SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                       __________________________________

                                    FORM 10-Q

       QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
                    1934 FOR THE QUARTER ENDED MARCH 31, 1999


                         SEC Exchange Act No. 000-23601
                                   __________


                            Pathfinder Bancorp, Inc.
                      __________________________________
                (Exact name of bank as specified in its charter)


                                    New York
                     ___________________________________
            (State or jurisdiction of incorporation or organization)


                                   16-1540137
                      _____________________________________
                     (I.R.S. Employer Identification Number)


       214 W. 1st Street
       Oswego, New York                                          13126
__________________________________                            ____________
(Address of principal executive office)                        (Zip Code)


          Bank's telephone number, including area code: (315) 343-0057
                                                       _______________


                                 Not Applicable
________________________________________________________________________________
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)


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

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest  practicable date: There were 2,727,070 shares
of the Bank's common stock outstanding as of May 13, 1999.



<PAGE>



                            PATHFINDER BANCORP, INC.
                                      INDEX




PART 1        FINANCIAL INFORMATION                                       PAGE

Item 1.       Financial Statements

              o Consolidated Balance Sheets                                 1
              o Consolidated Statements of Income                           2
              o Consolidated Statements of Shareholders' Equity             3
              o Consolidated Statements of Cash Flows                       4, 5
              o Notes to Consolidated Financial Statements                  6


Item 2.       Management's Discussion and Analysis of Financial           7 - 17
                           Condition and Results of Operations


PART II       OTHER INFORMATION                                          18 - 19







SIGNATURES



<PAGE>





                            PATHFINDER BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CONDITION
                March 31, 1999 (unaudited) and December 31, 1998

<TABLE>
<CAPTION>

                                                                      March 31,                December 31,
                                                                           1999                       1998
                                                                      _________                ___________
                         ASSETS
                         ______

<S>                                                                   <C>                        <C>
Cash and due from banks                                               $3,159,520                 $4,716,238
Federal funds sold                                                     2,000,000                  1,800,000
         Total cash and cash equivalents                               5,159,520                  6,516,238

Investment securities                                                 53,181,278                 53,443,039
Mortgage loans held-for-sale                                           4,783,616                  2,841,931
Loans:
     Real Estate                                                     114,423,242                115,971,684
     Consumer and other                                               10,760,153                 10,536,151
       Total loans                                                   125,183,395                126,507,835
     Less: Allowance for loan losses                                     999,161                    939,161
             Unearned discounts and origination fees                     175,871                    199,156
       Loans Receivable, net                                         124,008,363                125,369,518

Premises and equipment                                                 4,573,793                  4,489,928
Accrued interest receivable                                            1,329,579                  1,237,069
Other real estate                                                        691,251                    742,163
Intangible assets                                                      3,210,182                  3,289,121
Other assets                                                           5,187,238                  5,444,979
                                                                    $202,124,820               $203,373,986

LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________

Deposits:
     Interest bearing                                               $146,883,485               $150,591,029
     Non-interest bearing                                              9,156,604                  9,628,125
       Total deposits                                                156,040,089                160,219,154
Borrowed funds                                                        22,024,000                 18,691,000
Other liabilities                                                      2,162,312                  2,177,147
       Total liabilities                                             180,226,401                181,087,301

Shareholders' equity:
     Common stock, par value $.10 per share; authorized
     9,000,000 shares; issued 2,877,470 shares; and
     2,727,070 and 2,745,470 shares outstanding for
     1999 and 1998, respectively.                                        287,747                    287,747
     Additional paid in capital                                        6,843,071                  6,828,836
     Retained earnings                                                17,947,194                 17,820,409
     Unearned stock based compensation                                (1,322,515)                (1,428,746)
     Unearned ESOP shares                                                566,197                  1,012,462
     Accumulated other comprehensive income                             (330,169)                  (346,917)
     Treasury stock, at cost; 43,625 shares                           (2,093,106)                (1,887,106)
       Total shareholders' equity                                     21,898,419                 22,286,685
                                                                    $202,124,820               $203,373,986

</TABLE>

     The accompanying notes are an integral part of the financial statements


                                                         1


<PAGE>


                            PATHFINDER BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
          For the three months ended March 31, 1999 and March 31, 1998
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                March 31,         March 31,
                                                                                    1999              1998
                                                                                ________          ________
INTEREST INCOME:
<S>                                                                           <C>               <C>
   Loans                                                                      $2,665,329        $2,676,121
   Interest and dividends on investments:
       U.S. Treasury and agencies                                                  7,586            76,059
       State and political subdivisions                                           80,884            90,998
       Corporate                                                                 350,698           297,493
       Marketable equity securities                                               19,765            25,569
       Mortgage-backed                                                           325,669           371,178
       Federal funds sold and interest-bearing deposits                           35,728            12,104
           Total interest income                                               3,485,659         3,549,522

INTEREST EXPENSE:
   Interest on deposits                                                        1,382,379         1,528,866
   Interest on borrowed funds                                                    273,083           254,275
       Total interest expense                                                  1,655,462         1,783,141
               Net interest income                                             1,830,197         1,766,381
   Provision for loan losses                                                      97,129            75,298
               Net interest income after provision for loan losses             1,733,068         1,691,083

OTHER INCOME:
   Service charges on deposit accounts                                           142,950           111,954
   Mortgage servicing fees                                                        16,235            12,575
   Net securities gains                                                           31,571           228,839
   Other charges, commission and fees                                             99,465            71,345
       Total other income                                                        290,221           424,713

