<PAGE>

                       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 SEPTEMBER 30, 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 2,661,045 shares
of the Company's common stock outstanding as of November 11, 1999.
<PAGE>

                           PATHFINDER BANCORP, INC.
                                     INDEX



<TABLE>
<CAPTION>

PART 1                     FINANCIAL INFORMATION                                                 PAGE

<S>                     <C>                                                                   <C>
Item 1.                    Financial Statements (unaudited)

                           .     Consolidated Balance Sheets                                     1

                           .     Consolidated Statements of Income                               2

                           .     Consolidated Statements of Shareholders' Equity                 3

                           .     Consolidated Statements of Cash Flows                           4, 5

                           .     Notes to Consolidated Financial Statements                      6


Item 2.                    Management's Discussion and Analysis of Financial                     7 - 16
                           Condition and Results of Operations


Item 3.                    Quantitative and Qualitative Disclosure about
                           Market Risk                                                           17 - 19


PART II                    OTHER INFORMATION                                                     20



SIGNATURES
</TABLE>
<PAGE>

Item 1  - Financial Statements

                            PATHFINDER BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CONDITION
              September 30, 1999 (unaudited) and December 31, 1998

<TABLE>
<CAPTION>
                                                        September 30,  December 31,
                    ASSETS                                  1999           1998
------------------------------------------------        ------------   ------------
<S>                                                     <C>            <C>
Cash and due from banks                                 $  2,910,835   $  4,716,238
Federal funds sold                                           261,889      1,800,000
                                                        ------------   ------------
         Total cash and cash equivalents                   3,172,724      6,516,238

Investment securities                                     69,749,966     53,443,039
Mortgage loans held-for-sale                               2,116,379      2,841,931
Loans:
    Real Estate                                          118,425,877    115,971,684
    Consumer and other                                    11,220,120     10,536,151
                                                        ------------   ------------
       Total loans                                       129,645,997    126,507,835
   Less: Allowance for loan losses                         1,119,349        939,161
          Unearned discounts and origination fees            136,631        199,156
                                                        ------------   ------------
    Loans receivable, net                                128,390,017    125,369,518

Premises and equipment, net                                4,546,438      4,489,928
Accrued interest receivable                                1,442,401      1,237,069
Other real estate                                            809,412        742,163
Intangible assets, net                                     3,052,304      3,289,121
Other assets                                               6,220,345      5,444,979
                                                        ------------   ------------
   Total assets                                         $219,499,986   $203,373,986

      LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------

Deposits:
   Interest bearing                                     $143,739,540   $150,591,029
   Non-interest bearing                                    9,731,673      9,628,125
                                                        ------------   ------------
    Total deposits                                       153,471,213    160,219,154
Borrowed funds                                            43,264,500     18,691,000
Other liabilities                                          2,343,660      2,177,147
                                                        ------------   ------------
    Total liabilities                                    199,079,373    181,087,301
                                                        ------------   ------------

Shareholders' equity:
   Common stock, par value $.10 per share;
    authorized 9,000,000 shares; 2,884,720 and
    2,874,770 shares issued; and 2,661,045
    and 2,745,470 shares outstanding for 1999 and
    1998, respectively.                                      288,472       287,747
   Additional paid in capital                              6,906,466      6,828,836
   Retained earnings                                      18,111,127     17,820,409
   Unearned stock based compensation                      (1,096,286)    (1,428,746)
   Accumulated other comprehensive income                   (614,086)     1,012,462
   Unearned ESOP shares                                     (300,621)      (346,917)
   Treasury stock, at cost; 223,675 and 132,000
    shares for 1999 and 1998, respectively                (2,874,459)    (1,887,106)
   Total shareholders' equity                             20,420,613     22,286,685
                                                        ------------   ------------
                                                        $219,499,986   $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 and nine months ended
                   September 30, 1999 and September 30, 1998
                                  (unaudited)
<TABLE>
<CAPTION>

                                                        For the three months ended                     For the nine months ended
                                                      -----------------------------                  ------------------------------
                                                 September 30,                September 30,         September 30,    September 30,
                                                    1999                          1998                  1999            1998
                                               ----------------             ----------------       --------------  ---------------
<S>                                            <C>                          <C>                    <C>             <C>
INTEREST INCOME:
 Loans                                          $  2,722,997                 $   2,714,167          $  8,088,478    $  8,152,218
 Interest and dividends on investments:
   U.S. Treasury and agencies                        147,735                        35,123               200,222         171,806
   State and political subdivisions                   92,544                        78,307               263,088         257,306
   Corporate                                         400,101                       219,957             1,141,047         792,835
   Marketable equity securities                       32,511                        26,864                76,430          76,149
   Mortgage-backed                                   400,021                       322,532             1,047,584       1,034,776
   Federal funds sold and
    interest-bearing deposits                          2,148                        74,740                58,425         112,113
                                                -------------                -------------          ------------    ------------
      Total interest income                        3,798,057                     3,471,690            10,875,274      10,597,205

