . . . . .      134,811       166,955
Total assets. . . . . . . . . . . . . . . . . . . .  $27,307,499   $28,635,044
-------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued liabilities . . . . . . . . . . . . . . . .      367,320       250,022
Due to subsidiary . . . . . . . . . . . . . . . . .          370             -
Trust preferred debt. . . . . . . . . . . . . . . .    5,155,000     5,155,000
Shareholders' equity. . . . . . . . . . . . . . . .   21,784,809    23,230,022
Total liabilities and shareholders' equity. . . . .  $27,307,499   $28,635,044
-------------------------------------------------------------------------------


STATEMENTS OF INCOME. . . . . . . . . . . . . . . .         2003          2002          2001
---------------------------------------------------------------------------------------------
Interest income . . . . . . . . . . . . . . . . . .       16,410        45,641        42,436
Interest expense. . . . . . . . . . . . . . . . . .      243,030       142,400             -
---------------------------------------------------------------------------------------------
Net interest (expense) income . . . . . . . . . . .     (226,620)      (96,759)       42,436
Operating expense . . . . . . . . . . . . . . . . .     (105,891)      (71,703)      (65,369)
Realized gain on sale of investment security. . . .      103,745
Amortization of deferred financing costs. . . . . .      (30,204)      (15,100)            -
---------------------------------------------------------------------------------------------
Loss before tax benefit and equity in
undistributed net income of subsidiaries. . . . . .     (258,970)     (183,562)      (22,933)
---------------------------------------------------------------------------------------------
Tax benefit . . . . . . . . . . . . . . . . . . . .      (73,213)      (71,589)       (8,944)
---------------------------------------------------------------------------------------------
Loss before equity in undistributed net
income of subsidiaries. . . . . . . . . . . . . . .  $  (185,757)  $  (111,973)  $   (13,989)
---------------------------------------------------------------------------------------------
Equity in undistributed net income of subsidiaries.  $ 1,837,420   $ 1,268,252   $ 1,616,479
Net income. . . . . . . . . . . . . . . . . . . . .  $ 1,651,663   $ 1,156,279   $ 1,602,490
---------------------------------------------------------------------------------------------

                                       36
<PAGE>

STATEMENTS OF CASH FLOWS. . . . . . . . . . . . . .         2003          2002          2001
---------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income. . . . . . . . . . . . . . . . . . . . .  $ 1,651,663   $ 1,156,279   $ 1,602,490
Equity in undistributed
earnings of subsidiaries. . . . . . . . . . . . . .   (1,837,420)   (1,268,252)   (1,616,479)
Realized gain on sale of investment security. . . .     (103,745)            -             -
ESOP shares earned. . . . . . . . . . . . . . . . .      122,180       106,015        87,780
Amortization of deferred financing costs. . . . . .       30,204        15,100             -
Other operating activities. . . . . . . . . . . . .       81,243      (123,486)     (842,750)
---------------------------------------------------------------------------------------------
Net cash used in
operating activities. . . . . . . . . . . . . . . .      (55,875)     (114,344)     (768,959)
---------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from loan to
subsidiary. . . . . . . . . . . . . . . . . . . . .       55,496        55,497        55,497
Dividends receivable. . . . . . . . . . . . . . . .        7,321         4,170             -
Purchase of investments . . . . . . . . . . . . . .            -      (155,000)            -
Proceeds from sale of investments . . . . . . . . .      153,745             -             -
---------------------------------------------------------------------------------------------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . . . . .      216,562       (95,333)       55,497
---------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from exercise of
stock options . . . . . . . . . . . . . . . . . . .       35,374       138,858        62,510
Proceeds from trust preferred obligation. . . . . .            -     5,004,000             -
Investment in Bank subsidiary . . . . . . . . . . .            -    (2,000,000)            -
Dividend received from subsidiary . . . . . . . . .    1,500,000             -             -
Cash dividends. . . . . . . . . . . . . . . . . . .     (651,084)     (415,145)     (531,086)
Treasury stock purchased. . . . . . . . . . . . . .   (2,686,934)     (129,865)     (134,000)
---------------------------------------------------------------------------------------------
Net cash (used in) provided by
financing activities. . . . . . . . . . . . . . . .   (1,802,644)    2,597,848      (602,576)
---------------------------------------------------------------------------------------------
(Decrease) Increase in cash and
cash equivalents. . . . . . . . . . . . . . . . . .   (1,641,957)    2,388,171    (1,316,038)
Cash and cash equivalents at
beginning of year . . . . . . . . . . . . . . . . .    3,185,445       797,274     2,113,312
---------------------------------------------------------------------------------------------
Cash and cash equivalents
at end of year. . . . . . . . . . . . . . . . . . .  $ 1,543,488   $ 3,185,445   $   797,274
---------------------------------------------------------------------------------------------
</TABLE>

