SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q



{X}   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 2007

                                    OR

{_}   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________________

                    Securities Exchange Act Number 000-25101

                             ONEIDA FINANCIAL CORP.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

           Federal                                              16-1561678
--------------------------------                        ------------------------
(State or other jurisdiction of                               (IRS Employer)
incorporation or organization)                            Identification Number)

                     182 Main Street, Oneida, New York 13421
                   -------------------------------------------
                    (Address of Principal Executive Offices)

                                 (315) 363-2000
               ---------------------------------------------------
               Registrant's telephone number, including area code

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

      Indicate by check mark whether the Registrant is a large accelerated file,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One):


[ ] Large accelerated filer   [ ] Accelerated filer   [X] Non-accelerated filer

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.). Yes [ ] No [X]

Indicate by check mark whether the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:
  Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: There were 7,684,201 shares of
        the Registrant's common stock outstanding as of November 1, 2007.

<PAGE>

                             ONEIDA FINANCIAL CORP.
                                      INDEX
<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
PART I.  FINANCIAL INFORMATION

    Item 1.  Financial Statements                                                     1

             Consolidated Statements of Condition (unaudited)                         2
             As of September 30, 2007 and December 31, 2006

             Consolidated Statements of Operations (unaudited)                        3
             For the three months and nine months ended
             September 30, 2007 and 2006

             Consolidated Statements of Comprehensive Income (unaudited)              4
             For the three months and nine months ended
             September 30, 2007 and 2006

             Consolidated Statements of Changes in Stockholders' Equity               5
             (unaudited) For the three months ended March 31, June 30 and
             September 30, 2007

             Consolidated Statements of Cash Flows (unaudited)                        6
             For the three months and nine months ended September 30,
             2007 and 2006

             Notes to Consolidated Financial Statements (unaudited)                   7

   Item 2.   Management's Discussion and Analysis of Financial Condition             15
             And Results of Operations

   Item 3.   Quantitative and Qualitative Disclosures about Market Risk              24

   Item 4.   Controls and Procedures                                                 24

PART II. OTHER INFORMATION                                                           25

   Item 1.   Legal Proceedings                                                       25

   Item 1a.  Risk Factors                                                            25

   Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds             25

   Item 3.   Defaults Upon Senior Securities                                         26

   Item 4.   Submission of Matters to a Vote of Security Holders                     26

   Item 5.   Other Information                                                       26

   Item 6.   Exhibits                                                                26
</TABLE>

<PAGE>

PART I.      FINANCIAL INFORMATION
                      Item I.    Financial Statements







                                  Page 1 of 27
<PAGE>


ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
At September 30, 2007 and December 31, 2006 (Unaudited)

<TABLE>
<CAPTION>
                                                            At September 30, At December 31,
                                                                 2007               2006
                                                                 ----               ----
ASSETS                                                      (in thousands, except share data)
<S>                                                         <C>             <C>
         Cash and due from banks                            $     15,154    $     12,514
         Federal funds sold                                       12,960           6,196
                                                            ----------------------------
  TOTAL CASH AND CASH EQUIVALENTS                                 28,114          18,710

         Investment securities, at fair value                     94,831          85,717
         Mortgage-backed securities, at fair value                33,646          29,081

         Mortgage loans held for sale                              2,486           1,581

         Loans receivable                                        280,355         247,940
         Allowance for loan losses                                (2,548)         (2,081)
                                                            ----------------------------
   LOANS RECEIVABLE, NET                                         277,807         245,859

         Federal Home Loan Bank stock                              3,348           3,228
         Bank premises and equipment, net                         22,737          17,428
         Accrued interest receivable                               2,294           2,088
         Other assets                                              8,435           7,699
         Cash surrender value - life insurance                    14,335          11,676
         Goodwill                                                 22,735          18,137
         Other intangible assets                                   2,794           1,733
         -------------------------------------------------------------------------------
         TOTAL ASSETS                                       $    513,562    $    442,937
         ===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
         Interest bearing deposits                          $    327,957    $    260,173
         Non-interest bearing deposits                            65,005          53,097
         Federal funds purchased                                      --           4,000
         Borrowings                                               56,400          61,400
         Notes payable                                               477           1,411
         Other liabilities                                         5,090           4,456
                                                            ----------------------------
TOTAL LIABILITIES                                                454,929         384,537
Stockholders' equity:
         Preferred stock, 1,000,000 shares authorized                 --              --
         Common stock ($.01 par value; 20,000,000
              shares authorized; 8,322,452 shares issued)             83              83
         Additional paid-in capital                               18,814          18,704
         Retained earnings                                        45,350          44,580

         Common shares issued under employee
               stock ownership plans - unearned                     (142)           (142)
         Accumulated other comprehensive (loss)                   (2,429)         (1,786)
         Treasury stock (at cost, 534,396
                                    and 541,621 shares)           (3,043)         (3,039)
         -------------------------------------------------------------------------------
         TOTAL STOCKHOLDERS' EQUITY                               58,633          58,400
         -------------------------------------------------------------------------------
         TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY                               $    513,562    $    442,937
         ===============================================================================

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

                                  Page 2 of 27
</TABLE>

<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 2007 (unaudited) and
2006 (unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended           Nine Months Ended
                                                      September 30,   September 30, September 30, September 30,
                                                               2007         2006          2007         2006
                                                               ----         ----          ----         ----
                                                         (in thousands, except share and per share data)
INTEREST INCOME:
<S>                                                      <C>          <C>            <C>          <C>
         Interest and fees on loans                      $    4,816   $    4,197     $  13,669    $  12,030
         Interest on investment and mortgage-
                  backed securities                           1,421        1,225         3,904        3,819
         Dividends on equity securities                         206          221           603          640

         Interest on federal funds sold and
              interest-earning deposits                         216           13           639           41
-----------------------------------------------------------------------------------------------------------
   Total interest and dividend income                         6,659        5,656        18,815       16,530
-----------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
         Savings deposits                                       154          125           423          366
         Money market and interest-bearing checking             565          324         1,468          898
         Time deposits                                        1,696        1,085         4,589        2,964
         Borrowings                                             693          884         2,233        2,585
         Notes Payable                                            9           24            37           80
-----------------------------------------------------------------------------------------------------------
                  Total interest expense                      3,117        2,442         8,750        6,893
-----------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                           3,542        3,214        10,065        9,637
         Less: Provision for loan losses                         --           80            --          240
-----------------------------------------------------------------------------------------------------------
   Net interest income after provision for loan losses        3,542        3,134        10,065        9,397
-----------------------------------------------------------------------------------------------------------
OTHER INCOME:
      Investment securities (losses) gains, net                  --          (24)            1           (1)
      Gain on sale of mortgages, net                             24           36            97           93
      Commissions and fees on sales of
                   non-banking products                       3,486        2,944        10,184        9,292
         Other operating income                               1,048          919         3,053        2,759
-----------------------------------------------------------------------------------------------------------
   Total other income                                         4,558        3,875        13,335       12,143
-----------------------------------------------------------------------------------------------------------
OTHER EXPENSES:
         Compensation and employee benefits                   4,222        3,773        12,671       11,458
         Occupancy expenses, net                              1,103          933         3,225        2,781
         Other operating expense                              1,470        1,190         4,128        3,551
-----------------------------------------------------------------------------------------------------------
   Total other expenses                                       6,795        5,896        20,024       17,790
-----------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                    1,305        1,113         3,376        3,750
-----------------------------------------------------------------------------------------------------------
   Provision for income taxes                                   374          298           943          960
-----------------------------------------------------------------------------------------------------------
NET INCOME                                               $      931   $      815     $   2,433    $   2,790
===========================================================================================================
EARNINGS PER SHARE - BASIC                                    $0.12        $0.11         $0.32        $0.37
===========================================================================================================
EARNINGS PER SHARE - DILUTED                                  $0.12        $0.11         $0.31        $0.36
===========================================================================================================

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

                                  Page 3 of 27
</TABLE>

<PAGE>



ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months and Nine Months Ended September 30, 2007 (unaudited) and
2006 (unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended                Nine Months Ended
                                            September 30,  September 30,      September 30, September 30,
                                                   2007           2006            2007            2006
                                                   ----           ----            ----            ----
                                                                      (In thousands)
<S>                                        <C>             <C>             <C>             <C>
Net income                                 $        931    $        815    $      2,433    $      2,790
                                           ------------    ------------    ------------    ------------

Other comprehensive income (loss), net of tax:
   Unrealized gains (losses)
           on assets available for sale:
         Unrealized holding gains (losses)
             arising during period                  653           2,128          (1,071)          1,324
         Less: reclassification adjustment for
                   losses (gains) included
                           in net income             --              24              (1)              1
                                           ------------    ------------    ------------    ------------
                                                    653           2,152          (1,072)          1,325
         Net income tax benefit                    (261)           (861)            429            (530)
                                           ------------    ------------    ------------    ------------

Other comprehensive income (loss), net
   of tax                                           392           1,291            (643)            795

      Comprehensive income                 $      1,323    $      2,106    $      1,790    $      3,585
                                           ============    ============    ============    ============

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                  Page 4 of 27

<PAGE>


ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, June 30 and September 30, 2007 (unaudited)

<TABLE>
<CAPTION>
                                                                                                          Common Stock
                                                                                   Accumulated            Issued Under
                                                          Additional                  Other                 Employee
                                      Common Stock         Paid-In     Retained   Comprehensive  Treasury  Stock Plans-    Total
                                     Shares     Amount     Capital     Earnings   Income (Loss)   Stock     Unearned
                                                               (in thousands, except number of shares)
<S>                               <C>               <C>     <C>         <C>        <C>          <C>         <C>          <C>
Balance as of December 31, 2006   8,322,452         $83     $18,704     $44,580    $  (1,786)   $  (3,039)  $    (142)   $  58,400
Net income                                                                  748                                                748
Other comprehensive income,
         net of tax                                                                       71                                    71
Shares earned under stock plans                                  44                                                             44
Common stock dividends: $0.24
  per share                                                                (831)                                              (831)
Treasury stock purchased                                                                              (38)                     (38)
Treasury stock reissued                                                                                29                       29
                                  ------------------------------------------------------------------------------------------------

