<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the Quarterly Period Ended: JUNE 30, 1999

                         Commission file number: 1-14933

                             U.S. TRUST CORPORATION
             (Exact name of registrant as specified in its charter)

                    New York                                  13-3818952
        (State or other jurisdiction of                  (I. R. S. Employer
         incorporation or organization)                   Identification No.)

  114 West 47th Street, New York, New York                    10036-1532
  (Address of principal executive offices)                    (Zip Code)

                                 (212) 852-1000
              (Registrant's telephone number, including area code)

                                 Not Applicable
                                 --------------
             (Former name, former address and former fiscal year, if
                           changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

       18,417,753 shares, Common Stock, $1 par value, as of July 31, 1999
<PAGE>   2
                                 FORM 10-Q INDEX


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS
                                                                                 Page
<S>                                                                             <C>
Condensed Consolidated Statement of Income:

   For the Three Months Ended June 30, 1999 and 1998                               3
   For the Six Months Ended June 30, 1999 and 1998                                 4

Condensed Consolidated Statement of Condition as of June 30, 1999
   and December 31, 1998                                                           5

Condensed Consolidated Statement of Changes in Stockholders' Equity
   for the Six Months Ended June 30, 1999 and 1998                                 6

Condensed Consolidated Statement of Cash Flows for the Six Months
   Ended June 30, 1999 and 1998                                                    7

Notes to the Condensed Consolidated Financial Statements                           8

Item 2.  Management's Discussion and Analysis of Financial Condition
   And Results of Operations                                                 12 - 29

Item 3. Quantitative and Qualitative Disclosures About Market Risk           24 - 25


PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders                      30

Item 6.  Exhibits and Reports on Form 8-K                                         31


SIGNATURE                                                                         32
</TABLE>

                                       2
<PAGE>   3
                             U.S. TRUST CORPORATION
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                               FOR THE THREE MONTHS ENDED JUNE 30,
                                        ----------------------------------------------------
                                                                     INCREASE     (DECREASE)
                                                                     -----------------------
                                          1999           1998           $              %
                                          ----           ----           -              -
<S>                                     <C>           <C>           <C>           <C>
Fee Revenue                             $105,095      $ 83,293      $ 21,802          26.2%
Net Interest Revenue (*)                  29,008        24,704         4,304          17.4
                                        --------      --------      --------      --------

TOTAL REVENUE                            134,103       107,997        26,106          24.2
                                        --------      --------      --------      --------

OPERATING EXPENSES
Salaries                                  34,986        29,144         5,842          20.0
Performance Compensation                  14,672        11,465         3,207          28.0
Sales Commissions and Incentives           6,955         4,962         1,993          40.2
Other Employee Benefits                    8,324         7,183         1,141          15.9
                                        --------      --------      --------      --------

Total Salaries, Performance
   Compensation and Other Benefits        64,937        52,754        12,183          23.1
Net Occupancy                              9,560         8,886           674           7.6
Other                                     27,306        21,287         6,019          28.3
                                        --------      --------      --------      --------

TOTAL OPERATING EXPENSES                 101,803        82,927        18,876          22.8
                                        --------      --------      --------      --------

Income Before Income Tax Expense          32,300        25,070         7,230          28.8
Income Tax Expense                        12,759         9,777         2,982          30.5
                                        --------      --------      --------      --------

NET INCOME                              $ 19,541      $ 15,293      $  4,248          27.8%
                                        ========      ========      ========      ========

BASIC EARNINGS PER SHARE                $   1.05      $   0.81      $   0.24          29.6%
                                        ========      ========      ========      ========

DILUTED EARNINGS PER SHARE              $   0.93      $   0.73      $   0.20          27.4%
                                        ========      ========      ========      ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

(*)   Net Interest Revenue consists of interest income, net securities gains
      (losses) less interest expense and the provision for credit losses.

                                       3
<PAGE>   4
                             U.S. TRUST CORPORATION
                   CONDENSED CONSOLIDATED STATEMENT OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 FOR THE SIX MONTHS ENDED JUNE 30,
                                        ----------------------------------------------------
                                                                     INCREASE     (DECREASE)
                                                                     -----------------------
                                          1999          1998            $             %
                                          ----          ----            -             -
<S>                                     <C>           <C>           <C>           <C>
Fee Revenue                             $205,065      $161,913      $ 43,152          26.7%
Net Interest Revenue (*)                  57,929        50,058         7,871          15.7
                                        --------      --------      --------      --------

TOTAL REVENUE                            262,994       211,971        51,023          24.1
                                        --------      --------      --------      --------

OPERATING EXPENSES
Salaries                                  67,354        55,782        11,572          20.7
Performance Compensation                  31,180        22,087         9,093          41.2
Sales Commissions and Incentives          13,383         9,016         4,367          48.4
Other Employee Benefits                   16,597        14,769         1,828          12.4
                                        --------      --------      --------      --------

Total Salaries, Performance
   Compensation and Other Benefits       128,514       101,654        26,860          26.4
Net Occupancy                             19,139        17,889         1,250           7.0
Other                                     52,717        43,268         9,449          21.8
                                        --------      --------      --------      --------

TOTAL OPERATING EXPENSES                 200,370       162,811        37,559          23.1
                                        --------      --------      --------      --------

Income Before Income Tax Expense          62,624        49,160        13,464          27.4
Income Tax Expense                        24,736        19,172         5,564          29.0
                                        --------      --------      --------      --------

NET INCOME                              $ 37,888      $ 29,988      $  7,900          26.3%
                                        ========      ========      ========      ========

BASIC EARNINGS PER SHARE                $   2.04      $   1.59      $   0.45          28.3%
                                        ========      ========      ========      ========

DILUTED EARNINGS PER SHARE              $   1.81      $   1.43      $   0.38          26.6%
                                        ========      ========      ========      ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

(*)  Net Interest Revenue consists of interest income, net securities gains
     (losses) less interest expense and the provision for credit losses.

                                       4
<PAGE>   5
                             U.S. TRUST CORPORATION
                  CONDENSED CONSOLIDATED STATEMENT OF CONDITION
                             (Dollars In Thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                  JUNE 30,      DECEMBER 31,
ASSETS                                              1999            1998
                                                    ----            ----
<S>                                              <C>            <C>
Cash and Due from Banks                          $  248,430      $  108,346
Interest Earning Securities                       1,173,271       1,517,351
Loans, Net of Allowance for Credit Losses
      ($19,711 in 1999 and $19,414 in 1998)       2,457,266       2,171,393
Other Assets                                        370,170         345,772
                                                 ----------      ----------

Total Assets                                     $4,249,137      $4,142,862
                                                 ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Total Deposits                                   $3,512,026      $3,414,791
Short and Long-Term Credit Facilities               215,369         208,698
Other Liabilities                                   265,430         274,738
                                                 ----------      ----------

Total Liabilities                                 3,992,825       3,898,227
                                                 ----------      ----------

Stockholders' Equity                                256,312         244,635
                                                 ----------      ----------

Total Liabilities and Stockholders' Equity       $4,249,137      $4,142,862
                                                 ==========      ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>   6
                             U.S. TRUST CORPORATION
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                         Other            Total
                                          Common     Capital    Retained    Treasury       Loan to    Comprehensive   Stockholders'
                                          Stock      Surplus    Earnings      Stock         ESOP         Income           Equity
                                          -----      -------    --------      -----         ----         ------           ------
<S>                                     <C>         <C>         <C>         <C>           <C>         <C>             <C>
BALANCE, JANUARY 1, 1999                $ 19,971    $ 18,902    $293,289    $ (87,768)    $ (3,773)     $  4,014        $ 244,635

Net Income                                                        37,888                                                   37,888
Change in Net Unrealized (Loss) on
   Securities Available for Sale                                                                         (10,350)         (10,350)
                                                                --------                                --------        ---------

Total Comprehensive Income                                        37,888                                 (10,350)          27,538

Purchases of Treasury Stock                                                   (27,331)                                    (27,331)
Principal Payment by ESOP                                                                    3,773                          3,773
Cash Dividends Declared ($0.44 Per
  Share)                                                          (8,159)                                                  (8,159)
Issuance of Shares for Acquisition                     1,757                    5,801                                       7,558
Capital Effect of Employee Benefit
  Plans                                       76       1,738          18        6,466                                       8,298
                                        --------    ---------   --------    ---------     --------      --------        ---------