NOTE  20:  SELECTED  QUARTERLY  DATA  (UNAUDITED)

Summarized quarterly financial information for the years ended December 31, 2003
and  2002  is  as  follows:

<TABLE>
<CAPTION>
                                                   For the Quarters Ended
-----------------------------------------------------------------------------------
(In thousands except                    Dec. 31,   Sept. 30,   June 30,   Mar. 31,
Per Share Data)                           2003        2003       2003       2003
-----------------------------------------------------------------------------------
<S>                                    <C>         <C>         <C>        <C>
Interest Income . . . . . . . . . . .  $   3,730   $    3,677  $   3,877  $   4,001
Interest Expense. . . . . . . . . . .      1,388        1,428      1,532      1,600
Net Interest Income . . . . . . . . .      2,342        2,249      2,345      2,401
Net Income. . . . . . . . . . . . . .        310          333        517        492
Net Income Per Share (Basic). . . . .  $    0.13   $     0.14  $    0.21  $    0.20
Net Income Per Share (Diluted). . . .  $    0.13   $     0.14  $    0.21  $    0.20

                                                   For the Quarters Ended
-----------------------------------------------------------------------------------
(In thousands except. . . . . . . . .  Dec. 31,    Sept. 30,   June 30,   Mar. 31,
Per Share Data) . . . . . . . . . . .       2002         2002       2002       2002
-----------------------------------------------------------------------------------
Interest Income . . . . . . . . . . .  $   3,991   $    3,918  $   3,913  $   3,989
Interest Expense. . . . . . . . . . .      1,735        1,768      1,729      1,790
Net Interest Income . . . . . . . . .      2,256        2,150      2,184      2,199
Net (Loss) Income . . . . . . . . . .       (103)         349        360        550
Net (Loss) Income Per Share (Basic) .  $   (0.04)  $     0.14  $    0.14  $    0.22
Net (Loss) Income Per Share (Diluted)  $   (0.04)  $     0.13  $    0.14  $    0.21
</TABLE>

                                       37
<PAGE>

<TABLE>
<CAPTION>
<S>                                          <C>                                         <C>
CORPORATE INFORMATION

