SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                 ----------------------------------------------
                                    FORM 10-Q



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

      For the quarterly period ended September 30, 2009

                                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 has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes |_| No |_|

Indicate by check mark whether the  Registrant is a large  accelerated  file, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
the definitions of "accelerated  filer",  "large accelerated filer" and "smaller
reporting company" 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 7,790,352 shares
of the Registrant's common stock outstanding as of November 1, 2009.

<PAGE>

<TABLE>
<CAPTION>


                                        ONEIDA FINANCIAL CORP.
                                                INDEX

                                                                                 Page
                                                                                 ----
PART I. FINANCIAL INFORMATION

<S>                                                                              <C>
    Item 1.  Financial Statements                                                  1

             Consolidated Statements of Condition (unaudited)                      2
             As of September 30, 2009 and December 31, 2008

             Consolidated Statements of Operations (unaudited)                     3
             For the three and nine months ended September 30, 2009 and 2008

             Consolidated Statements of Comprehensive Income (unaudited)           4
             For the three and nine months ended September 30, 2009 and 2008

             Consolidated Statements of Changes in Stockholders' Equity
             (unaudited) For the three months ended March 31, June 30, and
             September 30, 2009                                                    5

             Consolidated Statements of Cash Flows (unaudited)                     6
             For the three and nine months ended September 30, 2009 and 2008

             Notes to Consolidated Financial Statements (unaudited)                8

   Item 2.   Management's Discussion and Analysis of Financial Condition          25

             And Results of Operations

   Item 3.   Quantitative and Qualitative Disclosures about Market Risk           34


   Item 4T.  Controls and Procedures                                              34

PART II.     OTHER INFORMATION                                                    35

   Item 1.   Legal Proceedings                                                    35

   Item 1a.  Risk Factors                                                         35

   Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds          35

   Item 3.   Defaults Upon Senior Securities                                      36

   Item 4.   Submission of Matters to a Vote of Security Holders                  36

   Item 5.   Other Information                                                    36

   Item 6.   Exhibits                                                             36
</TABLE>


<PAGE>



PART I.     FINANCIAL INFORMATION
                   Item I.    Financial Statements


                                  Page 1 of 37
<PAGE>

<TABLE>
<CAPTION>


ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
At September 30, 2009 and December 31, 2008
                                                                           (unaudited)
                                                                          At September 30,   At December 31,
                                                                                2009              2008
                                                                                ----              ----
ASSETS                                                                    (in thousands, except share data)
<S>                                                                          <C>               <C>
        Cash and due from banks                                              $  16,196         $  13,223
        Federal funds sold                                                      10,718                71
                                                                             ---------------------------
  TOTAL CASH AND CASH EQUIVALENTS                                               26,914            13,294

        Trading securities                                                       7,220             5,941
        Securities available for sale                                          114,521           134,763
        Securities held to maturity (fair value $50,232)                        49,692                --
        Mortgage loans held for sale                                               816               741
        Loans receivable                                                       297,443           304,376
        Allowance for loan losses                                               (2,875)           (2,624)
                                                                             ---------------------------
   LOANS RECEIVABLE, NET                                                       294,568           301,752

        Federal Home Loan Bank stock                                             2,692             3,784
        Bank premises and equipment, net                                        21,220            21,790
        Accrued interest receivable                                              2,334             2,659

        Other assets                                                            13,694            15,323
        Bank owned life insurance                                               15,526            15,020
        Goodwill                                                                23,183            22,963
        Other intangible assets                                                  1,746             2,100
        ------------------------------------------------------------------------------------------------
        TOTAL ASSETS                                                         $ 574,126         $ 540,130
        ================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
        Interest bearing deposits                                            $ 417,401         $ 364,911
        Non-interest bearing deposits                                           61,574            60,787
        Borrowings                                                              31,000            52,825
        Notes payable                                                               --                12
        Other liabilities                                                        7,018             6,766
                                                                             ---------------------------
TOTAL LIABILITIES                                                              516,993           485,301
Oneida Financial Corp. 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                                              19,424            19,221
        Retained earnings                                                       42,790            41,585
        Accumulated other comprehensive (loss)                                  (4,676)           (5,562)
        Treasury stock (at cost, 488,014
                         and 533,106 shares)                                    (3,047)           (3,058)
                                                                             ---------------------------
 Total stockholders' equity - controlling interest                              54,574            52,269
        Noncontrolling interest                                                  2,559             2,560
                                                                             ---------------------------
TOTAL STOCKHOLDERS' EQUITY                                                      57,133            54,829
        ------------------------------------------------------------------------------------------------
        STOCKHOLDERS' EQUITY                                                 $ 574,126         $ 540,130
        ================================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements Page 2 of 37
<PAGE>

<TABLE>
<CAPTION>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 2009 (unaudited) and
2008 (unaudited)

                                                                 Three Months Ended                Nine Months Ended
                                                            September 30,    September 30,     September 30,  September 30,
                                                                2009              2008            2009         2008
                                                                ----              ----            ----         ----
                                                                 (in thousands, except share and per share data)
INTEREST INCOME:
<S>                                                          <C>                <C>            <C>          <C>
        Interest and fees on loans                           $  4,418           $ 4,634        $ 13,309     $  13,857
        Interest on investment securities                       1,701             1,862           5,029         5,410
        Dividends on equity securities                            108               136             320           160
        Interest on federal funds sold and
           interest-earning deposits                                7                19             32            668
---------------------------------------------------------------------------------------------------------------------
   Total interest and dividend income                           6,234             6,651          18,690        20,095
---------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
        Core deposits                                             562               650           1,645         1,866
        Time deposits                                             863             1,431           2,922         4,757
        Borrowings                                                367               645           1,331         1,954
        Notes payable                                              --                 1              --             4
---------------------------------------------------------------------------------------------------------------------
               Total interest expense                           1,792             2,727           5,898         8,581
---------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                             4,442             3,924          12,792        11,514
        Less: Provision for loan losses                           400               125             560           275
---------------------------------------------------------------------------------------------------------------------
   Net interest income after provision for loan losses          4,042             3,799          12,232        11,239
---------------------------------------------------------------------------------------------------------------------
OTHER INCOME:
   Total other-than-temporary impairment losses                (3,300)             (831)         (4,923)         (832)
   Portion of loss recognized in OCI (before taxes)             2,366                --           3,535            --
                                                                -----           -------           -----       -------
   Net impairment losses                                         (934)             (831)         (1,388)         (832)
   Net gains on sale of securities, net                           276                 5             514            24
      Changes in fair value of trading securities                 739            (6,436)          1,308        (7,035)
      Commissions and fees on sales of
           non-banking products                                 3,539             3,178          11,594        10,050
        Other operating income                                  1,255             1,290           3,757         3,517
---------------------------------------------------------------------------------------------------------------------
   Total other income (loss)                                    4,875            (2,794)         15,785         5,724
---------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES:
        Compensation and employee benefits                      5,107             4,361          15,088        13,656
        Occupancy expenses, net                                 1,145             1,237           3,551         3,520
        Other operating expense                                 1,739             1,449           5,459         4,360
---------------------------------------------------------------------------------------------------------------------
   Total other expenses                                         7,991             7,047          24,098        21,536
---------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES                                 926            (6,042)          3,919        (4,573)
---------------------------------------------------------------------------------------------------------------------
   Provision (benefit) for income taxes                           230            (1,614)          1,040        (1,220)
---------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                            $    696            (4,428)       $  2,879       $(3,353)
Less: net income attributable to noncontrolling interest           --                --              --            --
---------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) attributable
       to Oneida Financial Corp.                             $    696           $(4,428)       $  2,879       $(3,353)
=====================================================================================================================
EARNINGS (LOSS) PER SHARE - BASIC                               $0.09            $(0.57)          $0.37        $(0.43)
=====================================================================================================================
EARNINGS (LOSS) PER SHARE - DILUTED                             $0.09            $(0.57)          $0.37        $(0.43)
=====================================================================================================================
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements. Page 3 of 37


<PAGE>




ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Three Months and Nine Months Ended September 30, 2009 (unaudited) and
2008 (unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended              Nine Months Ended
                                                          September 30,   September 30,    September 30,  September 30,

                                                               2009           2008          2009             2008
                                                               ----           ----          ----             ----
                                                                 (In thousands)                 (In thousands)

<S>                                                           <C>         <C>             <C>          <C>
Net income (loss)                                             $   696     $(4,428)        $ 2,879      $(3,353)
                                                              -------     -------         -------      -------
Other comprehensive income (loss), net of tax:

Net change in unrealized gains (losses):
     Other-than-temporary impaired securities
          Available for sale:
          Unrealized losses on securities
            arising during period                              (2,233)       (831)        (3,553)         (832)
          Less: reclassification
adjustment for
               losses included in net income                      934         831          1,388           832
                                                              -------     -------         -------      -------
               Net unrealized losses                           (1,299)         --         (2,165)           --
              Income tax effect                                   520          --            866            --
                                                              -------     -------         -------      -------
                                                                 (779)         --         (1,299)           --
     Securities available for sale:
          Unrealized gains (losses) on securities
            arising during period                               4,106      (1,749)         4,043        (6,281)
          Less: reclassification adjustment for
                gains included in net income                     (276)         (5)          (514)          (24)
                                                              -------     -------         -------      -------
               Net unrealized gains (losses)                    3,830      (1,754)         3,529        (6,305)
                       Income tax effect                       (1,532)        702         (1,412)        2,522
                                                              -------     -------         -------      -------
                                                                2,298      (1,052)         2,117        (3,783)
                                                              -------     -------         -------      -------
Unrealized holding gains (losses) on securities.
         net of tax                                             1,519      (1,052)           818        (3,783)
                                                              -------     -------         -------      -------
Change in unrealized loss on pension benefits                      37          42            111           126
                                                              -------     -------         -------      -------
Income tax effect                                                 (14)        (17)           (43)          (51)
                                                              -------     -------         -------      -------
                                                                   23          25             68            75
                                                              -------     -------         -------      -------
Other comprehensive gain (loss), net of tax                     1,542      (1,027)           886        (3,708)
Comprehensive income (loss)                                     2,238      (5,455)         3,765        (7,061)
Comprehensive income (loss) attributable to the
     Noncontrolling interest                                       --          --             --            --
                                                              -------     -------         -------      -------

     Comprehensive income (loss) attributable to
          Oneida Financial Corp.                              $ 2,238     $(5,455)        $ 3,765      $(7,061)
                                                              =======     =======         =======      ========
</TABLE>


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

                                             Page 4 of 37

<PAGE>



ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2009, June 30, 2009 and September 30, 2009
(unaudited)


<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                              Additional                  Other
                                               Common Stock     Paid-In    Retained    Comprehensive  Treasury  Noncontrolling Total
                                              Shares  Amount   Capital     Earnings        Loss        Stock      Interest

                                                                    (in thousands, except number of shares)



<S>                                        <C>         <C>    <C>         <C>          <C>            <C>       <C>         <C>
Balance as of December 31, 2008            8,322,452   $83    $19,221     $41,585      $(5,562)       $(3,058)  $ 2,560     $ 54,829
Net income                                                                  1,114                                              1,114
Other comprehensive loss,
     net of tax                                                                         (2,200)                              (2,200)
Shares earned under stock plans                   38
                                                                                                                                  38
Common stock dividends: $0.24 per share
                                                                             (831)                                             (831)
Treasury stock reissued                                                                                     9                      9
Tax benefit from stock plans                      12                                                                              12
                                           -----------------------------------------------------------------------------------------
Balance as of March 31, 2009               8,322,452   $83    $19,271     $41,868     $ (7,762)       $(3,049)  $ 2,560     $ 52,971
Net income                                                                  1,069                                              1,069
Other comprehensive income,
     net of tax                                                                          1,544                                 1,544
Shares earned under stock plans                                    38                                                             38
Stock repurchased                                                                                                    (1)         (1)
Treasury stock reissued                           (1)                                                       1                     --
                                           -----------------------------------------------------------------------------------------

Balance as of June 30, 2009                8,322,452   $83    $19,308     $42,937     $ (6,218)       $(3,048)  $ 2,559     $ 55,621
Net income                                                                    696                                                696
Other comprehensive income,
     net of tax                                                                          1,542                                 1,542
Shares earned under stock plans                                   117                                                            117
Common stock dividends: $0.24 per share                                      (843)                                             (843)
Treasury stock reissued                                            (1)                                      1                    --
                                           -----------------------------------------------------------------------------------------

Balance as of September 30, 2009           8,322,452   $83    $19,424     $42,790      $(4,676)      $ (3,047)  $ 2,559      $57,133
                                           =========================================================================================
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements. Page 5 of 37

<PAGE>


<TABLE>
<CAPTION>

ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months and Nine Months Ended September 30, 2009 (unaudited) and
2008 (unaudited)




                                                                             Three Months Ended           Nine Months Ended
                                                                         September 30, September 30, September 30,  September 30,
                                                                             2009         2008         2009            2008
                                                                             ----         ----         ----            ----