OTHER EXPENSES:
   Salaries and employee benefits                                                798,885           783,316
   Building occupancy                                                            178,470           161,816
   Data processing expenses                                                      160,116           113,277
   Professional and other services                                               160,881           120,498
   Deposit insurance premiums                                                      7,904            12,314
   Amortization of intangible asset                                              78,939             78,939
   Other expenses                                                                231,073           282,720
       Total other expenses                                                    1,616,268         1,552,880
Income before income taxes                                                       407,021           562,917
Provision for income taxes                                                       119,961           168,876
Net income                                                                      $287,060         $ 394,041
   Other comprehensive income, net of taxes:
       Unrealized net gains on securities:
           Unrealized holding (losses) gains arising during period              (753,615)           21,146
           Less: reclassification adjustment for gains included
                  in net income                                                    9,840            52,734
                                                                                (743,775)           73,880
Income tax benefit (provision)                                                   297,510           (29,552)
   Other comprensive (loss) income, net of tax                                  (446,265)           44,328
   Comprehensive income                                                         (159,205)         $438,369
   Net income per share - basic                                                  $   .11            $  .14
    Net income per share - diluted                                               $   .11           $   .14


</TABLE>

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

                                                         2



<PAGE>


                            PATHFINDER BANCORP, INC.
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                        THREE MONTHS ENDED MARCH 31, 1999
                                   (unaudited)



<TABLE>
<CAPTION>

                                                                                                 Accum.
                                                   Add't                   Unearn      Other     Unearned
                             Common Stock          Paid in   Retained    Stock-Bas     Compr.    ESOP       Treasury
                                Shares   Amount    Capital   Earnings   Compensation   Income    Shares     Stock        Total
                             ___________ ______   _______    _________   ___________   ______    ________   ________     _____

<S>                          <C>         <C>      <C>        <C>         <C>          <C>        <C>        <C>          <C>
Balance, December 31, 1998   2,874,470   $287,747 $6,828,836 $18,820,409 $(1,426,746) $1,012,462 $(346,917) $(1,887,106) $22,286,685

Net Income                                                       287,060                                                     287,060

ESOP shares earned                                    14,235                                        16,478                    30,983

Treasury stock purchased                                                                                       (206,000)   (206,000)

Stock based compensation earned                                              106,231                                         106,231

Change in unrealized net
 appreciation on investment securities                                                            (446,265)                (446,265)

Dividends declared (.06 per share)                                       (160,275)                                         (160,275)

Balance, March 31, 1999      2,874,470  $287,747  $6,843,071 $17,947,194 $(1,322,515) $ 566,197 $(330,169) $(2,093,106)  $21,898,419
</TABLE>

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






                                                         3




<PAGE>



                            PATHFINDER BANCORP, INC.
                            STATEMENTS OF CASH FLOWS
                        March 31, 1999 and March 31, 1998
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                March 31,        March 31,
                                                                                    1999             1998
OPERATING ACTIVITIES:
<S>                                                                             <C>               <C>
   Net Income                                                                   $287,060          $394,041
   Adjustments to reconcile net income to net cash
     provided by operating activities:
        Provision for loan, investment and other real estate losses               97,129            75,298
        Deferred compensation                                                     56,440            41,711
        ESOP and other stock-based compensation earned                           137,214           154,441
        Deferred income taxes                                                    (20,491)               --
        Realized and unrealized gains on loans and investment securities         (31,571)         (228,839)
        Depreciation                                                              86,558            49,965
        Amortization of intangibles                                               78,939            78,939
        Net amortization of premiums and discounts on
           investment securities                                                  18,692            13,816
        (Increase) decrease  in interest receivable                              (92,510)            8,478
        Decrease (Increase) in other assets                                      235,864           (77,922)
        (Decrease) in other liabilities                                          (84,091)         (562,951)
   Net cash provided by (used in) operating activities                           769,233           (53,023)

INVESTING ACTIVITIES
   Purchase of investment securities available for sale                       (5,043,225)         (711,449)
   Proceeds from maturities and principle reductions of
      investment securities held to maturity                                   4,552,098         1,500,000
   Proceeds from maturities and principle reductions of
      investment securities available for sale                                        --         4,026,461
   Proceeds from sale of investment securities                                        --           420,129
   Net increase in loans                                                        (677,659)       (5,334,976)
   Purchase of premises and equipment                                           (170,423)         (250,238)
   Proceeds from sale of other real estate owned                                  50,912           248,780
   Surrender value of life insurance                                             214,411           (28,491)
   Other investing activities                                                        --            (11,914)
        Net cash used in investing activities                                 (1,073,886)         (141,698)

FINANCING ACTIVITIES
   Net (decrease)  increase in demand deposits,  NOW accounts savings  accounts,
     money market deposit accounts
     and escrow deposits                                                      (4,089,492)        1,159,616
   Net (decrease) increase in time deposits                                      (89,573)        1,103,004
   Net proceeds from (repayments of) short term borrowings                     3,333,000        (1,972,000)
   Repayments of borrowings                                                           --           (13,950)
   Treasury stock acquired                                                      (206,000)         (957,988)
        Net cash (used in) financing activities                               (1,052,065)         (681,318)
        Decrease in cash and cash equivalents                                 (1,356,718)         (876,039)
   Cash and cash equivalents at beginning of period                            6,516,238         4,334,072
        Cash and cash equivalents at end of period                            $5,159,520        $3,458,033

</TABLE>


                                                                 4


<PAGE>



                             STATEMENT OF CASH FLOWS
                                   (continued)


<TABLE>
<CAPTION>

                                                                              March 31,         March 31,
                                                                                  1999              1998


CASH PAID DURING THE PERIOD FOR:

<S>                                                                           <C>               <C>
   Interest                                                                   $1,576,135        $1,827,700
   Income taxes                                                                       --           240,000

NON-CASH INVESTING ACTIVITY:

   Transfer of loans to other real estate                                            $--          $374,186
   Unrealized holding gains arising during period                               (743,775)           73,880

NON-CASH FINANCING ACTIVITY:

   Dividends declared and unpaid                                                $160,275          $140,410
   Stock awards granted                                                              --            957,984





</TABLE>


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









                                        5


<PAGE>



                            PATHFINDER BANCORP, INC.

