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 June 30, 2008

                        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 [ ] Non-accelerated filer
                         [X] Smaller reporting company

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 7,726,810 shares
       of the Registrant's common stock outstanding as of August 1, 2008.

<PAGE>

                             ONEIDA FINANCIAL CORP.
                                      INDEX

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

   Item 1.    Financial Statements                                                       1

              Consolidated Statements of Condition (unaudited)
              As of June 30, 2008 and December 31, 2007                                  2

              Consolidated Statements of Operations (unaudited)
              For the three and six months ended June 30, 2008 and 2007                  3

              Consolidated Statements of Comprehensive Income (unaudited)
              For the three and six months ended June 30, 2008 and 2007                  4

              Consolidated Statements of Changes in Stockholders' Equity (unaudited)
              For the three and six months ended June 30, 2008                           5

              Consolidated Statements of Cash Flows (unaudited)
              For the three and six months ended June 30, 2008 and 2007                  6

              Notes to Consolidated Financial Statements (unaudited)                     7

   Item 2.    Management's Discussion and Analysis of Financial Condition
              And Results of Operations                                                 17

   Item 3.    Quantitative and Qualitative Disclosures about Market Risk                26

   Item 4T.   Controls and Procedures                                                   26

PART II.      OTHER INFORMATION                                                         27

   Item 1.    Legal Proceedings                                                         27

   Item 1a.   Risk Factors                                                              27

   Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds               27

   Item 3.    Defaults Upon Senior Securities                                           28

   Item 4.    Submission of Matters to a Vote of Security Holders                       28

   Item 5.    Other Information                                                         28

   Item 6.    Exhibits                                                                  28
</TABLE>

<PAGE>

PART I.     FINANCIAL INFORMATION
                Item I. Financial Statements

                                  Page 1 of 29

<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
At June 30, 2008 and December 31, 2007

<TABLE>
<CAPTION>
                                                                     (unaudited)
                                                                     At June 30,      At December 31,
                                                                        2008               2007
                                                                     -----------    ------------------
                                                                     (in thousands, except share data)
<S>                                                                  <C>            <C>
ASSETS
       Cash and due from banks                                       $    13,151    $         14,744
       Federal funds sold                                                     42               1,717
                                                                     ---------------------------------
TOTAL CASH AND CASH EQUIVALENTS                                           13,193              16,461

       Trading securities                                                 13,037                  --
       Investment securities, at fair value                               72,720              95,811
       Mortgage-backed securities, at fair value                          78,820              46,583

       Mortgage loans held for sale                                          377               3,593

       Loans receivable                                                  292,891             283,336
       Allowance for loan losses                                          (2,528)             (2,511)
                                                                     ---------------------------------
LOANS RECEIVABLE, NET                                                    290,363             280,825

       Federal Home Loan Bank stock                                        3,846               3,404
       Bank premises and equipment, net                                   22,161              22,532
       Accrued interest receivable                                         2,680               2,658
       Other assets                                                       11,822              10,534
       Cash surrender value - life insurance                              14,728              14,480
       Goodwill                                                           23,003              22,793
       Other intangible assets                                             2,366               2,641
       -----------------------------------------------------------------------------------------------
       TOTAL ASSETS                                                  $   549,116    $        522,315
       ===============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
       Interest bearing deposits                                     $   362,130    $        334,444
       Non-interest bearing deposits                                      65,879              65,685
       Borrowings                                                         58,900              56,400
       Notes payable                                                          86                 158
       Other liabilities                                                   5,194               6,288
                                                                     ---------------------------------
TOTAL LIABILITIES                                                        492,189             462,975
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                                         19,138              19,053
       Retained earnings                                                  45,168              46,435
       Accumulated other comprehensive (loss)                             (4,392)             (3,161)
       Treasury stock (at cost, 537,156 and 537,256 shares)               (3,070)             (3,070)
       -----------------------------------------------------------------------------------------------
       TOTAL STOCKHOLDERS' EQUITY                                         56,927              59,340
       -----------------------------------------------------------------------------------------------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $   549,116    $        522,315
       ===============================================================================================
</TABLE>

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

                                  Page 2 of 29

<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 2008 (unaudited) and 2007
(unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended         Six Months Ended
                                                             June 30,     June 30,     June 30,     June 30,
                                                               2008         2007         2008         2007
                                                             --------     --------     --------     ---------
                                                             (in thousands, except share and per share data)
<S>                                                          <C>          <C>          <C>          <C>
INTEREST INCOME:
     Interest and fees on loans                              $  4,518     $  4,636     $  9,223     $  8,854
     Interest on investment and mortgage-backed
       securities                                               1,869        1,353        3,548        2,482
     Dividends on equity securities                               255          194          531          397
     Interest on federal funds sold and
       interest-earning deposits                                   76          257          141          423
-------------------------------------------------------------------------------------------------------------
   Total interest and dividend income                           6,718        6,440       13,443       12,156
-------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
     Savings deposits                                             153          155          298          269
     Money market and interest-bearing checking                   429          514          917          904
     Time deposits                                              1,625        1,598        3,326        2,892
     Borrowings                                                   643          725        1,309        1,539
     Notes Payable                                                  1           13            3           29
-------------------------------------------------------------------------------------------------------------
         Total interest expense                                 2,851        3,005        5,853        5,633
-------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                             3,867        3,435        7,590        6,523
     Less: Provision for loan losses                              150           --          150           --
-------------------------------------------------------------------------------------------------------------
   Net interest income after provision for loan losses          3,717        3,435        7,440        6,523
-------------------------------------------------------------------------------------------------------------
OTHER INCOME:
     Gain on sale of securities, net                               22           --           18            1
     Gain on sale of mortgages, net                                27           48           72           73
     Commissions and fees on sales of
       non-banking products                                     3,373        3,386        6,873        6,698
     Other operating income                                     1,074        1,095        2,154        2,005
     Changes in fair value                                          5           --         (599)          --
-------------------------------------------------------------------------------------------------------------
   Total other income                                           4,501        4,529        8,518        8,777
-------------------------------------------------------------------------------------------------------------
OTHER EXPENSES:
     Compensation and employee benefits                         4,715        4,332        9,295        8,449
     Occupancy expenses, net                                    1,070        1,121        2,283        2,122
     Other operating expense                                    1,548        1,445        2,911        2,658
-------------------------------------------------------------------------------------------------------------
   Total other expenses                                         7,333        6,898       14,489       13,229
-------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                        885        1,066        1,469        2,071
-------------------------------------------------------------------------------------------------------------
   Provision for income taxes                                     239          312          394          569
-------------------------------------------------------------------------------------------------------------
NET INCOME                                                   $    646     $    754     $  1,075     $  1,502
=============================================================================================================
EARNINGS PER SHARE - BASIC                                   $   0.08     $   0.10     $   0.14     $   0.20
=============================================================================================================
EARNINGS PER SHARE - DILUTED                                 $   0.08     $   0.10     $   0.14     $   0.19
=============================================================================================================
</TABLE>

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

                                  Page 3 of 29

<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months and Six Months Ended June 30, 2008 (unaudited) and 2007
(unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended         Six Months Ended
                                                             June 30,     June 30,     June 30,     June 30,
                                                               2008         2007         2008         2007
                                                             --------     --------     --------     --------
                                                                 (In thousands)            (In thousands)
<S>                                                          <C>          <C>          <C>          <C>
Net income                                                   $    646     $    754     $  1,075     $  1,502
                                                             --------     --------     --------     --------

Other comprehensive income, net of tax:

   Unrealized losses on securities arising during period       (4,245)      (1,843)      (4,534)      (1,724)
     Less: reclassification adjustment for gains included
       in net income                                              (22)          --          (18)          (1)
                                                             --------     --------     --------     --------
     Net unrealized (losses)                                   (4,267)      (1,843)      (4,552)      (1,725)
   Change in unrealized loss on pension benefits                   42           --           84           --
                                                             --------     --------     --------     --------
Other comprehensive (loss) before tax                          (4,225)      (1,843)      (4,468)      (1,725)
     Net income tax effect                                      1,690          737        1,787          690
                                                             --------     --------     --------     --------
Other comprehensive (loss), net of tax                         (2,535)      (1,106)      (2,681)      (1,035)

Comprehensive (loss) income                                  $ (1,889)    $   (352)    $ (1,606)    $    467
                                                             ========     ========     ========     ========
</TABLE>

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

                                  Page 4 of 29

<PAGE>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months and Six Months Ended June 30, 2008 (unaudited)

<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                     Additional                  Other
                                                    Common Stock      Paid-In     Retained   Comprehensive   Treasury
                                                 Shares     Amount    Capital     Earnings   Income (Loss)     Stock      Total
                                                                     (in thousands, except number of shares)
<S>                                             <C>         <C>      <C>          <C>        <C>             <C>        <C>
Balance as of December 31, 2007                 8,322,452     $ 83     $ 19,053   $ 46,435        $ (3,161)  $ (3,070)  $ 59,340
Net income                                                                             429                                   429
Other comprehensive loss, net of tax                                                                  (146)                 (146)
Shares earned under stock plans                                              44                                               44
Common stock dividends: $0.24 per share                                               (831)                                 (831)
Adjustment to initially apply SFAS No. 159
   net of tax (Note J)                                                              (1,519)          1,519                    --
Adjustment to initially apply measurement
   provisions of SFAS No. 158 (Note I)                                                   8             (69)                  (61)