        Operating Activities:                                                                 (in thousands)

<S>                                                                       <C>         <C>            <C>            <C>
   Net income (loss)                                                      $    696    $ (4,428)      $ 2,879        $(3,353)
   Adjustments to reconcile net income (loss) to net
   cash provided by operating
    activities:
      Depreciation and amortization                                            520         565         1,568          1,612
      Amortization of premiums/discounts on securities, net                     48          20           164             70
      Net change in valuation of financial instruments carried
        at fair value                                                         (738)      6,436        (1,308)         7,035
      Provision for loan losses                                                400         125           560            275
      Stock compensation earned                                                117          43           193            128
      Loss on sale of other real estate                                         44           6            44             12
      Net realized loss on sale of securities                                  658         826           874            808
      Gain on sale of loans, net                                               (55)        (36)         (293)          (108)
      Gain on sale of fixed assets                                              --        (134)           --           (134)
      Income tax payable                                                        89      (2,017)          147         (1,909)
      Accrued interest receivable                                               98         216           325            194
      Other assets                                                           2,067         830         1,473            582
      Other liabilities                                                     (2,295)      2,359           368          1,193
      Origination of loans held for sale                                   (11,104)     (4,226)      (48,500)       (10,967)
      Proceeds from sales of loans                                          11,374       4,423        48,718         14,452
---------------------------------------------------------------------------------------------------------------------------
          Net cash provided by operating activities                          1,919       5,008         7,212          9,890
---------------------------------------------------------------------------------------------------------------------------
Investing Activities:
  Purchase of investment securities                                        (12,756)     (1,575)      (47,336)      (18,755)
  Principal collected on and proceeds of maturities
      sales or calls from investments                                        2,919       8,800        19,511         31,964
  Purchase of mortgage-backed securities                                   (13,382)    (13,276)      (37,389)       (53,296)
  Principal collected on and proceeds from sales
     of mortgage-backed securities                                          13,814      16,831        36,120         23,502
  Net (increase) decrease in loans                                          (3,526)     (8,405)        6,234        (18,197)
Purchase of bank premises and equipment
                                                                              (169)       (207)         (644)          (608)
  Proceeds from the sale of bank premises and equipment                         --         133            --            133
  Proceeds from sale of other real estate                                      345          --           345             92
  Purchase of insurance agency                                                  --          23           (84)           (73)
  Purchase of employee benefits company                                         --          --          (136)            (8)
  Purchase of bank                                                              --          --                         (129)
---------------------------------------------------------------------------------------------------------------------------
          Net cash (used in) provided by investing activities              (12,755)      2,324       (23,379)       (35,375)
---------------------------------------------------------------------------------------------------------------------------
Financing Activities:
  Net increase in demand deposit, savings,
      money market, super now and escrow                                    19,069      12,535        57,014         34,272
  Net (decrease) increase in time deposits                                    (619)       (867)       (3,737)         5,276
  Proceeds from borrowings                                                   2,975      11,000         2,975         47,000
  Repayment of borrowings                                                   (3,975)    (18,000)      (24,800)       (51,500)
  Cash dividends                                                              (843)       (831)       (1,674)        (1,662)
  Exercise of stock options (using treasury stock)                              --          --             9            --
          Net cash provided by financing activities                         16,607       3,837        29,787         33,386
---------------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents                                        5,771      11,169        13,620          7,901
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period                            21,143      13,193        13,294         16,461
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                $ 26,914    $ 24,362      $ 26,914        $24,362
===========================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid for interest                                                       1,812       2,723         6,065          8,624
Cash paid for income taxes                                                     125           -           875            451

Supplemental noncash disclosures:
Transfer of loans to other real estate                                         340         156           389            260
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 7 of 37


<PAGE>



                                    ONEIDA FINANCIAL CORP.
                              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                             (UNAUDITED)
                                          SEPTEMBER 30, 2009
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  September  30, 2009 and  December 31, 2008 and for the
three  and  nine  month  periods  ended   September  30,  2009  and  2008.   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, 2008 was derived
from the audited  financial  statements  included in the  Company's  2008 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 2008 consolidated  financial statements,  including
the notes thereto included in the Company's Annual Report on Form 10-K.

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

Note B - Earnings per Share

The Company has stock compensation awards with non-forfeitable  rights which are
considered  participating  securities.  As such,  earnings per share is computed
using the  two-class  method as required by ASC  206-10-45.  Basic  earnings per
share is  computed  by  dividing  net income  allocated  to common  stock by the
weighted  average  number of common shares  outstanding  during the period which
excludes the participating  securities.  Diluted earnings per share includes the
dilutive  effect  of  additional   potential   common  shares  from  stock-based
compensation plans, but excludes awards considered participating securities.

The Company  adopted  ASC Topic  260-10-45-59A  through  61A ("ASC  260-10-45"),
"Participating  Securities and the Two Class Method"  effective January 1, 2009.
Prior earnings per share amounts have been  retrospectively  adjusted to conform
to the provisions of ASC 206-10-45.

The factors used in the earnings  per share  computation  are as follows for the
three and nine months ended September 30, 2009 and September 30, 2008:


<TABLE>
<CAPTION>

                                                                             Three Months Ended            Nine Months Ended
                                                                       September 30,   September 30,  September 30,   September 30,
                                                                            2009          2008            2009            2009
                                                                            ----          ----            ----            ----
Basic


<S>                                                                   <C>              <C>             <C>            <C>
     Distributed earnings allocated to common stock                   $  835,344       $   820,382     $ 1,659,891    $ 1,640,933
     (Overdistributed) Undistributed earnings
           allocated to common stock                                    (145,695)       (5,229,332)      1,200,843     (4,986,726)
                                                                      ----------       -----------     -----------    -----------
     Net earnings allocated to common stock                           $  689,649       $(4,408,950)    $ 2,860,734    $(3,345,793)
                                                                      ==========       ===========     ===========    ===========
          Weighted average common shares outstanding
           including shares considered participating securities        7,818,690         7,771,210       7,795,396      7,771,153

           Less:  Average participating securities                       (28,800)          (44,400)        (28,800)       (44,400)
                                                                      ----------       -----------     -----------    -----------
     Weighted average shares                                           7,789,890         7,726,810        7,766,59      7,726,753
Basic earnings (loss) per share                                       $     0.09       $     (0.57)    $      0.37    $     (0.43)

Note B - Earnings per Share (Continued)

Diluted
     Net earnings allocated to common stock                           $  689,649       $(4,408,950)    $ 2,860,734    $(3,345,793)
                                                                      ==========       ===========     ===========    ===========
          Weighted average common shares outstanding
           for basic earnings per common share                         7,789,890         7,726,810       7,766,596      7,726,753
                                                                      ==========       ===========     ===========    ===========
           Add: Dilutive effects of assumed
           exercise of stock options                                      13,947            55,614          31,581         57,086
                                                                      ----------       -----------     -----------    -----------
     Weighted average shares and dilutive
      potential common shares                                          7,803,837         7,782,424           7,798      7,783,839
                                                                      ==========       ===========     ===========    ===========
Diluted earnings (loss) per common share                              $     0.09           $ (0.57)          $0.37    $     (0.43)
                                                                      ==========       ===========     ===========    ===========
</TABLE>
<PAGE>


Stock options for 87,666 and 107,841  shares of common stock were not considered
in computing  diluted  earnings  per common  share for the three  months  ending
September  30,  2009 and  September  30,  2008  respectively  because  they were
antidilutive.  For the nine months  ending  September 30, 2009 and September 30,
2008,  stock  options  for 87,666 and  108,448  shares,  respectively,  were not
considered.  Dividends of $13,824 and $21,120 as of September  30, 2009 and 2008
respectively were paid on unvested shares with non-forfeitable  dividend rights,
none of which was included in net income as compensation expense because all the
awards are expected to vest.

Note C - Stock-Based Compensation

The Company's 2000 Stock Option Plan, which is shareholder approved, permits the
granting of share options to its 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 options
granted  expire by April 2010 and options  vest and become  exercisable  ratably
over a 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 September 30,
2009 and 2008.

The fair value of each option  award is  estimated  on the date of grant using a
closed form option  valuation  (Black-Scholes)  model that uses the  assumptions
noted  in  the  table  below.   Expected  volatilities  are  based  on  historic
volatilities of the Company's  common stock. The Company uses historical data to
estimate option exercise and  post-vesting  termination  behavior.  The expected
term of options granted is based on historical data and represents the period of
time that  options  granted  are  expected to be  outstanding,  which takes into
account that options are not transferable.  The risk-free  interest rate for the
expected term of the option is based on the U.S.  Treasury yield curve in effect
at the time of the grant. The fair value of options granted was determined using
the following weighted-average assumptions as of the grant date.

                                    2009           2008
                                    ----           ----
Risk-free interest rate             0.50%          N/A
Expected stock price volatility    62.09%          N/A
Expected dividend rate              3.00%          N/A
Expected life                       0.94 years     N/A

Information related to the stock option plan during each year follows:

                                                        2009            2008
                                                    -------------       ----
Intrinsic value of options exercised                $ 488,604            N/A
Cash received from option exercises                 $  10,303            N/A
Tax benefit realized from option exercises                  -            N/A
Weighted average fair value of options granted          $2.47            N/A

As of September 30, 2009, there was no unrecognized compensation cost for this
plan as all shares are vested under the terms of the plan. New grants are for
the reload option feature which are expensed at the date of grant.



                                            Page 9 of 37
<PAGE>

<TABLE>
<CAPTION>


Note C - Stock-Based Compensation (Continued)

Activity in the plan for 2009 was as follows:               Range of
                                                   ---------------------------  Weighted
Average                                                     Option Exercise     Exercise Price
                                                    Options         Price       for Options     Intrinsic
                                                  Outstanding       Per Share   Outstanding      Value

<S>                                                  <C>        <C>       <C>      <C>          <C>
Outstanding at December 31, 2008                     168,967    $ 4.722 - $18.167  $  7.707     $315,434
Granted                                               31,839         $11.146
Exercised                                            (76,931)         $4.722
Forfeited                                                  -
                                                 -----------
Outstanding at September 30, 2009                    123,875    $ 4.722 - $18.167  $ 10.445     $137,160
                                                 ===========
</TABLE>

At September 30, 2009, the weighted average information for outstanding and
exercisable shares is as follows:

                       Shares outstanding and Exercisable
             ------------------------------------------------------

               Range of                          Average          Average
               Exercise                          Exercise      Remaining Life
               Prices               Shares       Price            (Years)
               ------------------------------------------------------------

               $3.63 - $5.45        36,209        $4.722              0.57
               $9.09 - $10.90       11,118       $10.216              0.57
               $10.91 - $12.72      40,957       $11.532              0.57
               $12.73 - $14.53      18,689       $14.000              0.57
               $14.54 - $16.35      6,600        $14.794              0.57
               $16.36 - $18.17      10,302       $17.247              0.57
                                   -------       -------              ----
                   Total           123,875       $10.445              0.57
                                   =======       =======              ====

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 $116,751
and $42,558 for the three months ended September 30, 2009 and 2008  respectively
and $193,166 and $127,672 for the nine month period  ending  September  30, 2009
and 2008, respectively.  Shares unallocated under the plans available for future
awards  were 15,286 and 14,086 at  September  30,  2009 and  September  30, 2008
respectively.  At September 30, 2009 and December 31, 2008, there were nonvested
shares of 28,800 with  unrecognized  compensation  cost of $358,136 and $500,216
respectively.

