UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                          _____________________________

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the quarterly period ending March 31, 2006
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the transition period from _______ to _______

                          COMMISSION FILE NUMBER: 000-23601
                                                  ---------

                            PATHFINDER BANCORP, INC.
                            ------------------------
             (Exact Name of Registrant as Specified in its Charter)

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


                     214 West First Street, Oswego, NY 13126
                     ---------------------------------------
               (Address of Principal Executive Office) (Zip Code)

                                 (315) 343-0057
                                 --------------
               (Registrant's Telephone Number including area code)


     Indicate  by  check  mark  whether the Registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  twelve months (or for such shorter period that the
Registrant  was  required to file such reports) and (2) has been subject to such
requirements  for  the  past  90  days.     Yes  [X]   No  [  ].

     Indicate by check mark whether the Registrant is a large accelerated filer,
an  accelerated  filer,  or  a  non-accelerated  filer.  See  definition  of
"accelerated  filer  and  large accelerated filer" in Rule 12b-2 of the Exchange
Act.  (Check  one):

Large  Accelerated Filer []  Accelerated Filer [] Non-Accelerated  Filer  [X]

     Indicate  by  check  mark  whether  the  registrant  is a shell company (as
defined  in  Rule  12b-2  of  the  Exchange  Act).    Yes  [  ]       No  [X]

     As  of May 10, 2006 there were 2,950,419 shares issued and 2,463,132 shares
outstanding  of  the  Registrant's  Common  Stock.


<PAGE>
                            PATHFINDER BANCORP, INC.
                                      INDEX



PART 1      FINANCIAL INFORMATION                                    PAGE NO.

Item 1.     Consolidated Financial Statements

            Consolidated Statements of Condition                        1
            Consolidated Statements of Income                           2
            Consolidated Statements of Shareholders' Equity             3
            Consolidated Statements of Cash Flows                       4
            Notes to Consolidated Financial Statements                  5-8

Item 2.     Management's Discussion and Analysis of Financial
               Condition and Results of Operations                      9-16

Item 3.     Quantitative and Qualitative Disclosure about Market
               Risk                                                     17-18

Item 4.     Controls and Procedures                                     19


PART II     OTHER INFORMATION                                           20

            Item 1.     Legal proceedings
            Item 1A.    Risk Factors
            Item 2.     Unregistered sales of equity securities
                           and use of proceeds
            Item 3.     Defaults upon senior securities
            Item 4.     Submission of matters to a vote of security holders
            Item 5.     Other information
            Item 6.     Exhibits


SIGNATURES

<PAGE>

<TABLE>
<CAPTION>

                                                PATHFINDER  BANCORP, INC.
                                           CONSOLIDATED STATEMENTS OF CONDITION
                                     MARCH 31, 2006 (UNAUDITED) AND DECEMBER 31, 2005


                                                                                         March 31,          December 31,
ASSETS                                                                                     2006                 2005
------------------------------------------------------------------------------------------------------------------------

(Dollars in thousands, except per share data)
<S>                                                                                       <C>              <C>
Cash and due from banks                                                                     $      7,171   $       7,309
Interest earning deposits                                                                            395             586
------------------------------------------------------------------------------------------------------------------------
    Total cash and cash equivalents                                                                7,566           7,895
Investment securities, at fair value                                                              79,516          74,239
Federal Home Loan Bank stock, at cost                                                              2,080           1,805
Loans                                                                                            191,381         189,568
   Less: Allowance for loan losses                                                                 1,693           1,679
------------------------------------------------------------------------------------------------------------------------
     Loans receivable, net                                                                       189,688         187,889

Premises and equipment, net                                                                        7,951           8,020
Accrued interest receivable                                                                        1,642           1,678
Foreclosed real estate                                                                               887             743
Goodwill                                                                                           3,840           3,840
Intangible asset, net                                                                                349             404
Bank owned life insurance                                                                          6,036           5,987
Other assets                                                                                       4,199           4,448
------------------------------------------------------------------------------------------------------------------------
     Total assets                                                                           $    303,754   $     296,948
========================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------
Deposits:
  Interest-bearing                                                                           $   217,418   $     216,136
  Noninterest-bearing                                                                             20,258          20,241
------------------------------------------------------------------------------------------------------------------------
     Total deposits                                                                              237,676         236,377
Short-term borrowings                                                                              9,100           2,000
Long-term borrowings                                                                              28,360          29,360
Junior subordinated debentures                                                                     5,155           5,155
Other liabilities                                                                                  2,604           3,128
------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                           282,895         276,020

Shareholders' equity:
   Preferred stock, authorized shares 1,000,000; no shares issued or outstanding
   Common stock, par value $.01; authorized 10,000,000 shares;
    2,950,419 shares issued;  and 2,463,132  shares outstanding, respectively                         29              29
   Additional paid in capital                                                                      7,721           7,721
   Retained earnings                                                                              20,953          20,965
   Accumulated other comprehensive loss                                                           (1,342)         (1,285)
   Treasury stock, at cost; 487,287 shares                                                        (6,502)         (6,502)
------------------------------------------------------------------------------------------------------------------------
     Total shareholders' equity                                                                   20,859          20,928
------------------------------------------------------------------------------------------------------------------------
     Total liabilities and shareholders' equity                                               $  303,754   $     296,948
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                     -1-
<PAGE>

<TABLE>
<CAPTION>
                                     PATHFINDER  BANCORP, INC.
                                 CONSOLIDATED STATEMENTS OF INCOME
                                            (UNAUDITED)


                                                                 For the three     For the three
                                                                  months ended      months ended
                                                                 March 31, 2006    March 31, 2005
                                                                ----------------  ----------------
(Dollars in thousands, except per share data)
<S>                                                             <C>               <C>
INTEREST INCOME:
 Loans, including fees                                          $         3,057   $         2,889
 Debt securities:
Taxable                                                                     641               604
Tax-exempt                                                                   98               103
 Dividends                                                                   61                51
 Other                                                                        8                51
--------------------------------------------------------------------------------------------------
       Total interest income                                              3,865             3,698
--------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
  Interest on deposits                                                    1,249             1,030
  Interest on short-term borrowings                                          61                10
  Interest on long-term borrowings                                          438               459
       Total interest expense                                             1,748             1,499
--------------------------------------------------------------------------------------------------
          Net interest income                                             2,117             2,199
  Provision for loan losses                                                  22                72
--------------------------------------------------------------------------------------------------
          Net interest income after provision for loan losses             2,095             2,127
--------------------------------------------------------------------------------------------------
OTHER INCOME:
  Service charges on deposit accounts                                       371               274
  Earnings on bank owned life insurance                                      49                44
  Loan servicing fees                                                        59                41
  Net losses on sales of investment securities                               (2)                -
  Net losses on sales of loans and foreclosed real estate                   (19)              (12)
  Other charges, commissions and fees                                       135               142
--------------------------------------------------------------------------------------------------
          Total other income                                                593               489
--------------------------------------------------------------------------------------------------
OTHER EXPENSES:
  Salaries and employee benefits                                          1,275             1,264
  Building occupancy                                                        316               275
  Data processing expenses                                                  324               320
  Professional and other services                                           115               178
  Amortization of intangible asset                                           56                56
  Other expenses                                                            325               327
          Total other expenses                                            2,411             2,420
--------------------------------------------------------------------------------------------------
Income before income taxes                                                  277               196
Provision for income taxes                                                   37                47
--------------------------------------------------------------------------------------------------
NET INCOME                                                      $           240   $           149
==================================================================================================
     NET INCOME PER SHARE - BASIC                               $          0.10   $          0.06
==================================================================================================
     NET INCOME PER SHARE - DILUTED                             $          0.10   $          0.06
==================================================================================================
     DIVIDENDS PER SHARE                                        $        0.1025   $        0.1025
==================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                     -2-
<PAGE>