BALANCE, JUNE 30, 1999                  $ 20,047    $ 22,397    $323,036    $(102,832)    $      -      $ (6,336)       $ 256,312
                                        ========    =========   ========    =========     ========      ========        =========
</TABLE>



<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                         Other            Total
                                          Common     Capital    Retained    Treasury       Loan to    Comprehensive   Stockholders'
                                          Stock      Surplus    Earnings      Stock         ESOP         Income           Equity
                                          -----      -------    --------      -----         ----         ------           ------
<S>                                     <C>         <C>         <C>         <C>           <C>         <C>             <C>
BALANCE, JANUARY 1, 1998                $ 19,895    $ 12,325    $244,980    $ (42,627)    $ (7,254)     $  3,827        $ 231,146

Net Income                                                        29,988                                                   29,988
Change in Net Unrealized (Loss) on
  Securities Available for Sale                                                                              (70)             (70)
                                                                --------                                --------        ---------

Total Comprehensive Income                                        29,988                                     (70)          29,918

Purchases of Treasury Stock                                                   (28,210)                                    (28,210)
Principal Payment by ESOP                                                                    3,481                          3,481
Cash Dividends Declared ($0.36 Per
  Share)                                                          (6,772)                                                  (6,772)
Issuance of Shares for Acquisition                                                                                              -
Capital Effect of Employee Benefit
  Plans                                       37       1,230          55        3,644                                       4,966
                                        --------    --------    --------    ---------     --------      --------        ---------

BALANCE, JUNE 30, 1998                  $ 19,932    $ 13,555    $268,251    $ (67,193)    $ (3,773)     $  3,757        $ 234,529
                                        ========    ========    ========    =========     ========      ========        =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>   7
                             U.S. TRUST CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      FOR THE SIX MONTHS
                                                                         ENDED JUNE 30,
                                                                 -----------------------------
                                                                    1999                1998
                                                                    ----                ----
<S>                                                              <C>                 <C>
Net Cash Provided by Operating Activities                        $  38,713           $  48,349
                                                                 ---------           ---------

Cash Flows From Investing Activities:
Interest Earning Securities:
      Purchases                                                   (286,698)           (169,534)
      Sales                                                         10,019               1,315
      Maturities, Calls and Mandatory Redemptions                  600,602             437,814
Net Change in Loans                                               (286,224)            (93,832)
Other, Net                                                          (7,538)            (10,985)
                                                                 ---------           ---------

Net Cash Provided by (Used in) Investing Activities                 30,161             164,778
                                                                 ---------           ---------

Cash Flows From Financing Activities:
Net Change in Non-Interest Bearing Deposits                         44,234             (45,610)
Net Change in Interest Bearing Deposits                             53,001             (85,257)
Net Change in Short-Term Credit Facilities                          11,444             (16,787)
Repayments of Long-Term Debt                                        (4,773)             (4,481)
Purchases of Treasury Stock                                        (27,331)            (28,210)
Other, Net                                                          (5,365)             (5,303)
                                                                 ---------           ---------

Net Cash Provided by (Used in) Financing Activities                 71,210            (185,648)
                                                                 ---------           ---------

Net Change in Cash and Cash Equivalents                            140,084              27,479
Cash and Cash Equivalents at January 1                             108,346              74,887
                                                                 ---------           ---------

Cash and Cash Equivalents at June 30                             $ 248,430           $ 102,366
                                                                 =========           =========

Income Taxes Paid                                                $  22,095           $  21,144
Interest Expense Paid                                               60,625              59,713

Noncash Item:

Issuance of stock for employee benefit plans                     $   8,763           $   4,733
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       7
<PAGE>   8
                             U. S. TRUST CORPORATION
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

         The condensed consolidated financial statements include the accounts of
U.S. Trust Corporation (individually, the "Parent") and its wholly owned
subsidiaries (collectively, with the Parent, the "Corporation"). All material
intercompany accounts and transactions have been eliminated in consolidation.

         The accounting and reporting policies of the Corporation conform with
generally accepted accounting principles and general practice within the
investment management and banking industries. The preparation of financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities (including, but not limited to the allowance for credit losses,
retirement and postretirement benefits and deferred income taxes) as of the
financial statement dates and the reported amounts of revenues and expenses
during the reporting periods. Since management's judgment involves making
estimates concerning the likelihood of future events, the actual results could
differ from those estimates which will have a positive or negative effect on
future period results.

         In the opinion of management, all adjustments necessary for a fair
presentation of the consolidated financial position and results of operations
for the interim periods have been made. Such adjustments, unless otherwise noted
in these Notes to the Condensed Consolidated Financial Statements and/or
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Part I - Item 2 of this report), are of a normal recurring nature.
These financial statements should be read in conjunction with the audited
financial statements included in the Corporation's annual report on Form 10-K
for the year ended December 31, 1998 as well as the Form 10-Q for the first
quarter of 1999.

2.       ACCOUNTING CHANGES AND DEVELOPMENTS

         Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("FAS 131") was issued in
June 1997, effective for interim and annual periods beginning with consolidated
financial statements for December 31, 1998. Comparative prior period information
is required. FAS 131 requires disclosure of financial and descriptive
information about the Corporation's reportable operating segments. The
Corporation has presented the financial disclosures and commentary prescribed by
FAS 131 in the "Businesses of U.S Trust" section of Management's Discussion and
Analysis of Financial Condition and Results of Operations (Part I - Item 2 of
this report).

         In March 1998, Statement of Position No. 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use," ("SOP 98-1")
was issued effective for financial statements issued in 1999. SOP 98-1 requires
the capitalization of eligible costs of specified activities related to computer
software developed or obtained for internal use. SOP 98-1 was adopted by the
Company on January 1, 1999. The adoption of SOP 98-1 has not had a material
effect on the Corporation's financial condition or results of operations.

                                       8
<PAGE>   9
                             U.S. TRUST CORPORATION
      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.       ACCOUNTING CHANGES AND DEVELOPMENTS (CONTINUED)

         In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," ("FAS 133") was
issued. FAS 133 establishes accounting and reporting standards for derivatives.
FAS 133 requires recognition of all derivatives as either assets or liabilities
in the statement of financial condition and measurement of those instruments at
fair value. Fair market valuation adjustments for derivatives meeting hedge
criteria will be recorded in either comprehensive income or earnings depending
on their classification. The Corporation's use of derivatives to date has been
limited to utilizing interest rate swaps as hedges to mitigate interest rate
exposure associated with short-term floating interest-rate deposits. As such
this use of interest rate swaps would be categorized as a cash flow hedge (as
defined by FAS 133) and the effective portion of the gain or loss on the
interest rate swaps would be recorded in comprehensive income. In June 1999,
Statement of Financial Accounting Standards No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No 133" ("FAS 137") was issued. FAS 137 delayed the effective date of
FAS 133 one year to fiscal years beginning after June 15, 2000. Management is
evaluating the impact of adopting FAS 133 and does not believe that it will have
a material impact on its financial condition or its results from operations.

3.       ACQUISITIONS

         On January 29, 1999, the Corporation acquired Radnor Capital
Management, Inc., an investment management company located in Wayne,
Pennsylvania with approximately $727 million in assets under management. Under
the terms of the acquisition, the Corporation made a $7.8 million initial
payment in the form of the Corporation's common shares (101,604 shares) and may
make additional payments in its own common shares based upon business retention
and other conditions. The acquisition was accounted for as a purchase and did
not have a material effect on the Corporation's financial statements.

         On May 17, 1999, the Corporation announced that it had signed a
definitive agreement to acquire NCT Holdings, Inc. the parent of North Carolina
Trust Company, a non-deposit banking corporation headquartered in Greensboro,
North Carolina. North Carolina Trust Company primarily engages in the business
of investment management and fiduciary services and currently has approximately
$2.5 billion in assets under management. The acquisition, which is subject to
regulatory approval, is expected to close during the third quarter of 1999.

                                       9
<PAGE>   10
                             U.S. TRUST CORPORATION
      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         4. EARNINGS PER SHARE

         The calculations of Basic Earnings per Share and Diluted Earnings per
Share for the three-month and six-month periods ended June 30, 1999 and June 30,
1998 are reflected in the following table.

