| FEDERAL                                                        | 16-1540137                              |
|----------------------------------------------------------------|-----------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |

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Tabel of Contents

PATH

| PART I - FINANCIAL INFORMATION |                                                        | PAGE NO. |
|--------------------------------|-------------------------------------------------------------|----------|
|                           |                                                        |     |   |
| Item 1.                        | Consolidated Financial Statements (Unaudited)               |     |   |
|                           | Consolidated Statements of Condition                        |     | 3 |
|                           | Consolidated Statements of Income                           |     | 4 |
|                           | Consolidated Statements of Comprehensive Income             |     | 5 |
|                           | Consolidated Statements of Changes in Shareholders' Equity  |     | 6 |
|                           | Consolidated Statements of Cash Flows                       |     | 7 |
|                           | Notes to Consolidated Financial Statements                  |     | 8 |
|                           |                                                        |     |   |
| Item 2.                        | Management's Discussion and Analysis of Financial Condition |     | 27 |
|                           | and Results of Operations                                   |     |   |
|                           |                                                        |     |   |
| Item 3.                        | Quantitative and Qualitative Disclosures About Market Risk  |     | 38 |
|                           |                                                        |     |   |
| Item 4.                        | Controls and Procedures                                     |     | 38 |
|                           |                                                        |     |   |
| PART II - OTHER INFORMATION    |                                                        | 39       |
|                           |                                                        |     |   |
| Item 1.                        | Legal proceedings                                           |     |   |
| Item 1A.                       | Risk Factors                                                |     |   |
| Item 2.                        | Unregistered sales of equity securities and use of proceeds |     |   |
| Item 3.                        | Defaults upon senior securities                             |     |   |
| Item 4.                        | Mine Safety Disclosures                                     |     |   |
| Item 5.                        | Other information                                           |     |   |
| Item 6.                        | Exhibits                                                    |     |   |
|                           |                                                        |     |   |
| SIGNATURES                     |                                                        | 40       |
|                           |                                                        |     |   |
| EXHIBITS                       |                                                        |     | 41 |

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Tabel of Contents

Pathfinder 

|                                                                              |   | June 30, |    |   | December 31, |   |
|-----------------------------------------------------------------------------------|--------|----------|---------|--------|--------------|--------|
| (In thousands, except share data)                                                 |   | 2012     |    |   | 2011         |   |
| ASSETS:                                                                           |   |     |    |   |         |   |
| Cash and due from banks                                                           |   | $        | 8,029   |   |         | $      | 7,093 |   |
| Interest earning deposits                                                         |   |     | 2,110   |   |         |   | 3,125 |   |
| Total cash and cash equivalents                                                   |   |     | 10,139  |   |         |   | 10,218 |   |
| Interest earning time deposits                                                    |   |     | 2,000   |   |         |   | 2,000 |   |
| Investment securities, at fair value                                              |   |     | 123,728 |   |         |   | 100,395 |   |
| Federal Home Loan Bank stock, at cost                                             |   |     | 1,460   |   |         |   | 1,528 |   |
| Loans                                                                             |   |     | 312,578 |   |         |   | 304,750 |   |
| Less: Allowance for loan losses                                                   |   |     | 4,213   |   |         |   | 3,980 |   |
| Loans receivable, net                                                             |   |     | 308,365 |   |         |   | 300,770 |   |
| Premises and equipment, net                                                       |   |     | 10,342  |   |         |   | 10,697 |   |
| Accrued interest receivable                                                       |   |     | 1,791   |   |         |   | 1,685 |   |
| Foreclosed real estate                                                            |   |     | 419     |   |         |   | 536 |   |
| Goodwill                                                                          |   |     | 3,840   |   |         |   | 3,840 |   |
| Bank owned life insurance                                                         |   |     | 8,091   |   |         |   | 7,939 |   |
| Other assets                                                                      |   |     | 4,731   |   |         |   | 3,372 |   |
| Total assets                                                                      |   | $        | 474,906 |   |         | $      | 442,980 |   |
|                                                                              |   |     |    |   |         |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY:                                             |   |     |    |   |         |   |   |   |
| Deposits:                                                                         |   |     |    |   |         |   |   |   |
| Interest-bearing                                                                  |   | $        | 359,107 |   |         | $      | 328,976 |   |
| Noninterest-bearing                                                               |   |     | 40,556  |   |         |   | 37,153 |   |
| Total deposits                                                                    |   |     | 399,663 |   |         |   | 366,129 |   |
| Long-term borrowings                                                              |   |     | 25,019  |   |         |   | 26,074 |   |
| Junior subordinated debentures                                                    |   |     | 5,155   |   |         |   | 5,155 |   |
| Accrued interest payable                                                          |   |     | 124     |   |         |   | 145 |   |
| Other liabilities                                                                 |   |     | 5,139   |   |         |   | 7,636 |   |
| Total liabilities                                                                 |   |     | 435,100 |   |         |   | 405,139 |   |
| Shareholders' equity:                                                             |   |     |    |   |         |   |   |   |
| Preferred stock - SBLF, par value $0.01 per share; $1,000 liquidation preference; |   |     |    |   |         |   |   |   |
| 13,000 shares authorized; 13,000 shares issued and outstanding                    |   |     | 13,000  |   |         |   | 13,000 |   |
| Common stock, par value $0.01; authorized 10,000,000 shares;                      |   |     |    |   |         |   |   |   |
| 2,979,969 and 2,617,682 shares issued and outstanding, respectively               |   |     | 30      |   |         |   | 30 |   |
| Additional paid in capital                                                        |   |     | 8,071   |   |         |   | 8,730 |   |
| Retained earnings                                                                 |   |     | 25,632  |   |         |   | 24,618 |   |
| Accumulated other comprehensive loss                                              |   |     | (1,102  | )      |         |   | (2,664 | ) |
| Unearned ESOP                                                                     |   |     | (991    | )      |         |   | (1,039 | ) |
| Treasury stock, at cost; 362,287 shares                                           |   |     | (4,834  | )      |         |   | (4,834 | ) |
| Total shareholders' equity                                                        |   |     | 39,806  |   |         |   | 37,841 |   |
| Total liabilities and shareholders' equity                                        |   | $        | 474,906 |   |         | $      | 442,980 |   |

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Tabel of Contents

Pathfinder Bancorp

|                                                                                                            |   | For the three |   |   | For the three |   |   | For the six   |   |   | For the six   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                                                                                            |   | months ended  |   |   | months ended  |   |   | months ended  |   |   | months ended  |   |
| (In thousands, except per share data)                                                                           |   | June 30, 2012 |   |   | June 30, 2011 |   |   | June 30, 2012 |   |   | June 30, 2011 |   |
| Interest and dividend income:                                                                                   |   |          |   |   |          |   |   |          |   |   |          |   |
| Loans, including fees                                                                                           |   | $             | 3,977  |   |          | $      | 3,981  |          |   | $      | 7,988         |   |   | $ | 7,856 |   |
| Debt securities:                                                                                                |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |
| Taxable                                                                                                         |   |          | 488    |   |          |   | 604    |          |   |   | 946           |   |   |   | 1,197 |   |
| Tax-exempt                                                                                                      |   |          | 182    |   |          |   | 75     |          |   |   | 345           |   |   |   | 149 |   |
| Dividends                                                                                                       |   |          | 26     |   |          |   | 26     |          |   |   | 59            |   |   |   | 68 |   |
| Interest earning time deposits                                                                                  |   |          | 6      |   |          |   | -      |          |   |   | 12            |   |   |   | - |   |
| Federal funds sold and interest earning deposits                                                                |   |          | 1      |   |          |   | 1      |          |   |   | 2             |   |   |   | 2 |   |
|        Total interest income                                                 |   |          | 4,680  |   |          |   | 4,687  |          |   |   | 9,352         |   |   |   | 9,272 |   |
| Interest expense:                                                                                               |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |
| Interest on deposits                                                                                            |   |          | 736    |   |          |   | 821    |          |   |   | 1,497         |   |   |   | 1,633 |   |
| Interest on short-term borrowings                                                                               |   |          | 6      |   |          |   | 7      |          |   |   | 8             |   |   |   | 18 |   |
| Interest on long-term borrowings                                                                                |   |          | 255    |   |          |   | 278    |          |   |   | 507           |   |   |   | 558 |   |
|        Total interest expense                                                |   |          | 997    |   |          |   | 1,106  |          |   |   | 2,012         |   |   |   | 2,209 |   |
|           Net interest income                                 |   |          | 3,683  |   |          |   | 3,581  |          |   |   | 7,340         |   |   |   | 7,063 |   |
| Provision for loan losses                                                                                       |   |          | 150    |   |          |   | 262    |          |   |   | 375           |   |   |   | 525 |   |
|           Net interest income after provision for loan losses |   |          | 3,533  |   |          |   | 3,319  |          |   |   | 6,965         |   |   |   | 6,538 |   |
| Noninterest income:                                                                                             |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |
| Service charges on deposit accounts                                                                             |   |          | 280    |   |          |   | 276    |          |   |   | 553           |   |   |   | 571 |   |
| Earnings and gain on bank owned life insurance                                                                  |   |          | 96     |   |          |   | 55     |          |   |   | 188           |   |   |   | 117 |   |
| Loan servicing fees                                                                                             |   |          | 66     |   |          |   | 50     |          |   |   | 108           |   |   |   | 92 |   |
| Losses on impairment of investment securities                                                                   |   |          | -      |   |          |   | -      |          |   |   | -             |   |   |   | - |   |
| Net gains on sales and redemptions of investment securities                                                     |   |          | 49     |   |          |   | 295    |          |   |   | 161           |   |   |   | 323 |   |
| Net gains on sales of loans and foreclosed real estate                                                          |   |          | 49     |   |          |   | 14     |          |   |   | 25            |   |   |   | 40 |   |
| Debit card interchange fees                                                                                     |   |          | 106    |   |          |   | 96     |          |   |   | 203           |   |   |   | 180 |   |
| Other charges, commissions & fees                                                                           |   |          | 137    |   |          |   | 137    |          |   |   | 273           |   |   |   | 273 |   |
|           Total noninterest income                            |   |          | 783    |   |          |   | 923    |          |   |   | 1,511         |   |   |   | 1,596 |   |
| Noninterest expense:                                                                                            |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |
| Salaries and employee benefits                                                                                  |   |          | 1,869  |   |          |   | 1,764  |          |   |   | 3,844         |   |   |   | 3,473 |   |
| Building occupancy                                                                                              |   |          | 346    |   |          |   | 359    |          |   |   | 729           |   |   |   | 722 |   |
| Data processing                                                                                                 |   |          | 341    |   |          |   | 352    |          |   |   | 682           |   |   |   | 705 |   |
| Professional and other services                                                                                 |   |          | 146    |   |          |   | 159    |          |   |   | 298           |   |   |   | 285 |   |
| Advertising                                                                                                     |   |          | 99     |   |          |   | 136    |          |   |   | 160           |   |   |   | 275 |   |
| FDIC assessments                                                                                                |   |          | 78     |   |          |   | 162    |          |   |   | 155           |   |   |   | 324 |   |
| Audits and exams                                                                                                |   |          | 56     |   |          |   | 59     |          |   |   | 111           |   |   |   | 119 |   |
| Other expenses                                                                                                  |   |          | 419    |   |          |   | 412    |          |   |   | 830           |   |   |   | 783 |   |
|           Total noninterest expenses                          |   |          | 3,354  |   |          |   | 3,403  |          |   |   | 6,809         |   |   |   | 6,686 |   |
| Income before income taxes                                                                                      |   |          | 962    |   |          |   | 839    |          |   |   | 1,667         |   |   |   | 1,448 |   |
| Provision for income taxes                                                                                      |   |          | 241    |   |          |   | 252    |          |   |   | 418           |   |   |   | 435 |   |
| Net income                                                                                                      |   |          | 721    |   |          |   | 587    |          |   |   | 1,249         |   |   |   | 1,013 |   |
| Preferred stock dividends and discount accretion                                                                |   |          | 116    |   |          |   | 118    |          |   |   | 254           |   |   |   | 235 |   |
| Net income available to common shareholders                                                                     |   | $             | 605    |   |          | $      | 469    |          |   | $      | 995           |   |   | $ | 778 |   |
|                                                                                                            |   |          |   |   |          |   |   |          |   |   |          |   |   |   |   |   |
| Earnings per common share - basic                                                                               |   | $             | 0.24   |   |          | $      | 0.19   |          |   | $      | 0.40          |   |   | $ | 0.31 |   |
| Earnings per common share - diluted                                                                             |   | $             | 0.24   |   |          | $      | 0.19   |          |   | $      | 0.40          |   |   | $ | 0.31 |   |
| Dividends per common share                                                                                      |   | $             | 0.03   |   |          | $      | 0.03   |          |   | $      | 0.06          |   |   | $ | 0.06 |   |

