**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 |
|---|--------------------------------------------------------------------------------------------------------------------------------------|

| o | Transition                report pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934 |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

**U.S.B.      HOLDING CO., INC.**

| **DELAWARE**                                   |   | **36-3197969**                     |
|------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of |   | (I.R.S.                Employer    |
| incorporation                or organization)  |   | Identification                No.) |

| **100                DUTCH HILL ROAD, ORANGEBURG, NEW YORK** |   | **10962**                 |
|--------------------------------------------------------------|--------|---------------------------|
| (Address                of Principal Executive Offices)      |   | (Zip                Code) |

**845-365-4600**

| **CLASS**                                                               |   | **NUMBER                OF SHARES****OUTSTANDING                AT NOVEMBER 1, 2007** |       |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|------------|
| Common                stock, par value $0.01                  per share |   |                                                                                  | 22,023,291 |   |

----

**U.S.B.      HOLDING CO., INC.**

**TABLE      OF CONTENTS**

|                                                   |   |                                                                                                                                                 |   | **PAGE                NO.** |
|--------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
| **PART                I.  FINANCIAL INFORMATION** |   |                                                                                                                                                 |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                1.**                             |   | FINANCIAL                STATEMENTS (UNAUDITED)                                                                                                      |   |                        |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF SEPTEMBER 30,                2007                AND DECEMBER 31, 2006 |   | 1                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER                30,                2007 AND 2006      |   | 2                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER                30,                2007 AND 2006       |   | 3                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER                30, 2007 AND 2006                  |   | 4                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE NINE                MONTHS ENDED SEPTEMBER 30, 2007 |   | 5                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | CONDENSED                CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE NINE                MONTHS ENDED SEPTEMBER 30, 2006 |   | 6                           |
|                                                   |   |                                                                                                                                                 |   |                        |
|                                                   |   | NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                  |   | 7                           |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                2.**                             |   | MANAGEMENT'S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS                                  |   | 22                          |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                3.**                             |   | QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                            |   | 36                          |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                4.**                             |   | CONTROLS                AND PROCEDURES                                                                                                               |   | 37                          |
|                                                   |   |                                                                                                                                                 |   |                        |
| **PART                II. OTHER INFORMATION**          |   |                                                                                                                                                 |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                1A.**                            |   | RISK                FACTORS                                                                                                                          |   | 38                          |
|                                                   |   |                                                                                                                                                 |   |                        |
| **ITEM                6.**                             |   | EXHIBITS                                                                                                                                             |   | 38                          |
|                                                   |   |                                                                                                                                                 |   |                        |
| SIGNATURES                                             |   | 39                                                                                                                                                   |

----

**ITEM      1.**
**PART      I - FINANCIAL INFORMATION**

**U.S.B.      HOLDING CO., INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)**

|                                                                                                                                                         |   |                                                               |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------------|
|                                                                                                                                                              |   | **September                30,****2007**                           |          | **December                31,****2006** |   |
|                                                                                                                                                         |   | **(000’s,                except share                data)** |          |
| **ASSETS**                                                                                                                                                   |   |                                                               |          |   |   |   |   |
| Cash                and due from banks                                                                                                                       |   | $                                                                  | 75,428        |   | $ | 33,493 |   |
| Federal                funds sold                                                                                                                            |   |                                                               | 137,700       |   |   | 23,600 |   |
| Cash                and cash equivalents                                                                                                                     |   |                                                               | **213,128**   |   |   | **57,093** |   |
| Interest                bearing deposits in other banks                                                                                                      |   |                                                               | 198           |   |   | 175 |   |
| Securities:                                                                                                                                                  |   |                                                               |          |   |   |   |   |
| Available                for sale (at estimated fair value)                                                                                                  |   |                                                               | 495,806       |   |   | 431,294 |   |
| Held                to maturity (estimated fair value of $709,033 as of 2007 and                $747,507 as of 2006)                                         |   |                                                               | 713,011       |   |   | 751,948 |   |
| Loans,                net of allowance for loan losses of $15,622 as of 2007 and $16,034                as of                2006                            |   |                                                               | 1,547,569     |   |   | 1,577,386 |   |
| Premises                and equipment, net                                                                                                                   |   |                                                               | 13,747        |   |   | 13,943 |   |
| Accrued                interest receivable                                                                                                                   |   |                                                               | 19,685        |   |   | 22,486 |   |
| Federal                Home Loan Bank of New York stock                                                                                                      |   |                                                               | 34,873        |   |   | 34,523 |   |
| Intangible                assets, net                                                                                                                        |   |                                                               | 1,753         |   |   | 2,572 |   |
| Goodwill                                                                                                                                                     |   |                                                               | 1,380         |   |   | 1,380 |   |
| Other                assets                                                                                                                                  |   |                                                               | 29,714        |   |   | 30,447 |   |
| **TOTAL                ASSETS**                                                                                                                              |   | **$**                                                              | **3,070,864** |   | **$** | **2,923,247** |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                |   |                                                               |          |   |   |   |   |
| **Liabilities:**                                                                                                                                             |   |                                                               |          |   |   |   |   |
| Non-interest                bearing deposits                                                                                                                 |   | $                                                                  | 376,824       |   | $ | 294,882 |   |
| Interest                bearing deposits:                                                                                                                    |   |                                                               |          |   |   |   |   |
| NOW                accounts                                                                                                                                  |   |                                                               | 260,978       |   |   | 166,809 |   |
| Money                market accounts                                                                                                                         |   |                                                               | 201,355       |   |   | 161,531 |   |
| Savings                deposits                                                                                                                              |   |                                                               | 373,500       |   |   | 372,959 |   |
| Time                deposits                                                                                                                                 |   |                                                               | 823,235       |   |   | 900,188 |   |
| **Total                deposits**                                                                                                                            |   |                                                               | **2,035,892** |   |   | **1,896,369** |   |
| Accrued                interest payable                                                                                                                      |   |                                                               | 11,799        |   |   | 12,274 |   |
| Dividend                payable                                                                                                                              |   |                                                               | 3,303         |   |   | 3,285 |   |
| Accrued                expenses and other liabilities                                                                                                        |   |                                                               | 11,092        |   |   | 12,884 |   |
| Securities                transactions not yet settled                                                                                                       |   |                                                               | —       |   |   | 5,000 |   |
| Securities                sold under agreements to repurchase                                                                                                |   |                                                               | 593,412       |   |   | 606,206 |   |
| Federal                Home Loan Bank of New York advances                                                                                                   |   |                                                               | 126,794       |   |   | 101,809 |   |
| Subordinated                debt issued in connection with corporation-obligated mandatory                redeemable capital securities of subsidiary trusts |   |                                                               | 51,548        |   |   | 61,858 |   |
| **Total                liabilities**                                                                                                                         |   |                                                               | **2,833,840** |   |   | **2,699,685** |   |
| Minority-interest                in junior preferred stock of consolidated subsidiary                                                                        |   |                                                               | 122           |   |   | 126 |   |
| Commitments                and contingencies (Note 11)                                                                                                       |   |                                                               |          |   |   |   |   |
| **Stockholders’                equity:**                                                                                                               |   |                                                               |          |   |   |   |   |
| Preferred                stock, no par value                                                                                                                 |   |                                                               |          |   |   |   |   |
| Authorized                shares: 10,000,000; no shares outstanding as of 2007 and                2006                                                       |   |                                                               | —       |   |   | — |   |
| Common                stock, $0.01 par value; authorized shares 50,000,000;issued                shares of 23,134,075 as of 2007 and 2006                    |   |                                                               | 231           |   |   | 231 |   |
| Additional                paid-in capital                                                                                                                    |   |                                                               | 214,104       |   |   | 212,398 |   |
| Retained                earnings                                                                                                                             |   |                                                               | 49,944        |   |   | 40,777 |   |
| Treasury                stock at cost, common shares 1,111,663 as of 2007 and 1,232,052 as                of                2006                             |   |                                                               | (20,164       | ) |   | (22,348 | ) |
| Common                stock held for benefit plans                                                                                                           |   |                                                               | (3,636        | ) |   | (3,390 | ) |
| Deferred                compensation obligation                                                                                                              |   |                                                               | 3,636         |   |   | 3,390 |   |
| Accumulated                other comprehensive loss                                                                                                          |   |                                                               | (7,213        | ) |   | (7,622 | ) |
| **Total                stockholders’ equity**                                                                                                          |   |                                                               | **236,902**   |   |   | **223,436** |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                          |   | **$**                                                              | **3,070,864** |   | **$** | **2,923,247** |   |