Pathfinder Bancorp, Inc.. . . . . . . . . .  Rhonda Hutchins                             INDEPENDENT AUDITORS
BOARD OF DIRECTORS (1). . . . . . . . . . .  Assistant Vice President, Loan Officer      Beard Miller Company LLP
Janette Resnick, Chairman . . .                                             . . . . . .  320 East Market Street
Chris R. Burritt. . . . . . . . . . . . . .  Pamela S. Knox                              Harrisburg, PA 17108
Chris C. Gagas. . . . . . . . . . . . . . .  Assistant Vice President, Lending
George P. Joyce . . . . . . . . . . . . . .                                              TRANSFER AGENT
Raymond W. Jung . . . . . . . . . . . . . .  Laurie L. Lockwood                          Registrar and Transfer Company
Bruce E. Manwaring. . . . . . . . . . . . .  Assistant Vice President,                   10 Commerce Drive
L. William Nelson . . . . . . . . . . . . .  Assistant Controller,                       Cranford, NJ  07016
Thomas W. Schneider . . . . . . . . . . . .  Human Resource Officer
Corte J. Spencer. . . . . . . . . . . . . .                                              INVESTOR RELATIONS
Steven W. Thomas. . . . . . . . . . . . . .  Will O'Brien                                Thomas W. Schneider
                                             Assistant Vice President, . . . . . . .     President, Chief Executive Officer
DIRECTORS EMERITUS. . . . . . . . . . . . .  Business Relationship Manager
Victor S. Oakes . . . . . . . . . . . . . .                                              James A. Dowd, CPA
Lawrence W. O'Brien . . . . . . . . . . . .  Daniel R. Phillips                          Vice President, Chief Financial Officer
                                             Assistant Vice President, MIS
PATHFINDER EXECUTIVE OFFICERS:. . . . . . .                                              214 West First Street
Thomas W. Schneider . . . . . . . . . . . .  Shane R. Stepien                            Oswego, NY  13126
  President, Chief Executive Officer. . . .  Assistant Vice President,                   (315) 343-0057
                                             Marketing Manager
John F. Devlin. . . . . . . . . . . . . . .                                              GENERAL INQUIRIES AND REPORTS
  Vice President, Senior Commercial Lender.  Michele C. Torbitt                          A copy of the Bank's 2003 Annual
                                             Assistant Vice President, . .            .  Report to the Securities and Exchange
James A. Dowd, CPA. . . . . . . . . . . . .  Electronic Commerce                         Commission, Form 10-K, may be
  Vice President, Chief Financial Officer,.                                              obtained without charge by written
                                             PATHFINDER BRANCH MANAGERS. .  . . . . . .  request of shareholders to:
Edward Mervine, Esq.
  Vice President, General Counsel . . . . .  Susan M. Cahill, Main Office                Melissa A. Miller
                                             Craig J. Nessel, Plaza and. .  . . . . . .  Vice President, Operations,
Melissa A. Miller . . . . . . . . . . . . .   Eastside Offices                            Corporate Secretary
  Vice President, Operations, . . . . . . .  Cynthia L. Clafin, Mexico Office            Pathfinder Bank
  Corporate Secretary,. . . . . . . . . . .  Tona L. Kempston, Fulton Office             214 West First Street
  Compliance Officer. . . . . . . . . . . .  Denise M. Lyga, Lacona Office               Oswego, NY  13126

Gregory L. Mills. . . . . . . . . . . . . .  CORPORATE HEADQUARTERS                      The public may read and copy any mate-
  Vice President, Marketing,. . . . . . . .  214 West First Street                       rials the Company files with the SEC
  Branch Administration . . . . . . . . . .  Oswego, NY  13126                           at the SEC's Public Reference Room at
                                             (315) 343-0057                              450 Fifth Street, N.W. Washington, D.C.
PATHFINDER OFFICERS:. . . . . . . . . . . .                                              20549.  The public may obtain informa-
                                             ANNUAL MEETING. . . . . . . . . . . . . .   tion on the operation of the Public Ref-
Anita J. Austin . . . . . . . . . . . . . .  Wednesday, April 28, 2004, 10:00 AM         erence Room by calling the SEC at
  Auditor . . . . . . . . . . . . . . . . .  Econo Lodge Riverfront Hotel                1-800-SEC-0330.  The Company's
                                             70 East First Street. . . . . . . . . . .   filings are also available electronically
Annette L. Burns, CPA . . . . . . . . . . .  Oswego, NY  13126                           free of charge at the SEC website:
  Controller. . . . . . . . . . . . . . . .                                              http://www.sec.gov and at their
                                             STOCK LISTING .  . . . . . . . . . . . . .  website:http://www.pathfinderbank.com
Cynthia L. Clafin . . . . . . . . . . . . .  The Nasdaq Small Cap Market (SM)
  Assistant Vice President, . . . . . . . .  Symbol: PBHC  Listing: PathBcp              FDIC DISCLAIMER
  Mexico Branch Manager . . . . . . . . . .                                              This Annual Report has not been
                                             SPECIAL COUNSEL . . . . . . . . . . . . .   reviewed, or confirmed for accuracy
Roberta Davis . . . . . . . . . . . . . . .  Luse, Gorman, Pomerenk & Schick             or relevance, by the FDIC.
  Assistant Treasurer . . . . . . . . . . .  5335 Wisconsin Avenue N.W.
                                             Suite 400 . . . . . . . . . . . . . . . .  (1) Information concerning the principal
Jack Forsyth. . . . . . . . . . . . . . . .  Washington, D.C.  20015                     occupation of the Directors is available
Vice President, Municipal Banking Officer .                                              in the Company's Form 10-K.