                          Notes to Financial Statements


(1) Basis of Presentation

     The accompanying unaudited financial statements were prepared in accordance
     with the instructions for Form 10-Q and Regulation S-X and,  therefore,  do
     not include information for footnotes necessary for a complete presentation
     of financial position,  results of operations, and cash flows in conformity
     with generally accepted accounting principles. The following material under
     the heading  "Management's  Discussion and Analysis of Financial  Condition
     and Results of Operations" is written with the  presumption  that the users
     of the  interim  financial  statements  have read,  or have  access to, the
     Bank's latest audited financial statements and notes thereto, together with
     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations  as of  December  31,  1998 and for the three year  period  then
     ended. Therefore,  only material changes in financial condition and results
     of operations are discussed in the remainder of part 1.

     All adjustments  (consisting of only normal  recurring  accruals) which, in
     the opinion of  management,  are necessary for a fair  presentation  of the
     financial  statements  have been included in the results of operations  for
     the three months ended March 31, 1999 and 1998.

     Operating  results  for the  three  months  ended  March  31,  1999 are not
     necessarily  indicative  of the results  that may be expected  for the year
     ending December 31, 1999.

(2) Earnings per Share

     Earnings  per  share  are based on the  weighted  average  number of common
     shares  outstanding  during the period.  For purposes of computing earnings
     per share,  only Employee Stock Option Plan ("ESOP")  shares that have been
     committed to be released are considered outstanding.

     Earnings per share have been  computed  based upon net income for the three
     months  ended  March 31,  1999 and 1998,  using  2,676,936  and  2,819,904,
     weighted average common shares outstanding, respectively.







                                                           6




<PAGE>



                            Pathfinder Bancorp, Inc.

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operation

General

Throughout the  Management's  Discussion  and Analysis the term,  'the Company',
refers to the  consolidated  entity of  Pathfinder  Bancorp,  Inc.,  Oswego City
Savings  Bank,  and  Whispering  Oakes  Development  Corp. At December 31, 1998,
Pathfinder  Bancorp,  Inc.'s only business was the 100% ownership of Oswego City
Savings Bank. At March 31, 1999,  1,552,500  shares,  or 57.0%, of the Company's
common stock was held by Pathfinder  Bancorp,  MHC, the Company's mutual holding
company parent and 1,174,570 shares, or 43.0%, was held by the public.

The  Company's  net income is primarily  dependent  on its net interest  income,
which is the difference  between  interest  income earned on its  investments in
mortgage  loans,  investment  securities and other loans,  and its cost of funds
consisting  of interest paid on deposits and borrowed  funds.  The Company's net
income also is  affected by its  provision  for loan  losses,  as well as by the
amount of non interest  income,  including income from fees and service charges,
net gains and losses on sales of  securities,  and non interest  expense such as
employee  compensation and benefits,  deposit insurance premiums,  occupancy and
equipment costs, data processing and income taxes.  Earnings of the Company also
are  affected  significantly  by general  economic and  competitive  conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory  authorities,  which events are beyond the control of the Company.
In particular, the general level of market rates tends to be highly cyclical.

Termination of Merger Agreement

On January 28, 1999, the Company  announced  that in conference and  concurrence
with the Board of Trustees of Oswego County Savings Bank,  the merger  agreement
between the two banks,  which was  originally  signed on  September  5, 1997 was
terminated.  The Company  cited the failure to gain  regulatory  approval  for a
transaction  that was deemed  unique as the reason for the  cancellation  of the
merger plans. For the year ended December 31, 1998, the Company recognized costs
of $379,000 in  connection  with the merger.  These costs were for  professional
services  rendered in legal,  tax, and  accounting  work,  as well as for filing
fees. There were no further costs associated with the canceled merger

Whispering Oaks Development Corporation

On October 31, 1998, the Company incorporated Whispering Oaks Development Corp.
('WODC') as a wholly owned subsidiary of Oswego City Savings Bank. The assets of
WODC were  formerly  held by the  Company as a  component  of other real  estate
owned.  The Company is in the process of liquidating the  development  property.
The subsidiary was formed to comply with regulatory  requirements  regarding the
development  of the property.  The net book value of the assets  transferred  is
$638,000.   Management   does  not  anticipate  any  loss  associated  with  the
liquidation of the assets held in the subsidiary.


                                        7

<PAGE>



Stock Split

On January 13, 1998, the Board of Directors of the Company  declared a three for
two stock split in the form of a dividend on the holdings company's  outstanding
common stock. The stock dividend was paid on February 5, 1998 to shareholders of
record as of January 26, 1998. The stock dividend was applied  retroactively  to
all per share data  reported in the financial  statements  and presented in this
report.

Year 2000

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four to define the applicable  year.  The Company's  computer
programs  that have date  sensitive  software may recognize a date using '00' as
the year 1900 rather than the year 2000.  Left  unresolved,  the Year 2000 issue
could  result in a system  failure or  miscalculations  causing  disruptions  of
operations  including,  but not  limited to, a  temporary  inability  to process
transactions,   calculate  interest,   or  engage  in  similar  normal  business
activities.  In early 1997,  the Company formed a Year 2000 committee to address
the issues surrounding the problem. The committee has adopted a policy statement
and plan of action to identify, correct, test, and implement solutions to ensure
that the Company's systems are ready to process in the Year 2000 and beyond. The
policy statement  comprises three phases:  the assessment  phase, the renovation
phase,  and the  validation  phase.  During  1997,  the  Company  completed  its
assessment   phase  and  identified  five  systems  critical  to  its  continued
operations. These systems include the loan, deposit, investment, general ledger,
and electronic  funds transfer  systems..  The committee has determined that the
required  changes are minimal,  and that such changes will resolve the Company's
Year 2000 computer  systems  issues.  The committee  has  segregated  the issues
between those that affect  information  technology  ('IT') and those that do not
('non-IT'). At May 15, 1999, the implementation of modifications for Year 2000
readiness of mission critical systems is complete. Testing for non-IT systems is
95%  complete  at May 15,  1999.  Testing of  solutions  for IT  commenced  in
September  1998 with a goal to be fully  tested by June 30,  1999.  At May 15,
1999, IT testing was approximately 80% complete.