Balance as of March 31, 2007      8,322,452         $83     $18,748     $44,497    $  (1,715)     $(3,048)  $    (142)   $  58,423
Net income                                                                  754                                                754
Other comprehensive loss,
         net of tax                                                                   (1,106)                               (1,106)
Shares earned under stock plans                                  44                                                             44
Tax benefit from stock plans                                    (22)                                                           (22)
                                  ------------------------------------------------------------------------------------------------

Balance as of June 30, 2007       8,322,452         $83     $18,770     $45,251    $  (2,821)     $(3,048)  $    (142)   $  58,093
Net income                                                                  931                                                931
Other comprehensive income,
         net of tax                                                                      392                                   392
Shares earned under stock plans                                  44                                                             44
Common stock dividends: $0.24 per share                                    (832)                                              (832)
Treasury stock reissued                                                                                 5                        5
                                  ------------------------------------------------------------------------------------------------

Balance as of September 30, 2007  8,322,452         $83     $18,814     $45,350    $  (2,429)     $(3,043)  $    (142)    $ 58,633
                                  ================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                  Page 5 of 27
<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months and Nine Months Ended September 30, 2007 (unaudited) and
2006 (unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended           Nine Months Ended
                                                         September 30, September 30,  September 30, September 30,
                                                                2007       2006         2007          2006
                                                                ----       ----         ----          ----
<S>                                                             <C>         <C>         <C>         <C>
  Operating Activities:                                                        (in thousands)
   Net income                                                   $    931    $    815    $  2,433    $  2,790
   Adjustments to reconcile net income to net
    cash provided by operating  activities:
      Depreciation and amortization                                  534         374       1,416       1,094
      Amortization of premiums/discounts on securities, net            9          27          56          80
      Provision for loan losses                                       --          80          --         240
      Stock compensation earned                                       44          45         132         142
      Loss on sale of other real estate                               --          --          --          17
      Loss (gain) on sale/call of securities, net                     --          24          (1)          1
      Gain on sale of loans, net                                     (24)        (36)        (97)        (93)
      Income tax payable                                             174        (181)       (145)       (311)
      Accrued interest receivable                                    171         187          76         187
      Other assets                                                   (68)        (15)       (834)        737
      Other liabilities                                             (703)       (508)     (1,152)     (1,723)
      Origination of loans held for sale                          (3,971)     (4,745)    (15,370)    (12,193)
      Proceeds from sales of loans                                 4,163       4,434      14,562      12,283
------------------------------------------------------------------------------------------------------------
          Net cash provided by operating activities                1,260         501       1,076       3,251
------------------------------------------------------------------------------------------------------------
Investing Activities:
  Purchase of investment securities                              (12,284)       (884)    (20,514)     (4,011)
  Principal collected on and proceeds of maturities
      sales or calls from investments                              9,087       6,626      22,000      22,810
  Purchase of mortgage-backed securities                          (6,832)         --      (7,424)       (999)
  Principal collected on and proceeds from sales
      of mortgage-backed securities                                6,307       1,292       9,514       3,686
  Net increase in loans                                           (4,791)     (1,582)     (5,807)    (10,823)
  Purchase of bank premises and equipment                         (1,667)     (1,504)     (4,425)     (4,014)
  Proceeds from sale of other real estate                             --          --          22          45
  Purchase of insurance agency                                        --          --         (66)     (1,782)
  Purchase of consulting group                                        --         (28)       (132)     (1,510)
  Purchase of bank (net of cash acquired)                             --         --          908          --

------------------------------------------------------------------------------------------------------------
       Net cash (used in) provided by investing activities       (10,180)      3,920      (5,924)      3,402
------------------------------------------------------------------------------------------------------------
Financing Activities:
  Net increase in demand deposit, savings,
      money market, interest-bearing checking and escrow           6,450      (7,288)     12,507      (2,890)
  Net increase in time deposits                                    3,179       2,978      12,374       4,738
  Proceeds from borrowings                                        14,500      27,900      51,680      63,430
  Repayment of borrowings                                        (14,500)    (27,030)    (60,680)    (70,900)
  Cash dividends                                                    (832)       (796)     (1,663)     (1,540)
  Exercise of stock options (using treasury stock)                     5           2          34          36
------------------------------------------------------------------------------------------------------------
          Net cash provided by (used in) financing activities      8,802      (4,234)     14,252      (7,126)
------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents                    (118)        187       9,404        (473)
------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period                  28,232      12,217      18,710      12,877
------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                      $ 28,114    $ 12,404    $ 28,114    $ 12,404
============================================================================================================


<PAGE>

Supplemental disclosures of cash flow information:
Cash paid for interest                                             3,144       2,488       8,717       6,987
Cash paid for income taxes                                           200         480         675         985
Non-cash investing activities:
Transfer of loans to other real estate                                --          --          22          62
Note payable issued in connection with acquisitions                   --          --          --       2,594
============================================================================================================
    The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                              Page 6 of 27
<PAGE>


                             ONEIDA FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)
                               SEPTEMBER 30, 2007
Note A - Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in accordance  with the  instructions  to Form 10-Q and Rule 10-01 of Regulation
S-X  and,  therefore,  do  not  include  all of the  information  and  footnotes
necessary  for a  complete  presentation  of  financial  condition,  results  of
operations,  and cash flows in conformity  with  generally  accepted  accounting
principles.   Accordingly,   in  the  opinion  of  management,  all  adjustments
(consisting  of normal  recurring  accruals)  necessary  to fairly  present  the
consolidated financial position of the Oneida Financial Corp. (the "Company") at
September 30, 2007 and the results of its consolidated operations and cash flows
for the  period  then  ended  have  been  included.  Operating  results  for the
three-month  period and nine-month period are not necessarily  indicative of the
results that may be expected for the year ended December 31, 2007.

Note B - Earnings per Share

Basic  earnings per share  represents  income  available to common  stockholders
divided by the weighted average number of common shares  outstanding  during the
period.  ESOP  shares are  considered  outstanding  for the  calculation  unless
unearned.  Diluted  earnings per share give effect to weighted  average  shares,
which would be  outstanding  assuming the exercise of issued  options and awards
using the treasury  stock  method.  Earnings per common share have been computed
based on the  following  for the periods  ended  September 30:

                                      Income      Shares       Per Share
September 30, 2007:
------------------
Net income (Three Months Ended)       $930,589
                                      --------

Basic Earnings Per Share:             $930,589    7,684,764        $0.12
                                                                   -----
Effect of dilutive securities:
         Stock options and awards           --       80,404
                                      ---------------------
Diluted Earnings Per Share            $930,589    7,765,168        $0.12
                                                                   -----

September 30, 2006:
------------------
Net income (Three Months Ended)       $814,725
                                      --------

Basic Earnings Per Share:             $814,725    7,633,903        $0.11
                                                                   -----
Effect of dilutive securities:
         Stock options and awards           --       77,844
                                      ---------------------
Diluted Earnings Per Share            $814,725    7,711,747        $0.11
                                                                   -----

September 30, 2007:
------------------
Net income (Nine Months Ended)        $2,432,640
                                      ----------

Basic Earnings Per Share:             $2,432,640  7,683,157        $0.32
                                                                   -----
Effect of dilutive securities:
         Stock options and awards           --       76,274
                                      ---------------------
Diluted Earnings Per Share            $2,432,640  7,759,431        $0.31
                                                                   -----

September 30, 2006:
------------------
Net income (Nine Months Ended)        $2,790,140
                                      ----------

Basic Earnings Per Share:             $2,790,140  7,632,555        $0.37
                                                                   -----
Effect of dilutive securities:
         Stock options and awards           --       76,601
                                      ---------------------
Diluted Earnings Per Share            $2,790,140  7,709,156        $0.36
                                                                   -----

Stock options for 52,013 and 53,820  shares of common stock were not  considered
in computing  diluted  earnings  per common  share for the three  months  ending
September  30, 2007 and  September  30,  2006,  respectively,  because they were
antidilutive.  For the nine months  ending  September 30, 2007 and September 30,
2006,  stock  options  for  52,368  and 54,559  shares,  respectively,  were not
considered.

                                  Page 7 of 27
<PAGE>

Note C - Stock-Based Compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123R "Share-Based  Payment," (FAS 123R) for its share-based
compensation  plans. The Company previously  accounted for these plans under the
recognition and measurement  principles of Accounting Principles Board (APB) No.
25,   "Accounting  for  Stock  Issued  to  Employees,"   (APB  25)  and  related
interpretations and disclosure requirements  established by FAS 123, "Accounting
for Stock-Based  Compensation."  Under APB 25, because the exercise price of the
Company's  employee  stock  options  equaled the market price of the  underlying
stock on the date of the grant,  no compensation  expense was recorded.  The pro
forma effects on income for stock  options were instead  disclosed in a footnote
to the financial  statements.  Expense was recorded in the income  statement for
restricted stock awards.

Under FAS 123R, all share-based compensation cost is measured at the grant date,
based on the fair value of the  award,  and is  recognized  as an expense in the
income statement over the vesting period. The Company adopted FAS 123R using the
modified  prospective  method.  The  cost  for all  share-based  awards  granted
subsequent to January 1, 2006,  represented  the grant-date  fair value that was
estimated in accordance with the provisions of FAS 123R.  Prior periods have not
been restated.

There is no  unrecognized  compensation  cost for this plan as of September  30,
2007 as all shares are  vested  under the terms of the plan.  New grants are for
the reload  feature  which are expensed at date of grant.  There were no options
granted during 2007.

