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

                                    FORM 10-Q
(Mark One)

      |X|   Quarterly report pursuant to Section 13 or 15(d) of the
            Securities Exchange Act of 1934

            For the quarterly period ended September 30, 2004, or

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

            For the transition period from ____________ to _____________

            Commission file Number              1-12811
                                 ---------------------------------------

                            U.S.B. HOLDING CO., INC.
                            ------------------------
             (Exact Name of Registrant as Specified in Its Charter)

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

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

                                  845-365-4600
                                  ------------
              (Registrant's Telephone Number (including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                      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.

                                                  NUMBER OF SHARES
                 CLASS                     OUTSTANDING AT NOVEMBER 2, 2004
                 -----                     -------------------------------

        Common stock, par value                     20,339,686
            $0.01 per share

<PAGE>

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

                                TABLE OF CONTENTS

                                                                        PAGE NO.
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

        CONDENSED CONSOLIDATED STATEMENTS OF
        CONDITION AS OF SEPTEMBER 30, 2004 AND
        DECEMBER 31, 2003.                                                  1

        CONDENSED CONSOLIDATED STATEMENTS OF
        INCOME FOR THE THREE MONTHS ENDED
        SEPTEMBER 30, 2004 AND 2003.                                        2

        CONDENSED CONSOLIDATED STATEMENTS OF
        INCOME FOR THE NINE MONTHS ENDED
        SEPTEMBER 30, 2004 AND 2003.                                        3

        CONDENSED CONSOLIDATED STATEMENTS OF
        CASH FLOWS FOR THE NINE MONTHS ENDED
        SEPTEMBER 30, 2004 AND 2003.                                        4

        CONDENSED CONSOLIDATED STATEMENTS OF
        CHANGES IN STOCKHOLDERS' EQUITY FOR
        THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003.                  5

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS. 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS.                     19

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
        ABOUT MARKET RISK.                                                 29

ITEM 4. CONTROLS AND PROCEDURES                                            30

PART II. OTHER INFORMATION AND SIGNATURES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
        AND USE OF PROCEEDS                                                31

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                  32

        SIGNATURES                                                         36

                                      - i -

<PAGE>

ITEM 1. PART I - FINANCIAL INFORMATION

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                                                 (000's, except share data)
                                                                                September 30,    December 31,
ASSETS                                                                                   2004            2003
-------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>
Cash and due from banks                                                           $   127,286     $    57,451
Federal funds sold                                                                     29,000          10,000
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents                                                             156,286          67,451
Interest bearing deposits in other banks                                                  349              25
Securities:
     Available for sale (at estimated fair value)                                     901,619       1,081,380
     Held to maturity (estimated fair value of $513,179 in 2004
       and $240,752 in 2003)                                                          503,612         237,998
Loans, net of allowance for loan losses of $15,134 in 2004 and $14,757 in 2003      1,472,465       1,433,923
Premises and equipment, net                                                            15,933          15,353
Accrued interest receivable                                                            13,281          15,721
Federal Home Loan Bank of New York stock                                               46,757          30,594
Other assets                                                                           28,630          24,017
-------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                      $ 3,138,932     $ 2,906,462
=============================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------------
Liabilities:
Non-interest bearing deposits                                                     $   403,713     $   296,133
Interest bearing deposits:
     NOW accounts                                                                     234,446         133,382
     Money market accounts                                                            216,884         195,510
     Savings deposits                                                                 416,567         436,561
     Time deposits                                                                    724,827         713,463
-------------------------------------------------------------------------------------------------------------
Total deposits                                                                      1,996,437       1,775,049
Accrued interest payable                                                                5,898           6,599
Accrued expenses and other liabilities                                                 14,755          11,340
Securities sold under agreements to repurchase                                        797,651         788,632
Federal Home Loan Bank of New York advances                                            83,134         104,873
Subordinated debt issued in connection with Corporation-Obligated
         mandatory redeemable capital securities of subsidiary trusts                  61,858          51,548
-------------------------------------------------------------------------------------------------------------
Total liabilities                                                                   2,959,733       2,738,041
-------------------------------------------------------------------------------------------------------------
Minority-interest junior preferred stock of consolidated subsidiary                       128             128
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, no par value
Authorized shares: 10,000,000; no shares outstanding in 2004 and 2003                      --              --
Common stock, $0.01 par value; authorized shares 50,000,000;
      issued shares of 22,004,107 in 2004, and 20,924,504 in 2003                         220             209
Additional paid-in capital                                                            184,049         159,628
Retained earnings                                                                      22,828          31,655
Treasury stock at cost, common shares 1,679,646 in 2004 and 1,436,714 in 2003         (23,155)        (18,225)
Common stock held for benefit plans                                                    (2,515)         (2,491)
Deferred compensation obligation                                                        2,448           2,327