</TABLE>

<PAGE>
EXHIBIT  14  CODE  OF  ETHICS
-----------------------------

                            PATHFINDER BANCORP, INC.

                                 CODE OF ETHICS
                                       FOR
                        DIRECTORS, OFFICERS AND EMPLOYEES

I.     PREFACE

     Pathfinder  Bancorp Inc. and its subsidiaries (collectively "Pathfinder" or
"the  Company")  are  committed  to  the  highest  standard  of ethical business
conduct.  Pathfinder  expects  that  its  directors,  officers  and  employees
(collectively  "Personnel")  will  observe the highest standards of integrity in
the context of Pathfinder's business.  Pathfinder is committed to complying with
the  letter  and  spirit  of  all  applicable  laws  and  regulations.

     This  code  of  business  conduct and ethics sets forth Pathfinder's policy
embodying the high standards of business and ethics of integrity required of all
Pathfinder  Personnel  (1).  When  conducting  business  affairs  on  behalf  of
Pathfinder,  all  Personnel are required to abide scrupulously by the provisions
of  this  code  as well as with all applicable laws. The provisions of this code
will be enforced vigorously, and any individual found to be in violation will be
appropriately  disciplined,  which  may  include  immediate  termination  of
employment.

II.     APPLICABILITY

     Every  one of Pathfinder's Personnel has a responsibility to deal ethically
and  honestly  in  all  aspects  of  Pathfinder's business including the ethical
handling  of  actual  or apparent conflicts of interest and to comply fully with
all  laws,  regulations  and Pathfinder's policies.  Every person is expected to
assume  responsibility  for  applying these standards of ethical conduct and for
acquainting  himself/herself  with  the various laws, regulations and Pathfinder
policies  applicable  to  his  or her assigned duties.  When in doubt, Personnel
have the affirmative responsibility to seek clarification from their supervisor,
the  Compliance  Officer,  or,  if  necessary,  from  legal  counsel.

III.     ADMINISTRATION  AND  ENFORCEMENT

     BOARD  OF  DIRECTORS.  The  Board of Directors is responsible for approving
this  Code  and  making appropriate supplements and revisions from time to time.
As  provided  below,  the  Board also has the authority to issue waivers of this
Code  upon  application.  Finally,  issues  that cannot be resolved by the Audit
Committee  as described below, shall be resolved by the full Board of Directors.

     (1)  Due  to  their  special  responsibilities, the Chief Executive and the
          Chief  Financial  Officer  are  also  subject  to  an  additional code
          attached  hereto.
                                        1
<PAGE>

     AUDIT  COMMITTEE.  The  Audit  Committee  of  the  Board  of  Directors  of
Pathfinder  (the  "Committee")  is responsible for oversight of the Pathfinder's
Code of Ethics (this "Code").  The Committee has responsibility for implementing
and  administrating  this  Code.

     COMPLIANCE  OFFICER.  To assist the Committee in administering this Code on
a  regular  basis and to provide guidance in situations where Personnel may have
questions  concerning  the  right  course of action to take, the Committee shall
appoint  a  Compliance Officer to provide guidance on implementing this Code and
to  work  with  the Officers of the Company to ensure compliance with this Code.
It  is  the  responsibility of the Chief Executive Officer, with assistance from
the Compliance Officer, to ensure that this Code has been read and understood by
all  Personnel.  The Compliance Officer will meet as necessary with the Officers
of  the Company and the Committee to implement this Code, but will report to the
Committee  no  less  than  every  year  barring  extraordinary  circumstances.

     WAIVERS.  This  Code  is  intended  to  apply  equally  to  all  Personnel.
Accordingly,  any  waiver  of  the standards set forth in this Code by executive
officers  or  directors  may be made only by the Committee and the full Board of
Directors  of  the  Company and must be disclosed to shareholders within two (2)
business  days  by  filing  an  SEC  Form  8-K.