The Company has  utilized  both  internal  and  external  resources  to program,
replace, and test the software for Year 2000 modifications.  The Company is also
communicating  with its third  party  data  processing  vendors,  as well as its
significant  suppliers  and  commercial  customers,  to determine  the Company's
exposure should any of these parties fail to resolve their own significant  Year
2000 issues.  The committee is evaluating the risk from these third parties and,
where appropriate,  will establish action plans to reduce or eliminate the risk.
In some cases,  the Company  will rely on third party  information  which may be
inaccurate and unverifiable.  Should third party entities, including Federal and
State  governments  and agencies fail to resolve their own Year 2000 issues,  an
adverse effect on the Company could result.

The costs of the  remedial  actions and the date on which the  Company  plans to
complete the Year 2000  modifications,  are based on management's best estimates
and  assumptions  including the continued  availability of third party services,
their  modification  plans,  and other  factors.  Costs related to the Year 2000
issue will be expensed as they are incurred, except for the cost, if any for new
hardware or software that is purchased which will be capitalized and expensed in
conformity with generally accepted accounting principles. The Company's costs of
preparing its data processing systems for the impact of the Year 2000

                                        8

<PAGE>



were approximately $45,000 in non-capitalized costs to date with the majority of
expenditures  for  software  and  hardware   upgrades  being   capitalized  upon
implementation  in February 1999. The total amount  capitalized was $575,000 and
is being depreciated over an average of approximately  four and one-third years.
The  depreciation  will result in additional  annual  expenses of  approximately
$133,000  over this period.  Exclusive of these  expenses,  management  does not
anticipate costs exceeding $75,000 in additional  expenses  associated with Year
2000 readiness issues.

As of May 15,  1999,  the Company  believes  that the  progress it has made to
date,  along with the expected  completion of mission  critical testing in 1999,
will result in the Company's  being well  prepared to meet the Year 2000.  There
can be no assurance that the Company's  third party data service  providers will
be able to  satisfactorily  address  the Year  2000  issue,  or that  the  costs
associated  with Year 2000  readiness  and  compliance  issues  will not  exceed
management's  estimate.  The Company has established  contingency  plans for all
mission  critical  systems and will  evaluate the  implementation  of such plans
throughout 1999

This Quarterly Report contains certain 'forward-looking  statements'  within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties,  including,  among other things,
changes in economic conditions in the Company's market area, changes in policies
by regulatory agencies,  fluctuations in interest rates, demand for loans in the
Company's  market  areas and  competition,  that could cause  actual  results to
differ  materially from historical  earnings and those presently  anticipated or
projected.  The Company wishes to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made. The
Company  wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially  from any opinions or statements  expressed
with respect to future periods in any current statements.

The Company does not undertake,  and  specifically  declines any obligation,  to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

For other matters  affecting the Company,  Including events which may affect the
Company's operations and financial performance, see 'Recent Events'.

The following  discussion reviews the financial  condition at March 31, 1999 and
the results of  operations  of the Company for the three  months ended March 31,
1999.

Financial Condition

Assets

Total assets decreased  approximately $1.3 million, or .6%, to $202.1 million at
March 31, 1999 from $203.4  million at December 31, 1998.  The decrease in total
assets was primarily  incurred as a result of  reductions in the Company's  cash
and due from banks.  Cash inflows from automatic direct deposits on December 31,
1998 resulted in higher than normal cash inventory  positions.  A portion of the
direct

                                        9

<PAGE>



deposits was subsequently withdrawn in the normal course of business,  causing a
reduction in total assets for the period. Mortgage loans held-for-sale increased
by a net $1.9  million,  or 68.3%,  to $4.8  million at March 31, 1999 from $2.8
million at December  31,  1998.  The  increase in mortgage  loans  held-for-sale
results  from  orginations  of $3.0  million,  less sales of $1.1  million.  The
origination  and  sale  of  secondary  market  qualifying   mortgages   reflects
management's  continued emphasis on pursuing a diversification of revenue lines.
The retention of mortgage  servings and the  recognition  of income derived from
the servicing  rights,  combined with the sale of the loans  produces fee income
and  mitigates the  Company's  credit and interest  rate risks.  The increase in
mortgage loans  held-for-sale  was partially  offset by decreases in total loans
(held  in the  Company's  portfolio)  and  investment  securities.  Total  loans
decreased by $1.3  million,  or 1.0%,  to $125.2  million at March 31, 1999 from
$126.5  million at December  31, 1998 and  investment  securities  decreased  by
$262,000, or .5%, to $53.2 million from $53.4 million. The decline in asset base
also reflects the lack of  significant  growth and economic  development  in the
Company's market area.

Non-earning  assets  decreased  by  $211,000,  or 1.4%,  at March 31,  1999 when
compared to December 31, 1998. The decrease in non-earning assets is principally
due to  reductions  in other  real  estate  owned  and the  amortization  of the
Company's intangible asset.

Liabilities

Total  liabilities  decreased by $861,000,  to $180.2  million at March 31, 1999
from $181.1 million at December 31, 1998. The decrease is primarily attributable
to a $4.2  million,  or 2.6%,  net outflow of deposits,  partially  offset by an
increase in borrowed funds of $3.3 million,  or 17.8%.  The decrease in deposits
is principally  the result of net  withdrawals on savings and checking  accounts
from direct deposits  credited to customers'  accounts on December 31, 1998. The
timing of direct deposits,  especially social security deposits,  which occurred
on the last day of 1998, did not reflect the normal  withdrawal of such deposits
for  customers'  day-to-day  uses.  The majority of these  withdrawals  occurred
during  the first week of 1999.  Exclusive  of the direct  deposit  timing,  net
deposit account  activity  remained  relatively flat during the first quarter of
1999. The absence of net deposit  inflows  reflects both the lack of significant
growth  in the  Company's  market  area  and  the  availability  of  alternative
investment  products,  particularly  mutual funds. The increased  borrowings are
comprised  of  advances  from the  Federal  Home  Loan  Bank of New York used to
supplement the Company's deposit flows.