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Tabel of Contents

Pathfind

|                                                                                            |   | For the three |   |   | For the three |   |   | For the six  |   |   | For the six  |   |
|-------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------------|--------|
|                                                                                            |   | months ended  |   |   | months ended  |   |   | months ended |   |   | months ended |   |
|                                                                                            |   | June 30,      |   |   | June 30,      |   |   | June 30,     |   |   | June 30,     |   |
| (In thousands)                                                                                  |   | 2012          |   |   | 2011          |   |   | 2012         |   |   | 2011         |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |
| Retirement Plans:                                                                               |   |          |   |   |          |   |   |         |   |   |         |   |
| Retirement plan net losses and transition obligation recognized in plan expenses                |   | $             | 106    |   |          | $      | 66     |         |   | $      | 240          |   |   | $ | 133 |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Gain on pension plan curtailment                                                                |   |          | 1,919  |   |          |   | -      |         |   |   | 1,919        |   |   |   | - |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Unrealized holding gain on financial derivative:                                                |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Change in unrealized holding (loss) on financial derivative                                     |   |          | (27    | )      |          |   | (64    | )            |   |   | (35          | )      |   |   | (54 | ) |
| Reclassification adjustment for interest expense included in net income                         |   |          | 16     |   |          |   | 14     |         |   |   | 30           |   |   |   | 29 |   |
| Net unrealized loss on financial derivative                                                     |   |          | (11    | )      |          |   | (50    | )            |   |   | (5           | )      |   |   | (25 | ) |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Unrealized holding gains on available-for-sale securities:                                      |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Unrealized holding gains arising during the period                                              |   |          | 445    |   |          |   | 1,632  |         |   |   | 612          |   |   |   | 2,114 |   |
| Reclassification adjustment for net gains included in income                                    |   |          | (49    | )      |          |   | (295   | )            |   |   | (161         | )      |   |   | (322 | ) |
| Net unrealized gains on securities available-for-sale                                           |   |          | 396    |   |          |   | 1,337  |         |   |   | 451          |   |   |   | 1,792 |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Other comprehensive income, before tax                                                          |   |          | 2,410  |   |          |   | 1,353  |         |   |   | 2,605        |   |   |   | 1,900 |   |
| Tax effect                                                                                      |   |          | (966   | )      |          |   | (541   | )            |   |   | (1,043       | )      |   |   | (760 | ) |
| Other comprehensive income, net of tax                                                          |   |          | 1,444  |   |          |   | 812    |         |   |   | 1,562        |   |   |   | 1,140 |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Net Income                                                                                      |   |          | 721    |   |          |   | 587    |         |   |   | 1,249        |   |   |   | 1,013 |   |
| Comprehensive Income                                                                            |   | $             | 2,165  |   |          | $      | 1,399  |         |   | $      | 2,811        |   |   | $ | 2,153 |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Tax Effect Allocated to Each Component of Comprehensive Income                                  |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
| Retirement plan net losses and transition obligation recognized in plan expenses                |   | $             | (43    | )      |          | $      | (26    | )            |   | $      | (96          | )      |   | $ | (53 | ) |
| Gain on pension plan curtailment                                                                |   |          | (768   | )      |          |   | -      |         |   |   | (768         | )      |   |   | - |   |
| Unrealized loss on financial derivative                                                         |   |          | 2      |   |          |   | 20     |         |   |   | 2            |   |   |   | 10 |   |
| Unrealized gains on available-for-sale securities                                               |   |          | (157   | )      |          |   | (535   | )            |   |   | (181         | )      |   |   | (717 | ) |
| Income tax expense related to other comprehensive income                                        |   | $             | (966   | )      |          | $      | (541   | )            |   | $      | (1,043       | )      |   | $ | (760 | ) |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
|                                                                                            |   |          |   |   |          |   |   |         |   |   |         |   |   |   |   |   |
|                                                                                            |   | As of         |   |   | As of         |   |   |         |   |   |         |   |   |   |
|                                                                                            |   | June 30,      |   |   | December 31,  |   |   |         |   |   |         |   |   |   |
| Accumulated Other Comprehensive Loss By Component:                                              |   |          | 2012   |   |          |   | 2011   |         |   |   |         |   |   |   |   |   |
| Unrealized loss and transition obligation for pension and other postretirement obligations      |   | $             | (3,870 | )      |          | $      | (6,029 | )            |   |   |         |   |   |   |   |   |
| Tax effect                                                                                      |   |          | 1,548  |   |          |   | 2,412  |         |   |   |         |   |   |   |   |   |
| Net unrealized loss and transition obligation for pension and other postretirement obligations  |   |          | (2,322 | )      |          |   | (3,617 | )            |   |   |         |   |   |   |   |   |
| Unrealized loss on financial derivative instruments used in cash flow hedging relationships     |   |          | (205   | )      |          |   | (200   | )            |   |   |         |   |   |   |   |   |
| Tax effect                                                                                      |   |          | 81     |   |          |   | 80     |         |   |   |         |   |   |   |   |   |
| Net unrealized loss on financial derivative instruments used in cash flow hedging relationships |   |          | (124   | )      |          |   | (120   | )            |   |   |         |   |   |   |   |   |
| Unrealized gains on available-for-sale securities                                               |   |          | 2,240  |   |          |   | 1,789  |         |   |   |         |   |   |   |   |   |
| Tax effect                                                                                      |   |          | (896   | )      |          |   | (716   | )            |   |   |         |   |   |   |   |   |
| Net unrealized gains on available-for-sale securities                                           |   |          | 1,344  |   |          |   | 1,073  |         |   |   |         |   |   |   |   |   |
| Accumulated other comprehensive loss                                                            |   | $             | (1,102 | )      |          | $      | (2,664 | )            |   |   |         |   |   |   |   |   |

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Tabel of Contents

| PATHFINDER BANCORP, INC.                                    |   |
|-------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY  |   |
| Six months ended June 30, 2012 and June 30, 2011(Unaudited) |   |
|                                                        |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Other Com- |   |   |   |   |   |   |   |   |   |   |
|                                                        |   | Preferred |   |   | Common |   |   | Paid in |   |   | Retained |   |   | prehensive |   |   | Unearned |   |   | Treasury |   |   |   |   |
|  (In thousands, except share data)                     |   | Stock |   |   | Stock |   |   | Capital |   |   | Earnings |   |   | Loss |   |   | ESOP |   |   | Stock |   |   | Total |   |
|  Balance, January 1, 2012                              |   | $ | 13,000 |   |   | $ | 30 |   |   | $ | 8,730 |   |   | $ | 24,618 |   |   | $ | (2,664 | ) |   | $ | (1,039 | ) |   | $ | (4,834 | ) |   | $ | 37,841 |   |
|  Comprehensive income:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net income                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,249 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,249 |   |
|  Other comprehensive income (loss), net of tax:        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Unrealized holding gains on securities                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  available for sale (net of $181 tax expense)          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 270 |   |   |   |   |   |   |   |   |   |   |   | 270 |   |
|  Unrealized holding losses on financial                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  derivative (net of $2 tax benefit)                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (3 | ) |   |   |   |   |   |   |   |   |   |   | (3 | ) |
|  Retirement plan net losses                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  recognized in plan expenses                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (net of $96 tax expenses)                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 144 |   |   |   |   |   |   |   |   |   |   |   | 144 |   |
| Pension plan curtailment                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  (net of $768 tax expense)                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,151 |   |   |   |   |   |   |   |   |   |   |   | 1,151 |   |
|  Total comprehensive income                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,811 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Purchase of CPP Warrants from Treasury                |   |   |   |   |   |   |   |   |   |   | (706 | ) |   |   | 169 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (537 | ) |
|  Preferred stock dividends - SBLF                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (254 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (254 | ) |
|  ESOP shares earned (1,793 shares)                     |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   |   |   |   |   |   |   |   |   | 48 |   |   |   |   |   |   |   | 50 |   |
|  Stock based compensation                              |   |   |   |   |   |   |   |   |   |   | 45 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 45 |   |
|  Common stock dividends declared ($0.06 per share)     |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (150 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (150 | ) |
|  Balance, June 30, 2012                                |   | $ | 13,000 |   |   | $ | 30 |   |   | $ | 8,071 |   |   | $ | 25,632 |   |   | $ | (1,102 | ) |   | $ | (991 | ) |   | $ | (4,834 | ) |   | $ | 39,806 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2011                                    |   | $ | 6,225 |   |   | $ | 30 |   |   | $ | 8,615 |   |   | $ | 24,163 |   |   | $ | (1,939 | ) |   | $ | - |   |   | $ | (6,502 | ) |   | $ | 30,592 |   |
| Comprehensive income:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,013 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,013 |   |
| Other comprehensive income (loss), net of tax:              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains on securities                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale (net of $717 tax expense)                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,075 |   |   |   |   |   |   |   |   |   |   |   | 1,075 |   |
| Unrealized holding loss on financial                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| derivative (net of $10 tax benefit)                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (15 | ) |   |   |   |   |   |   |   |   |   |   | (15 | ) |
| Retirement plan net losses and transition                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligation recognized in plan expenses                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net of $53 tax expense)                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 80 |   |   |   |   |   |   |   |   |   |   |   | 80 |   |
| Total comprehensive income                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,153 |   |
| Preferred stock discount accretion                          |   |   | 65 |   |   |   |   |   |   |   |   |   |   |   | (65 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Preferred stock dividends - CPP                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (170 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (170 | ) |
| Stock based compensation                                    |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2 |   |
| Stock options exercised                                     |   |   |   |   |   |   |   |   |   |   | 14 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 14 |   |
| Common stock dividends declared ($0.06 per share)           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (149 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (149 | ) |
| Balance, June 30, 2011                                      |   | $ | 6,290 |   |   | $ | 30 |   |   | $ | 8,631 |   |   | $ | 24,792 |   |   | $ | (799 | ) |   | $ | - |   |   | $ | (6,502 | ) |   | $ | 32,442 |   |

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Tabel of Contents

Pathfinder Bancorp

|                                                                             |   | For the six   |    |
|----------------------------------------------------------------------------------|--------|---------------|---------|
|                                                                             |   | months ended  |    |
| (In thousands)                                                                   |   | June 30, 2012 |    |   | June 30, 2011 |   |
| OPERATING ACTIVITIES                                                             |   |          |    |   |   |   |
| Net income                                                                       |   | $             | 1,249   |   |   | $ | 1,013 |   |
| Adjustments to reconcile net income to net cash flows from operating activities: |   |          |    |   |   |   |   |   |
| Provision for loan losses                                                        |   |          | 375     |   |   |   | 525 |   |
| Proceeds from sales of loans                                                     |   |          | 205     |   |   |   | - |   |
| Originations of loans held-for-sale                                              |   |          | (195    | ) |   |   | - |   |
| Realized gains on sales and redemptions of:                                      |   |          |    |   |   |   |   |   |
| Real estate acquired through foreclosure                                         |   |          | (15     | ) |   |   | (40 | ) |
| Loans                                                                            |   |          | (10     | ) |   |   | - |   |
| Available-for-sale investment securities                                         |   |          | (161    | ) |   |   | (323 | ) |
| Depreciation                                                                     |   |          | 401     |   |   |   | 340 |   |
| Amortization of mortgage servicing rights                                        |   |          | 5       |   |   |   | 13 |   |
| Amortization of deferred loan costs                                              |   |          | 84      |   |   |   | 106 |   |
| Earnings on bank owned life insurance                                            |   |          | (151    | ) |   |   | (117 | ) |
| Realized gain on proceeds from bank owned life insurance                         |   |          | (37     | ) |   |   | - |   |
| Net amortization of premiums and discounts on investment securities              |   |          | 559     |   |   |   | 207 |   |
| Stock based compensation and ESOP expense                                        |   |          | 95      |   |   |   | 2 |   |
| Net change in accrued interest receivable                                        |   |          | (106    | ) |   |   | 69 |   |
| Pension plan contribution                                                        |   |          | (2,600  | ) |   |   | - |   |
| Net change in other assets and liabilities                                       |   |          | (21     | ) |   |   | (1,414 | ) |
| Net cash flows from operating activities                                         |   |          | (323    | ) |   |   | 381 |   |
| INVESTING ACTIVITIES                                                             |   |          |    |   |   |   |   |   |
| Purchase of investment securities available-for-sale                             |   |          | (41,689 | ) |   |   | (22,112 | ) |
| Net proceeds from the redemptions of Federal Home Loan Bank stock                |   |          | 68      |   |   |   | 319 |   |
| Proceeds from maturities and principal reductions of                             |   |          |    |   |   |   |   |   |
| investment securities available-for-sale                                         |   |          | 11,434  |   |   |   | 13,580 |   |
| Proceeds from sales and redemptions of:                                          |   |          |    |   |   |   |   |   |
| Available-for-sale investment securities                                         |   |          | 6,974   |   |   |   | 5,451 |   |
| Real estate acquired through foreclosure                                         |   |          | 222     |   |   |   | 257 |   |
| Purchase of bank owned life insurance                                            |   |          | -       |   |   |   | (800 | ) |
| Net change in loans                                                              |   |          | (8,230  | ) |   |   | (5,263 | ) |
| Purchase of premises and equipment                                               |   |          | (46     | ) |   |   | (1,440 | ) |
| Net cash  flows from investing activities                              |   |          | (31,267 | ) |   |   | (10,008 | ) |
| FINANCING ACTIVITIES                                                             |   |          |    |   |   |   |   |   |
| Net change in demand deposits, NOW accounts, savings accounts,                   |   |          |    |   |   |   |   |   |
| money management deposit accounts, MMDA accounts and escrow deposits             |   |          | 19,352  |   |   |   | 15,814 |   |
| Net change in time deposits and brokered deposits                                |   |          | 14,182  |   |   |   | 2,033 |   |
| Net repayments of short-term borrowings                                          |   |          | -       |   |   |   | (5,894 | ) |
| Payments on long-term borrowings                                                 |   |          | (1,055  | ) |   |   | (6,000 | ) |
| Proceeds from long-term borrowings                                               |   |          | -       |   |   |   | 3,000 |   |
| Proceeds from exercise of stock options                                          |   |          | -       |   |   |   | 14 |   |
| Purchase of CPP warrants from the US Treasury                                    |   |          | (537    | ) |   |   | - |   |
| Cash dividends paid to preferred shareholder - SBLF and CPP                      |   |          | (281    | ) |   |   | (170 | ) |
| Cash dividends paid to common shareholders                                       |   |          | (150    | ) |   |   | (149 | ) |
| Net cash flows from financing activities                                         |   |          | 31,511  |   |   |   | 8,648 |   |
| Change in cash and cash equivalents                                              |   |          | (79     | ) |   |   | (979 | ) |
| Cash and cash equivalents at beginning of period                                 |   |          | 10,218  |   |   |   | 13,763 |   |
| Cash and cash equivalents at end of period                                       |   | $             | 10,139  |   |   | $ | 12,784 |   |
| CASH PAID DURING THE PERIOD FOR:                                                 |   |          |    |   |   |   |   |   |
| Interest                                                                         |   | $             | 2,033   |   |   | $ | 2,248 |   |
| Income taxes                                                                     |   |          | 3       |   |   |   | 1,006 |   |
| NON-CASH INVESTING ACTIVITY                                                      |   |          |    |   |   |   |   |   |
| Transfer of loans to foreclosed real estate                                      |   |          | 176     |   |   |   | 789 |   |