<TABLE>
<CAPTION>
                                                                           Three Month Periods       Six Month Periods
                                                                             Ended June 30,            Ended June 30,
------------------------------------------------------------------------------------------------------------------------
(In Thousands)                                                             1999         1998         1999         1998
------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>          <C>          <C>          <C>
Net income for basic earnings per share                                   $19,541      $15,293      $37,888      $29,988
Dividend equivalents on stock based benefit plans (after-tax)                 218          177          394          322
                                                                          -------      -------      -------      -------
Net income for diluted earnings per share                                 $19,759      $15,470      $38,282      $30,310

Weighted average shares outstanding for basic earnings per share           18,528       18,806       18,546       18,882
Dilutive effect of stock based benefit plans                                2,656        2,369        2,551        2,269
                                                                          -------      -------      -------      -------
Total dilutive shares outstanding                                          21,184       21,175       21,097       21,151
                                                                          =======      =======      =======      =======

Basic earnings per share                                                  $  1.05      $  0.81      $  2.04      $  1.59
                                                                          =======      =======      =======      =======

Diluted earnings per share                                                $  0.93      $  0.73      $  1.81      $  1.43
                                                                          =======      =======      =======      =======
</TABLE>

5.       NET INTEREST REVENUE
         The following is an analysis of the composition of net interest
revenue:

<TABLE>
<CAPTION>
                                                         Three Month Periods                        Six Month Periods
                                                            Ended June 30,                            Ended June 30,
                                              --------------------------------------    -----------------------------------------
                                                                            Increase                                     Increase
                                                                            --------                                     --------
(In Thousands)                                   1999           1998       (Decrease)        1999           1998        (Decrease)
--------------------------------------        ---------      ---------     ----------    ---------      ---------      -----------
<S>                                           <C>            <C>           <C>           <C>            <C>            <C>
Interest revenue:
   Loans                                      $  41,324      $  36,651          12.7%       80,875         72,037           12.3%
   Securities:
     Taxable                                     14,120         14,904          (5.3)       28,203         30,809           (8.5)
     Tax-exempt                                   1,146            937          22.3         2,243          1,814           23.6
   Short-term investments and deposits
       with banks                                 2,536          2,534           0.1         6,298          6,151            2.4
                                              ---------      ---------     ---------     ---------      ---------      ---------
Total interest revenue                           59,126         55,026           7.5       117,619        110,811            6.1
                                              ---------      ---------     ---------     ---------      ---------      ---------
Interest expense:
   Deposits                                      26,972         26,146           3.2        53,731         52,864            1.6
   Short and long-term credit facilities          3,162          4,029         (21.5)        5,976          7,592          (21.3)
                                              ---------      ---------     ---------     ---------      ---------      ---------
Total interest expense                           30,134         30,175          (0.1)       59,707         60,456           (1.2)
                                              ---------      ---------     ---------     ---------      ---------      ---------
Net interest income                              28,992         24,851          16.7        57,912         50,355           15.0
   Provision for credit losses                       --           (150)          N/M            --           (300)           N/M
   Securities gains, net                             16              3           N/M            17              3            N/M
                                              ---------      ---------     ---------     ---------      ---------      ---------
Net interest revenue                          $  29,008      $  24,704          17.4%    $  57,929      $  50,058           15.7%
                                              =========      =========     =========     =========      =========      =========
</TABLE>

                                       10
<PAGE>   11
                             U.S. TRUST CORPORATION
      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.       PLEDGED ASSETS

         Financial instruments carried at $228.5 million on June 30, 1999 and
$230.3 million on December 31, 1998 were pledged to secure public deposits as
collateral for borrowings, to qualify for fiduciary powers and for other
permitted purposes.

7.       CONTINGENCIES

         There are various pending and threatened actions and claims against the
Corporation in which the Corporation has denied liability and which it will
vigorously contest. Although there can be no assurance as to the ultimate
outcome, management, after consultation with counsel and based on current
available information, is of the opinion that the ultimate resolution of such
matters, taken in the aggregate, is unlikely to have a material adverse effect
on the Corporation's financial position, results of operations or cash flows.

8.       RECLASSIFICATIONS

         Certain amounts presented in the prior period have been reclassified to
conform with the current year's presentation.

9.       OPERATING SEGMENTS

         The Corporation has presented the financial disclosures on its
operating segments in the "Businesses of U.S. Trust" section of Management's
Discussion and Analysis of Financial Condition and Results of Operations (Part I
- Item 2 of this report).

                                       11
<PAGE>   12
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

FINANCIAL REPORTING MATTERS

         In this Form 10-Q we make certain forward-looking statements with
respect to the financial condition, results of operations and business of the
Corporation. These forward-looking statements may contain words such as
"believes," "expects," "anticipates," "estimates" or similar expressions.
         We caution that these statements are not guarantees of future
performance. They involve a number of risks and uncertainties that are difficult
to predict. Factors that may cause actual results to differ materially from
those expressed or implied in the forward-looking statements, include but are
not limited to the following:

-        Competitive pressures in the investment or asset management, corporate
         fiduciary or private banking industries may increase significantly.

-        General economic or business conditions, or volatility in the equity,
         fixed income and real estate markets, may be unfavorable. Such economic
         environments could result in, among other things, a reduced demand for
         asset management or other financial services, or a decline in assets
         under management over a short or an extended time period. Fee revenues
         and net interest revenue could be negatively impacted by such events.

-        Legislative changes, including but not limited to legislation related
         to income and estate tax matters, and regulatory changes in banking or
         other businesses that the Corporation engages in, may adversely affect
         its financial condition.

-        Technological changes, including changes required to address "Year
         2000" data systems issues, may be more difficult or expensive to
         implement than anticipated or year 2000 issues at other companies may
         adversely affect operations.

You should not place undue reliance on these foward-looking statements, which
speak only as of the date of this document or the date of any document
incorporated by reference.

CONSOLIDATED RESULTS OF OPERATIONS

         Net income for the second quarter of 1999 was $19.5 million, compared
to $15.3 million earned in the second quarter of 1998. On a diluted basis,
income per share was $0.93 in the second quarter of 1999, versus $0.73 in the
second quarter of 1998. The Corporation's annualized return on average
stockholders' equity was 30.5% for the second quarter of 1999, compared to 26.4%
for the second quarter of 1998. For the six month period, the Corporation's
annualized return on average stockholders' equity was 30.1% compared to 26.0%
for the 1998 period.

                                       12
<PAGE>   13
FEE REVENUE

<TABLE>
<CAPTION>
                                         Three Month Periods Ended                Six Month Periods Ended
                                   -------------------------------------    -------------------------------------
                                    June 30,      June 30,     Increase     June 30,      June 30,      Increase
(In Thousands)                       1999          1998       (Decrease)      1999          1998       (Decrease)
--------------------------           ----          ----       ----------      ----          ----       ----------
<S>                                <C>           <C>          <C>           <C>           <C>          <C>
Personal wealth management         $ 81,512      $ 62,483        30.5 %     $160,229      $120,851        32.6 %
Institutional services               23,583        20,810          13.3       44,836        41,062           9.2
                                   --------      --------      --------     --------      --------      --------
               Fee revenue         $105,095      $ 83,293          26.2     $205,065      $161,913          26.7
                                   ========      ========      ========     ========      ========      ========

Market related fees                $ 86,998      $ 67,849        28.2 %      168,532       131,353        28.3 %
Transaction related fees             18,097        15,444          17.2       36,533        30,560          19.5
                                   --------      --------      --------     --------      --------      --------
               Fee revenue         $105,095      $ 83,293          26.2     $205,065      $161,913          26.7
                                   ========      ========      ========     ========      ========      ========
</TABLE>

         Fee revenue for the second quarter of 1999 increased approximately
$21.8 million to $105.1 million from $83.3 million in the second quarter of
1998. Market related fee revenue increased by $19.1 million to $87.0 million
from $67.8 million in the second quarter of 1998. The increase in fee revenue
during this period was attributable to strong new business, acquisitions and
appreciation in the equity markets.

         Market related fee revenue is based primarily on the market value of
the assets in clients' investment management accounts. In general, fee revenue
is influenced by a variety of factors, including growth or decline of stock,
bond and real estate market levels, new business, acquisitions, changes in fee
rate schedules and added services. Fee revenue is negatively impacted by the
outflow of investment management assets due to terminating trusts, client
withdrawals, income and estate taxes and lost business. Fee revenue related to
market conditions is determined on a sliding scale so that as the value of a
client's portfolio grows in size, the Corporation earns a smaller percentage on
the increasing account value. Therefore, market value or other incremental
changes in a portfolio's size may not typically have a proportionate impact on
the level of fee revenue. In general, fee revenue is calculated quarterly based
upon the value of the prior quarters' assets under management. Another important
factor in the determination of fee revenues is the type of assets under
management. Depending on how assets under management are invested, fluctuations
in any one market will not necessarily have a proportionate impact on the
overall level of fee revenue. The following is a comparative analysis of the
composition of assets under management.