Activity in the plan for 2007 was as follows:
<TABLE>
<CAPTION>
                                                     Range of             Weighted Average
                                                 ------------------    ------------------------
                                                   Option Exercise     Exercise Price
                                     Options          Price            Shares         Intrinsic
                                   Outstanding      Per Share          Outstanding    Value
                                   ----------------------------------------------------------

<S>                                     <C>        <C>       <C>       <C>            <C>
Outstanding at December 31, 2006        186,492    $ 4.722 - $18.167   $  7.561       $934,347
Granted                                      --
Exercised                                (7,225)      $4.722                          $ 49,377
Forfeited                                    --
                                   ------------
Outstanding at September 30, 2007       179,267    $ 4.722-$18.167     $  7.676       $881,980
                                   ============
</TABLE>

At September 30, 2007, the weighted average information for outstanding and
exercisable shares is as follows:

                             Shares outstanding and Exercisable
         -----------------------------------------------------------------------
         Range of                                Average        Average
         Exercise                                Exercise    Remaining Life
         Price                    Shares         Price          (Years)
         ----------------------------------------------------------------------

         $4.722 - $5.45           119,990   $      4.722          2.58
         $9.094 - $10.900           4,465   $      9.419          2.58
         $10.90 - $12.717          19,221   $     11.985          2.58
         $12.717 - $14.534         18,689   $     14.000          2.58
         $14.534 - $16.350          6,600   $     14.794          2.58
         $16.350 - $18.167         10,302   $     17.247          2.58
                             ------------   ------------   -----------
                 Total            179,267   $      7.676          2.58
                             ============   ============   ============

During 2006, the Company  reserved  80,000 shares of restricted  stock under the
2006  Recognition  and  Retention  Plan.  The market value of the 68,000  shares
awarded at the date of grant approximated  $777,920.  In addition,  in 2006, the
Company awarded 10,000 shares of restricted  stock from the  unallocated  shares
under the 2000  Management  Recognition and Retention Plan having a market value
of  approximately  $114,400.  Compensation  expense equal to the market value of
Oneida Financial Corp.'s stock on the grant date is amortized over the five year
vesting period for shares of restricted stock granted which will be fully vested
at December 31, 2010.  Compensation  expense  recorded in conjunction with these
plans was $43,701 and $44,616 for the three months ended  September 30, 2007 and
2006,  respectively,  and $131,103 and $133,848 for the nine month period ending
September 30, 2007 and 2006,  respectively.  Shares  unallocated under the plans
available  for future  awards were  12,886 at  September  30, 2007 and 2006.  At
September 30, 2007 and December 31, 2006,  there were nonvested shares of 73,686
and 75,286,  respectively,  with unrecognized  compensation cost of $682,115 and
$813,218, respectively.

                                  Page 8 of 27
<PAGE>

Note D - Dividend Restrictions

Oneida  Financial MHC, which owns 4,309,750 or 55.34% of the outstanding  shares
as of September 30, 2007 of Oneida Financial Corp.,  filed a notice with the OTS
regarding  its intent to waive its right to receive cash  dividends  declared by
Oneida Financial Corp. The OTS did not object to the notice.

Note E - Pension Plan

Net  pension  and  postretirement  cost  (benefit),  which  is  recorded  within
compensation  and employee  benefits  expenses in the  condensed  statements  of
income,  is  comprised  of the  following:


<TABLE>
<CAPTION>
                                                     Three Months Ended              Six Months Ended
                                               September 30,   September 30,   September 30,   September 30,
                                                    2007            2006            2007            2006
                                                    ----            ----            ----            ----
                                                                       (in thousands)
<S>                                            <C>             <C>             <C>             <C>
Service cost                                   $         --    $         --    $         --    $         --
Interest cost                                        55,000          70,986         165,000         212,958
Expected return on plan assets                      (87,000)        (73,005)       (261,000)       (219,015)
Amortization of unrecognized loss                    14,000          18,539          42,000          55,617
                                               ------------    ------------    ------------    ------------
         Net pension and postretirement cost   $    (18,000)   $     16,520    $    (54,000)   $     49,560
                                               ============    ============    ============    ============
</TABLE>

The plan  was  frozen  as of June 15,  2004  consequently  there  will not be an
increase  in   compensation   expense  from  the  plan.  The  Bank   anticipates
contributing $58,684 in 2007 to fund its pension plan. As of September 30, 2007,
contributions to the plan totaled $58,180.

Note F - Investment Securities and Mortgage-Backed Securities

Investment securities and mortgage-backed securities consist of the following at
September 30, 2007 and December 31, 2006:

<TABLE>
<CAPTION>
                                                              September 30, 2007
                                                 -------------------------------------------
                                                               Gross Unrealized
Investment Securities                            Fair Value          Gains            Losses
                                                 -------------------------------------------
Available for sale portfolio:                                (in thousands)
-----------------------------
<S>                                               <C>            <C>            <C>
     Debt securities:
         U. S. Agencies                           $     40,810   $         40   $        501
         Corporate                                      22,666             18          1,148
         State and municipals                           15,691             57            109
                                                  ------------   ------------   ------------
                                                        79,167            115          1,758
     Equity investments:
         Preferred and other equity stocks              12,063             87            341
         Mutual fund                                     3,601             68             --
                                                  ------------   ------------   ------------
                                                  $     94,831   $        270   $      2,099
                                                  ============   ============   ============
Mortgage-Backed Securities
  Available for sale portfolio:
     Fannie Mae                                   $     11,164   $         36   $        168
     Freddie Mac                                        16,081              4            389
     Ginnie Mae                                          1,453              7              2
     Small Business Administration                          14             --             --
     Collateralized Mortgage Obligations                 4,934              3             36
                                                  ------------   ------------   ------------
                                                  $     33,646   $         50   $        595
                                                  ============   ============   ============
</TABLE>

                                  Page 9 of 27
<PAGE>

Note F - Investment Securities and Mortgage-Backed Securities (Continued)

<TABLE>
<CAPTION>
                                                                December 31, 2006
                                                  ------------------------------------------
                                                                Gross Unrealized
Investment Securities                             Fair Value          Gains           Losses
                                                  ------------------------------------------
  Available for sale portfolio:                                (in thousands)
  -----------------------------
<S>                                               <C>            <C>            <C>
     Debt securities:
         U. S. Agencies                           $     36,245   $         13   $        659
         Corporate                                      18,067             94            388
         State and municipals                           15,706             75            117
                                                  ------------   ------------   ------------
                                                        70,018            182          1,164
     Equity investments:
         Preferred and other equity stocks              12,943            379             45
         Mutual fund                                     2,756             --             27
                                                  ------------   ------------   ------------
                                                  $     85,717   $        561   $      1,236
                                                  ============   ============   ============
Mortgage-Backed Securities
  Available for sale portfolio:
     Fannie Mae                                   $     10,008   $         17   $        232
     Freddie Mac                                        16,197              2            377
     Ginnie Mae                                            989             --              5
     Small Business Administration                          16             --             --
     Collateralized Mortgage Obligations                 1,871             --             32
                                                  ------------   ------------   ------------
                                                  $     29,081   $         19   $        646
                                                  ============   ============   ============
</TABLE>

The Company evaluates securities for other-than-temporary impairment at least on
a quarterly  basis, and more frequently when economic or market concerns warrant
such evaluation.  Consideration is given to the length of time and the extent to
which fair value has been less than cost, the financial  condition and near-term
prospects of the issuer, and the intent and ability of the Company to retain its
investments  in the  issuer  for a period  of time  sufficient  to allow for any
anticipated   recovery  in  fair  value.  In  analyzing  an  issuer's  financial
condition,  the Company may consider  whether the  securities  are issued by the
federal  government or its agencies,  whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuer's financial condition.

The Company  currently has a $2.0 million General Motors Acceptance Corp. (GMAC)
bond,  maturing October 15, 2010 which has a rating below investment  grade. The
unrealized  loss of $194,000 and $20,000 at September  30, 2007 and December 31,
2006, respectively,  has not been considered other than temporary as the Company
has the  intent  and  ability  to  retain  the  investment  for a period of time
sufficient to allow for recovery in the market value,  and  management  believes
that the repayment of the investment is probable at maturity.

Note G - Allowance for Loan Losses

The  allowance for loan losses is a valuation  allowance  for probable  incurred
credit losses.  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.  Management  estimates  the
allowance required by using past loan loss experience,  the nature and volume of
the  portfolio,  information  about specific  borrower  situations and estimated
collateral values,  economic  conditions,  and other factors.  Allocation of the
allowance may be made for specific loans,  but the entire allowance is available
for any loan that, in management's  judgment,  should be charged off. Quarterly,
management   evaluates  the  adequacy  of  the  allowance  and   determines  the
appropriate  provision  for loan  losses by applying a range of  estimated  loss
percentages  to each  category of performing  loans and  classified  loans.  The
allowance adjustment is based upon the net change in each portfolio category, as
well as  adjustments  related  to  impaired  loans,  since  the  prior  quarter.
Management  monitors and modifies the level of the  allowance for loan losses to
maintain it at a level  which it  considers  adequate  to provide  for  probable
incurred  loan  losses.  A  loan  is  considered  impaired,   based  on  current
information  and  events,  if it is  probable  that the Bank  will be  unable to
collect the  scheduled  payments of principal and interest when due according to
the contractual terms of the loan agreement. Factors considered by management in
determining  impairment  include  payment  status,  collateral  value,  and  the
probability of collecting  scheduled  principal and interest  payments when due.
The  measurement  of impaired  loans is generally  based on the present value of
expected future cash flows discounted at the historical effective interest rate,
except that all collateral-dependent  loans are measured for impairment based on
the estimated fair value of the collateral.  At September 30, 2007 the allowance
for loan losses as a percentage of net loans receivable was 0.91% as compared to
0.84% at December 31, 2006.