INTEREST EXPENSE:
 Interest on deposits                              1,318,538                     1,576,295             4,035,382       4,647,020
 Interest on borrowed funds                          497,975                       184,435             1,096,784         665,171
                                                ------------                 -------------          ------------    ------------
      Total interest expense                       1,816,513                     1,760,730             5,132,166       5,312,191
                                                ------------                 -------------          ------------    ------------

       Net interest income                         1,981,544                     1,710,960             5,743,108        5,285,014
 Provision for loan losses                           151,151                       110,462               311,612          251,003
                                                ------------                 -------------          ------------    -------------
       Net interest income after
        provision for loan losses                  1,830,393                     1,600,498             5,431,496        5,034,011
                                                ------------                 -------------          ------------    -------------

OTHER INCOME:
 Service charges on deposit accounts                 133,113                       117,350               363,660          384,388
 Mortgage servicing fees                              44,089                        10,148                77,109           34,145
 Net securities (losses) gains                       (53,541)                      (11,295)               19,834          258,750
 Other charges, commission and fees                  109,047                       114,896               389,712          264,392
                                                ------------                 -------------           -----------    -------------
      Total other income                             232,708                       231,099               850,315          941,675
                                                ------------                 -------------           -----------    -------------

OTHER EXPENSES:
 Salaries and employee benefits (a)                  861,315                     790,301       2,473,134        2,316,966
 Building occupancy                                  196,945                     148,757         553,979          470,251
 Data processing expenses                            209,513                     111,385         580,326          336,344
 Professional and other services                     159,804                      87,134         569,157          405,502
 Deposit insurance premiums                            3,732                       7,821          19,410           27,867
 Amortization of intangible asset (b)                 78,939                      78,939         236,817          236,817
 Other expenses                                      283,743                     290,851         789,302          815,562
                                                ------------                  ----------     -----------      -----------
      Total other expenses                         1,793,991                   1,515,188       5,222,125        4,609,309
                                                ------------                  ----------     -----------      -----------
Income before income taxes                           269,110                     316,409       1,059,686        1,366,377
Provision for income taxes (c)                        73,691                      86,334         290,996          390,824
                                                ------------                  ----------     -----------      -----------
Net income                                      $    195,419                  $  230,075     $   768,690      $   975,553
                                                ------------                  ----------     -----------      -----------
 Other comprehensive income, net of
  taxes:
   Unrealized net (losses) gains on
    securities:
      Unrealized holding (losses)
       gains arising during period                (1,339,762)                     59,243      (2,725,598)         225,586
      Reclassification adjustment for
       gains included in net income                    4,844                       2,337          14,685           55,071
                                                ------------                  ----------     -----------      -----------
                                                  (1,334,918)                     61,580      (2,710,913)         280,657
Income tax benefit (provision)                       533,967                     (24,632)      1,084,365         (112,263)
                                                ------------                  ----------     -----------      -----------
 Other comprehensive (loss) income,
  net of tax                                        (800,951)                     36,948      (1,626,548)         168,394
                                                ------------                  ----------     -----------      -----------
 Comprehensive (loss) income                    $   (605,532)                 $  267,023     $  (857,858)     $ 1,143,947
                                                ============                  ==========     ===========      ===========

 Net income per share  - basic                  $        .08                        $.08            $.29            $. 35
                                                ============                  ==========     ===========      ===========
 Net income per share - diluted                 $        .07                        $.08            $.28             $.34
                                                ============                  ==========     ===========      ===========
</TABLE>
(a)  includes non-cash expenses for stock based compensation plans of $135,000
     and $147,000 for the three month period ended September 30, 1999 and 1998,
     respectively, and $409,000 and $467,000 for the nine month period ended
     September 30, 1999 and 1998, respectively.
(b)  represents the non-cash amortization of premium paid on deposits acquired
(c)  includes the tax benefit of $64,000 and $68,000 associated with the
     realization of non-cash expenses for the three month period ended September
     30, 1999 and 1998, respectively, and $194,000 and $211,000 for the nine
     month period ended September 30, 1999 and 1998, respectively.