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Tabel of Contents

Notes

|                                               |   | Three months ended |   |   | Six months ended |   |
|----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                               |   | June 30,           |   |   | June 30,         |   |
| (In thousands, except per share data)              |   | 2012               |   |   | 2011             |   |   | 2012 |   |   | 2011 |   |
| Basic Earnings Per Common Share                    |   |               |   |   |             |   |   |   |   |   |   |   |
| Net income available to common shareholders        |   | $                  | 605    |   |             | $      | 469 |   |   | $ | 995 |   |   | $ | 778 |   |
| Weighted average common shares outstanding         |   |               | 2,503  |   |             |   | 2,485 |   |   |   | 2,502 |   |   |   | 2,485 |   |
| Basic earnings per common share                    |   | $                  | 0.24   |   |             | $      | 0.19 |   |   | $ | 0.40 |   |   | $ | 0.31 |   |
|                                               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Diluted Earnings Per Common Share                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income available to common shareholders        |   | $                  | 605    |   |             | $      | 469 |   |   | $ | 995 |   |   | $ | 778 |   |
| Weighted average common shares outstanding         |   |               | 2,503  |   |             |   | 2,485 |   |   |   | 2,502 |   |   |   | 2,485 |   |
| Effect of assumed exercise of stock options        |   |               | 2      |   |             |   | 2 |   |   |   | 3 |   |   |   | 2 |   |
| Effect of assumed exercise of stock warrants       |   |               | -      |   |             |   | 49 |   |   |   | 7 |   |   |   | 44 |   |
| Diluted weighted average common shares outstanding |   |               | 2,505  |   |             |   | 2,536 |   |   |   | 2,512 |   |   |   | 2,531 |   |
| Diluted earnings per common share                  |   | $                  | 0.24   |   |             | $      | 0.19 |   |   | $ | 0.40 |   |   | $ | 0.31 |   |

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Tabel of Contents

|                                        |   | June 30, 2012 |    |
|---------------------------------------------|--------|---------------|---------|
|                                        |   |          |    |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                        |   | Amortized     |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| (In thousands)                              |   | Cost          |    |   | Gains |   |   | Losses |   |   | Value |   |
| Debt investment securities:                 |   |          |    |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs              |   | $             | 10,332  |   |   | $ | 35 |   |   | $ | (7 | ) |   | $ | 10,360 |   |
| State and political subdivisions            |   |          | 24,382  |   |   |   | 889 |   |   |   | (107 | ) |   |   | 25,164 |   |
| Corporate                                   |   |          | 24,144  |   |   |   | 151 |   |   |   | (505 | ) |   |   | 23,790 |   |
| Residential mortgage-backed - US agency     |   |          | 59,416  |   |   |   | 1,478 |   |   |   | (25 | ) |   |   | 60,869 |   |
| Residential mortgage-backed - private label |   |          | 397     |   |   |   | 14 |   |   |   | - |   |   |   | 411 |   |
| Total                                       |   |          | 118,671 |   |   |   | 2,567 |   |   |   | (644 | ) |   |   | 120,594 |   |
| Equity investment securities:               |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds:                               |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ultra short mortgage fund                   |   |          | 1,286   |   |   |   | 12 |   |   |   | - |   |   |   | 1,298 |   |
| Large cap equity fund                       |   |          | 905     |   |   |   | 199 |   |   |   | - |   |   |   | 1,104 |   |
| Other mutual funds                          |   |          | 183     |   |   |   | 102 |   |   |   | - |   |   |   | 285 |   |
| Common stock - financial services industry  |   |          | 443     |   |   |   | 5 |   |   |   | (1 | ) |   |   | 447 |   |
| Total                                       |   |          | 2,817   |   |   |   | 318 |   |   |   | (1 | ) |   |   | 3,134 |   |
| Total investment securities                 |   | $             | 121,488 |   |   | $ | 2,885 |   |   | $ | (645 | ) |   | $ | 123,728 |   |

|                                        |   |              |   |   |       |   |   |       |   |   |      |   |
|---------------------------------------------|--------|-------------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|
|                                        |   |              |   |   |       |   |   |       |   |   |      |   |
|                                        |   | December 31, 2011 |   |
|                                        |   |              |   |   | Gross      |   |   | Gross      |   |   | Estimated |   |
|                                        |   | Amortized         |   |   | Unrealized |   |   | Unrealized |   |   | Fair      |   |
| (In thousands)                              |   | Cost              |   |   | Gains      |   |   | Losses     |   |   | Value     |   |
| Debt investment securities:                 |   |              |   |   |       |   |   |       |   |   |      |   |
| US Treasury, agencies and GSEs              |   | $                 | 5,025  |   |       | $      | 48     |       |   | $      | -         |   |   | $ | 5,073 |   |
| State and political subdivisions            |   |              | 19,508 |   |       |   | 797    |       |   |   | (1        | )      |   |   | 20,304 |   |
| Corporate                                   |   |              | 21,086 |   |       |   | 38     |       |   |   | (690      | )      |   |   | 20,434 |   |
| Residential mortgage-backed - US agency     |   |              | 49,665 |   |       |   | 1,395  |       |   |   | (4        | )      |   |   | 51,056 |   |
| Residential mortgage-backed - private label |   |              | 505    |   |       |   | 14     |       |   |   | -         |   |   |   | 519 |   |
| Total                                       |   |              | 95,789 |   |       |   | 2,292  |       |   |   | (695      | )      |   |   | 97,386 |   |
| Equity investment securities:               |   |              |   |   |       |   |   |       |   |   |      |   |   |   |   |   |
| Mutual funds:                               |   |              |   |   |       |   |   |       |   |   |      |   |   |   |   |   |
| Ultra short mortgage fund                   |   |              | 1,286  |   |       |   | 12     |       |   |   | -         |   |   |   | 1,298 |   |
| Large cap equity fund                       |   |              | 905    |   |       |   | 119    |       |   |   | -         |   |   |   | 1,024 |   |
| Other mutual funds                          |   |              | 183    |   |       |   | 60     |       |   |   | -         |   |   |   | 243 |   |
| Common stock - financial services industry  |   |              | 443    |   |       |   | 2      |       |   |   | (1        | )      |   |   | 444 |   |
| Total                                       |   |              | 2,817  |   |       |   | 193    |       |   |   | (1        | )      |   |   | 3,009 |   |
| Total investment securities                 |   | $                 | 98,606 |   |       | $      | 2,485  |       |   | $      | (696      | )      |   | $ | 100,395 |   |

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Tabel of Contents

|                                   |   | Amortized |    |   | Estimated  |   |
|----------------------------------------|--------|-----------|---------|--------|------------|--------|
|                                   |   | Cost      |    |   | Fair Value |   |
| (In thousands)                         |   |      |    |   |       |   |
| Due in one year or less                |   | $         | 5,141   |   |       | $      | 5,167 |   |
| Due after one year through five years  |   |      | 20,958  |   |       |   | 21,117 |   |
| Due after five years through ten years |   |      | 10,675  |   |       |   | 11,123 |   |
| Due after ten years                    |   |      | 22,084  |   |       |   | 21,907 |   |
| Mortgage-backed securities             |   |      | 59,813  |   |       |   | 61,280 |   |
| Totals                                 |   | $         | 118,671 |   |       | $      | 120,594 |   |

|                                     |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  | June 30, 2012 |   |   |                                                   |              |   |                                                         |   |   |       |      |
|------------------------------------------|--------|------------|--------|--------|-------------------------|-------------------------|--------|--------|--------|--------|-----------------------|--------|-----------------------|---------------|--------|--------|--------------------------------------------------------|-------------------|--------|--------------------------------------------------------------|--------|--------|------------|-----------|
|                                     |   |       |   |   | Less than Twelve Months |                    |   |   |   |   | Twelve Months or More |   |                  |          |   |   |          Total |              |
|                                     |   | Number of  |   |   |                    |                    |   |   |   |   | Number of             |   |                  |          |   |   |                                                   |              |   | Number of                                                    |   |   |       |      |   |   |   |
|                                     |   | Individual |   |   | Unrealized              |                    |   | Fair   |   |   | Individual            |   |                  | Unrealized    |   |   | Fair                                                   |              |   | Individual                                                   |   |   | Unrealized |      |   | Fair |   |
|                                     |   | Securities |   |   | Losses                  |                    |   | Value  |   |   | Securities            |   |                  | Losses        |   |   | Value                                                  |              |   | Securities                                                   |   |   | Losses     |      |   | Value |   |
| (Dollars in thousands)                   |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  |          |   |   |                                                   |              |   |                                                         |   |   |       |      |   |   |   |
| US Treasury, agencies and GSE's          |   |       | 5      |   |                    | $                       | (7     | )      |   | $      | 5,150                 |   |                  |          | -      |   |                                                   | $                 | -      |                                                         |   | $      | -          |      |   |   | 5 |   |   | $ | (7 | ) |   | $ | 5,150 |   |
| State and political subdivisions         |   |       | 12     |   |                    |                    | (107   | )      |   |   | 5,965                 |   |                  |          | -      |   |                                                   |              | -      |                                                         |   |   | -          |      |   |   | 12 |   |   |   | (107 | ) |   |   | 5,965 |   |
| Corporate                                |   |       | 9      |   |                    |                    | (60    | )      |   |   | 5,719                 |   |                  |          | 2      |   |                                                   |              | (445   | )                                                            |   |   | 1,524      |      |   |   | 11 |   |   |   | (505 | ) |   |   | 7,243 |   |
| Residential mortgage-backed - US agency  |   |       | 7      |   |                    |                    | (25    | )      |   |   | 5,124                 |   |                  |          | -      |   |                                                   |              | -      |                                                         |   |   | -          |      |   |   | 7 |   |   |   | (25 | ) |   |   | 5,124 |   |
| Common stock-financial services industry |   |       | 1      |   |                    |                    | (1     | )      |   |   | 2                     |   |                  |          | -      |   |                                                   |              | -      |                                                         |   |   | -          |      |   |   | 1 |   |   |   | (1 | ) |   |   | 2 |   |
| Totals                                   |   |       | 34     |   |                    | $                       | (200   | )      |   | $      | 21,960                |   |                  |          | 2      |   |                                                   | $                 | (445   | )                                                            |   | $      | 1,524      |      |   |   | 36 |   |   | $ | (645 | ) |   | $ | 23,484 |   |
|                                     |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  |          |   |   |                                                   |              |   |                                                         |   |   |       |      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  |          |   |   |                                                   |              |   |                                                         |   |   |       |      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  |          |   |   |                                                   | December 31, 2011 |   |                                                         |   |   |       |      |   |   |   |   |   |   |   |
|                                     |   |       |   |   |                    | Less than Twelve Months |   |   |   |   |                  |   | Twelve Months or More |          |   |   |                                                   |              |   |           Total |   |
|                                     |   | Number of  |   |   |                    |                    |   |   |   |   |                  |   | Number of             |          |   |   |                                                   |              |   |                                                         |   |   |       | Number of |   |   |   |   |   |   |   |   |   |
|                                     |   | Individual |   |   | Unrealized              |                    |   | Fair   |   |   | Individual            |   |                  | Unrealized    |   |   | Fair                                                   |              |   | Individual                                                   |   |   | Unrealized |      |   | Fair |   |
|                                     |   | Securities |   |   | Losses                  |                    |   | Value  |   |   | Securities            |   |                  | Losses        |   |   | Value                                                  |              |   | Securities                                                   |   |   | Losses     |      |   | Value |   |
| (Dollars in thousands)                   |   |       |   |   |                    |                    |   |   |   |   |                  |   |                  |          |   |   |                                                   |              |   |                                                         |   |   |       |      |   |   |   |   |   |   |   |   |   |   |   |   |
| State and political subdivisions         |   |       | 1      |   |                    | $                       | (1     | )      |   | $      | 412                   |   |                  |          | -      |   |                                                   | $                 | -      |                                                         |   | $      | -          |      |   |   | 1 |   |   | $ | (1 | ) |   | $ | 412 |   |
| Corporate                                |   |       | 19     |   |                    |                    | (131   | )      |   |   | 13,489                |   |                  |          | 2      |   |                                                   |              | (559   | )                                                            |   |   | 1,410      |      |   |   | 21 |   |   |   | (690 | ) |   |   | 14,899 |   |
| Residential mortgage-backed - US agency  |   |       | 2      |   |                    |                    | (4     | )      |   |   | 1,896                 |   |                  |          | -      |   |                                                   |              | -      |                                                         |   |   | -          |      |   |   | 2 |   |   |   | (4 | ) |   |   | 1,896 |   |
| Common stock-financial services industry |   |       | -      |   |                    |                    | -      |   |   |   | -                     |   |                  |          | 1      |   |                                                   |              | (1     | )                                                            |   |   | 3          |      |   |   | 1 |   |   |   | (1 | ) |   |   | 3 |   |
| Totals                                   |   |       | 22     |   |                    | $                       | (136   | )      |   | $      | 15,797                |   |                  |          | 3      |   |                                                   | $                 | (560   | )                                                            |   | $      | 1,413      |      |   |   | 25 |   |   | $ | (696 | ) |   | $ | 17,210 |   |

----

Tabel of Contents

| (In thousands)                      |   | 2012   |   |   | 2011   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| Beginning balance – January 1 |   | $      | -      |   |   | $      | 875 |   |
| Reductions for securities sold      |   |   | -      |   |   |   | (875 | ) |
| Ending balance - June 30            |   | $      | -      |   |   | $      | - |   |

|            |   | For the three months |   |   | For the six months |   |
|-----------------|--------|----------------------|--------|--------|--------------------|--------|
|            |   | ended June 30,       |   |   | ended June 30,     |   |
| (In thousands)  |   | 2012                 |   |   | 2011               |   |   | 2012 |   |   | 2011 |   |
| Realized gains  |   | $                    | 49     |   |               | $      | 297 |   |   | $ | 161 |   |   | $ | 328 |   |
| Realized losses |   |                 | -      |   |               |   | (2 | ) |   |   | - |   |   |   | (5 | ) |
|   Total    |   | $                    | 49     |   |               | $      | 295 |   |   | $ | 161 |   |   | $ | 323 |   |