                                       13
<PAGE>   14
<TABLE>
<CAPTION>
                                                                   June 30,          March 31,          June 30,
                                                                     1999              1999               1998
                                                                     ==========================================
<S>                                                                <C>               <C>                <C>
Equity securities                                                     57 %              57 %               56 %
Fixed income securities                                               28                27                 30
Short-term money management, real estate and other                    15                16                 14
                                                                    -------------------------------------------
                                                                     100 %             100 %              100 %
                                                                    ===========================================
</TABLE>

 The following table delineates assets under management and administration as of
June 30, 1999, December 31, 1998 and June 30, 1998. This analysis is presented
on a consolidated and segment basis. Unless otherwise noted, asset values are
measured at their estimated fair value.

<TABLE>
<CAPTION>
                                                                                          June vs.      June vs.
                                                                                           March         June
                                               June 30,      March 31,      June 30,     Increase      Increase
(In Billions)                                    1999          1999          1998       (Decrease)    (Decrease)
------------------------------------             ----          ----          ----       ----------    ----------
<S>                                            <C>           <C>           <C>          <C>           <C>
CONSOLIDATED ASSETS UNDER MANAGEMENT:
   Investment management                       $   65.1      $   66.1      $   54.2        (1.5)%        20.1%
   Special fiduciary                               13.0          13.4          14.0        (2.9)         (7.0)
                                               --------      --------      --------       -------       ------
Total assets under management                      78.1          79.5          68.2        (1.7)         14.6
                                               --------      --------      --------       -------       ------
Assets under administration:
   Personal custody and other                      22.4          20.3          22.4        10.4           0.1
   Corporate and municipal trusteeships
     and agency relationships, at par             315.5         310.6         279.7         1.6          12.8
                                               --------      --------      --------       -------       ------

Total assets under administration                 337.9         330.9         302.1         2.1          11.8
                                               --------      --------      --------       -------       ------
Total assets under management and
   administration                              $  416.0      $  410.4      $  370.3         1.4%         12.3%
                                               ========      ========      ========       =======       ======

SEGMENT ASSETS UNDER MANAGEMENT AND
  ADMINISTRATION:
Personal wealth management
     Assets under management                   $   53.1      $   54.0      $   42.4        (1.7)%        25.1%
     Assets under administration                   19.6          15.5          16.2        26.5          21.0
                                               --------      --------      --------       -------       ------
       Total                                       72.7          69.5          58.7         4.6          24.0
                                               --------      --------      --------       -------       ------
Institutional
     Assets under management                       25.0          25.5          25.7        (1.9)         (2.8)
     Assets under administration                  318.3         315.4         285.9         0.9          11.3
                                               --------      --------      --------       -------       ------
        Total                                     343.3         340.9         311.7         0.7          10.1
                                               --------      --------      --------       -------       ------
Total assets under management and
   administration                              $  416.0      $  410.4      $  370.3         1.4%         12.3%
                                               ========      ========      ========       =======       ======
</TABLE>

                                       14
<PAGE>   15
         Investment management assets at June 30, 1999 were $65.1 billion
compared to $61.3 billion at December 31, 1998, and $54.2 billion at June 30,
1998. On January 29, 1999, the Corporation acquired Radnor Capital Management,
Inc., which managed approximately $727 million in assets (see Note 3 to Notes to
the Condensed Consolidated Financial Statements in Part I - Item 1 of this
report).

         As of June 30, 1999, U.S. Trust's Campbell, Cowperthwait Division had
$3.1 billion of assets under management, compared with $2.9 billion as of June
30, 1998. As of March 31, 1999, the division had $5.9 billion of assets under
management. Management believes that the reduction in assets under management
was due to significant employee turnover in the division during the first
quarter of 1999, which has now ended. The estimated annualized fee revenue
related to assets withdrawn from U.S. Trust's Campbell, Cowperthwait Division
is approximately three percent of the corporation's estimated 1999 total fee
revenue.

         Approximately $8.2 billion of assets under management were invested in
the Corporation's Excelsior Funds at June 30, 1999. At December 31, 1998 and
June 30, 1998, total assets under management invested in the Excelsior Funds
were $7.5 billion and $6.9 billion, respectively.

NET INTEREST REVENUE

         Net interest revenue is affected by changes in the absolute levels of
interest rates and shifts in the term structure of interest rates, funding
strategies, and the impact of changes in the credit quality of the loan
portfolio. The net yield on interest earning assets for the quarter ended June
30, 1999 has increased moderately to 3.31% from 3.22% for the quarter ended June
30, 1998. Taxable equivalent net interest revenue for the second quarter of 1999
was $29.9 million an increase of $4.3 million from the comparable 1998 period.
Average interest earning assets increased by 13.4% to approximately $3.6 billion
as of June 30, 1999 compared to approximately $3.2 billion at June 30, 1998.

         The loan portfolio is the largest component of average total assets.
Average loans for the second quarter of 1999 were $2.3 billion, a $401.8 million
or 20.9% increase over average loans for the second quarter of 1998. The
Corporation's loan portfolio is predominantly comprised of loans to private
banking customers. Approximately 73.7% and 72.1% of total loans are
collateralized by residential real estate mortgages at June 30, 1999 and June
30, 1998, respectively.

                                       15
<PAGE>   16
<TABLE>
<CAPTION>
                                                      Three Month Periods                          Six Month Periods
                                                         Ended June 30,                              Ended June 30,
                                      ---------------------------------------------     ------------------------------------------
(In Thousands)                            1999        Rate        1998        Rate        1999         Rate      1998        Rate
-----------------------------------       ----        ----        ----        ----        ----         ----      ----        ----
<S>                                   <C>             <C>      <C>            <C>       <C>            <C>     <C>           <C>
Interest Earning Securities           $ 1,281,922     5.84%    $1,259,040     6.07%     $1,333,865     5.79%   $1,309,429    6.14%
Loans                                   2,323,151     7.13%     1,925,155     7.64%      2,251,599     7.24%    1,887,432    7.70%
                                      -----------     -----    ----------     -----     ----------     -----   ----------    -----
     Total Interest Earning Assets    $ 3,605,073     6.67%    $3,184,195     7.02%     $3,585,464     6.70%   $3,196,861    7.06%
                                      ===========     =====    ==========     =====     ==========     =====   ==========    =====

Interest Bearing Deposits               2,668,442     4.05%     2,234,269     4.69%      2,661,348     4.07%    2,261,871    4.71%
Short-Term Credit Facilities              162,426     4.65%       200,568     5.30%        148,095     4.59%      182,916    5.27%
Long-Term Credit Facilities                63,000     8.09%        68,058     8.06%         63,867     8.07%       69,029    8.04%
                                      -----------     -----    ----------     -----     ----------     -----   ----------    -----
Total Interest Bearing Liabilities    $ 2,893,868     4.18%    $2,502,895     4.84%     $2,873,310     4.19%   $2,513,816    4.85%
                                      ===========     =====    ==========     =====     ==========     =====   ==========    =====
Net Free Funds*                           711,205                 681,300                  712,154                683,045
                                      -----------              ----------               ----------             ----------
Total Interest Bearing Liabilities
   And Net Free Funds                 $ 3,605,073              $3,184,195               $3,585,464             $3,196,861
                                      ===========              ==========               ==========             ==========
Net Yield                                             3.31                    3.22                     3.34                  3.25
                                                      =====                   =====                    =====                 =====
Interest Spread                                       2.49                    2.18                     2.51                  2.21
                                                      =====                   =====                    =====                 =====
</TABLE>

* Net free funds in the table above includes average stockholders' equity of
  $256,930 and $232,392 at June 30, 1999 and June 30, 1998, respectively for the
  quarters then ended and $254,158 and $232,602, respectively for the six month
  periods then ended. Loans and Stockholders' Equity (included in Net Free Funds
  above) includes the Loan to ESOP which had an average balance of $3.8 million
  and $4.3 million for the quarter and six months ended June 30, 1998
  respectively.

                                       16
<PAGE>   17
OPERATING EXPENSES
The following table provides details of operating expenses for the second
quarters of 1999 and 1998.