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

Balance as of March 31, 2008                    8,322,452     $ 83     $ 19,097   $ 44,522        $ (1,857)  $ (3,070)  $ 58,775
Net income                                                                             646                                   646
Other comprehensive loss, net of tax                                                                (2,535)               (2,535)
Shares earned under stock plans                                              41                                               41

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

Balance as of June 30, 2008                     8,322,452     $ 83     $ 19,138   $ 45,168        $ (4,392)  $ (3,070)  $ 56,927
                                                =================================================================================
</TABLE>

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

                                  Page 5 of 29

<PAGE>

ONEIDA FINANCIAL CORP. AND  SUBSIDIARIES
CONSOLIDATED STATEMENT  OF CASH FLOWS
For the Three Months and Six Months Ended June 30, 2008 (unaudited) and 2007
(unaudited)

<TABLE>
<CAPTION>
                                                                       Three Months Ended           Six Months Ended
                                                                     June 30,      June 30,      June 30,      June 30,
                                                                       2008          2007          2008          2007
                                                                    ----------    ----------    ----------    ----------
                                                                                   (in thousands)
<S>                                                                 <C>           <C>           <C>           <C>
Operating Activities:
   Net income                                                       $      646    $      754    $    1,075    $    1,502
   Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                                         524           516         1,047           882
     Amortization of premiums/discounts on securities, net                  25             7            50            47
     Net change in valuation of financial instruments carried
       at fair value                                                        (5)           --           599            --
     Provision for loan losses                                             150            --           150            --
     Stock compensation earned                                              41            44            85            88
     Loss on sale of other real estate                                       6            --             6            --
     Gain on sale/call of securities, net                                  (22)           --           (18)           (1)
     Gain on sale of loans, net                                            (27)          (48)          (72)          (73)
     Income tax payable                                                    (58)         (512)          108          (319)
     Accrued interest receivable                                          (262)         (311)          (22)          (95)
     Other assets                                                       (1,128)        9,859          (248)         (766)
     Other liabilities                                                     (27)          540        (1,166)         (449)
     Origination of loans held for sale                                 (4,852)       (6,087)       (6,741)      (11,399)
     Proceeds from sales of loans                                        5,012         5,810        10,029        10,399
-------------------------------------------------------------------------------------------------------------------------
       Net cash provided by (used in) operating activities                  23        10,572         4,882          (184)
-------------------------------------------------------------------------------------------------------------------------
Investing Activities:
   Purchase of investment securities                                    (4,177)       (6,595)      (17,180)       (8,230)
   Principal collected on and proceeds of maturities
      sales or calls from investments                                   10,156         3,640        23,164        12,913
   Purchase of mortgage-backed securities                              (18,998)         (592)      (40,020)         (592)
   Principal collected on and proceeds from sales
      of mortgage-backed securities                                      3,918         1,836         6,671         3,207
   Net increase in loans                                               (10,082)       (5,103)       (9,792)       (1,016)
   Purchase of bank premises and equipment                                (295)       (1,118)         (401)       (2,758)
   Proceeds from sale of other real estate                                  69            22            69            22
   Purchase of insurance agency                                            (73)          (66)          (73)          (66)
   Purchase of consulting group                                             --            --          (129)         (132)
   Purchase of bank (net of cash acquired)                                  --           908            (8)          908
-------------------------------------------------------------------------------------------------------------------------
      Net cash (used in) provided by investing activities              (19,482)       (7,068)      (37,699)        4,256
-------------------------------------------------------------------------------------------------------------------------
Financing Activities:
   Net increase in demand deposit, savings,
      money market, interest-bearing checking and escrow                22,741         3,191        21,737         6,057
   Net (decrease) increase in time deposits                            (16,904)        5,537         6,143         9,195
   Proceeds from borrowings                                             16,000         9,000        36,000        37,180
   Repayment of borrowings                                             (13,500)      (24,430)      (33,500)      (46,180)
   Cash dividends                                                           --            --          (831)         (831)
   Exercise of stock options (using treasury stock)                         --            --            --            29
-------------------------------------------------------------------------------------------------------------------------
      Net cash provided by (used in) financing activities                8,337        (6,702)       29,549         5,450
-------------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents                       (11,122)       (3,198)       (3,268)        9,522
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period                        24,315        31,430        16,461        18,710
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                          $   13,193    $   28,232    $   13,193    $   28,232
=========================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid for interest                                                   2,876         2,942         5,901         5,573
Cash paid for income taxes                                                 451           475           451           500

Supplemental noncash disclosures:
Transfer of loans to other real estate                                      28            22           104            22
Adoption of fair value option:
   Securities transferred from available for sale to trading                --            --        16,187            --
   Deferred tax asset related to fair value adjustments                     --            --         1,255            --
=========================================================================================================================
</TABLE>

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

                                  Page 6 of 29

<PAGE>

                             ONEIDA FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)
                                  JUNE 30, 2008

Note A - Basis of Presentation

The accompanying  unaudited  consolidated  financial  statements  include Oneida
Financial Corp. (the "Company") and its wholly owned subsidiary,  Oneida Savings
Bank (the  "Bank") as of June 30, 2008 and  December  31, 2007 and for the three
and six month periods ended June 30, 2008 and 2007. All  inter-company  accounts
and  transactions  have  been  eliminated  in  consolidation.  The  accompanying
unaudited  consolidated  financial  statements  have been prepared in accordance
with accounting  principles  generally  accepted in the United States of America
for  interim  financial  information  and with the  instructions  to Form  10-Q.
Accordingly,  they do not include all of the information and footnotes  required
by accounting  principles generally accepted in the United States of America for
complete  financial  statements.  The  preparation  of financial  statements  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make estimates and assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could differ
from those estimates.  In the opinion of management,  the unaudited consolidated
financial  statements  include all necessary  adjustments,  consisting of normal
recurring accruals, necessary for a fair presentation for the periods presented.

The Company  believes that the  disclosures are adequate to make the information
presented  not  misleading;  however,  results  of  operations  and  other  data
presented  are not  necessarily  indicative  of results to be  expected  for the
entire year.

The data in the  consolidated  balance  sheet for  December 31, 2007 was derived
from the Company's  2007 Annual Report on Form 10-K.  That data,  along with the
interim  financial  information  presented  in  the  consolidated  statement  of
condition,   statements  of  operations,   comprehensive   income,   changes  in
stockholders'  equity and cash flows should be read in conjunction with the 2007
consolidated  financial statements,  including the notes thereto included in the
Company's Annual Report on Form 10-K.

Amounts in the prior period's consolidated financial statements are reclassified
when necessary to conform with the current period's presentation.

Note B - Earnings per Share

Basic earnings per share is net income 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
June 30:

                                  Page 7 of 29

<PAGE>

Note B - Earnings per Share (Continued)

                                            Income        Shares    Per Share
June 30, 2008:
--------------
Net income (Three Months Ended)          $   645,818
                                         -----------

Basic Earnings Per Share:                $   645,818    7,726,739   $    0.08
                                                                    ---------
Effect of dilutive securities:
   Stock options and awards                       --       57,930
                                         ------------------------
Diluted Earnings Per Share               $   645,818    7,784,669   $    0.08
                                                                    ---------

June 30, 2007:
--------------
Net income (Three Months Ended)          $   754,094
                                         -----------

Basic Earnings Per Share:                $   754,094    7,683,550   $    0.10
                                                                    ---------
Effect of dilutive securities:
   Stock options and awards                       --       75,680
                                         ------------------------
Diluted Earnings Per Share               $   754,094    7,759,230   $    0.10
                                                                    ---------

June 30, 2008:
--------------
Net income (Six Months Ended)            $ 1,075,016
                                         -----------

Basic Earnings Per Share:                $ 1,075,016    7,726,724   $    0.14
                                                                    ---------
Effect of dilutive securities:
   Stock options and awards                       --       57,821
                                         ------------------------
Diluted Earnings Per Share               $ 1,075,016    7,784,545   $    0.14
                                                                    ---------

June 30, 2007:
--------------
Net income (Six Months Ended)            $ 1,502,051
                                         -----------

Basic Earnings Per Share:                $ 1,502,051    7,682,341   $    0.20
                                                                    ---------
Effect of dilutive securities:
   Stock options and awards                       --       73,746
                                         ------------------------
Diluted Earnings Per Share               $ 1,502,051    7,756,087   $    0.19
                                                                    ---------

Stock options for 51,362 and 52,368 shares of common stock were not considered
in computing diluted earnings per common share for the three months ending June
30, 2008 and June 30, 2007 respectively because they were antidilutive. For the
six months ending June 30, 2008 and June 30, 2007, stock options for 51,362 and
52,368 shares, respectively, were not considered.