----

Tabel of Contents

|                                  |   | Pension Benefits                    |   |   | Postretirement Benefits           |   |   | Pension Benefits |   |   | Postretirement Benefits |   |
|---------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|--------|------------------|--------|--------|-------------------------|--------|
|                                  |   | For the three months ended June 30, |   |   | For the six months ended June 30, |   |
| (In thousands)                        |   | 2012                                |   |   | 2011                              |   |   | 2012             |   |   | 2011                    |   |   | 2012 |   |   | 2011 |   |   | 2012 |   |   | 2011 |   |
|                                  |   |                                |   |   |                              |   |   |             |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                          |   | $                                   | 55     |   |                              | $      | 82     |             |   | $      | -                       |   |   | $ | - |   |   | $ | 166 |   |   | $ | 164 |   |   | $ | - |   |   | $ | - |   |
| Interest cost                         |   |                                | 101    |   |                              |   | 104    |             |   |   | 5                       |   |   |   | 5 |   |   |   | 212 |   |   |   | 207 |   |   |   | 9 |   |   |   | 10 |   |
| Expected return on plan assets        |   |                                | (201   | )      |                              |   | (157   | )                |   |   | -                       |   |   |   | - |   |   |   | (399 | ) |   |   | (313 | ) |   |   | - |   |   |   | - |   |
| Amortization of transition obligation |   |                                | -      |   |                              |   | -      |             |   |   | -                       |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9 |   |
| Amortization of net losses            |   |                                | 103    |   |                              |   | 62     |             |   |   | 3                       |   |   |   | - |   |   |   | 233 |   |   |   | 124 |   |   |   | 7 |   |   |   | - |   |
| Net periodic benefit plan cost        |   | $                                   | 58     |   |                              | $      | 91     |             |   | $      | 8                       |   |   | $ | 9 |   |   | $ | 212 |   |   | $ | 182 |   |   | $ | 16 |   |   | $ | 19 |   |

|                                        |   | June 30, |    |   | December 31, |   |
|---------------------------------------------|--------|----------|---------|--------|--------------|--------|
| (In thousands)                              |   | 2012     |    |   | 2011         |   |
| Residential mortgage loans:                 |   |     |    |   |         |   |
| 1-4 family first-lien residential mortgages |   | $        | 166,233 |   |         | $      | 158,384 |   |
| Construction                                |   |     | 2,495   |   |         |   | 3,935 |   |
|                                        |   |     | 168,728 |   |         |   | 162,319 |   |
|                                        |   |     |    |   |         |   |   |   |
| Commercial loans:                           |   |     |    |   |         |   |   |   |
| Real estate                                 |   |     | 78,001  |   |         |   | 73,420 |   |
| Lines of credit                             |   |     | 13,223  |   |         |   | 13,791 |   |
| Other commercial and industrial             |   |     | 20,766  |   |         |   | 22,701 |   |
| Municipal                                   |   |     | 4,086   |   |         |   | 3,619 |   |
|                                        |   |     | 116,076 |   |         |   | 113,531 |   |
|                                        |   |     |    |   |         |   |   |   |
| Consumer loans:                             |   |     |    |   |         |   |   |   |
| Home equity and junior liens                |   |     | 23,609  |   |         |   | 24,171 |   |
| Other consumer                              |   |     | 3,644   |   |         |   | 4,140 |   |
|                                        |   |     | 27,253  |   |         |   | 28,311 |   |
|                                        |   |     |    |   |         |   |   |   |
| Total loans                                 |   |     | 312,057 |   |         |   | 304,161 |   |
| Net deferred loan costs                     |   |     | 521     |   |         |   | 589 |   |
| Less allowance for loan losses              |   |     | (4,213  | )      |         |   | (3,980 | ) |
| Loans receivable, net                       |   | $        | 308,365 |   |         | $      | 300,770 |   |

----

Tabel of Contents

| Portfolio Segment          | Class                                       |
|----------------------------|---------------------------------------------|
|                       |                                        |
| Residential Mortgage Loans | 1-4 family first-lien residential mortgages |
|                       | Construction                                |
|                       |                                        |
| Commercial Loans           | Real estate                                 |
|                       | Lines of credit                             |
|                       | Other commercial and industrial             |
|                       | Municipal                                   |
|                       |                                        |
| Consumer Loans             | Home equity and junior liens                |
|                       | Other consumer                              |

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Tabel of Contents

|                                        |   | June 30, 2012 |    |
|---------------------------------------------|--------|---------------|---------|
|                                        |   |          |    |   | Special |   |   |   |   |   |   |   |   |   |   |
| (In thousands)                              |   | Pass          |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Residential mortgage loans:                 |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $             | 159,611 |   |   | $ | 1,307 |   |   | $ | 5,315 |   |   | $ | - |   |   | $ | 166,233 |   |
| Construction                                |   |          | 2,495   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,495 |   |
|                                        |   |          | 162,106 |   |   |   | 1,307 |   |   |   | 5,315 |   |   |   | - |   |   |   | 168,728 |   |
| Commercial loans:                           |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |          | 73,260  |   |   |   | 1,039 |   |   |   | 3,702 |   |   |   | - |   |   |   | 78,001 |   |
| Lines of credit                             |   |          | 11,988  |   |   |   | 100 |   |   |   | 1,135 |   |   |   | - |   |   |   | 13,223 |   |
| Other commercial and industrial             |   |          | 19,917  |   |   |   | 138 |   |   |   | 711 |   |   |   | - |   |   |   | 20,766 |   |
| Municipal                                   |   |          | 4,086   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,086 |   |
|                                        |   |          | 109,251 |   |   |   | 1,277 |   |   |   | 5,548 |   |   |   | - |   |   |   | 116,076 |   |
| Consumer loans:                             |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |          | 21,666  |   |   |   | 124 |   |   |   | 1,768 |   |   |   | 51 |   |   |   | 23,609 |   |
| Other consumer                              |   |          | 3,485   |   |   |   | 18 |   |   |   | 109 |   |   |   | 32 |   |   |   | 3,644 |   |
|                                        |   |          | 25,151  |   |   |   | 142 |   |   |   | 1,877 |   |   |   | 83 |   |   |   | 27,253 |   |
| Total loans                                 |   | $             | 296,508 |   |   | $ | 2,726 |   |   | $ | 12,740 |   |   | $ | 83 |   |   | $ | 312,057 |   |
|                                        |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                        |   | December 31, 2011 |    |
|---------------------------------------------|--------|-------------------|---------|
|                                        |   |              |    |   | Special |   |   |   |   |   |   |   |   |   |   |
| (In thousands)                              |   | Pass              |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Residential mortgage loans:                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 153,049 |   |   | $ | 1,050 |   |   | $ | 4,285 |   |   | $ | - |   |   | $ | 158,384 |   |
| Construction                                |   |              | 3,935   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,935 |   |
|                                        |   |              | 156,984 |   |   |   | 1,050 |   |   |   | 4,285 |   |   |   | - |   |   |   | 162,319 |   |
| Commercial loans:                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 69,737  |   |   |   | 212 |   |   |   | 3,471 |   |   |   | - |   |   |   | 73,420 |   |
| Lines of credit                             |   |              | 12,579  |   |   |   | 49 |   |   |   | 1,163 |   |   |   | - |   |   |   | 13,791 |   |
| Other commercial and industrial             |   |              | 21,978  |   |   |   | 89 |   |   |   | 591 |   |   |   | 43 |   |   |   | 22,701 |   |
| Municipal                                   |   |              | 3,619   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,619 |   |
|                                        |   |              | 107,913 |   |   |   | 350 |   |   |   | 5,225 |   |   |   | 43 |   |   |   | 113,531 |   |
| Consumer loans:                             |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 22,500  |   |   |   | 162 |   |   |   | 1,456 |   |   |   | 53 |   |   |   | 24,171 |   |
| Other consumer                              |   |              | 3,922   |   |   |   | 61 |   |   |   | 123 |   |   |   | 34 |   |   |   | 4,140 |   |
|                                        |   |              | 26,422  |   |   |   | 223 |   |   |   | 1,579 |   |   |   | 87 |   |   |   | 28,311 |   |
| Total loans                                 |   | $                 | 291,319 |   |   | $ | 1,623 |   |   | $ | 11,089 |   |   | $ | 130 |   |   | $ | 304,161 |   |

----

Tabel of Contents

|                                        |   | June 30, 2012 |   |
|---------------------------------------------|--------|---------------|--------|
|                                        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | 30-59 Days    |   |   | 60-89 Days |   |   | 90 Days |   |   | Total |   |   |   |   |   | Total Loans |   |
| (In thousands)                              |   | Past Due      |   |   | Past Due |   |   | and Over |   |   | Past Due |   |   | Current |   |   | Receivable |   |
| Residential mortgage loans:                 |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $             | 1,745  |   |   | $ | 1,056 |   |   | $ | 1,344 |   |   | $ | 4,145 |   |   | $ | 162,088 |   |   | $ | 166,233 |   |
| Construction                                |   |          | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,495 |   |   |   | 2,495 |   |
|                                        |   |          | 1,745  |   |   |   | 1,056 |   |   |   | 1,344 |   |   |   | 4,145 |   |   |   | 164,583 |   |   |   | 168,728 |   |
| Commercial loans:                           |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |          | 1,581  |   |   |   | 1,085 |   |   |   | 1,380 |   |   |   | 4,046 |   |   |   | 73,955 |   |   |   | 78,001 |   |
| Lines of credit                             |   |          | 201    |   |   |   | 267 |   |   |   | 310 |   |   |   | 778 |   |   |   | 12,445 |   |   |   | 13,223 |   |
| Other commercial and industrial             |   |          | 661    |   |   |   | 291 |   |   |   | 492 |   |   |   | 1,444 |   |   |   | 19,322 |   |   |   | 20,766 |   |
| Municipal                                   |   |          | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,086 |   |   |   | 4,086 |   |
|                                        |   |          | 2,443  |   |   |   | 1,643 |   |   |   | 2,182 |   |   |   | 6,268 |   |   |   | 109,808 |   |   |   | 116,076 |   |
| Consumer loans:                             |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |          | 580    |   |   |   | 163 |   |   |   | 765 |   |   |   | 1,508 |   |   |   | 22,101 |   |   |   | 23,609 |   |
| Other consumer                              |   |          | 22     |   |   |   | 31 |   |   |   | 44 |   |   |   | 97 |   |   |   | 3,547 |   |   |   | 3,644 |   |
|                                        |   |          | 602    |   |   |   | 194 |   |   |   | 809 |   |   |   | 1,605 |   |   |   | 25,648 |   |   |   | 27,253 |   |
| Total loans                                 |   | $             | 4,790  |   |   | $ | 2,893 |   |   | $ | 4,335 |   |   | $ | 12,018 |   |   | $ | 300,039 |   |   | $ | 312,057 |   |

|                                        |   | December 31, 2011 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | 30-59 Days        |   |   | 60-89 Days |   |   | 90 Days |   |   | Total |   |   |   |   |   | Total Loans |   |
| (In thousands)                              |   | Past Due          |   |   | Past Due |   |   | and Over |   |   | Past Due |   |   | Current |   |   | Receivable |   |
| Residential mortgage loans:                 |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $                 | 2,870  |   |   | $ | 934 |   |   | $ | 1,428 |   |   | $ | 5,232 |   |   | $ | 153,152 |   |   | $ | 158,384 |   |
| Construction                                |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,935 |   |   |   | 3,935 |   |
|                                        |   |              | 2,870  |   |   |   | 934 |   |   |   | 1,428 |   |   |   | 5,232 |   |   |   | 157,087 |   |   |   | 162,319 |   |
| Commercial loans:                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                                 |   |              | 2,015  |   |   |   | 4 |   |   |   | 1,623 |   |   |   | 3,642 |   |   |   | 69,778 |   |   |   | 73,420 |   |
| Lines of credit                             |   |              | 337    |   |   |   | 75 |   |   |   | 467 |   |   |   | 879 |   |   |   | 12,912 |   |   |   | 13,791 |   |
| Other commercial and industrial             |   |              | 356    |   |   |   | 392 |   |   |   | 504 |   |   |   | 1,252 |   |   |   | 21,449 |   |   |   | 22,701 |   |
| Municipal                                   |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,619 |   |   |   | 3,619 |   |
|                                        |   |              | 2,708  |   |   |   | 471 |   |   |   | 2,594 |   |   |   | 5,773 |   |   |   | 107,758 |   |   |   | 113,531 |   |
| Consumer loans:                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity and junior liens                |   |              | 357    |   |   |   | 182 |   |   |   | 550 |   |   |   | 1,089 |   |   |   | 23,082 |   |   |   | 24,171 |   |
| Other consumer                              |   |              | 55     |   |   |   | 2 |   |   |   | 156 |   |   |   | 213 |   |   |   | 3,927 |   |   |   | 4,140 |   |
|                                        |   |              | 412    |   |   |   | 184 |   |   |   | 706 |   |   |   | 1,302 |   |   |   | 27,009 |   |   |   | 28,311 |   |
| Total loans                                 |   | $                 | 5,990  |   |   | $ | 1,589 |   |   | $ | 4,728 |   |   | $ | 12,307 |   |   | $ | 291,854 |   |   | $ | 304,161 |   |

----

Tabel of Contents

|                                        |   | June 30, |   |   | December 31, |   |
|---------------------------------------------|--------|----------|--------|--------|--------------|--------|
| (In thousands)                              |   | 2012     |   |   | 2011         |   |
| Residential mortgage loans:                 |   |     |   |   |         |   |
| 1-4 family first-lien residential mortgages |   | $        | 1,344  |   |         | $      | 1,428 |   |
| Construction                                |   |     | -      |   |         |   | - |   |
|                                        |   |     | 1,344  |   |         |   | 1,428 |   |
| Commercial loans:                           |   |     |   |   |         |   |   |   |
| Real estate                                 |   |     | 1,380  |   |         |   | 1,623 |   |
| Lines of credit                             |   |     | 310    |   |         |   | 467 |   |
| Other commercial and industrial             |   |     | 492    |   |         |   | 504 |   |
| Municipal                                   |   |     | -      |   |         |   | - |   |
|                                        |   |     | 2,182  |   |         |   | 2,594 |   |
| Consumer loans:                             |   |     |   |   |         |   |   |   |
| Home equity and junior liens                |   |     | 765    |   |         |   | 550 |   |
| Other consumer                              |   |     | 44     |   |         |   | 156 |   |
|                                        |   |     | 809    |   |         |   | 706 |   |
| Total nonaccrual loans                      |   | $        | 4,335  |   |         | $      | 4,728 |   |