                                  Page 10 of 27

<PAGE>

Note G - Allowance for Loan Losses (Continued)

The following table sets forth the analysis of the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>
                                       Three Months Ended            Nine Months Ended
                                   September 30, September 30, September 30,    September 30,
                                       2007          2006          2007             2006
                                       ----          ----          ----             ----
                                                      (in thousands)
<S>                                 <C>           <C>             <C>            <C>
Balance at beginning of period:     $ 2,609        $ 2,089        $ 2,081         $ 1,959
     Charge-offs                        (88)          (133)          (160)           (273)
     Recoveries                          27             60            101             170
     Provision for loan losses           --             80             --             240
     Provision acquired                  --             --            526              --
                                    -------        -------        -------         -------
Balance at end of period            $ 2,548        $ 2,096        $ 2,548         $ 2,096
                                    =======        =======        =======         =======
</TABLE>

Impaired loans were as follows:        September 30, 2007      December 31, 2006
                                                    (in thousands)
Impaired loans                                $         --          $      --
Allocated allowance for loan losses           $         --          $      --
Average of impaired loans during the yearrr   $         --          $       8
Cash-basis interest income recognized         $         --          $       1

Note H - Segment Information

The Company has  determined  that it has three primary  business  segments,  its
banking franchise, its insurance activities and its benefit consulting activity.
For the three  months and nine months  ended  September  30, 2007 and 2006,  the
Company's insurance  activities  consisted of those conducted through its wholly
owned  subsidiary,  Bailey & Haskell  Associates,  Inc.  The  Company's  benefit
consulting  activities  consisted  of those  conducted  through its wholly owned
subsidiary,  Benefit  Consulting  Group,  Inc.  which was  acquired  June  2006.
Information about the Company's segments is presented in the following table for
the periods indicated:

<TABLE>
<CAPTION>
                                                                 Three Months Ended September 30, 2007
                                                        ---------------------------------------------------------
                                                        Banking          Insurance    Benefit Consulting    Total
                                                        Activities       Activities   Activities
                                                                                (in thousands)
<S>                                                     <C>            <C>            <C>            <C>
Net interest income                                     $      3,542   $         --   $         --   $      3,542
Provision for loan losses                                         --             --             --             --
                                                        ------------   ------------   ------------   ------------
  Net interest income after provision for loan losses          3,542             --             --          3,542
Other income                                                   1,029          2,444          1,085          4,558
Other expenses                                                 3,485          2,014            762          6,261
Depreciation and amortization                                    426             51             57            534
                                                        ------------   ------------   ------------   ------------
         Income before income taxes                              660            379            266          1,305
Income tax expense                                               142            150             82            374
                                                        ------------   ------------   ------------   ------------
         Net income                                     $        518   $        229   $        184   $        931
                                                        ============   ============   ============   ============

Total Assets                                            $    501,669   $     14,079   $      4,054   $    519,802
                                                        ============   ============   ============   ============
</TABLE>

                                  Page 11 of 27
<PAGE>

Note H - Segment Information (Continued)

<TABLE>
<CAPTION>
                                                                  Three Months Ended September 30, 2006
                                                        ---------------------------------------------------------
                                                        Banking        Insurance    Benefit Consulting      Total
                                                        Activities     Activities        Activities
                                                                              (in thousands)
<S>                                                     <C>            <C>                      <C>  <C>
Net interest income                                     $      3,214   $         --   $         --   $      3,214
Provision for loan losses                                         80             --             --             80
                                                        ------------   ------------   ------------   ------------
  Net interest income after provision for loan losses          3,134             --             --          3,134
Other income                                                     931          2,244            700          3,875
Other expenses                                                 3,023          1,943            556          5,522
Depreciation and amortization                                    258             53             63            374
                                                        ------------   ------------   ------------   ------------
         Income before income taxes                              784            248             81          1,113
Income tax expense                                               213             65             20            298
                                                        ------------   ------------   ------------   ------------
         Net income                                     $        571   $        183   $         61   $        815
                                                        ============   ============   ============   ============

Total Assets                                            $    422,630   $     12,765   $      4,073   $    439,468
                                                        ============   ============   ============   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                  Nine Months Ended September 30, 2007
                                                        ---------------------------------------------------------
                                                        Banking        Insurance      Benefit Consulting    Total
                                                        Activities     Activities         Activities
                                                                              (in thousands)
<S>                                                     <C>            <C>            <C>            <C>
Net interest income                                     $     10,065   $         --   $         --   $     10,065
Provision for loan losses                                         --             --             --             --
                                                        ------------   ------------   ------------   ------------
  Net interest income after provision for loan losses         10,065             --             --         10,065
Other income                                                   3,045          7,615          2,675         13,335
Other expenses                                                10,217          6,205          2,186         18,608
Depreciation and amortization                                  1,080            168            168          1,416
                                                        ------------   ------------   ------------   ------------
         Income before income taxes                            1,813          1,242            321          3,376
Income tax expense                                               471            375             97            943
                                                        -------------  ------------   ------------   ------------
         Net income                                     $      1,342   $        867   $        224   $      2,433
                                                        =============  =============  ============   ============

Total Assets                                            $    501,669   $     14,079   $      4,054   $    519,802
                                                        =============  =============  ============   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                   Nine Months Ended September 30, 2006
                                                        ---------------------------------------------------------
                                                        Banking         Insurance     Benefit Consulting    Total
                                                        Activities      Activities           Activities
                                                                              (in thousands)
<S>                                                     <C>            <C>            <C>            <C>
Net interest income                                     $      9,637   $         --   $         --   $      9,637
Provision for loan losses                                        240             --             --            240
                                                        ------------   ------------   ------------   ------------
  Net interest income after provision for loan losses          9,397             --             --          9,397
Other income                                                   2,851          7,056          2,236         12,143
Other expenses                                                 9,176          5,785          1,735         16,696
Depreciation and amortization                                    754            151            189          1,094
                                                        ------------   ------------   ------------   ------------
         Income before income taxes                            2,318          1,120            312          3,750
Income tax expense                                               530            340             90            960
                                                        ------------   ------------   ------------   ------------
         Net income                                     $      1,788   $        780   $        222   $      2,790
                                                        ============   ============   ============   ============

Total Assets                                            $    422,630   $     12,765   $      4,073   $    439,468
                                                        ============   ============   ============   ============
</TABLE>

                                  Page 12 of 27
<PAGE>

Note H - Segment Information (Continued)

The following  represents a  reconciliation  of the Company's  reported  segment
assets to consolidated assets as of September 30:

                   Assets                         2007             2006
                                                  ----             ----

Total assets for reportable segments        $    519,802    $    439,468
Elimination of intercompany cash balances         (6,240)         (5,236)
                                            ------------    ------------

Consolidated Total                          $    513,562    $    434,232
                                            ============    ============

Note I - Acquisitions

On April 2, 2007, the Bank completed its acquisition of Vernon Bank Corporation,
the stock  holding  company of the National  Bank of Vernon.  Under terms of the
agreement,  Oneida Savings Bank paid $11.4 million or $54.00 in cash for each of
the 210,447  outstanding shares of common stock of Vernon Bank Corporation.  The
merger was an opportunity to enhance technological capabilities,  expand product
lines and broaden the branch  network in contiguous  markets for our  collective
customer base. The results of Vernon Bank  Corporation have been included in the
consolidated  financial  statements  since April 2, 2007.  Assets  acquired as a
result of the  acquisition  totaled  $67.5  million and  resulted in  additional
goodwill  and  core  deposit   intangibles   of   approximately   $5.9  million.
Amortization expense of the core deposit intangible was $66,000 and $132,000 for
the three months and nine months ended  September  30, 2007,  respectively.  The
core deposit  intangible is being amortized using a 10-year  accelerated  method
amortization term.

The following table  summarizes the estimated fair values of the assets acquired
and liabilities  assumed at the date of  acquisition.  Oneida Savings Bank is in
the process of obtaining  third party  valuations of certain  assets;  thus, the
allocation of the purchase price is subject to refinement.

                                                          At April 2, 2007
                                                           (in thousands)

         Cash and cash equivalents                           $12,272
         Investments and mortgage backed securities           18,248
         Loans receivable, net                                26,163
         Property, plant and equipment                         1,906
         Goodwill                                              4,400
         Intangible assets                                     1,455
         Other assets                                          3,064
                                                             -------
                           Total assets acquired              67,508
         Deposits                                            (54,811)
         Other liabilities                                      (855)
                                                             -------
                                                             $11,842
                                                             =======

Note J - Accounting Pronouncements

The Company adopted FASB Interpretation 48, Accounting for Uncertainty in Income
Taxes ("Fin 48"),  as of January 1, 2007.  A tax  position  is  recognized  as a
benefit  only if it is "more  likely  than not" that the tax  position  would be
sustained in a tax examination,  with a tax examination being presumed to occur.
The amount  recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on  examination.  For tax positions not meeting the
"more  likely than not" test,  no tax benefit is  recorded.  The adoption had no
affect on the Company's financial statements.

The Company and its  subsidiaries are subject to U.S. federal income tax as well
as income  tax of the state of New York.  The  Company  is no longer  subject to
examination  by taxing  authorities  for years before 2003. The Company does not
expect the total amount of unrecognized tax benefits to  significantly  increase
in the next twelve months.

The Company recognizes interest and/or penalties related to income tax matters
in income tax expense. The Company did not have any amounts accrued for interest
and penalties at September 30, 2007.



                                  Page 13 of 27
<PAGE>

Note K - Effect of Newly Issued but not Yet Effective Accounting Standards


In September 2006, the FASB issued  Statement No. 157, Fair Value  Measurements.
This  Statement  defines fair value,  establishes a framework for measuring fair
value and expands  disclosures  about fair value  measurements.  This  Statement
establishes a fair value hierarchy  about the  assumptions  used to measure fair
value and clarifies  assumptions  about risk and the effect of a restriction  on
the  sale or use of an  asset.  The  standard  is  effective  for  fiscal  years
beginning  after November 15, 2007. The Company has not completed its evaluation
of the impact of the adoption of this standard.

In February 2007,  the FASB issued  Statement No. 159, The Fair Value Option for
Financial Assets and Financial  Liabilities.  This Statement permits entities to
choose to measure eligible financial instruments and certain other items at fair
value at specified election dates. The objective of the Statement was to improve
financial  reporting  by providing  entities  with the  opportunity  to mitigate
volatility  in  reported   earnings  caused  by  measuring  related  assets  and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  The standard is effective for fiscal years beginning after November
15, 2007.  The Company has not  completed  its  evaluation  of the impact of the
adoption of this standard.


                                  Page 14 of 27

<PAGE>


ITEM  2. Management's Discussion and Analysis of Financial Condition and Results
         Of Operations

























































                                  Page 15 of 27

<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


      This section presents Management's  discussion and analysis of and changes
to the Company's  consolidated financial results of operations and condition and
should be read in conjunction with the Company's financial  statements and notes
thereto included herein.

      When used in this  quarterly  report  the words or  phrases  "will  likely
result," "are  expected  to," "will  continue,"  "is  anticipated,"  "estimate,"
"project"  or similar  expressions  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 area 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  result  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.