<TABLE>
<CAPTION>

                                                 PATHFINDER BANCORP, INC.
                                CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   THREE MONTHS ENDED MARCH 31, 2006 AND MARCH 31, 2005
                                                       (unaudited)


                                                                                                Accumulated
                                                                      Additional                 Other Com-     Unearned
                                               Common Stock             Paid in     Retained     prehensive       ESOP
                                               ------------
                                                  Shares     Amount     Capital     Earnings   Income (Loss)     Shares
                                               ------------  -------  -----------  ----------  --------------  ----------
<S>                                            <C>           <C>      <C>          <C>         <C>             <C>
(Dollars in thousands, except per share data)
BALANCE, DECEMBER 31, 2005                        2,950,419  $    29  $     7,721  $  20,965   $      (1,285)  $       -
Comprehensive income
Net income                                                                               240
Other comprehensive loss, net of tax
Unrealized net losses on securities                                                                      (57)

Total Comprehensive income
Dividends declared ($.1025 per share)                                                   (252)
-------------------------------------------------------------------------------------------------------------------------

BALANCE, MARCH 31, 2006                           2,950,419  $    29  $     7,721  $  20,953   $      (1,342)  $       -
=========================================================================================================================


BALANCE, DECEMBER 31, 2004                        2,937,419  $    29  $     7,453  $  21,186   $        (307)  $     (33)
Comprehensive loss
Net income                                                                               149
Other comprehensive loss, net of tax
Unrealized net losses on securities                                                                     (823)

Total Comprehensive Loss
ESOP shares earned                                                             22                                     11
Stock option exercised                                3,000        -           20
Dividends declared ($.1025 per share)                                                   (251)
-------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2005                           2,940,419  $    29  $     7,495  $  21,084   $      (1,130)  $     (22)
=========================================================================================================================


                                                Treasury
                                                 Stock      Total
                                               ----------  --------
<S>                                            <C>         <C>
(Dollars in thousands, except per share data)
BALANCE, DECEMBER 31, 2005                     $  (6,502)  $20,928
Comprehensive income
Net income                                                     240
Other comprehensive loss, net of tax
Unrealized net losses on securities                            (57)
                                                           --------
Total Comprehensive income                                     183
Dividends declared ($.1025 per share)                         (252)
-------------------------------------------------------------------
BALANCE, MARCH 31, 2006                        $  (6,502)  $20,859
===================================================================


BALANCE, DECEMBER 31, 2004                     $  (6,502)  $21,826
Comprehensive income
Net income                                                     149
Other comprehensive loss, net of tax
Unrealized net losses on securities                           (823)
                                                           --------
Total Comprehensive Income                                    (674)
ESOP shares earned                                              33
Stock option exercised                                          20
Dividends declared ($.1025 per share)                         (251)
-------------------------------------------------------------------
BALANCE, MARCH 31, 2005                        $  (6,502)  $20,954
===================================================================
</TABLE>

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

                                     -3-
<PAGE>

<TABLE>
<CAPTION>

                            PATHFINDER BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)




                                                        March 31,    March 31,
                                                          2006         2005
--------------------------------------------------------------------------------
(Dollars in thousands)
<S>                                                    <C>          <C>
OPERATING ACTIVITIES
Net income                                             $      240   $      149
Adjustments to reconcile net income to net cash
  provided by operating activities:
Provision for loan losses                                      22           72
ESOP shares earned                                              -           33
Deferred income tax expense                                    31           34
Proceeds from sale of loans                                     -        1,120
Realized loss on:
  Sale of real estate through foreclosure                       7            1
  Loans                                                         -           11
  Available-for-sale investment securities                      2            -
Depreciation                                                  190          161
Amortization of intangible asset                               56           56
Amortization of deferred financing costs                        8            8
Amortization of mortgage servicing rights                      28           37
Earnings on bank owned life insurance                         (49)         (44)
Net amortization of premiums on investment securities          32           89
Decrease (increase) in interest receivable                     36          (90)
Net change in other assets and liabilities                   (475)        (294)
--------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                     128        1,343
================================================================================
INVESTING ACTIVITIES
Purchase of investment securities available-for-sale      (12,013)     (17,810)
Proceeds from maturities and principal reductions of
  investment securities available-for-sale                  2,366        1,577
Proceeds from sale:
  Real estate acquired through foreclosure                     50           49
  Available-for-sale investment securities                  3,976            -
Net (increase) decrease in loans                           (2,024)         997
Purchase of premises and equipment                           (121)        (280)
--------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES                      (7,766)     (15,467)
================================================================================
FINANCING ACTIVITIES
Net decrease in demand deposits, NOW accounts
  savings accounts, money market deposit accounts
  and escrow deposits                                        (519)     (10,000)
Net increase in time deposits                               1,818       18,308
Increase in short-term borrowings                           7,100        1,000
Payments on long-term borrowings                           (1,000)      (2,000)
Proceeds from exercise of stock options                         -           20
Cash dividends paid                                           (90)         (89)
--------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                   7,309        7,239
================================================================================

  DECREASE IN CASH AND CASH EQUIVALENTS                      (329)      (6,885)
 Cash and cash equivalents at beginning of period           7,895       14,325
--------------------------------------------------------------------------------
  CASH AND CASH EQUIVALENTS AT END OF PERIOD           $    7,566   $    7,440
================================================================================
</TABLE>

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

                                     -4-
<PAGE>

PATHFINDER BANCORP, INC.

Notes to Consolidated Financial Statements

(1) BASIS OF PRESENTATION

The  accompanying  unaudited  consolidated  financial  statements  of Pathfinder
Bancorp, Inc. and its wholly owned subsidiaries have been prepared in accordance
with  U.S.  generally  accepted  accounting  principles  for  interim  financial
information and the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly,  they do not include all of the information and footnotes necessary
for  a  complete  presentation  of  consolidated  financial position, results of
operations,  and  cash  flows  in  conformity with generally accepted accounting
principles.  In the opinion of management, all adjustments, consisting of normal
recurring  accruals,  considered  necessary  for  a  fair presentation have been
included.

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  Company'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, 2005 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.