Accumulated other comprehensive loss                                                   (4,804)         (4,810)
-------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                            179,071         168,293
-------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $ 3,138,932     $ 2,906,462
=============================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.


                                       1
<PAGE>

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                       (000's, except share data)
                                                               Three Months Ended
                                                                    September 30,
---------------------------------------------------------------------------------
                                                                  2004       2003
---------------------------------------------------------------------------------
<S>                                                            <C>        <C>
INTEREST INCOME:
Interest and fees on loans                                     $22,334    $21,708
Interest on federal funds sold                                      89        247
Interest and dividends on securities:
      U.S. government agencies                                   9,632      6,950
      Mortgage-backed securities                                 3,579      2,761
      Obligations of states and political subdivisions             872        813
      Corporate and other                                           31          4
Dividends on Federal Home Loan Bank of New York stock              213        388
---------------------------------------------------------------------------------
Total interest income                                           36,750     32,871
---------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits                                             5,928      5,928
Interest on borrowings                                           7,301      6,856
Interest on subordinated debt issued in connection with/and
          Corporation - Obligated mandatory redeemable
          capital securities of subsidiary trusts                1,029        857
---------------------------------------------------------------------------------
Total interest expense                                          14,258     13,641
---------------------------------------------------------------------------------

NET INTEREST INCOME                                             22,492     19,230
Provision for credit losses                                        110        391
---------------------------------------------------------------------------------
Net interest income after provision for credit losses           22,382     18,839
---------------------------------------------------------------------------------

NON-INTEREST INCOME:
Service charges and fees                                         1,038      1,047
Other income                                                       970      1,091
---------------------------------------------------------------------------------
Total non-interest income                                        2,008      2,138
---------------------------------------------------------------------------------

NON-INTEREST EXPENSES:
Salaries and employee benefits                                   7,554      6,774
Occupancy and equipment                                          2,049      1,707
Advertising and business development                               620        590
Professional fees                                                  875        364
Communications                                                     424        300
Stationery and printing                                            148        217
FDIC insurance                                                      70         67
Amortization of intangibles                                        290        253
Other expense                                                    1,005        855
---------------------------------------------------------------------------------
Total non-interest expenses                                     13,035     11,127
---------------------------------------------------------------------------------
Income before income taxes                                      11,355      9,850
Provision for income taxes                                       3,836      3,564
---------------------------------------------------------------------------------
NET INCOME                                                     $ 7,519    $ 6,286
=================================================================================

BASIC EARNINGS PER COMMON SHARE                                $  0.37    $  0.31
=================================================================================

DILUTED EARNINGS PER COMMON SHARE                              $  0.35    $  0.30
=================================================================================
</TABLE>

See notes to condensed consolidated financial statements.


