Pathfinder Bancorp, Inc. Announces Fourth Quarter and Year-End Earnings

Market Wire, February, 2009

Operating expenses increased 1% from the prior year to $9.9 million from $9.8 million. During 2008, other expenses, salary and employee benefits, and building occupancy, increased $134,000, $78,000, and $68,000 respectively. The increase in salaries and employee benefits was primarily due to merit based wage adjustments. The increase in building occupancy was due to an increase in both depreciation and equipment maintenance. The increase in other expenses was primarily due to expenses related to other real estate owned and other non-recurring expenses. Amortization expense decreased $182,000 as core deposit intangibles, from a 2002 branch acquisition, became fully amortized in October 2007.

Government Sponsored Programs

The board of directors and management analyzed the potential merits of participating in the Capital Purchase Program (CPP) of the Treasury Department's Troubled Asset Relief Program (TARP). It is the general view of the board and management that in the present national economic risk environment, enhancing the Company's capital ratios is both prudent, given the current climate, and potentially opportunistic as we move into the next business cycle. Additionally, any increase to capital will continue to support the Company's lending activities to individuals, families, and businesses in our community. In November, Pathfinder Bancorp, MHC the mutual holding company parent of Pathfinder Bancorp, Inc. filed its original application requesting Capital Purchase Program funds under the Treasury's Troubled Asset Relief Program. Management is currently awaiting a response from the treasury relating to its application. Treasury has yet to devise a term sheet for mutually chartered companies.

The Company is participating in the FDIC's Temporary Liquidity Guarantee Program, including the transaction account guarantee program, which insures all non-interest bearing transaction accounts regardless of dollar amount.

Statement Regarding Non-GAAP Financial Measures

This release contains supplemental financial information determined by methods other than those in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP"). The Company's management believes that such non-GAAP financial measures are useful to management and investors as it enhances their ability to evaluate and compare the Company's operating results from period to period in a meaningful manner, as operating results excluding other than temporary impairment charges on its investment security holdings are essential in understanding the financial performance of the Company, and is more representative of the basis that management utilizes to monitor financial performance. Readers are cautioned that non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, and should consider the impairment charges recorded during 2008 in assessing the Company's performance. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analyzing the Company's performance under GAAP, nor are they necessarily comparable to non-GAAP measures presented by other companies.