Note C - Stock-Based Compensation

The Company's 2000 Stock Option Plan, which is shareholder approved, permits the
granting of share options to its Company's directors, officers and key employees
for up to 374,568 shares of common stock. The exercise price of options granted
is equal to the market value of the Company's shares at the date of grant. All
unexercised options granted expire by April 2010 and options vest and become
exercisable ratably over a one to five-year period. The plan also has a reload
feature which entitles the option holder, who has delivered common stock as
payment of the exercise price for option stock, to a new option to acquire
additional shares in the amount equal to the shares traded in. The option period
during which the reload option may be exercised expires at the same time as that
of the original option that the holder has exercised. The Company has a policy
of using shares held as treasury stock to satisfy share option exercises. There
were 9,243 shares available for future grants under the plan described above as
of June 30, 2008 and 2007. There was no unrecognized compensation cost for this
plan as of June 30, 2008 as all shares vested under the terms of the plan. There
were no new grants during the year.

Activity in the plan for 2008 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>
Outstanding at December 31, 2007                  179,267   $ 4.722-$18.167   $  7.676           $ 587,508
Granted                                                --
Exercised                                            (100)
Forfeited                                          (3,450)  $         12.00
                                              -----------
Outstanding at June 30, 2008                      175,717   $ 4.722-$18.167   $  7.592           $ 512,889
                                              ===========
</TABLE>

At June 30, 2008, 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)
   --------------------------------------------------------------

   $3.633 - $5.45             119,890   $  4.722        1.82
   $9.094 - $10.90              4,465   $  9.419        1.82
   $10.900 - $12.717           15,771   $ 11.985        1.82
   $12.717 - $14.534           18,689   $ 14.000        1.82
   $14.534 - $16.350            6,600   $ 14.794        1.82
   $16.350 - $18.167           10,302   $ 17.247        1.82
                              -------   --------        ----
      Total                   175,717   $  7.592        1.82
                              =======   ========        ====

                                  Page 8 of 29

<PAGE>

Note C - Stock-Based Compensation (Continued)

The Management Recognition and Retention Plans provide for the issuance of
shares of restricted stock to directors, officers and key employees.
Compensation expense equal to the market value of Oneida Financial Corp.'s stock
on the grant date is recognized ratably over the five year vesting period for
shares of restricted stock granted that will be fully vested at December 31,
2010. Compensation expense recorded in conjunction with these plans was $41,413
and $43,701 for the three months ended June 30, 2008 and 2007, respectively, and
$85,114 and $87,402 for the six month period ending June 30, 2008 and 2007,
respectively. Shares unallocated under the plans available for future awards
were 14,086 and 12,886 at June 30, 2008 and June 30, 2007 respectively. At June
30, 2008 and December 31, 2007, there were nonvested shares of 44,400 and 45,600
respectively with unrecognized compensation cost of $567,027 and $638,414
respectively.

Note D - Dividend Restrictions

Oneida  Financial MHC, which owns 4,309,750 or 55.45% of the outstanding  shares
as of June 30,  2008 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

The Bank provides a noncontributory defined benefit retirement accumulation plan
(pension plan) covering substantially all employees. Under the pension plan,
retirement benefits are primarily a function of the employee's years of service
and level of compensation. As of June 15, 2004, the Bank had a plan amendment to
freeze the plan benefits for plan participants. The Bank uses a December 31
measurement date for its 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
                                                        June 30,     June 30,     June 30,     June 30,
                                                          2008         2007         2008         2007
                                                       ----------   ----------   ----------   ----------
<S>                                                    <C>          <C>          <C>          <C>
Service cost                                           $       --   $       --   $       --   $       --
Interest cost                                              55,000       55,000      110,000      110,000
Expected return on plan assets                            (72,000)     (87,000)    (144,000)    (174,000)
Net amortization and deferral                              42,000       14,000       84,000       28,000
                                                       ----------   ----------   ----------   ----------
   Net periodic pension cost (benefit)                 $   25,000   $  (18,000)  $   50,000   $  (36,000)

Net loss (gain)                                           (25,200)          --      (50,400)          --
Prior service cost (credit)                                    --           --           --           --
                                                       ----------   ----------   ----------   ----------
   Total recognized in other comprehensive income         (25,200)          --      (50,400)          --
                                                       ----------   ----------   ----------   ----------
Total recognized in net periodic benefit cost and
   Other comprehensive income                          $      200   $  (18,000)  $      400   $  (36,000)
                                                       ==========   ==========   ==========   ==========
</TABLE>

Weighted-average assumptions as of December 31:     2008      2007
                                                  -------   --------
   Discount rate                                    5.465%     5.080%
   Expected return on plan assets                   7.500%     9.000%

As of June 30, 2008, contributions to the pension plan totaled $14,000. The Bank
anticipates contributing $55,988 in 2008 to fund its pension plan.

State Bank of Chittenango participated in the New York State Bankers Retirement
System plan which was a noncontributory defined benefit plan covering
substantially all employees. Under the plan, retirement benefits were primarily
a function of the employee's years of service and level of compensation. The
plan was frozen as of May 31, 2002. State Bank of Chittenango used a September
30 measurement date for its pension plan and has transitioned to a December 31
measurement date effective January 1, 2008. See Note I for the impact on the
change in measurement date.

                                  Page 9 of 29

<PAGE>

Note E - Pension Plan (Continued)

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
                                                        June 30,     June 30,     June 30,     June 30,
                                                          2008         2007         2008         2007
                                                       ----------   ----------   ----------   ----------
<S>                                                    <C>          <C>          <C>          <C>
Service cost                                           $    6,800   $    6,100   $   13,600   $   12,200
Interest cost                                              33,700       33,400       67,400       66,800
Expected return on plan assets                            (52,000)     (51,000)    (104,000)    (102,000)
                                                       ----------   ----------   ----------   ----------
   Net periodic pension cost (benefit)                 $  (11,500)  $  (11,500)  $  (23,000)  $  (23,000)

Net loss (gain)                                                --           --           --           --
Prior service cost (credit)                                    --           --           --           --
                                                       ----------   ----------   ----------   ----------

   Total recognized in other comprehensive income              --           --           --           --
                                                       ----------   ----------   ----------   ----------

Total recognized in net periodic benefit cost and
   Other comprehensive income                          $  (11,500)  $  (11,500)  $  (23,000)  $  (23,000)
                                                       ==========   ==========   ==========   ==========
</TABLE>

Weighted-average assumptions as of December 31:    2008       2007
                                                  -------   --------
   Discount rate                                     6.25%      6.25%
   Expected return on plan assets                    7.50%      7.50%

As of June 30, 2008, there were no contributions to the plan during 2008. The
Bank does not anticipate contributing in 2008 to fund its pension plan.

Note F - Investment Securities and Mortgage-Backed Securities

Investment securities and mortgage-backed securities consist of the following at
June 30, 2008 and December 31, 2007:
                                                       June 30, 2008
                                            -----------------------------------
                                                            Gross Unrealized
                                            Fair Value      Gains       Losses
                                            -----------------------------------
                                                       (in thousands)
Investment Securities
Available for sale portfolio:
-----------------------------
   Debt securities:
      U. S. Agencies                        $   26,979   $      118   $     279
      Corporate                                 25,435           21       4,525
      State and municipals                      20,306          113         180
                                            ----------   ----------   ---------
                                            $   72,720   $      252   $   4,984
                                            ==========   ==========   =========
Mortgage-Backed Securities
  Available for sale portfolio:
  -----------------------------
   Fannie Mae                               $   26,641   $       55   $     255
   Freddie Mac                                  28,653           15         477
   Ginnie Mae                                    6,561            9          30
   Small Business Administration                    14           --          --
   Collateralized Mortgage Obligations          16,951           47         474
                                            ----------   ----------   ---------
                                            $   78,820   $      126   $   1,236
                                            ==========   ==========   =========

                                  Page 10 of 29

<PAGE>

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

                                                        December 31, 2007
                                                  -----------------------------
                                                               Gross Unrealized
                                                  Fair Value   Gains     Losses
                                                  -----------------------------
                                                           (in thousands)
Investment Securities
   Available for sale portfolio:
   -----------------------------
      Debt securities:
         U. S. Agencies                           $   37,949   $ 146   $    202
         Corporate                                    24,955      45      1,381
         State and municipals                         19,252     148         17
                                                  ----------   -----   --------
                                                      82,156     339      1,600
      Equity investments:
         Preferred and other equity stocks            10,459      --      2,196
         Mutual fund                                   3,196      --        336
                                                  ----------   -----   --------
                                                  $   95,811   $ 339   $  4,132
                                                  ==========   =====   ========
Mortgage-Backed Securities
   Available for sale portfolio:
   -----------------------------
      Fannie Mae                                  $   15,481   $  98   $     98
      Freddie Mac                                     21,826      47        111
      Ginnie Mae                                       2,467      26         --
      Small Business Administration                       14      --         --
      Collateralized Mortgage Obligations              6,795      32         24
                                                  ----------   -----   --------
                                                  $   46,583   $ 203   $    233
                                                  ==========   =====   ========

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.