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

                                      -2-
<PAGE>

                           PATHFINDER BANCORP, INC.
                 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     NINE MONTHS ENDED SEPTEMBER 30, 1999
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                                  Accumulated
                           Common Stock     Additional                Unearned       Other     Unearned
                       -------------------   Paid in     Retained    Stock-Based  Comprehensive   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     2,877,470  $287,747  $6,828,836  $17,820,409  $(1,428,746) $ 1,012,462  $(346,917) $(1,887,106)  $22,286,685


Net Income                                                  768,690                                                         768,690


ESOP shares earned                              30,628                                            46,296                     76,924


Stock options
 exercised                 7,250       725      47,002                                                                       47,727


Treasury stock
 purchased                                                                                                   (987,353)     (987,353)



Stock based
 compensation earned                                                     332,460                                            332,460

Change in unrealized
 net appreciation on
 investment securities                                                             (1,626,548)                           (1,626,548)

Cash dividends declared
 ($.18/share)                                              (477,972)                                                       (477,972)
                       ---------  --------  ----------  -----------  -----------  -----------  ---------  -----------   -----------

Balance,
 September 30, 1999    2,884,720  $288,472  $6,906,466  $18,111,127  $(1,096,286) $  (614,086) $(300,621) $(2,874,459)  $20,420,613
                       =========  ========  ==========  ===========  ===========  ===========  =========  ===========   ===========

</TABLE>


The accompanying notes are an integral part of the financial statements



                                      -3-
<PAGE>


                            PATHFINDER BANCORP, INC.
                             STATEMENTS OF CASH FLOW
                    September 30, 1999 and September 30, 1998
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                    September 30,            September 30,
                                                                                        1999                     1998
                                                                                    -------------            -------------
<S>                                                                                  <C>                      <C>
OPERATING ACTIVITIES:
   Net Income                                                                          $768,690                $975,553
   Adjustments to reconcile net income to net cash
     provided by operating activities:
        Provision for loan, investment and other real estate losses                     311,612                 251,003
        Deferred compensation                                                           142,560                 152,484
        ESOP and other stock-based compensation earned                                  409,384                 466,279
        Deferred income taxes                                                           (75,351)                     --
        Realized and unrealized loss/(gain) on:
             Sale of real estate acquired through foreclosure                                --                  13,303
             Sale of loans                                                              (77,262)                (53,041)
             Available-for-sale investment securities                                    57,428                (205,709)
        Depreciation                                                                    311,520                 167,545
        Amortization of intangibles                                                     236,817                 236,817
        Net amortization of premiums and discounts on
           investment securities                                                         36,270                 (29,272)
        (Increase) decrease in interest receivable                                     (205,332)                152,851
        Decrease (Increase)  in other assets                                            110,915                (520,195)
        Decrease in other liabilities                                                   169,515                (277,016)
                                                                                    -----------             -----------
   Net cash provided by operating activities                                          2,196,766               1,330,602
                                                                                    -----------             -----------

INVESTING ACTIVITIES:
        Purchase of investment securities available for sale                        (25,252,470)             (3,405,778)
        Proceeds from maturities and principle reductions of
            investment securities held to maturity                                           --               3,770,000
        Proceeds from maturities and principle reductions of
           investment securities available for sale                                   8,168,758              12,056,283
        Proceeds from sale of:
             Real estate acquired through foreclosure                                    50,912                 333,761
             Loans                                                                    4,082,918               6,773,681
             Available-for-sale securities                                                                      420,129
        Net increase in loans                                                        (8,754,625)            (13,054,549)
        Purchase of premises and equipment                                             (368,030)               (810,114)
        Decrease (increase) in surrender value of life insurance                        127,476                (110,779)
        Other investing activities                                                      (25,569)               (232,997)
                                                                                    -----------             -----------
   Net cash (used in) provided by investing activities                              (21,970,630)              5,739,637
                                                                                    -----------             -----------

</TABLE>

                                      -4-

<PAGE>


                             STATEMENT OF CASH FLOWS
                                   (continued)


<TABLE>
<CAPTION>
                                                                                    September 30,           September 30,
                                                                                        1999                    1998
                                                                                    -----------             ------------

<S>                                                                                 <C>                      <C>
FINANCING ACTIVITIES:
        Net(decrease) increase in demand deposits, NOW accounts savings
           accounts, money market deposit accounts and escrow deposits               (5,227,471)             $2,081,495
        Net (decrease) increase in time deposits                                     (1,520,470)              1,938,030
        Proceeds from (repayments of) borrowings, net                                24,573,500              (8,083,850)
        Proceeds from stock option exercised                                             47,727                      --
        Cash dividends                                                                 (455,583)               (276,593)
        Treasury stock acquired                                                        (987,353)             (2,395,244)
                                                                                    -----------              ----------
   Net cash provided by (used in) financing activities                               16,430,350              (6,736,162)
                                                                                    -----------              ----------
   Decrease  in cash and cash equivalents                                            (3,343,514)                334,077
   Cash and cash equivalents at beginning of period                                   6,516,238               4,334,072
                                                                                    -----------              ----------
   Cash and cash equivalents at end of period                                       $ 3,172,724              $4,668,149
                                                                                    ===========              ==========