Note D - Dividend Restrictions

Oneida  Financial MHC, which owns 4,309,750 or 55.12% of the outstanding  shares
as of September 30, 2009 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
covering  substantially all employees.  Under the 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, which is recorded within compensation and
employee benefits expenses in the condensed statements of income, is comprised
of the following:
<PAGE>

<TABLE>
<CAPTION>

                                                  Three Months Ended          Nine Months Ended
                                           September 30,  September 30, September 30,  September 30,
                                               2009          2008           2009           2008
                                               ----          ----           ----           ----

<S>                                            <C>           <C>            <C>         <C>
Service cost                                   $       -     $      -       $       -   $       -
Interest cost                                     41,000       55,000         123,000     165,000
Expected return on plan assets                   (49,000)     (72,000)       (147,000)   (216,000)
Net amortization and deferral                     37,000       42,000         111,000     126,000
                                               ---------    ---------        --------     -------
        Net periodic pension cost              $  29,000     $ 25,000       $  87,000   $  75,000


Note E - Pension Plan (Continued)

Net gain                                         (22,200)     (25,200)        (66,600)    (75,600)
Prior service cost                                     -            -               -           -
                                               ---------    ---------        --------     -------

  Total recognized in other comprehensive
     income                                      (22,200)     (25,200)        (66,600)    (75,600)
                                               ---------    ---------        --------     -------
Total recognized in net periodic benefit
     cost and Other comprehensive income (loss) $  6,800     $   (200)      $  20,400   $    (600)
                                                ========   ===========      ========= ============
</TABLE>


Weighted-average assumptions as of December 31:    2009                 2008
                                                   ----                 ----
        Discount rate                             5.390%               5.465%
        Expected return on plan assets            7.500%               7.500%

As of  September  30, 2009,  contributions  to the pension plan for 2009 totaled
$100,000. The Bank anticipates contributing $200,000 in 2009 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 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                Nine Months Ended
                                                   September 30,   September 30,     September 30, September 30,
                                                     2009              2008             2009          2008
                                                     ----              ----             ----          ----

<S>                                                  <C>             <C>            <C>            <C>
Service cost                                         $  6,500        $  6,800       $  19,500      $  20,400
Interest cost                                          34,000          33,700        102,000        101,100
Expected return on plan assets                        (34,500)        (52,000)      (103,500)      (156,000)
Net amortization and deferral                          14,000               -         42,000              -
                                                     --------        --------      ---------       ---------
   Net periodic pension cost (benefit)               $ 20,000        $(11,500)      $ 60,000       $(34,500)

Net loss                                                   -                -              -              -
Prior service cost                                         -                -              -              -
                                                     --------        --------      ---------       ---------
  Total recognized in other comprehensive income           -                -              -              -
                                                     --------        --------      ---------       ---------

Total recognized in net periodic benefit cost and

        Other comprehensive income (loss)           $ 20,000         $(11,500)      $  60,000       $(34,500)
                                                    ========        =========       =========       ========
</TABLE>


Weighted-average assumptions as of December 31:       2009            2008
                                                      ----            ----
        Discount rate                                 6.25%           6.25%
        Expected return on plan assets                7.50%           7.50%

As of September 30, 2009, there were no contributions to the plan. The Bank does
not anticipate contributing in 2009 to fund its pension plan.


                                  Page 11 of 37

<PAGE>

Note F - Investment Securities and Mortgage-Backed Securities

The amortized cost, gross unrealized gains and losses and approximate fair value
of available for sale securities at September 30, 2009 and December 31, 2008 are
as follows:

<TABLE>
<CAPTION>

                                                            September 30, 2009
                                           ------------------------------------------
                                           Amortized   Gross Unrealized       Fair
                                             Cost      Gains     Losses      Value
                                           ------------------------------------------
Available for sale portfolio:                         (in thousands)
-----------------------------
<S>                                          <C>          <C>      <C>        <C>
    Debt securities:
        U. S. Agencies                     $ 12,056      $197    $     6    $ 12,247
        Corporate                            16,733       203      1,405      15,531
        Trust preferred securities           10,341        --      4,403       5,938
        State and municipals                 20,742       750        129      21,363
        Small Business Administration            12        --         --          12
                                           --------     -----      -----    --------
                                             59,884     1,150      5,943      55,091
                                           --------     -----      -----    --------
    Residential mortgage-backed securities:
        Fannie Mae                           18,478       637          3      19,112
        Freddie Mac                          17,631       604         --      18,235
        Ginnie Mae                           15,295       425         42      15,678
        Collateralized Mortgage Obligations   7,199        28        822       6,405
                                             58,603     1,694        867      59,430
                                           --------    -------   -------    --------
        Total available for sale           $118,487    $2,844    $ 6,810    $114,521
                                           ========    =======   =======    ========
</TABLE>

<TABLE>
<CAPTION>

                                                       December 31, 2008
                                           ------------------------------------------
                                           Amortized   Gross Unrealized       Fair
                                             Cost      Gains     Losses      Value
                                           ------------------------------------------
  Available for sale portfolio:                       (in thousands)
  -----------------------------

<S>                                        <C>         <C>       <C>        <C>
    Debt securities:
        U. S. Agencies                     $ 21,002    $  216    $    13    $ 21,205
        Corporate                            16,051        --      3,378      12,673
           Trust preferred securities        11,750        --      2,542       9,208
        State and municipals                 17,274       223        150      17,347
        Small Business Administration            13        --         --          --
                                            -------    ------    -------    --------
                                             66,090       439      6,083      60,446
                                            -------    ------    -------    --------
    Residential mortgage-backed securities
        Fannie Mae                           19,640       283         83      19,840
        Freddie Mac                          22,858       416         83      23,191
        Ginnie Mae                           23,938       533         24      24,447
        Collateralized Mortgage Obligations   7,569        --        730       6,839
                                           --------    ------    -------    --------
                                             74,005     1,232        920      74,317
                                           --------    ------    -------    --------
        Total available for sale           $140,095    $1,671    $ 7,003    $134,763

                                           ========    ======    =======    ========
</TABLE>

The amortized cost, unrecognized gains and losses, and fair value of securities
held to maturity were as follows:

<TABLE>
<CAPTION>

                                                       September 30, 2009
                                           ------------------------------------------
                                           Amortized   Gross Unrealized       Fair
                                             Cost      Gains     Losses      Value
                                           ------------------------------------------
    Debt securities:                                   (in thousands)

<S>                                         <C>        <C>      <C>      <C>
        U. S. Agencies                      $23,974    $ 134    $  33    $  24,075
         Small Business Administration          911       --       14          897
        State and municipals                  8,639      466       --        9,105
                                             33,524      600       47       34,077
    Residential mortgage-backed securities
        Ginnie Mae                            5,792        7       20        5,779
        Fannie Mae                            8,347       --       --        8,347
        Freddie Mac                           2,029       --       --        2,029
                                             16,168        7       20       16,155
        Total held to maturity              $49,692    $ 607    $  67    $  50,232
</TABLE>
                                  Page 12 of 37
<PAGE>

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

There were no held to maturity  securities at December 31, 2008. As of September
30, 2009 and December 31, 2008,  mortgage-backed  securities  were  comprised of
pass-through  securities  backed  by  conventional   residential  mortgages  and
guaranteed  by  Fannie  Mae,  Freddie  Mac or  Ginnie  Mae,  which in turn,  are
supported  by the full  faith and credit of the United  States  Government.  The
collateralized mortgage obligations are non-agency issued obligations.

Securities with  unrealized  losses at September 30, 2009 and December 31, 2008,
aggregated by investment category and length of time that individual  securities
have been in a continuous unrealized loss position, are as follows:

<TABLE>
<CAPTION>


September 30, 2009
                                                             Less than 12 Months              More than 12 Months           Total
                                                               Fair     Unrealized      Fair   Unrealized        Fair     Unrealized
Description of Securities                                     Value       Loss          Value     Loss          Value        Loss
                                                                                        (In thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>          <C>        <C>           <C>           <C>         <C>
U.S. Agency                                                  $1,332       $  6       $     --      $    --       $ 1,332     $     6
Corporate                                                       964         85          7,302        1,320         8,266       1,405
Trust preferred securities                                       --         --          5,938        4,403         5,938       4,403
State and municipals                                             --         --          3,181          129         3,181         129
Fannie Mae                                                      159          3             --           --           159           3
Ginnie Mae                                                    3,091         42             --           --         3,091          42
Collateralized mortgage obligations                           1,545         38          3,951          784         5,496         822
                                                            -------       -------      ------      -------       -------      ------
Total securities available for sale in
     an unrealized loss position                             $7,091       $174       $ 20,372      $ 6,636       $27,463      $6,810
                                                             ======       ====       ========      =======       =======      ======
U.S. Agency                                                  $3,967       $ 33       $     --      $    --       $ 3,967      $   33
Small business administration                                   897         14             --           --           897          14
Ginnie Mae                                                    2,035         20             --           --         2,035          20
                                                            -------       -------      ------      -------       -------      ------
Total securities held to maturity in
     an unrealized loss position                             $6,899       $ 67       $     --      $    --       $ 6,899      $   67
                                                            =======       ====       ========      =======       =======      ======


December 31, 2008
                                                            Less than 12 Months            More than 12 Months              Total
                                                            Fair     Unrealized       Fair     Unrealized        Fair     Unrealized
Description of Securities                                   Value       Loss          Value       Loss          Value        Loss
                                                                           (In thousands)
------------------------------------------------------------------------------------------------------------------------------------
U.S. Agency                                               $ 1,589       $   13      $    --       $    --       $ 1,589       $   13
Corporate                                                   5,248          414        4,025         2,964         9,273        3,378
Trust preferred securities                                  1,955          262        7,253         2,280         9,208        2,542
State and municipals                                        4,347          150
                                                                                         --            --         4,347          150
Fannie Mae                                                  4,482           61
                                                                                      1,192            22         5,674           83
Freddie Mac                                                 3,919           80          120             3         4,039           83
Ginnie Mae                                                  1,116           24           --            --         1,116           24
Small Business Administration                                  13           --           --            --            13           --
Collateralized mortgage obligations                         6,838          730            1            --         6,839          730
                                                                                     -------        -----       -------       ------
Total securities available for sale in
     an unrealized loss position                          $29,507       $1,734      $12,591       $ 5,269       $42,098       $7,003
                                                          =======       ======      =======       =======       =======       ======
</TABLE>
U.S. Agency and Agency Mortgage-Backed Securities

Fannie Mae, Freddie Mac, Ginnie Mae and the Small Business Administration
guarantee the contractual cash flows of our agency and mortgage-backed
securities. Fannie Mae and Freddie Mac are government sponsored enterprises that
were placed under the conservatorship of the U.S. Government on September 7,
2008. Our Ginnie Mae mortgage-backed securities are backed by the full faith and
credit of the U.S. Government.


                                  Page 13 of 37
<PAGE>


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

At September 30, 2009, of the eight U.S. Government  sponsored enterprise agency
and  mortgage-backed  securities in an unrealized loss position in our available
for sale  portfolio,  none were in a continuous  unrealized loss position for 12
months or more. The  unrealized  losses at September 30, 2009 were primarily due
to the changes in interest rates and continued  illiquidity  and  uncertainty in
the market. We do not consider these securities other than temporarily  impaired
due to the  guarantee  provided as to the full payment of principal and interest
and the fact that we do not intend to sell these  securities  and it is not more
likely  than not that we will be required  to sell these  securities  before the
recovery of their cost basis, which may be at maturity.

Non-Agency Collateralized mortgage obligations.

All of our non-agency  collateralized mortgage obligations carry various amounts
of credit  enhancement and none are  collateralized  with subprime loans.  These
securities were purchased based on the underlying loan  characteristics  such as
loan to value ratio,  credit scores,  property  type,  location and the level of
credit  enhancement.  Current  characteristics  of each  security  are  reviewed
regularly by management.  If the level of credit loss coverage is sufficient, it
indicates that we will receive all of the originally scheduled cash flows.

At  September  30,  2009,  of  the  five  non-agency   collateralized   mortgage
obligations in an unrealized loss position, four were in a continuous unrealized
loss  position of 12 months or more.  We have  assessed  these  securities in an
unrealized  loss position at September 30, 2009 and determined  that the decline
in fair value was temporary.  We believe the decline in fair value was caused by
the  significant  widening in liquidity  spreads across  sectors  related to the
continued  illiquidity and uncertainty in the markets and not the credit quality
of the individual issuer or underlying assets. In making this determination,  we
considered  the  period  of time the  securities  were in a loss  position,  the
percentage  decline  in  comparison  to  the  securities'  amortized  cost,  the
financial  condition of the issuer,  and the delinquency or default rates of the
underlying  collateral.  In addition,  we do not intend to sell these securities
and it is not  more  likely  than  not that we will be  required  to sell  these
securities before the recovery of their cost basis, which may be at maturity. It
is possible that the underlying loan collateral on these securities will perform
worse  than  expectations,  which may lead to  adverse  changes in cash flows on
these securities and potential future other than temporary impairment losses.

Corporate Debt and Municipal Securities

At September 30, 2009, of the ten corporate debt and municipal  securities in an
unrealized loss position,  nine were in a continuous unrealized loss position of
12 months or more. We have assessed these  securities  and  determined  that the
decline in fair value was temporary. In making this determination, we considered
the  period  of time the  securities  were in a loss  position,  the  percentage
decline  in  comparison  with the  securities'  amortized  cost,  the  financial
condition  of the  issuer,  and the  delinquency  or default  rates based on the
applicable  bond ratings.  In addition,  we do not have the intent to sell these
securities  and it is not more  likely than not that we will be required to sell
these  securities  before  the  recovery  of their cost  basis,  which may be at
maturity. Included in the nine securities whose unrealized loss position exceeds
12 months was a $2.0  million  General  Motors  Acceptance  Corp.  (GMAC)  bond,
maturing October 15, 2010 which has a rating below investment  grade.  This is a
variable rate note based on the three month Treasury bill whose  unrealized loss
was  $180,000  and $1.1  million at  September  30, 2009 and  December  31, 2008
respectively.  In addition,  also included was a $2.5 million  Sallie Mae (SLMA)
bond,  maturing  May 1, 2012 which is rated below  investment  grade.  This is a
variable rate note based on the consumer  price index.  The  unrealized  loss at
September   30,  2009  and  December   31,  2008  was  $837,000  and   $875,000,
respectively. Both GMAC and SLMA are paying as agreed.