Unrealized losses on other investments have not been recognized into income
because the issuer(s) securities are of investment grade (except for General
Motors Acceptance Corp. bond), management has the intent and ability to hold
these securities for the foreseeable future and the decline in fair value is
largely due to declines in market interest rates since the securities were
purchased. 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 $446,000 and $264,000 at June 30, 2008 and
December 31, 2007 respectively has not been considered other than temporary in
that 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.

The Company currently has a $2.5 million Sallie Mae bond, maturing May 1, 2012
which is rated investment grade. The unrealized loss at June 30, 2008 and
December 31, 2007 of $818,000 and $431,000 respectively has not been considered
other-than-temporary in that 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 that based on credit ratings and assessment of likelihood of
default the Company has concluded that it is probable that payment will be made
at maturity.

The Company currently has $9.7 million of trust preferred securities as of June
30, 2008. The unrealized loss at June 30, 2008 and December 31, 2007 on the nine
securities totaled $2.1 million and $442,000 respectively. These securities have
been evaluated in accordance with EITF 99-20, Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests That
Continue To Be Held by a Transferor in Securitized Financial Assets, to
determine if any are considered other than temporarily impaired. As of June 30,
2008, through review of the current and expected cash flow analysis, underlying
collateral and stress tests performed on the securities, none of the trust
preferred securities is considered impaired as of June 30, 2008.

                                  Page 11 of 29

<PAGE>

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 June 30, 2008 the allowance for loan losses as a percentage of
net loans receivable was 0.87% as compared to 0.88% at December 31, 2007.

The following table sets forth the analysis of the allowance for loan losses for
the periods indicated:

                                       Three Months Ended     Six Months Ended
                                      June 30,   June 30,   June 30,   June 30,
                                        2008       2007       2008       2007
                                      --------   --------   --------   --------
                                                    (in thousands)
Balance at beginning of period:       $  2,496   $  2,085   $  2,511   $  2,081
   Charge-offs                            (143)       (32)      (188)       (73)
   Recoveries                               25         30         55         75
   Provision for loan losses               150         --        150         --
   Provision acquired                       --        526         --        526
                                      --------   --------   --------   --------
Balance at end of period              $  2,528   $  2,609   $  2,528   $  2,609
                                      ========   ========   ========   ========

There were no impaired loans as of June 30, 2008 or December 31, 2007.

Note H - Segment Information

The Company has determined that it has four primary business segments, its
banking franchise, its insurance activities, its benefit consulting activities
and risk management activities. For the three months and six months ended June
30, 2008 and 2007, 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. The risk management activities consisted of those conducted through
its wholly owned subsidiary Workplace Health Solutions, Inc. which was formed in
February 2008. Information about the Company's segments is presented in the
following table for the periods indicated:

<TABLE>
<CAPTION>
                                                                       Three Months Ended June 30, 2008
                                                   --------------------------------------------------------------------------
                                                     Banking     Insurance   Benefit Consulting   Risk Management
                                                   Activities   Activities       Activities          Activities      Total
                                                                                (in thousands)
<S>                                                <C>          <C>          <C>                  <C>               <C>
Net interest income                                $    3,867   $       --       $       --          $       --     $   3,867
Provision for loan losses                                 150           --               --                  --           150
                                                   ----------   ----------       ----------          ----------     ---------
   Net interest income after provision
     for loan losses                                    3,717           --               --                  --         3,717
Other income                                            1,128        2,006            1,354                  13         4,501
Other expenses                                          3,715        1,957            1,040                  97         6,809
Depreciation and amortization                             414           64               46                  --           524
                                                   ----------   ----------       ----------          ----------     ---------
      Income (loss) before income taxes                   716          (15)             268                 (84)          885
Income tax (benefit) expense                              143           --              128                 (32)          239
                                                   ----------   ----------       ----------          ----------     ---------
         Net income (loss)                         $      573   $      (15)      $      140          $      (52)    $     646
                                                   ==========   ==========       ==========          ==========     =========

Total Assets                                       $  532,584   $   19,075       $    4,654          $       10     $ 556,323
                                                   ==========   ==========       ==========          ==========     =========
</TABLE>

                                  Page 12 of 29

<PAGE>

Note H - Segment Information (Continued)

<TABLE>
<CAPTION>
                                                                          Three Months Ended June 30, 2007
                                                              --------------------------------------------------------
                                                                Banking     Insurance   Benefit Consulting
                                                              Activities   Activities       Activities         Total
                                                                                   (in thousands)
<S>                                                           <C>          <C>          <C>                  <C>
Net interest income                                           $    3,435   $       --       $       --       $   3,435
Provision for loan losses                                             --           --               --              --
                                                              ----------   ----------       ----------       ---------
   Net interest income after provision for loan losses             3,435           --               --           3,435
Other income                                                       1,079        2,560              890           4,529
Other expenses                                                     3,557        2,060              765           6,382
Depreciation and amortization                                        402           59               55             516
                                                              ----------   ----------       ----------       ---------
      Income before income taxes                                     555          441               70           1,066
Income tax expense                                                   207           85               20             312
                                                              ----------   ----------       ----------       ---------
      Net income                                              $      348   $      356       $       50       $     754
                                                              ==========   ==========       ==========       =========

Total Assets                                                  $  492,049   $   14,287       $    3,892       $ 510,228
                                                              ==========   ==========       ==========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                                         Six Months Ended June 30, 2008
                                                   --------------------------------------------------------------------------
                                                     Banking     Insurance   Benefit Consulting   Risk Management
                                                   Activities   Activities       Activities          Activities       Total
                                                                                (in thousands)
<S>                                                <C>          <C>          <C>                  <C>               <C>
Net interest income                                $    7,590   $       --       $       --          $       --     $   7,590
Provision for loan losses                                 150           --               --                  --           150
                                                   ----------   ----------       ----------          ----------     ---------
   Net interest income after provision
      for loan losses                                   7,440           --               --                  --         7,440
Other income                                            1,645        4,342            2,518                  13         8,518
Other expenses                                          7,385        3,900            2,007                 150        13,442
Depreciation and amortization                             828          127               92                  --         1,047
                                                   ----------   ----------       ----------          ----------     ---------
    Income (loss) before income taxes                     872          315              419                (137)        1,469
Income tax (benefit) expense                               86          159              201                 (52)          394
                                                   ----------   ----------       ----------          ----------     ---------
      Net income (loss)                            $      786   $      156       $      218          $      (85)    $   1,075
                                                   ==========   ==========       ==========          ==========     =========

Total Assets                                       $  532,584   $   19,075       $    4,654          $       10     $ 556,323
                                                   ==========   ==========       ==========          ==========     =========
</TABLE>

                                  Page 13 of 29

<PAGE>

Note H - Segment Information (Continued)

<TABLE>
<CAPTION>
                                                                           Six Months Ended June 30, 2007
                                                              --------------------------------------------------------
                                                                Banking     Insurance   Benefit Consulting
                                                              Activities   Activities       Activities         Total
                                                                                   (in thousands)
<S>                                                           <C>          <C>          <C>                  <C>
Net interest income                                           $    6,523   $       --       $       --       $   6,523
Provision for loan losses                                             --           --               --              --
                                                              ----------   ----------       ----------       ---------
   Net interest income after provision for loan losses             6,523           --               --           6,523
Other income                                                       2,015        5,171            1,591           8,777
Other expenses                                                     6,730        4,191            1,426          12,347
Depreciation and amortization                                        654          117              111             882
                                                              ----------   ----------       ----------       ---------
      Income before income taxes                                   1,154          863               54           2,071
Income tax expense (benefit)                                         329          225               15             569
                                                              ----------   ----------       ----------       ---------
      Net income (loss)                                       $      825   $      638       $       39       $   1,502
                                                              ==========   ==========       ==========       =========

Total Assets                                                  $  492,049   $   14,287       $    3,892       $ 510,228
                                                              ==========   ==========       ==========       =========
</TABLE>

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

                                                            2008        2007
                                                         ---------   ---------
              Assets
Total assets for reportable segments                     $ 556,323   $ 510,228
Elimination of intercompany cash balances                   (7,207)     (6,129)
                                                         ---------   ---------

Consolidated Total                                       $ 549,116   $ 504,099
                                                         =========   =========

Note I - Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 158, Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB statement No. 87, 88, 106 and 132
(R). Effective for fiscal years ending after December 15, 2008, defined benefit
plan assets and obligations are to be measured as of the date of the employer's
fiscal year-end. The Company has elected to use the remeasurement method for
adjusting from a September measurement date to the December measurement date.
Under this method, the plan assets and benefit obligations are remeasured as of
the beginning of the fiscal year that the measurement date provisions are
applied. The Company then uses those new measurements to determine the effects
of the measurement date change as of the beginning of the fiscal year that the
measurement date provisions are applied. Adoption of this FASB resulted in
$13,691, net of tax of $5,476 being recognized as an adjustment to retained
earnings for the net periodic benefit cost for the period October 1, 2007 to
December 31, 2007. In addition, the change in fair value of plan assets and the
benefit obligations for the period between October 1, 2007 to December 31, 2007
of $116,423, net of tax of $46,569 was recognized as a separate adjustment of
the opening balance of accumulated other comprehensive income as of January 1,
2008.