CASH PAID DURING THE PERIOD FOR:

   Interest                                                                         $ 4,976,031              $5,407,043
   Income taxes                                                                         475,000                 451,000


NON-CASH INVESTING ACTIVITY:

   Transfer of loans to other real estate                                           $    92,592              $  533,135
   Change in unrealized depreciation in securities available for sale                 2,710,913                 280,657
    Loans securitized and held as investments                                         2,049,818                      --

NON-CASH FINANCING ACTIVITY:

   Dividends declared and unpaid                                                    $   159,663              $  133,749

</TABLE>



The accompanying notes are an integral part of the 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 and nine months ended September 30, 1999 and 1998.

    Operating results for the three months and nine months ended September 30,
    1999 are not necessarily indicative of the results that may be expected for
    the year ending December 31, 1999.

(2) Earnings per Share
    ------------------

    Basic earnings per share is computed on the weighted average shares
    outstanding. Diluted earnings per share is computed on the weighted average
    shares outstanding adjusted for the dilutive effect of the assumed exercise
    of stock options during the year. The following is a reconciliation of basic
    to diluted earnings per share for the nine months ended September 30, 1999
    and 1998.
<TABLE>
<CAPTION>

<S>                                   <C>           <C>            <C>
1999 Net Income                       $768,690
   Basic EPS                           768,690      2,643,531       $   .29
-------------------------------------------------------------------------------
    Effect of dilutive securities:
       Stock options                                        0        61,111
   Diluted EPS                        $768,690      2,704,642       $   .28
===============================================================================
1998 Net Income                       $975,553
   Basic EPS                           975,553      2,771,996       $   .35
-------------------------------------------------------------------------------
    Effect of dilutive securities:
       Stock options                                        0        64,787
   Diluted EPS                        $975,553      2,836,783       $   .34
===============================================================================
</TABLE>

                                      -6-
<PAGE>

Item 2  -    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, Pathfinder REIT, Inc, and Whispering Oaks Development Corp. At
September 30, 1999, Pathfinder Bancorp, Inc.'s only business was the 100%
ownership of Oswego City Savings Bank and its subsidiaries. At September 30,
1999, 1,552,500 shares, or 58.3%, of the Company's common stock was held by
Pathfinder Bancorp, MHC, the Company's mutual holding company parent and
1,108,545 shares, or 41.7%, 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 loans, 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.

Real Estate Investment Trust Formation
--------------------------------------

On May 13, 1999, Oswego City Savings Bank (the "Bank") funded Pathfinder REIT,
Inc., an operating subsidiary of Oswego City Savings Bank, with approximately
$30 million in real estate backed loans. 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 Bank. The
REIT will enable the Bank to segregate certain assets for management purposes,
and enable the Company to secure a method of achieving liquidity enhancement and
contingency funding in the future. The Company incurred expenses of
approximately $75,000 during the second and third quarters of 1999 associated
with the establishment of the REIT.

                                      -7-
<PAGE>

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
$631,000. Management does not anticipate any loss associated with the
liquidation of the assets held in the subsidiary.

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 September 30, 1999, the implementation of modifications for Year
2000 readiness of mission critical systems is complete. Testing for IT and non-
IT systems is 100% complete at September 30, 1999. Additional testing will be
performed throughout the remainder of 1999 as a precautionary measure, and the
Company is presently testing business resumption contingency plans.

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

                                      -8-
<PAGE>

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 efforts to prepare its
data processing systems for the impact of the Year 2000 were approximately
$130,000 in non-capitalized costs to date with the majority of expenditures for
software and hardware upgrades being capitalized upon implementation in February
1999, and maintenance costs of operating parallel systems. 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 $50,000 in
additional expenses associated with Year 2000 readiness issues.

As of November 9, 1999, the Company believes that the progress it has made to
date, including the expected completion of contingency testing in the fourth
quarter of 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 September 30, 1999
and the  results of  operations  of the  Company  for the three  months and nine
months ended September 30, 1999.