Operating  results for the three months ended March 31, 2006 are not necessarily
indicative  of the results that may be expected for the year ending December 31,
2006.

(2)  EARNINGS  PER  SHARE

Basic  earnings  per  share  has  been  computed  by  dividing net income by the
weighted average number of common shares outstanding throughout the three months
ended  March  31, 2006, and 2005, using 2,463,132 and 2,447,210 weighted average
common  shares  outstanding,  respectively.  Diluted  earnings per share for the
three  months  ended  March 31, 2006 and 2005 have been computed using 2,481,777
and 2,486,766 weighted average common shares outstanding, respectively.  Diluted
earnings  per  share  gives  effect  to  weighted  average  shares that would be
outstanding  assuming  the  exercise  of issued stock options using the treasury
stock  method.

(3)  PENSION  BENEFITS

The  composition  of  net  periodic benefit plan cost for the three months ended
March  31,  is  as  follows:

<TABLE>
<CAPTION>

                              FOR THE THREE MONTHS
                                 ENDED MARCH 31,
                                  2006        2005
---------------------------------------------------
<S>                              <C>         <C>
(In thousands)
Service cost                     $  48       $  38
Interest cost                       63          57
Expected return on plan assets     (92)        (71)
Amortization of net losses          28          24
---------------------------------------------------
Net periodic benefit cost        $  47       $  48
===================================================
</TABLE>
                                     -5-
<PAGE>

The  Company  previously  disclosed in its consolidated financial statements for
the year ended December 31, 2005, that it expected to contribute $192,000 to its
pension  plan in 2006. As of March 31, 2006, $45,013 had been contributed to the
pension  plan.

(4)  DIVIDEND  RESTRICTIONS

The  Company maintains a restricted capital account with a $1.5 million balance,
representing  Pathfinder  Bancorp,  M.H.C.'s  portion  of dividends waived as of
March  31,  2006.

(5)  COMPREHENSIVE LOSS

The  components  of  other comprehensive loss income and related tax effects for
the  three  month  periods  ended  March  31,  2006  and  2005  are  as follows:

<TABLE>
<CAPTION>
                                                  For the three months
                                                    ended March 31,
                                                       2006     2005
                                                 -----------------------
<S>                                              <C>         <C>
(In thousands)
Gross change in unrealized losses on
  securities available for sale                  $     (88)  $(1,372)
Reclassification adjustment for losses
  included in net income                                 2         -
---------------------------------------------------------------------
                                                       (86)   (1,372)
Tax effect                                              29       549
---------------------------------------------------------------------
Net of tax amount                                $     (57)  $  (823)
=====================================================================
</TABLE>

(6) GUARANTEES

The  Company  does  not  issue  any  guarantees  that  would  require  liability
recognition  or  disclosure,  other  than its standby letters of credit. Standby
letters  of  credit written are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Generally, all letters
of  credit,  when  issued have expiration dates within one year. The credit risk
involved  in issuing letters of credit is essentially the same as those that are
involved  in  extending  loan  facilities  to customers. The Company, generally,
holds  collateral  and/or  personal guarantees supporting these commitments. The
Company  had  $134,000  of  standby  letters  of  credit  as  of March 31, 2006.
Management  believes  that  the  proceeds  obtained  through  a  liquidation  of
collateral  and  the  enforcement of guarantees would be sufficient to cover the
potential amount of future payments required under the corresponding guarantees.
The  current  amount  of the liability as of March 31, 2006 for guarantees under
standby  letters  of  credit  issued  is  not  material.

(7)  STOCK BASED COMPENSATION

Prior  to  2006,  the  Company  accounted for stock-based compensation issued to
directors  and  employees  using  the  intrinsic value method in accordance with
Accounting  Principles  Board  Opinion  No.  25, "Accounting for Stock Issued to
Employees"  (APB  25).  This  method  required  that  compensation  expense  be
recognized  to  the extent that the fair value of the stock exceeds the exercise
price  of  the  stock  award  at  the  grant date. The Company generally did not
recognize  compensation expense related to stock option awards because the stock
options  generally  had  fixed  terms  and exercise prices that were equal to or
greater  than  the  fair  value of the Company's common stock at the grant date.

                                     -6-
<PAGE>

Effective  January  1,  2006, the Company adopted Financial Accounting Standards
Board  (FASB)  Statement  No. 123(R), Share-Based Payment, ("SFAS 123(R)"). SFAS
123(R)  requires  compensation costs related to share-based payment transactions
to  be  recognized  in  the income statement (with limited exceptions) using the
modified  prospective  method  based  on  the  grant-date  fair  value  of  the
stock-based  compensation  issued.  Compensation  costs  are recognized over the
period  that  an  employee provides service in exchange for the award. As of the
date  of  adoption  of  SFAS 123(R), the Company's options are fully granted and
vested. There was no impact to the Company's consolidated financial position or
results  of  operations.

In  conjunction  with  SFAS 123(R), the Company also adopted FASB Staff Position
("FSP") SFAS 123(R)-2, "Practical Accommodation to the Application of Grant Date
as  Defined  in  SFAS  123(R)"  effective January 1, 2006. FSP 123(R)-2 provides
guidance  on  the  application  of  grant  date  as  defined  in SFAS 123(R). In
accordance  with  this standard a grant date of an award exists if (a) the award
is  a  unilateral  grant,  and (b) the key terms and conditions of the award are
expected to be communicated to an individual recipient within a relatively short
time period from the date of approval. The adoption of this standard did not our
consolidated  financial  position,  results  of operations or cash flows for the
three  month  period  ended  March  31,  2006.

In  November  2005, the FASB issued final FSP No. 123(R)-3, "Transition Election
Related  to  Accounting  for the Tax Effects of Share-Based Payment Awards." The
FSP  provides  an  alternative  method  of  calculating excess tax benefits (the
Additional  Paid-in  Capital "APIC" pool) from the method defined in SFAS 123(R)
for  share-based payments. A one-time election to adopt the transition method in
this  FSP  is  available to those entities adopting SFAS 123(R) using either the
modified  retrospective  or modified prospective method. Up to one year from the
initial adoption of SFAS 123(R) or effective date of the FSP is provided to make
this  one-time  election.  However,  until an entity makes its election, it must
follow  the  guidance  in SFAS 123(R). We are currently evaluating the potential
impact  of  calculating  the APIC pool with this alternative method and have not
yet  determined  which  method  we  will  adopt,  or  the expected impact on our
financial  position  or  results  of  operations.

In  February 2006, the FASB issued FSP No. 123(R)-4, "Classifications of Options
and  Similar  Instruments  Issued  as  Employee Compensation That Allow for Cash
Settlement  upon the Occurrence of a Contingent Event." The position amends SFAS
123(R)  to incorporate that a cash settlement feature that can be exercised only
upon the occurrence of a contingent event that is outside the employee's control
does  not  meet certain conditions in SFAS 123(R) until it becomes probable that
the  event  will occur. The guidance in this FSP was required to be applied upon
initial  adoption  of  SFAS  123(R). The Company does not have any option grants
that  allow  for  cash  settlement.