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. In February 2008, the FASB issued Staff
Position (FSP) 157-2, Effective Date of FASB Statement No. 157. This FSP delays
the effective date of FAS 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after November 15,
2008 and interim periods within those fiscal years. The impact of adoption was
not material.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. The standard provides companies with
an option to report selected financial assets and liabilities at fair value and
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. The new standard is effective for the
Company on January 1, 2008. As of January 1, 2008, the Company elected the fair
value option for certain preferred and common equity securities. The effect of
the adoption is described in Note J below.

                                  Page 14 of 29

<PAGE>

Note J - Fair Value

Fair Value Option

The following table summarizes the impact of adopting the fair value option for
preferred and common equity securities on January 1, 2008. The Company has
elected to adopt this standard for these securities as they do not have stated
maturity values and the fair value fluctuates with market changes and using fair
value appears to be an appropriate measure. Amounts shown represent the carrying
value of the affected instruments before and after the changes in accounting
resulting from the adoption of Statement 159.

<TABLE>
<CAPTION>
                                                                       Balance Sheet
                                              Balance Sheet       Net Gain/     1/1/08 after
                                              1/1/08              (Loss) upon   Adoption of
                                              Prior to Adoption   Adoption      Fair Value Option
                                              ---------------------------------------------------
                                                               (in thousands)
<S>                                           <C>                 <C>           <C>
Assets:
      Investment securities                   $ 11,123            $    (2,532)  $          11,123
                                                                  -----------

Cumulative effect of adoption (pre-tax)                                (2,532)
Tax impact                                                              1,013
                                                                  -----------
Cumulative effect adjustment (net of tax),
      Decrease to retained earnings                               $     1,519
</TABLE>

Fair Value Measurement

Statement 157 defines fair value as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. Statement 157 also
establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring
fair value. The standard describes three levels of inputs that may be used to
measure fair value:

      Level 1: Quoted prices (unadjusted) for identical assets or liabilities in
      active markets that the entity has the ability to access as of the
      measurement date.

      Level 2: Significant other observable inputs other than Level 1 prices
      such as quoted prices for similar assets or liabilities; quoted prices in
      markets that are not active; or other inputs that are observable or can be
      corroborated by observable market data.

      Level 3: Significant unobservable inputs that reflect a company's own
      assumptions about the assumptions that market participants would use in
      pricing an asset or liability.

The Company used the following methods and significant assumptions used to
estimate the fair value of items:

      Securities: The fair values of trading securities and securities available
      for sale are determined by obtaining quoted prices on nationally
      recognized securities exchanges (Level 1 inputs), matrix pricing, which is
      a mathematical technique widely used in the industry to value debt
      securities without relying exclusively on quoted prices for the specific
      securities, but rather by relying on the securities relationship to other
      benchmark quoted securities (Level 2 inputs) or unobservable inputs that
      represents assumptions such as financial forecasts or projected earnings
      (Level 3).

Assets and liabilities measured at fair value on a recurring basis, including
financial liabilities for which the Company has elected the fair value option,
are summarized below:

<TABLE>
<CAPTION>
                                        Fair Value Measurements at June 30, 2008 Using
                                        ----------------------------------------------
                                                                Significant
                                           Quoted Prices in     Other          Significant
                                           Active Markets for   Observable     Unobservable
                                June 30,   Identical Assets     Inputs         Inputs
                                2008       (Level 1)            (Level 2)      (Level 3)
                                -----------------------------------------------------------
                                                     (in thousands)
<S>                             <C>        <C>                  <C>            <C>
Assets:
Trading securities              $ 13,037              --        $    10,990    $      2,047
Available for sale securities     72,720              --             65,702           7,018
</TABLE>

                                  Page 15 of 29

<PAGE>

Note J - Fair Value (Continued)

The Level 3 assets include trust preferred securities and corporate debt and
equity securities which are all rated investment grade. The table below presents
a reconciliation and income statement classification of gains and losses for all
assets measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) for the three months ended and six months ended
June 30, 2008:

<TABLE>
<CAPTION>
                                                     Fair Value Measurements Using Significant
                                                                 Unobservable Inputs
                                                                    (Level 3)
                                                     ------------------------------------------
                                                                    Securities
                                                     Trading        Available for
                                                     Securities     Sale                 Total
                                                     ------------------------------------------
                                                                  (in thousands)
<S>                                                  <C>            <C>             <C>
Beginning balance January 1, 2008                    $      1,996   $       8,455   $   10,451
Total gains or losses (realized/unrealized)
  Included in earnings
         Interest income on securities                        (10)             (6)         (16)
         Other changes in fair value                         (158)             --         (158)
  Included in other comprehensive income                       --            (873)        (873)
                                                     ------------------------------------------
Ending balance March 31, 2008                        $      1,828   $       7,576   $    9,404
Total gains or losses (realized/unrealized)
  Included in earnings
         Interest income on securities                        (10)             (6)         (16)
         Other changes in fair value                          229              --          229

  Included in other comprehensive income                       --            (552)        (552)
                                                     ------------------------------------------
Ending balance June 30, 2008                         $      2,047   $       7,018   $    9,065
                                                     ==========================================
</TABLE>

For items for which the fair value option has been elected, interest income is
recorded within the consolidated statements of income based on the contractual
amount of interest income earned on financial assets (except any that are in
nonaccrual status). Dividend income is recorded based on cash dividends. Cash
flows from the purchase and sale of securities for which the fair value option
has been elected are shown as investing activities within in the consolidated
statement of cash flows.

The following table presents the amount of gains and losses from fair value
changes included in income before income taxes for financial assets and
liabilities carried at fair value for the six months ended June 30, 2008:

<TABLE>
<CAPTION>
                              Changes in Fair Values for the Period ended June 30, 2008, for items
                              Measured at Fair Value Pursuant to Election of the Fair Value Option
                              --------------------------------------------------------------------
                                                                                    Total Changes
                                                                                    In Fair Values
                              Other                                                 Included in
                              Gains and         Interest         Interest           Current Period
                              Losses            Income           Expense            Earnings
                              --------------------------------------------------------------------
                                                         (in thousands)
<S>                           <C>               <C>              <C>                <C>
Assets:
      Trading securities      $     599               --               --           $          599
</TABLE>

                                  Page 16 of 29

<PAGE>

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

                                  Page 17 of 29

<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. The Company has four primary business  segments;
its banking franchise,  insurance activities,  benefit consulting activities and
risk  management  activities.  However,  only the  banking  franchise  is deemed
material  to  the  Bank's   financial   condition  and  results  of  operations.
Consequently,   segment  disclosures  are  not  presented  in  the  Management's
Discussion and Analysis.  At December 31, 2007 and June 30, 2008 the Company had
7,726,710 shares and 7,726,810  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 of $0.24 per share which
was paid to its  shareholders  as of July 29, 2008,  on August 12, 2008.  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.

      Assets acquired as a result of the  acquisition  totaled $66.9 million and
resulted in additional  goodwill and core deposit  intangibles of  approximately
$5.9 million.  Amortization  expense of the core deposit  intangible was $60,000
for the three  months  ended June 30, 2008 and $126,000 for the six months ended
June 30,  2008.  Amortization  expense was $66,000 for both the three months and
six months ended June 30, 2007. The core deposit  intangible is being  amortized
using a 10-year accelerated method amortization term.

                                  Page 18 of 29

<PAGE>

      Effective  January 1, 2008,  the Company  adopted  FASB No. 157 Fair Value
Measurements  and FASB No. 159, The Fair Value Option for  Financial  Assets and
Financial Liabilities.  FASB No. 157 defines fair value, establishes a framework
for measuring fair value and expands  disclosures about fair value measurements.
Footnote J to the  consolidated  financial  statements sets forth the fair value
measurements using Level 1, Level 2 or Level 3 as defined in the FASB as of June
30, 2008.  Level 3 assets  totaled $9.1 million and $10.5 million as of June 30,
2008 and December 31, 2007  respectively  and  represented  1.7% and 2% of total
assets respectively. The assets include trust preferred securities and corporate
debt and equity securities which are all rated investment  grade.  There were no
assets  transferred  into or from the Level 3 category  during the  quarter.  In
addition,  for the Level 3 assets,  $2.0 million  represents  trading securities
whose  change in fair value for the three months ended and six months ended June
30, 2008 of a $229,000 gain and a $71,000 gain  respectively  were recognized in
the consolidated  statement of operations.  The remaining Level 3 assets of $7.0
million had an unrealized loss at June 30, 2008 of $1.8 million.

