Item 2.06 Material Impairments

Pathfinder Bancorp, Inc. (NASDAQ: PBHC), the parent company of Pathfinder Bank, announced today exposure and potential security impairment charges related to a senior unsecured note (the Note) issued by Lehman Brothers Holdings Inc. (Lehman Brothers), which filed a Chapter 11 Bankruptcy petition on September 15, 2008. The Bank does not hold any stock investment or other security investment positions in Lehman Brothers.

The company anticipates that in connection with the Bankruptcy filing, it will record an other-than-temporary impairment and take a non-cash charge to earnings for the quarter ended September 30, 2008. At June 30, 2008, the Company's investment in the Note was included in securities available-for-sale at a cost of approximately $994,000. Similar notes have traded over the last 3 days at prices ranging from 13 - 30 cents on the dollar. The impairment charge will not affect the Company's classification of "well capitalized" for regulatory purposes. In light of the recent market conditions and events, the Company continues to closely monitor its balance sheet composition and capital levels.