*See      notes to condensed consolidated financial statements.*

----

**U.S.B.        HOLDING CO., INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)**

|                                                                                                                                                                                   |   | **Three                Months Ended****September                30,** |           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|----------------|
|                                                                                                                                                                                   |   | **2007**                                                              |           | **2006** |   |
|                                                                                                                                                                                   |   | **(000’s,                except share data)**                   |           |
| **INTEREST                INCOME:**                                                                                                                                                    |   |                                                                  |           |   |   |
| Interest                and fees on loans                                                                                                                                              |   | $                                                                     | 29,198         |   | $ | 27,931 |   |
| Interest                on federal funds sold                                                                                                                                          |   |                                                                  | 659            |   |   | 396 |   |
| Interest                and dividends on securities:                                                                                                                                   |   |                                                                  |           |   |   |   |   |
| U.S.                government agencies                                                                                                                                                |   |                                                                  | 9,839          |   |   | 9,942 |   |
| Mortgage-backed                securities                                                                                                                                              |   |                                                                  | 6,093          |   |   | 5,789 |   |
| Obligations                of states and political subdivisions                                                                                                                        |   |                                                                  | 1,086          |   |   | 1,037 |   |
| Corporate                and other                                                                                                                                                     |   |                                                                  | 38             |   |   | 41 |   |
| Dividends                on Federal Home Loan Bank of New York stock                                                                                                                   |   |                                                                  | 657            |   |   | 489 |   |
| **Total                interest income**                                                                                                                                               |   |                                                                  | **47,570**     |   |   | **45,625** |   |
| **INTEREST                EXPENSE:**                                                                                                                                                   |   |                                                                  |           |   |   |   |   |
| Interest                on deposits                                                                                                                                                    |   |                                                                  | 15,502         |   |   | 12,816 |   |
| Interest                on borrowings                                                                                                                                                  |   |                                                                  | 8,406          |   |   | 8,223 |   |
| Interest                on subordinated debt issued in connection withcorporation-obligated                mandatory redeemable capital                securities of subsidiary trusts |   |                                                                  | 1,195          |   |   | 1,436 |   |
| **Total                interest expense**                                                                                                                                              |   |                                                                  | **25,103**     |   |   | **22,475** |   |
| **NET                INTEREST INCOME**                                                                                                                                                 |   |                                                                  | **22,467**     |   |   | **23,150** |   |
| (Reversal                of) provision for credit losses                                                                                                                               |   |                                                                  | (11            | ) |   | 37 |   |
| **Net                interest income after (reversal of) provision for credit                losses**                                                                                  |   |                                                                  | **22,478**     |   |   | **23,113** |   |
| **NON-INTEREST                INCOME:**                                                                                                                                                |   |                                                                  |           |   |   |   |   |
| Service                charges and fees                                                                                                                                                |   |                                                                  | 794            |   |   | 826 |   |
| Other                income                                                                                                                                                            |   |                                                                  | 1,044          |   |   | 853 |   |
| Gains                on securities transactions                                                                                                                                        |   |                                                                  | 4              |   |   | 426 |   |
| **Total                non-interest income**                                                                                                                                           |   |                                                                  | **1,842**      |   |   | **2,105** |   |
| **NON-INTEREST                EXPENSES:**                                                                                                                                              |   |                                                                  |           |   |   |   |   |
| Salaries                and employee benefits                                                                                                                                          |   |                                                                  | 8,878          |   |   | 8,363 |   |
| Occupancy                and equipment                                                                                                                                                 |   |                                                                  | 1,991          |   |   | 1,995 |   |
| Advertising                and business development                                                                                                                                    |   |                                                                  | 505            |   |   | 666 |   |
| Professional                fees                                                                                                                                                       |   |                                                                  | 391            |   |   | 379 |   |
| Communications                                                                                                                                                                         |   |                                                                  | 338            |   |   | 337 |   |
| Amortization                of intangibles                                                                                                                                             |   |                                                                  | 272            |   |   | 277 |   |
| Stationery                and printing                                                                                                                                                 |   |                                                                  | 143            |   |   | 136 |   |
| FDIC                insurance                                                                                                                                                          |   |                                                                  | 64             |   |   | 61 |   |
| Acquisition                costs                                                                                                                                                       |   |                                                                  | 2,337          |   |   | ― |   |
| Other                expense                                                                                                                                                           |   |                                                                  | 841            |   |   | 891 |   |
| **Total                non-interest expenses**                                                                                                                                         |   |                                                                  | **15,760**     |   |   | **13,105** |   |
| Income                before income taxes                                                                                                                                              |   |                                                                  | 8,560          |   |   | 12,113 |   |
| Provision                for income taxes                                                                                                                                              |   |                                                                  | 2,758          |   |   | 3,968 |   |
| **NET                INCOME**                                                                                                                                                          |   | **$**                                                                 | **5,802**      |   | **$** | **8,145** |   |
| **BASIC                EARNINGS PER COMMON SHARE**                                                                                                                                     |   | **$**                                                                 | **0.26**       |   | **$** | **0.37** |   |
| **DILUTED                EARNINGS PER COMMON SHARE**                                                                                                                                   |   | **$**                                                                 | **0.26**       |   | **$** | **0.36** |   |
| **WEIGHTED                AVERAGE COMMON SHARES**                                                                                                                                      |   |                                                                  | **22,006,642** |   |   | **21,751,565** |   |
| **ADJUSTED                WEIGHTED AVERAGE COMMON SHARES**                                                                                                                             |   |                                                                  | **22,551,734** |   |   | **22,641,540** |   |
| **DIVIDENDS                PER COMMON SHARE**                                                                                                                                          |   | **$**                                                                 | **0.15**       |   | **$** | **0.14** |   |

*See      notes to condensed consolidated financial statements.*

----

**U.S.B.        HOLDING CO., INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)**

|                                                                                                                                                                                   |   | **Nine                Months Ended****September                30,** |           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|----------------|
|                                                                                                                                                                                   |   | **2007**                                                             |           | **2006** |   |
|                                                                                                                                                                                   |   | **(000’s,                except share data)**                  |           |
| **INTEREST                INCOME:**                                                                                                                                                    |   |                                                                 |           |   |   |
| Interest                and fees on loans                                                                                                                                              |   | $                                                                    | 88,109         |   | $ | 80,886 |   |
| Interest                on federal funds sold                                                                                                                                          |   |                                                                 | 2,324          |   |   | 1,018 |   |
| Interest                and dividends on securities:                                                                                                                                   |   |                                                                 |           |   |   |   |   |
| U.S.                government agencies                                                                                                                                                |   |                                                                 | 29,720         |   |   | 29,822 |   |
| Mortgage-backed                securities                                                                                                                                              |   |                                                                 | 16,644         |   |   | 14,549 |   |
| Obligations                of states and political subdivisions                                                                                                                        |   |                                                                 | 3,472          |   |   | 3,251 |   |
| Corporate                and other                                                                                                                                                     |   |                                                                 | 128            |   |   | 131 |   |
| Dividends                on Federal Home Loan Bank of New York stock                                                                                                                   |   |                                                                 | 1,898          |   |   | 1,270 |   |
| **Total                interest income**                                                                                                                                               |   |                                                                 | **142,295**    |   |   | **130,927** |   |
| **INTEREST                EXPENSE:**                                                                                                                                                   |   |                                                                 |           |   |   |   |   |
| Interest                on deposits                                                                                                                                                    |   |                                                                 | 46,898         |   |   | 34,182 |   |
| Interest                on borrowings                                                                                                                                                  |   |                                                                 | 24,420         |   |   | 23,223 |   |
| Interest                on subordinated debt issued in connection withcorporation-obligated                mandatory redeemable capital                securities of subsidiary trusts |   |                                                                 | 4,283          |   |   | 4,145 |   |
| **Total                interest expense**                                                                                                                                              |   |                                                                 | **75,601**     |   |   | **61,550** |   |
| **NET                INTEREST INCOME**                                                                                                                                                 |   |                                                                 | **66,694**     |   |   | **69,377** |   |
| (Reversal                of) provision for credit losses                                                                                                                               |   |                                                                 | 693            |   |   | 1,344 |   |
| **Net                interest income after (reversal of) provision for credit                losses**                                                                                  |   |                                                                 | **66,001**     |   |   | **68,033** |   |
| **NON-INTEREST                INCOME:**                                                                                                                                                |   |                                                                 |           |   |   |   |   |
| Service                charges and fees                                                                                                                                                |   |                                                                 | 2,437          |   |   | 2,489 |   |
| Other                income                                                                                                                                                            |   |                                                                 | 2,824          |   |   | 2,749 |   |
| Gains                on securities transactions                                                                                                                                        |   |                                                                 | 6              |   |   | 431 |   |
| **Total                non-interest income**                                                                                                                                           |   |                                                                 | **5,267**      |   |   | **5,669** |   |
| **NON-INTEREST                EXPENSES:**                                                                                                                                              |   |                                                                 |           |   |   |   |   |
| Salaries                and employee benefits                                                                                                                                          |   |                                                                 | 26,414         |   |   | 24,627 |   |
| Occupancy                and equipment                                                                                                                                                 |   |                                                                 | 6,093          |   |   | 5,885 |   |
| Advertising                and business development                                                                                                                                    |   |                                                                 | 1,746          |   |   | 1,941 |   |
| Professional                fees                                                                                                                                                       |   |                                                                 | 1,312          |   |   | 1,153 |   |
| Communications                                                                                                                                                                         |   |                                                                 | 1,030          |   |   | 980 |   |
| Amortization                of intangibles                                                                                                                                             |   |                                                                 | 820            |   |   | 838 |   |
| Stationery                and printing                                                                                                                                                 |   |                                                                 | 467            |   |   | 432 |   |
| FDIC                insurance                                                                                                                                                          |   |                                                                 | 193            |   |   | 197 |   |
| Acquisition                costs                                                                                                                                                       |   |                                                                 | 2,337          |   |   | ― |   |
| Other                expense                                                                                                                                                           |   |                                                                 | 2,919          |   |   | 2,810 |   |
| **Total                non-interest expenses**                                                                                                                                         |   |                                                                 | **43,331**     |   |   | **38,863** |   |
| Income                before income taxes                                                                                                                                              |   |                                                                 | 27,937         |   |   | 34,839 |   |
| Provision                for income taxes                                                                                                                                              |   |                                                                 | 8,880          |   |   | 11,354 |   |
| **NET                INCOME**                                                                                                                                                          |   | **$**                                                                | **19,057**     |   | **$** | **23,485** |   |
| **BASIC                EARNINGS PER COMMON SHARE**                                                                                                                                     |   | **$**                                                                | **0.87**       |   | **$** | **1.08** |   |
| **DILUTED                EARNINGS PER COMMON SHARE**                                                                                                                                   |   | **$**                                                                | **0.85**       |   | **$** | **1.03** |   |
| **WEIGHTED                AVERAGE COMMON SHARES**                                                                                                                                      |   |                                                                 | **21,934,259** |   |   | **21,746,909** |   |
| **ADJUSTED                WEIGHTED AVERAGE COMMON SHARES**                                                                                                                             |   |                                                                 | **22,442,760** |   |   | **22,708,031** |   |
| **DIVIDENDS                PER COMMON SHARE**                                                                                                                                          |   | **$**                                                                | **0.45**       |   | **$** | **0.42** |   |