Liquidity and Capital Resources

Shareholders' equity decreased $388,000, or 1.7%, to $21.9 million at March 31,
1999 from $22.3  million at December  31, 1998.  The  decrease in  shareholder's
equity is primarily the result of a $446,000  reduction in accumulated and other
comprehensive  income,  an  increase  in  treasury  stock  of  $206,000  for the
acquisition of 18,400 shares as part of the Company's share  repurchase  program
(see 'Recent  Events'),  and  dividends  declared of  $160,000.  The decrease in
accumulated  and other  comprehensive  income  results  from a  decrease  in the
unrealized   appreciation   of  the  Company's   available-for-sale   investment
securities  portfolio caused by rising interest rates at the end of the quarter.
Partially  offsetting  the  decreases  in  shareholder's  equity were  increases
resulting  from net income  totaling  $287,000,  and ESOP and other  stock-based
compensation earned of $137,000.

                                       10

<PAGE>




The Company's primary sources of funds are deposits, amortization and prepayment
of  loans  and  maturities  of  investment   securities  and  other   short-term
investments,  earnings and funds provided from operations, and borrowings. While
scheduled principal  repayments on loans are a relatively  predictable source of
funds,  deposit  flows and loan  prepayments  are greatly  influenced by general
interest rates,  economic conditions,  and competition.  The Company manages the
pricing of deposits to maintain a desired  deposit  balance.  In  addition,  the
Company  invests  excess funds in short-term  interest-bearing  instruments  and
other  assets,  which  provide  liquidity  to  meet  lending  requirements.  For
additional information about cash flows from the Company's operating, financing,
and investing activities, see Statements of Cash Flows included in the Financial
Statements.  The Company  adjusts its liquidity  levels in order to meet funding
needs of deposit  outflows,  payment of real estate taxes on mortgage  loans and
loan commitments.  The Company also adjusts liquidity as appropriate to meet its
assets and liability management objectives.

Management of Market Risk  -  Interest Rate Risk

The Company's most significant form of market risk is interest rate risk, as the
majority of the  Company's  assets and  liabilities  are sensitive to changes in
interest rates. The Company's mortgage loan portfolio,  consisting  primarily of
loans on residential real property located in Oswego County, is subject to risks
associated with the local economy.  The Company's  interest rate risk management
program  focuses  primarily on evaluating  and managing the  composition  of the
Company's  assets  and  liabilities  in the  context of  various  interest  rate
scenarios.  Factors beyond management's  control,  such as market interest rates
and competition, also have an impact on interest income and interest expense.

The extent to which such assets and  liabilities  are "interest rate  sensitive"
can be measured by an institution's interest rate sensitivity "gap". An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of  interest-earning  assets
maturing  or  repricing  within  a  specific  time  period  and that  amount  of
interest-bearing  liabilities  maturing or repricing  within that time period. A
gap is considered  positive when the amount of interest  rate  sensitive  assets
exceeds the amount of interest rate sensitive  liabilities.  A gap is considered
negative  when the amount of interest  rate  sensitive  liabilities  exceeds the
amount of interest rate  sensitive  assets.  During a period of rising  interest
rates, a negative gap would tend to adversely affect net interest income while a
positive gap would tend to positively  affect net interest  income.  Conversely,
during a period  of  falling  interest  rates,  a  negative  gap  would  tend to
positively  affect  net  interest  income  while a  positive  gap would  tend to
adversely affect net interest income.

The Company does not  generally  maintain in its portfolio  fixed  interest rate
loans with terms exceeding 20 years. In addition,  ARM loans are originated with
terms that provide that the interest  rate on such loans cannot adjust below the
initial  rate.  Generally,  the  Company  tends to fund  longer-term  loans  and
mortgage-backed   securities  with   shorter-term   time  deposits,   repurchase
agreements,  and  advances.  The impact of this  asset/liability  mix creates an
inherent  risk to earnings in a rising  interest rate  environment.  In a rising
interest rate environment,  the Company's cost of shorter-term deposits may rise
faster than its

                                       11

<PAGE>



earnings on longer-term loans and investments.  Additionally,  the prepayment of
principal on real estate loans and mortgage-backed  securities tends to decrease
as rates  rise,  providing  less  available  funds to invest in the higher  rate
environment.  Conversely, as interest rates decrease the prepayment of principal
on real-estate loans and mortgage-backed  securities tends to increase,  causing
the Company to invest funds in a lower rate environment. The potential impact on
earnings  from this  mismatch  is  mitigated  to a large  extent by the size and
stability of the Company's savings accounts. Savings accounts have traditionally
provided  a  source  of  relatively  low cost  funding  that  have  demonstrated
historically a low sensitivity to interest rate changes.  The Company  generally
matches a percentage of these, which are deemed core, against  longer-term loans
and investments.  In addition, the Company has sought to extend the terms of its
time deposits.  In this regard, the Company has on occasion offered certificates
of  deposits  with three and four year terms which  allow  depositors  to make a
one-time election, at any time during the term of the certificate of deposit, to
adjust the rate of the  certificate of deposit to the then prevailing rate for a
certificate  of deposit  with the same term.  The Company has further  sought to
reduce the term of a portion of its rate  sensitive  assets by  originating  one
year ARM loans,  five  year/one year ARM loans  (mortgage  loans which are fixed
rate for the  first  five  years and  adjustable  annually  thereafter),  and by
maintaining a relatively short term investment  securities  (original maturities
of three to five years) portfolio with staggered maturities.