----

Tabel of Contents

|                                        |   |       |   |   | June 30, 2012 |   |   |      |   |   | December 31, 2011 |   |
|---------------------------------------------|--------|------------|--------|--------|---------------|--------|--------|-----------|--------|--------|-------------------|--------|
|                                        |   |       |   |   | Unpaid        |   |   |      |   |   |              |   |   | Unpaid |   |   |   |   |
|                                        |   | Recorded   |   |   | Principal     |   |   | Related   |   |   | Recorded          |   |   | Principal |   |   | Related |   |
| (In thousands)                              |   | Investment |   |   | Balance       |   |   | Allowance |   |   | Investment        |   |   | Balance |   |   | Allowance |   |
| With no related allowance recorded:         |   |       |   |   |          |   |   |      |   |   |              |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   | $          | 535    |   |          | $      | 535    |      |   | $      | -                 |   |   | $ | 442 |   |   | $ | 442 |   |   | $ | - |   |
| Residential construction mortgage           |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |       | 1,237  |   |          |   | 1,370  |      |   |   | -                 |   |   |   | 968 |   |   |   | 1,096 |   |   |   | - |   |
| Commercial lines of credit                  |   |       | 336    |   |          |   | 336    |      |   |   | -                 |   |   |   | 74 |   |   |   | 74 |   |   |   | - |   |
| Other commercial and industrial             |   |       | 248    |   |          |   | 248    |      |   |   | -                 |   |   |   | 257 |   |   |   | 257 |   |   |   | - |   |
| Municipal                                   |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |       | 345    |   |          |   | 345    |      |   |   | -                 |   |   |   | 312 |   |   |   | 312 |   |   |   | - |   |
| Other consumer                              |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| With an allowance recorded:                 |   |       |   |   |          |   |   |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   |       | 1,088  |   |          |   | 1,088  |      |   |   | 226               |   |   |   | 856 |   |   |   | 856 |   |   |   | 149 |   |
| Residential construction mortgage           |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |       | 1,568  |   |          |   | 1,568  |      |   |   | 277               |   |   |   | 735 |   |   |   | 735 |   |   |   | 109 |   |
| Commercial lines of credit                  |   |       | 113    |   |          |   | 123    |      |   |   | 113               |   |   |   | 378 |   |   |   | 378 |   |   |   | 178 |   |
| Other commercial and industrial             |   |       | 320    |   |          |   | 320    |      |   |   | 269               |   |   |   | 122 |   |   |   | 122 |   |   |   | 122 |   |
| Municipal                                   |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |       | 157    |   |          |   | 157    |      |   |   | 61                |   |   |   | 136 |   |   |   | 136 |   |   |   | 61 |   |
| Other consumer                              |   |       | 3      |   |          |   | 3      |      |   |   | 3                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total:                                      |   |       |   |   |          |   |   |      |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family first-lien residential mortgages |   |       | 1,623  |   |          |   | 1,623  |      |   |   | 226               |   |   |   | 1,298 |   |   |   | 1,298 |   |   |   | 149 |   |
| Residential construction mortgage           |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial real estate                      |   |       | 2,805  |   |          |   | 2,938  |      |   |   | 277               |   |   |   | 1,703 |   |   |   | 1,831 |   |   |   | 109 |   |
| Commercial lines of credit                  |   |       | 449    |   |          |   | 459    |      |   |   | 113               |   |   |   | 452 |   |   |   | 452 |   |   |   | 178 |   |
| Other commercial and industrial             |   |       | 568    |   |          |   | 568    |      |   |   | 269               |   |   |   | 379 |   |   |   | 379 |   |   |   | 122 |   |
| Municipal                                   |   |       | -      |   |          |   | -      |      |   |   | -                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity and junior liens                |   |       | 502    |   |          |   | 502    |      |   |   | 61                |   |   |   | 448 |   |   |   | 448 |   |   |   | 61 |   |
| Other consumer                              |   |       | 3      |   |          |   | 3      |      |   |   | 3                 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Total impaired loans                  |   | $          | 5,950  |   |          | $      | 6,093  |      |   | $      | 949               |   |   | $ | 4,280 |   |   | $ | 4,408 |   |   | $ | 619 |   |

|                                        |   | For the three months ended June 30, |   |   | For the six months ended June 30, |   |
|---------------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
| (In thousands)                              |   | 2012                                |   |   | 2011                              |   |   | 2012 |   |   | 2011 |   |
| 1-4 family first-lien residential mortgages |   | $                                   | 1,414  |   |                              | $      | 1,071 |   |   | $ | 1,375 |   |   | $ | 1,106 |   |
| Commercial real estate                      |   |                                | 2,649  |   |                              |   | 3,833 |   |   |   | 2,333 |   |   |   | 3,938 |   |
| Commercial lines of credit                  |   |                                | 451    |   |                              |   | 200 |   |   |   | 451 |   |   |   | 250 |   |
| Other commercial and industrial             |   |                                | 681    |   |                              |   | 452 |   |   |   | 580 |   |   |   | 474 |   |
| Home equity and junior liens                |   |                                | 475    |   |                              |   | 649 |   |   |   | 468 |   |   |   | 609 |   |
| Other consumer                              |   |                                | 2      |   |                              |   | - |   |   |   | 1 |   |   |   | - |   |
| Total                                       |   | $                                   | 5,672  |   |                              | $      | 6,205 |   |   | $ | 5,208 |   |   | $ | 6,377 |   |

----

Tabel of Contents

|                                        |   | For the three months ended June 30, |   |   | For the six months ended June 30, |   |
|---------------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
| (In thousands)                              |   | 2012                                |   |   | 2011                              |   |   | 2012 |   |   | 2011 |   |
| 1-4 family first-lien residential mortgages |   | $                                   | 31     |   |                              | $      | 26 |   |   | $ | 46 |   |   | $ | 38 |   |
| Commercial real estate                      |   |                                | 37     |   |                              |   | 75 |   |   |   | 60 |   |   |   | 108 |   |
| Commercial lines of credit                  |   |                                | 13     |   |                              |   | - |   |   |   | 18 |   |   |   | 2 |   |
| Other commercial and industrial             |   |                                | 13     |   |                              |   | 11 |   |   |   | 19 |   |   |   | 19 |   |
| Home equity and junior liens                |   |                                | 3      |   |                              |   | (2 | ) |   |   | 7 |   |   |   | 9 |   |
| Other consumer                              |   |                                | -      |   |                              |   | - |   |   |   | - |   |   |   | - |   |
| Total                                       |   | $                                   | 97     |   |                              | $      | 110 |   |   | $ | 150 |   |   | $ | 176 |   |

----

Tabel of Contents

|                                  |   | For the three months ended June 30, 2012 |    |
|---------------------------------------|--------|------------------------------------------|---------|
|                                  |   | 1-4 family                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | first-lien                               |    |   | Residential |   |   |   |   |   |   |   |   | Other |   |
|                                  |   | residential                              |    |   | construction |   |   | Commercial |   |   | Commercial |   |   | commercial |   |
| (In thousands)                        |   | mortgage                                 |    |   | mortgage |   |   | real estate |   |   | lines of credit |   |   | and industrial |   |
| Allowance for loan losses:            |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $                                        | 719     |   |   | $ | - |   |   | $ | 1,465 |   |   | $ | 515 |   |   | $ | 719 |   |
|    Charge-offs         |   |                                     | (15     | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (46 | ) |
|    Recoveries          |   |                                     | 1       |   |   |   | - |   |   |   | - |   |   |   | 50 |   |   |   | - |   |
|    Provisions          |   |                                     | 72      |   |   |   | - |   |   |   | 122 |   |   |   | (167 | ) |   |   | 25 |   |
| Ending balance                        |   | $                                        | 777     |   |   | $ | - |   |   | $ | 1,587 |   |   | $ | 398 |   |   | $ | 698 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   |                                     | 226     |   |   |   | - |   |   |   | 277 |   |   |   | 113 |   |   |   | 269 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $                                        | 551     |   |   | $ | - |   |   | $ | 1,310 |   |   | $ | 285 |   |   | $ | 429 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                                        | 166,233 |   |   | $ | 2,495 |   |   | $ | 78,001 |   |   | $ | 13,223 |   |   | $ | 20,766 |   |
| Ending balance: individually          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   |                                     | 1,623   |   |   |   | - |   |   |   | 2,805 |   |   |   | 449 |   |   |   | 568 |   |
| Ending balance: collectively          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | 164,610 |   |   | $ | 2,495 |   |   | $ | 75,196 |   |   | $ | 12,774 |   |   | $ | 20,198 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                                     |    |   |   | Home equity |   |   | Other |   |   |   |   |   |   |   |   |   |
|                                  |   | Municipal                                |    |   | and junior liens |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for loan losses:            |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $                                        | 2       |   |   | $ | 495 |   |   | $ | 134 |   |   | $ | 63 |   |   | $ | 4,112 |   |
|    Charge-offs         |   |                                     | -       |   |   |   | (8 | ) |   |   | (43 | ) |   |   | - |   |   |   | (112 | ) |
|    Recoveries          |   |                                     | -       |   |   |   | 3 |   |   |   | 9 |   |   |   | - |   |   |   | 63 |   |
|    Provisions          |   |                                     | -       |   |   |   | 11 |   |   |   | 31 |   |   |   | 56 |   |   |   | 150 |   |
| Ending balance                        |   | $                                        | 2       |   |   | $ | 501 |   |   | $ | 131 |   |   | $ | 119 |   |   | $ | 4,213 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   |                                     | -       |   |   |   | 61 |   |   |   | 3 |   |   |   | - |   |   |   | 949 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $                                        | 2       |   |   | $ | 440 |   |   | $ | 128 |   |   | $ | 119 |   |   | $ | 3,264 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                                        | 4,086   |   |   | $ | 23,609 |   |   | $ | 3,644 |   |   | $ | - |   |   | $ | 312,057 |   |
| Ending balance: individually          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   |                                     | -       |   |   |   | 502 |   |   |   | 3 |   |   |   | - |   |   |   | 5,950 |   |
| Ending balance: collectively          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | 4,086   |   |   | $ | 23,107 |   |   | $ | 3,641 |   |   | $ | - |   |   | $ | 306,107 |   |

----

Tabel of Contents

|                          |   | For the six months ended June 30, 2012 |   |
|-------------------------------|--------|----------------------------------------|--------|
|                          |   | 1-4 family                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | first-lien                             |   |   | Residential |   |   |   |   |   |   |   |   | Other |   |
|                          |   | residential                            |   |   | construction |   |   | Commercial |   |   | Commercial |   |   | commercial |   |
| (In thousands)                |   | mortgage                               |   |   | mortgage |   |   | real estate |   |   | lines of credit |   |   | and industrial |   |
| Allowance for loan losses:    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance             |   | $                                      | 664    |   |   | $ | - |   |   | $ | 1,346 |   |   | $ | 463 |   |   | $ | 649 |   |
|    Charge-offs |   |                                   | (35    | ) |   |   | - |   |   |   | (54 | ) |   |   | - |   |   |   | (89 | ) |
|    Recoveries  |   |                                   | 29     |   |   |   | - |   |   |   | 14 |   |   |   | 50 |   |   |   | - |   |
|    Provisions  |   |                                   | 119    |   |   |   | - |   |   |   | 281 |   |   |   | (115 | ) |   |   | 138 |   |
| Ending balance                |   | $                                      | 777    |   |   | $ | - |   |   | $ | 1,587 |   |   | $ | 398 |   |   | $ | 698 |   |
|                          |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |                                   |   |   |   | Home equity |   |   | Other |   |   |   |   |   |   |   |   |   |
|                          |   | Municipal                              |   |   | and junior liens |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for loan losses:    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance             |   | $                                      | 2      |   |   | $ | 501 |   |   | $ | 162 |   |   | $ | 193 |   |   | $ | 3,980 |   |
|    Charge-offs |   |                                   | -      |   |   |   | (8 | ) |   |   | (84 | ) |   |   | - |   |   |   | (270 | ) |
|    Recoveries  |   |                                   | -      |   |   |   | 5 |   |   |   | 30 |   |   |   | - |   |   |   | 128 |   |
|    Provisions  |   |                                   | -      |   |   |   | 3 |   |   |   | 23 |   |   |   | (74 | ) |   |   | 375 |   |
| Ending balance                |   | $                                      | 2      |   |   | $ | 501 |   |   | $ | 131 |   |   | $ | 119 |   |   | $ | 4,213 |   |

----

Tabel of Contents

|                                  |   | For the three months ended June 30, 2011 |    |
|---------------------------------------|--------|------------------------------------------|---------|
|                                  |   | 1-4 family                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | first-lien                               |    |   | Residential |   |   |   |   |   |   |   |   | Other |   |
|                                  |   | residential                              |    |   | construction |   |   | Commercial |   |   | Commercial |   |   | commercial |   |
| (In thousands)                        |   | mortgage                                 |    |   | mortgage |   |   | real estate |   |   | lines of credit |   |   | and industrial |   |
| Allowance for loan losses:            |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $                                        | 754     |   |   | $ | - |   |   | $ | 1,366 |   |   | $ | 582 |   |   | $ | 623 |   |
|    Charge-offs         |   |                                     | (29     | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Recoveries          |   |                                     | 33      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Provisions          |   |                                     | (71     | ) |   |   | - |   |   |   | 259 |   |   |   | (291 | ) |   |   | 208 |   |
| Ending balance                        |   | $                                        | 687     |   |   | $ | - |   |   | $ | 1,625 |   |   | $ | 291 |   |   | $ | 831 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   | $                                        | 222     |   |   | $ | - |   |   | $ | 301 |   |   | $ | 50 |   |   | $ | 432 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $                                        | 465     |   |   | $ | - |   |   | $ | 1,324 |   |   | $ | 241 |   |   | $ | 399 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                                        | 149,603 |   |   | $ | 2,729 |   |   | $ | 70,038 |   |   | $ | 13,440 |   |   | $ | 20,692 |   |
| Ending balance: individually          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | 1,305   |   |   | $ | - |   |   | $ | 2,295 |   |   | $ | 50 |   |   | $ | 805 |   |
| Ending balance: collectively          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | 148,298 |   |   | $ | 2,729 |   |   | $ | 67,743 |   |   | $ | 13,390 |   |   | $ | 19,887 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                                     |    |   |   | Home equity |   |   | Other |   |   |   |   |   |   |   |   |   |
|                                  |   | Municipal                                |    |   | and junior liens |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for loan losses:            |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                     |   | $                                        | 2       |   |   | $ | 423 |   |   | $ | 84 |   |   | $ | (67 | ) |   | $ | 3,767 |   |
|    Charge-offs         |   |                                     | -       |   |   |   | (15 | ) |   |   | (23 | ) |   |   | - |   |   |   | (67 | ) |
|    Recoveries          |   |                                     | -       |   |   |   | 3 |   |   |   | 8 |   |   |   | - |   |   |   | 44 |   |
|    Provisions          |   |                                     | -       |   |   |   | 49 |   |   |   | 47 |   |   |   | 61 |   |   |   | 262 |   |
| Ending balance                        |   | $                                        | 2       |   |   | $ | 460 |   |   | $ | 116 |   |   | $ | (6 | ) |   | $ | 4,006 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| individually evaluated for impairment |   | $                                        | -       |   |   | $ | 115 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,120 |   |
| Ending balance: related to loans      |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| collectively evaluated for impairment |   | $                                        | 2       |   |   | $ | 345 |   |   | $ | 116 |   |   | $ | (6 | ) |   | $ | 2,886 |   |
|                                  |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivables:                    |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                                        | 3,888   |   |   | $ | 24,986 |   |   | $ | 3,461 |   |   |   |   |   |   | $ | 288,837 |   |
| Ending balance: individually          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | -       |   |   | $ | 688 |   |   | $ | - |   |   |   |   |   |   | $ | 5,143 |   |
| Ending balance: collectively          |   |                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment              |   | $                                        | 3,888   |   |   | $ | 24,298 |   |   | $ | 3,461 |   |   |   |   |   |   | $ | 283,694 |   |