(8)  NEW  ACCOUNTING  PRONOUNCEMENTS

In  January  2006,  the  Company  adopted  Financial  Accounting  Standard Board
("FASB")  Staff  Position  ("FSP") SFAS No. 115-1 and FAS 124-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments." The
FSP  addresses when an investment is considered impaired, whether the impairment
is  other-than-temporary and the measurement of an impairment loss. The FSP also
includes  accounting  considerations  subsequent  to  the  recognition  of  an
other-than-temporary  impairment  and  requires  certain  disclosures  about
unrealized losses that have not been recognized as other-than-temporary. The FSP
did  not  have  a  significant  impact  on  the Company's consolidated financial
position  or  results  of  operations.

In January 2006, the Company adopted FASB Interpretation No. 47, "Accounting for
Conditional  Asset  Retirement Obligations - an interpretation of SFAS No. 143,"
("FIN  47").  This  Interpretation  provides  clarification  with respect to the
timing  of  liability  recognition  for  legal  obligations  associated with the
retirement  of  tangible  long-lived  assets  when  the  timing and/or method of
settlement  of the obligation are conditional on a future event. The adoption of
FIN  47  did  not  impact  the  Company's  consolidated  financial  statements.

                                     -7-
<PAGE>

In  January 2006, the Company adopted SFAS No. 154, Accounting Changes and Error
Corrections  ("SFAS  154").  SFAS  No. 154 requires retroactive application of a
voluntary  change  in  accounting principle to prior period financial statements
unless  it  is impracticable. SFAS No. 154 also requires that a change in method
of depreciation, amortization, or depletion for long-lived, non-financial assets
be accounted for as a change in accounting estimate that is affected by a change
in accounting principle. The adoption of the provisions of SFAS 154 did not have
a  material  impact  on  the  Company's  consolidated  financial  statements.

In  January 2006, the Company adopted FASB Staff Position FAS 13-1 ("FSP 13-1"),
which  requires  companies  to  expense  rental  costs associated with ground or
building operating leases that are incurred during a construction period, versus
capitalizing  these  rental  costs.  The  adoption  of  FSP  13-1 did not have a
material  impact on the Company's consolidated financial condition or results of
operations.

In  February  2006,  the FASB issued SFAS No. 155, Accounting for Certain Hybrid
Financial  Instruments  ("SFAS 155"). SFAS 155 amends FASB Statement No. 133 and
FASB  Statement  No. 140, and improves the financial reporting of certain hybrid
financial  instruments  by  requiring more consistent accounting that eliminates
exemptions  and  provides  a  means  to  simplify  the  accounting  for  these
instruments.  Specifically,  SFAS  155  allows  financial  instruments that have
embedded  derivatives  to  be  accounted for as a whole (eliminating the need to
bifurcate  the derivative from its host) if the holder elects to account for the
whole  instrument  on  a  fair value basis. The Company is required to adopt the
provisions  of  SFAS  155, as applicable, beginning in 2007. Management does not
believe  the  adoption  of SFAS 155 will have a material impact on the Company's
consolidated financial  position  and  results  of  operations.

In  March  2006,  the  FASB  issued  SFAS  No.  156, Accounting for Servicing of
Financial  Assets -An Amendment of FASB Statement No. 140 ("SFAS 156"). SFAS 156
requires  that  all  separately  recognized  servicing  assets  and  servicing
liabilities  be  initially measured at fair value, if practicable. The statement
permits,  but  does  not require, the subsequent measurement of servicing assets
and  servicing  liabilities at fair value. SFAS 156 is effective for the Company
beginning  in  2007.  The Company does not believe that the adoption of SFAS 156
will  have  a  significant  effect  on  its  consolidated financial  statements.

                                     -8-
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

GENERAL

Throughout  the  Management's  Discussion  and  Analysis ("MD&A") the term, "the
Company",  refers  to  the  consolidated  entity  of  Pathfinder  Bancorp,  Inc.
Pathfinder  Bank  and Pathfinder Statutory Trust I are wholly owned subsidiaries
of  Pathfinder  Bancorp, Inc.  Pathfinder Commercial Bank, Pathfinder REIT, Inc.
and  Whispering  Oaks  Development,  Inc. represent wholly owned subsidiaries of
Pathfinder  Bank.   At March 31, 2006, Pathfinder Bancorp, M.H.C., the Company's
mutual  holding  company  parent, whose activities are not included in the MD&A,
held  64.3%  of  the  Company's  common  stock  and  the  public  held  35.7%.

The  following discussion reviews the Company's financial condition at March 31,
2006 and the results of operations for the three months ended March 31, 2006 and
March  31,  2005.

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  that  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.

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  is  also  affected  by  its provision for loan losses, as well as by the
amount  of  other  income,  including  income  from  fees and service charges on
deposit  accounts,  net  gains  and  losses  on  sales  of securities, loans and
foreclosed  real  estate,  and  other  expenses  such  as  salaries and employee
benefits,  building  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.

                                     -9-
<PAGE>

APPLICATION  OF  CRITICAL  ACCOUNTING  POLICIES

The  Company's consolidated financial statements are prepared in accordance with
accounting  principles  generally  accepted  in the United States of America and
follow  practices  within  the banking industry. Application of these principles
requires management to make estimates, assumptions and judgments that affect the
amounts  reported  in  the  consolidated  financial  statements and accompanying
notes.  These  estimates,  assumptions  and  judgments  are based on information
available  as  of  the  date  of  the financial statements; accordingly, as this
information changes, the financial statements could reflect different estimates,
assumptions  and  judgments. Certain policies inherently have a greater reliance
on  the  use  of estimates, assumptions and judgments and as such have a greater
possibility  of  producing  results  that  could  be  materially  different than
originally  reported.  Estimates,  assumptions  and judgments are necessary when
assets  and  liabilities  are  required  to be recorded at fair value or when an
asset or liability needs to be recorded contingent upon a future event. Carrying
assets  and  liabilities  at  fair  value  inherently  results in more financial
statement  volatility.  The fair values and information used to record valuation
adjustments for certain assets and liabilities are based on quoted market prices
or  are  provided by other third-party sources, when available. When third party
information  is not available, valuation adjustments are estimated in good faith
by  management.

The  most  significant accounting policies followed by the Company are presented
in  Note  1 to the consolidated financial statements included in the 2005 Annual
Report  on  Form 10-K ("the Consolidated Financial Statements"). These policies,
along  with the disclosures presented in the other financial statement notes and
in  this  discussion,  provide  information  on  how  significant  assets  and
liabilities  are  valued  in the consolidated financial statements and how those
values  are  determined.  Based  on  the  valuation  techniques  used  and  the
sensitivity  of  financial  statement  amounts  to  the methods, assumptions and
estimates  underlying those amounts, management has identified the determination
of  the  allowance  for  loan losses to be the accounting area that requires the
most  subjective and complex judgments, and as such could be the most subject to
revision  as  new  information  becomes  available.