Trust preferred securities

The  Company  currently  has  $5.9  million  invested  in nine  trust  preferred
securities  as of  September  30,  2009 whose  unrealized  losses have been in a
continuous loss position exceeding 12 months or more. Of the $5.9 million,  $4.6
million have variable rates of interest.  The unrealized losses at September 30,
2009 and December 31, 2008 on the nine securities  totaled $4.4 million and $2.5
million respectively.  All of the securities are rated below investment grade as
of September  30,  2009.  Through  review of the current and expected  cash flow
analysis  based on the credit  quality  of the  underlying  collateral,  default
probabilities  and anticipated  losses given the default  assumptions and stress
tests performed on these securities,  six of the trust preferred securities have
been considered other-than-temporarily impaired as of September 30, 2009.


                                  Page 14 of 37

<PAGE>

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

The significant inputs utilized in the cash flow analysis are as follows:

                                       Significant inputs at September 30, 2009
                                       ----------------------------------------

Annual prepayment                           0% annually, 100% at maturity
Projected specific defaults/deferrals               19.50% - 52.26%
Projected severity of loss on specific
   defaults/deferrals                                  85% - 100%
Projected additional defaults:
                QTR 2 - 2009                       4% (not annualized)
                QTR 3 - 2009                       3% (not annualized)
                QTR 4 - 2009                       2% (not annualized)
                QTR 1 - 2010                       1% (not annualized)
                Thereafter                         0.50% applied annually
Projected  severity of loss on additional
defaults                                           85% - 100%
Present  value discount rates and margins          Libor + 0.85% - 9.68%

Based on the assumptions  utilized, an other than temporary impairment charge of
$934,000 was  recorded in the third  quarter of 2009 and the  impairment  charge
totaled $1.4 million year-to-date. It is possible that the underlying collateral
of these securities will perform worse than  expectations  including an increase
in  deferrals/defaults  above projections,  which may lead to adverse changes in
cash  flows  on  these  securities  and  potential  future  other-than-temporary
impairment  losses.  Events that may trigger material declines in fair value for
these  securities  in  the  future  would  include,  but  are  not  limited  to,
deterioration  of  credit  metrics,  such  as  significantly  higher  levels  of
defaults,  and  severity  of  loss  on the  underlying  collateral  and  further
illiquidity.

A roll-forward of the  other-than-temporary  impairment amount related to credit
losses  for  the  nine  months  ended  September  30,  2009  is as  follows  (in
thousands):

Balance  of  credit   losses  on  debt   securities   for  which  a  portion  of
other-than-temporary  impairment was recognized in other  comprehensive  income,
beginning of period (as measured effective April 1, 2009
     upon adoption of ASC Topic 320-10-65                              $    --

Additional credit loss for which other-than-temporary
impairment was not previously recognized                                 1,388

Balance of credit losses on debt securities for which a portion
of other-than-temporary impairment was recognized in other
comprehensive income, end of period                                    $ 1,388

Scheduled contractual maturities of our investment securities at September 30,
2009 are as follows. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties. Securities not due at a single maturity
date, primarily mortgage-backed securities, are shown separately.

<TABLE>
<CAPTION>

                                            Available for Sale         Held to Maturity
                                            ------------------      --------------------
                                            Amortized     Fair       Amortized      Fair
                                            ------------------      --------------------
                                              Cost       Value        Cost          Value
Debt securities:                                                   (In thousands)
<S>                                        <C>         <C>        <C>              <C>
     Within one year                       $  4,234    $  4,241   $    53          $     54
     After one year through five years       14,801      14,010     5,160             5,212
     After five years through ten years      21,896      22,454    22,627            22,832
     After ten years                         18,953      14,386     5,684             5,979
                Total debt securities        59,884      55,091    33,524            34,077
      Mortgage-backed securities             58,603      59,430    16,168            16,155
                Total                      $118,487    $114,521   $49,692          $ 50,232


Sales and write-downs of available for sale securities were as follows for the
nine months ended:

                                                       September 30, 2009       September 30, 2008
                                                      --------------------      ------------------
                                                                     (In thousands)
Proceeds                                                 $ 19,107               $   25,059
Gross Gains                                              $    514               $      154
Gross Losses                                             $  1,388               $      962
</TABLE>

                                            Page 15 of 37

<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 September 30, 2009, the allowance for loan losses as a percentage
of net loans receivable was 0.97% as compared to 0.87% at December 31, 2008.

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

<TABLE>
<CAPTION>


                                      Three Months Ended                Nine Months Ended
                                      September 30,  September 30,  September 30, September30,
                                          2009         2008            2009          2008
                                          ----         ----            ----          ----
                                                         (In thousands)


<S>                                    <C>           <C>              <C>         <C>
Balance at beginning of period:        $ 2,624       $ 2,528          $ 2,624     $2,511
     Charge-offs                          (191)         (195)            (452)      (383)
     Recoveries                             42            30              143         85
     Provision for loan losses             400           125              560        275
                                       -------       -------            -----     ------
     Balance at end of period          $ 2,875       $ 2,488          $ 2,875     $2,488
                                       =======       =======          =======     ======



Impaired loans were as follows:                     September 30, 2009     December 31, 2008
                                                   -------------------     -----------------
                                                                       (in thousands)
Impaired loans                                       $  2,158                  $   --
Allocated allowance for loan losses                  $    516                  $   --
Average of impaired loans during the year            $    719                  $   --
Cash-basis interest income recognized                $     71                  $   --
</TABLE>

Note H - Segment Information

The Bank 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 nine months ended September 30,
2009 and 2008,  the Bank's  insurance  activities  consisted of those  conducted
through its wholly  owned  subsidiary,  Bailey & Haskell  Associates,  Inc.  The
Bank's benefit  consulting  activities  consisted of those conducted through its
wholly owned  subsidiary,  Benefit  Consulting  Group,  Inc. 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 Bank's  segments is presented in the  following  table for the periods
indicated:

<TABLE>
<CAPTION>

                                                                   Three Months Ended September 30, 2009
                                                                   -------------------------------------
                                                                                    Benefit      Risk
                                                         Banking       Insurance   Consulting   Management      Total
                                                        Activities    Activities   Activitie    Activities
                                                                               (In thousands)

<S>                                                    <C>           <C>            <C>        <C>           <C>
Net interest income                                    $  4,442      $    --        $   --     $     --      $  4,442
Provision for loan losses                                   400           --            --           --           400

  Net interest income after provision
        for loan losses                                   4,042           --            --          --          4,042

Note H - Segment Information (Continued)

Other income                                              1,337        2,021         1,392          125         4,875
Other expenses                                            4,082        2,076         1,136          177         7,471
Depreciation and amortization                               424           57            39           --           520
                                                       --------      --------      -------     --------      --------
    Income (loss) before income taxes                       873         (112)          217          (52)          926
                                                       --------      --------      -------     --------      --------
Income tax (benefit) expense                                228          (42)           63          (19)          230
        Net income (loss)                              $    645      $   (70)       $  154     $    (33)     $    696
                                                       ========     ========        ======     ========      ========

Total Assets                                           $558,657      $14,282        $4,274     $     79      $577,292
                                                       ========     ========        ======     ========      ========
</TABLE>

<TABLE>
<CAPTION>

                                                                   Three Months Ended September 30, 2009
                                                                   -------------------------------------
                                                                                    Benefit      Risk
                                                         Banking       Insurance   Consulting   Management      Total
                                                        Activities    Activities   Activitie    Activities
                                                                                (In thousands)

<S>                                                    <C>           <C>            <C>        <C>           <C>
Net interest income                                    $   3,924     $    --         $    --   $     --      $  3,924
Provision for loan losses                                    125          --              --         --           125
                                                       ---------     -------         -------   -------       --------
  Net interest income after provision
        for loan losses                                    3,799          --              --         --         3,799

Other (loss) income                                       (5,972)      1,967           1,168         43        (2,794)
Other expenses                                             3,526       1,890             964        102         6,482
Depreciation and amortization                                455          62              47          1           565
                                                       ---------     -------         -------   --------      --------
    (Loss) Income before income taxes                     (6,154)         15             157        (60)       (6,042)
Income tax (benefit) expense                              (1,685)         18              76        (23)       (1,614)
                                                       ---------     -------         -------   --------      --------
        Net (loss) income                               $ (4,469)    $    (3)        $    81   $    (37)     $ (4,428)
                                                        =========    =======         ========  ========      ========

Total Assets                                            $ 534,373    $17,970         $ 4,847   $     52      $557,242
                                                        =========    =======         ========  ========      ========
</TABLE>

<TABLE>
<CAPTION>

                                                                   Nine Months Ended September 30, 2009
                                                                   ------------------------------------

                                                                                    Benefit      Risk
                                                         Banking       Insurance   Consulting   Management      Total
                                                        Activities    Activities   Activitie    Activities
                                                                               (In thousands)

<S>                                                    <C>           <C>            <C>        <C>           <C>
Net interest income                                     $ 12,792     $    --     $        --   $     --      $ 12,792
Provision for loan losses                                    560          --              --
                                                                                                     --           560
  Net interest income after provision
        for loan losses                                   12,232          --              --         --        12,232
Other income                                               4,192       7,169           4,099        325        15,785
Other expenses                                            12,365       6,311           3,355        499        22,530
Depreciation and amortization                              1,280         172             115          1         1,568
                                                        --------     -------     -----------      -----      --------
    Income (loss) before income taxes                      2,779         686             629       (175)        3,919
Income tax (benefit) expense                                 552         293             261        (66)        1,040
                                                        --------     -------     -----------      -----      --------
        Net income (loss)                               $  2,227     $   393     $       368   $   (109)     $  2,879
                                                        ========     =======          ======   ========      ========
Total Assets                                            $558,657     $14,282     $     4,274   $     79      $577,292
                                                        ========     =======          ======   ========      ========
</TABLE>


                                            Page 17 of 37

<PAGE>

Note H - Segment Information (Continued)
<TABLE>
<CAPTION>

                                                                   Nine Months Ended September 30, 2008
                                                                   ------------------------------------


                                                                                    Benefit      Risk
                                                         Banking       Insurance   Consulting   Management      Total
                                                        Activities    Activities   Activitie    Activities
                                                                               (In thousands)

<S>                                                     <C>          <C>         <C>          <C>           <C>
Net interest income                                     $ 11,514     $    --     $       --   $     --      $ 11,514
Provision for loan losses                                    275          --             --         --           275
                                                        --------     -------     ----------   --------      --------
Net interest income after provision
        for loan losses                                   11,239          --             --         --        11,239
Other (loss) income                                       (4,326)      6,308          3,686         56         5,724
Other expenses                                            10,912       5,789          2,971        252        19,924
Depreciation and amortization                              1,283         189            139          1         1,612
                                                        --------     -------     ----------   --------      --------

    Income (loss) before income taxes                     (5,282)        330            576       (197)       (4,573)
Income tax (benefit) expense                              (1,599)        177            277        (75)       (1,220)
        Net income (loss)                               $ (3,683)    $   153     $      299   $   (122)     $ (3,353)
                                                        ========     =======     ==========   =========     ========

Total Assets                                            $534,373     $17,970     $    4,847   $     52      $557,242
                                                        ========     =======     ==========   =========     ========
</TABLE>


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

                Assets                             2009          2008
                                                   ----          ----
                                                     (In thousands)
Total assets for reportable segments              $577,292      $  557,242
Elimination of intercompany cash balances           (3,166)         (7,337)
                                                  --------      -----------

Consolidated Total                                $574,126      $  549,905
                                                  ========      ===========

Note I - Accounting Pronouncements

In  December  2007,  the FASB  issued a  revision  of the  business  combination
accounting   standard.   The  revised   guidance   establishes   principles  and
requirements  for how an  acquirer  recognizes  and  measures  in its  financial
statements the identifiable assets acquired,  the liabilities  assumed,  and any
noncontrolling   interest  in  an  acquiree,   including  the   recognition  and
measurement  of  goodwill  acquired  in  a  business  combination.  The  revised
accounting guidance is effective for fiscal years beginning on or after December
31, 2008.  The adoption of this standard did not have an impact on the Company's
results of operations or financial position.

In December  2007, the FASB issued ASC  810-10-65,  "Noncontrolling  Interest in
Consolidated  Financial  Statements"  which changed the accounting and reporting
for  minority  interests,   which  will  be  recharacterized  as  noncontrolling
interests  and  classified  as a  component  of equity  within the  consolidated
balance  sheets  but  separate  from the  parent's  equity.  ASC 810  -10-65  is
effective  for fiscal  years and interim  periods  within  those  fiscal  years,
beginning  on or after  December  15,  2008.  The  presentation  and  disclosure
requirements have been applied  retrospectively  for all periods presented.  The
adoption of this standard  resulted in a  reclassification  of $2.6 million from
other  liabilities  to equity as of  December  31,  2008.  The  adoption of this
standard did not have an impact on the results of operations. The noncontrolling
interest  represents  the  preferred  shareholder  minority  interest  in Oneida
Preferred Funding Corp, a real estate investment trust.