*See      notes to condensed consolidated financial statements.*

----

**U.S.B.        HOLDING CO., INC.**

**CONDENSED          CONSOLIDATED STATEMENTS OF CASH FLOWS          (UNAUDITED)**

|                                                                                                                                          |   | **(000’s)****Nine                Months Ended****September                30,** |        |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|-------------|
|                                                                                                                                          |   | **2007**                                                                              |        | **2006** |   |
| **OPERATING                ACTIVITIES:**                                                                                                      |   |                                                                                  |        |
| Net                income                                                                                                                     |   | $                                                                                     | 19,057      |   | $ | 23,485 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                               |   |                                                                                  |        |   |   |   |   |
| Provision                for credit losses                                                                                                    |   |                                                                                  | 693         |   |   | 1,344 |   |
| Depreciation                and amortization                                                                                                  |   |                                                                                  | 2,170       |   |   | 2,554 |   |
| Amortization                of discounts on securities - net                                                                                  |   |                                                                                  | (233        | ) |   | (181 | ) |
| Deferred                income tax benefit, net                                                                                               |   |                                                                                  | (754        | ) |   | (385 | ) |
| Gains                on securities transactions                                                                                               |   |                                                                                  | (6          | ) |   | (431 | ) |
| Share-based                compensation                                                                                                       |   |                                                                                  | 1,879       |   |   | 868 |   |
| Income                tax benefits from share-based payment arrangements                                                                      |   |                                                                                  | (294        | ) |   | (841 | ) |
| Benefit                plan liability                                                                                                         |   |                                                                                  | 24          |   |   | 21 |   |
| Decrease                in accrued interest receivable                                                                                        |   |                                                                                  | 2,801       |   |   | 428 |   |
| (Decrease)                increase in accrued interest payable                                                                                |   |                                                                                  | (475        | ) |   | 2,078 |   |
| Increase                (decrease) in accrued income tax payable                                                                              |   |                                                                                  | 553         |   |   | (385 | ) |
| Other                - net                                                                                                                    |   |                                                                                  | (676        | ) |   | 1,836 |   |
| **Net                cash provided by operating activities**                                                                                  |   |                                                                                  | **24,739**  |   |   | **30,391** |   |
| **INVESTING                ACTIVITIES:**                                                                                                      |   |                                                                                  |        |   |   |   |   |
| Proceeds                from sales of securities available for sale                                                                           |   |                                                                                  | 3           |   |   | 47,413 |   |
| Proceeds                from principal repayments, redemptions and maturities of:                                                             |   |                                                                                  |        |   |   |   |   |
| Securities                available for sale                                                                                                  |   |                                                                                  | 41,634      |   |   | 40,486 |   |
| Securities                held to maturity                                                                                                    |   |                                                                                  | 56,914      |   |   | 18,978 |   |
| Purchases                of securities available for sale                                                                                     |   |                                                                                  | (105,925    | ) |   | (153,061 | ) |
| Purchases                of securities held to maturity                                                                                       |   |                                                                                  | (22,379     | ) |   | (9,653 | ) |
| Net                purchases of Federal Home Loan Bank of New York stock                                                                      |   |                                                                                  | (350        | ) |   | (3,747 | ) |
| Net                increase in interest bearing deposits in other banks                                                                       |   |                                                                                  | (23         | ) |   | (47 | ) |
| Net                decrease (increase) in loans outstanding                                                                                   |   |                                                                                  | 29,056      |   |   | (60,226 | ) |
| Purchases                of premises and equipment                                                                                            |   |                                                                                  | (1,155      | ) |   | (1,401 | ) |
| **Net                cash used for investing activities**                                                                                     |   |                                                                                  | **(2,225**  | **)** |   | **(121,258** | **)** |
| **FINANCING                ACTIVITIES:**                                                                                                      |   |                                                                                  |        |   |   |   |   |
| Net                increase in non-interest bearing deposits, NOW, money market and                savings                accounts            |   |                                                                                  | 216,476     |   |   | 118,400 |   |
| Net                (decrease) increase in time deposits, net of withdrawals and                maturities                                     |   |                                                                                  | (76,953     | ) |   | 24,435 |   |
| Net                increase (decrease) in securities sold under agreements to repurchase                -                short-term           |   |                                                                                  | 6,706       |   |   | (61,469 | ) |
| Proceeds                from securities sold under agreements to repurchase -                long-term                                        |   |                                                                                  | 100,000     |   |   | 210,000 |   |
| Repayment                of securities sold under agreement to repurchase -                long-term                                          |   |                                                                                  | (119,500    | ) |   | (92,500 | ) |
| Proceeds                from Federal Home Loan Bank of New York advances -                long-term                                           |   |                                                                                  | 50,000      |   |   | 100,000 |   |
| Repayment                of Federal Home Loan Bank of New York advances - long term                                                           |   |                                                                                  | (25,015     | ) |   | (70,013 | ) |
| Redemption                of junior preferred stock of consolidated subsidiary                                                                |   |                                                                                  | (4          | ) |   | ― |   |
| Redemption                of corporation-obligated mandatory redeemable capital securities                of                subsidiary trusts |   |                                                                                  | (10,310     | ) |   | ― |   |
| Cash                dividends paid                                                                                                            |   |                                                                                  | (9,890      | ) |   | (9,149 | ) |
| Income                tax benefits from share-based payment arrangements                                                                      |   |                                                                                  | 294         |   |   | 841 |   |
| Proceeds                from exercise of common stock options                                                                                 |   |                                                                                  | 1,717       |   |   | 1,994 |   |
| Purchases                of treasury stock                                                                                                    |   |                                                                                  | —     |   |   | (3,916 | ) |
| **Net                cash provided by financing activities**                                                                                  |   |                                                                                  | **133,521** |   |   | **218,623** |   |
| **Net                increase in Cash and Cash Equivalents**                                                                                  |   |                                                                                  | **156,035** |   |   | **127,756** |   |
| **Cash                and Cash Equivalents, Beginning of Period**                                                                             |   |                                                                                  | **57,093**  |   |   | **80,935** |   |
| **Cash                and Cash Equivalents, End of Period**                                                                                   |   | **$**                                                                                 | **213,128** |   | **$** | **208,691** |   |
| **Supplemental                Disclosures:**                                                                                                  |   |                                                                                  |        |   |   |   |   |
| Interest                paid                                                                                                                  |   | $                                                                                     | (76,076     | ) | $ | (59,472 | ) |
| Income                tax payments                                                                                                            |   | $                                                                                     | (8,743      | ) | $ | (11,449 | ) |
| Amortization                of loss on transfer of available for sale securities to held to maturity                securities                |   | $                                                                                     | (507        | ) | $ | (507 | ) |
| Change                in shares held in trust for deferred compensation                                                                       |   | $                                                                                     | (246        | ) | $ | (164 | ) |
| Change                in deferred compensation obligation                                                                                     |   | $                                                                                     | 246         |   | $ | 164 |   |
| Change                in accumulated other comprehensive loss (income)                                                                        |   | $                                                                                     | 409         |   | $ | (508 | ) |
| Non-cash                purchases of treasury stock related to the exercise of stock                options                                   |   | $                                                                                     | —     |   | $ | (197 | ) |
| Issuance                of treasury stock related to the exercise of stock options                                                            |   | $                                                                                     | ―     |   | $ | 653 |   |

*See      notes to condensed consolidated financial statements*
*.*

----

**U.S.B.      HOLDING CO., INC.**

**CONDENSED      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)**

**FOR      THE NINE MONTHS ENDED SEPTEMBER 30, 2007**

**(000’s      except share data)**

|                                                                                                                                                               |   | **Common****Stock****Shares****Outstanding** |           | **Common****Stock****Par****Value** |   |  **Additional****Paid-In****Capital** |   |   **Retained****Earnings** |        |   **Treasury****Stock** |   | **Common****Stock****Held                for****Benefit                Plans** |   |  **Deferred****Compensation****Obligation** |        | **Accumulated****Other****Comprehensive****Loss** |   |  **Total****Stockholders’****Equity** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------------|-------------------------------------|--------|--------------------------------------------|--------|--------------------------------------|-------------|-----------------------------------|--------|--------------------------------------------------------------------------------|--------|--------------------------------------------------|-------------|---------------------------------------------------|--------|--------------------------------------------------|--------|
| Balance                at January 1, 2007                                                                                                                          |   |                                         | 21,902,023     |                                | $      | 231                                        |   | $                                    | 212,398     |                              | $      | 40,777                                                                         |   | $                                                | (22,348     | )                                                 | $      | (3,390                                           | )      | $ | 3,390 |   | $ | (7,622 | ) | $ | 223,436 |   |
| Net                Income                                                                                                                                          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | 19,057                                                                         |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 19,057 |   |
| Other                comprehensive income:                                                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized securities gains                arising during the period,                net of tax of $207                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | 386 |   |   | 386 |   |
| Reclassification                adjustment of net                gain for securities sold, net                of tax of $2                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (4 | ) |   | (4 | ) |
| Compensation                cost related to The                Retirement Plan for Non-Employee                Directors, net of                tax benefit of $15 |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | 27 |   |   | 27 |   |
| Other                comprehensive income                                                                                                                          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | 409 |   |   | 409 |   |
| Total                comprehensive income                                                                                                                          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 19,466 |   |
| Cash                dividends:                                                                                                                                     |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                ($0.45 per share)                                                                                                                            |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (9,880                                                                         | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (9,880 | ) |
| Junior                preferred stock                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (10                                                                            | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (10 | ) |
| Common                stock options exercised and                related tax benefit                                                                               |   |                                         | 120,389        |                                |   |                                       |   |                                 | (173        | )                                 |   |                                                                           |   |                                             | 2,184       |                                              |   |                                             |   |   |   |   |   |   |   |   | 2,011 |   |
| Compensation                cost related to stock                options                                                                                           |   |                                         |           |                                |   |                                       |   |                                 | 1,879       |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 1,879 |   |
| Deferred                compensation obligation                                                                                                                    |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   | (246                                             | )      |   | 246 |   |   |   |   |   | ― |   |
| **Balance                at September 30, 2007**                                                                                                                   |   |                                         | **22,022,412** |                                | **$**  | **231**                                    |   | **$**                                | **214,104** |                              | **$**  | **49,944**                                                                     |   | **$**                                            | **(20,164** | **)**                                             | **$**  | **(3,636**                                       | **)**  | **$** | **3,636** |   | **$** | **(7,213** | **)** | **$** | **236,902** |   |