The  allowance for loan losses represents management's estimate of probable loan
losses  inherent  in the loan portfolio. Determining the amount of the allowance
for loan losses is considered a critical accounting estimate because it requires
significant  judgment  and the use of estimates related to the amount and timing
of  expected  future  cash flows on impaired loans, estimated losses on pools of
homogeneous  loans  based  on  historical  loss experience, and consideration of
current  economic  trends  and  conditions,  all  of which may be susceptible to
significant  change.  The  loan portfolio also represents the largest asset type
on  the  consolidated  balance  sheet.  Note  1  to  the  Consolidated Financial
Statements  describes  the  methodology used to determine the allowance for loan
losses,  and  a  discussion  of the factors driving changes in the amount of the
allowance  for  loan  losses  is  included  in  this  report.

The  Company  carries  all  of its investments at fair value with any unrealized
gains  or  losses  reported net of tax as an adjustment to shareholders' equity.
Based  on  management's  assessment, at March 31, 2006, the Company did not hold
any  security  that  had  a  fair value decline that is currently expected to be
other  than  temporary. Consequently, any declines in a specific security's fair
value below amortized cost have not been provided for in the consolidated income
statement. The Company's ability to fully realize the value of its investment in
various  securities,  including  corporate  debt securities, is dependent on the
underlying  creditworthiness  of  the  issuing  organization.

EXECUTIVE  SUMMARY

Net  income  was  $240,000, or $0.10 per share, for the three months ended March
31,  2006,  as  compared to $149,000, or $0.06 per share, for the same period in
2005.  During  the  first  quarter  of  2006,  the Company continued its efforts

                                      -10-
<PAGE>

toward  transforming  its  more  traditional  thrift  balance  sheet with mostly
residential loans as earning assets, toward that of a community bank with a more
diverse  mix  of  residential,  consumer  and  commercial  loans.  On an average
balance basis, commercial loans comprise 27.1% of the total gross loan portfolio
at  March  31, 2006, as compared to 21.3% of the portfolio at December 31, 2005.
Asset  quality  continues  to improve during 2006 as reflected in the decreasing
non-performing  loan  ratios.

Short-term  borrowings  increased $7.1 million during the first quarter of 2006.
The  short-term  borrowings  were  entered  into as a replacement for outflow of
municipal deposits from two large rate-sensitive customers toward the end of the
quarter.

On  April  23,  2006,  Alliance  Bank N.A. announced it had reached a definitive
agreement  to  merge  with  the  parent  company  of Oswego County National Bank
(OCNB).  OCNB,  formerly,  Oswego  County Savings Bank has been domiciled in the
city  of  Oswego  since  it's  founding  in  1870 and has been the primary local
competitor  for  Pathfinder  Bank.  In management's view, the absorption of OCNB
into  Alliance  bank,  a  $900  million bank headquartered in Syracuse, NY, will
provide  both  challenges  and  opportunities for Pathfinder Bank. The challenge
will  be  the  ability  of a larger competitor to more actively and aggressively
market within the primary business area of Pathfinder Bank. Opportunities exist,
as  management  believes  that  it's unique competencies and differentiators are
more  closely matched by a locally domiciled bank than one headquartered outside
our  primary  market area. Opportunities may exist to garner additional business
opportunities  with  the  traditional customer base of OCNB which is more apt to
conduct  its  business  with  a  local  bank.

RESULTS  OF  OPERATIONS

The  return  on  average  assets and return on average shareholders' equity were
0.31%  and  4.54%,  respectively,  for  the  three  months ended March 31, 2006,
compared  with  0.19%  and 2.77%, respectively, for the three months ended March
31,  2005.  During  the first quarter of 2006 when compared to the first quarter
of  2005,  net interest income decreased $82,000, partially offset by a decrease
in provision for loan losses of $50,000, a $113,000 increase in other income and
a  $9,000  decrease  in  other  expenses.

NET  INTEREST  INCOME

Net  interest  income  is  the  Company's primary source of operating income for
payment  of  operating expenses and providing for loan losses.  It is the amount
by  which  interest  earned  on  interest-earning deposits, loans and investment
securities,  exceeds  the  interest  paid on deposits and other interest-bearing
liabilities.  Changes  in  net  interest  income  and  net interest margin ratio
result  from  the  interaction  between  the  volume  and composition of earning
assets,  interest-bearing  liabilities,  related  yields  and associated funding
costs.

Net  interest  income, on a tax-equivalent basis remained relatively constant at
$2.2 million for the three months ended March 31, 2006 when compared to the same
period of 2005.  The Company's net interest margin for the first quarter of 2006
decreased  to  3.13%  from  3.20%  when  compared  to  the same quarter in 2005.
Management  expects continued margin compression to adversely impact earnings as
we  perceive  the  yield  curve will continue to be flat over the near term. The
decline  in net interest income is attributable to the higher rates paid on both
deposits  and  borrowings,  offset  by an increase of 33 basis points in earning
asset yields.  Average interest-earning assets decreased 2% to $275.9 million at
March 31, 2006 as compared to $280.2 million at March 31, 2005.  The decrease in
average  earning assets is primarily attributable to an $8.7 million decrease in
interest earning deposits, offset by a $3.6 million increase in loans receivable
and  an  $863,000  increase in investment securities.  Average  interest-bearing

                                      -11-
<PAGE>

liabilities  decreased  $948,000,  and  the  cost  of  funds  increased 39 basis
points  to  2.66%  from 2.27% for  the  same  period  in  2005.  The decrease in
the  average balance of interest-bearing liabilities resulted primarily from the
anticipated cyclical outflow of municipal deposits during the second half of the
first  quarter.

INTEREST  INCOME

Total  interest  income,  on a tax-equivalent basis, for the quarter ended March
31,  2006  increased  $169,000,  or 5%, to $3.9 million from $3.7 million at the
quarter  ended  March  31,  2005.  The  average  balance of loans increased $3.6
million,  with  yields increasing 25 basis points to 6.42% for the first quarter
of  2006.  Average  commercial  loans increased $2.6 million, and experienced an
increase  in the average tax-equivalent yield of 149 basis points, to 8.00% from
6.51%,  in 2006.  The increase in the yield on commercial loans is primarily the
result  of  the  adjustable  rate  portions of the portfolio repricing upward in
connection  with upward adjustments in the prime rate, as well as new commercial
loan  originations  occurring  at  market  rates  significantly  higher than the
weighted  average  existing  portfolio  rate.  The  average  balance of loans to
municipal  entities  for the first quarter of 2006 was $3.1 million, compared to
$3.3  million  for the same period in 2005. Average commercial real estate loans
increased  $3.5  million  for the first quarter of 2006, with an increase in the
yield  of  34  basis  points.  The Company's residential mortgage loan portfolio
decreased  $3.1  million, or 3%, when comparing the first quarter of 2006 to the
same  period  in  2005.  The  average  yield  on  the  residential mortgage loan
portfolio  decreased  13  basis points to 5.73% in 2006 from 5.86% in 2005.   An
increase  in  the average balance of consumer loans of $848,000, or 5%, resulted
from  an  increase  in  home  equity loans. The average yield increased 75 basis
points,  to  7.65%  from  6.90% in 2005 as a result of the increase in the prime
rate.  Average  investment  securities  (taxable and tax-exempt) for the quarter
ended  March  31, 2006 increased by $863,000, compared to the same period a year
ago,  with  an  increase  in  tax-equivalent interest income from investments of
$40,000,  or  5%,  compared  to  the  first  quarter  of  2005.  The  average
tax-equivalent  yield  of the portfolio increased 15 basis points, to 3.97% from
3.82%.  The increase in the average balance of investment securities is a result
of  security acquisitions made during February in order to provide the necessary
collateral  for  municipal  deposit  inflows.