----

Tabel of Contents

|                          |   | For the six months ended June 30, 2011 |   |
|-------------------------------|--------|----------------------------------------|--------|
|                          |   | 1-4 family                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | first-lien                             |   |   | Residential |   |   |   |   |   |   |   |   | Other |   |
|                          |   | residential                            |   |   | Mortgage |   |   | Commercial |   |   | Commercial |   |   | commercial |   |
|                          |   | mortgage                               |   |   | Construction |   |   | real estate |   |   | lines of credit |   |   | and industrial |   |
| Allowance for loan losses:    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance             |   | $                                      | 750    |   |   | $ | - |   |   | $ | 1,204 |   |   | $ | 579 |   |   | $ | 501 |   |
|    Charge-offs |   |                                   | (59    | ) |   |   | - |   |   |   | (71 | ) |   |   | (15 | ) |   |   | - |   |
|    Recoveries  |   |                                   | 33     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Provisions  |   |                                   | (37    | ) |   |   | - |   |   |   | 492 |   |   |   | (273 | ) |   |   | 330 |   |
| Ending balance                |   | $                                      | 687    |   |   | $ | - |   |   | $ | 1,625 |   |   | $ | 291 |   |   | $ | 831 |   |
|                          |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |                                   |   |   |   | Home equity |   |   | Other |   |   |   |   |   |   |   |   |   |
|                          |   | Municipal                              |   |   | and junior liens |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
| Allowance for loan losses:    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance             |   | $                                      | 3      |   |   | $ | 424 |   |   | $ | 89 |   |   | $ | 98 |   |   | $ | 3,648 |   |
|    Charge-offs |   |                                   | -      |   |   |   | (24 | ) |   |   | (51 | ) |   |   | - |   |   |   | (220 | ) |
|    Recoveries  |   |                                   | -      |   |   |   | 5 |   |   |   | 15 |   |   |   | - |   |   |   | 53 |   |
|    Provisions  |   |                                   | (1     | ) |   |   | 55 |   |   |   | 63 |   |   |   | (104 | ) |   |   | 525 |   |
| Ending balance                |   | $                                      | 2      |   |   | $ | 460 |   |   | $ | 116 |   |   | $ | (6 | ) |   | $ | 4,006 |   |

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Tabel of Contents

|                                        |   | At June 30, 2012 |   |
|---------------------------------------------|--------|------------------|--------|
|                                        |   |             |   |   |   |   |   |   |   |   | Total Fair |   |
| (In thousands)                              |   | Level 1          |   |   | Level 2 |   |   | Level 3 |   |   | Value |   |
| Debt investment securities:                 |   |             |   |   |   |   |   |   |   |   |   |   |
| US Treasury, agencies and GSEs              |   | $                | -      |   |   | $ | 10,360 |   |   | $ | - |   |   | $ | 10,360 |   |
| State and political subdivisions            |   |             | -      |   |   |   | 25,164 |   |   |   | - |   |   |   | 25,164 |   |
| Corporate                                   |   |             | -      |   |   |   | 23,790 |   |   |   | - |   |   |   | 23,790 |   |
| Residential mortgage-backed - US agency     |   |             | -      |   |   |   | 60,869 |   |   |   | - |   |   |   | 60,869 |   |
| Residential mortgage-backed - private label |   |             | -      |   |   |   | 411 |   |   |   | - |   |   |   | 411 |   |
| Equity investment securities:               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds:                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ultra short mortgage fund                   |   |             | 1,298  |   |   |   | - |   |   |   | - |   |   |   | 1,298 |   |
| Large cap equity fund                       |   |             | 1,104  |   |   |   | - |   |   |   | - |   |   |   | 1,104 |   |
| Other mutual funds                          |   |             | -      |   |   |   | 285 |   |   |   | - |   |   |   | 285 |   |
| Common stock - financial services industry  |   |             | 28     |   |   |   | 419 |   |   |   | - |   |   |   | 447 |   |
| Total investment securities                 |   | $                | 2,430  |   |   | $ | 121,298 |   |   | $ | - |   |   | $ | 123,728 |   |
|                                        |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap derivative               |   | $                | -      |   |   | $ | (205 | ) |   | $ | - |   |   | $ | (205 | ) |
|                                        |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Tabel of Contents

|                                        |   |                 |   |   |    |   |   |    |   |   |       |   |
|---------------------------------------------|--------|----------------------|--------|--------|---------|--------|--------|---------|--------|--------|------------|--------|
|                                        |   |                 |   |   |    |   |   |    |   |   |       |   |
|                                        |   | At December 31, 2011 |   |
|                                        |   |                 |   |   |    |   |   |    |   |   | Total Fair |   |
| (In thousands)                              |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Value      |   |
| Debt investment securities:                 |   |                 |   |   |    |   |   |    |   |   |       |   |
| US Treasury, agencies and GSEs              |   | $                    | -      |   |    | $      | 5,073  |    |   | $      | -          |   |   | $ | 5,073 |   |
| State and political subdivisions            |   |                 | -      |   |    |   | 20,304 |    |   |   | -          |   |   |   | 20,304 |   |
| Corporate                                   |   |                 | -      |   |    |   | 20,434 |    |   |   | -          |   |   |   | 20,434 |   |
| Residential mortgage-backed - US agency     |   |                 | -      |   |    |   | 51,056 |    |   |   | -          |   |   |   | 51,056 |   |
| Residential mortgage-backed - private label |   |                 | -      |   |    |   | 519    |    |   |   | -          |   |   |   | 519 |   |
| Equity investment securities:               |   |                 |   |   |    |   |   |    |   |   |       |   |   |   |   |   |
| Mutual funds:                               |   |                 |   |   |    |   |   |    |   |   |       |   |   |   |   |   |
| Ultra short mortgage fund                   |   |                 | 1,298  |   |    |   | -      |    |   |   | -          |   |   |   | 1,298 |   |
| Large cap equity fund                       |   |                 | 1,024  |   |    |   | -      |    |   |   | -          |   |   |   | 1,024 |   |
| Other mutual funds                          |   |                 | -      |   |    |   | 243    |    |   |   | -          |   |   |   | 243 |   |
| Common stock - financial services industry  |   |                 | 25     |   |    |   | 419    |    |   |   | -          |   |   |   | 444 |   |
| Total investment securities                 |   | $                    | 2,347  |   |    | $      | 98,048 |    |   | $      | -          |   |   | $ | 100,395 |   |
|                                        |   |                 |   |   |    |   |   |    |   |   |       |   |   |   |   |   |
| Interest rate swap derivative               |   | $                    | -      |   |    | $      | (200   | )       |   | $      | -          |   |   | $ | (200 | ) |

|                   |   | At June 30, 2012     |   |
|------------------------|--------|----------------------|--------|
|                   |   |                 |   |   |   |   |   |   |   |   | Total Fair |   |
| (In thousands)         |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Value |   |
| Impaired loans         |   | $                    | -      |   |   | $ | - |   |   | $ | 2,300 |   |   | $ | 2,300 |   |
| Foreclosed real estate |   | $                    | -      |   |   | $ | - |   |   | $ | 272 |   |   | $ | 272 |   |
|                   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |                 |   |
|                   |   | At December 31, 2011 |   |
|                   |   |                 |   |   |   |   |   |   |   |   |   |   |   | Total Fair |   |
| (In thousands)         |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Value |   |
| Impaired loans         |   | $                    | -      |   |   | $ | - |   |   | $ | 1,608 |   |   | $ | 1,608 |   |
| Foreclosed real estate |   | $                    | -      |   |   | $ | - |   |   | $ | 165 |   |   | $ | 165 |   |

|                   |                    | Quantitative Information about Level 3 Fair Value Measurements |                                           |
|------------------------|-------------------------|----------------------------------------------------------------|------------------------------------------------|
|                   | Valuation               | Unobservable                                                   | Range                                          |
|                   | Techniques              | Input                                                          | (Weighted Avg.)                                |
| At June 30, 2012       |                    |                                                           |                                           |
| Impaired loans         | Appraisal of collateral | Appraisal Adjustments                                          | 4% - 35% (24%)                                 |
|                   |                    | Costs to Sell                                                  | 0% - 17% (13%)                                 |
|                   |                    |                                                           |                                           |
| Foreclosed real estate | Appraisal of collateral | Appraisal Adjustments                                          |  0% - 15% (13%)                           |
|                   |                    | Costs to Sell                                                  |  0% -   7%  (6%) |
|                   |                    |                                                           |                                           |

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Tabel of Contents

|                                   |   |       |   |   | June 30, 2012 |   |    | December 31, 2011 |   |
|----------------------------------------|--------|------------|--------|--------|---------------|--------|---------|-------------------|--------|
|                                   |   | Fair Value |   |   | Carrying      |   |    | Estimated         |   |   | Carrying |   |   | Estimated |   |
| (In thousands)                         |   | Hierarchy  |   |   | Amounts       |   |    | Fair Values       |   |   | Amounts |   |   | Fair Values |   |
| Financial assets:                      |   |       |   |   |          |   |    |              |   |   |   |   |   |   |   |
| Cash and cash equivalents              |   |       | 1      |   |          | $      | 10,139  |              |   | $ | 10,139 |   |   | $ | 10,218 |   |   | $ | 10,218 |   |
| Interest earning time deposits         |   |       | 1      |   |          |   | 2,000   |              |   |   | 2,000 |   |   |   | 2,000 |   |   |   | 2,000 |   |
| Investment securities                  |   |       | 1      |   |          |   | 2,430   |              |   |   | 2,430 |   |   |   | 2,347 |   |   |   | 2,347 |   |
| Investment securities                  |   |       | 2      |   |          |   | 121,298 |              |   |   | 121,298 |   |   |   | 98,048 |   |   |   | 98,048 |   |
| Federal Home Loan Bank stock           |   |       | 2      |   |          |   | 1,460   |              |   |   | 1,460 |   |   |   | 1,528 |   |   |   | 1,528 |   |
| Net loans                              |   |       | 3      |   |          |   | 308,365 |              |   |   | 320,509 |   |   |   | 300,770 |   |   |   | 310,218 |   |
| Accrued interest receivable            |   |       | 1      |   |          |   | 1,791   |              |   |   | 1,791 |   |   |   | 1,685 |   |   |   | 1,685 |   |
|                                   |   |       |   |   |          |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                 |   |       |   |   |          |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand Deposits, Savings, NOW and MMDA |   |       | 1      |   |          | $      | 232,615 |              |   | $ | 232,615 |   |   | $ | 214,318 |   |   | $ | 214,318 |   |
| Time Deposits                          |   |       | 2      |   |          |   | 167,048 |              |   |   | 169,642 |   |   |   | 151,811 |   |   |   | 154,836 |   |
| Borrowings                             |   |       | 2      |   |          |   | 25,019  |              |   |   | 26,027 |   |   |   | 26,074 |   |   |   | 27,322 |   |
| Junior subordinated debentures         |   |       | 2      |   |          |   | 5,155   |              |   |   | 5,155 |   |   |   | 5,155 |   |   |   | 5,155 |   |
| Accrued interest payable               |   |       | 1      |   |          |   | 124     |              |   |   | 124 |   |   |   | 145 |   |   |   | 145 |   |
| Interest rate swap derivative          |   |       | 2      |   |          |   | 205     |              |   |   | 205 |   |   |   | 200 |   |   |   | 200 |   |
| Off-balance sheet instruments:         |   |       |   |   |          |   |    |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Standby letters of credit              |   |       |   |   |          | $      | -       |              |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Commitments to extend credit           |   |       |   |   |          | $      | -       |              |   | $ | - |   |   | $ | - |   |   | $ | - |   |

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Tabel of Contents

|                   |                    |   | June 30, |   |   | December 31, |   |
|------------------------|-------------------------|--------|----------|--------|--------|--------------|--------|
|  (In thousands)   |                    |   | 2012     |   |   | 2011         |   |
|  Cash flow hedge: |                    |   |     |   |   |         |   |
|                   |  Other liabilities |   | $        | 205    |   |         | $      | 200 |   |

|                                                             |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
| (In thousands)                                                   |   | 2012                        |   |   | 2011                      |   |   | 2012 |   |   | 2011 |   |
| Balance as of March 31:                                          |   | $                           | (194   | )      |                      | $      | (85 | ) |   | $ | (200 | ) |   | $ | (110 | ) |
| Amount of losses recognized in other comprehensive income        |   |                        | (27    | )      |                      |   | (64 | ) |   |   | (35 | ) |   |   | (54 | ) |
| Amount of loss reclassified from other comprehensive income      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|      and recognized as interest expense |   |                        | 16     |   |                      |   | 14 |   |   |   | 30 |   |   |   | 29 |   |
| Balance as of June 30:                                           |   | $                           | (205   | )      |                      | $      | (135 | ) |   | $ | (205 | ) |   | $ | (135 | ) |