                                       2
<PAGE>

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                                                      (000's, except share data)
                                                                                            Nine Months Ended
                                                                                                September 30,
-------------------------------------------------------------------------------------------------------------------
                                                                                          2004            2003
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>             <C>
INTEREST INCOME:
Interest and fees on loans                                                            $ 65,982        $ 64,832
Interest on federal funds sold                                                             237             605
Interest and dividends on securities:
      U.S. government agencies                                                          27,999          15,727
      Mortgage-backed securities                                                         9,609          12,015
      Obligations of states and political subdivisions                                   2,643           2,482
      Corporate and other                                                                   91               8
Dividends on Federal Home Loan Bank of New York stock                                      465           1,106
-------------------------------------------------------------------------------------------------------------------
Total interest income                                                                  107,026          96,775
-------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits                                                                    17,904          17,922
Interest on borrowings                                                                  21,604          19,749
Interest on subordinated debt issued in connection with/and
          Corporation - Obligated mandatory redeemable
          capital securities of subsidiary trusts                                        2,892           2,586
-------------------------------------------------------------------------------------------------------------------
Total interest expense                                                                  42,400          40,257
-------------------------------------------------------------------------------------------------------------------

NET INTEREST INCOME                                                                     64,626          56,518
Provision for credit losses                                                                664           2,063
-------------------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses                                   63,962          54,455
-------------------------------------------------------------------------------------------------------------------

NON-INTEREST INCOME:
Service charges and fees                                                                 3,206           2,887
Other income                                                                             2,645           2,812
Gains on securities transactions                                                         1,197           8,383
-------------------------------------------------------------------------------------------------------------------
Total non-interest income                                                                7,048          14,082
-------------------------------------------------------------------------------------------------------------------

NON-INTEREST EXPENSES:
Salaries and employee benefits                                                          22,571          20,097
Occupancy and equipment                                                                  5,863           5,117
Advertising and business development                                                     2,099           1,924
Professional fees                                                                        1,739           1,079
Communications                                                                           1,104             909
Stationery and printing                                                                    532             601
FDIC insurance                                                                             220             208
Amortization of intangibles                                                                835             761
Other expense                                                                            2,900           2,819
-------------------------------------------------------------------------------------------------------------------
Total non-interest expenses                                                             37,863          33,515
-------------------------------------------------------------------------------------------------------------------
Income before income taxes                                                              33,147          35,022
Provision for income taxes                                                              11,234          12,426
-------------------------------------------------------------------------------------------------------------------
NET INCOME                                                                            $ 21,913        $ 22,596
===================================================================================================================

BASIC EARNINGS PER COMMON SHARE                                                        $  1.07         $  1.10
===================================================================================================================

DILUTED EARNINGS PER COMMON SHARE                                                      $  1.03         $  1.08
===================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.