INTEREST  EXPENSE

Total  interest  expense increased $249,000 for the three months ended March 31,
2006,  when  compared  to the same quarter in 2005. Deposit interest expense for
the  comparable  periods increased $219,000, or 21%, as the average rate paid on
higher  earning  money management accounts increased 97 basis points to 2.63% in
2006  from  1.66%  in 2005, offset by a decrease in the average balance of money
management  accounts  to  $39.6  million in 2006 from $42.8 million in 2005. The
cost of other interest-bearing deposits increased 27 basis points, to 2.15% from
1.88%,  as  the average balance of these deposits increased $2.4 million, or 1%.
Interest  expense  on  borrowings  increased  by  $30,000, or 6%, from the prior
period.  The  increase  in  interest  expense on borrowings was the result of an
increase  in  the  cost  of  the floating rate junior subordinated debentures to
8.07%  in  2006  from 5.97% in 2005 and an increase in the cost of borrowings to
4.60% in 2006 from 4.53% in 2005. The increase in borrowing expense is partially
offset  by a slight decrease in the average balance of borrowings of $220,000 or
1%.

PROVISION  FOR  LOAN  LOSSES

Provision  for  loan  losses  for  the quarter ended March 31, 2006 decreased to
$22,000 from $72,000 for the same period in 2005, primarily as a result of a 19%
decrease  in  non-performing loans due to the continued efforts to improve asset
quality.  The  Company's  ratio of allowance for loan losses to period end loans
has  decreased  to  0.88%  at  March  31,  2006  from  1.01%  at March 31, 2005.
Non-performing  loans  to  period end loans have decreased to 0.75% at March 31,
2006  from  0.94%  at  March  31,  2005.

                                      -12-
<PAGE>

OTHER  INCOME

The  Company's  other  income  is primarily comprised of fees on deposit account
balances  and  transactions,  loan  servicing,  commissions,  and  net  gains on
securities,  loans  and  foreclosed  real  estate.

The  following  table  sets  forth  certain  information on other income for the
periods  indicated:

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                              2006   2005      Change
-----------------------------------------------------------------------------------------
(Dollars in thousands)
<S>                                                           <C>    <C>    <C>    <C>
Service charges on deposit accounts                           $371   $274   $ 97   35.4%
Earnings on bank owned life insurance                           49     44      6   13.6%
Loan servicing fees                                             47     41      6   14.6%
Other charges, commissions and fees                            135    142     (8)  -5.6%
----------------------------------------------------------------------------------------
Core noninterest income                                        602    501    101   20.2%
Net losses on sales and impairment of investment securities     (2)     -     (2)     -
Net losses on sales of loans and foreclosed real estate         (7)   (12)     5  -41.7%
----------------------------------------------------------------------------------------
Total noninterest income                                      $593   $489   $104   21.3%
========================================================================================
</TABLE>

For  the three months ended March 31, 2006, core noninterest income reflected an
increase  of  20%, when compared with the three months ended March 31, 2005. The
increase  in  income  from  service charges on deposit accounts is primarily the
result  of  an  increase  in deposit accounts attributable to the opening of the
Central Square branch and additional customer acquisition efforts in all markets
served,  combined  with an increase in fees on all deposit accounts. Income from
loan  servicing fees reflects an increase in commercial loan origination related
fees  earned, combined with a decrease in the amortization of mortgage servicing
rights.  The  reduction in other charges, commissions and fees was primarily due
to  recording  a  grant  from  New  York  State in March 2005 for a company wide
Leadership  Training  Program.  This  reduction  was offset by increases in fees
associated  with  the  Bank's  debit  card  usage  of  $9,000.

                                      -13-
<PAGE>

OTHER EXPENSE

The  following  table  sets  forth  certain information on other expense for the
quarters  indicated:

<TABLE>
<CAPTION>

                                    Three Months Ended March 31,
                                      2006    2005     Change
------------------------------------------------------------------
(Dollars in thousands)
<S>                                 <C>     <C>     <C>    <C>
Salaries and employee benefits      $1,275  $1,264  $ 11     0.9%
Building occupancy                     316     275    41    14.9%
Data processing                        324     320     4     1.3%
Professional and other services        115     178   (63)  -35.4%
Amortization of intangible assets       56      56     -     0.0%
Other operating                        325     327    (2)   -0.6%
-----------------------------------------------------------------
Total other expense                 $2,411  $2,420  $ (9)   -0.4%
=================================================================

</TABLE>

Total other expense decreased slightly for the three months ended March 31, 2006
when  compared  to  the  same quarter of 2005. The reduction in professional and
other  services  from  2005  was primarily due to consulting expenses associated
with  a  fee  enhancement program and a company wide Leadership Training program
being  recognized  in  the prior year. A portion of the expenses associated with
the  Leadership  Training  program  were offset by corresponding grant income in
other  charges, commission and fees. The increase in building occupancy expenses
is  primarily  attributable  to  the operation of the Central Square branch that
opened in May 2005. Salaries and employee benefits also increased as a result of
the  opening  of  the  Central  Square  branch. These increases were offset by a
reduction  in  staffing  and expenses recognized on the employee stock ownership
plan.

INCOME TAX EXPENSE

Income  taxes decreased $10,000 for the quarter ended March 31, 2006 as compared
to  the  same  period in 2005. The Company continues to strive to reduce its tax
rate  from  the  statutory  rate  primarily  through the ownership of tax-exempt
investment  securities,  bank  owned  life  insurance  and  other  tax  savings
strategies.  Enactment  of  proposed state tax legislation regarding Real Estate
Investment  Trusts  would  increase  the  state  tax  rate  for  the  Company.

CHANGES IN FINANCIAL CONDITION

ASSETS

Total  assets  increased approximately $6.8 million, or 2%, to $303.8 million at
March  31, 2006, from $296.9 million at December 31, 2005. The increase in total
assets  was primarily the result of an increase in investment securities of $5.3
million  and  a $1.8 million, or 1%, increase in loans receivable. The growth in
investment  securities  was a result of security acquisitions during January and
February 2006 in order to obtain the required collateral for increased municipal
deposit  inflows.  The  deposit  inflows  were substantially offset by municipal
outflows  from  two  large  rate-sensitive  customers  during  March.