Item 2 

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Tabel of Contents

|                                         |   | For the Three Months Ended June 30, |    |
|----------------------------------------------|--------|-------------------------------------|---------|
|                                         |   | 2012                                |    |   | 2011 |   |
|                                         |   |                                |    |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                         |   | Average                             |    |   |   |   |   | Yield / |   |   | Average |   |   |   |   |   | Yield / |   |
| (Dollars in thousands)                       |   | Balance                             |    |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |
| Interest-earning assets:                     |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans residential                |   | $                                   | 166,447 |   |   | $ | 2,046 |   |   |   | 4.92 | % |   | $ | 150,937 |   |   | $ | 1,999 |   |   |   | 5.30 | % |
| Real estate loans commercial                 |   |                                | 73,769  |   |   |   | 1,094 |   |   |   | 5.93 | % |   |   | 69,749 |   |   |   | 1,101 |   |   |   | 6.31 | % |
| Commercial loans                             |   |                                | 39,725  |   |   |   | 458 |   |   |   | 4.61 | % |   |   | 37,249 |   |   |   | 475 |   |   |   | 5.10 | % |
| Consumer loans                               |   |                                | 27,474  |   |   |   | 390 |   |   |   | 5.68 | % |   |   | 28,596 |   |   |   | 418 |   |   |   | 5.85 | % |
| Taxable investment securities                |   |                                | 102,395 |   |   |   | 514 |   |   |   | 2.01 | % |   |   | 81,554 |   |   |   | 630 |   |   |   | 3.09 | % |
| Tax-exempt investment securities             |   |                                | 23,273  |   |   |   | 275 |   |   |   | 4.73 | % |   |   | 9,420 |   |   |   | 113 |   |   |   | 4.80 | % |
| Interest-earning time deposit                |   |                                | 2,000   |   |   |   | 6 |   |   |   | 1.20 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Interest-earning deposits                    |   |                                | 951     |   |   |   | 1 |   |   |   | 0.42 | % |   |   | 2,575 |   |   |   | 1 |   |   |   | 0.16 | % |
| Total interest-earning assets                |   |                                | 436,034 |   |   |   | 4,784 |   |   |   | 4.39 | % |   |   | 380,080 |   |   |   | 4,737 |   |   |   | 4.99 | % |
| Noninterest-earning assets:                  |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other assets                                 |   |                                | 34,086  |   |   |   |   |   |   |   |   |   |   |   | 36,630 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                    |   |                                | (4,160  | ) |   |   |   |   |   |   |   |   |   |   | (3,815 | ) |   |   |   |   |   |   |   |   |
| Net unrealized gains                         |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on available for sale securities             |   |                                | 2,279   |   |   |   |   |   |   |   |   |   |   |   | 1,215 |   |   |   |   |   |   |   |   |   |
| Total assets                                 |   | $                                   | 468,239 |   |   |   |   |   |   |   |   |   |   | $ | 414,110 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                                 |   | $                                   | 30,672  |   |   | $ | 19 |   |   |   | 0.25 | % |   | $ | 29,901 |   |   | $ | 21 |   |   |   | 0.28 | % |
| Money management accounts                    |   |                                | 14,958  |   |   |   | 12 |   |   |   | 0.32 | % |   |   | 12,658 |   |   |   | 11 |   |   |   | 0.35 | % |
| MMDA accounts                                |   |                                | 81,257  |   |   |   | 109 |   |   |   | 0.54 | % |   |   | 62,893 |   |   |   | 111 |   |   |   | 0.71 | % |
| Savings and club accounts                    |   |                                | 64,179  |   |   |   | 13 |   |   |   | 0.08 | % |   |   | 60,195 |   |   |   | 22 |   |   |   | 0.15 | % |
| Time deposits                                |   |                                | 158,316 |   |   |   | 583 |   |   |   | 1.47 | % |   |   | 139,419 |   |   |   | 656 |   |   |   | 1.88 | % |
| Junior subordinated debentures               |   |                                | 5,155   |   |   |   | 44 |   |   |   | 3.41 | % |   |   | 5,155 |   |   |   | 41 |   |   |   | 3.18 | % |
| Borrowings                                   |   |                                | 30,780  |   |   |   | 217 |   |   |   | 2.81 | % |   |   | 31,368 |   |   |   | 244 |   |   |   | 3.12 | % |
| Total interest-bearing liabilities           |   |                                | 385,317 |   |   |   | 997 |   |   |   | 1.03 | % |   |   | 341,589 |   |   |   | 1,106 |   |   |   | 1.30 | % |
| Noninterest-bearing liabilities:             |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                              |   |                                | 40,079  |   |   |   |   |   |   |   |   |   |   |   | 35,456 |   |   |   |   |   |   |   |   |   |
| Other liabilities                            |   |                                | 4,338   |   |   |   |   |   |   |   |   |   |   |   | 5,144 |   |   |   |   |   |   |   |   |   |
| Total liabilities                            |   |                                | 429,734 |   |   |   |   |   |   |   |   |   |   |   | 382,189 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                         |   |                                | 38,505  |   |   |   |   |   |   |   |   |   |   |   | 31,921 |   |   |   |   |   |   |   |   |   |
| Total liabilities & shareholders' equity |   | $                                   | 468,239 |   |   |   |   |   |   |   |   |   |   | $ | 414,110 |   |   |   |   |   |   |   |   |   |
| Net interest income                          |   |                                |    |   |   | $ | 3,787 |   |   |   |   |   |   |   |   |   |   | $ | 3,631 |   |   |   |   |   |
| Net interest rate spread                     |   |                                |    |   |   |   |   |   |   |   | 3.36 | % |   |   |   |   |   |   |   |   |   |   | 3.69 | % |
| Net interest margin                          |   |                                |    |   |   |   |   |   |   |   | 3.47 | % |   |   |   |   |   |   |   |   |   |   | 3.82 | % |
| Ratio of average interest-earning assets     |   |                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to average interest-bearing liabilities      |   |                                |    |   |   |   |   |   |   |   | 113.16 | % |   |   |   |   |   |   |   |   |   |   | 111.27 | % |

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Tabel of Contents

|                                         |   | For the Six Months Ended June 30, |    |
|----------------------------------------------|--------|-----------------------------------|---------|
|                                         |   | 2012                              |    |   | 2011 |   |
|                                         |   |                              |    |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                         |   | Average                           |    |   |   |   |   | Yield / |   |   | Average |   |   |   |   |   | Yield / |   |
| (Dollars in thousands)                       |   | Balance                           |    |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |
| Interest-earning assets:                     |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans residential                |   | $                                 | 164,765 |   |   | $ | 4,117 |   |   |   | 5.00 | % |   | $ | 149,959 |   |   | $ | 3,963 |   |   |   | 5.29 | % |
| Real estate loans commercial                 |   |                              | 73,253  |   |   |   | 2,133 |   |   |   | 5.82 | % |   |   | 69,146 |   |   |   | 2,155 |   |   |   | 6.23 | % |
| Commercial loans                             |   |                              | 39,780  |   |   |   | 969 |   |   |   | 4.87 | % |   |   | 38,628 |   |   |   | 922 |   |   |   | 4.77 | % |
| Consumer loans                               |   |                              | 27,713  |   |   |   | 788 |   |   |   | 5.69 | % |   |   | 28,588 |   |   |   | 842 |   |   |   | 5.89 | % |
| Taxable investment securities                |   |                              | 98,095  |   |   |   | 1,005 |   |   |   | 2.05 | % |   |   | 72,692 |   |   |   | 1,265 |   |   |   | 3.48 | % |
| Tax-exempt investment securities             |   |                              | 21,807  |   |   |   | 521 |   |   |   | 4.78 | % |   |   | 9,367 |   |   |   | 225 |   |   |   | 4.80 | % |
| Interest-earning time deposit                |   |                              | 2,000   |   |   |   | 12 |   |   |   | 1.20 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Interest-earning deposits                    |   |                              | 1,122   |   |   |   | 2 |   |   |   | 0.36 | % |   |   | 3,712 |   |   |   | 2 |   |   |   | 0.11 | % |
| Total interest-earning assets                |   |                              | 428,535 |   |   |   | 9,547 |   |   |   | 4.46 | % |   |   | 372,092 |   |   |   | 9,374 |   |   |   | 5.04 | % |
| Noninterest-earning assets:                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other assets                                 |   |                              | 34,297  |   |   |   |   |   |   |   |   |   |   |   | 44,333 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                    |   |                              | (4,101  | ) |   |   |   |   |   |   |   |   |   |   | (3,734 | ) |   |   |   |   |   |   |   |   |
| Net unrealized gains                         |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on available for sale securities             |   |                              | 2,220   |   |   |   |   |   |   |   |   |   |   |   | 766 |   |   |   |   |   |   |   |   |   |
| Total assets                                 |   | $                                 | 460,951 |   |   |   |   |   |   |   |   |   |   | $ | 413,457 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                                 |   | $                                 | 30,972  |   |   | $ | 38 |   |   |   | 0.25 | % |   | $ | 30,552 |   |   | $ | 41 |   |   |   | 0.27 | % |
| Money management accounts                    |   |                              | 14,668  |   |   |   | 26 |   |   |   | 0.35 | % |   |   | 12,593 |   |   |   | 21 |   |   |   | 0.33 | % |
| MMDA accounts                                |   |                              | 79,233  |   |   |   | 223 |   |   |   | 0.56 | % |   |   | 63,565 |   |   |   | 211 |   |   |   | 0.66 | % |
| Savings and club accounts                    |   |                              | 63,228  |   |   |   | 28 |   |   |   | 0.09 | % |   |   | 60,385 |   |   |   | 43 |   |   |   | 0.14 | % |
| Time deposits                                |   |                              | 156,631 |   |   |   | 1,182 |   |   |   | 1.51 | % |   |   | 137,905 |   |   |   | 1,317 |   |   |   | 1.91 | % |
| Junior subordinated debentures               |   |                              | 5,155   |   |   |   | 86 |   |   |   | 3.34 | % |   |   | 5,155 |   |   |   | 81 |   |   |   | 3.14 | % |
| Borrowings                                   |   |                              | 29,178  |   |   |   | 429 |   |   |   | 2.94 | % |   |   | 33,407 |   |   |   | 495 |   |   |   | 2.96 | % |
| Total interest-bearing liabilities           |   |                              | 379,065 |   |   |   | 2,012 |   |   |   | 1.06 | % |   |   | 343,562 |   |   |   | 2,209 |   |   |   | 1.29 | % |
| Noninterest-bearing liabilities:             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                              |   |                              | 39,520  |   |   |   |   |   |   |   |   |   |   |   | 33,570 |   |   |   |   |   |   |   |   |   |
| Other liabilities                            |   |                              | 3,956   |   |   |   |   |   |   |   |   |   |   |   | 4,827 |   |   |   |   |   |   |   |   |   |
| Total liabilities                            |   |                              | 422,541 |   |   |   |   |   |   |   |   |   |   |   | 381,959 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                         |   |                              | 38,410  |   |   |   |   |   |   |   |   |   |   |   | 31,498 |   |   |   |   |   |   |   |   |   |
| Total liabilities & shareholders' equity |   | $                                 | 460,951 |   |   |   |   |   |   |   |   |   |   | $ | 413,457 |   |   |   |   |   |   |   |   |   |
| Net interest income                          |   |                              |    |   |   | $ | 7,535 |   |   |   |   |   |   |   |   |   |   | $ | 7,165 |   |   |   |   |   |
| Net interest rate spread                     |   |                              |    |   |   |   |   |   |   |   | 3.39 | % |   |   |   |   |   |   |   |   |   |   | 3.75 | % |
| Net interest margin                          |   |                              |    |   |   |   |   |   |   |   | 3.52 | % |   |   |   |   |   |   |   |   |   |   | 3.85 | % |
| Ratio of average interest-earning assets     |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to average interest-bearing liabilities      |   |                              |    |   |   |   |   |   |   |   | 113.05 | % |   |   |   |   |   |   |   |   |   |   | 108.30 | % |

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|                              |   | Three Months Ended June 30 |   |   | Six Months Ended June 30   |   |
|-----------------------------------|--------|----------------------------|--------|--------|----------------------------|--------|
|                              |   | 2012 vs. 2011              |   |   | 2012 vs. 2011              |   |
|                              |   | Increase/(Decrease) Due to |   |   | Increase/(Decrease) Due to |   |
|                              |   |                       |   |   |                       |   |   | Total |   |   |   |   |   |   |   |   | Total |   |
|                              |   |                       |   |   |                       |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
| (In thousands)                    |   | Volume                     |   |   | Rate                       |   |   | (Decrease) |   |   | Volume |   |   | Rate |   |   | (Decrease) |   |
| Interest Income:                  |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans residential     |   | $                          | 703    |   |                       | $      | (656 | ) |   | $ | 47 |   |   | $ | 658 |   |   | $ | (504 | ) |   | $ | 154 |   |
| Real estate loans commercial      |   |                       | 256    |   |                       |   | (263 | ) |   |   | (7 | ) |   |   | 258 |   |   |   | (280 | ) |   |   | (22 | ) |
| Commercial loans                  |   |                       | 142    |   |                       |   | (159 | ) |   |   | (17 | ) |   |   | 28 |   |   |   | 19 |   |   |   | 47 |   |
| Consumer loans                    |   |                       | (16    | )      |                       |   | (12 | ) |   |   | (28 | ) |   |   | (26 | ) |   |   | (28 | ) |   |   | (54 | ) |
| Taxable investment securities     |   |                       | 697    |   |                       |   | (813 | ) |   |   | (116 | ) |   |   | 870 |   |   |   | (1,130 | ) |   |   | (260 | ) |
| Tax-exempt investment securities  |   |                       | 173    |   |                       |   | (11 | ) |   |   | 162 |   |   |   | 299 |   |   |   | (3 | ) |   |   | 296 |   |
| Interest-earning time deposits    |   |                       | 6      |   |                       |   | - |   |   |   | 6 |   |   |   | 12 |   |   |   | - |   |   |   | 12 |   |
| Interest-earning deposits         |   |                       | (4     | )      |                       |   | 4 |   |   |   | - |   |   |   | (436 | ) |   |   | 436 |   |   |   | - |   |
| Total interest income             |   |                       | 1,957  |   |                       |   | (1,910 | ) |   |   | 47 |   |   |   | 1,663 |   |   |   | (1,490 | ) |   |   | 173 |   |
| Interest Expense:                 |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                      |   |                       | 3      |   |                       |   | (5 | ) |   |   | (2 | ) |   |   | 1 |   |   |   | (4 | ) |   |   | (3 | ) |
| Money management accounts         |   |                       | 6      |   |                       |   | (5 | ) |   |   | 1 |   |   |   | 4 |   |   |   | 1 |   |   |   | 5 |   |
| MMDA accounts                     |   |                       | 116    |   |                       |   | (118 | ) |   |   | (2 | ) |   |   | 86 |   |   |   | (74 | ) |   |   | 12 |   |
| Savings and club accounts         |   |                       | -      |   |                       |   | (9 | ) |   |   | (9 | ) |   |   | 5 |   |   |   | (20 | ) |   |   | (15 | ) |
| Time deposits                     |   |                       | 411    |   |                       |   | (484 | ) |   |   | (73 | ) |   |   | 381 |   |   |   | (516 | ) |   |   | (135 | ) |
| Junior subordinated debentures    |   |                       | -      |   |                       |   | 3 |   |   |   | 3 |   |   |   | - |   |   |   | 5 |   |   |   | 5 |   |
| Borrowings                        |   |                       | (5     | )      |                       |   | (22 | ) |   |   | (27 | ) |   |   | (63 | ) |   |   | (3 | ) |   |   | (66 | ) |
| Total interest expense            |   |                       | 531    |   |                       |   | (640 | ) |   |   | (109 | ) |   |   | 414 |   |   |   | (611 | ) |   |   | (197 | ) |
| Net change in net interest income |   | $                          | 1,426  |   |                       | $      | (1,270 | ) |   | $ | 156 |   |   | $ | 1,249 |   |   | $ | (879 | ) |   | $ | 370 |   |