The  Company  manages its  interest  rate  sensitivity  by  monitoring  (through
simulation  and net present value  techniques)  the impact on it's GAP position,
net interest  income,  and the market  value of  portfolio  equity to changes in
interest  rates on its current and forecast mix of assets and  liabilities.  The
Company has an  Asset-Liability  Management  Committee  which is responsible for
reviewing the Company's assets and liability policies,  setting prices and terms
on rate-sensitive  products, and monitoring and measuring the impact of interest
rate changes on the Company's earnings.  The Committee meets monthly on a formal
basis and reports to the Board of Directors  on interest  rate risks and trends,
as well as liquidity and capital ratios and  requirements.  The Company does not
have a targeted gap range,  rather the Board of Directors has set  parameters of
percentage change by which net interest margin and the market value of portfolio
equity are affected by changing  interest  rates.  The Board and management deem
these  measures  to be a more  significant  and  realistic  means  of  measuring
interest rate risk.

At March 31, 1999, the total interest bearing liabilities  maturing or repricing
within one year exceeded total interest-earning  assets maturing or repricing in
the same period by $20.0 million,  representing a cumulative  one-year gap ratio
of a negative  7.21%.  Simulation  and net present  value  analysis  demonstrate
percentage  changes to net  interest  income and net  portfolio  value (the fair
value of assets minus the fair value of  liabilities) of a negative 13.41% and a
negative  21.87%,  respectively,  in an upward 200 basis point parallel shift in
the yield curve.

Results of Operations

The Company had net income of approximately $287,000, and $394,000 for the three
months ended March 31, 1999, and 1998, respectively.  The decrease in net income
of $107,000, or 27.1%, resulted primarily from a decrease in non-interest income
of $135,000, or 31.7%, and increases in noninterest expense of $63,000, or 4.1%,
and  provisions  for loan losses of $22,000,  or 29.0%,  partially  offset by an
increase in net interest  income of $64,000,  or 3.6%, and a reduction in income
tax provision of $49,000.


                                       12

<PAGE>



As a result of the  decrease  in net income  between  the  comparative  periods,
annualized return on average assets and return on average  shareholders'  equity
were .57% and 5.16%,  respectively,  for the three  months  ended March 31, 1999
compared to .81% and 6.71% for the first  quarter of 1998.  Earnings per share '
basic  was $.11 for the  first  quarter  of 1999  compared  to $.14 for the same
period in 1998.

Interest Income

Interest income, on a tax-equivalent basis, totaled $3.5 million for the quarter
ended March 31, 1999,  as compared to $3.6  million for the quarter  ended March
31, 1998, a decrease of $66,000, or 1.8%. The decrease resulted primarily from a
decrease in the tax-equivalent yield on average interest-earning assets to 7.70%
for the three  months  ended March 31, 1999 from 8.02% in the prior year period,
partially  offset by an  increase  of $4.0  million in average  interest-earning
assets.  The  yield  reduction  is  principally  the  result  of  mortgage  loan
originations,  primarily in the held-for-sale  portfolio, at rates over 90 basis
points below the weighted  average coupon of the existing loan  portfolio  which
lowered the total portfolio yield,  and the  reinvestment of security  principal
maturities and  prepayments at rates over 75 basis points less than the existing
portfolio yield. The decline in yield on investments and mortgages was caused by
a general decline in market  interest rates. To illustrate,  the yield on 1 year
and 30 year  treasury  bonds  declined by 71 basis  points and 31 basis  points,
respectively from March 31, 1998 to March 31, 1999.

Interest  income on loans  receivable  totaled $2.7 million for the three months
ended March 31, 1999 and 1998, respectively. The stability in interest income on
loans  occurred from an increase in the average  balance of loans  receivable of
$5.0 million,  or 4.4% to $118.8 million at March 31, 1999,  from $113.8 million
at  March  31,  1998,  offset  by a  reduction  in the  average  yield  on loans
receivable  to 8.08% from 8.43%.  The  increase in the average  balance in loans
receivable  was  primarily  due  to the  origination  of 15  and  30  year  term
one-to-four  family fixed rate  mortgage  loans  held-for-sale  to the secondary
market and  one-to-four  family  adjustable  rate mortgage loans retained in the
Company's portfolio.  The mortgage loans held-for-sale into the secondary market
is part of a strategy  to increase  and retain the  Company's  customer  base by
offering  competitively priced mortgages to qualifying home buyers and retaining
the servicing on these loans as a source of fee income.  The Company  originated
$3.0 million in mortgage  loans  held-for-sale  during the first quarter of 1999
and sold $1.1 into the secondary  market.  The  origination  of adjustable  rate
mortgage  loans is primarily  comprised of '5/1 ARMS'  which have interest rates
which are fixed for the first five years and are adjustable annually thereafter,
and amortize over 30 years. To a lesser degree,  the Company also experienced an
increase in the origination of commercial  real estate and business  loans.  The
decrease in the yield on average loans  receivable was attributable to the lower
rates charged on mortgage loans held-for-sale,  the initial rates charged on 5/1
ARMS,  and the  downward  repricing  of the one year  adjustable  rate  mortgage
portfolio caused by the relatively lower interest rate environment.

Interest  income on consumer  and other loans  decreased  $13,000,  or 4.7%,  to
$265,000 for the quarter ended March 31, 1999 from $278,000 for the period ended
March 31,  1998.  The  decrease in interest  income on consumer  and other loans
resulted from a decrease in both the average  balance and average yield on these
loans.  The average balance on consumer and other loans decreased  $390,000,  or
3.7%,  to $10.3  million from $10.6 million for the periods ended March 31, 1999
and 1998, respectively. The

                                       13

<PAGE>



average  yield on consumer and other loans  declined to 10.33% from 10.44%.  The
decrease  in the  average  balance on  consumer  and other  loans  reflects  the
relatively low demand by qualified borrowers in the Company's market area.

Interest  income  on  the  mortgage-backed  securities  portfolio  decreased  by
$45,000,  or 12.1%,  to $326,000 for the three months ended March 31, 1999, from
$371,000 for the three  months  ended March 31,  1998.  The decrease in interest
income on mortgage-backed  securities  resulted generally from a decrease in the
average balance on mortgage-backed  securities of $3.1 million, partially offset
by an increase in the average yield on mortgage-backed  securities to 6.72% from
6.59%.  The  decrease  in the  average  balance  of  mortgage-backed  securities
resulted from the scheduled  amortization  and  prepayments  of principal on the
underlying mortgage loans.  Prepayments  accelerated during the first quarter of
1999 as the  relatively  low  interest  rate  environment  continues  to  foster
significant  refinancing  activity.  The  cash  flow  from  the  mortgage-backed
securities  portfolio  was  utilized  to fund  the  origination  of loans by the
Company, rather than the purchase of additional mortgage-backed securities.