      FASB No.  159  provides  companies  with the  option  to  report  selected
financial  assets  and  liabilities  at fair  value and  establishes  disclosure
requirements. Footnote J to the consolidated financial statements sets forth the
assets which  management  has elected to report at fair value.  As of January 1,
2008,  Management  has elected to apply FASB 159 to preferred  and common equity
securities  currently  in the  portfolio.  These  securities  do not have stated
market values and whose fair value  fluctuates  with market  changes.  As of the
three months ended and six months ended June 30, 2008,  the change in fair value
of $5,000 gain and $599,000 loss respectively was recognized in the consolidated
statement of operations.

      During the first quarter 2008 we renamed our  MacDonald/Yando  Agency Inc.
subsidiary to Workplace Health Solutions, Inc.("WHS") WHS is designed to develop
a series of proactive medical services to help mitigate and prevent work related
injuries. This subsidiary was designed to complement our other subsidiaries with
an overall philosophy of innovative risk management services.

FINANCIAL CONDITION

      ASSETS.  Total assets at June 30, 2008 were $549.1 million, an increase of
$26.8  million  from  $522.3  million  at  December  31,  2007.  Mortgage-backed
securities  increased  $32.2  million  reflecting  purchases of $40.0 million of
mortgage-backed  securities  partially offset by the principal  collected on and
proceeds from sales and maturities of  mortgaged-backed  securities.  Investment
securities  decreased  $10.0 million due to principal  collected on and proceeds
from sales and  maturities of investment  securities of $23.2 million  offset by
purchases of investment securities.  Market rate fluctuations during the quarter
have resulted in  mortgage-backed  securities being more attractive  vehicle for
the  investment  of  proceeds  from called  securities  and excess cash and cash
equivalents.  Loans  receivable,  including loans held for sale,  increased $6.3
million to $290.7  million at June 30,  2008  compared  with  $284.4  million at
December  31,  2007.  At June 30,  2008,  total  commercial  real  estate  loans
decreased by $5.4 million  while  commercial  business  loans  increased by $2.1
million from December 31, 2007. At June 30, 2008 total consumer loans  increased
by $676,000 from December 31, 2007.  Residential loans increased by $9.0 million
since  December  31,  2007,  after  the  sale of  $10.0  million  of  fixed-rate
residential  real  estate  loans in the  secondary  market  during the six month
period. Goodwill and other intangibles totaled $25.4 million as of June 30, 2008
and  December  31,  2007.  Additional  goodwill  in the amount of  $129,000  was
recorded for the contingent  purchase  payment made to Benefit  Consulting Group
LLC. 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 June 30,  2008 and
December 31, 2007.  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  management  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-

                                  Page 19 of 29

<PAGE>

dependent loans are measured for impairment based on the estimated fair value of
the  collateral.  At June 30, 2008 the allowance for loan losses as a percentage
of net loans receivable was 0.87% as compared to 0.88% as of December 31, 2007.

      LIABILITIES.  Total  liabilities  increased  by $29.2  million  to  $492.2
million at June 30, 2008 from $463.0  million at December 31, 2007. The increase
is  primarily  the result of an increase in  interest-bearing  deposits of $27.7
million.  Contributing  to the  increase  in  deposits  has been an  increase in
municipal deposits offered through the Bank's limited purpose commercial banking
subsidiary,  State  Bank of  Chittenango.  Municipal  deposits  increased  $20.2
million from December 31, 2007 to June 30, 2008.  Non-interest  bearing deposits
increased  $200,000  from $65.7 million at December 31, 2007 to $65.9 million at
June 30, 2008.  Borrowings increased $2.5 million from December 31, 2007 to June
30,  2008 as the Bank  utilizes  its  overnight  line of  credit  for  liquidity
purposes.

      STOCKHOLDERS' EQUITY. Total stockholders' equity decreased by $2.4 million
to $56.9  million at June 30, 2008 as compared to $59.3  million at December 31,
2007.  Stockholders'  equity decreased due to the valuation  adjustments of $2.7
million made for the Company's available for sale investment and mortgage-backed
securities  and  $831,000  due to the payment of  semiannual  cash  dividends of
$0.24. This was partially offset by the addition of after-tax net income of $1.1
million for the six months ended June 30, 2008.

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 and six months  ended June 30, 2008 and
2007 and for the year ended  December 31, 2007. 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 June 30,                     Twelve Months Ended Dec. 31,
                                        ------------------------------------------------------------  ------------------------------
                                                       2008                           2007                           2007
                                          Average    Interest             Average   Interest            Average    Interest
                                        Outstanding   Earned/  Yield/  Outstanding  Earned/   Yield/  Outstanding  Earned/   Yield/
                                          Balance      Paid     Rate     Balance      Paid     Rate     Balance      Paid     Rate
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  -------
                                                                          (Dollars in Thousands)
<S>                                     <C>          <C>       <C>     <C>          <C>       <C>     <C>          <C>       <C>
Assets
------
Interest-earning Assets:
------------------------
   Loans Receivable                     $   286,411  $  4,518    6.31% $   272,299  $  4,636    6.81% $   271,789  $ 18,552    6.83%
   Investment and Mortgage-Backed
         Securities                         151,156     1,869    4.95%     104,491     1,353    5.18%     107,120     5,442    5.08%
   Federal Funds                             12,434        76    2.44%      15,684       257    6.55%      15,814       829    5.24%
   Equity Securities                         13,038       255    7.82%      15,256       194    5.09%      13,648       850    6.23%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
      Total Interest-earning Assets         463,039     6,718    5.80%     407,730     6,440    6.32%     408,371    25,673    6.29%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
Non interest-earning Assets:
----------------------------
   Cash and due from banks                   12,355                         15,763                         14,771
   Other assets                              74,779                         76,460                         71,107
                                        -----------                    -----------                    -----------
         Total assets                   $   550,173                    $   499,953                    $   494,249
                                        ===========                    ===========                    ===========
Liabilities and Stockholders' Equity
------------------------------------
Interest-bearing Liabilities:
-----------------------------
   Money Market Deposits                $    79,770  $    386    1.94% $    54,903  $    447    3.27% $    58,370  $  1,831    3.14%
   Savings Accounts                          77,310       153    0.80%      79,546       155    0.78%      74,332       570    0.77%
   Interest-bearing Checking                 40,082        44    0.44%      36,186        67    0.74%      36,024       265    0.74%
   Time Deposits                            166,922     1,624    3.91%     140,362     1,598    4.57%     138,651     6,372    4.60%
   Borrowings                                56,428       643    4.58%      60,302       725    4.82%      59,710     2,948    4.94%
   Notes Payable                                107         1    3.76%         994        13    5.25%         836        42    5.02%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
      Total Interest-bearing
         Liabilities                        420,619     2,851    2.73%     372,293     3,005    3.24%     367,923    12,028    3.27%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
Non-interest-bearing Liabilities:
---------------------------------
   Demand deposits                           64,450                         64,320                         61,187
   Other liabilities                          6,185                          4,736                          6,661
                                        -----------                    -----------                    -----------
      Total liabilities                 $   491,254                    $   441,349                    $   435,771
                                        -----------                    -----------                    -----------
Stockholders' equity                         58,919                         58,604                         58,478
                                        -----------                    -----------                    -----------
Total liabilities and stockholders'
   equity                               $   550,173                    $   499,953                    $   494,249
                                        ===========                    ===========                    ===========
   Net Interest Income                               $  3,867                       $  3,435                       $ 13,645
                                                     ========                       ========                       ========
   Net Interest Spread                                           3.07%                          3.08%                          3.02%
                                                               ======                         ======                         ======
   Net Earning Assets                   $    42,420                    $    35,437                    $    40,448
                                        ===========                    ===========                    ===========
   Net yield on average
      Interest-earning assets                            3.34%                          3.37%                          3.34%
                                                     ========                       ========                       ========
   Average interest-earning
      assets to average
      Interest-bearing liabilities                     110.09%                        109.52%                        110.99%
                                                     ========                       ========                       ========
</TABLE>