                                      -9-
<PAGE>

Financial Condition

Assets
------

Total assets increased approximately $16.1 million, or 7.9%, to $219.5 million
at September 30, 1999 from $203.4 million at December 31, 1998. The increase in
total assets was primarily the result of the execution of a wholesale growth
strategy in which the Company uses borrowed funds to fund the purchase of
investment securities and the origination of loans, as well as offsetting
reductions in core deposits. Investment securities increased by $16.3 million,
or 30.5%, to $69.7 million at September 30, 1999 from $53.4 million at December
31, 1998. Mortgage loans held-for-sale decreased by a net $726,000, or 25.5%, to
$2.1 million at September 30, 1999 from $2.8 million at December 31, 1998. The
decrease in mortgage loans held-for-sale results from orginations of $5.3
million, less sales and securitization of $6.1 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 servicing rights 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. Total loans increased by
$3.1 million, or 2.5%, to $129.6 million at September 30, 1999 from $126.5
million at December 31, 1998.

Non-earning assets increased by $868,000, or 5.7%, at September 30, 1999 when
compared to December 31, 1998. The increase in non-earning assets is principally
due to the generation of deferred tax assets from the mark-to-market of the
available-for-sale investment portfolio, and an increase in accrued interest
receivable on investment securities.

Liabilities
-----------

Total liabilities increased by $17.9 million, to $199.0 million at September 30,
1999 from $181.1 million at December 31, 1998. The increase is primarily
attributable to a $24.6 million, or 131.5%, increase in borrowed funds,
partially offset by a $6.7 million, or 4.2%, net outflow of deposits. The
decrease in deposits 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 and repurchase agreements used to
supplement the Company's deposit flows and fund the wholesale growth strategy.

Liquidity and Capital Resources
-------------------------------

Shareholders' equity decreased $1.8 million, or 8.1%, to $20.5 million at
September 30, 1999 from $22.3 million at December 31, 1998. The decrease in
shareholder's equity is primarily the result of an $1.6 million reduction in
accumulated and other comprehensive income, an increase in treasury stock of
$987,000 for the acquisition of 91,675 shares as part of the Company's share
repurchase program (see "Recent Events"), and dividends declared of $478,000.
The decrease in accumulated and other comprehensive income results from a
decrease in the unrealized appreciation of the

                                      -10-
<PAGE>

Company's available-for-sale investment securities portfolio caused by rising
interest rates during the second and third quarters of 1999. Partially
offsetting the decreases in shareholder's equity were increases resulting from
net income totaling $769,000, and ESOP and other stock-based compensation earned
of $409,000.

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
asset and liability management objectives.


Results of Operations

The Company had net income of approximately $195,000, and $230,000 for the three
months ended September 30, 1999, and 1998, respectively. Net income for the nine
months ended September 30, 1999 and 1998 amounted to $769,000 and $976,000,
respectively. The decrease in net income of $35,000, or 15.1%, for the three
months ended September 30, 1999, resulted primarily from an increase in
operating expenses of $279,000, or 18.4%, and an increase in provision for loan
losses of $41,000, or 36.8%, partially offset by an increase in net interest
income of $271,000, or 15.8%, and a reduction in income tax provision of
$13,000.

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 .36% and 3.75%, respectively, for the three months ended September 30, 1999
compared to .48% and 3.95% for the third quarter of 1998. Earnings per share -
basic was $.08 for the third quarter of 1999 compared to $.08 for the same
period in 1998.

Interest Income
---------------

Interest income, on a tax-equivalent basis, totaled $3.8 million for the three
months ended September 30, 1999 compared to $3.5 million for the third quarter
of 1998, an increase of $331,000, or 9.4%. The increase in interest income
resulted primarily from a $23.8 million increase in the average balance of
interest-earning assets, partially offset by a reduction in the tax-equivalent
average yield on interest-earning assets to 7.66% from 7.94%. The increase in
average interest-earning assets occurred as a result of growth in both the loan
and investment securities portfolios. Average total loans increased $5.3
million, or 4.2%, and average investment securities increased $23.4 million, or

                                      -11-
<PAGE>

55.4%. The yield reduction is principally the result of mortgage loan
originations, primarily in the held-for-sale portfolio and adjustable rate
mortgages, at rates over 90 basis points below the weighted average coupon of
the existing loan portfolio which lowered the total portfolio yield to 8.26%
from 8.57%. The decline in yield on mortgages was caused by a general decline in
short-term market interest rates, the acceleration of loan prepayments, and the
increased competition in residential real estate lending.

Interest income, on a tax equivalent basis, totaled $11.0 million for the nine
months ended September 30, 1999, as compared to $10.7 million for the same
period in 1998, an increase of $292,000, or 2.7%. The increase resulted
primarily from an increase in the average balance on interest-earning assets of
$13.1 million, partially offset by a reduction in the tax-equivalent yield on
interest-earning assets to 7.66% from 8.00%.