*      See      notes to condensed consolidated financial statements.*

----

**U.S.B.      HOLDING CO., INC.**

**CONDENSED      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)**

**FOR      THE NINE MONTHS ENDED SEPTEMBER 30, 2006**

**(000’s      except share data)**

|                                                                                                                              |   | **Common****Stock****Shares****Outstanding** |           | **Common****Stock****Par****Value** |   |  **Additional****Paid-In****Capital** |   |   **Retained****Earnings** |        |   **Treasury****Stock** |   | **Common****Stock****Held                for****Benefit                Plans** |   |  **Deferred****Compensation****Obligation** |        | **Accumulated****Other****Comprehensive****Loss** |   |  **Total****Stockholders’****Equity** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------------|-------------------------------------|--------|--------------------------------------------|--------|--------------------------------------|-------------|-----------------------------------|--------|--------------------------------------------------------------------------------|--------|--------------------------------------------------|-------------|---------------------------------------------------|--------|--------------------------------------------------|--------|
| Balance                at January 1, 2006                                                                                         |   |                                         | 21,713,805     |                                | $      | 231                                        |   | $                                    | 211,686     |                              | $      | 21,654                                                                         |   | $                                                | (21,670     | )                                                 | $      | (2,927                                           | )      | $ | 2,927 |   | $ | (7,748 | ) | $ | 204,153 |   |
| Net                Income                                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | 23,485                                                                         |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 23,485 |   |
| Other                comprehensive loss:                                                                                          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized securities loss                arising during the period, net                of tax benefit of $272 |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (505 | ) |   | (505 | ) |
| Reclassification                adjustment of net                gain for securities sold, net                of tax of $2        |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (3 | ) |   | (3 | ) |
| Other                comprehensive loss                                                                                           |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (508 | ) |   | (508 | ) |
| Total                comprehensive income                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 22,977 |   |
| Cash                dividends:                                                                                                    |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                ($0.42 per share)                                                                                           |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (9,139                                                                         | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (9,139 | ) |
| Junior                preferred stock                                                                                             |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (10                                                                            | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (10 | ) |
| Common                stock options exercised and                related tax benefit                                              |   |                                         | 216,186        |                                |   |                                       |   |                                 | 317         |                              |   |                                                                           |   |                                             | 3,171       |                                              |   |                                             |   |   |   |   |   |   |   |   | 3,488 |   |
| Compensation                cost related to stock                options                                                          |   |                                         |           |                                |   |                                       |   |                                 | 868         |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 868 |   |
| Purchases                of treasury stock                                                                                        |   |                                         | (188,822       | )                                   |   |                                       |   |                                 | (456        | )                                 |   |                                                                           |   |                                             | (4,113      | )                                                 |   |                                             |   |   |   |   |   |   |   |   | (4,569 | ) |
| Deferred                compensation obligation                                                                                   |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   | (164                                             | )      |   | 164 |   |   |   |   |   | ― |   |
| **Balance                at September 30, 2006**                                                                                  |   |                                         | **21,741,169** |                                | **$**  | **231**                                    |   | **$**                                | **212,415** |                              | **$**  | **35,990**                                                                     |   | **$**                                            | **(22,612** | **)**                                             | **$**  | **(3,091**                                       | **)**  | **$** | **3,091** |   | **$** | **(8,256** | **)** | **$** | **217,768** |   |

*See      notes to condensed consolidated financial statements.*

----

**U.S.B.      HOLDING CO., INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (UNAUDITED)**

| **1.** | **Principles                of Consolidation** |
|--------|------------------------------------------------|

| **2.** | **Basis                of Presentation** |
|--------|------------------------------------------|

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (UNAUDITED)**

| **3.** | **Accounting                Pronouncements** |
|--------|----------------------------------------------|

**Accounting      for Uncertainty in Income Tax Positions: **

**Pending      Accounting Pronouncement - Fair Value Measurements: **

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (UNAUDITED)**

**Pending      Accounting Pronouncement - Fair Value Option for Financial Assets and Financial      Liabilities: **

| **4.** | **Accounting                for Share-Based                Compensation** |
|--------|---------------------------------------------------------------------------|

----

**U.S.B.      HOLDING CO., INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (UNAUDITED)**

|                                                                                                                         |   | **2007**    |        |                                                        |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|-------------------------------------------------------------|--------|
|                                                                                                                              |   | **Options** |        |  **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value****($                in 000’s)** |   |
| Vested                outstanding at January 1, 2007                                                                         |   |        | 583,884     |                                                        | $      | 14.74 |   |   |   |   |
| Unvested                outstanding at January 1, 2007                                                                       |   |        | 97,486      |                                                        |   | 21.88 |   |   |   |   |
| **Outstanding                at January 1, 2007**                                                                            |   |        | **681,370** |                                                        |   | **15.76** |   |   |   |   |
| Granted                                                                                                                      |   |        | 100,162     |                                                        |   | 20.59 |   |   |   |   |
| Exercised                                                                                                                    |   |        | (24,915     | )                                                           |   | 10.30 |   |   |    |   |
| **Outstanding                at September 30, 2007**                                                                         |   |        | **756,617** |                                                        |   | **16.58** |   | **$** | **5,029** |   |
| **Exercisable                at September 30, 2007**                                                                         |   |        | **656,455** |                                                        | **$**  | **15.97** |   | **$** | **4,765** |   |
| Weighted                average fair value of options granted during the nine months ended                September 30, 2007 |   |        |        |                                                        | $      | 6.25 |   |   |   |   |

|                                                                                                                         |   | **2006**    |        |                                                  |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|-------------------------------------------------------|--------|
|                                                                                                                         |   | **Options** |        | **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value****($                in 000’s)** |   |
| Vested                outstanding at January 1, 2006                                                                         |   |        | 558,082     |                                                  | $      | 13.09 |   |   |   |   |
| Unvested                outstanding at January 1, 2006                                                                       |   |        | 94,811      |                                                  |   | 20.14 |   |   |   |   |
| **Outstanding                at January 1, 2006**                                                                            |   |        | **652,893** |                                                  |   | **14.11** |   |   |   |   |
| Granted                                                                                                                      |   |        | 97,486      |                                                  |   | 21.88 |   |   |   |   |
| Exercised                                                                                                                    |   |        | (69,009     | )                                                     |   | 8.79 |   |   |    |   |
| **Outstanding                at September 30, 2006**                                                                         |   |        | **681,370** |                                                  |   | **15.76** |   | **$** | **4,290** |   |
| **Exercisable                at September 30, 2006**                                                                         |   |        | **583,884** |                                                  | **$**  | **14.74** |   | **$** | **4,273** |   |
| Weighted                average fair value of options granted during the nine months ended                September 30, 2006 |   |        |        |                                                  | $      | 7.38 |   |   |   |   |

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (UNAUDITED)**

|                                                           |   | **2007**              |          |
|----------------------------------------------------------------|--------|-----------------------|---------------|
|                                                           |   | ** ****Options** |          | **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value****($                in 000’s)** |   |
| Vested                outstanding at January 1, 2007           |   |                  | 1,990,693     |   | $ | 14.96 |   |   |   |   |
| Unvested                outstanding at January 1, 2007         |   |                  | 596,539       |   |   | 23.16 |   |   |   |   |
| **Outstanding                at January 1, 2007**              |   |                  | **2,587,232** |   |   | **16.85** |   |   |   |   |
| Granted                                                        |   |                  | 321,669       |   |   | 21.96 |   |   |   |   |
| Cancelled                                                      |   |                  | (3,205        | ) |   | 21.87 |   |   |   |   |
| Exercised                                                      |   |                  | (95,474       | ) |   | 15.29 |   |   |    |   |
| **Outstanding                at September 30, 2007**           |   |                  | **2,810,222** |   |   | **17.48** |   | **$** | **16,524** |   |
| **Exercisable                at September 30, 2007**           |   |                  | **2,000,376** |   | **$** | **15.31** |   | **$** | **15,843** |   |
| Weighted                average fair value of options granted  |   |                  |          |   |   |   |   |   |   |   |
| during                the nine months ended September 30, 2007 |   |                  |          |   | $ | 6.55 |   |   |   |   |

|                                                           |   | **2006**              |          |
|----------------------------------------------------------------|--------|-----------------------|---------------|
|                                                           |   | ** ****Options** |          | **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value****($                in 000’s)** |   |
| Vested                outstanding at January 1, 2006           |   |                  | 2,651,175     |   | $ | 14.16 |   |   |   |   |
| Unvested                outstanding at January 1, 2006         |   |                  | 1,560         |   |   | 22.26 |   |   |   |   |
| **Outstanding                at January 1, 2006**              |   |                  | **2,652,735** |   |   | **14.16** |   |   |   |   |
| Granted                                                        |   |                  | 321,586       |   |   | 21.96 |   |   |   |   |
| Cancelled                                                      |   |                  | (200          | ) |   | 21.93 |   |   |   |   |
| Exercised                                                      |   |                  | (147,177      | ) |   | 10.77 |   |   |  |   |
| Expired                                                        |   |                  | (69,858       | ) |   | 22.34 |   |   |    |   |
| **Outstanding                at September 30, 2006**           |   |                  | **2,757,086** |   |   | **15.04** |   | **$** | **19,345** |   |
| **Exercisable                at September 30, 2006**           |   |                  | **2,439,267** |   | **$** | **14.14** |   | **$** | **19,313** |   |
| Weighted                average fair value of options granted  |   |                  |          |   |   |   |   |   |   |   |
| during                the nine months ended September 30, 2006 |   |                  |          |   | $ | 6.92 |   |   |   |   |