<TABLE>
<CAPTION>
                                                Three Month Periods Ended              Six Month Periods Ended
                                            -----------------------------------    -----------------------------------
                                             June 30,      June 30,   Increase     June 30,      June 30,    Increase
(In Thousands)                                 1999          1998    (Decrease)      1999          1998     (Decrease)
------------------------------------           ----          ----    ----------      ----          ----     ----------
<S>                                         <C>           <C>        <C>           <C>           <C>        <C>
Salaries and other employee benefits        $ 43,310      $ 36,327      19.2%      $ 83,951      $ 70,551      19.0%
Performance compensation                      14,672        11,465      28.0         31,180        22,087      41.2
Sales commissions and incentives               6,955         4,962      40.2         13,383         9,016      48.4
Occupancy                                      9,560         8,886       7.6         19,139        17,889       7.0
Other                                         27,306        21,287      28.3         52,717        43,268      21.8
                                            --------      --------      -----      --------      --------      -----
Total operating expenses                    $101,803      $ 82,927      22.8%      $200,370      $162,811      23.1%
                                            ========      ========      =====      ========      ========      =====
</TABLE>

         Operating expenses increased by $18.9 million in the second quarter of
1999, compared to the second quarter of 1998. The Corporation's pre-tax margin
was 24.1% for the second quarter of 1999 and 23.2% for the second quarter of
1998.

         Salaries and other employee benefits increased $7.0 million from the
second quarter of 1998. The number of full-time equivalent employees increased
10.7% to 1,834 at June 30, 1999, compared to 1,656 at June 30, 1998. The
increase in employees is attributable to acquisitions and internal growth
required to meet an expanding customer base.

         Performance compensation is determined based upon the Corporation's
financial performance as measured by the Corporation's diluted earnings per
share, adjusted to offset the impact of extraordinary or nonrecurring events, or
other conditions or circumstances that warrant consideration. Performance
compensation increased $3.2 million in the second quarter of 1999 reflecting the
Corporation's strong financial performance and the increase in staffing levels.

         Sales commissions and incentives increased $2.0 million in the second
quarter of 1999 compared to the second quarter of 1998. This increase reflects
the Corporation's strong emphasis on sales. The Corporation makes a substantial
commitment to sales, marketing and advertising. As of June 30, 1999,
approximately 147 employees were devoted to these functions compared to 129 as
of June 30, 1998. Direct expenses associated with these functions, including
salary and employee benefits, performance compensation and sales commissions and
incentives were $13.5 million for the second quarter of 1999, an increase of
34.2% from the $10.0 million incurred during the corresponding 1998 period. In
addition to the aforementioned expenses, occupancy expense directly allocable to
these functions amounted to approximately $649,000 for the second quarter of
1999 and $577,000 for the second quarter of 1998.

         Other operating expenses increased $6.0 million in the second quarter
of 1999 as compared to the second quarter of 1998. This increase reflects the
impact

                                      17
<PAGE>   18
of the Corporation's national expansion strategy as well as normal growth and
also includes an expense of $2.4.million reflecting a change in the
useful life of personal computers from four to three years.

         Other operating expenses includes an outsourcing agreement with The
Chase Manhattan Bank ("Chase"). Pursuant to this agreement, Chase furnishes
necessary securities processing, custodial, data processing and other operations
support services to the Corporation. The initial term of this agreement expires
on August 31, 2000. The Corporation has notified Chase that it is exercising its
option to extend the term of the agreement for two additional years beyond
August 31, 2000. During the initial five-year term of the agreement, the
Corporation pays Chase an annual base fee of $10 million plus additional volume
charges. The base fee for the two additional option years will increase by 10%
of total charges (excluding certain items) incurred in the final year of the
initial term of the agreement.

         Management is considering various possible alternatives for obtaining
the services currently provided under the agreement after its expiration on
August 31, 2002. These alternatives include seeking a further extension of the
Chase agreement, obtaining the services from other third-party providers or
providing all or a portion of such services itself. Although the costs of
obtaining or providing such services are expected to increase from the current
level, Management believes, at this time, that such an increase will not have a
material adverse effect on the Corporation's results of operations.

         Other operating expenses also includes amortization of intangibles
resulting from acquisitions. Amortization of intangibles was $1.5 million in the
second quarter of 1999 and $0.9 million in the second quarter of 1998. For the
six month period ended June 30, 1999, amortization of intangibles was $2.7
million versus $1.8 million for the comparable 1998 period. Amortization of
intangibles does not require the use of cash and therefore, Management believes
it may be distinguished from other operating expenses. The impact on net income
after consideration of applicable income tax benefits of these non-cash charges
was approximately $1.1 million in the second quarter of 1999 and $818,000 in
the second quarter of 1998. Excluding the after-tax impact of amortization of
intangible assets, diluted earnings per share would have been $0.98 and $0.77
for the three-month periods ended June 30, 1999 and 1998, respectively and
$1.91 and $1.50 for the six month periods ended June 30, 1999 and 1998,
respectively.

THE BUSINESSES OF U.S. TRUST - SEGMENT INFORMATION
The Corporation has two principal businesses: Personal Wealth Management
Services and Institutional Services. Personal Wealth Management Services is
further delineated into two components - New York Wealth Management Services
("New York") and National Wealth Management Services ("National").

PERSONAL WEALTH MANAGEMENT SERVICES
The Corporation provides a complete array of financial services for affluent
individuals and families. These services, defined as Personal Wealth Management
Services, include investment management (domestic and international equity,
fixed income and alternative investments, such as venture capital and real
estate),

                                       18
<PAGE>   19
investment consulting, trust, financial and estate planning and private banking.
Personal Wealth Management Services are provided through New York and National.
The Corporation has been well established in the New York Wealth Management
business for many years. More recently, the Corporation has expanded its
presence beyond New York through national expansion resulting in the
establishment of its National Wealth Management business. The Corporation
anticipates that its national expansion will continue over the next several
years.

          The cornerstone of the Corporation's services to the personal market
in both its New York and National businesses is investment management. At June
30, 1999, personal assets under management were approximately $53.1 billion. A
major strategy for the growth of the Corporation's Personal Wealth Management
business has been national expansion. Personal Wealth Management clients usually
prefer services to be delivered locally. The Corporation has established
affiliates throughout the United States: California, Connecticut, Florida, New
Jersey, Oregon, Pennsylvania, Texas and Washington D.C.

INSTITUTIONAL SERVICES
Institutional Services includes investment management, corporate trust,
brokerage and special fiduciary services for corporations, endowments,
foundations, pension plans and other institutional clients.

         The Corporation's institutional investment management business provides
a wide range of investment options for its clients, including balanced and
specialized domestic and international equity investment styles, structured
investments, alternative investments, fixed-income vehicles and short-term cash
management. At June 30, 1999, the Corporation managed approximately $25.0
billion for its institutional clients.

SEGMENT FINANCIAL RESULTS
The following analysis presents the Corporation's financial results for the
three month and six month periods ended June 30, 1999 and 1998, on a segment
basis. The Corporation's internal accounting policies credit or charge each
segment with revenues and expenses as incurred and on a consistent basis.
Presentation of financial information on a quarterly basis may and most likely
will result in non-recurring transactions (either revenue or expense) being
allocated to a segment which may result in short-term swings in a segment's
profit contribution. Accordingly, while informative, quarterly segment
disclosures may not be indicative of long-term performance and should not
necessarily be used as long-term forecasting benchmarks.