Interest income on loans receivable totaled $2.7 million for the three months
ended September 30, 1999 and 1998, respectively. The stability of interest
income on loans receivable occurred as a result of a reduction in the average
yield on loans receivable to 8.26% from 8.57%, offset by an increase in the
average balance of loans receivable of $5.3 million, or 4.2%, to $131.9 million
at September 30, 1999, from $126.6 million at September 30, 1998. For the nine
months ended September 30, 1999 and 1998, interest income on loans receivable
decreased $64,000, or .8%. Average loans receivable increased $4.1 million while
the yield on average loans receivable decreased to 8.26% from 8.59%. The
increase in the average balance of loans receivable was primarily due to the
origination of 15 year fixed rate mortgages and one-to-four family adjustable
rate mortgage loans retained in the Company's portfolio. The origination of
adjustable rate mortgage loans is primarily comprised of "5/1 ARMS" which have
interest rates that 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 15 year fixed rate mortgages, 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 short-term
interest rate environment.

Interest income on the mortgage-backed securities portfolio increased by
$77,000, or 23.8%, to $400,000 for the three months ended September 30, 1999,
from $323,000 for the three months ended September 30, 1998. The increase in
interest income on mortgage-backed securities resulted generally from an
increase in the average balance on mortgage-backed securities of $4.7 million,
partially offset by a reduction in the average yield on mortgage-backed
securities to 6.68% from 6.70%. For the nine months ended September 30, 1999 and
1998, interest income on mortgage-backed securities was $1.0 million. The
increase in the average balance of mortgage-backed securities for the third
quarter of 1999 resulted from the investment of borrowed funds and the cash flow
generated by the scheduled amortization and prepayments of principal on the
underlying mortgage loans.

Interest income on investment securities, on a tax equivalent basis , increased
$318,000, or 80.9%, for the three months ended September 30, 1999, to $711,000
from $393,000 for the same period in 1998. The increase resulted primarily from
an increase in the average balance of investment securities

                                      -12-
<PAGE>

of $19.7 million for the quarter ended September 30, 1999 as compared to the
third quarter of 1998, as well as an increase in the tax equivalent average
yield on investment securities to 6.40% from 6.36%. The increase in the average
balance of investment securities is the result of a wholesale strategy of
utilizing borrowings to fund growth in the Company's investment portfolio and
leverage the Company's equity. The investment securities purchased during the
second and third quarters provided higher yields than the previously existing
portfolio as interest rates rose during the latter half of the second quarter
and third quarter when such activity was more predominant.

For the nine months ended September 30, 1999, tax equivalent interest income on
investment securities increased $397,000, or 28.5%, to $1.8 million compared to
$1.4 million for the same period in 1998. The increase resulted primarily from
an increase in the average balance on investment securities of $10.3 million,
partially offset by a decrease in the tax equivalent yield on investment
securities to 6.00% from 6.65%.

Interest income on interest-earning deposits decreased $73,000, or 97.3%, to
$2,000 from $75,000 for the three months ended September 30, 1999 and 1998,
respectively. The decrease was primarily the result of a decrease of $5.8
million in the average balance of interest-earning deposits, as well as a
reduction in the average yield on interest-earning deposits to 4.85% from 5.04%.
For the nine months ended September 30, 1999, interest income on interest-
earning deposits decreased $54,000, or 47.9%. The decrease is principally due to
a reduction of $1.4 million in the average balance on interest-earning deposits,
as well as a decrease in the yield to 5.02% for the nine months ended September
30, 1999, from 5.07% for the same period in 1998. The decrease in interest-
earning deposits generally reflects a shift to liability based liquidity sources
from asset based sources, as well as the decrease in the Company's core
deposits.

Interest Expense
----------------

Interest expense for the quarter ended September 30, 1999 increased by
approximately $56,000, or 3.2%, to $1.8 million when compared to the same
quarter for 1998. The increase in interest expense for the period was the result
of a $20.4 million increase in the average balance on interest-bearing
liabilities to $181.3 million from $160.9 million for the periods ended
September 30, 1999 and 1998, respectively, partially offset by a reduction in
the average cost of deposits to 4.01% for the three months ended September 30,
1999 from 4.38% for the three months ended September 30, 1998. The decrease in
the average cost of interest-bearing 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 an $23.8 million
increase in the average balance of borrowed funds, partially offset by a $3.3
million decrease in deposits. The decrease in the average balance on the
Company's core deposits is reflective of increased competition from non-deposit
investment products and a lack of growth in the Company's market area. These
conditions are anticipated to continue in the near term. The increase in
borrowings is the result of the execution of a wholesale leveraged growth
strategy, whereby funds obtained from term advances and repurchase agreements
are invested in investment and mortgage-backed securities. The leveraged growth
strategy generally entails accepting additional interest rate risk by
mismatching the terms or re-pricing period of the borrowings with the terms or

                                      -13-
<PAGE>

re-pricing periods of the investment. For further information regarding the
Company's interest rate risk and measurement system, see "Item 3 - Quantitative
and Qualitative Disclosure about Market Risk".