                                  Page 20 of 29

<PAGE>

<TABLE>
<CAPTION>
                                                          Six Months Ended June 30,                     Twelve Months Ended Dec. 31,
                                        ------------------------------------------------------------  ------------------------------
                                                       2008                           2007                           2007
                                          Average    Interest             Average   Interest            Average    Interest
                                        Outstanding   Earned/  Yield/  Outstanding  Earned/   Yield/  Outstanding  Earned/   Yield/
                                          Balance      Paid     Rate     Balance      Paid     Rate     Balance      Paid     Rate
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  -------
                                                                          (Dollars in Thousands)
<S>                                     <C>          <C>       <C>     <C>          <C>       <C>     <C>          <C>       <C>
Assets
------
Interest-earning Assets:
------------------------
   Loans Receivable                     $   286,001  $  9,223    6.45% $   260,427  $  8,854    6.80% $   271,789  $ 18,552    6.83%
   Investment and Mortgage-Backed
         Securities                         140,183     3,548    5.06%      99,866     2,482    4.97%     107,120     5,442    5.08%
   Federal Funds                             10,073       141    2.80%      13,381       423    6.32%      15,814       829    5.24%
   Equity Securities                         15,856       531    6.70%      15,324       397    5.18%      13,648       850    6.23%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
      Total Interest-earning Assets         452,113    13,443    5.95%     388,998    12,156    6.25%     408,371    25,673    6.29%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
Non interest-earning Assets:
----------------------------
   Cash and due from banks                   12,603                         13,773                         14,771
   Other assets                              74,500                         68,724                         71,107
                                        -----------                    -----------                    -----------
         Total assets                   $   539,216                    $   471,495                    $   494,249
                                        ===========                    ===========                    ===========
Liabilities and Stockholders' Equity
------------------------------------
Interest-bearing Liabilities:
-----------------------------
   Money Market Deposits                $    75,424  $    817    2.18%     $50,049  $    782    3.15% $    58,370  $  1,831    3.14%
   Savings Accounts                          75,787       298    0.79%      73,089       269    0.74%      74,332       570    0.77%
   Interest-bearing Checking                 39,830       100    0.50%      33,873       122    0.73%      36,024       265    0.74%
   Time Deposits                            161,703     3,326    4.14%     129,322     2,892    4.51%     138,651     6,372    4.60%
   Borrowings                                56,519     1,309    4.66%      62,910     1,539    4.93%      59,710     2,948    4.94%
   Notes Payable                                125         3    4.83%       1,149        29    5.09%         836        42    5.02%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
      Total Interest-bearing
         Liabilities                        409,388     5,853    2.88%     350,392     5,633    3.24%     367,923    12,028    3.27%
                                        -----------  --------  ------  -----------  --------  ------  -----------  --------  ------
Non-interest-bearing Liabilities:
---------------------------------
   Demand deposits                           63,498                         57,398                         61,187
   Other liabilities                          7,236                          5,217                          6,661
                                        -----------                    -----------                    -----------
      Total liabilities                 $   480,122                    $   413,007                    $   435,771
                                        -----------                    -----------                    -----------
Stockholders' equity                         59,094                         58,488                         58,478
                                        -----------                    -----------                    -----------
Total liabilities and stockholders'
   equity                               $   539,216                    $   471,495                    $   494,249
                                        ===========                    ===========                    ===========

   Net Interest Income                               $  7,590                       $  6,523                       $ 13,645
                                                     ========                       ========                       ========
   Net Interest Spread                                           3.07%                          3.01%                          3.02%
                                                               ======                         ======                         ======
   Net Earning Assets                   $    42,725                    $    38,606                    $    40,448
                                        ===========                    ===========                    ===========
   Net yield on average
      Interest-earning assets                            3.36%                          3.35%                          3.34%
                                                     ========                       ========                       ========
   Average interest-earning
      assets to average
      Interest-bearing liabilities                     110.44%                        111.02%                        110.99%
                                                     ========                       ========                       ========
</TABLE>

RESULTS OF OPERATIONS

      GENERAL. Net income for the three months ended June 30, 2008 was $646,000,
a decrease of $108,000 or 14.3% from  $754,000  for the three  months ended June
30, 2007.  The decrease in net income was primarily the result of an increase in
other  expenses and an increase in the  provision  for loan losses  offset by an
increase in net interest income and a decrease in the

                                  Page 21 of 29

<PAGE>

provision  for income  taxes.  Net income for the six months ended June 30, 2008
was $1.1  million,  a decrease of $427,000  from $1.5 million for the six months
ended June 30,  2008.  Net income  from  operations  for the six  months,  which
excludes the FASB159  change in fair value of $599,000,  net of $162,000  income
taxes, was $1.5 million or $0.19 per diluted share.  This compares to net income
from  operations  for the six months  ending June 30, 2007 of $1.5  million,  or
$0.19 per  diluted  share.  The net  income  excluding  the  non-cash  charge to
earnings remained stable as other income decreased and other expenses  increased
offsetting an increase in net interest  income.  The acquisition of The National
Bank of Vernon and the opening of a banking,  insurance and retail center in the
Griffiss  Business and  Technology  Park in Rome, New York both completed in the
second quarter of 2007 contributed to the increase in non-interest expense.

      INTEREST  INCOME.  Interest and dividend  income  increased by $278,000 or
4.3%, to $6.7 million for the three months ended June 30, 2008 from $6.4 million
for three months  ended June 30,  2007.  For the six months ended June 30, 2008,
interest and dividend income increased by $1.3 million or 10.7% to $13.4 million
from $12.2  million  for the six months  ended June 30,  2007.  The  increase in
interest  income  was the  result of an  increase  in the  average  balances  of
interest-earning  assets  during  the  current  period  of $63.1  million.  This
increase was  partially  offset by a decrease in the yield of 30 basis points on
interest earning assets.  The increase in  interest-earning  assets is primarily
due to the acquisition of Vernon Bank Corporation on April 2, 2007.

      Interest on loans decreased  $118,000 to $4.5 million for the three months
ended June 30, 2008 from $4.6  million for the three months ended June 30, 2007.
The  decrease in interest  income on loans is a result of a decrease of 50 basis
points in the average  yield to 6.31% for the three  months  ended June 30, 2008
from 6.81% for the three months  ended June 30,  2007,  offset by an increase of
$14.1 million in the average  balance of loans  receivable  for the three months
ended June 30, 2008 as compared with the same period in 2007. For the six months
ended June 30, 2008, the average  balance of loans increased $25.6 million while
the average yield decreased 35 basis points to 6.45% during the 2008 period from
6.80% during the 2007 period.  The average balance of commercial loans increased
$4.1  million for the six months  ended June 30, 2008 from the six months  ended
June 30, 2007 while  commercial  real estate loans  increased $5.6 million.  The
average balance of residential  real estate loans increased $9.0 million for the
same time  period,  after  recording  the sale of $17.6  million  in fixed  rate
one-to-four family residential real estate loans over the last 12 months.

      Interest on investments and mortgage-backed  securities increased $516,000
as a result of an increase in the average  balance of investment  securities and
mortgage-backed  securities  of $46.7 million for the three months period ending
June 30,  2008 as  compared  with  the same  period  in  2007.  Offsetting  this
increase,  the average  yield  decreased  23 basis points to 4.95% for the three
months  ended June 30, 2008 from 5.18% for the three months ended June 30, 2007.
For  the  six  months  ended  June  30,  2008,   interest  on  investments   and
mortgage-backed  securities  increased  $1.1  million as compared  with the same
period in 2007 due to an  increase  in the average  balance of  investments  and
mortgage-backed securities of $40.3 million and an increase in the average yield
of 9 basis points from 4.97% to 5.06%.

      Interest income from federal funds decreased during the three months ended
June 30, 2008 to $76,000 as compared  with  $257,000  for the 2007  period.  The
decrease  in  interest  income is  primarily  due to a decrease  in the  average
balance of $3.3 million as well as a decrease of 411 basis points in the average
yield. For the six months ended June 30, 2008,  interest income on federal funds
decreased  $282,000  due to a decrease  in both the  average  yield and  average
balance as compared  with the same period in 2007.  The  decrease in the average
balance of federal funds sold was due to the liquidity needed in 2007 to provide
for  the  cash  consideration  required  for  the  acquisition  of  Vernon  Bank
Corporation.

      INTEREST  EXPENSE.  Interest expense was $2.9 million for the three months
ended June 30,  2008,  a decrease  of  $154,000  or 5.1% from the same period in
2007. The decrease in interest expense is due to a decrease in the average yield
on  interest-bearing  liabilities  offset by an increase in the average balance.
Interest  expense on borrowed  funds totaled  $644,000 for the second quarter of
2008  compared  with  $738,000  for the 2007  period.  The  average  balance  of
borrowings  decreased  $4.8 million for the three months  period ending June 30,
2008 as  compared  with the same  period  in 2007.  The cost of  borrowed  funds
decreased 25 basis points to 4.58% for the three months ended June 30, 2008 from
4.82% for the three months  ended June 30,  2007.  For the six months ended June
30,  2008  interest  expense on  borrowing  funds  decreased  $256,000  due to a
decrease in the average  balance  outstanding  of borrowings to $56.6 million as
compared to $64.1 million for the six month period in 2007.  Interest expense on
deposits  decreased  $60,000 and totaled $2.2 million for the three months ended
June 30, 2008 as compared  to $2.3  million for the three month  period in 2008.
The average cost of deposits  was 2.43% for the three month  period  ending June
30, 2008  compared  with 2.92% for the three month period in 2007.  In addition,
the average balance of deposit  accounts  increased $53.1 million from June 2007
to June  2008.  For the six months  ended June 30,  2008,  the  average  cost of
deposits  was 2.59% as compared  with 2.86% for the six month  period in 2007.In
addition,  the average balance of deposit  accounts  increased $66.4 million for
the six months  ended June 30, 2008 as compared  with six months  ended June 30,
2007.