                                       19
<PAGE>   20
                FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                    Personal Wealth Management
      (Dollars In Thousands)              -----------------------------------------                            Total
                                          New York          National          Total       Institutional     Corporation
                                          --------          --------          -----       -------------     -----------
<S>                                       <C>              <C>              <C>           <C>               <C>
      THREE MONTHS ENDED
      ------------------
      June 30, 1999
      Fee revenue                         $ 54,761         $ 26,751         $ 81,512         $ 23,583         $105,095
      Allocated net interest
         Revenue                            20,343            6,106           26,449            2,559           29,008
                                          --------         --------         --------         --------         --------

      Total revenue                         75,104           32,857          107,961           26,142          134,103
      Operating expense                     53,926           29,631           83,557           18,246          101,803
                                          --------         --------         --------         --------         --------

      Income before taxes                 $ 21,178         $  3,226         $ 24,404         $  7,896         $ 32,300
                                          ========         ========         ========         ========         ========

      Profit margin                           28.2%             9.8%            22.6%            30.2%            24.1%

      Percentage of income
      before taxes                            65.6%            10.0%            75.6%            24.4%

      Assets Managed (1)                  $ 36,029         $ 17,065         $ 53,094         $ 25,018         $ 78,112

      Assets Administered (1)             $ 16,495         $  3,118         $ 19,613         $318,253         $337,866

      THREE MONTHS ENDED
      ------------------
      June 30, 1998
      Fee revenue                         $ 46,060         $ 16,423         $ 62,483         $ 20,810         $ 83,293
      Allocated net interest
         Revenue                            16,946            5,273           22,219            2,485           24,704
                                          --------         --------         --------         --------         --------

      Total revenue                         63,006           21,696           84,702           23,295          107,997
      Operating expense                     45,200           19,694           64,894           18,033           82,927
                                          --------         --------         --------         --------         --------

      Income before taxes                 $ 17,806         $  2,002         $ 19,808         $  5,262         $ 25,070
                                          ========         ========         ========         ========         ========

      Profit margin                           28.3%             9.2%            23.4%            22.6%            23.2%

      Percentage of income
         before taxes                         71.0%             8.0%            79.0%            21.0%

      Assets Managed (1)                  $ 30,666         $ 11,775         $ 42,441         $ 25,741         $ 68,182

      Assets Administered (1)             $ 13,544         $  2,668         $ 16,212         $285,917         $302,129
</TABLE>


      (1) $ in millions

                                       20
<PAGE>   21
                 FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                                    Personal Wealth Management
      (Dollars In Thousands)               ----------------------------------------                             Total
                                           New York         National          Total        Institutional     Corporation
                                           --------         --------          -----        -------------     -----------
<S>                                        <C>              <C>              <C>           <C>               <C>
      SIX MONTHS ENDED
      ----------------
      June 30, 1999
      Fee revenue                          $108,467         $ 51,762         $160,229         $ 44,836         $205,065
      Allocated net interest
         Revenue                             40,678           11,868           52,546            5,383           57,929
                                           --------         --------         --------         --------         --------

       Total revenue                        149,145           63,630          212,775           50,219          262,994
      Operating expense                     109,377           55,333          164,710           35,660          200,370
                                           --------         --------         --------         --------         --------

       Income before taxes                 $ 39,768         $  8,297         $ 48,065         $ 14,559         $ 62,624
                                           ========         ========         ========         ========         ========

      Profit margin                            26.7%            13.0%            22.6%            29.0%            23.8%

      Percentage of income
      before taxes                             63.5%            13.2%            76.8%            23.2%


      SIX MONTHS ENDED
      ----------------
      June 30, 1998
       Fee revenue                         $ 89,404         $ 31,447         $120,851         $ 41,062         $161,913
      Allocated net interest
         Revenue                             34,459           10,450           44,909            5,149           50,058
                                           --------         --------         --------         --------         --------

       Total revenue                        123,863           41,897          165,760           46,211          211,971
      Operating expense                      89,552           37,409          126,961           35,850          162,811
                                           --------         --------         --------         --------         --------

       Income before taxes                 $ 34,311         $  4,488         $ 38,799         $ 10,361         $ 49,160
                                           ========         ========         ========         ========         ========

      Profit margin                            27.7%            10.7%            23.4%            22.4%            23.2%

      Percentage of income
         before taxes                          69.8%             9.1%            78.9%            21.1%
</TABLE>

         Fee revenue for the Personal Wealth Management segment increased 30.5%
from the second quarter of 1998. Fee revenue for the New York component of the
Personal Wealth Management segment grew 18.9% from the second quarter of 1998
whereas the National component's fee revenue growth rate was 62.9%. Fee revenue
growth is attributable to new business, the overall strength in the financial
markets and acquisitions.

         Allocated net interest revenue attributable to the Personal Wealth
Management segment increased 19.0% from the second quarter of 1998. New York and
National's growth rates were 20.0% and 15.8%, respectively. The increase in
allocated net interest revenue is principally attributable to the growth in
private banking activities in this segment.

         The Personal Wealth Management Segment's profit margin decreased
modestly to 22.6% in the second quarter of 1999 from 23.4% in the second quarter
of 1998. New York's profit margin was 28.2% in the second quarter of 1999, and


                                       21
<PAGE>   22
28.3% in the second quarter of 1998. National's profit margin was 9.8% and 9.2%
for the three-month periods ended June 30, 1999 and June 30, 1998,
respectively.

         Institutional's fee revenue has grown by 13.3% from the second quarter
of 1998. Institutional's allocated net interest revenue has remained relatively
flat from June 30, 1998. Institutional receives interest revenue credit
principally from the customer deposits generated from its corporate trust
activities. Institutional's profit margin has increased from 22.6% in the second
quarter of 1998 to 30.2% in the second quarter of 1999. Institutional's assets
under management at June 30, 1999 are $0.7 billion less than the comparable
amount at June 30, 1998. The decline is primarily attributable to the
institutional assets withdrawn from the Campbell Cowperthwait division.

YEAR 2000 ISSUES - STATE OF READINESS

         The following discussion relates to the Corporation's Year 2000 state
of readiness and the resulting external remediation costs. All of the external
remediation costs are recorded as other operating expenses.

         In 1996, the Corporation established a Year 2000 Committee with the
responsibility for developing an effective plan for identifying, renovating,
testing and implementing simulated solutions for Year 2000 processing. The Plan
consists of the following five phases: (1) awareness of the problem and
commitment by senior management to dedicate the necessary resources to address
this problem; (2) a comprehensive inventory assessment of all hardware and
software, vendor interfaces and service providers to understand the magnitude of
the issue; (3) a systems code remediation schedule for all affected software
systems; (4) a comprehensive validation methodology to test all affected
applications; and (5) production implementation of the corrected software
systems.

          The first two phases of the Plan were completed in June, 1997. The
remaining phases of the Plan, software code remediation and testing of critical
systems were substantially completed as of December 31, 1998. During these
phases the Corporation worked with Chase and Marshall & Illsley Data Services,
providers of the Corporation's most significant data processing systems
(collectively, the "Service Providers") to assure compliance with required
systems changes. The Service Providers are responsible for and bear the cost of
effecting all necessary changes to such systems.

         As of June 30, 1999, all mission critical systems of the Corporation,
i.e., Asset Management, Banking and Corporate Trust were in full production. The
Corporation will run all of its corrected systems in a production environment
during the balance of 1999. Where appropriate, point-to-point street-wide
testing for connectivity and data exchange with regulatory and depository
agencies will also take place in 1999.

         In addition, the Corporation has business relationships with vendors
and suppliers. The Corporation has contacted these entities to determine the
status of their Year 2000 efforts and to track the renovation and readiness of
their systems for the Year 2000. Where appropriate, testing will be conducted
between the

                                       22
<PAGE>   23
Corporation and these vendors. In the event that the product or service provided
by the vendor is not Year 2000 ready, alternative providers will be employed. A
final follow-up regarding these entities' Year 2000 readiness is currently in
process with completion scheduled by the end of the third quarter of 1999.

         As a result of its Plan, the Corporation expects to have dealt with
Year 2000 issues well in advance of the event.

YEAR 2000 ISSUES - THE COST

The Corporation has estimated the total cost of remediating its Year 2000 issues
will range from approximately $4 million to $5 million. These costs include the
costs of remediation, testing, third party assessment, and contingency planning.
To date the Corporation has spent approximately $3.8 million. This amount does
not include the cost associated with substantial managerial time that senior
officers and employees have dedicated on Year 2000 issues. Since the Service
Providers are responsible for and bear the cost of effecting all necessary
changes to the Corporation's most significant data processing systems, most of
the Corporation's costs were on testing. The Corporation expects remaining costs
in 1999 to not exceed $1.0 million most of which will be incurred on
infrastructure/equipment upgrades. While the Corporation has deferred certain
other projects as a result of efforts regarding Year 2000, we believe that these
deferrals will have no material impact on our operating results.

YEAR 2000 ISSUES - CONTINGENCY PLAN

         The Corporation has developed a contingency plan to deal with Year 2000
issues, including (1) identifying likely contingencies; (2) developing
procedures to be followed in the event of each contingency; and (3) identifying
personnel responsible for each of the Corporation's businesses that may be
involved in any actual contingency. In the event of an operational disruption,
the Corporation has in place contingency plans for its mission critical
functions. Key area and command recovery personnel within each business sector
will have been identified and trained to initiate the necessary action steps in
maintaining overall control and business continuity. The Corporation's plan has
been completed, and approved by it's Board of Directors. In addition, the plan
has been reviewed by the Corporation's internal audit department.