For the nine months ended September 30, 1999, interest expense decreased
$180,000, or 3.3%, when compared to the first nine months of 1998. The decrease
in interest expense for the period was the result of a decrease in the average
cost of deposits to 3.95% for the nine months ended September 30, 1999 from
4.36% for the nine months ended September 30, 1998, partially offset by a $10.8
million increase in the average balance on interest-bearing liabilities to
$173.1 million from $162.3 million when compared to the nine months ended
September 30, 1999 and 1998, respectively.

Net Interest Income
-------------------

Net interest income totaled $2.0 million for the three months ended September
30, 1999 and $1.7 million for the same period in 1998, an increase of $271,000,
or 15.8%. The increase in net interest income for the quarter ended September
30, 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. The Company's net
interest rate spread for the quarter ended September 30, 1999 rose to 3.65% from
3.56% for the quarter ended September 30, 1998.

For the nine months ended September 30, 1999, net interest income rose $458,000,
or 8.6%, compared to the first three quarters of 1998. This increase is
reflected in the increase in the Company's net interest rate spread for the nine
months ended September 30, 1999 to 3.70% from 3.64% for the same period in 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 September 30, 1999 of $151,000, as compared to
a provision of $110,000 for the three months ended September 30, 1998. For the
nine months ended September 30, 1999 and 1998, the provision for loan losses was
$312,000 and $251,000, respectively. The increase in provision for loan losses
reflects higher net charge-offs for the period, as well as the increased risk
associated with expanded commercial lending activity. The Company's ratios of
allowance for loan losses to total loans receivable and to non-performing loans
at September 30, 1999 were .85% and 54.33%, respectively.

Non-interest Income
-------------------

Non-interest  income consists of servicing income, fee income and gain (loss) on
sales of loans and

                                      -14-
<PAGE>

investment securities and other operating income. Non-interest income increased
approximately $2,000, or .7%, to $233,000 for the three months ended September
30, 1999 as compared to $231,000 for the prior year quarter. The increase is
primarily attributable to an increase of $34,000, or 334.5%, in mortgage
servicing fees, and $16,000, or 13.4% in service charges on deposit accounts.
These increases were partially offset by reductions in net securities gains and
losses of $42,000 and in other charges, commissions, and fees of $6,000. The
increase in mortgage servicing fees reflects the servicing rights generated from
the Company's mortgage banking activities. The increase in service charges on
deposit accounts is primarily attributable to increased ATM activity generated
through an expanded network of offsite facilities. The decrease in other
charges, commissions and fees is primarily the result of a decrease in
investment service fees and lower growth of the cash surrender value of Company
owned life insurance. The company owned life insurance is used to fund certain
benefit plans. The net loss of $54,000 incurred on securities gains and losses
resulted from loan sales and the mark to market impact of certain equity
securities in the Company's portfolio.

For the nine months ended September 30, 1999, noninterest income decreased
$91,000, or 9.7%, compared to the 1998 period. The decrease in noninterest
income for this period is the result of a reduction of $239,000 in net
securities gains, partially offset by higher income on fees, service charges,
and commissions of $148,000. The increases in noninterest income, other than net
securities gains and losses, is the result of an on-going effort by the Company
to diversify its revenue sources and lessen its dependence on net interest
income. As a component of this objective, the Company is in the process of
expanding its facilities and resources to provide trust services and enhance its
investment management services.

Noninterest Expense
-------------------

Noninterest expense increased $279,000, or 18.4%, to $1.8 million for the three
months ended September 30, 1999, as compared to the same period in 1998. This
increase was primarily attributable to a $98,000, or 88.1% increase in data
processing costs, a $73,000 or 83.4% increase in professional services, a
$48,000, or 32.4% increase in building occupancy, and a $71,000, or 9.0%
increase in salaries and employee benefits, partially offset by a $7,000
decrease in other expenses and a $4,000 reduction in deposit insurance
assessments. For the nine months ended September 30, 1999, noninterest expense
increased $613,000, or 13.3%, to $5.2 million as compared to $4.6 million for
the same period in 1998. This increase was primarily attributable to a $244,000,
or 72.5% increase in data processing costs, a $164,000, or 40.4% increase in
professional services, an $84,000, or 17.8% increase in building occupancy, and
a $156,000, or 6.7% increase in salaries and employee benefits. These increased
expenses were partially offset by a reduction in other expenses of $26,000, or
3.2%, and an $8,000 reduction in deposit insurance assessments.