----

**U.S.B.      HOLDING CO., INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|                                           |   | **Three                months ended**    |   | **Nine                months ended**     |   |
|------------------------------------------------|--------|------------------------------------------|--------|------------------------------------------|--------|
| **Director                Plan Assumptions:**  |   | **September                30,****2007** |   | **September                30,****2006** |   | **September                30,****2007** |   | **September                30,****2006** |   |
| Expected                stock price volatility |   |                                     | 29.89  | %                                        |   | 31.31 | % |   | 30.59 | % |   | 32.22 | % |
| Risk-free                interest rate         |   |                                     | 4.85   |                                     |   | 5.07 |   |   | 4.96 |   |   | 4.56 |   |
| Expected                dividend yield         |   |                                     | 2.85   |                                     |   | 2.43 |   |   | 2.64 |   |   | 2.51 |   |
| Expected                annual forfeitures     |   |                                     | 1.99   |                                     |   | 1.70 |   |   | 1.85 |   |   | 1.70 |   |
| Expected                life (in years)        |   |                                     | 7.92   |                                     |   | 7.81 |   |   | 7.87 |   |   | 7.75 |   |
|                                           |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| **Employee                Plan Assumptions:**  |   |                                     |   |                                     |   |   |   |   |   |   |   |   |   |
| Expected                stock price volatility |   |                                     | 29.92  | %                                        |   | 30.52 | % |   | 29.92 | % |   | 30.54 | % |
| Risk-free                interest rate         |   |                                     | 4.78   |                                     |   | 5.03 |   |   | 4.78 |   |   | 5.03 |   |
| Expected                dividend yield         |   |                                     | 2.58   |                                     |   | 2.43 |   |   | 2.58 |   |   | 2.43 |   |
| Expected                annual forfeitures     |   |                                     | 1.31   |                                     |   | 1.29 |   |   | 1.31 |   |   | 1.29 |   |
| Expected                life (in years)        |   |                                     | 7.42   |                                     |   | 6.86 |   |   | 7.42 |   |   | 6.87 |   |

| **5.** | **Intangible                Assets** |
|--------|--------------------------------------|

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

| **6.** | **Earnings                Per Common Share                (“EPS”)** |
|--------|---------------------------------------------------------------------------------|

|                                                                                                                                                  |   | **Three                Months Ended****September                30,** |       | **Nine                Months Ended****September                30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|----------------------------------------------------------------------|--------|
|                                                                                                                                                  |   | **2007**                                                              |       | **2006**                                                             |   | **2007** |   | **2006** |   |
| **Numerator:**                                                                                                                                        |   |                                                                  |       |                                                                 |   |   |   |   |   |
| Net                Income                                                                                                                             |   | $                                                                     | 5,802      |                                                                 | $      | 8,145 |   | $ | 19,057 |   | $ | 23,485 |   |
| Less:                preferred dividends                                                                                                              |   |                                                                  | ―    |                                                                 |   | ― |   |   | 10 |   |   | 10 |   |
| Net                income for basic and diluted earnings                per common share - net income available                to common stockholders |   | $                                                                     | 5,802      |                                                                 | $      | 8,145 |   | $ | 19,047 |   | $ | 23,475 |   |
| **Denominator:**                                                                                                                                      |   |                                                                  |       |                                                                 |   |   |   |   |   |   |   |   |   |
| Denominator                for basic earnings per common                share - weighted average shares                                               |   |                                                                  | 22,006,642 |                                                                 |   | 21,751,565 |   |   | 21,934,259 |   |   | 21,746,909 |   |
| Effects                of dilutive securities - director                and employee stock options                                                    |   |                                                                  | 545,092    |                                                                 |   | 889,975 |   |   | 508,501 |   |   | 961,122 |   |
| Denominator                for diluted earnings per common                share - adjusted weighted average                shares                     |   |                                                                  | 22,551,734 |                                                                 |   | 22,641,540 |   |   | 22,442,760 |   |   | 22,708,031 |   |
| Basic                earnings per common share                                                                                                        |   | $                                                                     | 0.26       |                                                                 | $      | 0.37 |   | $ | 0.87 |   | $ | 1.08 |   |
| Diluted                earnings per common share                                                                                                      |   |                                                                  | 0.26       |                                                                 |   | 0.36 |   |   | 0.85 |   |   | 1.03 |   |

| **7.** | **Securities** |
|--------|----------------|

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|                                                            |   | **(000’s)**           |        |
|-----------------------------------------------------------------|--------|-----------------------------|-------------|
|   **September                30, 2007**               |   |  **Amortized****Cost** |        | **Gross****Unrealized****Gains** |   | **Gross****Unrealized****Losses** |   | **Estimated****Fair****Value** |   |
| **Available                for Sale:**                          |   |                        |        |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 72,931      |   | $ | ― |   | $ | 948 |   | $ | 71,983 |   |
| Mortgage-backed                securities                       |   |                        | 426,337     |   |   | 2,060 |   |   | 4,954 |   |   | 423,443 |   |
| Obligations                of states and political subdivisions |   |                        | 226         |   |   | 10 |   |   | ― |   |   | 236 |   |
| Corporate                securities                             |   |                        | 111         |   |   | 33 |   |   | ― |   |   | 144 |   |
| **Total                securities available for sale**          |   | **$**                       | **499,605** |   | **$** | **2,103** |   | **$** | **5,902** |   | **$** | **495,806** |   |
| **Held                to Maturity:**                            |   |                        |        |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 615,398     |   | $ | 121 |   | $ | 5,509 |   | $ | 610,010 |   |
| Obligations                of states and political subdivisions |   |                        | 97,613      |   |   | 1,694 |   |   | 284 |   |   | 99,023 |   |
| **Total                securities held to maturity**            |   | **$**                       | **713,011** |   | **$** | **1,815** |   | **$** | **5,793** |   | **$** | **709,033** |   |

|                                                            |   | **(000’s)**           |        |
|-----------------------------------------------------------------|--------|-----------------------------|-------------|
|   **December                31, 2006**                |   |  **Amortized****Cost** |        | **Gross****Unrealized****Gains** |   | **Gross****Unrealized****Losses** |   | **Estimated****Fair****Value** |   |
| **Available                for Sale:**                          |   |                        |        |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 72,927      |   | $ | — |   | $ | 1,027 |   | $ | 71,900 |   |
| Mortgage-backed                securities                       |   |                        | 361,904     |   |   | 2,027 |   |   | 4,932 |   |   | 358,999 |   |
| Obligations                of states and political subdivisions |   |                        | 230         |   |   | 12 |   |   | ― |   |   | 242 |   |
| Corporate                securities                             |   |                        | 109         |   |   | 44 |   |   | ― |   |   | 153 |   |
| **Total                securities available for sale**          |   | **$**                       | **435,170** |   | **$** | **2,083** |   | **$** | **5,959** |   | **$** | **431,294** |   |
| **Held                to Maturity:**                            |   |                        |        |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 639,846     |   | $ | 178 |   | $ | 6,033 |   | $ | 633,991 |   |
| Obligations                of states and political subdivisions |   |                        | 112,102     |   |   | 1,800 |   |   | 386 |   |   | 113,516 |   |
| **Total                securities held to maturity**            |   | **$**                       | **751,948** |   | **$** | **1,978** |   | **$** | **6,419** |   | **$** | **747,507** |   |

|   | Available                for sale and held to maturity qualified obligations of states and                political subdivisions are not subject to Federal income tax. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|   | A                summary of gross unrealized losses on securities that are not                other-than-temporarily impaired, which have been in a continuous                unrealized loss position for less than 12 months and for 12 months                or                longer as of September 30, 2007 and December 31, 2006, is as                follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Securities      in an Unrealized Loss Position that are not Other-Than-Temporarily      Impaired**

|                                                                           |   |  **(000’s)**                   |    |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                           |   | **Less                Than 12 Months**    |    | **12                Months or More** |   | **Total** |   |
| **September                30, 2007**                                          |   |   **Fair                Value** |    | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |
| U.S.                government agencies                                        |   | $                                         | 169,484 |   | $ | 67 |   | $ | 381,513 |   | $ | 6,390 |   | $ | 550,997 |   | $ | 6,457 |   |
| Mortgage-backed                securities                                      |   |                                      | 109,467 |   |   | 149 |   |   | 130,496 |   |   | 4,805 |   |   | 239,963 |   |   | 4,954 |   |
| Obligations                of states and political                subdivisions |   |                                      | 28,509  |   |   | 75 |   |   | 9,792 |   |   | 209 |   |   | 38,301 |   |   | 284 |   |
| Corporate                securities                                            |   |                                      | 1       |   |   | — |   |   | — |   |   | — |   |   | 1 |   |   | — |   |
| Total                temporarily impaired securities                           |   | $                                         | 307,461 |   | $ | 291 |   | $ | 521,801 |   | $ | 11,404 |   | $ | 829,262 |   | $ | 11,695 |   |

|                                                                           |   | **(000’s)**                         |    |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
| **December                31, 2006**                                           |   |   **Fair                Value** |    | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |
| U.S.                government agencies                                        |   | $                                         | 120,536 |   | $ | 511 |   | $ | 406,325 |   | $ | 6,549 |   | $ | 526,861 |   | $ | 7,060 |   |
| Mortgage-backed                securities                                      |   |                                      | 6,550   |   |   | 22 |   |   | 145,583 |   |   | 4,910 |   |   | 152,133 |   |   | 4,932 |   |
| Obligations                of states and political                subdivisions |   |                                      | 41,195  |   |   | 148 |   |   | 8,914 |   |   | 238 |   |   | 50,109 |   |   | 386 |   |
| Total                temporarily impaired securities                           |   | $                                         | 168,281 |   | $ | 681 |   | $ | 560,822 |   | $ | 11,697 |   | $ | 729,103 |   | $ | 12,378 |   |