GENERAL

      Oneida  Financial Corp. is the parent company of Oneida Savings Bank ("the
Bank").  The Company conducts no business other than holding the common stock of
the Bank and general investment  activities resulting from the capital it holds.
Consequently,  the net  income  of the  Company  is  primary  derived  from  its
investment in the Bank. The Bank's results of operations are primarily dependent
on its net interest  income,  which is the difference  between  interest  income
earned on its investments in loans,  investment  securities and  mortgage-backed
securities  and its cost of funds  consisting  of interest  paid on deposits and
borrowings.  The Bank's net income is also  affected by its  provision  for loan
losses, as well as by the amount of other income, including income from fees and
service charges,  revenue derived from the insurance agency and employee benefit
services  provided by subsidiaries of the Bank, net gains and losses on sales of
investments and loans, and operating expenses such as employee  compensation and
benefits,  occupancy and equipment costs and income taxes.  Earnings of the Bank
are also affected significantly by general economic and competitive  conditions,
particularly changes in market interest rates, which tend to be highly cyclical,
and government policies and actions of regulatory authorities,  which events are
beyond the control of the Bank.  At December 31, 2006 and September 30, 2007 the
Company had 7,769,945 shares and 7,775,170 shares outstanding of which 4,309,750
were held by Oneida Financial MHC, the Company's mutual holding company parent.

RECENT DEVELOPMENTS

      The Company  announced a semi-annual  cash dividend as of July 11, 2007 of
$0.24 per share  which was paid to its  shareholders  on August 7, 2007.  Oneida
Financial MHC waived its receipt of dividends.

      On April 2,  2007,  the Bank  completed  its  acquisition  of Vernon  Bank
Corporation,  the stock holding  company of the National  Bank of Vernon.  Under
terms of the agreement, Oneida Savings Bank paid $11.4 million or $54.00 in cash
for each of the  210,447  outstanding  shares  of common  stock of  Vernon  Bank
Corporation.  The  results  of  Vernon  Bank  Corporation  are  included  in the
consolidated financial statements since April 2, 2007.

      Footnote  I to  the  consolidated  financial  statements  sets  forth  the
estimated fair values of the assets acquired and liabilities assumed at the date
of acquisition.  Assets  acquired as a result of the  acquisition  totaled $67.5
million and resulted in  additional  goodwill and core  deposit  intangibles  of
approximately $5.9 million.  Amortization expense of the core deposit intangible
was $66,000 and $132,000  for the three  months and nine months ended  September
30,  2007.  The core  deposit  intangible  is being  amortized  using a  10-year
accelerated method amortization term.


                                  Page 16 of 27
<PAGE>

FINANCIAL CONDITION

      ASSETS.  Total  assets at  September  30,  2007 were  $513.6  million,  an
increase of $70.6 million from $442.9  million at December 31, 2006.  Investment
securities increased $9.1 million and mortgage-backed  securities increased $4.6
million due to the acquisition of Vernon Bank, offset by principal  collected on
and proceeds  from sales and  maturities  of  investment  and  mortgaged  backed
securities.  Loans  receivable,  including loans held for sale,  increased $32.9
million to $280.3  million at September 30, 2007 compared with $247.4 million at
December  31,  2006.  The  increase in loans  receivable  was largely due to the
acquisition  of $26.2  million of loans from Vernon Bank. At September 30, 2007,
total commercial  business loans increased by $4.7 million while commercial real
estate loans increased by $10.7 million from December 31, 2006. At September 30,
2007 total  consumer  loans  increased  by  $924,000  from  December  31,  2006.
Residential  loans increased by $17.0 million since December 31, 2006, after the
sale of  $14.6  million  of  fixed-rate  residential  real  estate  loans in the
secondary market during the nine-month  period.  Goodwill and other  intangibles
totaled $25.5 million as of September 30, 2007 and $19.9 million at December 31,
2006. Goodwill in the amount of $4.4 million and intangible assets in the amount
$1.5 million were recorded in conjunction  with the  acquisition of The National
Bank of Vernon that closed during the second quarter 2007.  Additional  goodwill
in the amount of $132,000 was recorded for the contingent  purchase payment made
to the benefit  consulting  company we acquired in 2006.  Under the terms of the
agreement,  contingent  purchase payments based on future performance levels may
be made over a five-year  period starting with the year ended December 31, 2006.
Offsetting  this  payment  was the  amortization  expense  recorded on a monthly
basis.

      The  allowance  for loan losses was $2.5 million at September  30, 2007 as
compared  with $2.1 million at December 31, 2006.  The increase in the allowance
is due to the  acquisition  of the Vernon  Bank's  allowance  for loan losses of
$526,000.  The allowance  for loan losses is a valuation  allowance for probable
incurred  credit  losses.  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.  Management
estimates the allowance balance required by using past loan loss experience, the
nature  and  volume  of  the  portfolio,  information  about  specific  borrower
situations  and estimated  collateral  values,  economic  conditions,  and other
factors.  Allocation of the allowance  may be made for specific  loans,  but the
entire  allowance  is available  for any loan that,  in  management's  judgment,
should be charged  off.  Quarterly,  management  evaluates  the  adequacy of the
allowance and determines the appropriate provision for loan losses by applying a
range of estimated  loss  percentages  to each category of performing  loans and
classified loans. The allowance  adjustment is based upon the net change in each
portfolio category,  as well as adjustments related to impaired loans, since the
prior quarter.  Management  monitors and modifies the level of the allowance for
loan losses to maintain it at a level which it considers adequate to provide for
probable incurred loan losses. A loan is considered  impaired,  based on current
information  and  events,  if it is  probable  that the Bank  will be  unable to
collect the  scheduled  payments of principal and interest when due according to
the contractual terms of the loan agreement. Factors considered by management in
determining  impairment  include  payment  status,  collateral  value,  and  the
probability of collecting  scheduled  principal and interest  payments when due.
The  measurement  of impaired  loans is generally  based on the present value of
expected future cash flows discounted at the historical effective interest rate,
except that all collateral-dependent  loans are measured for impairment based on
the estimated fair value of the collateral.  At September 30, 2007 the allowance
for loan losses as a percentage of net loans receivable was 0.91% as compared to
0.84% as of December 31, 2006.

      The book value of premises  and  equipment  increased  $6.8  million  from
December 31, 2006 to  September  30, 2007 as a result of the  construction  of a
26,000 square foot banking, insurance and retail center at the Griffiss Business
and  Technology  Park in Rome,  New York,  which opened for business on April 3,
2007, as well as the acquisition of Vernon Bank.

      LIABILITIES.  Total  liabilities  increased  by $70.4  million  to  $454.9
million at September  30, 2007 from $384.5  million at December  31,  2006.  The
increase is  primarily  the result of an  increase in deposits of $79.7  million
acquired from Vernon Bank. Offsetting these increases, borrowings decreased $5.0
million due to a maturity of a borrowing that was not renewed.

      STOCKHOLDERS'  EQUITY.  Total  stockholders'  equity  increased  to  $58.6
million at September 30, 2007 as compared to $58.4 million at December 31, 2006.
Stockholders'  equity  increased  due to the addition of after-tax net income of
$2.4  million for the nine months ended  September  30,  2007.  Offsetting  this
increase  was a decrease in the  valuation  adjustments  made for the  Company's
available for sale investment and mortgage-backed securities.  Accumulated Other
Comprehensive Loss improved by $643,000 from December 31, 2006 to a loss of $2.4
million from a loss of $1.8  million.  The payment of the  Company's  semiannual
cash  dividends  of $0.24  resulted in a reduction  in  stockholders'  equity of
$831,000.



                                  Page 17 of 27
<PAGE>

ANALYSIS OF NET INTEREST INCOME

      Net  interest   income   represents  the  difference   between  income  on
interest-earning  assets  and  expense  on  interest-bearing   liabilities.  Net
interest income also depends on the relative amounts of interest-earning  assets
and  interest-bearing  liabilities  and the interest rates earned or paid on the
assets or liabilities.

      AVERAGE BALANCE SHEET. The following tables set forth certain  information
relating to the Company for the three months and nine months ended September 30,
2007  and 2006  and for the  year  ended  December  31,  2006.  For the  periods
indicated,  the dollar amount of interest  income from average  interest-earning
assets and the  resultant  yields,  as well as the  interest  expense on average
interest-bearing   liabilities   is   expressed  in  thousands  of  dollars  and
percentages.  No tax equivalent  adjustments  were made. The average  balance is
computed based upon an average daily balance.