YEAR 2000 ISSUES - RISK

Although it is not possible to predict accurately the consequences of a Year
2000 failure, the Corporation is confident that its efforts at remediation will
greatly reduce any disruption. While not anticipated, the most reasonable likely
worst case scenario would be a failure by either one of the Corporation's
mission critical systems or the Service Providers systems. In this case, the
Corporation would lose the ability to service its clients for a period of time.
If any of these failures were not

                                       23
<PAGE>   24
corrected within a reasonable period of time, it could have a material negative
effect on the operations and financial condition of the Corporation.

         The disclosure contained in this 10-Q as well as the information
previously filed by the Corporation regarding its Year 2000 readiness are
designated as Year 2000 readiness disclosure related to the Year 2000
Information and Readiness Disclosure Act.

MARKET RISK AND SENSITIVITY ANALYSIS

         The objective of risk assessment and asset and liability management is
to maximize net interest revenue while maintaining acceptable levels of
interest rate sensitivity, high asset quality and adequate liquidity.

         The Corporation does not trade financial instruments nor does the
Corporation invest in financial instruments denominated in foreign currencies.
The Corporation's principal risk is interest rate related. Interest rate risk
results from differences in the maturity and/or repricing of the Corporation's
interest earning assets (which consist primarily of mortgage loans, mortgage
backed securities and other fixed rate investments) and its interest bearing
liabilities, (predominately floating rate deposits). The Corporation uses
interest rate swaps ("Swaps") as hedging vehicles to mitigate interest rate
exposure associated with short-term floating interest-rate deposits.

         The Corporation employs net interest income ("NII") simulation modeling
techniques to evaluate and manage the effect of changing interest rates. The
Corporation's simulation model includes all on-balance sheet and off-balance
sheet financial instruments and measures NII under various interest rate
scenarios. Key variables in the NII simulation include changes to the level and
term structure of interest rates, the repricing of financial instruments,
prepayment and reinvestment assumptions, loan and deposit pricing and volume
assumptions. These simulations involve assumptions that are inherently uncertain
and as a result, the simulation models cannot precisely estimate NII or
precisely predict the impact of changes in interest rates on NII. Actual results
may differ from simulated results due to the timing magnitude and frequency of
interest rate changes as well as changes in market conditions and management
strategies, including changes in asset and liability mix.

         The Corporation's simulation model facilitates the evaluation of a
potential range of net interest revenue, under various interest rate scenarios.
The simulation model as of June 30, 1999 projects a decrease in net interest
revenue of $1.0 million to $2.0 million over the following three month period
for an immediate 50 to 100 basis points increase in rates. Conversely, if
interest rates immediately decreased by 50 to 100 basis points, the simulation
model projects a $0.9 to $1.9 million increase in net interest revenue. As of
June 30, 1998 the simulation model projected a decrease in net interest revenue
of $0.6 million to $1.2 million over the following three months for an immediate
50 to 100 basis points increase in rates. Conversely, if interest rates had
immediately decreased by 50 to 100 basis points as of June 30, 1998, the
simulation model projected a $0.6 million to $1.2 million increase in net
interest revenue for the subsequent three month period.

                                       24
<PAGE>   25
         Each of these simulations assumes that the asset and liability
structure of the balance sheet would not be changed as a result of the simulated
changes in interest rates. As the Corporation actively manages its balance sheet
and interest rate exposure, in all likelihood, the Corporation would take steps
to ameliorate any additional interest rate exposure that would result from the
simulated changes in the interest rate environment.

The following table provides details, as of June 30, 1999, of the notional
amounts of Swaps by maturity and the related average interest rates paid and
received. The Corporation is a fixed rate payor on all of its Swaps.

<TABLE>
<CAPTION>
                                                                           Maturing
                                                    -----------------------------------------------------------
                                                    Within 1                1 to 5
(Dollars in Thousands)                                Year                   Years                       Total
-------------------------                             ----                   -----                       -----
<S>                                                 <C>                   <C>                         <C>
Fixed pay swaps                                     $150,000              $ 595,000                   $ 745,000
Average rate paid                                      6.89%                  6.11%                       6.27%
Average rate received (1)                              5.09%                  5.10%                       5.10%
</TABLE>

(1)  Represents the average variable rate that will be received by the
     Corporation based upon the rate in effect at the latest variable rate reset
     date of each Swap.

         The impact of the Corporation's hedging activities upon net interest
revenue for the quarters ended June 30, 1999 and 1998, are detailed in the
following table.

<TABLE>
<CAPTION>
                                                         Three Month Periods                      Six Month Periods
                                                             Ended June 30,                          Ended June 30,
                                                      --------------------------              --------------------------
(Dollars In Thousands)                                   1999             1998                  1999              1998
----------------------                                   ----             ----                  ----              ----
<S>                                                   <C>               <C>                   <C>               <C>
Net Interest revenue:
   As reported                                        $ 29,008          $ 24,704              $ 57,929          $ 50,058
   Excluding hedging activities                       $ 31,252          $ 26,087              $ 62,135          $ 52,662

Net yield on interest earning assets:
   As reported                                            3.31%             3.22%                 3.34%             3.25%
   Excluding hedging activities                           3.58%             3.40%                 3.60%             3.43%
</TABLE>

                                       25
<PAGE>   26
The difference between results "As reported" and "Excluding hedging activities"
in each period reflects the cost of using swaps to hedge interest rate risk.

CAPITAL AND LIQUIDITY MANAGEMENT

<TABLE>
<CAPTION>
                                                                                              Minimum
                                                                                              Federal                Well
                                                                                              Reserve             Capitalized
                                  Actual as of                  Actual as of                 Ratio For           Under Prompt
                                 June 30, 1999                 June 30, 1998                  Capital             Corrective
(Dollars In Thousands)          Amount     Rate               Amount     Rate                Adequacy               Action
----------------------          ------     ----               ------     ----                --------               ------
<S>                           <C>          <C>              <C>          <C>                <C>                  <C>
Tier 1 Capital:
   Corporation                $ 253,560    12.1%            $ 256,902    14.0%                 4.0%                  6.0%
   Trust Company                170,429     9.7%              153,123     9.9%                 4.0%                  6.0%

Total Capital:
   Corporation                  273,271    13.0%              275,939    15.1%                 8.0%                  10.0%
   Trust Company                187,915    10.7%              169,831    11.0%                 8.0%                  10.0%

Tier 1 Leverage:
   Corporation                  253,560     6.3%              256,902     7.2%               3.0-5.0%              3.0-5.0%
   Trust Company                170,429     5.4%              153,123     5.4%               3.0-5.0%                5.0%
</TABLE>

         Regulatory capital amounts and ratios for the Parent and its
wholly owned subsidiary United States Trust Company of New York (the "Trust
Company") as of June 30, 1999 and 1998 are set forth in the above table. Minimum
ratio requirements and ratios required to be considered "well capitalized" by
the Board of Governors of the Federal Reserve Board are also presented.

         The objective of liquidity management is to ensure the availability of
financial resources to meet the Corporation's cash flow requirements and to
capitalize on opportunities for business expansion. The Corporation monitors the
liquidity position of the Parent and each of its subsidiaries on an ongoing
basis to ensure that funds are available to meet loan and deposit cash flow
requirements. Liquidity management is also structured to ensure that the capital
needs of the Parent and its subsidiaries are met on a day to day basis.

         The Parent's liquidity requirements consist mainly of dividend payments
to common stockholders, interest and principal payments to debt holders,
repurchases of its common stock and capital required for acquisitions or for
additions to its subsidiaries.

         At the January 26, 1999, Parent's Board of Directors (the "Board")
meeting, the Board authorized the repurchase of an additional two million
shares of the Parent's common stock. The repurchased shares are available to
meet the Parent's obligations under its stock-based benefit plans and for
general capital management purposes. During the second quarter of 1999, 189,200
shares were repurchased at a weighted average purchase price of $89.29 per
share. As of June 30, 1999, the Parent could repurchase an additional 1,863,125
common shares. On January 26, 1999, the Parent announced a 22% increase in its
regular quarterly common

                                       26
<PAGE>   27
stock dividend, indicating an annual dividend of $0.88 per share. Actual
dividends declared are subject to approval by the Board and regulatory capital
limitations.

         The Parent's sources of liquidity are derived primarily from dividends
from its subsidiaries, issuances of common stock and issuances of long and
short-term debt instruments. As of June 30, 1999, the subsidiaries have the
ability to pay dividends of approximately $64.2 million without prior approval
of the regulatory authorities.