IV.     ACCURACY  IN  REPORTING

     CORPORATE  RECORDS.  All Personnel have a responsibility to ensure that all
Company  documents  and reports for which the person is responsible are prepared
and  maintained  properly  and  are free of any false, misleading, incomplete or
otherwise  improper  information.  Personnel  are  prohibited  from  defrauding,
misleading,  manipulating  or coercing any employees or directors of the Company
or  any  advisors  to  the  Company,  including  outside  counsel  or  auditors.

     FINANCIAL STATEMENTS.  Whenever a person is responsible for the preparation
or  review  of  the Company's financial statements, the person shall ensure that
the  financial  statements  are  prepared  in accordance with generally accepted
accounting  principals  as  currently  in  force.

     ERRORS  OR  MISLEADING  STATEMENTS.  If  a  person ever becomes aware of an
error  or  potential  misstatement  in any company documents including financial
statements  or  other  documents  filed  with  the  SEC, the person must contact
immediately  their  supervisor  and  Compliance  Officer and report the error or
potential  misstatement.

     AUDITS.  All  Personnel  shall  cooperate  fully  with  any  audits  of the
Company's  financial  statements  or other corporate documents whether conducted
internally  or  by  a  third  party.


V.     CONFLICTS  OF  INTEREST

     A.   GENERAL.

          A    conflict of interest arises when an individual has an interest in
                                        2
<PAGE>
     any  business  or  property  or an obligation to any person that could
     affect  the  person's judgment in fulfilling his or her responsibilities to
     Pathfinder.  Pathfinder Personnel are expected to refrain from any activity
     or  investment  that constitutes, or might appear to constitute, a conflict
     of  interest  with  respect  to  dealings  between Pathfinder and any other
     organization  or  individual.

     B.   RECUSAL  AND  RECORDATION.

          DISCLOSURE  AND  RECUSAL. Whenever a person has a conflict of interest
     in  connection  with  an internal or external operation or other conduct of
     the  Company,  the person shall make a full disclosure of the nature of the
     conflict  of  interest,  recuse  himself/herself  from  the decision-making
     process  and  abstain  from  any  further  action  thereon.

          RECORDATION.  Whenever a person has declared a conflict of interest in
     Connection  with  a  transaction, such declaration and the person's recusal
     and  abstention  from  the decision-making process shall be reported to the
     Compliance  Officer.  The  Compliance  Officer shall report the conflict of
     interest to the Committee and shall ensure that the conflict of interest is
     recorded  in  the  Committee  meeting  minutes.

     C.   CORPORATE  OPPORTUNITIES.

          GENERAL  PROHIBITION.  Personnel  and  their  affiliates  (defined  as
     immediate  Family  members)  must  not  compete with the Company, profit or
     otherwise  take  advantage  from  inside  information  or  take  business
     opportunities  which  are  within  the  line  of  business conducted by the
     Company  or  within a line of business that the Company might reasonably be
     expected  to  enter  in  the  future.

          DISCLOSURE.  In  the event that a person or his affiliate is presented
     with  or otherwise becomes aware of a corporate opportunity which is within
     the  line  of  business conducted by the Company or a line of business that
     the  Company  might  be  expected  to enter in the future, the person shall
     fully  disclose both the details of the opportunity and his/her interest in
     the  opportunity  to  the  person's  supervisor and the Compliance Officer.
     Thereafter,  the  person  shall  abstain  from discussion and voting on any
     approval  or  disapproval  thereof.  Where it is unclear whether a business
     opportunity would present a corporate opportunity to the Company based upon
     a  review  of  the business plan disclosure should be made to the Committee
     and  then  the  entire  Board  of  Directors.

          RECORDATION.  A  decision  by  the  Board  approving  or  disapproving
     dealings  with a corporate opportunity presented to it by a person shall be
     recorded  in  the  minutes of the Board and shall reflect the nature of the
     opportunity  and  all members who take action or abstain from taking action
     on  its  consideration.