----

**U.S.B.            HOLDING CO., INC.**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

| **8.** | **Loans** |
|--------|-----------|

| **9.** | **Borrowings                and Stockholders’Equity** |
|--------|-------------------------------------------------------------|

----

**U.S.B.          HOLDING CO., INC.**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|                                           |   | **(000’s                except percentages)** |   |
|------------------------------------------------|--------|-----------------------------------------------------|--------|
| **Short-Term                Borrowings**       |   | **2007**                                            |   | **2006** |   |
| Balance                at September 30         |   | $                                                   | 7,412  |   | $ | 863 |   |
| Average                balance outstanding     |   | $                                                   | 2,685  |   | $ | 46,901 |   |
| Weighted-average                interest rate: |   |                                                |   |   |   |   |   |
| As                of September 30              |   |                                                | 3.97   | % |   | 3.88 | % |
| Paid                during period              |   |                                                | 3.95   | % |   | 4.72 | % |

----

**U.S.B.          HOLDING CO., INC.**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

|                                                |   | **(000’s                except percentages)** |    |
|-----------------------------------------------------|--------|-----------------------------------------------------|---------|
|   **Long-Term                Borrowings** |   |  **Within****1                Year**           |    | **After                1****But                Within****5                Years** |   |  **After****5                Years** |   |  **2007****Total** |   |  2006Total |   |
| Contractual                Payment Date:            |   |                                                |    |   |   |   |   |   |   |   |   |
| Total                long-term borrowing            |   | $                                                   | 50,021  |   | $ | 120,096 |   | $ | 542,677 |   | $ | 712,794 |   | $ | 707,309 |   |
| Weighted                average interest rate       |   |                                                | 5.63    | % |   | 5.71 | % |   | 4.13 | % |   | 4.50 | % |   | 4.46 | % |
| Expected                Call Date:                  |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                long-term borrowing            |   | $                                                   | 131,021 |   | $ | 145,096 |   | $ | 436,677 |   | $ | 712,794 |   | $ | 707,309 |   |
| Weighted                average interest rate       |   |                                                | 4.01    | % |   | 5.30 | % |   | 4.38 | % |   | 4.50 | % |   | 4.46 | % |

----

**U.S.B.        HOLDING CO., INC.**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (UNAUDITED)**

| **10.** | **Corporation-Obligated                Mandatory Redeemable Capital Securities of Subsidiary                Trusts** |
|---------|----------------------------------------------------------------------------------------------------------------------|

| **11.** | **Commitments                and Contingencies** |
|---------|--------------------------------------------------|

----

**U.S.B.          HOLDING CO., INC.**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

----

**U.S.B.          HOLDING CO., INC.**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

| **12.** | **Segment                Information** |
|---------|----------------------------------------|

| **13.** | **Merger                Agreement with KeyCorp** |
|---------|--------------------------------------------------|

----

**U.S.B.          HOLDING CO., INC.**

| **ITEM                    2.** | **MANAGEMENT’S                      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                      OF                      OPERATIONS** |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Forward-Looking      Statements***

*This      Quarterly Report on Form 10-Q contains a number of “forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933, as amended,      and      Section 21E of the Securities Exchange Act of 1934, as amended. These      forward-looking statements may be identified by the use of such words as“believe,” “expect,” “anticipate,” “intend,” “should,” “ “would,” “could,”“may,” “planned,” “estimated,” “potential,” “outlook,” “predict,” “project” and      similar terms and phrases, including references to      assumptions.*

*Forward-looking      statements are based on various assumptions and analyses made by the Company      in      light of management's experience and its perception of historical trends,      current conditions and expected future developments, as well as other factors      the Company believes are appropriate under the circumstances. These statements      are not guarantees of future performance and are subject to risks, uncertainties      and other factors (many of which are beyond the Company’s control) that could      cause actual results to differ materially from future results expressed or      implied by such forward-looking statements. These factors include, without      limitation, the following: the timing and occurrence or non-occurrence of events      may be subject to circumstances beyond the Company’s control; there may be      increases in competitive pressure among financial institutions or from      non-financial institutions; changes in the interest rate environment may reduce      interest margins or affect the value of the Company’s investments; changes in      deposit flows, loan demand or real estate values may adversely affect the      Company’s business; changes in accounting principles, policies or guidelines may      cause the Company’s financial condition to be perceived differently; general      economic conditions, either nationally or locally in some or all of the areas      in      which the Company does business, or conditions in the securities markets or the      banking industry may be less favorable than the Company currently anticipates;      legislative or regulatory changes may adversely affect the Company’s business;      applicable technological changes may be more difficult or expensive than the      Company anticipates; success or consummation of new business initiatives may      be      more difficult or expensive than the Company anticipates; or litigation or      matters before regulatory agencies, whether currently existing or commencing      in      the future, may delay the occurrence or non-occurrence of events longer than      the      Company anticipates.*

*The      Company's forward-looking statements are only as of the date on which such      statements are made. By making any forward-looking statements, the Company      assumes no duty to update them to reflect new, changing or unanticipated events      or circumstances. These risks and uncertainties should be considered in      evaluating forward-looking statements and undue reliance should not be placed      on      these statements.*

**MERGER      AGREEMENT WITH KEYCORP**

----

**U.S.B.      HOLDING CO., INC.**

| **ITEM              2.** | **MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS** |
|--------------------------|-------------------------------------------------------------------------------------------------------------------------------|

**OVERVIEW**

**Critical      Accounting Policies**

----

**U.S.B.        HOLDING CO., INC.**

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

**COMPARISON      OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 2007 AND DECEMBER 31,      2006**

----

**U.S.B.      HOLDING CO., INC.**

| **ITEM              2.** | **MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS** |
|--------------------------|-------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   |                                     |      | **(000’s)**                       |   |                        |   |
|-------------------------------------------------------|--------|------------------------------------------|-----------|-----------------------------------------|--------|-----------------------------|--------|
|                                                  |   | **September                30,****2007** |      | **December                31,****2006** |   | **Increase/****(Decrease)** |   |
| Time                and demand loans                  |   | $                                        | 135,372   |                                    | $      | 140,416                     |   | $ | (5,044 | ) |
| Installment                loans                      |   |                                     | 25,415    |                                    |   | 28,621                      |   |   | (3,206 | ) |
| Credit                Card                            |   |                                     | 7,581     |                                    |   | 7,444                       |   |   | 137 |   |
| Real                Estate                            |   |                                     |      |                                    |   |                        |   |   |   |   |
| -                Commercial                           |   |                                     | 556,543   |                                    |   | 572,622                     |   |   | (16,079 | ) |
| -                Residential                          |   |                                     | 290,553   |                                    |   | 293,370                     |   |   | (2,817 | ) |
| -                Construction and real estate secured |   |                                     | 461,260   |                                    |   | 465,463                     |   |   | (4,203 | ) |
| -                Home equity                          |   |                                     | 83,316    |                                    |   | 82,452                      |   |   | 864 |   |
| Other                                                 |   |                                     | 4,413     |                                    |   | 5,280                       |   |   | (867 | ) |
| Gross                loans                            |   |                                     | 1,564,453 |                                    |   | 1,595,668                   |   |   | (31,215 | ) |
| Deferred                net loan commitment fees      |   |                                     | (1,262    | )                                       |   | (2,248                      | )      |   | 986 |   |
| Total                loans                            |   |                                     | 1,563,191 |                                    |   | 1,593,420                   |   |   | (30,229 | ) |
| Allowance                for loan losses              |   |                                     | (15,622   | )                                       |   | (16,034                     | )      |   | 412 |   |
| Total                loans, net                       |   | $                                        | 1,547,569 |                                    | $      | 1,577,386                   |   | $ | (29,817 | ) |