In April 2009, the FASB issued ASC Topic 820-35-51, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability  Have  Significantly
Decreased and Identifying  Transactions  That Are Not Orderly." The ASC provides
additional guidance for determining fair value based on observable transactions.
The ASC provides that if evidence  suggests that an observable  transaction  was
not executed in an orderly way that little, if any, weight should be assigned to
this indication of an asset or liabilities' fair value. Conversely,  if evidence
suggests  that the  observable  transaction  was executed in an orderly way, the
transaction  price of the  observable  transaction  may be appropriate to use in
determining the fair value of the asset/liability in question,  with appropriate
weighting given to this indication based on facts and circumstances. Finally, if
there is no way for the entity to determine  whether the observable  transaction
was executed in an orderly  way,  relatively  less weight  should be ascribed to
this  indictor  of fair  value.  The ASC is  effective  for  interim  and annual
reporting  periods  ending  after June 15,  2009.  The  adoption did not have an
impact on the Company's results of operations or financial position.

                                 Page 18 of 37
<PAGE>

Note I - Accounting Pronouncements (Continued)

In April 2009, the FASB issued ASC Topic 320-10-65.  "Transition  Related to FSP
115-2 & 124-2 Recognition and Presentation of Other-Than-Temporary Impairments."
The ASC eliminates the requirement for the issuer to evaluate whether it has the
intent and ability to hold an impaired  investment  until maturity.  Conversely,
the new ASC  requires  the  issuer to  recognize  an OTTI in the event  that the
issuer  intends to sell the  impaired  security  or in the event that it is more
likely than not the issuer will be required sell the security prior to recovery.
In the event that the sale of the security in question  prior to maturity is not
probable but the entity does not expect to recover its  amortized  cost basis in
that  security,  then the entity will be required to recognize  an OTTI.  In the
event that the  recovery of the  security's  cost basis prior to maturity is not
probable and an OTTI is  recognized,  the ASC provides that any component of the
OTTI  relating  to a decline in the  creditworthiness  of the  debtor  should be
reflected  in  earnings,   with  the   remainder   being   recognized  in  Other
Comprehensive Income.  Conversely,  in the event that the issuer intends to sell
the security  before the recovery of its cost basis or if it is more likely than
not that the Company will have to sell the  security  before the recovery of its
cost basis,  then the entire OTTI will be  recognized  in  earnings.  The ASC is
effective for interim and annual  reporting  periods ending after June 15, 2009.
As a result  of  implementing  this  ASC,  the  amount  of  other-than-temporary
impairment recognized in income for the nine months ended September 30, 2009 was
$1.4   million.   Had  the   standard   not   been   issued,   the   amount   of
other-than-temporary  impairment  that would have been  recognized in income for
the period would have been $4.9 million.

The  Company  adopted  ASC  Topic  855,   "Subsequent  Events".  ASC  Topic  855
establishes  general  standards of accounting for and disclosures of events that
occur after the balance sheet date but before financial statements are issued or
are  available to be issued.  Specifically,  the ASC sets forth the period after
the balance  sheet date during which  management  of a reporting  entity  should
evaluate  events or  transactions  that may occur for potential  recognition  or
disclosure in the financial statements;  the circumstances under which an entity
should recognize  events or transactions  occurring after the balance sheet date
in its  financial  statements;  and the  disclosures  that an entity should make
about events and  transactions  that occurred  after the balance sheet date. The
adoption did not have a material impact on the Company's  consolidated financial
position, results of operations or cash flows.

In June 2009,  the FASB  released new  guidance  under ASC 860,  "Transfers  and
Servicing,"  to  improve  the  relevance,   representational  faithfulness,  and
comparability  of the  information  that we provide in our financial  statements
about a transfer of financial assets; the effects of a transfer on our financial
position, financial performance, and cash flows; and our continuing involvement,
if any, in transferred financial assets. Additionally, this guidance removes the
concept of a qualifying special-purpose entity from current accounting guidance.
This new guidance is effective  for fiscal  years,  and interim  periods  within
those fiscal  years,  beginning  after  November 15, 2009.  The Company does not
expect the  adoption  to have a material  impact on the  Company's  consolidated
financial position, results of operations or cash flows.

In June 2009, the FASB amended accounting  guidance related to the consolidation
of variable  interest  entities.  The amended  guidance  changes how a reporting
entity  determines when an entity that is  insufficiently  capitalized or is not
controlled  through  voting (or  similar  rights)  should be  consolidated.  The
determination of whether a reporting  entity is required to consolidate  another
entity is based on, among other things,  the other  entity's  purpose and design
and the reporting  entity's ability to direct the activities of the other entity
that most  significantly  impact the other entity's  economic  performance.  The
amended guidance is effective for fiscal years, and interim periods within those
fiscal years, beginning after November 15, 2009. The Company does not expect the
adoption  to have a  material  impact on the  Company's  consolidated  financial
position, results of operations or cash flows.

Note J - Fair Value

The Company adopted Statement of Financial  Accounting  Standards ASC 820, "Fair
Value  Measurements,"  and ASC 825, "The Fair Value Option for Financial  Assets
and Financial  Liabilities,"  on January 1, 2008. ASC 825 permits,  but does not
require, companies to measure many financial instruments and certain other items
at fair value. The decision to elect the fair value option is made  individually
for each instrument and is irrevocable once made.  Changes in fair value for the
selected  instruments  are  recorded  in  earnings.  As of January 1, 2008,  the
Company  has  elected the fair value  option for  certain  preferred  and common
equity securities.

Fair Value Option

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 nine months ended September 30:


                                            Page 19 of 37
<PAGE>

<TABLE>
<CAPTION>

Note J - Fair Value (Continued)

                        Changes in Fair Values for the nine months ended September 30, 2009,
                        for items Measured at Fair Value Pursuant to Election of the Fair Value Option
                        ------------------------------------------------------------------------------
                                                                              Total Changes In
                        Other                                                 Fair Values Included
                        Gains and      Interest             Interest          in Current Period
                        Losses         Income               Expense             Earnings
                        ------------------------------------------------------------------------------
                                              (In thousands)
Assets:
<S>                     <C>              <C>                                     <C>
   Trading securities   $ 1,278          30                   -                  $1,308


                        Changes in Fair Values for the nine months ended September 30, 2008,
                        for items Measured at Fair Value Pursuant to Election of the Fair Value Option
                        ------------------------------------------------------------------------------
                                                                              Total Changes In
                        Other                                                 Fair Values Included
                        Gains and      Interest             Interest          in Current Period
                        Losses         Income               Expense             Earnings
                        ------------------------------------------------------------------------------
                                                   (In thousands)
Assets:
   Trading securities   ($7,035)        -                    -                   ($7,035)
</TABLE>
Fair Value Measurement

ASC 820 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. ASC 820 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.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

      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 inputs).

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

      Impaired  Loans:  Estimates  of  fair  value  used  for  other  collateral
      supporting commercial loans generally is not observable in the marketplace
      and therefore,  such  valuations have been classified as Level 3. Impaired
      loans had a principal balance of $1,750,000 with a valuation  allowance of
      $516,000 as of September 30, 2009 resulting in an additional provision for
      loan  losses of $516,000  for the three and nine months then ended.  There
      were no impaired loans as of December 31, 2008.



                                  Page 20 of 37

<PAGE>

Note J - Fair Value (Continued)

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 September 30, 2009 Using
                                                                                Significant
                                                        Quoted Prices in        Other           Significant
                                                        Active Markets for      Observable      Unobservable
                                                        Identical Assets        Inputs          Inputs
Assets:                         September 30, 2009      (Level 1)               (Level 2)       (Level 3)
                                ----------------------------------------------------------------------------
                                                              (In thousands)
<S>                                 <C>                                       <C>               <C>
Trading securities:
   Common and preferred equity      $  7,220                -                 $   5,145         $   2,075
Available for sale securities:
      U.S. Agency                     12,247                -                    12,247                 -
     Corporate                        15,531                -                    13,243             2,288
     Trust preferred securities        5,938                -                         -             5,938
     State and municipals             21,363                -                    21,363                 -
     Small business administration        12                -                        12                 -
     Residential mortgage-backed
          securities                  59,430                -                    59,430                 -
             Total                  $121,741                -                 $ 111,440         $  10,301



                                            Fair Value Measurements at December 31, 2008 Using
                                                                                Significant
                                                        Quoted Prices in        Other           Significant
                                                        Active Markets for      Observable      Unobservable
                                                        Identical Assets        Inputs          Inputs
Assets:                          December 31, 2008      (Level 1)               (Level 2)       (Level 3)
                                 -----------------    ------------------------------------------------------
                                                                      (In thousands)
Trading securities:
     Common and preferred equity    $  5,941                -                 $   3,921         $   2,020
Available for sale securities:
     U.S. Agency                      21,205                -                    21,205                 -
     Corporate                        12,673                -                    11,173             1,500
     Trust preferred securities        9,208                -                         -             9,208
     State and municipals             17,347                -                    17,347                 -
     Small business administration        13                -                        13                 -
     Residential mortgage-backed
            securities                74,317                -                    73,549               768

             Total                  $140,704                -                 $ 127,208         $  13,496
</TABLE>


The Level 3 assets include trust preferred securities, corporate debt and equity
securities  and a  private  collateral  mortgage  obligation.  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 and nine months
ended September 30, 2009.  There were no sales of Level 3 assets during the nine
months ended September 30, 2009 and 2008.

<TABLE>
<CAPTION>

                                                          Fair Value Measurements Using Significant
                                                                 Unobservable Inputs
                                                                 (Level 3)
                                                          ------------------------------------------

                                                                                        Residential
                                                                            Trust        Mortgage
                                                Trading                    Preferred     -backed
                                                Securities      Corporate  Securitites  Securities     Total
                                                --------------------------------------------------------------
                                                                 (In thousands)
<S>                       <C>                    <C>            <C>         <C>         <C>          <C>
Beginning balance January 1, 2009                $2,020         $  1,500    $ 9,208     $  768       $ 13,496
Total gains or losses (realized/unrealized)
  Included in earnings
        Interest income (losses) on securities      (10)               -         (5)        -             (15)


Note J - Fair Value (Continued)

        Other changes in fair value                  70                -          -          -             70
 Included in other comprehensive income (losses)      -              631     (3,624)      (191)        (3,184)

Ending balance March 31, 2009                    $2,080            2,131    $ 5,579       $577       $ 10,367
Total gains or losses (realized/unrealized)
  Included in earnings
        Interest income (losses) on securities      (10)               -         (4)         7             (7)
        Other changes in fair value                  10                -       (454)         -           (444)
 Included in other comprehensive income (losses)      -               94      1,079        416          1,589
Transfers out of Level 3                              -                -          -     (1,000)        (1,000)

Ending balance June 30, 2009                     $2,080         $  2,225    $ 6,200     $    -       $ 10,505
Total gains or losses (realized/unrealized)
  Included in earnings
        Interest income (losses) on securities      (10)               1          -          -             (9)
        Other changes in fair value                   5                -       (934)         -           (929)
 Included in other comprehensive income (losses)      -               62        672          -            734
Transfers out of Level 3                              -                -          -          -              -

Ending balance September 30, 2009                $2,075         $  2,288    $ 5,938     $    -       $ 10,301

</TABLE>

                                            Page 21 of 37
<PAGE>


<TABLE>
<CAPTION>

                                                          Fair Value Measurements Using Significant
                                                                      Unobservable Inputs
                                                                         (Level 3)
                                                          ------------------------------------------


                                                                          Trust
                                            Trading                      Preferred
                                            Securities     Corporate     Securities     Total
                                            -------------------------------------------------------
                                                                 (In thousands)

<S>                                          <C>           <C>           <C>          <C>
Beginning balance January 1, 2008            $1,996        $ 2,360       $  8,045     $ 12,401
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           -           (576)          (509)      (1,085)
                                            -------------------------------------------------------
Ending balance March 31, 2008                $1,828        $ 1,784       $  7,530     $ 11,142
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           -           (134)          (672)        (806)
                                            -------------------------------------------------------
Ending balance June 30, 2008                 $2,047        $ 1,650       $  6,852     $ 10,549
Total gains or losses (realized/unrealized)
  Included in earnings
        Interest income on securities           (10)             -            (8)          (18)
        Other changes in fair value              10              -             -            10
 Included in other comprehensive income           -            359        (1,863)       (1,504)
Transfers into Level 3                            -              -         2,828         2,828
                                            -------------------------------------------------------
Ending balance September 30, 2008            $2,047        $ 2,009       $ 7,809      $ 11,865
                                            =======================================================
</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 the  consolidated
statement of cash flows.