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 95
percent complete. Management of the

                                      -15-
<PAGE>

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 commissions paid to mortgage originators,
accelerated amortization of certain stock-based compensation and 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 $13,000, or 14.6%, for the quarter ended
September 30, 1999 as compared to the same period in the prior year. This
decrease was directly attributable to a $47,000 decrease in the Company's pretax
income.

For the nine months ended  September  30, 1999 and 1998,  income tax expense was
$291,000 and $391,000, respectively.

Recent Events

Share Repurchase Program
------------------------

On January 22, 1999, the Company announced the adoption of its 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
October 30, 1999, the Company had purchased 101,675 shares commensurate with the
plan at an aggregate cost of $1.1 million. In November 1998, the Company
completed its first share repurchase program, acquiring 132,000 shares of common
stock at an aggregate cost of $1.9 million.

Management Succession
---------------------

On November 10, 1999, Chris C. Gagas, Chairman, President and Chief Executive
Officer of Pathfinder Bancorp, Inc. announced that he will retire as President
and CEO, effective January 15, 2000. Mr. Gagas has been a director of the
Company since 1966 and has served as Chairman, President and CEO since 1986. Mr.
Gagas will remain as the Company's Chairman. Thomas W. Schneider, Executive
Vice-President and Chief Financial Officer has been named by the Board of
Directors to succeed as President and CEO of the Company. Mr. Schneider joined
the Company in 1988 as Controller. He was named Chief Financial Officer in 1994
and elected as Executive Vice- President in 1998.

                                      -16-
<PAGE>

Item 3   -   Quantitative and Qualitative Disclosure about Market 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 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

                                      -17-
<PAGE>

Company's savings accounts. Savings accounts have traditionally provided a
source of relatively low cost funding that have historically demonstrated 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 its 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.

Gap Analysis. At September 30, 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 $26.7 million, representing a
cumulative one-year gap ratio of a negative 12.54%.


Changes in Net Interest Income and Net Portfolio Value. The following table
measures the Company's interest rate risk exposure in terms of the percentage
change in its net interest income and net portfolio value as a result of a
hypothetical changes in 50 basis point increments in market interest rates. Net
portfolio value (also referred to as market value of portfolio equity)
represents the fair value of net assets (determined as the market value of
assets minus the market value of liabilities). The table quantifies the changes
in net interest income and net portfolio value to parallel shifts in the yield
curve. The column "Net Interest Income Percent Change" measures the change to
the next twelve month's projected net interest income, due to parallel shifts in
the yield curve. The column "Net Portfolio Value Percent Change" measures
changes in the current net mark-to-market value of assets and liabilities due to
parallel shifts in the yield curve. The base case assumes September 30, 1999
interest rates. The Company uses these percentage changes as a means to measure
interest rate risk exposure and quantifies those changes against guidelines set
by the Board of Directors as part

                                      -18-
<PAGE>

of the Company's  Interest Rate Risk policy. The Company's current interest rate
risk exposure is within those guidelines set forth.





<TABLE>
<CAPTION>

  Change in Interest Rates
     Increase(Decrease)
       Basis Points             Net Interest Income       Net Portfolio Value
       (Rate Shock)              Percentage Change         Percentage Change
  ------------------------      -------------------       -------------------
<S>                            <C>                         <C>

          200                        -15.38%                     -17.06%
          150                        -11.39                      -12.82
          100                        - 7.74                      - 8.54
           50                        - 3.61                      - 4.15
        Base Case                         -                           -
          (50)                         3.27                        3.39
         (100)                         6.15                        5.69
         (150)                         8.62                        6.83
         (200)                        10.58                        7.20

</TABLE>

                                      -19-
<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
---------------------------------------------------

None

Other Information
-----------------

On September 21, 1999 the Board of Directors declared a $.06 cash dividend to
shareholders of record as of September 30, 1999, payable on October 15, 1999.

Exhibits and Reports
--------------------

None




                                      -20-
<PAGE>

                                   SIGNATURES




     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.



                                         PATHFINDER BANCORP, INC.



Date: 11/10/1999                         /s/ Chris C. Gagas
     -----------                         --------------------------
                                         Chris C. Gagas
                                         Chairman, President,
                                         Chief Executive Officer







Date: 11/10/1999                         /s/ Thomas W. Schneider
     -----------                         --------------------------
                                         Thomas W. Schneider
                                         Executive Vice President,
                                         Chief Financial Officer

                                      -21-