----

**U.S.B.        HOLDING CO., INC.**

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

----

**U.S.B.        HOLDING CO., INC.**

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                      |   | **September                30,****2007** |      |  **(000’s)****December                31,****2006** |   | **Increase/****(Decrease)** |   |
|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|----------------------------------------------------------------|--------|-----------------------------|--------|
| **Non-interest                bearing deposits:**                                                         |   |                                     |      |                                                           |   |                        |   |   |   |   |
| Individuals,                partnerships, and corporations                                                |   | $                                        | 258,678   |                                                           | $      | 269,468                     |   | $ | (10,790 | ) |
| Certified                and official checks                                                              |   |                                     | 19,256    |                                                           |   | 14,753                      |   |   | 4,503 |   |
| States                and political subdivisions                                                          |   |                                     | 98,890    |                                                           |   | 10,661                      |   |   | 88,229 |   |
| Total                non-interest bearing deposits                                                        |   |                                     | 376,824   |                                                           |   | 294,882                     |   |   | 81,942 |   |
| **Interest                bearing deposits:**                                                             |   |                                     |      |                                                           |   |                        |   |   |   |   |
| NOW                accounts                                                                               |   |                                     | 98,683    |                                                           |   | 110,386                     |   |   | (11,703 | ) |
| Money                market accounts                                                                      |   |                                     | 181,102   |                                                           |   | 139,052                     |   |   | 42,050 |   |
| Savings                deposits                                                                           |   |                                     | 371,185   |                                                           |   | 370,034                     |   |   | 1,151 |   |
| States                and political subdivisions - NOW, money market, and                savings deposits |   |                                     | 184,863   |                                                           |   | 81,827                      |   |   | 103,036 |   |
| Time                deposits of individuals, partnerships, corporations under                $100,000     |   |                                     | 374,163   |                                                           |   | 378,631                     |   |   | (4,468 | ) |
| Time                deposits of individuals, partnerships, corporations over                $100,000      |   |                                     | 209,543   |                                                           |   | 214,039                     |   |   | (4,496 | ) |
| Brokered                time deposits                                                                     |   |                                     | ―   |                                                           |   | 54,000                      |   |   | (54,000 | ) |
| States                and political subdivisions - time deposits                                          |   |                                     | 143,799   |                                                           |   | 161,660                     |   |   | (17,861 | ) |
| IRAs                and Keoghs                                                                            |   |                                     | 95,730    |                                                           |   | 91,858                      |   |   | 3,872 |   |
| Total                interest bearing deposits                                                            |   |                                     | 1,659,068 |                                                           |   | 1,601,487                   |   |   | 57,581 |   |
| Total                deposits                                                                             |   | $                                        | 2,035,892 |                                                           | $      | 1,896,369                   |   | $ | 139,523 |   |

----

**U.S.B.          HOLDING CO., INC.**

| **ITEM                  2.** | **MANAGEMENT’S                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                    OPERATIONS** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|

**COMPARISON      OF RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,      2007      AND 2006**

**Earnings**

----

**U.S.B.        HOLDING CO., INC.**

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

**Net      Interest Income**

----

**U.S.B.        HOLDING CO., INC.**

| **ITEM                2.** | **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                     |   | **(000’s,                  except                  percentages)****For                  the three months ended September 30,** |         |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                                                     |   | **2007**                                                                                                                             |         | **2006** |   |
|                                                                                                                                                                     |   | **Average                  Balance**                                                                                                 |         |  **Interest** |   | **Average                  Yield/Rate** |   | **Average                  Balance** |   |  **Interest** |   | **Average                  Yield/Rate** |   |
| **INTEREST                  EARNING ASSETS**                                                                                                                             |   |                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  earning assets:                                                                                                                                |   |                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                  funds sold                                                                                                                                      |   | $                                                                                                                                    | 50,400       |   | $ | 659 |   |   | 5.12 | % | $ | 30,029 |   | $ | 396 |   |   | 5.16 | % |
| Securities:                                                                                                                                                              |   |                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government agencies                                                                                                                                |   |                                                                                                                                 | 703,969      |   |   | 9,839 |   |   | 5.59 |   |   | 712,931 |   |   | 9,943 |   |   | 5.58 |   |
| Mortgage-backed                  securities                                                                                                                              |   |                                                                                                                                 | 434,083      |   |   | 6,093 |   |   | 5.61 |   |   | 410,217 |   |   | 5,780 |   |   | 5.64 |   |
| Obligations                  of states and political subdivisions                                                                                                        |   |                                                                                                                                 | 103,634      |   |   | 1,659 |   |   | 6.40 |   |   | 98,589 |   |   | 1,595 |   |   | 6.47 |   |
| Corporate                  securities, FHLB stock, and other securities                                                                                                  |   |                                                                                                                                 | 37,514       |   |   | 695 |   |   | 7.41 |   |   | 36,930 |   |   | 538 |   |   | 5.83 |   |
| Loans,                  net                                                                                                                                              |   |                                                                                                                                 | 1,577,360    |   |   | 29,213 |   |   | 7.33 |   |   | 1,493,654 |   |   | 27,976 |   |   | 7.47 |   |
| Total                  interest earning assets                                                                                                                           |   |                                                                                                                                 | 2,906,960    |   |   | 48,158 |   |   | 6.52 | % |   | 2,782,350 |   |   | 46,228 |   |   | 6.61 | % |
| **INTEREST                  BEARING LIABILITIES**                                                                                                                        |   |                                                                                                                                 |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
| Deposits:                                                                                                                                                                |   |                                                                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                                                                                                                                                                      |   | $                                                                                                                                    | 185,466      |   | $ | 781 |   |   | 1.67 | % | $ | 166,551 |   | $ | 497 |   |   | 1.20 | % |
| Money                  market                                                                                                                                            |   |                                                                                                                                 | 208,295      |   |   | 1,772 |   |   | 3.38 |   |   | 177,596 |   |   | 1,209 |   |   | 2.73 |   |
| Savings                                                                                                                                                                  |   |                                                                                                                                 | 397,062      |   |   | 2,598 |   |   | 2.60 |   |   | 405,041 |   |   | 2,367 |   |   | 2.34 |   |
| Time                                                                                                                                                                     |   |                                                                                                                                 | 855,257      |   |   | 10,351 |   |   | 4.79 |   |   | 799,036 |   |   | 8,743 |   |   | 4.33 |   |
| Total                  interest bearing deposits                                                                                                                         |   |                                                                                                                                 | 1,646,080    |   |   | 15,502 |   |   | 3.70 |   |   | 1,548,224 |   |   | 12,816 |   |   | 3.27 |   |
| Federal                  funds purchased, securities sold under agreements to repurchase                  and FHLB                  advances                             |   |                                                                                                                                 | 734,441      |   |   | 8,406 |   |   | 4.48 |   |   | 717,994 |   |   | 8,223 |   |   | 4.53 |   |
| Subordinated                  debt issued in connection with corporation - obligated  mandatory                  redeemable capital securities of subsidiary trusts |   |                                                                                                                                 | 51,548       |   |   | 1,195 |   |   | 9.27 |   |   | 61,858 |   |   | 1,436 |   |   | 9.29 |   |
| Total                  interest bearing liabilities                                                                                                                      |   |                                                                                                                                 | 2,432,069    |   |   | 25,103 |   |   | 4.05 | % |   | 2,328,076 |   |   | 22,475 |   |   | 3.82 | % |
| **NET                  INTEREST INCOME**                                                                                                                                 |   |                                                                                                                                 |         |   | $ | 23,055 |   |   |   |   |   |   |   | $ | 23,753 |   |   |   |   |
| **NET                  YIELD ON INTEREST EARNING ASSETS (NET INTEREST                  MARGIN)**                                                                         |   |                                                                                                                                 |         |   |   |   |   |   | 3.17 | % |   |   |   |   |   |   |   | 3.41 | % |

----

**U.S.B.          HOLDING CO., INC.**

| **ITEM                  2.** | **MANAGEMENT’S                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                    OPERATIONS** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                 |   | **(000’s,                except percentages)****For                the nine months ended September 30,** |      |
|--------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|-----------|
|                                                                                 |   | **2007**                                                                                                       |      | **2006** |   |
|                                                                                 |   | **Average                Balance**                                                                             |      |  **Interest** |   | **Average                Yield/Rate** |   | **Average                Balance** |   |  **Interest** |   | **Average                Yield/Rate** |   |
| **INTEREST                EARNING ASSETS**                                           |   |                                                                                                           |      |   |   |   |   |   |   |   |   |   |   |
| Interest                earning assets:                                              |   |                                                                                                           |      |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                    |   | $                                                                                                              | 59,299    |   | $ | 2,324 |   |   | 5.17 | % | $ | 27,472 |   | $ | 1,018 |   |   | 4.89 | % |
| Securities:                                                                          |   |                                                                                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                                              |   |                                                                                                           | 709,911   |   |   | 29,720 |   |   | 5.58 |   |   | 712,283 |   |   | 29,822 |   |   | 5.58 |   |
| Mortgage-backed                securities                                            |   |                                                                                                           | 396,570   |   |   | 16,644 |   |   | 5.60 |   |   | 357,793 |   |   | 14,549 |   |   | 5.42 |   |
| Obligations                of states and                political subdivisions       |   |                                                                                                           | 109,809   |   |   | 5,267 |   |   | 6.40 |   |   | 104,147 |   |   | 5,001 |   |   | 6.40 |   |
| Corporate                securities, FHLB stock,                and other securities |   |                                                                                                           | 37,024    |   |   | 2,026 |   |   | 4.10 |   |   | 35,454 |   |   | 1,401 |   |   | 5.28 |   |
| Loans,                net                                                            |   |                                                                                                           | 1,596,831 |   |   | 88,154 |   |   | 7.31 |   |   | 1,486,081 |   |   | 81,023 |   |   | 7.22 |   |
| Total                interest earning assets                                         |   |                                                                                                           | 2,909,444 |   |   | 144,135 |   |   | 6.59 | % |   | 2,723,230 |   |   | 132,814 |   |   | 6.49 | % |