          FURTHER  ACTION.  If,  after  full disclosure, the Board elects not to
     take  a  Corporate  opportunity  presented to it, to the extent it does not
     otherwise  present  a  conflict  of  interest with his/her position, or the
     Board  does  not rule otherwise, the person who presented the matter to the
     Board  is  free  to  pursue  the  opportunity.
                                        3
<PAGE>

     D.   INSIDER  TRANSACTIONS.

          DISCLOSURE.  Insiders  (defined  as  Officers  and  Directors)  shall
     disclose  all  conflicts  of  interest  they  may  have  with regard to any
     contract  or  other business arrangement to be entered into by the Company.
     Contracts  or other business arrangement between the Company and an Insider
     or  between  the Company and an affiliate of an Insider, shall be presented
     by  the  Compliance  Officer  to  the  Board  for  approval only after full
     disclosure  of the conflict of interest by the Insider who shall thereafter
     recuse  himself/herself  from  the decision making process and abstain from
     voting  on  the  matter.

          RECORDATION.  A  decision  by  the  Board  approving or disapproving a
     contract  or  other business arrangement with an Insider or affiliate of an
     Insider  or  where  an Insider otherwise has a financial interest, shall be
     recorded  in the minutes of the Board which shall reflect the nature of the
     contract  or  other  arrangement and all members who take action or abstain
     from  taking  action  on  its  consideration.

          TERMS.  Any  contract  or  business  arrangement  entered  into by the
     Company  with  an Insider or affiliate of an Insider shall be on such terms
     and conditions and at such costs as would be reasonable under the facts and
     circumstances  if  entered  into  with  an  unrelated  third  party.

          COMPLIANCE WITH LAW. All contracts or other business arrangements with
     any Insider or affiliates of Insiders in which the Insiders have a personal
     or  financial interest, shall comply with any applicable statutes, rules or
     regulation.

          PAYMENT  OF  FEES. In paying any management or other fees to Insiders,
     the  following  criteria  should  be  taken  into  consideration.

          1.   Management  fees  and other fees paid by the Company shall have a
               direct  relationship  to and be based solely upon the fair market
               value  of  the  goods  received  or  services  rendered.

          2.   Fees shall be paid only for goods which meet the legitimate needs
               of  the  Company  and  which  are  actually  rendered.

          3.   Fees  shall  take  into  consideration  the qualifications of the
               individual(s)  providing  services.

          4.   Reasonable  fees  may  be based upon cost, cost plus a reasonable
               profit  or current fair market value of the services rendered and
               may  take  reasonable  overhead  costs  into  consideration.

          5.   No  prepayment  of  fees  for  services  shall  be  made.
                                        4
<PAGE>

     E.  ACCEPTANCE  OF  GIFTS  AND  OTHER  GRATUITIES.

     GENERAL.  Personnel  are prohibited from (a) soliciting for themselves or a
third party (other than the Company) anything of value from anyone in return for
any  business,  service  or  confidential  information  of  the  Company; or (b)
accepting  anything  in  value  (other  than  salary, wages, fees or other usual
compensation) from anyone in connection with the business of the Company, either
prior  to  or  after  a  transaction.

     EXCEPTIONS.  Exceptions  to the general prohibition regarding acceptance of
things  of  value  in  connection  with  the  Company's business may include the
acceptance  of:

          1.   gifts, gratuities, amenities or favors based on obvious family or
               personal  relationships (such as those with the parents, children
               or  spouse of a Company official) where the circumstances make it
               clear  that it is those relationships rather than the business of
               the  Company,  which  are  the  motivating  factors;

          2.   meals,  refreshments,  entertainment,  accommodations  or  travel
               arrangements,  all  of  reasonable  value, during the course of a
               meeting  or  other occasion, the purpose of which is to hold bona
               fide business discussions or to foster better business relations,
               provided  that  the expense would be paid for by the Company as a
               reasonable  business  expense,  if not paid for by another party;

          3.   advertising  or promotional material of reasonable value, such as
               pens, pencils, note pads, key chains, calendars or similar items;

          4.   discounts  or  rebates  on  merchandise  or  services that do not
               exceed  those  available  to  other  customers;

          5.   gifts  of value not to exceed $35.00 that are related to commonly
               recognized  events  or  occasions,  such as a promotion, new job,
               wedding,  retirement,  Christmas  or  bat  or  bar  mitzvah;  or

          6.   civic,  charitable,  educational, religious organizational awards
               for  recognition  service  accomplishment.

     NOTIFICATION  AND  APPROVAL.  In  the event a person is offered anything of
value  from  anyone  in  return  for  any  business,  service,  or  confidential
information  of  the Company and the item of value is not clearly subject to the
exceptions  described  above,  the person should report it immediately to his or
her  supervisor  or  to  the  Compliance  Officer.