Assets and liabilities measured at fair value on a nonrecurring basis are
summarized below:



                                            Page 22 of 37
<PAGE>

<TABLE>
<CAPTION>

Note J - Fair Value (Continued)
                                            Fair Value Measurements at September 30, 2009 Using
                                                                        Significant
                                                Quoted Prices in        Other Significant
                                                Active Markets for      Observable Unobservable
                                                Identical Assets        Inputs Inputs
Assets:                    September 30, 2009    (Level 1)              (Level 2)      (Level 3)
                           ---------------------------------------------------------------------
                                                        (In thousands)
<S>                          <C>                                         <C>         <C>
    Impaired loans           $  1,234               -                    $  -        $ 1,234
</TABLE>


Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments at September
30, 2009 and December 31, 2008 were as follows:

<TABLE>
<CAPTION>

                                                     September 30, 2009           December 31, 2008
                                                     ------------------           -----------------
                                                Carrying       Estimated     Carrying       Estimated
                                                Amount         Fair Value    Amount         Fair Value
                                                --------       ----------    -------        ----------
                                                                    (in thousands)
<S>                                             <C>            <C>            <C>              <C>
Financial assets:
     Cash and cash equivalents                  $ 26,914       $  26,914      $ 13,294         $13,294
     Trading securities                            7,220           7,220         5,941           5,941
     Investment securities, available for sale   114,521         114,521       134,763         134,763
     Investment securities, held to maturity      49,692          50,232           N/A             N/A
     Loans receivable, net                       294,568         297,333       301,752         317,625
     Federal Home Loan Bank stock                  2,692             N/A         3,784             N/A
     Accrued interest receivable                   2,334           2,334         2,659           2,659

Financial liabilities:
     Deposits                                   $478,975       $ 476,161      $425,698    $    421,101
     Federal Home Loan Bank advances              31,000          31,335        52,825          52,788
     Notes payable                                     -               -            12              12
     Accrued interest payable                        130             130           332             332
</TABLE>

Our fair value  estimates  are based on our  existing on and off  balance  sheet
financial   instruments   without  attempting  to  estimate  the  value  of  any
anticipated future business.  In addition,  the tax ramifications related to the
realization of the unrealized gains and losses can have a significant  effect on
our fair value estimates and have not been  considered in these.  Our fair value
estimates  are  made  as of  the  dates  indicated,  based  on  relevant  market
information  and  information  about the  financial  instruments,  including our
judgments   regarding   future  expected  loss   experience,   current  economic
conditions,  risk  characteristics of various financial  instruments,  and other
factors.  These estimates are subjective in nature and involve uncertainties and
matters  of  significant  judgment  and  therefore  cannot  be  determined  with
precision.  Changes in our assumptions could significantly affect the estimates.
Our fair value estimates,  methods, and assumptions are set forth below for each
type of financial instrument.

Cash and Cash Equivalents
The  carrying  value of our cash and cash  equivalents  approximates  fair value
because these instruments have original maturities of three months or less.

Investment Securities
We carry our  investment  securities  held to  maturity at cost and we carry our
investment securities available for sale at fair value. The fair value estimates
of these  securities  are based on quoted market  prices of identical  assets or
liabilities,  where available. Where sufficient data is not available to produce
a fair  valuation,  fair value is based on broker  quotes of  similar  assets or
liabilities.  Broker quotes may be adjusted to ensure that financial instruments
are  recorded  at  fair  value.  Adjustments  may  include  amounts  to  reflect
counterparty  credit quality and our  creditworthiness,  among other things,  as
well as  unobservable  parameters.  Any such valuation  adjustments  are applied
consistently over time. If quoted prices are not available,  fair value is based
upon  valuation  models  that use  cash  flow,  security  structure,  and  other
observable information.


                                    Page 23 of 37
<PAGE>

Note J - Fair Value (Continued)

Loans and Leases
Variable-rate loans reprice as the associated rate index changes. Therefore, the
carrying  value of these loans  approximate  fair  value.  The fair value of our
fixed-rate loans were calculated by discounting scheduled cash flows through the
estimated  maturity using credit adjusted  quarter-end  origination  rates.  Our
estimate  of  maturity  is based on the  contractual  cash  flows  adjusted  for
prepayment estimates based on current economic and lending conditions.

FHLB Stock
It is  not  practicable  to  estimate  the  fair  value  of  FHLB  stock  due to
restrictions placed on its transferability.

Accrued Interest Receivable
The carrying value of accrued interest receivable approximates fair value.

Deposits
The fair value of our  deposits  with no stated  maturity,  such as savings  and
checking, as well as mortgagors' payments held in escrow, is equal to the amount
payable on demand.  The fair value of time deposits was estimated by discounting
expected  maturities  at interest  rates  approximating  those  currently  being
offered. The fair value of accrued interest approximates fair value.

Borrowings
The fair value of borrowings is estimated  using  discounted cash flows analysis
to maturity.


                                  Page 24 of 37


<PAGE>


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


                                  Page 25 of 37

<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  primarily  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;
it's 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, 2008 and September 30, 2009 the Company
had  7,745,660  and  7,790,352  respectively  of  shares  outstanding  of  which
4,309,750  were held by Oneida  Financial  MHC,  the  Company's  mutual  holding
company parent.


RECENT DEVELOPMENTS

      The Company  announced a semi-annual  cash dividend as of July 28, 2009 of
$0.24 per share which was paid to its  shareholders  on August 11, 2009.  Oneida
Financial MHC waived its receipt of dividends.

      As an  FDIC-insured  institution,  the  Bank is  required  to pay  deposit
insurance  premiums to the FDIC.  Because the FDIC's deposit insurance fund fell
below prescribed levels in 2008, the FDIC has announced  increased  premiums for
all  insured  depository  institutions,  including  the Bank,  in order to begin
recapitalizing  the fund.  Insurance  assessments  range  from 0.12% to 0.50% of
total deposits for the first calendar quarter 2009  assessment.  Effective April
1, 2009, insurance assessments were increased from 0.07% to 0.78%,  depending on
an institution's risk classification and other factors. In addition,  on May 22,
2009  the FDIC  adopted  a final  rule  that  imposed  a 5 basis  point  special
assessment on insured depository  institutions to be paid on September 30, 2009,
based on assets less tier 1 capital as of September 30, 2009. These changes have
resulted,  and will continue to result,  in increased  deposit insurance expense
for the Bank in 2009. These increases will be reflected in other expenses in the
Bank's  income  statement in the period of  enactment.  FDIC  insurance  premium
expense was $878,000 for the nine months  ended  September  30, 2009 as compared
with $41,000 for the nine months  ended  September  30,  2008.

                                 Page 26 of 37
<PAGE>


      On September 29, 2009, the Federal Deposit Insurance  Corporation issued a
proposed rule  pursuant to which all insured  depository  institutions  would be
required to prepay their  estimated  assessments for the fourth quarter of 2009,
and for all of 2010,  2011 and 2012.  Under the proposed rule,  this  prepayment
would be due on December 31, 2009.  Under the proposed rule, the assessment rate
for the fourth quarter of 2009 and for 2010 would be based on each institution's
total base  assessment  rate for the third  quarter of 2009,  modified to assume
that the assessment  rate in effect on September 30, 2009 had been in effect for
the entire third  quarter,  and the  assessment  rate for 2011 and 2012 would be
equal to the modified third quarter  assessment  rate plus an additional 3 basis
points.  In addition,  each  institution's  base assessment rate for each period
would be calculated using its third quarter assessment base,  adjusted quarterly
for an estimated 5% annual growth rate in the assessment base through the end of
2012.

FINANCIAL CONDITION

      ASSETS.  Total  assets at  September  30,  2009 were  $574.1  million,  an
increase  of  $34.0   million   from  $540.1   million  at  December  31,  2008.
Mortgage-backed  securities increased $1.3 million reflecting purchases of $37.4
million  of  mortgage-backed   securities  partially  offset  by  the  principal
collected  on  and  proceeds  from  sales  and  maturities  of  mortgaged-backed
securities.  Investment  securities increased $28.2 million reflecting purchases
of $47.3  million of  investment  securities  partially  offset by the principal
collected on and proceeds from sales and  maturities  of investment  securities.
The increase in  investment  and  mortgage-backed  securities  is primarily  the
result of the increase in  collateral  required for pledging  against  municipal
deposit  accounts  and a  decrease  in loans  receivable  partially  offset by a
decrease in borrowings.  Securities held to maturity were purchases in 2009 that
are collateral required for pledging against municipal deposits where management
has the intent to hold until the contractual  maturity of the securities.  Loans
receivable,  including  loans held for sale,  decreased  $6.8  million to $298.3
million at September 30, 2009 compared with $305.1 million at December 31, 2008.
Residential  loans decreased by $6.8 million since December 31, 2008,  after the
sale of  $48.7  million  of  fixed-rate  residential  real  estate  loans in the
secondary  market  during the nine month period.  At September  30, 2009,  total
commercial real estate loans increased by $4.0 million while commercial business
loans  decreased by $1.7 million from  December 31, 2008.  At September 30, 2009
total  consumer  loans  decreased by $2.5 million from  December 31, 2008.  As a
result of the decrease in loans  receivable  and  increase in deposit  accounts,
cash and cash equivalents increased $13.6 million from $13.3 million at December
31, 2008 to $26.9 million at September 30, 2009.  Goodwill and other intangibles
totaled  $24.9 million as of September 30, 2009 and $25.1 million as of December
31,  2008.  Additional  goodwill in the amount of $136,000  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 $2.9  million  and $2.6  million  at
September 30, 2009 and December 31, 2008,  respectively.  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.
During  the  current  quarter  the  Company  identified  an  impaired  unsecured
commercial  loan and  established  a specific  reserve for the loan. To date the
borrower of the impaired loan has made all payments as agreed.  At September 30,
2009 the allowance for loan losses as a percentage of net loans  receivable  was
0.97% as compared to 0.87% as of December 31, 2008.

      LIABILITIES.  Total  liabilities  increased  by $31.7  million  to  $517.0
million at September  30, 2009 from $485.3  million at December  31,  2008.  The
increase is primarily the result of an increase in interest-bearing  deposits of
$52.5  million and an increase in  non-interest  bearing  deposits of  $800,000.
Contributing to the increase in total deposits has been an increase in municipal
deposits  offered  through  Oneida Savings  Bank's  limited  purpose  commercial
banking subisidiary, State

                                 Page 27 of 37
<PAGE>

Bank of Chittenango. Municipal deposits increased $27.9 million to $82.8 million
at September 30, 2009 from $54.9  million at December 31, 2008.  The increase in
total deposits also enabled the Bank to reduce  borrowings  outstanding by $21.8
million to $31.0  million at September  30, 2009  compared with $52.8 million at
December 31, 2008.

      STOCKHOLDERS' EQUITY. Total stockholders' equity increased by $2.3 million
to $57.1  million at September 30, 2009 as compared to $54.8 million at December
31, 2008.  Stockholders'  equity increased $886,000 as a result of the valuation
adjustment   made  for  the  Company's   available  for  sale   investment   and
mortgage-backed securities. In addition,  stockholders' equity decreased by $1.7
million due to the  payment of  semiannual  cash  dividends  of $0.24  partially
offset by the  addition  of  after-tax  net income of $2.9  million for the nine
months ended September 30, 2009.

      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 nine months ended  September  30, 2009
and 2008 and for the year ended  December 31, 2008.  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.  The average yields and rates are annualized where appropriate.  No
tax equivalent adjustments were made. The average balance is computed based upon
an average daily balance.

      TABLE 1. Average Balance Sheet.

<TABLE>
<CAPTION>

        TABLE 1.  Average Balance Sheet.