At  March  31,  2006,  the  securities balance included a net unrealized loss on
available  for  sale securities of $2.2 million, versus a net unrealized loss of
$2.1 million at December 31, 2005. These unrealized losses relate principally to
changes  in interest rates subsequent to the acquisition of specific securities.
None  of the securities in this category had an unrealized loss that exceeded 8%
of  book  value.  The  Company has the intent and ability to hold the individual
securities  to  maturity  or  market  price  recovery.

                                      -14-
<PAGE>

LIABILITIES

Total  liabilities increased $6.9 million, or 3%, to $282.9 million at March 31,
2006  from  $276.0  million at December 31, 2005. The increase in liabilities is
primarily  due  to  a  $7.1 million increase in short-term borrowings and a $1.3
million  increase  in  interest-bearing  deposits,  partially  offset  by a $1.0
million  decrease in long-term borrowings. The increase in short-term borrowings
primarily  resulted  from  the  replacement  of  substantial  municipal  deposit
outflows  of  two large rate-sensitive, municipal customers occurring during the
latter  half  of  the  first  quarter.

LOAN  AND  ASSET  QUALITY  AND  ALLOWANCE  FOR  LOAN  LOSSES

The  following  table  represents information concerning the aggregate amount of
nonperforming  assets:

<TABLE>
<CAPTION>
                                                     March 31,    December 31,    March 31,
                                                       2006           2005          2005
--------------------------------------------------------------------------------------------
<S>                                                 <C>          <C>             <C>
(Dollars In thousands)
Nonaccrual loans:
Commercial real estate and commercial               $      486        $    757      $   840
Consumer                                                    81              89          117
Real estate -  Construction                                  0               0            0
                     Mortgage                              860             834          805
--------------------------------------------------------------------------------------------
Total nonaccrual loans                                   1,427           1,680        1,762
Loans past due 90 days or more and still accruing            0               0            0
--------------------------------------------------------------------------------------------
Total non-performing loans                               1,427           1,680        1,762
Foreclosed real estate                                     887             743          850
--------------------------------------------------------------------------------------------
Total non-performing assets                         $    2,314        $  2,423      $ 2,612
============================================================================================
Non-performing loans to total loans                       0.75%           0.89%        0.94%
Non-performing assets to total assets                     0.76%           0.82%        0.85%
--------------------------------------------------------------------------------------------
</TABLE>

Total  nonperforming  loans  decreased  15%  at  March 31, 2006 when compared to
December  31,  2005.  Management  believes  that adequate reserves exist for any
potential  losses  that may occur from the remediation process. The 19% increase
in foreclosed real estate is primarily due to carrying 13 foreclosed real estate
properties  at  March  31,  2006  versus  10  properties  at  December 31, 2005.

The  allowance  for loan losses at March 31, 2006 and December 31, 2005 was $1.7
million,  or  0.88%  and  0.89%  of  period  end  loans,  respectively.

CAPITAL

Shareholders'  equity  remained constant at $20.9 million at March 31, 2006 when
compared  to  December 31, 2005. The Company added $240,000 to retained earnings
through net income and returned $252,000 to its shareholders in the form of cash
dividends.  The  Company's  mutual  holding  company parent, Pathfinder Bancorp,
M.H.C, accepted the dividend for the quarter ended March 31, 2006. (See Footnote
4).

Risk-based capital provides the basis for which all banks are evaluated in terms
of  capital  adequacy.  Capital  adequacy  is  evaluated primarily by the use of
ratios  which  measure  capital  against  total assets, as well as against total
assets  that  are  weighted based on defined risk characteristics. The Company's
goal  is to maintain a strong capital position, consistent with the risk profile
of  its  subsidiary banks that supports growth and expansion activities while at
the same time exceeding regulatory standards. At March 31, 2006, Pathfinder Bank

                                      -15-
<PAGE>

exceeded  all  regulatory required minimum capital ratios and met the regulatory
definition  of  a  "well-capitalized" institution, i.e. a leverage capital ratio
exceeding  5%,  a  Tier  1  risk-based  capital  ratio  exceeding 6% and a total
risk-based  capital  ratio  exceeding  10%.

LIQUIDITY

Liquidity  management  involves  the  Company's  ability  to  generate  cash  or
otherwise  obtain  funds  at reasonable rates to support asset growth and reduce
assets  to  meet  deposit  withdrawals, to maintain reserve requirements, and to
otherwise operate the Company on an ongoing basis. The Company's primary sources
of  funds are deposits, borrowed funds, amortization and prepayment of loans and
maturities  of  investment  securities  and  other  short-term  investments, and
earnings  and  funds  provided  from  operations.  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-earning and other assets, which provide liquidity
to  meet  lending  requirements.

The  Company's liquidity has been enhanced by its membership in the Federal Home
Loan  Bank  of  New York, whose competitive advance programs and lines of credit
provide  the  Company  with  a  safe, reliable and convenient source of funds. A
significant  decrease  in  deposits  in  the  future could result in the Company
having to seek other sources of funds for liquidity purposes. Such sources could
include, but are not limited to, additional borrowings, trust preferred security
offerings,  brokered  deposits,  negotiated  time  deposits,  the  sale  of
"available-for-sale"  investment  securities,  the sale of securitized loans, or
the  sale  of  whole loans. Such actions could result in higher interest expense
costs  and/or  losses  on  the  sale  of  securities  or  loans.

The  Asset  Liability  Management  Committees of the Company are responsible for
implementing  the  policies and guidelines for the maintenance of prudent levels
of  liquidity.  As  of  March  31,  2006,  management  reported  to the Board of
Directors  that  the  Company  is  in  compliance  with  its  liquidity  policy
guidelines.

                                      -16-
<PAGE>

ITEM  3  -  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company's  risk  of  loss arising from adverse changes in the fair value of
financial  instruments,  or  market risk, is composed primarily of interest rate
risk. The management of interest rate sensitivity seeks to avoid fluctuating net
interest  margins  and to provide consistent net interest income through periods
of  changing  interest  rates.  The  Company  has  Asset-Liability  Management
Committees  which are responsible for establishing policies to limit exposure to
interest  rate  risk,  and  to  ensure  procedures  are  established  to monitor
compliance with those policies. Those procedures include reviewing the Company's
asset  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 and capital. The Company's Board of Directors reviews the
guidelines  established  by  the  Committees.