VI.     CONFIDENTIAL  INFORMATION

     All  Personnel  must  treat  the confidential information of Pathfinder and
third parties with which Pathfinder deals with the utmost care to ensure that it
is  not  disseminated  inappropriately  to  individuals  or organizations. It is
improper  for  Personnel,  during or subsequent to employment and without proper
authorization,  to give or make available to anyone, or use for his/her benefit,
information  of a confidential nature which was derived from his/her employment.

                                        5
<PAGE>

VII.     PROHIBITIONS  UNDER  SECURITY  LAWS

     Personnel  are prohibited from buying or selling securities on the basis of
"material  inside  information",  which  includes any information which a person
acquires  and  which is not available to ordinary investors in the market place.
Personnel  are  also  prohibited  from  communicating  or  relating  such inside
information  to  others  for  the  purpose  of  that  person  buying  or selling
securities themselves. Even casual reference of such information could amount to
the  breach  of  the  rules  and  regulations  in  this  area.

VIII.     REPORTING  ILLEGAL  OR  UNETHICAL  BEHAVIOR

     The  Company  strives  to maintain sound and ethical business practices and
holds  all  persons  to  high  ethical  standards.  In  order  to maintain these
standards,  all  Personnel  have  an  affirmative  obligation to report to their
supervisor,  if  appropriate, or the Compliance Officer a violation of any laws,
regulations  or  provisions  of  this  Code  by  any person. If a person is ever
uncertain of the best course of action in a specific situation, he or she should
immediately  seek clarification and help from their supervisor or the Compliance
Officer.

     The  Company will not tolerate any attempt by anyone to retaliate against a
person who, while acting in good faith pursuant to this Code, reports illegal or
unethical  behavior by any employee, director, officer or third party advisor to
the  Company.  Thus,  no person may be discharged, demoted, suspended, or in any
manner  threatened,  harassed or discriminated against for providing information
about violations of the law or this Code, or assisting in the investigation of a
violation  of  the  law  or  this  Code, or participating in bringing a lawsuit.

IX.     BREACHES  OF  ETHICAL  BEHAVIOR

     If  any  person  breaches  any  of the provisions of this Code, such breach
shall be reported to that person's supervisor, the Compliance Officer, the Chief
Executive  Officer  and  the Committee. The Compliance Officer and the Committee
shall review, or designate a committee to review, the facts and circumstances of
the  breach  of  this  Code and shall determine the appropriate remedy including
immediate  termination  for  cause  of  the  person  who  breached  this  Code.

                                        6
<PAGE>

                                 CODE OF ETHICS
            FOR CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS
                           OF PATHFINDER BANCORP, INC.

It  is the policy of Pathfinder Bancorp, Inc. and its subsidiaries (collectively
"Pathfinder"  or  the  "Company")  that the Chief Executive Officer ("CEO"), and
Chief  Financial Officer ("CFO") adhere to and advocate the following principles
governing  their  professional  and  ethical conduct in the fulfillment of their
responsibilities:

     1.     Act  with  honesty and integrity, avoid actual or apparent conflicts
between his or her personal, private interests and the interests of the Company,
including  receiving  improper  personal  benefits  as  a  result  of his or her
position

2.     Perform  responsibilities  with  a  view  to causing periodic reports and
other  documents  filed  with  the SEC to contain information which is accurate,
complete,  fair  and  understandable.

3.     Comply  with  laws of federal, state, and local governments applicable to
the  Company,  and  the  rules  and regulations of private and public regulatory
agencies  having  jurisdiction  over  the  Company.
4.     Act  in  good  faith,  responsibly, with due care, and diligence, without
misrepresenting  or  omitting material facts or allowing independent judgment to
be  compromised.

5.     Respect  the confidentiality of information acquired in the course of the
performance  of  his or her responsibilities except when authorized or otherwise
legally obligated to disclose.  Not use confidential information acquired in the
course of the performance of his or her responsibilities for personal advantage.