                                        Three Months Ended September 30,          Twelve Months Ended Dec. 31,
                                        --------------------------------          ----------------------------
                                           2009                  2008                       2008

                          Average      Interest          Average      Interest           Average      Interest
                          Outstanding  Earned/   Yield/  Outstanding  Earned/   Yield/   Outstanding  Earned/    Yield/
Assets                    Balance      Paid      Rate    Balance      Paid      Rate     Balance      Paid       Rate
------                    -----------  ----      ----    -------      ----      ----     -------      ----       ----
Interest-earning Assets:                        (Dollars in Thousands)
------------------------


<S>                       <C>          <C>      <C>      <C>          <C>       <C>      <C>         <C>         <C>
  Loans Receivable        $296,541     $4,418   5.96%    $298,448     $4,634    6.21%    $293,499    $18,535     6.32%
  Investment and           160,851      1,701   4.23%     151,614      1,862    4.91%     143,987      7,379     5.12%
Mortgage-Backed
Securities
  Federal Funds             12,621          7   0.22%       3,216         19    2.36%       7,342        169     2.30%
  Equity Securities          6,496        108   6.65%      12,962        136    4.20%      12,814        651     5.08%
                          --------     ------   -----    --------     ------    -----     -------     ------     -----
    Total                  476,509      6,234   5.23%     466,240      6,651    5.71%     457,642     26,734     5.84%
                          --------     ------   -----    --------     ------    -----     -------     ------     -----
Interest-earning Assets

Non interest-earning
Assets:
  Cash and due from banks   13,395                         12,020                          11,725
  Other assets              74,417                         75,544                          74,999
                          --------                       --------                        --------
              Total       $564,321                       $553,804                        $544,366
                          ========                       ========                        ========
assets
Liabilities and
Stockholders' Equity
Interest-bearing
Liabilities:

  Money Market Deposits   $124,357       $398   1.27%     $88,816       $433   1.94%      $83,115     $1,654     1.99%
  Savings Accounts          83,050        127   0.61%      79,718        161   0.80%       77,266        603     0.78%
  Interest-bearing          46,978         37   0.31%      40,652         56   0.55%       40,459        238     0.59%
Checking
  Time Deposits            150,335        863   2.28%     162,388      1,431   3.51%      159,933      6,020     3.76%

  Borrowings                31,145        367   4.68%      57,306        645   4.48%       56,194      2,561     4.56%

  Notes Payable                  0          0   0.00%          70          1   5.68%           88          5     5.68%
                           -------      -----   ----      -------      -----   ----       -------     ------     ----
    Total                  435,865      1,792   1.63%     428,950      2,727   2.53%      417,055     11,081     2.66%
                           -------      -----   ----      -------      -----   ----       -------     ------     ----
Interest-bearing
Liabilities
Non-interest-bearing
Liabilities:
  Demand deposits           62,623                         65,681                          63,711
  Other liabilities         10,122                          4,274                           7,559
                           -------                       --------                        --------
      Total liabilities   $508,610                       $498,905                        $488,325
                          --------                       --------                        --------
Stockholders' equity        55,711                         54,899                          56,041
                          --------                       --------                        --------
Total liabilities and     $564,321                       $553,804                        $544,366
                          ========                       ========                        ========
stockholders' equity

    Net Interest Income                $4,442                         $3,924                         $15,653
                                      =======                         ======                         =======
    Net Interest Spread                         3.60%                          3.18%                             3.18%
                                                ====                           ====                              ====
    Net Earning Assets     $40,644                        $37,290                         $40,587
   Net yield on average    =======                        =======                         =======
      Interest-earning                  3.73%                          3.37%                           3.42%
assets                                  ====                           ====                            ====
    Average
interest-earning
      assets to average
      Interest-bearing                109.32%                        108.69%                         109.73%
liabilities                           ======                         ======                          ======

</TABLE>

<TABLE>
<CAPTION>

                                          Nine Months Ended September 30,  Twelve Months Ended Dec. 31,
                          -----------------------------------------------  ----------------------------
                                     2009                 2008                        2008

                          Average      Interest          Average      Interest           Average      Interest
                          Outstanding  Earned/   Yield/  Outstanding  Earned/   Yield/   Outstanding  Earned/    Yield/
Assets                    Balance      Paid      Rate    Balance      Paid      Rate     Balance      Paid       Rate
------                    -----------  ----      ----    -------      ----      ----     -------      ----       ----
Interest-earning Assets:                                (Dollars in Thousands)
------------------------


<S>                       <C>         <C>       <C>      <C>         <C>       <C>       <C>         <C>         <C>
  Loans Receivable        $298,389    $13,309   5.95%    $290,150    $13,857   6.37%     $293,499    $18,535     6.32%
  Investment and           149,593      5,029   4.48%     143,993      5,410   5.01%      143,987      7,379     5.12%
Mortgage-Backed
Securities
  Federal Funds             13,307         32   0.32%       7,787        160   2.74%        7,342        169     2.30%
  Equity Securities          5,980        320   7.13%      14,891        668   5.98%       12,814        651     5.08%
                          --------     ------   ----      -------     ------   ----       -------     ------     ----
    Total                  467,269     18,690   5.33%     456,821     20,095   5.87%      457,642     26,734     5.84%
                          --------     ------   ----      -------     ------   ----       -------     ------     ----
Interest-earning Assets
Non interest-earning
Assets:
  Cash and due from banks   12,976                         12,408                          11,725
  Other assets              75,382                         74,847                          74,999
                          --------                       --------                        --------
              Total       $555,627                       $544,076                        $544,366
                          ========                       ========                        ========
assets
Liabilities and
Stockholders' Equity
Interest-bearing
Liabilities:

  Money Market Deposits   $112,661     $1,169   1.39%     $79,888     $1,223   2.04%      $83,115     $1,654     1.99%
  Savings Accounts          80,325        365   0.61%      77,097        459   0.80%       77,266        603     0.78%
  Interest-bearing          45,707        111   0.32%      40,104        184   0.61%       40,459        238     0.59%
Checking
  Time Deposits            153,123      2,922   2.55%     161,931      4,757   3.92%      159,933      6,020     3.76%

  Borrowings                37,979      1,331   4.69%      56,781      1,954   4.60%       56,194      2,561     4.56%

  Notes Payable                  1          0   0.00%         106          4   5.04%            5         88     5.68%
                          --------     ------   ----      -------     ------   ----       -------     ------     ----
    Total                  429,796      5,898   1.83%     415,907      8,581   2.76%       11,081    417,055     2.66%
                          --------     ------   ----      -------     ------   ----       -------     ------     ----
Interest-bearing
Liabilities
Non-interest-bearing
Liabilities:
  Demand deposits           60,524                         64,227                                     63,711
  Other liabilities
                            10,567                          6,248                                      7,559
                          --------                       --------                                   --------
      Total liabilities   $500,887                       $486,382                                   $488,325
Stockholders' equity        54,740                         57,695                                     56,041
                          --------                       --------                                   --------
Total liabilities and     $555,627                       $544,077                                   $544,366
                          ========                       ========                                   ========
stockholders' equity

    Net Interest Income               $12,792                        $11,514              $15,653
                                      =======                        =======              =======
    Net Interest Spread                         3.50%                          3.11%                             3.18%
    Net Earning Assets     $37,473                        $40,914                                    $40,587
   Net yield on average    =======                        =======                                    =======
      Interest-earning               3.65%                             3.36%                3.42%
assets                               ====                              ====                 ====
    Average
interest-earning
      assets to average
      Interest-bearing              108.72%                          109.84%              109.73%
liabilities                         ======                           ======               ======
</TABLE>


RESULTS OF OPERATIONS


      GENERAL.  Net income for the three  months  ended  September  30, 2009 was
$696,000,  an increase of $5.3  million  from a net loss of $4.6 million for the
three months  ended  September  30,  2008.  Net income for the nine months ended
September 30, 2009 was $2.9 million, an increase of $6.2 million from a net loss
of $3.4 million for the nine months ended  September  30, 2008.  The increase in
net  income  was  primarily  the  result of the 2008  periods  being  negatively
affected  by the  significant  decline in  carrying  value of Federal  Home Loan
Mortgage  Corporation  (`Freddie Mac")  perpetual  preferred stock Page 29 of 37
following the announcement by the United States Treasury and the Federal Housing
Finance  Agency ("the  FHFA") that Freddie Mac was placed under  conservatorship
during September 2008.

      INTEREST  INCOME.  Interest and dividend  income  decreased by $417,000 or
6.3%,  to $6.2 million for the three months ended  September  30, 2009 from $6.7
million for three months  ended  September  30,  2008.  The decrease in interest
income was the result of a decrease in the yield of 48 basis  points on interest
earning  assets  partially  offset by an  increase  in the  average  balances of
interest-earning  assets of $10.3 million  during the 2009 period.  For the nine
months ended September 30, 2009,  interest and dividend income decreased by $1.4
million or 7.0%,  to $18.7  million from $20.1 million for the nine months ended
September 30, 2008.

      Interest on loans decreased  $216,000 to $4.4 million for the three months
ended  September 30, 2009 from $4.6 million for the three months ended September
30, 2008. The decrease in interest  income on loans is a result of a decrease of
25 basis  points  in the  average  yield to 5.96%  for the  three  months  ended
September  30, 2009 from 6.21% for the three months ended  September 30, 2008 as
well as an increase of $1.9 million in the average  balance of loans  receivable
for the three months ended  September  30, 2009 as compared with the same period
in 2008.  For the nine  months  ended  September  30,  2009,  interest  on loans
decreased  $548,000 or 4.0%, from $13.9 million for the same period in 2008. The
average balance of loans for the nine month period  increased $8.2 million while
the average yield decreased 42 basis points to 5.95% during the 2009 period from
6.37% during the 2008 period.  The decrease in yield  reflected  the decrease in
market interest rates and the reduction of 200 basis points in the federal funds
target rate.

      Interest on investments and mortgage-backed  securities decreased $161,000
as a result of a decrease in the average yield of 68 basis points from 4.91% for
the three  months ended  September  30, 2008 to 4.23% for the three months ended
September  30, 2009  partially  offset by an increase in the average  balance of
investment  securities  and  mortgage-backed  securities of $9.2 million for the
three months period  ending  September 30, 2009 as compared with the same period
in 2008. For the nine months ended  September 30, 2009,  interest on investments
and  mortgage-backed  securities  decreased  $381,000 as compared  with the same
period in 2008 due to a decrease in the average  yield of 53 basis points offset
by an  increase  in the  average  balance  of  investments  and  mortgage-backed
securities  of $5.6  million.  The increase in  investment  and  mortgage-backed
securities is primarily  the result of the increase in  collateral  required for
pledging against municipal deposit accounts.

      Interest income from federal funds decreased during the three months ended
September 30, 2009 to $7,000 as compared  with $19,000 for the 2008 period.  The
decrease in interest  income is primarily  due to a decrease of 214 basis points
in the  average  yield  offset by an  increase  in the  average  balance of $9.4
million.  For the nine months  ended  September  30,  2009,  interest  income on
federal funds  decreased  $128,000 due to a decrease in the average yield of 242
basis  points  offset by an increase in the average  balance of $5.5  million as
compared with the same period in 2008.

      Interest income from equity securities  decreased $28,000 as a result of a
decrease in the  average  balances  of $6.5  million for the three month  period
ending September 30, 2009 as compared with the same period in 2008. For the nine
months  ended  September  30,  2009,  interest  income  from  equity  securities
decreased  $348,000 as a result of a decrease  in the  average  balances of $8.9
million for the period as compared with the same period in 2008. The decrease in
the average balance was the result of the continued decline in market values for
equity securities in our portfolio during 2009.

      INTEREST  EXPENSE.  Interest expense was $1.8 million for the three months
ended  September  30, 2009, a decrease of $935,000 or 34.3% from the same period
in 2008. The decrease in interest  expense is due to a decrease in interest paid
on deposit accounts. Interest expense on deposits decreased $656,000 and totaled
$1.4 million for the three months ended  September  30, 2009 as compared to $2.1
million for the three month  period in 2008.  The average  cost of deposits  was
1.40% for the three month period  ending  September 30, 2009 compared with 2.22%
for the three month period in 2008. In addition,  the average balance of deposit
accounts  increased  $33.1 million  during the three months ended  September 30,
2009 from the three  months  ended  September  30,  2008.  Interest  expense  on
borrowed  funds  totaled  $367,000 for the third  quarter of 2009  compared with
$645,000 for the 2008 period. The average balance of borrowings  decreased $26.2
million for the three months period  ending  September 30, 2009 as compared with
the same period in 2008.  For the nine months ended  September 30, 2009 interest
expense  on  borrowings  decreased  $623,000  due to a decrease  in the  average
balance  outstanding of borrowings to $38.0 million as compared to $56.8 million
for the nine month  period in 2008.  The decrease in  borrowings  was due to the
planned  repayment of Federal Home Loan Bank  advances upon  maturity.  Interest
expense on deposits decreased $2.1 million and totaled $4.6 million for the nine
months ended  September  30, 2008 as compared to $6.6 million for the nine month
period in 2008.  For the nine months ended  September 30, 2009, the average cost
of deposits was 1.56% as compared  with 2.47% for the nine month period in 2008.
In addition, the average balance of deposit accounts increased $32.8 million for
the nine months  ended  September  30, 2009 as compared  with nine months  ended
September 30, 2008.