Since  December  of  2004,  the  Federal Reserve has increased short-term target
rates  10 times, 25 basis points each time to 5.00% from 2.50%. During this time
frame longer-term interest rates have remained relatively unchanged resulting in
a  flattening  and  inversion  of  the yield curve. The short-term interest rate
increases  have  caused  continued net interest margin compression as short-term
deposits  and  borrowings  on  the  Company's  liability sensitive balance sheet
reprice  into  the  current  rate  environment while security purchases and loan
originations  and  refinances  were  being done at the stable longer-term rates.
During the period of rising short-term interest rates, the Company has continued
to  practice  conservative  balance sheet management strategies by attempting to
extend the maturities of its rate sensitive liabilities and shorten the maturity
or  repricing term of its rate sensitive assets. This conservative balance sheet
management  strategy has resulted in additional margin pressure and reduction in
net interest income during the prior two years. Management believes this balance
sheet  strategy  best  positions the Company and lessens its risk against future
interest  rate  fluctuations.

The  primary objective of the Company's asset/liability management process is to
maximize  earnings  and  return on capital within acceptable levels of risk. The
Company does not believe it is possible to reliably predict future interest rate
movements,  and  it  seeks  to  maintain  an  appropriate  process  and  set  of
measurement  tools  that  enable it to identify and quantify sources of interest
rate  risk  ("IRR")  in varying rate environments. The primary tools used by the
Company  in  managing  rate  risk  are income simulation and net portfolio value
modeling  techniques.

Interest  rate risk can result from timing differences in the maturity/repricing
of  an  institution's  assets,  liabilities and off balance sheet contracts; the
effect of embedded options, such as loan prepayments, interest rate caps/floors,
and  deposit  withdrawals;  and  the  difference  in the behavior of the various
lending  and  funding  rates,  sometimes  referred  to  as  basis  risk.

Given  the  potential  types and differing related characteristics of IRR, it is
important  that  the  Company  maintains  an  appropriate  process  and  set  of
measurement tools that enable it to identify and quantify its primary sources of
IRR.  The  Company  also recognizes that effective management of IRR includes an
understanding  of  when  potential  adverse  changes in interest rates will flow
through  its  consolidated  income statements. Accordingly, the Company not only
looks at a 12 month horizon when managing its exposure to IRR, it also considers
a  longer-term  strategic  horizon.

It  is  the  Company's  objective  to manage its exposure to interest rate risk,
understanding  that  it  is  in  the  business  of  taking  on rate risk and the
elimination of such risk is not possible. It is also understood that as exposure
to  interest  rate  risk  is  reduced, it may also result in net interest margin
being  reduced.

Management  believes  the modeling and analysis of net interest income (Earnings
at  Risk)  and  net  portfolio  value (Value at Risk) in different interest rate

                                      -17-
<PAGE>

environments  provides  the  most  meaningful measure of interest rate risk. Net
interest  income  simulation  analysis captures both the potential of all assets
and  liabilities  to mature or reprice and the probability that they will do so.
Net  interest  income  simulation  also  attends  to  the relative interest rate
sensitivities  of  these  items,  and  projects  their behavior over an extended
period  of  time.  Finally, net interest income simulation permits management to
assess  the  probable  effects  on  the  consolidated  balance sheet not only of
changes  in  interest  rates,  but also of proposed strategies for responding to
them. Net portfolio value represents the fair value of net assets (determined as
the  market  value  of  assets  minus  the  market  value of liabilities using a
discounted  cash  flow  technique).

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 hypothetical changes in 100 basis point increments in market interest
rates. The table quantifies the changes in net interest income and net portfolio
value  to  parallel  shifts in the yield curve. The column "Percentage Change in
Net  Interest  Income"  measures the change to the next twelve month's projected
net  interest  income,  due  to  parallel  shifts in the yield curve. The column
"Percentage  Change in Net Portfolio Value" measures changes in the current fair
value  of  assets  and  liabilities  to  parallel shifts in the yield curve. The
column "NPV Capital Ratio" measures the ratio of the fair value of net assets to
the  fair  value  of  total  assets  at  the  base  case  and in 100 basis point
incremental interest rate shocks. 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 of the Company's
Interest Rate Risk policy. The Company's interest rate risk exposure as of March
31,  2006  is  within  those  guidelines  set  forth.


<TABLE>
<CAPTION>

<S>        <C>       <C>            <C>
                     Percentage     Percentage
Change in  NPV       Change in      Change in
Interest   Capital   Net Interest   Net Portfolio
Rates      Ratio     Income         Value
---------  --------  -------------  --------------
<S>        <C>       <C>             <C>
 300          8.14%     -13.92%        -28.33%
 200          9.16%      -9.10%        -19.03%
 100         10.21%      -4.48%         -9.45%
   0         11.24%         --             --
-100         11.79%       1.79%          5.60%
-200         11.65%      -2.17%          4.86%
-300         10.61%      -8.54%          1.10%
</TABLE>


GAP ANALYSIS. At March 31, 2006, the total interest bearing liabilities maturing
or repricing within one year exceeded the total interest-earning assets maturing
or  repricing  in  the  same  period by $39.2 million, representing a cumulative
one-year  gap  ratio  of  a  negative  12.91%.

                                      -18-
<PAGE>


ITEM  4  -  CONTROLS  AND  PROCEDURES

Under  the  supervision  and with the participation of the Company's management,
including  our  Chief Executive Officer and Chief Financial Officer, the Company
has  evaluated  the  effectiveness of the design and operation of its disclosure
controls  and  procedures  (as defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange  Act)  as  of  the  end of the period covered by this quarterly report.
Based  upon  that  evaluation,  the  Chief Executive Officer and Chief Financial
Officer  concluded that, as of the end of the period covered by this report, the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information  required  to  be disclosed in the reports that the Company files or
submits  under  the  Securities  Exchange  Act  of  1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. There has been no change in the Company's
internal  control over financial reporting during the most recent fiscal quarter
that  has materially affected, or is reasonable likely to materially affect, the
Company's  internal  control  over  financial  reporting.

                                      -19-
<PAGE>

PART  II  -  OTHER  INFORMATION

ITEM 1 - LEGAL PROCEEDINGS
--------------------------

None

ITEM 1A - RISK FACTORS
----------------------

There have been no significant changes in the risk factors affecting Pathfinder
Bancorp, Inc. that were identified in Item 1A of Part 1 of the Company's Form
10-K for the year ended December 31, 2005.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
--------------------------------------------------------------------

None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
----------------------------------------

None

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

None

ITEM 5 - OTHER INFORMATION
--------------------------

None

ITEM 6 - EXHIBITS
-----------------

Exhibit No.          Description
-----------          -----------

31.1               Rule 13a-14(a) / 15d-14(a) Certification of the Chief
                       Executive Officer
31.2               Rule 13a-14(a) / 15d-14(a) Certification of the Chief
                       Financial Officer
32.1               Section  1350  Certification  of  the Chief Executive
                       Officer and Chief Financial  Officer



SIGNATURES


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


     PATHFINDER BANCORP, INC.
     ------------------------
           (Registrant)


May 22, 2006             /s/ Thomas W. Schneider
                         -----------------------
Date:                    Thomas W. Schneider
                         President, Chief Executive Officer


May 22, 2006             /s/ James A. Dowd
                         ----------------
Date:                    James A. Dowd
                         Vice President, Chief Financial Officer

                                      -20-
<PAGE>