6.     Proactively  promote  ethical  behavior  among  subordinates  and  peers.

7.     Use corporate assets and resources employed or entrusted in a responsible
manner.

8.     Not  use corporate information, corporate assets, corporate opportunities
or  one's  position with the Company for personal gain.  Not compete directly or
indirectly  with  the  Company.

9.     Comply  in  all  respects with the Company's Code of Business Conduct and
Ethics  and  the  Company's  Policy  on  Insider  Trading.

10.     Advance  the Company's legitimate interests when the opportunity arises.

It  is also the Company's Policy that the CEO and CFO of the Company acknowledge
and certify to the foregoing annually and file a copy of such certification with
each  of  the  Audit  Committee  and  the Nominating/Governance Committee of the
Board.

                                        7
<PAGE>

The  Audit  Committee  shall have the power to monitor, make determinations, and
recommend  action  to  the  Board  with  respect  to  violations of this Policy.

                                        8
<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


<PAGE>


EXHIBIT  23.1  CONSENT  OF  BEARD  MILLER  COMPANY  LLP
-------------------------------------------------------

                         CONSENT OF INDEPENDENT AUDITORS

Regarding:


Registration  Statement,  File  No.  333-53027


We  consent  to  the incorporation by reference in the above listed Registration
Statement  of  our  report  dated February 6, 2004, relating to the consolidated
financial  statements  of  Pathfinder Bancorp, Inc. incorporated by reference in
its  Annual  Report  (Form  10-K)  for  the  year  ended  December  31,  2003.





/s/  Beard  Miller  Company  LLP

Harrisburg,  Pennsylvania
March  24,  2004



EXHIBIT  23.2  CONSENT  OF  PRICEWATERHOUSECOOPERS  LLP
-------------------------------------------------------


                         CONSENT OF INDEPENDENT AUDITORS


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 January 31, 2003 relating to the financial statements, which appear in the
Annual  Report  to  Shareholders, which is incorporated in this Annual Report on
Form  10-K.




/s/  Pricewaterhouse  Coopers  LLP

Syracuse,  New  York
March  29,  2004


<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,  2004                  /s/  Thomas  W.  Schneider
----------------                  --------------------------
Date                              Thomas  W.  Schneider
                                  President  and  Chief  Executive  Officer


<PAGE>

EXHIBIT  31.2  RULE  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,  2004                 /s/  James  A.  Dowd
----------------                 --------------------
Date                             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,  2003  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,  2004                /s/  Thomas  W.  Schneider
----------------                --------------------------
Date                            Thomas  W.  Schneider
                                President  and  Chief  Executive  Officer


March  30,  2004               /s/  James  A.  Dowd
----------------               --------------------
Date                          James  A.  Dowd
                              Vice  President  and  Chief  Financial  Officer







<PAGE>

EXHIBIT  99.1          REPORT  OF  PRICEWATERHOUSECOOPERS  LLP
-------------          ---------------------------------------

REPORT  OF  INDEPENDENT  AUDITORS


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

In  our opinion, the consolidated statement of condition as of December 31, 2002
and  the  related consolidated statements of income, of changes in shareholders'
equity  and of cash flows for each of the two years in the period ended December
31,  2002 (appearing on pages 18 through 22 of the Pathfinder Bancorp, Inc. 2003
Annual  Report  to shareholders which has been incorporated by reference in this
Form  10-K)  present  fairly,  in all material respects, the financial position,
results  of  operations  and  cash  flows  of  Pathfinder  Bancorp, Inc. and its
subsidiaries  at  December  31,  2002,  in conformity with accounting principles
generally  accepted in the United States of America.  These financial statements
are  the  responsibility  of  the Company's management; our responsibility is to
express  an  opinion  on  these  financial  statements  based on our audits.  We
conducted  our  audits of these statements in accordance with auditing standards
generally  accepted  in the United States of America, which 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,  assessing  the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We  believe  that  our  audits  provide  a  reasonable  basis  for  our opinion.


As  discussed  in  Note  1  to  the consolidated financial statements, effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No.  147,  "Accounting for Certain Acquisitions of Bank or Thrift Institutions".

/s/  PricewaterhouseCoopers  LLP

Syracuse,  New  York
January  31,  2003

<PAGE>
[Logo] PathFinder
          BANCORP, INC.