      PROVISION  FOR LOAN LOSSES.  The total  provision  for loan losses for the
three  months  ended  and six  months  ended  June 30,  2008 was  $150,000.  The
allowance  for loan losses was $2.5  million for the three months ended June 30,
2008,  a decrease of $81,000  from $2.6  million at June 30, 2 007. The ratio of
the net loan loss  allowance  to loans  receivable  is 0.87% at June 30, 2008 as
compared with a ratio of 0.95% of loans receivable at June 30, 2007.  Management
continues to

                                  Page 22 of 29

<PAGE>

monitor changes in the loan portfolio mix in response to the redirection of loan
asset  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 remained stable at $4.5 million for
the three month period ending June 30, 2008 compared with the same period in
2007. Commissions and fees on sales of non-banking products was $3.4 million for
each of the three month periods ending June 30, 2008 and June 30, 2007. For the
six months ended June 30, 2008, other operating income decreased $259,000 to
$8.5 million from $8.8 million for the same period in 2007. The decrease in
other income was primarily due to a change in fair value of $599,000 that was
recognized in connection with the adoption of FAS 159 for certain preferred and
common equity securities. During the six months ended June 30, 2008, the change
in fair value of these securities as determined by market trading prices ranged
from an unrealized gain of $164,000 to an unrealized loss of $604,000 which was
recognized at March 2008. The Company intends to hold these securities and
therefore does not expect to realize the loss recorded. The decrease was offset
by increases in commissions and fees on the sale of non-banking products through
the Company's subsidiaries for the six months ended June 30, 2008 as compared
with the same period during 2007. Commissions and fees on sales of non-banking
products was $6.9 million for the six months ended June 30, 2008 as compared to
$6.7 million for the same period in 2007. In addition, service charges on
deposit accounts increased $139,000 or 11.8% for the six months ended June 30,
2008 compared with the six months ended June 30, 2007.

      OTHER EXPENSES. Other operating expenses increased by $435,000 or 6.3%, to
$7.3  million for the three months ended June 30, 2008 from $6.9 million for the
same period in 2007.  For the six months  ended June 30, 2008,  other  operating
expenses increased $1.3 million to $14.5 million from $13.2 million for the same
period in 2007. The increase in non-interest  expense primarily is the result of
an  increase in  equipment  and other  operating  expenses  associated  with the
expansion of our banking franchise  resulting from 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.  Compensation
expense increased  $846,000 or 10.0% for the six months ended June 30, 2008 from
the same  period  in 2007  largely  associated  with the  revenue  growth of the
insurance  and  consulting  subsidiaries  as well as due to the  acquisition  of
Vernon Bank Corporation.

      INCOME TAX. Income tax expense  decreased to $239,000 for the three months
ended June 30, 2008 as compared to $312,000 for the second  quarter of 2007. For
the six months  ended June 30,  2007,  the income tax  expense was  $394,000,  a
decrease of $175,000 from  $569,000 for the six months ended June 30, 2007.  Net
income  decreased  from $1.5  million to $1.1  million for the six month  period
while the effective tax rate  decreased to 26.8% for the six months of 2008 from
27.5% for the six months of 2007 to reflect the overall tax rate  expected to be
in effect for 2008 within changes in permanent differences.

      LIQUIDITY  AND CAPITAL  RESOURCES.  In addition to the  Company's  primary
funding sources of cash flow from banking and insurance 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  and fees from the sales of  insurance
products.  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 second quarter
of 2008,  loan  originations  totaled  $39.3  million  compared to $29.6 million
during the second quarter of 2007. The purchases of  mortgage-backed  securities
totaled $18.9 million  during the second quarter of 2008 as compared to $592,000
during  the  second   quarter  of  2007.   The  increase  in  the  purchases  of
mortgage-backed  securities is due to additional liquidity provided by increased
deposits.

      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 second quarter of 2008 cash flows
provided by the sale,  principal  payments and maturity of securities  available
for sale was $14.1 million compared to $5.5 million for the same period in 2007.

      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

                                 Page 23 of 29

<PAGE>

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 particular
customer's  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 June 30, 2008 the  Company had  outstanding
commitments to originate loans of  approximately  $8.3 million,  which generally
have an expiration period of less than 120 days. Commitments to sell residential
mortgages amounted to $7.9 million at June 30, 2008.

      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 $55.7 million at June 30, 2008 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 June 30, 2008 the total of cash, interest-earnings demand
accounts and federal funds sold was $13.2 million.

At June 30, 2008, 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
                                                          (Dollars in thousands)
<S>                                     <C>        <C>     <C>         <C>     <C>         <C>
As of June 30, 2008:
   Total Capital (to Risk Weighted
     Assets)                            $ 37,511   10.42%  $ 28,807        8%  $ 36,009       10%
   Tier I Capital (to Risk Weighted
     Assets)                            $ 34,982    9.71%  $ 14,403        4%  $ 21,605        6%
   Tier I Capital (to Average Assets)   $ 34,982    6.67%  $ 20,985        4%  $ 26,231        5%
</TABLE>

<TABLE>
<CAPTION>
                                                                                   To Be Well
                                                                               Capitalized Under
                                                              For Capital      Prompt Corrective
                                             Actual        Adequacy Purposes   Action Provisions
                                        ----------------   -----------------   -----------------
                                         Amount    Ratio    Amount     Ratio    Amount     Ratio
                                                          (Dollars in thousands)
<S>                                     <C>        <C>     <C>         <C>     <C>         <C>
As of December 31, 2007:
   Total Capital (to Risk Weighted
     Assets)                            $ 35,221   10.18%  $ 27,682        8%  $ 34,602       10%
   Tier I Capital (to Risk Weighted
     Assets)                            $ 32,710    9.45%  $ 13,841        4%  $ 20,761        6%
   Tier I Capital (to Average Assets)   $ 32,710    6.60%  $ 19,830        4%  $ 24,787        5%
</TABLE>

                                  Page 24 of 29

<PAGE>

ONEIDA FINANCIAL CORP.
SELECTED FINANCIAL RATIOS
At and for the Three and Six Months Ended June 30, 2008 and 2007 (unaudited)

<TABLE>
<CAPTION>
(Annualized where appropriate)                            Three Months Ending    Six Months Ended
                                                                June 30,             June 30,
                                                           2008        2007      2008       2007
                                                          ------    ---------   ------    --------
<S>                                                       <C>       <C>         <C>       <C>
Performance Ratios:

   Return on average assets                                 0.47%       0.60%     0.40%       0.64%
   Return on average equity                                 4.39%       5.15%     3.64%       5.14%
   Net interest margin                                      3.34%       3.37%     3.36%       3.35%

   Efficiency Ratio                                        86.03%      84.69%    88.25%      84.89%
   Ratio of operating expense to average total assets       5.33%       5.40%     5.37%       5.61%
   Ratio of average interest-earning assets to average
      interest-bearing liabilities                        110.09%     109.52%   110.44%     111.02%

Asset Quality Ratios:

   Non-performing assets to total assets                    0.09%       0.03%     0.09%       0.03%

   Allowance for loan losses to non-performing loans      566.82%   1,705.23%   566.82%   1,705.23%
   Allowance for loan losses to loans receivable, net       0.87%       0.95%     0.87%       0.95%

Capital Ratios:

   Total stockholders' equity to total assets              10.37%      11.52%    10.37%      11.52%
   Average equity to average assets                        10.71%      12.72%    10.96%      12.40%
</TABLE>

                                  Page 25 of 29

<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 June 30, 2008, 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 2007 Annual Report to Stockholders.
There has been no material change in the Company's interest rate risk profile
since December 31, 2007.

ITEM 4T.    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(3) 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 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 26 of 29

<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 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 2007 Form 10-K for the fiscal year ended
December 31, 2007.

Item 2      Unregistered Sales of Equity Securities and Use of Proceeds

      There was no repurchase activity during the three months ended June 30,
2008. Our current repurchase plan of 250,000 was announced on February 13, 2008
and represents 3.2% of the common stock outstanding. The plan has no expiration
date.

                                  Page 27 of 29

<PAGE>

Item 3      Defaults Upon Senior Securities

            Not applicable.

Item 4      Submission of Matters to a Vote of Security Holders

                  At the Annual Meeting of Shareholders, held on May 6, 2008,
            shareholders voted on the following matters as follows:

            Proposal No. 1 - Election of Directors

                                               For       Withheld
                                            ---------    --------
            Edward Clarke                   6,992,860     31,896
            Rodney Kent                     6,995,006     29,750
            Richard Myers                   6,988,511     36,345

            Proposal No. 2 - Ratification of Crowe Chizek and Company LLC as
            auditors for the Company for the fiscal year ended December 31,
            2008:

            For         Against    Abstain
            ---         --------   -------
            7,011,528   8,284      4,943

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 28 of 29

<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: August 14, 2008                      By: /s/ Michael R. Kallet
                                           ------------------------------
                                           Michael R. Kallet
                                           President and Chief Executive Officer

Date: August 14, 2008                      By: /s/ Eric E. Stickels
                                           ------------------------------
                                           Eric E. Stickels
                                           Executive Vice President and Chief
                                           Financial Officer

                                  Page 29 of 29