**INTEREST      BEARING LIABILITIES**

| Deposits:                                                                                                                                                                                               |   |   |      |   |   |   |   |   |   |   |   |      |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| NOW                                                                                                                                                                                                     |   | $      | 194,182   |   | $      | 2,670  |   |   | 1.84   | %      | $      | 184,803   |   | $ | 1,790 |   |   | 1.29 | % |
| Money                market                                                                                                                                                                             |   |   | 189,218   |   |   | 4,630  |   |   | 3.27   |   |   | 156,816   |   |   | 2,598 |   |   | 2.22 |   |
| Savings                                                                                                                                                                                                 |   |   | 399,299   |   |   | 7,710  |   |   | 2.58   |   |   | 420,733   |   |   | 6,668 |   |   | 2.12 |   |
| Time                                                                                                                                                                                                    |   |   | 887,291   |   |   | 31,888 |   |   | 4.79   |   |   | 775,008   |   |   | 23,126 |   |   | 3.98 |   |
| Total                interest bearing deposits                                                                                                                                                          |   |   | 1,669,990 |   |   | 46,898 |   |   | 3.75   |   |   | 1,537,360 |   |   | 34,182 |   |   | 2.97 |   |
| Federal                funds purchased,securities                sold under agreements                to repurchaseand                FHLB advances                                                     |   |   | 718,884   |   |   | 24,420 |   |   | 4.48   |   |   | 685,705   |   |   | 23,223 |   |   | 4.47 |   |
| Subordinated                debt issued inconnection                withcorporation                - obligatedmandatory                redeemable capitalsecurities                of subsidiary trusts |   |   | 58,195    |   |   | 4,283  |   |   | 9.81   |   |   | 61,858    |   |   | 4,145 |   |   | 8.93 |   |
| Total                interest bearing liabilities                                                                                                                                                       |   |   | 2,447,069 |   |   | 75,601 |   |   | 4.10   | %      |   | 2,284,923 |   |   | 61,550 |   |   | 3.58 | % |
| **NET                INTEREST INCOME**                                                                                                                                                                  |   |   |      |   | $      | 68,534 |   |   |   |   |   |      |   | $ | 71,264 |   |   |   |   |
| **NET                YIELD ON INTEREST EARNING ASSETS (NET INTEREST                MARGIN)**                                                                                                            |   |   |      |   |   |   |   |   | 3.14   | %      |   |      |   |   |   |   |   | 3.49 | % |

----

**U.S.B.            HOLDING CO., INC.**

| **ITEM                    2.** | **MANAGEMENT’S                      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                      OF                      OPERATIONS** |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                              |   | **For                the three months ended****September                30, 2007 compared to 2006** |      | **For                the nine months ended****September                30, 2007 compared to 2006** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|-----------|----------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                              |   | **Increase                (Decrease) due to change in**                                             |      | **Increase                (Decrease) due to change in**                                            |   |
|                                                                                                                                                                                              |   | **Average****Volume**                                                                               |      | **Average****Rate**                                                                                |   | **Total                Increase****(Decrease)** |   | **Average****Volume** |   | **Average****Rate** |   | **Total                Increase****(Decrease)** |   |
| **INTEREST                INCOME:**                                                                                                                                                               |   |                                                                                                |      |                                                                                               |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                                                                                                                                 |   | $                                                                                                   | 284       |                                                                                               | $      | (21 | ) | $ | 263 |   | $ | 1,245 |   | $ | 61 |   | $ | 1,306 |   |
| Securities                                                                                                                                                                                        |   |                                                                                                | 293       |                                                                                               |   | 137 |   |   | 430 |   |   | 1,855 |   |   | 1,029 |   |   | 2,884 |   |
| Loans,                net                                                                                                                                                                         |   |                                                                                                | 4,061     |                                                                                               |   | (2,824 | ) |   | 1,237 |   |   | 6,109 |   |   | 1,022 |   |   | 7,131 |   |
| **Total                interest earning assets**                                                                                                                                                  |   |                                                                                                | **4,638** |                                                                                               |   | **(2,708** | **)** |   | **1,930** |   |   | **9,209** |   |   | **2,112** |   |   | **11,321** |   |
|                                                                                                                                                                                              |   |                                                                                                |      |                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **INTEREST                EXPENSE:**                                                                                                                                                              |   |                                                                                                |      |                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing deposits                                                                                                                                                          |   |                                                                                                | 872       |                                                                                               |   | 1,814 |   |   | 2,686 |   |   | 3,144 |   |   | 9,572 |   |   | 12,716 |   |
| Federal                funds purchased, securities sold                under agreements to repurchase and                FHLB advances                                                            |   |                                                                                                | 608       |                                                                                               |   | (425 | ) |   | 183 |   |   | 1,144 |   |   | 53 |   |   | 1,197 |   |
| Subordinated                debt issued in connection with                corporation - obligated mandatory                redeemable capital securities                of subsidiary trusts |   |                                                                                                | (238      | )                                                                                                  |   | (3 | ) |   | (241 | ) |   | (357 | ) |   | 495 |   |   | 138 |   |
| **Total                interest bearing liabilities**                                                                                                                                             |   |                                                                                                | **1,242** |                                                                                               |   | **1,386** |   |   | **2,628** |   |   | **3,931** |   |   | **10,120** |   |   | **14,051** |   |
| **Decrease                in interest differential**                                                                                                                                              |   | **$**                                                                                               | **3,396** |                                                                                               | **$**  | **(4,094** | **)** | **$** | **(698** | **)** | **$** | **5,278** |   | **$** | **(8,008** | **)** | **$** | **(2,730** | **)** |

**Provision      for Credit Losses**

----

**U.S.B.              HOLDING CO., INC.**

| **ITEM                      2.** | **MANAGEMENT’S                        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                        OF                        OPERATIONS** |
|----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Non-Interest      Income**

**Non-Interest      Expenses**

----

**U.S.B.              HOLDING CO., INC.**

| **ITEM                      2.** | **MANAGEMENT’S                        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                        OF                        OPERATIONS** |
|----------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Decrease                    of $4,000 (0.2 percent) and an increase of $208,000 (3.5 percent)                    in                    occupancy and equipment expense. The increase for the nine month                    period                    primarily reflects higher utility cost expense and property taxes                    from the                    opening of branch locations and maintenance contracts on new                    equipment                    purchased. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Decreases                      of $161,000 (24.2 percent) and $195,000 (10.0 percent) in advertising                      and                      business development expense. The decreases primarily reflect                      decreases in                      sponsorship events and lower radio and television advertising                      costs. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Increases                of $12,000 (3.2 percent) and $159,000 (13.8 percent) in professional                fees.                The increases were primarily due to higher legal fees related to                a                previous non-performing real estate construction loan held by the                Bank’s                wholly-owned subsidiary, Dutch Hill Realty Corp., as well as higher                audit                and legal fees for Securities and Exchange Commission                compliance. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Increase                of $2.3 million in acquisition costs for both periods. The increase                was                primarily due to investment banker and legal fees related to the                Company’s                pending merger with KeyCorp. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Decrease                of $50,000 (5.6 percent) and an increase of $109,000 (3.9 percent)                in                other expense. The decrease for the three month period is primarily                due to                reductions in travel and training expense and the charitable contribution                made by the Bank to the U.S.B. Foundation. The increase for the nine                month                period was primarily due to higher credit card related expenses and                outside printing costs and a lower level of deferred expenses related                to                loan originating, partially offset by lower expenses for courier                runs to                Bank locations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**U.S.B.          HOLDING CO., INC.**

| **ITEM                  2.** | **MANAGEMENT’S                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                    OPERATIONS** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|

**Income      Taxes**

----

**U.S.B.            HOLDING CO., INC.**

| **ITEM                    3.** | **QUANTITATIVE                      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|--------------------------------|-------------------------------------------------------------------------------------|

----

**U.S.B.              HOLDING CO., INC.**

| **ITEM                      4.** | **CONTROLS                        AND PROCEDURES** |
|----------------------------------|----------------------------------------------------|

----

**PART      II - OTHER INFORMATION**

**ITEM      1A.**
**RISK      FACTORS**

**ITEM      6.**
**EXHIBITS**

| **Exhibit                No.** |   | **Exhibit**                                                                                                                                                                                                                                                                                                                       |
|--------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (2)                (a)         |   | Amended                and Restated Agreement and Plan of Merger dated as of October 22,                2007                among KeyCorp, KYCA LLC, and U.S.B. Holding, Co., Inc. (incorporated                herein by reference to Exhibit 99.2 to the Registrant’s Form 8-K filed on                October 26, 2007). |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (10)                (w)        |   | Employment                Agreement dated as of July 25, 2007 among the Company, the Bank and                Thomas                E. Hales (incorporated herein by reference to Exhibit 10(w) to the                Registrant’s Form 8-K filed on July 30, 2007).                                                         |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (10)                (x)        |   | Employment                Agreement dated as of July 25, 2007 among the Company, the Bank and                Raymond J. Crotty (incorporated herein by reference to Exhibit 10(x)                to                the Registrant’s Form 8-K filed on July 30, 2007).                                                       |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (10)                (y)        |   | Letter                Agreement dated July 25, 2007 between the Company and Thomas Buonaiuto                (incorporated herein by reference to Exhibit 10(y) to the Registrant’s                Form 8-K filed on July 30, 2007).                                                                                         |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (10)                (z)        |   | U.S.B.                Holding Co., Inc. Amended and Restated Severance Plan (incorporated                herein                by reference to Exhibit 10(z) to the Registrant’s Form 8-K filed on July                30, 2007).                                                                                           |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (31.1)                         |   | Certification                of Chief Executive Officer Pursuant to Exchange Act Rule                13a-14(a).*                                                                                                                                                                                                                  |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (31.2)                         |   | Certification                of Chief Financial Officer Pursuant to Exchange Act Rule                13a-14(a).*                                                                                                                                                                                                                  |
|                           |   |                                                                                                                                                                                                                                                                                                                              |
| (32)                           |   | Certification                of Chief Executive Officer and Chief Financial Officer Pursuant to                18                U.S.C. Section 1350.*                                                                                                                                                                            |

|   | *                Filed Herewith |
|--------|---------------------------------|

----

**SIGNATURES**

**U.S.B.      HOLDING CO., INC.**|                                               |   |   |                                                                                                          |
|----------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------|
|                                               |   |   |                                                                                                          |
| /s/ Thomas E. Hales                                |   |   | /s/ Thomas M. Buonaiuto                                                                                       |
| Thomas              E. Hales                       |   |   | Thomas              M. Buonaiuto                                                                              |
| Chairman of the Board,                        |   |   | Executive Vice President,                                                                                     |
| Chief Executive Officer, and              Director |   |   | Chief                Financial Officer, and                                                                   |
|                                               |   |   | Assistant                Secretary (Principal                Financial and Accounting                Officer) |

----