         TABLE 1.  Average Balance Sheet.
<TABLE>
<CAPTION>
                                               Three Months Ended September 30,                      Twelve  Months Ended Dec. 31,
                                     ----------------------------------------------------------    ---------------------------------
                                                    2007                           2006                           2006
                                      Average     Interest             Average   Interest             Average     Interest
                                     Outstanding  Earned/    Yield/  Outstanding  Earned/    Yield/ Outstanding   Earned/   Yield/
Assets                                Balance       Paid      Rate    Balance      Paid       Rate    Balance      Paid      Rate
------                                -------       ----      ----    -------      ----       ----    -------      ----      ----
                                                                      (Dollars in Thousands)
<S>                                  <C>       <C>            <C>    <C>        <C>           <C>    <C>       <C>          <C>
Interest-earning Assets:
------------------------
 Loans Receivable                    $280,957  $  4,816       6.86%  $247,337   $ 4,197       6.79%  $243,661  $ 16,165     6.63%
 Investment and
 Mortgage-Backed                      110,195     1,421       5.16%   103,336     1,225       4.74%   107,479     5,080     4.73%
     Securities
 Federal Funds                         14,356       216       6.02%       934        13       5.57%     3,014       178     5.91%
 Equity Securities                     15,328       206       5.38%    17,666       221       5.00%    17,677       838     4.74%
                                     --------  --------   --------   --------   -------   --------   --------  --------  -------
   Total Interest-earning Assets      420,836     6,659       6.33%   369,273     5,656       6.13%   371,831    22,261     5.99%
                                     --------  --------   --------   --------   -------   --------   --------  --------  -------
Non interest-earning Assets:
----------------------------
  Cash and due from banks              15,392                           9,769                          10,440
  Other assets                         72,511                          56,732                          53,147
                                     --------                        --------                         -------
              Total assets           $508,739                        $435,774                        $435,418
                                     ========                        ========                        ========
Liabilities and Stockholders'Equity
-----------------------------------
Interest-bearing Liabilities:
-----------------------------
  Money Market Deposits               $60,662      $493       3.22%   $42,464      $300       2.80%   $43,664    $1,135     2.60%
  Savings Accounts                     76,648       154       0.80%    67,935       125       0.73%    68,165       483     0.71%
  Interest-bearing Checking            38,531        72       0.74%    30,666        24       0.31%    30,979       143     0.46%
  Time Deposits                       144,200     1,696       4.67%   109,346     1,085       3.94%   109,711     4,202     3.83%
  Borrowings                           56,400       693       4.87%    68,669       884       5.11%    67,749     3,383     4.99%
  Notes Payable                           681         9       5.24%     1,908        24       4.99%     1,016       100     9.84%
                                     --------  --------   --------   --------  --------   --------   --------  --------  -------
    Total Interest-bearing
Liabilities                           377,122     3,117       3.28%   320,988     2,442       3.02%   321,284     9,446     2.94%
                                     --------  --------   --------   --------  --------   --------   --------  --------  -------
Non-interest-bearing Liabilities:
---------------------------------
  Demand deposits                      64,816                          52,314                          51,737
  Other liabilities                     8,772                           7,914                           7,629
                                     --------                        --------                        --------
      Total liabilities              $450,710                         381,216                        $380,650
                                     --------                        --------                        --------
Stockholders' equity                   58,029                          54,558                          54,768
                                     --------                        --------                        --------
Total liabilities and
stockholders' equity                 $508,739                        $435,774                        $435,418
                                     ========                        ========                        ========
    Net Interest Income                          $3,542                          $3,214                         $12,815
                                               ========                         =======                        ========
    Net Interest Spread                                       3.05%                           3.11%                         3.05%
                                                             =====                        ========                       =======
    Net Earning Assets                $43,714                         $48,285                         $50,547
                                     ========                        ========                        ========
   Net yield on average
      Interest-earning assets                      3.37%                           3.48%                           3.45%
                                               ========                         =======                        ========
    Average interest-earning
      assets to average
      Interest-bearing
liabilities                                      111.59%                         115.04%                         115.73%
                                               ========                         =======                        ========
</TABLE>

                                  Page 18 of 27
<PAGE>

<TABLE>
<CAPTION>
                                                    Nine Months Ended September 30,               Twelve  Months Ended Dec. 31,
                                  --------------------------------------------------------------  -----------------------------
                                                2007                          2006                              2006
                                   Average     Interest            Average   Interest             Average   Interest
                                  Outstanding   Earned/  Yield/ Outstanding   Earned/   Yield/   Outstanding  Earned/   Yield/
Assets                             Balance      Paid      Rate    Balance      Paid      Rate      Balance      Paid     Rate
------                             -------      ----      ----    -------      ----      ----       -------      ----    ----
                                                                 (Dollars in Thousands)
<S>                                  <C>        <C>      <C>      <C>        <C>           <C>     <C>        <C>         <C>
Interest-earning Assets:
------------------------
Loans Receivable                     $267,270   $13,669    6.82%  $242,295   $12,029       6.62%   $243,661   $16,165       6.63%
Investment and Mortgage-Backed
            Securities                103,309     3,904    5.04%   110,044     3,820       4.63%    107,479     5,080       4.73%
Federal Funds                          13,706       639    6.22%     1,051        41       5.20%      3,014       178       5.91%
Equity Securities                      15,325       603    5.25%    18,438       640       4.63%     17,677       838       4.74%
                                     --------  --------  -------  --------   -------   --------    --------  --------       -----
    Total Interest-earning Assets     399,610    18,815    6.28%   371,828    16,530       5.93%    371,831    22,261       5.99%
                                     --------  --------  -------  --------   -------   --------    --------  --------       -----
Non interest-earning Assets:
  Cash and due from banks              14,313                       10,052                           10,440

  Other assets                         69,986                       51,468                           53,147
                                     --------                     --------                         --------
              Total assets           $483,909                     $433,348                         $435,418
                                     ========                     ========                         ========
Liabilities and Stockholders'
Equity
Interest-bearing Liabilities:
  Money Market Deposits               $53,587    $1,274    3.18%   $42,145      $827       2.62%    $43,664    $1,135       2.60%
  Savings Accounts                     74,276       423    0.76%    69,451       366       0.70%     68,165       483       0.71%
  Interest-bearing Checking            35,425       194    0.73%    30,842        71       0.31%     30,979       143       0.46%

  Time Deposits                       134,282     4,589    4.57%   107,437     2,964       3.69%    109,711     4,202       3.83%

  Borrowings                           60,740     2,233    4.92%    69,813     2,585       4.95%     67,749     3,383       4.99%
  Notes Payable                           993        37    4.98%       819        80      13.06%      1,016       100       9.84%
                                     --------  --------  ------   --------   -------   --------    --------  --------    -------
 Total Interest-bearing Liabilities   359,303     8,750    3.26%   320,507     6,893       2.88%    321,284     9,446       2.94%
                                     --------  --------  ------   --------   -------   --------    --------  --------    -------
Non-interest-bearing Liabilities:
  Demand deposits                      59,870                       51,176                          51,737

  Other liabilities                     6,401                        7,358                           7,629
                                     --------                     --------                        --------
      Total liabilities              $425,574                      379,041                        $380,650
                                     --------                     --------                        --------

Stockholders' equity                   58,335                       54,307                          54,768
                                     --------                     --------                        --------
Total liabilities and
stockholders' equity                 $483,909                     $433,348                        $435,418
                                     ========                     ========                        ========

    Net Interest Income                         $10,065                       $9,637                          $12,815
                                               ========                      =======                         ========
    Net Interest Spread                                    3.02%                           3.05%                            3.05%
                                                           =====                        ========                          =======
    Net Earning Assets                $40,307                      $51,321                         $50,547
                                     ========                     ========                        ========
   Net yield on average
      Interest-earning assets                     3.36%                         3.46%                            3.45%
                                               ========                      =======                         ========
    Average interest-earning
      assets to average
      Interest-bearing
liabilities                                     111.22%                       116.01%                          115.73%
                                               ========                      =======                         ========
</TABLE>

RESULTS OF OPERATIONS

      GENERAL.  Net income for the three  months  ended  September  30, 2007 was
$931,000,  an increase of $116,000 or 14.2% from  $815,000  for the three months
ended September 30, 2006. The increase in net income was primarily the result of
an increase in net interest income and non-interest  income and decreases in the
provision  for loan loss  offset by an  increase  in other  expenses  and income
taxes. Net income for the nine months ended September 30, 2007 was $2.4 million,
a decrease of $357,000 from $2.8 million for the nine months ended September 30,
2006.

      INTEREST INCOME. Interest and dividend income increased by $1.0 million or
17.7%,  to $6.7 million for the three months ended  September 30, 2007 from $5.7
million for three months  ended  September  30, 2006.  For the nine months ended
September 30, 2007,  interest and dividend  income  increased by $2.3 million or
13.8% to $18.8  million from $16.5  million for the nine months ended  September
30, 2006.  The increase in interest  income was the result of an increase in the
average yield of  interest-earning  assets as well as an increase in the average
balances  during the three  months and nine  months  ended  September  30,  2007
compared to the same period in 2006.

                                  Page 19 of 27
<PAGE>

      Interest income on loans increased  $619,000 to $4.8 million for the three
months  ended  September  30, 2007 from $4.2  million for the three months ended
September 30, 2006.  The increase in interest  income on loans is a result of an
increase of $33.6  million in the average  balance of loans  receivable  for the
three months ended  September  30, 2007 as compared with the same period in 2006
as well as an increase of 7 basis  points in the average  yield to 6.86% for the
three  months  ended  September  30, 2007 from 6.79% for the three  months ended
September 30, 2006.  For the nine months ended  September 30, 2007,  the average
balance of loans  increased  $25.0 million while the average yield  increased 20
basis  points to 6.82% during the 2007 period from 6.62% during the 2006 period.
The average  balance of commercial  real estate loans increased $10.5 million at
September  30,  2007 from  September  30,  2006  while the  average  balance  of
commercial  business  loans  increased $2.2 million during the nine months ended
2007 compared with 2006.  Consumer loans  increased $3.1 million during the 2007
period as compared to 2006. The average balance of residential real estate loans
increased  $9.1 million for the same time period,  after  recording  the sale of
$19.3 million in fixed rate  one-to-four  family  residential  real estate loans
over the last 12 months.

      Investment income increased $196,000 as a result of an increase in average
yield of 42 basis points to 5.16% for the three months ended  September 30, 2007
from 4.74% for the three months ended  September 30, 2006 as well as an increase
in the average balance of investment  securities and mortgage-backed  securities
of $6.9  million  for the three  months  period  ending  September  30,  2007 as
compared with the same period in 2006.  For the nine months ended  September 30,
2007,  investment  income increased  $83,000 as compared with the same period in
2006 due to a decrease in the average balance of investment and  mortgage-backed
securities of $6.7 million for the nine month period  ending  September 30, 2007
as compared with the same period in 2006.

      Interest income from federal funds increased during the three months ended
September 30, 2007 to $216,000 as compared with $13,000 for the 2006 period. The
increase  in interest  income is due to an  increase  in the average  balance of
$13.4  million as well as an increase of 45 basis  points in the average  yield.
For the nine months ended  September 30, 2007,  interest income on federal funds
increased  $598,000  due to an increase  in both the  average  yield and average
balance as compared  with the same period in 2006.  The  increase in the average
balance of federal  funds  sold  provided  the cash  consideration  required  in
connection with the acquisition of Vernon Bank Corporation and also reflects the
cash received as part of the acquisition.