Interest  income  on  investment  securities,  on a  tax  equivalent,  decreased
$34,000,  or 6.4%,  for the three months  ended March 31, 1999 to $494,000  from
$528,000 for the same period in 1998.  The decrease  resulted  primarily  from a
decrease in the tax equivalent  average yield on investment  securities to 6.25%
from 6.79%, partially offset by an increase in the average balance of investment
securities  of $508,000 for the quarter  ended March 31, 1999 as compared to the
first quarter of 1998.  The average yield on investment  securities  declined as
higher coupon  securities  purchased  three to five years ago were either called
due to the lower interest rate environment or matured and were replaced by lower
yielding securities.


Interest income on  interest-earning  deposits increased $24,000,  or 200.0%, to
$36,000  from  $12,000  for the three  months  ended  March  31,  1999 and 1998,
respectively.  The  increase  was  primarily  the result of an  increase of $2.0
million in the average balance of interest-earning deposits, partially offset by
a reduction  in the  average  yield on  interest-earning  deposits to 5.12% from
6.02%.  The  increase in the average  balance on  interest-earning  deposits was
primarily due to short term placement of security  principal  amortization.  The
decrease in the average yield on  interest-earning  deposits was principally due
the decrease in the federal funds rate brought about by the general reduction in
interest rates.

Interest Expense

Interest expense for the quarter ended March 31, 1999 decreased by approximately
$128,000,  or 7.2%,  to $1.7 million when compared to the same quarter for 1998.
The decrease in interest  expense for the period was the result of a decrease in
the average  cost of deposits to 3.97% for the three months ended March 31, 1999
from 4.43% for the three months ended March 31, 1998, partially offset by a $5.7
million  increase  in the average  balance on  interest-bearing  liabilities  to
$166.7  million  from $161.1  million  for the periods  ended March 31, 1999 and
1998,  respectively.  The  decrease  in the  average  cost  of  interest-beating
liabilities resulted from the general reduction in interest rates throughout the
economy which led to reductions in product  pricing and the cost of  borrowings.
The  increase  in  the  average  balance  on  interest-bearing  liabilities  was
principally the result of a $1.5 million increase in the average balance on Now

                                       14

<PAGE>



accounts,  a $1.8 million  increase in the average  balance on  certificates  of
deposit, and a $2.5 million increase in the average balance of borrowed funds.

Net Interest Income

Net  interest  income  totaled $1.8 million for the three months ended March 31,
1999 and $1.7  million for the same period in 1998,  an increase of $64,000,  or
3.6%.  The increase in net interest  income for the quarter ended March 31, 1999
occurred  as the result of the cost of  interest-bearing  liabilities  repricing
downward more sharply than the yield on  interest-earning  assets. This led to a
widening of the Company's net interest rate spread.  In the prior three quarters
the  declining  interest  rate  environment  resulted  in a  compression  of net
interest rate spread.  However,  during the fourth  quarter of 1998,  short term
interest rate  reductions by the Federal  Reserve Bank combined with an 85 basis
point reduction in the base rate on the Company's passbook savings account, have
resulted in a widening of the net interest rate spread. Net interest rate spread
for the  quarter  ended  March 31, 1999 rose to 3.82% from 3.68% for the quarter
ended March 31, 1998.

Provision for Loan Losses

The  Company  maintains  an  allowance  for loan  losses  based upon a quarterly
evaluation of known and inherent risks in the loan  portfolio,  which includes a
review  of the  balances  and  composition  of the  loan  portfolio  as  well as
analyzing the level of delinquencies in each segment of the loan portfolio. Loan
loss  provisions are based upon  management's  estimate of the fair value of the
collateral  and the  Company's  actual  loss  experience,  as well as  standards
applied by the FDIC.  The Company  established  a provision  for  possible  loan
losses for the three  months  ended March 31, 1999 of $97,000,  as compared to a
provision of $75,000 for the three months ended March 31, 1998.  The increase in
provision for loan losses reflects higher net charge-offs for the period as well
as  the  increased  risks  associated  with  expanded  commercial  lending.  The
Company's  ratios of allowance for loan losses to total loans  receivable and to
non-performing loans at March 31, 1999 were .78% and 57.17%, respectively.

Non-interest Income

Non-interest  income consists of servicing income, fee income and gain (loss) on
sales  of  loans  and  investment   securities  and  other   operating   income.
Non-interest income decreased  approximately $135,000, or 31.7%, to $290,000 for
the three months ended March 31, 1999 as compared to $425,000 for the prior year
quarter.  This decrease is primarily  attributable to a decrease of $197,000, or
86.2%,  in net securities  gains and losses,  partially  offset by a 31,000,  or
27.7%,  increase  in deposit  account  service  charges,  a $4,000  increase  in
mortgage  servicing  fees, and a $28,000,  or 39.4%,  increase in other charges,
commissions,  and fees. The decrease in net securities  gains and losses results
from a mark to market gain recognition of unrealized  market value  appreciation
in the Company's  investment in the IIMF mutual fund which was $154,000 lower in
1999  compared  to  1998,  and a  $43,000  gain on the  sale  of two  investment
securities  during the first  quarter of 1998.  The increase in deposit  account
service  charges  resulted  primarily from increased ATM surcharge  fees,  which
reflects  higher  charges and an expansion  of the ATM network.  The increase in
other  charges,  commissions  and fees  resulted  principally  from  higher fees
derived

                                       15

<PAGE>



from  investment  services  and  increases in the cash  surrender  value of life
insurance policies held by the Company.