         Also the Corporation has a $50.0 million committed credit facility
based on LIBOR or Prime maturing on March 31, 2002. At March 31, 1999 $12.5
million was outstanding under this facility. The Corporation has a second $30.0
million committed credit facility based on LIBOR or Prime maturing on March 31,
2002 under which $10.0 million was outstanding at June 30, 1999.

         The Parent is authorized to issue up to 5 million, $1.00 par value,
preferred shares. As of June 30, 1999, no preferred shares have been issued.

         In addition to traditional interest and non-interest bearing deposit
raising capabilities, the banking subsidiaries have established their own
external funding sources. Certain subsidiaries have established credit
facilities with the Federal Home Loan Bank ("FHLB") totaling approximately
$428.1 million. As of June 30, 1999, the amount under these credit facilities
was $13.0 million.

         The subsidiaries also generate liquidity from the types of financial
instruments that they carry as investment securities. As of June 30, 1999
approximately $828.5 million or 81.3% of the investment securities portfolio is
comprised of U.S. Treasury or federal agency obligations. These securities are
readily marketable and may be sold or financed through repurchase agreements, as
appropriate. At June 30, 1999, securities sold under agreements to repurchase
aggregated $152.4 million. The subsidiaries may also pledge these securities to
secure public deposits, to qualify for fiduciary powers and to use as collateral
for FHLB and other borrowings. Pledged assets at June 30, 1999 totaled $228.5
million. The Corporation's assets are principally liquid and low risk.
Approximately 35% of total assets for the second quarter of 1999 consist of
short-term financial instruments and readily marketable securities.

Interest Earning Securities

         Included in interest earning securities are $155.0 million and $204.0
million of interest bearing deposits with banks, and 1.018 billion and $1.058
billion of securities available for sale at June 30, 1999 and December 31,
1998, respectively. At December 31, 1998, Interest Earning Securities included
$255.0 million of federal funds sold and securities purchased under agreements
to resell.

         The Corporation maintains a high quality securities portfolio with
approximately 81.3% comprised of U.S. Treasury obligations, obligations of the
Government National Mortgage Association ("GNMAs") and other federal agency
obligations as of June 30, 1999. The remaining portfolio is comprised of
variable rate collateralized mortgage obligations ("CMOs") and obligations of
states and municipalities. CMOs principally are collateralized by GNMAs.

         The fair value of securities was $10.6 million less than their
amortized cost at June 30, 1999 but $7.2 million more than their amortized cost
at December 31,

                                       27
<PAGE>   28
1998. The Corporation classified all of its securities portfolio as "available
for sale". While the Corporation does not trade its securities portfolio, it
needs to have the ability to sell securities as required to meet its
asset/liability objectives.

QUALITY OF LENDING ACTIVITIES
         The Corporation's loan portfolio is predominantly comprised of loans to
private banking customers. At June 30, 1999, the loan portfolio totaled $2.5
billion of which approximately 74.0% were collateralized by residential real
estate mortgages.

An analysis of allowance for credit losses follows:

<TABLE>
<CAPTION>
                                             Three Month Periods               Six Month Periods
                                                Ended June 30,                  Ended June 30,
                                           ------------------------        -------------------------
(Dollars In Thousands)                       1999            1998            1999             1998
-----------------------------                ----            ----            ----             ----
<S>                                        <C>             <C>             <C>              <C>
Balance, Beginning of Period               $ 19,329        $ 18,713        $ 19,414         $ 18,294
Provision for Credit Losses                      --             150              --              300
Recoveries                                      382             174             547              464
Charge-offs                                      --              --            (250)             (21)
                                           --------        --------        --------         --------
Net (Charge-Offs) Recoveries                    382             174             297              443
                                           --------        --------        --------         --------

Balance, End of Period                     $ 19,711        $ 19,037        $ 19,711         $ 19,037
                                           ========        ========        ========         ========
</TABLE>

The level of the allowance for credit losses is based upon management's judgment
as to the current condition of the credit portfolio determined by a continuing
surveillance process. In assessing the adequacy of the allowance for credit
losses, management relies on its ongoing review of specific loans, past
experience, the present loan portfolio composition and general economic and
financial considerations.

         As a percentage of average loans, annualized net loan recoveries were
seven basis points for the second quarter of 1999, compared to annualized net
loan recoveries of four basis points for the second quarter of 1998. The
allowance for credit losses at June 30, 1999, was 0.85% of average loans for the
quarter. This compares with 0.99% of average loans for the quarter ended June
30, 1998. Given the current market environment, management anticipates that the
allowance for credit losses as a percentage of loans will continue to decrease.


                                       28
<PAGE>   29

         Nonperforming assets, which include non-accrual ("impaired") loans and
real estate acquired through foreclosure or restructurings, for the most recent
five quarters are as follows:

<TABLE>
<CAPTION>
                               June 30,         March 31,       Dec. 31,        Sept.30,           June 30,
                                1999              1999            1998            1998               1998
                               ----------------------------------------------------------------------------
<S>                            <C>              <C>             <C>             <C>                <C>
(In Thousands)
Non-accrual loans              $ 637             $ 583          $ 6,203          $ 7,616           $ 8,172
Real estate owned, net             -                 -              534              534                 -
                               ----------------------------------------------------------------------------

Total Nonperforming            $ 637             $ 583          $ 6,737          $ 8,150           $ 8,172
                               ============================================================================
</TABLE>




                                      29

<PAGE>   30
                           PART II - OTHER INFORMATION

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

         (a) The Annual Meeting of Shareholders of the Parent was held April 27,
1999.

         (b) Not required.

         (c) (i) Election of six directors to hold office for a three year term
expiring in 2002, Mr. Denham for a two year term expiring in 2001 and Mr.
Pforzheimer for a one year term expiring in 2000 and, in each case, until their
successors have been elected and qualified.

<TABLE>
<CAPTION>
<S>                            <C>                  <C>                            <C>
Eleanor Baum                                        Carl H. Pforzheimer III
For                            16,489,351           For                            16,528,200
Withhold Authority             154,313              Withhold Authority             115,464

Philippe De Montebello                              John H. Stookey
For                            16,534,373           For                            16,530,199
Withhold Authority             109,291              Withhold Authority             113,465

Robert E. Denham                                    Frederick B. Taylor
For                            16,529,145           For                            16,486,400
Withhold Authority             114,519              Withhold Authority             157,264

Peter L. Malkin                                     Robert N. Wilson
For                            16,115,351           For                            16,534,838
Withhold Authority             528,313              Withhold Authority             108,826
</TABLE>

            (ii) Ratification of appointment of PricewaterhouseCoopers LLP as
independent auditors for the Corporation and its consolidated subsidiaries for
the year 1999.

                  For                       16,528,941
                  Against                   76,486
                  Abstain                   38,237

            (iii) Approval of Amendment to the Parent's Certificate of
                  Incorporation to Increase the number of authorized Common
                  Shares from 40 million to 70 million.

                  For                       15,938,607
                  Against                   614,411
                  Abstain                   90,646

            (iv) Approval of Employee Stock Purchase Plan.

                  For                       16,434,556
                  Against                   140,731
                  Abstain                   68,377

                                       30
<PAGE>   31
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

       (a) EXHIBITS:

<TABLE>
<CAPTION>
<S>      <C>
3.1      Certificate of Incorporation dated June 2, 1999.

3.2      Restated By-Laws of the Corporation dated April 27, 1999.

4        Note: The exhibits filed herewith do not include the instruments with
         respect to long-term debt of the Corporation, inasmuch as the total
         amount of debt authorized under any such instrument does not exceed 10%
         of the total assets of the Corporation on a consolidated basis. The
         Corporation agrees, pursuant to Item 601 (b)(4)(iii) of Regulation S-K,
         that it will furnish a copy of any such instrument to the Securities
         and Exchange Commission upon request.

27       Financial Data Schedule.
</TABLE>

(1)  Incorporated herein by reference.

         (b) REPORTS ON FORM 8-K:

         None during the quarter for which this report is filed.

                                       31
<PAGE>   32
                                    SIGNATURE



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





                                                         U. S. Trust Corporation
                                                         -----------------------
                                                                    (Registrant)





Date:  August 13, 1999                        By: /s/       Richard E. Brinkmann
       ---------------                           -------------------------------
                                                            Richard E. Brinkmann

                                                           Managing Director and
                                                                     Comptroller
                                                  (Principal Accounting Officer)
                                                  ------------------------------

                                       32