                                  Page 30 of 37

<PAGE>


      PROVISION  FOR LOAN LOSSES.  The total  provision  for loan losses for the
three  months  ended  September  30,  2009 and 2008 was  $400,000  and  $125,000
respectively.  The total  provision  for loan losses for the nine  months  ended
September  30,  2009 and 2008  was  $560,000  and  $275,000,  respectively.  The
allowance  for loan losses was $2.9  million as of  September  30, 2009 and $2.5
million as of  September  30,  2008.  During the  current  quarter  the  Company
identified  an impaired  unsecured  commercial  loan and  established a specific
reserve for the loan.  To date the  borrower of the  impaired  loan has made all
payments as agreed. The ratio of the loan loss allowance to net loans receivable
is  0.97%  at  September  30,  2009 as  compared  with a ratio of 0.83% of loans
receivable at September 30, 2008. Management continues to 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  increased by $7.7 million for the
three month period  ending  September  30, 2009 compared with the same period in
2008 to $4.9 million from a loss of $2.8  million.  The increase in other income
was  primarily  due to an  increase  in the  change  in fair  value  of  trading
securities  as  well as an  increase  in  commissions  and  fees on the  sale of
non-banking  products  through the Company's  subsidiaries  for the three months
ended  September  30,  2009 as  compared  with  the  same  period  during  2008.
Commissions  and fees on sales of non-banking  products was $3.5 million for the
three months ended  September  30, 2009 as compared to $3.2 million for the same
period in 2008.  Oneida  Financial Corp. has identified the preferred and common
equity securities it holds in the investment portfolio as trading securities and
as such the change in fair value of these  securities is reflected as a non-cash
adjustment  through the income  statement.  For the three months ended September
30, 2009 the market value of the Bank's trading securities increased $739,000 as
compared  with a decrease of $6.4 million in the 2008  period.  The 2008 periods
were  negatively  impacted  by the  significant  decline in value of Freddie Mac
perpetual  preferred  stock  following  the  announcement  by the United  States
Treasury and the FHFA that Freddie Mac was placed under  conservatorship  during
September 2008. Offsetting the increase in other income was an impairment charge
of $934,000  recorded  for the three months  ended  September  30, 2009 for four
trust preferred  securities  which were determined to be  other-than-temporarily
impaired.  The trust preferred  securities  owned by the Company are diversified
pools of collateralized debt obligations  primarily issued by domestic financial
institutions and their holding  companies.  For the three months ended September
30, 2008, the Company recorded an  other-than-temporary  impairment  charge on a
Lehman  Brothers  medium  term  note  of  $831,000  following  their  bankruptcy
announcement in September  2008. For the nine month period ending  September 30,
2009,  other operating  income  increased by $10.1 million to $15.8 million from
$5.7  million  for the same  period  in 2008.  Commissions  and fees on sales of
non-banking  products was $11.6 million for the nine months ended  September 30,
2009 as compared to $10.0 million for the same period in 2008. In addition,  the
non-cash  change  in fair  value  as of  September  30,  2009 was a gain of $1.3
million  as  compared  to a loss of  $7.0  million  that  was  recognized  as of
September 30, 2008. Net investment gains for the nine months ended September 30,
2009 were $514,000  compared with net  investment  gains of $24,000 for the nine
months ended September 30, 2008.

      OTHER  EXPENSES.  Other  operating  expenses  increased by $1.0 million or
13.4%,  to $8.0 million for the three months ended  September 30, 2009 from $7.0
million for the same period in 2008.  The  increase  in  noninterest  expense is
primarily the result of an increase in operating  expenses  associated  with our
insurance  agency and consulting  subsidiaries  associated with commissions paid
concurrent with revenue  increases.  In addition,  an increase in premiums being
assessed by the Federal Deposit  Insurance  Corporation for the current calendar
year has resulted in additional  non-interest  expense of $206,000 for the three
months  ended  September  30,  2009 as  compared  with the  three  months  ended
September 30, 2008. Other operating expenses increased by $2.6 million or 11.9%,
to $24.1 million for the nine months ended September 30, 2009 from $21.5 million
for the same period in 2008. The premiums being assessed by the Federal  Deposit
Insurance  Corporation  for the nine months ended  September 30, 2009  increased
$837,000  compared to the nine month period  ended  September  30,  2008.  It is
expected  that deposit  insurance  premiums will continue to be higher in future
periods.

      INCOME TAX. Income tax expense  increased to $230,000 for the three months
ended  September  30, 2009 as compared to a tax benefit of $1.6  million for the
third quarter  2008.  For the nine months ended  September 30, 2009,  income tax
expense  increased  to $1.0  million  from a tax benefit of $1.2 million for the
nine months ended  September 30, 2009.  Net income  increased from a net loss of
$3.4  million to net income of $2.9  million for the nine month period while the
effective tax rate decreased to 26.5% for the nine months of 2009 from 26.7% for
the nine months of 2008 to reflect the overall tax rate expected to be in effect
for 2009.

      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.

                                 Page 31 of 37
<PAGE>


      The primary  investing  activities of the Company are the  origination  of
residential  mortgages,  commercial  loans and  consumer  loans,  as well as the
purchase of mortgage-backed and other debt securities.  During the third quarter
of 2009,  loan  originations  totaled  $38.1  million  compared to $31.6 million
during  the  third   quarter  of  2008.   The   purchases  of   investment   and
mortgage-backed  securities  totaled $26.1  million  during the third quarter of
2009 as  compared  to $14.9  million  during  the  third  quarter  of 2008.  The
purchases  of  investment  securities  were funded 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 third quarter of 2009 cash flows
provided by the sale,  principal  payments and maturity of securities  available
for sale was $16.7  million  compared  to $25.6  million  for the same period in
2008.

      In the ordinary  course of business,  the Company  extends  commitments to
originate residential and commercial loans and other consumer loans. Commitments
to extend  credit are  agreements  to lend to a customer  as long as there is no
violation of any condition  established in the contract.  Commitments  generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since the Company does not expect all of the commitments to be funded,
the  total  commitment   amounts  do  not  necessarily   represent  future  cash
requirements.  The  Company  evaluates  each  customer's  creditworthiness  on a
case-by-case   basis.   Collateral  may  be  obtained  based  upon  management's
assessment of the 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  September  30, 2009 the Company had
outstanding  commitments to originate loans of approximately $6.2 million. These
commitments  generally  have  an  expiration  period  of  less  than  120  days.
Commitments to sell residential  mortgages amounted to $6.3 million at September
30, 2009.

      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 $51.6  million at  September  30, 2009 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 expected loan commitment fundings, deposit outflows or the amount of debt
being  called,  additional  sources of funds are  available  through  the use of
repurchase agreements, the sale of loans or investments or the Company's various
lines of credit.  As of September  30, 2009 the total of cash,  interest-earning
demand accounts and federal funds sold was $26.9 million.

      At  September  30,  2009,  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

As of September 30, 2009:                            (Dollars in thousands)


     Total Capital
       (to Risk Weighted
<S>                           <C>          <C>       <C>            <C>        <C>            <C>
       Assets)                $40,831      10.30%    $ 31,711       8%         $39,638        10%
     Tier I Capital
       (to Risk Weighted
       Assets)                $37,955       9.58%    $ 15,855       4%         $23,783         6%
     Tier I Capital
       (to Average Assets)    $37,955       7.03%    $ 21,603       4%         $27,004         5%

</TABLE>

                                                   Page 32 of 37
<PAGE>

<TABLE>
<CAPTION>

                                                                                     To Be Well
                                                                                  Capitalized Under
                                                           For Capital           Prompt Corrective
                                     Actual             Adequacy Purposes        Action Provisions
                               -------------------     --------------------    ----------------------
                                 Amount    Ratio        Amount     Ratio         Amount       Ratio

<S>                           <C>          <C>        <C>            <C>        <C>           <C>
As of December 31, 2008:                                 (Dollars in thousands)
     Total Capital
       (to Risk Weighted
       Assets)                $37,214      10.21%     $ 29,165       8%         $36,457       10%
     Tier I Capital
       (to Risk Weighted
       Assets)                $34,590       9.49%     $ 14,582       4%         $21,873        6%
     Tier I Capital
       (to Average Assets)    $34,590       6.64%     $ 20,837       4%         $26,046        5%
</TABLE>



ONEIDA FINANCIAL CORP.
SELECTED FINANCIAL RATIOS
At and for the  Three  and  Nine  Months  Ended  September  30,  2009  and  2008
(unaudited)

<TABLE>
<CAPTION>


        (Annualized where appropriate)                   Three Months Ending      Nine Months Ended
                                                             September 30,            September 30,
                                                          2009         2008       2009      2008
                                                         -----        -----       ----      ----
        Performance Ratios:

<S>                                                        <C>         <C>        <C>     <C>
          Return (loss) on average assets                  0.49%       (3.20%)    0.69%   (0.82%)
                 Return (loss) on average equity           5.00%      (32.36%)    7.01%   (7.75%)
                Net interest margin                        3.73%        3.37%     3.65%    3.36%

           Efficiency Ratio                               84.52%       82.38%    83.09%   84.24%
                 Ratio of operating expense
               to average total assets                     5.66%        5.09%     5.78%    5.28%
           Ratio of average interest-earning assets
               to average interest-bearing liabilities   109.32%      108.69%   108.72%  109.84%

        Asset Quality Ratios:

          Non-performing assets to total assets            0.40%        0.11%     0.40%    0.11%

          Allowance for loan losses
               to non-performing loans                 1,110.04%      555.36% 1,110.04%  555.36%
            Allowance for loan losses
               to loans receivable, net                    0.97%        0.83%     0.97%    0.83%

        Capital Ratios:

            Total stockholders' equity to total assets     9.95%        9.22%     9.95%    9.22%
                  Average equity to average assets         9.87%        9.91%     9.85%   10.60%
</TABLE>

                                            Page 33 of 37

<PAGE>



ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

Various forms of market risk are inherent in the business of the Bank  including
concentration risk, liquidity management,  credit risk and collateral risk among
others.  However,  the Bank's most  significant  form of market risk is interest
rate risk, as the majority of the Bank's assets and liabilities are sensitive to
changes in interest rates.  Ongoing monitoring and management of this risk is an
important component of the Company's asset and liability management process. The
Bank's interest rate risk management program focuses primarily on evaluating and
managing the  composition of the Bank's assets and liabilities in the context of
various interest rate scenarios.  Factors beyond Management's  control,  such as
market  interest rates and  competition,  also have an impact on interest income
and expense. Based on the asset-liability  composition at September 30, 2009, 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  2008 Annual  Report to  Stockholders.
There has been no material  change in the  Company's  interest rate risk profile
since December 31, 2008.


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 34 of 37
<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 20 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

      Other than set forth below,  there has not been any material change in the
risk factors  disclosure from that contained in the Company's 2008 Form 10-K for
the fiscal year ended December 31, 2008.

A  legislative  proposal has been  introduced  that would  eliminate the primary
federal  regulator  of Oneida  Financial,  MHC and Oneida  Financial  Corp.  and
require Oneida Financial Corp. to become a bank holding company.

      The U.S. Treasury Department recently introduced proposed legislation that
would  significantly  change the current bank  regulatory  system.  The proposal
would create a new federal banking regulator, the National Bank Supervisor,  and
Page 35 of 37 merge  the  Office  of Thrift  Supervision,  which is the  primary
federal regulator of Oneida  Financial,  MHC and Oneida Financial Corp., as well
as the Office of the Comptroller of the Currency (the primary federal  regulator
for national banks) into the new federal bank regulator.

      Under this legislation as proposed,  Oneida Financial Corp. would become a
bank holding  company  subject to  regulation  and  supervision  by the Board of
Governors  of the  Federal  Reserve  System  instead  of the  Office  of  Thrift
Supervision.  As a bank  holding  company,  Oneida  Financial  Corp.  may become
subject  to  regulatory  capital  requirements  it would not be  subject to as a
savings and loan holding  company and certain  restrictions  on its  activities.
Compliance  with  new  regulations  and  being  supervised  by one or  more  new
regulatory agencies could increase our expenses.

Item 2   Unregistered Sales of Equity Securities and Use of Proceeds

The following table  summarizes our share  repurchase  activity during the three
months ended September 30, 2009. The shares  repurchased were stock options that
were exercised using reload options.  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.

<TABLE>
<CAPTION>

-------------------------------- ------------ ----------- ------------------------ --------------------
Period                           Total        Average     Total Number of Shares   Maximum Number of
                                 Number of    Price       Purchased as Part of     Shares that May
                                 Shares       Paid per    Publicly Announced       Yet Be Purchased
                                 Purchased    Share       Plans                    Under the Plan
-------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>         <C>                      <C>
July 1, 2009 - July 31, 2009     --           --          --                       --
-------------------------------------------------------------------------------------------------------
August 1, 2009 -August 31, 2009  6,653        $10.75      --                       --
-------------------------------------------------------------------------------------------------------
September 1, 2009 - September    --           --          --                       --
30, 2009
-------------------------------------------------------------------------------------------------------
Total                            6,653        $10.75      --                       250,000
-------------------------------------------------------------------------------------------------------
</TABLE>

Item 3      Defaults Upon Senior Securities

            Not applicable.

Item 4      Submission of Matters to a Vote of Security Holders

            Not applicable

Item 5      Other Information

            None

Item 6      Exhibits

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

                        Exhibits

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

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

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

                                            Page 36 of 37

<PAGE>


                                              SIGNATURES

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

                                          ONEIDA FINANCIAL CORP.


Date:   November 13, 2009                 By:    /s/ Michael R. Kallet
                                          --------------------------------------
                                          Michael R. Kallet
                                          President and Chief Executive Officer


Date:   November 13, 2009                 By:    /s/ Eric E. Stickels
                                          --------------------------------------
                                          Eric E. Stickels
                                          Executive Vice President and Chief
                                          Financial Officer


                                            Page 37 of 37
<PAGE>