      INTEREST  EXPENSE.  Interest expense was $3.1 million for the three months
ended  September 30, 2007, an increase of $675,000 or 27.6% from the same period
in 2006. The increase in interest expense is due to an increase in interest paid
on  deposit  accounts  partially  offset by  interest  paid on  borrowed  funds.
Interest  expense on borrowed  funds  totaled  $693,000 for the third quarter of
2007 compared  with  $884,000 for the 2006 period.  The average cost of borrowed
funds  decreased 24 basis  points to 4.87% for the three months ended  September
30, 2007 from 5.11% for the three months ended  September 30, 2006. For the nine
months ended  September 30, 2007,  interest  expense on borrowed funds decreased
$352,000 due to a decrease in the average  balance  outstanding of borrowings to
$60.7  million  during the nine months ended  September  30, 2007 as compared to
$69.8  million for the nine month period in 2006.  Interest  expense on deposits
increased $881,000 and totaled $2.4 million for the three months ended September
30,  2007 as compared to $1.5  million for the three month  period in 2006.  The
average cost of deposits was 3.02% for the three month period  ending  September
30, 2007  compared  with 2.45% for the three month period in 2006.  In addition,
the average balance of deposit  accounts  increased $69.6 million from September
2006 to September  2007.  For the nine months  ended  September  30,  2007,  the
average  cost of deposits  was 2.90% as  compared  with 2.26% for the nine month
period in 2006. In addition,  the average balance of deposit accounts  increased
$47.7 million for the nine months ended  September 30, 2007 as compared with the
nine months ended September 30, 2006.

      PROVISION  FOR LOAN LOSSES.  There was no  provision  for loan losses made
during the third  quarter  2007 as compared  with a provision of $80,000 for the
three months ended  September 30, 2006. For the nine months ended  September 30,
2007  and  2006  respectively,  total  provision  for  loan  losses  were $0 and
$240,000,  respectively.  The  allowance  for loan losses was $2.5 million as of
September  30, 2007 as compared to $2.1  million as of September  30, 2006.  The
ratio of the net loan loss  allowance to loans  receivable is 0.91% at September
30, 2007 as compared with a ratio of 0.85% of loans  receivable at September 30,
2006.  Management  continues  to monitor  changes in the loan  portfolio  mix in
response to the redirection of loan  origination  and retention  toward consumer
and commercial  business loans.  The method utilized to evaluate the adequacy of
the  allowance  level  accounts  for the higher  relative  degree of credit risk
associated  with this activity as compared  with  traditional  residential  real
estate lending.  Provisions to the allowance are made as management assesses the
level of  allowance  to maintain it at a level  which is  considers  adequate to
provide for probable incurred loan losses.

      OTHER  INCOME.  Other  operating  income  increased  by  $683,000  for the
three-month  period  ending  September 30, 2007 compared with the same period in
2006 to $4.6  million  from $3.9  million.  The  increase  in other  income  was
primarily due to an increase in commissions  and fees on the sale of non-banking
products through the Company's subsidiaries for the three months ended September
30, 2007 a compared  with the same period during 2006.  Commissions  and fees on
sales of  non-banking  products  was $3.5  million  for the three  months  ended
September 30, 2007 as compared to $2.9 million for the same period in 2006.

                                  Page 20 of 27
<PAGE>

      In addition, service charges on deposit accounts increased $39,000 or 6.4%
for the three months ended  September  30, 2007  compared  with the three months
ended September 30, 2006.

      For the nine months ended  September  30,  2007,  other  operating  income
increased  $1.2 million to $13.3  million from $12.1 million for the nine months
ended  September 30, 2006. The increase is primarily due to increases in revenue
derived from the  Company's  insurance  agency  subsidiary as well as the income
associated with Benefit  Consulting Group Inc.  Commissions and fees on sales of
non-banking  products was $10.2 million for the nine months ended  September 30,
2007 as compared to $9.3 million for the nine months ended in 2006. In addition,
service  charges  on  deposit  accounts  increased  $96,000 or 5.5% for the nine
months ended  September 30, 2007  compared with the nine months ended  September
30, 2006.

      OTHER EXPENSES.  Other operating  expenses increased by $899,000 or 15.2%,
to $6.8 million for the three months ended  September 30, 2007 from $5.9 million
for the same period in 2006. For the nine months ended September 30, 2007, other
operating expenses increased by $2.2 million to $20.0 million from $17.8 million
for the same  period  in 2006.  The  increase  in other  operating  expenses  is
primarily the result of operating expenses  associated with our insurance agency
and  consulting  subsidiaries.  In  addition,  the  increase in other  operating
expenses are associated with the acquisition of the Vernon Bank  Corporation and
the  completion  of our  banking,  insurance  and retail  center at the Griffiss
Business and Technology Park in Rome, New York.

      INCOME TAX. Income tax expense  increased to $374,000 for the three months
ended  September 30, 2007 as compared to $298,000 for the third quarter of 2006.
For the nine  months  ended  September  30,  2007,  the income tax  expense  was
$943,000,  a  decrease  of  $17,000  from  $960,000  for the nine  months  ended
September  30,  2006.  The  effective  tax rate  increased to 27.9% for the nine
months of 2007 from 25.6% for the nine months of 2006 to reflect the overall tax
rate expected to be in effect for 2007.

      LIQUIDITY  AND CAPITAL  RESOURCES.  In addition to the  Company's  primary
funding sources of cash flows from operations,  deposits and borrowings, funding
is provided  from the  principal  and  interest  payments  received on loans and
investment  securities,  proceeds  from the  maturities  and sale of  investment
securities,  as well as proceeds from the sale of fixed rate  mortgage  loans in
the secondary market.  While maturities and scheduled  amortization of loans and
securities  are  predictable  sources of funds,  deposit  balances  and mortgage
prepayments  are greatly  influenced  by general  interest  rates,  the economic
environment and local competitive conditions.

      The primary  investing  activities of the Company are the  origination  of
residential  mortgages,  commercial  loans and  consumer  loans,  as well as the
purchase of mortgage-backed and other debt securities.  During the third quarter
of 2007,  loan  originations  totaled  $30.6  million  compared to $19.7 million
during the third quarter of 2006. The purchases of investment securities totaled
$27.9  million  during the first nine months of 2007 as compared to $5.0 million
during  the  first  nine  months  of 2006.  The  increase  in the  purchases  of
investment  securities is due to additional  liquidity  after the acquisition of
Vernon Bank Corporation.

      Cash flow from operations,  deposit growth, as well as the sales, maturity
and principal payments received on loans and investment  securities were used to
fund the investing  activities  described above.  Additionally,  the Company has
lines of credit with the Federal  Home Loan Bank,  Federal  Reserve Bank and two
commercial  banks that provide funding sources for lending,  liquidity and asset
and liability management as needed.  During the third quarter of 2007 cash flows
provided by the sale,  principal  payments and maturity of securities  available
for sale was $15.4 million compared to $7.9 million for the same period in 2006.

      In the ordinary  course of business,  the Company  extends  commitments to
originate residential and commercial loans and other consumer loans. Commitments
to extend  credit are  agreements  to lend to a customer  as long as there is no
violation of any condition  established in the contract.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since the Company does not expect all of the commitments to be funded,
the  total  commitment   amounts  do  not  necessarily   represent  future  cash
requirements.  The  Company  evaluates  each  customer's  creditworthiness  on a
case-by-case   basis.   Collateral  may  be  obtained  based  upon  management's
assessment of the customers' creditworthiness.  Commitments to extend credit may
be written on a fixed rate basis  exposing  the  Company to  interest  rate risk
given the  possibility  that market rates may change between the commitment date
and the actual  extension of credit.  As of  September  30, 2007 the Company had
outstanding  commitments to originate loans of approximately $4.2 million, which
generally have an expiration  period of less than 120 days.  Commitments to sell
residential mortgages amounted to $4.5 million at September 30, 2007.

                                  Page 21 of 27
<PAGE>

      The Company extends credit to consumer and commercial  customers,  up to a
specified amount, through lines of credit. The borrower is able to draw on these
lines as needed,  thus the funding  requirements  are  generally  unpredictable.
Unused  lines of credit  amounted  to $45.9  million at  September  30, 2007 and
generally  have an expiration  period of less than one year.  It is  anticipated
that  there  will be  sufficient  funds  available  to  meet  the  current  loan
commitments  and other  obligations  through the sources  described  above.  The
credit risk involved in issuing these  commitments  is  essentially  the same as
that involved in extending  loans to customers and is limited to the contractual
notional amount of those instruments.

      Cash,  interest-earning  demand accounts at correspondent  banks,  federal
funds sold,  and other  short-term  investments  are the  Company's  most liquid
assets.  The level of these  assets are  monitored  daily and are  dependent  on
operating,  financing, lending and investing activities during any given period.
Excess short-term liquidity is usually invested in overnight federal funds sold.
In the event that funds beyond those  generated  internally  are required due to
higher than expected loan commitment fundings, deposit outflows or the amount of
debt being called,  additional sources of funds are available through the use of
repurchase agreements, the sale of loans or investments or the Company's various
lines of credit.  As of September 30, 2007 the total of cash,  interest-earnings
demand accounts and federal funds sold was $28.1 million.

      At  September  30,  2007,  the  Bank  exceeded  all   regulatory   capital
requirements.  The current  requirements  and the actual levels for the Bank are
detailed in the following table.