Noninterest Expense

Noninterest  expense increased  $63,000,  or 4.1%, to $1.6 million for the three
months  ended March 31,  1999,  as  compared  to the same  period in 1998.  This
increase was primarily  attributable  to a $47,000,  or 41.3%,  increase in data
processing  costs, a $40,000,  or 33.5%,  increase in professional  services,  a
$17,000,  or 10.3%,  increase  in  building  occupancy,  and a $16,000,  or 2.0%
increase in salaries  and  employee  benefits.  These  increased  expenses  were
partially  offset by a reduction  in other  expenses of $52,000,  or 18.3%.  The
increase  in  data  processing   costs  primarily   results  from  increases  in
depreciation  and  maintenance  on upgraded  hardware and  software  placed into
service  during the first quarter of 1999.  The on-going  equipment and software
depreciation  expenses result from capitalized  costs of approximately  $575,000
amortized over  approximately 4 and one-third years.  These upgrades to hardware
and software  represent the principal efforts of the Company to perform remedial
actions for Year 2000 and bring the  Company's  Year 2000  readiness  to over 90
percent  complete.  Management of the Company  believes that, in addition to the
Year 2000  readiness  issue,  the  enhanced  information  systems  increase  the
Company's  ability to expand and  compete  over the near term.  The  increase in
professional  service  costs  is  primarily  comprised  of  increased  fees  for
information  system  consulting,  investment and risk  management,  and attorney
fees.  The  increase  in  building  occupancy  expense  is  principally  due  to
depreciation  and maintenance  increases from  renovations in the Company's main
office.  The  increase in salaries and  employee  benefits is  primarily  due to
annual salary  increases.  The reduction in other  expenses  primarily  reflects
lower costs to maintain other real estate owned and lower security costs.

For further  information  regarding the Company's  efforts and costs  associated
with the Year 2000 issue, see 'General ' Year 2000'.

Income Taxes

Income taxes decreased  approximately  $49,000,  or 29.0%, for the quarter ended
March 31, 1999 as compared to the same period in the prior year.  This  decrease
was directly attributable to a $156,000 decrease in the Company's pretax income.

Recent Events

Real Estate Investment Trust Formation

On March 31, 1999,  the Company  filed a notice with the New York State  Banking
Department of its  intention to establish a new  operating  subsidiary of Oswego
City Savings Bank (the  'Bank'),  which will issue  securities  in the nature of
common stock and perpetual, cumulative preferred stock. The Company intends that
the  subsidiary  will be  treated as a real  estate  investment  trust  ('REIT')
pursuant to Section 856 of the Internal  Revenue Code of 1986,  as amended,  and
that the  REIT  primarily  will  acquire,  hold,  and  invest  in  certain  real
estate-related and other assets, which would constitute permissible  investments
by the

                                       16

<PAGE>



Bank.  Prior to commencement of activities,  the REIT will receive from the Bank
loans  currently  owned by the  Bank,  and the  Bank  will  receive  100% of the
outstanding  common  stock of the REIT and also shares of a class of  perpetual,
cumulative  preferred stock.  It is  anticipated  that the REIT, to be
known as Pathfinder REIT, Inc., will commence operation by May 14, 1999.

Share Repurchase Program

On January 22,  1999,  the Company  announced  the adoption of it's second share
repurchase  program  to acquire up to  135,000  shares of the  Company's  common
stock,  which represents  approximately 5% of the common stock  outstanding.  At
April 30, 1999, the Company had purchased  73,775 shares  commensurate  with the
plan at an aggregate cost of $813,000.  In November 1998, the Company  completed
it's first share repurchase program, acquiring 132,000 shares of common stock at
an aggregate cost of $1.9 million.


                                       17

<PAGE>

                           Part II - Other Information

Legal Proceedings

From time to time,  the Bank is involved as a plaintiff  or defendant in various
legal actions incident to its business. None of these actions individually or in
the aggregate is believed to be material to the financial condition of the Bank

Changes in Securities

Not applicable

Defaults upon Senior Securities

Not applicable

Submission of Matters to a Vote of Security Holders

The Bank's Meeting of Shareholders was held on April 28, 1999. The following are
the items voted on and the results of the shareholder voting.

1.   The  election  of Chris C. Gagas,  Chris R.  Burritt and Raymond W. Jung to
     serve as  directors of the Bank each for a term of three years or until his
     successor has been elected and qualified. For Against

                  Chris C. Gagas                     2,439,192         174,206
                  Chris R. Burritt                   2,439,192         174,206
                  Raymond W. Jung                    2,439,192         174,206

                  Set forth  below are the names of the other  directors  of the
                  Bank and their terms of office.

                            Name                          Term Expires
                  Bruce Manwaring                             2000
                  L. William Nelson                           2000
                  Victor S. Oakes                             2000
                  Lawrence O'Brien                            2001
                  Corte Spencer                               2001
                  Janette Resnick                             2001

2.   The  ratification  of the  appointment  of Coopers and Lybrand,  L.L.P.  as
     auditors for the fiscal year ending December 31, 1999.

                                           For          Against          Abstain
            Number of Votes           2,449,704         160,160           3,534


                                          18


<PAGE>



3.   A shareholder  proposal  calling on the Board of Directors to take steps to
     amend the Company's Certificate of Incorporation and Bylaws.

                             For            Against                    Abstain

                           231,803          1,849,157                  6,430

4.   A shareholder proposal to take steps to sell or merge the company.

                              For             Against                  Abstain

                           242,546          1,836,354                  8,490



































                                       19


<PAGE>


                                   SIGNATUARES





         Under the requirements of the Securities Exchange Act of 1934, the Bank
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.




                             OSWEGO CITY SAVINGS BANK


                             /s/ Chris C. Gagas
                             ___________________________________
Date:    May 12, 1999        Chris C. Gagas
         ____________        Chairman, President, Chief Executive Officer


                             /s/ Thomas W. Schneider
                             ____________________________________
Date:    May 12, 1999        Thomas W. Schneider
         ____________        Executive Vice President, Chief Financial Officer