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|                                                        |   | Three Months Ended June 30, |   |   |   |   |   |   |   |
|-------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|
| (in thousands)                                              |   | 2012                        |   |   | 2011   |   |   | Change |   |
| Service charges on deposit accounts                         |   | $                           | 280    |   |   | $      | 276    |   |   | $ | 4 |   |   |   | 1.4 | % |
| Earnings and gain on bank owned life insurance              |   |                        | 96     |   |   |   | 55     |   |   |   | 41 |   |   |   | 74.5 | % |
| Loan servicing fees                                         |   |                        | 66     |   |   |   | 50     |   |   |   | 16 |   |   |   | 32.0 | % |
| Debit card interchange fees                                 |   |                        | 106    |   |   |   | 96     |   |   |   | 10 |   |   |   | 10.4 | % |
| Other charges, commissions and fees                         |   |                        | 137    |   |   |   | 137    |   |   |   | - |   |   |   | 0.0 | % |
| Noninterest income before gains                             |   |                        | 685    |   |   |   | 614    |   |   |   | 71 |   |   |   | 11.6 | % |
| Net gains on sales and redemptions of investment securities |   |                        | 49     |   |   |   | 295    |   |   |   | (246 | ) |   |   | -83.4 | % |
| Net gains on sales of loans and foreclosed real estate      |   |                        | 49     |   |   |   | 14     |   |   |   | 35 |   |   |   | 250.0 | % |
| Total noninterest income                                    |   | $                           | 783    |   |   | $      | 923    |   |   | $ | (140 | ) |   |   | -15.2 | % |
|                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   | Six Months Ended June 30,   |   |   |   |   |   |   |   |   |   |
| (in thousands)                                              |   |                        | 2012   |   |   |   | 2011   |   |   | Change |   |
| Service charges on deposit accounts                         |   | $                           | 553    |   |   | $      | 571    |   |   | $ | (18 | ) |   |   | -3.2 | % |
| Earnings and gain on bank owned life insurance              |   |                        | 188    |   |   |   | 117    |   |   |   | 71 |   |   |   | 60.7 | % |
| Loan servicing fees                                         |   |                        | 108    |   |   |   | 92     |   |   |   | 16 |   |   |   | 17.4 | % |
| Debit card interchange fees                                 |   |                        | 203    |   |   |   | 180    |   |   |   | 23 |   |   |   | 12.8 | % |
| Other charges, commissions and fees                         |   |                        | 273    |   |   |   | 273    |   |   |   | - |   |   |   | 0.0 | % |
| Noninterest income before gains                             |   |                        | 1,325  |   |   |   | 1,233  |   |   |   | 92 |   |   |   | 7.5 | % |
| Net gains on sales and redemptions of investment securities |   |                        | 161    |   |   |   | 323    |   |   |   | (162 | ) |   |   | -50.2 | % |
| Net gains on sales of loans and foreclosed real estate      |   |                        | 25     |   |   |   | 40     |   |   |   | (15 | ) |   |   | -37.5 | % |
| Total noninterest income                                    |   | $                           | 1,511  |   |   | $      | 1,596  |   |   | $ | (85 | ) |   |   | -5.3 | % |

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|                            |   |                                                            Three Months Ended June 30,                                   |   |   |   |   |   |   |   |
|---------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| (In thousands)                  |   | 2012                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 2011   |   |   | Change |   |
| Salaries and employee benefits  |   | $                                                                                                                                                                                                                                                                                                                                                                                                                          | 1,869  |   |   | $      | 1,764  |   |   | $ | 105 |   |   |   | 6.0 | % |
| Building occupancy              |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 346    |   |   |   | 359    |   |   |   | (13 | ) |   |   | -3.6 | % |
| Data processing                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 341    |   |   |   | 352    |   |   |   | (11 | ) |   |   | -3.1 | % |
| Professional and other services |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 146    |   |   |   | 159    |   |   |   | (13 | ) |   |   | -8.2 | % |
| Advertising                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 99     |   |   |   | 136    |   |   |   | (37 | ) |   |   | -27.2 | % |
| FDIC assessments                |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 78     |   |   |   | 162    |   |   |   | (84 | ) |   |   | -51.9 | % |
| Audits and exams                |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 56     |   |   |   | 59     |   |   |   | (3 | ) |   |   | -5.1 | % |
| Other expenses                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 419    |   |   |   | 412    |   |   |   | 7 |   |   |   | 1.7 | % |
| Total noninterest expense       |   | $                                                                                                                                                                                                                                                                                                                                                                                                                          | 3,354  |   |   | $      | 3,403  |   |   | $ | (49 | ) |   |   | -1.4 | % |
|                            |   |                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |                                                                  Six Months Ended June 30, |   |   |   |   |   |   |   |   |   |
| (In thousands)                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 2012   |   |   |   | 2011   |   |   | Change |   |
| Salaries and employee benefits  |   | $                                                                                                                                                                                                                                                                                                                                                                                                                          | 3,844  |   |   | $      | 3,473  |   |   | $ | 371 |   |   |   | 10.7 | % |
| Building occupancy              |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 729    |   |   |   | 722    |   |   |   | 7 |   |   |   | 1.0 | % |
| Data processing                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 682    |   |   |   | 705    |   |   |   | (23 | ) |   |   | -3.3 | % |
| Professional and other services |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 298    |   |   |   | 285    |   |   |   | 13 |   |   |   | 4.6 | % |
| Advertising                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 160    |   |   |   | 275    |   |   |   | (115 | ) |   |   | -41.8 | % |
| FDIC assessments                |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 155    |   |   |   | 324    |   |   |   | (169 | ) |   |   | -52.2 | % |
| Audits and exams                |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 111    |   |   |   | 119    |   |   |   | (8 | ) |   |   | -6.7 | % |
| Other expenses                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                       | 830    |   |   |   | 783    |   |   |   | 47 |   |   |   | 6.0 | % |
| Total noninterest expense       |   | $                                                                                                                                                                                                                                                                                                                                                                                                                          | 6,809  |   |   | $      | 6,686  |   |   | $ | 123 |   |   |   | 1.8 | % |

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|                                         |   |   |   |   |              |   |   |                  |   |   |         |   |   | Minimum      |   |
|----------------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|-----------------------|--------|--------|--------------|--------|--------|--------------|--------|
|                                         |   |   |   |   |              |   |   |                  |   |   |         |   |   | To Be "Well- |   |
|                                         |   |   |   |   |              |   |   | Minimum               |   |   | Capitalized" |   |
|                                         |   |   |   |   |              |   |   | For Capital           |   |   | Under Prompt |   |
|                                         |   | Actual |   |   | Adequacy Purposes |   |   | Corrective Provisions |   |
| (Dollars in thousands)                       |   | Amount |   |   | Ratio             |   |   | Amount                |   |   | Ratio        |   |   | Amount       |   |   | Ratio |   |
| As of June 30, 2012                          |   |   |   |   |              |   |   |                  |   |   |         |   |   |         |   |   |   |   |
| Total Core Capital (to Risk-Weighted Assets) |   | $      | 45,299 |   |              |   | 14.6   | %                     |   | $      | 24,880       |   |   |         | 8.0    | % |   | $ | 31,101 |   |   |   | 10.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets)     |   | $      | 41,267 |   |              |   | 13.3   | %                     |   | $      | 12,440       |   |   |         | 4.0    | % |   | $ | 18,660 |   |   |   | 6.0 | % |
| Tier 1 Capital (to Assets)                   |   | $      | 41,267 |   |              |   | 8.8    | %                     |   | $      | 18,962       |   |   |         | 4.0    | % |   | $ | 23,702 |   |   |   | 5.0 | % |
| As of December 31, 2011:                     |   |   |   |   |              |   |   |                  |   |   |         |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Total Core Capital (to Risk-Weighted Assets) |   | $      | 43,670 |   |              |   | 14.9   | %                     |   | $      | 23,386       |   |   |         | 8.0    | % |   | $ | 29,233 |   |   |   | 10.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets)     |   | $      | 39,917 |   |              |   | 13.7   | %                     |   | $      | 11,693       |   |   |         | 4.0    | % |   | $ | 17,540 |   |   |   | 6.0 | % |
| Tier 1 Capital (to Average Assets)           |   | $      | 39,917 |   |              |   | 9.4    | %                     |   | $      | 17,041       |   |   |         | 4.0    | % |   | $ | 21,301 |   |   |   | 5.0 | % |

|                                            |   | June 30, |   |   | December 31, |   |   | June 30, |   |
|-------------------------------------------------|--------|----------|--------|--------|--------------|--------|--------|----------|--------|
| (Dollars in thousands)                          |   | 2012     |   |   | 2011         |   |   | 2011     |   |
| Nonaccrual loans:                               |   |     |   |   |         |   |   |     |   |
| Commercial real estate and commercial           |   | $        | 2,182  |   |         | $      | 2,594  |     |   | $ | 2,626 |   |
| Consumer                                        |   |     | 809    |   |         |   | 706    |     |   |   | 400 |   |
| Residential real estate                         |   |     | 1,344  |   |         |   | 1,428  |     |   |   | 1,036 |   |
| Total nonaccrual loans                          |   |     | 4,335  |   |         |   | 4,728  |     |   |   | 4,062 |   |
| Total non-performing loans                      |   |     | 4,335  |   |         |   | 4,728  |     |   |   | 4,062 |   |
| Foreclosed real estate                          |   |     | 419    |   |         |   | 536    |     |   |   | 945 |   |
| Total non-performing assets                     |   | $        | 4,754  |   |         | $      | 5,264  |     |   | $ | 5,007 |   |
|                                            |   |     |   |   |         |   |   |     |   |   |   |   |
| Troubled debt restructurings not included above |   | $        | 589    |   |         | $      | 594    |     |   | $ | 602 |   |
|                                            |   |     |   |   |         |   |   |     |   |   |   |   |
| Non-performing loans to total loans             |   |     | 1.39   | %      |         |   | 1.55   | %        |   |   | 1.40 | % |
| Non-performing assets to total assets           |   |     | 1.00   | %      |         |   | 1.19   | %        |   |   | 1.20 | % |

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Item 3 - Quantitative 

Item 4 

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PART II - OTHER 

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SIGNATUR

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EXHIBIT 31

| Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| I, Thomas W. Schneider, certify that:                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 1. I have reviewed this Quarterly Report on Form 10-Q of Pathfinder Bancorp, Inc.;                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                               | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|                                                                                                                                                                                                                                                                                                                                               | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                               | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and                                                                                                                                                                                                                                                                                                                                                                    |
| 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                               | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                               | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| August 13, 2012                                                                                                                                                                                                                                                                                                                                    | /s/ Thomas W. SchneiderThomas W. SchneiderPresident and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |

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| Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| I, James A. Dowd, certify that:                                                                                                                                                                                                                                                                                                               |
| 1. I have reviewed this Quarterly Report on Form 10-Q of Pathfinder Bancorp, Inc.;                                                                                                                                                                                                                                                       |   |
| 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a   material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;           |   |
| 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;                                               |   |
| 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  |   |
|                                                                                                                                                                                                                                                                                                                                               | (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|                                                                                                                                                                                                                                                                                                                                               | (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|                                                                                                                                                                                                                                                                                                                                               | (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  |
| 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                               | (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|                                                                                                                                                                                                                                                                                                                                               | (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.   |
| August 13, 2012                                                                                                                                                                                                                                                                                                                                    | /s/ James A. DowdJames A. DowdSenior Vice President and Chief Financial Officer |   |

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| Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Thomas W. Schneider, President and Chief Executive Officer, and James A. Dowd, Senior Vice President and Chief Financial Officer of Pathfinder Bancorp, Inc. (the "Company"), each certify in his capacity as an officer of the Company that he has reviewed the Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2012 and that to the best of his knowledge:  |
| 1. The report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and                                                                                                                                                                                                                                                                     |
| 2. The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.                                                                                                                                                                                                                              |
| The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                         |
| August 13, 2012                                                                                                                                                                                                                                                                                                                                                                                | /s/ Thomas W. SchneiderThomas W. SchneiderPresident and Chief Executive Officer  |
| August 13, 2012                                                                                                                                                                                                                                                                                                                                                                                | /s/ James A. DowdJames A. DowdSenior Vice President and Chief Financial Officer |

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