<TABLE>
<CAPTION>
                                                                                                    To Be Well
                                                                                                 Capitalized Under
                                                                     For Capital                 Prompt Corrective
                                         Actual                   Adequacy Purposes              Action Provisions
                              ------------------------      --------------------------    ---------------------------
                                     Amount      Ratio            Amount         Ratio          Amount          Ratio
<S>                            <C>               <C>        <C>                  <C>      <C>                   <C>
As of September 30, 2007:                                       (Dollars in thousands)
Total Capital
   (to Risk Weighted Assets)   $     36,215      10.58%     $     27,380         8%       $     34,225            10%
Tier I Capital
   (to Risk Weighted Assets)   $     33,667       9.84%     $     13,690         4%       $     20,535             6%
Tier I Capital
   (to Average Assets)         $     33,667       7.02%     $     19,172         4%       $     23,965             5%

<CAPTION>
                                                                                                    To Be Well
                                                                                                 Capitalized Under
                                                                  For Capital                    Prompt Corrective
                                     Actual                   Adequacy Purposes                  Action Provisions
                              ----------------------        --------------------------    ---------------------------
                                    Amount      Ratio             Amount         Ratio          Amount          Ratio
<S>                            <C>               <C>        <C>                  <C>      <C>                     <C>
As of December 31, 2006:                                         (Dollars in thousands)
Total Capital
   (to Risk Weighted Assets)   $     39,204    13.36%       $     23,522           8%     $     29,402            10%
Tier I Capital
   (to Risk Weighted Assets)   $     37,045    12.63%       $     11,761           4%     $     17,642             6%
Tier I Capital
   (to Average Assets)         $     37,045     8.89%       $     16,706           4%     $     20,883             5%
</TABLE>

                                            Page 22 of 27
<PAGE>

ONEIDA FINANCIAL CORP.
SELECTED FINANCIAL RATIOS
At and for the Three Months Ended and Nine Months Ended  September  30, 2007 and
2006 (unaudited)

<TABLE>
<CAPTION>
(Annualized where appropriate)                        Three Months Ending     Nine Months Ended
                                                         September 30,          September 30,
                                                       2007        2006        2007       2006
                                                       ----        ----        ----      -----
<S>                                                    <C>         <C>         <C>         <C>
  Performance Ratios:

  Return on average assets                             0.73%       0.75%       0.67%       0.86%
  Return on average equity                             6.42%       5.98%       5.56%       6.85%
  Net interest margin                                  3.37%       3.48%       3.36%       3.46%

  Efficiency Ratio                                    83.89%      81.82%      83.89%      80.36%
  Ratio of operating expense
         to average total assets                       5.34%       5.41%       5.52%       5.47%
  Ratio of average interest-earning assets
         to average interest-bearing liabilities     111.59%     115.04%     111.22%     116.01%

  Asset Quality Ratios:

     Non-performing assets to total assets             0.05%       0.01%       0.05%       0.01%

     Allowance for loan losses
         to non-performing loans                   1,011.11%   3,677.19%   1,011.11%   3,677.19%
     Allowance for loan losses
         to loans receivable, net                      0.91%       0.85%       0.91%       0.85%

  Capital Ratios:

      Total stockholders' equity to total assets      11.42%      12.85%      11.42%      12.85%
      Average equity to average assets                11.41%      12.52%      12.05%      12.53%
</TABLE>






















                                  Page 23 of 27
<PAGE>

ITEM  3. Quantitative and Qualitative Disclosure About Market Risk

      Various  forms of market  risk are  inherent  in the  business of the Bank
including  concentration risk, liquidity management,  credit risk and collateral
risk among others.  However,  the Bank's most significant form of market risk is
interest  rate risk, as the majority of the Bank's  assets and  liabilities  are
sensitive to changes in interest  rates.  Ongoing  monitoring  and management of
this  risk is an  important  component  of the  Company's  asset  and  liability
management  process.  The Bank's interest rate risk  management  program focuses
primarily on evaluating  and managing the  composition  of the Bank's assets and
liabilities in the context of various  interest rate  scenarios.  Factors beyond
Management's control,  such as market interest rates and competition,  also have
an  impact  on  interest  income  and  expense.  Based  on  the  asset-liability
composition  at  September  30, 2007,  in a rising  interest  rate  environment,
Management  would expect that the Company's cost of shorter-term  deposits might
rise faster than its earnings on longer-term loans and investments.  Conversely,
as interest rates decrease, the prepayment of principal on loans and investments
tends  to  increase,  causing  the  Company  to  invest  funds  in a lower  rate
environment.  To mitigate the effect of interest  rate changes,  Management  has
taken steps to emphasize core deposits,  monitor certificate of deposit rates to
better match asset changes,  and sell  substantially all newly originated longer
term fixed rate  loans in the  secondary  market  without  recourse.  Management
believes   this  approach  will  help  reduce  the  exposure  to  interest  rate
fluctuations and enhance long-term profitability.

      For a discussion of the Company's asset and liability  management policies
as well as the  potential  impact of interest  rate changes upon the earnings of
the Company,  see "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" in the Company's 2006 Annual Report to  Stockholders.
There has been no material  change in the  Company's  interest rate risk profile
since December 31, 2006.

ITEM  4. Controls and Procedures

      Under  the  supervision  and with  the  participation  of our  management,
including our Chief Executive Officer and Chief Financial  Officer,  the Company
has evaluated the  effectiveness  of the design and operation of our  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  quarterly  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 quarterly
report, the Company's disclosure controls and procedures are effective to ensure
that  information  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 or submits  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 reasonably likely to
materially affect, the Company's internal control over financial reporting


















                                  Page 24 of 27
<PAGE>

                             ONEIDA FINANCIAL CORP.
                                AND SUBSIDIARIES

Part  II - Other Information Item 1 Legal Proceedings

      Much of the Bank's market area is included in the 270,000-acre  land claim
of the Oneida Indian Nation  ("Oneidas").  The land claim area is held primarily
by private  persons.  Over 15 years ago the United States Supreme Court ruled in
favor of the Oneidas in a lawsuit  which  management  believes  was  intended to
encourage  the State of New York to negotiate an equitable  settlement in a land
dispute that has existed for over 200 years.

      In June 1998,  the United  States  Justice  Department  intervened  in the
action on behalf of the Oneidas  against Madison County and Oneida County in New
York  State.  In  September  1998,  an U.S.  District  Court  removed  a stay of
litigation,  having  been in place  since  the late  1980's  pending  settlement
negotiations. In December 1998, both the Oneidas and the U.S. Justice Department
filed motions to amend the long outstanding claim against the State of New York.
The motion  attempts to include in the claim,  various named and 20,000  unnamed
additional  defendants,  who own real  property  in parts of Madison  and Oneida
counties,  thereby including the additional defendants in the original suit. The
U.S.  District  Court granted the motions to add as a defendant the State of New
York, but denied the motions to add the private landowners. Neither the Bank nor
the Company is a named  defendant in the motion.  The Court further  rejected as
not being viable the remedies of ejectment  and/or of monetary  damages  against
private  landowners.  In January  2001,  amended  complaints  were served by the
Oneidas and the United  States  which seek to eject the  Counties of Madison and
Oneida from lands owned by the counties, and the Oneidas also seek a declaration
that they have the right to possess all land within the land claim area. In June
2001,  the Court  determined  that certain land purchased by the Oneidas in 1997
and 1998 are exempt from real estate taxes,  accepting the Oneidas argument that
the acquired parcels lie within the boundaries of the "reservation"  established
in 1974 by the Federal Government.

      In February  2002, a joint  statement was issued by the Oneidas,  State of
New York, and the counties of Madison and Oneida,  indicating that the framework
for a  settlement  had been  agreed  upon  subject to the  approval by the State
legislature  and the  Federal  Government.  The  Oneidas  of  Wisconsin  and the
Stockbridge-Munsee  Band of the Mohican Indians have commenced  separate actions
in the United  State  District  Court for the  Northern  District of New York to
dispute and interrupt any settlement pending.

      In July 2003, the United States Court of Appeals  affirmed the decision of
the lower court  against the City of Sherrill but appeals  continue  relative to
the  decision  against the  Counties of Madison and Oneida.  In January 2005 the
United  State  Supreme  Court  heard the appeal  brought  forward by the City of
Sherrill  against the Oneidas  arguing that the  acquisition of real property by
the Oneidas within the land claim area does not return the property to sovereign
status. Therefore, the City of Sherrill contends that the property is subject to
the  payment of real  property  taxes or revert to the  ownership  of the taxing
authority if assessed  property  taxes are not paid.  The United States  Supreme
Court  filed  their  decision  in  March  2005,  ruling  in favor of the City of
Sherrill.

      To date  neither  the  original  claim nor the  motion to amend has had an
adverse impact on the local economy or real property values. In addition,  title
insurance  companies continue to underwrite policies in the land claim area with
no change  in  premiums  or  underwriting  standards.  The Bank  requires  title
insurance on all  residential  real estate loans,  excluding  home equity loans.
Both the State of New York and the Oneidas have  indicated  in their  respective
communications that individual  landowners will not be adversely affected by the
ongoing litigation. The Company continues to monitor the situation.

      The Company is not involved in any other pending legal  proceedings  other
than routine  legal  proceedings  occurring  in the ordinary  course of business
which, in the aggregate,  involve amounts which are believed by management to be
immaterial to the financial condition or operations of the Company.

Item  1a Risk Factors

      There has not been any material change in the risk factors disclosure from
that  contained in the Company's  Annual Report on Form 10-K for the fiscal year
ended December 31, 2006.

Item  2 Unregistered Sales of Equity Securities and Use of Proceeds

      There were no shares  repurchased  during the three months ended September
30, 2007. Our current  repurchase plan of 250,000 was announced on June 8, 2004.
The plan has no expiration date.




                                 Page 25 of 27

<page>

Item 3      Defaults Upon Senior Securities

            Not applicable.

Item 4      Submission of Matters to a Vote of Security Holders

            Not applicable

Item 5      Other Information

            None

Item 6      Exhibits

            (a)   All   required   exhibits   are   included  in  Part  I  under
                  Consolidated   Financial   Statements,   Notes  to   Unaudited
                  Consolidated Financial Statements and Management's  Discussion
                  and Analysis of Financial Condition and Results of Operations,
                  and are incorporated by reference, herein.

                  Exhibits

                  Exhibit  31.1  -  Certification  of  Chief  Executive  Officer
                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

                  Exhibit  31.2  -  Certification  of  Chief  Financial  Officer
                  Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002

                  Exhibit  32.1 -  Certification  pursuant to 18 U.S.C.  Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002

                                  Page 26 of 27

<PAGE>




                                   SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.

                                           ONEIDA FINANCIAL CORP.


Date:    November 14, 2007                 By:  /s/ Michael R. Kallet
                                           -------------------------------------
                                           Michael R. Kallet
                                           President and Chief Executive Officer


Date:    November 14, 2007                 By:  /s/ Eric E. Stickels
                                           -------------------------------------
                                           Eric E. Stickels
                                           Executive Vice President and Chief
                                           Financial Officer




































                                  Page 27 of 27