                                       3
<PAGE>

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                                                                               (000's)
                                                                                                          Nine Months Ended
                                                                                                             September 30,
                                                                                                           2004        2003
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>             <C>
OPERATING ACTIVITIES:
Net income                                                                                          $    21,913     $    22,596
Adjustments to reconcile net income to net cash provided by operating activities:
     Provision for credit losses                                                                            664           2,063
     Depreciation and amortization                                                                        2,567           2,319
     Amortization of  (discounts) premiums on securities - net                                             (519)            891
     Deferred income tax benefit, net                                                                    (2,581)         (2,685)
     Gains on securities transactions                                                                    (1,197)         (8,383)
Non-cash benefit plan expense                                                                               377             313
Decrease (increase) in accrued interest receivable                                                        2,483            (832)
Decrease in accrued interest payable                                                                       (721)            (32)
Other - net                                                                                               2,754           1,712
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                                                25,740          17,962
-------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale                                                    105,418         423,073
Proceeds from principal paydowns, redemptions and maturities of:
     Securities available for sale                                                                      505,846         373,271
     Securities held to maturity                                                                         84,533         178,599
Purchases of securities available for sale                                                             (726,635)     (1,328,955)
Purchases of securities held to maturity                                                                (52,598)        (89,950)
Net purchases of Federal Home Loan Bank of New York stock                                               (16,163)        (10,525)
Net liabilities assumed in Reliance Bank acquisition                                                     10,697              --
Net increase in interest bearing deposits in other banks                                                   (299)            (12)
Net increase in loans outstanding                                                                       (28,319)        (88,473)
Purchases of premises and equipment - net                                                                (2,237)         (3,570)
-------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                                                                 (119,757)       (546,542)
-------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase in non-interest bearing deposits, NOW, money market and savings accounts                   199,370         275,877
Net (decrease) increase in time deposits, net of withdrawals and maturities                              (1,895)         60,893
Net (decrease) increase in securities sold under agreements to repurchase - short-term                  (15,981)        149,275
Repayment of Federal Home Loan Bank of New York advances - short-term                                   (10,500)             --
Proceeds from securities sold under agreements to repurchase - long-term                                 75,000         115,000
Repayment of securities sold under agreements to repurchase - long term                                 (50,000)             --
Repayment of Federal Home Loan Bank of New York advances - long term                                    (11,239)         (2,503)
Net proceeds from issuance of subordinated debt issued in connection with
     Corporation-Obligated mandatory redeemable capital securities of subsidiary trusts                   9,975              --
Redemption of junior preferred stock of consolidated subsidiary, net                                         --              (1)
Cash dividends paid                                                                                      (6,935)         (5,684)
Proceeds from exercise of common stock options                                                              523           1,382
Purchases of treasury stock                                                                              (5,466)         (4,223)
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                           $   182,852     $   590,016
-------------------------------------------------------------------------------------------------------------------------------
Increase in Cash and Cash Equivalents                                                               $    88,835     $    61,436
Cash and Cash Equivalents, Beginning of Period                                                           67,451          90,801
-------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period                                                            $   156,286     $   152,237
===============================================================================================================================
Supplemental Disclosures:
-------------------------------------------------------------------------------------------------------------------------------
     Interest paid                                                                                  $   (43,121)    $   (40,289)
-------------------------------------------------------------------------------------------------------------------------------
     Income tax payments                                                                            $   (15,058)    $   (15,016)
-------------------------------------------------------------------------------------------------------------------------------
     Purchase of available for sale securities not yet settled, including interest receivable       $       884     $   102,431
-------------------------------------------------------------------------------------------------------------------------------
     Payment for available for sale securities not yet settled at beginning of period, including
     interest receivable                                                                            $        --     $  (263,090)
-------------------------------------------------------------------------------------------------------------------------------
     Payment for held to maturity securities not yet settled at beginning of period, including
     interest receivable                                                                            $      (924)    $        --
-------------------------------------------------------------------------------------------------------------------------------
     Transfer of available for sale securities to held to maturity securities at market value       $   298,312     $    46,941
-------------------------------------------------------------------------------------------------------------------------------
     Loans acquired in acquisition of Reliance Bank, including interest receivable                  $    10,869     $        --
-------------------------------------------------------------------------------------------------------------------------------
     Deposits assumed in acquisition of Reliance Bank, including interest payable                   $    23,933     $        --
-------------------------------------------------------------------------------------------------------------------------------
     Other assets (including intangibles) acquired in acquisition of Reliance Bank,
             net of other liabilities assumed                                                       $     2,367     $        --
-------------------------------------------------------------------------------------------------------------------------------
     Change in shares held in trust for deferred compensation                                       $      (121)    $      (425)
-------------------------------------------------------------------------------------------------------------------------------
     Change in deferred compensation obligation                                                     $       121     $       425
-------------------------------------------------------------------------------------------------------------------------------
     Change in accumulated other comprehensive loss                                                 $         6     $    (5,806)
-------------------------------------------------------------------------------------------------------------------------------
     Non cash exercise of stock options and related tax benefit                                     $     2,061     $     1,333
-------------------------------------------------------------------------------------------------------------------------------
     Non cash purchases of treasury stock related to the exercise of stock options                  $    (1,600)    $      (873)
-------------------------------------------------------------------------------------------------------------------------------
     Issuance of treasury stock related to the exercise of stock options                            $     2,136     $     2,448
===============================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.


                                       4
<PAGE>

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

                            (000's except share data)
                   FOR THE NINE MONTHS ENDED SEPTEMER 30, 2004

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                      Common    Common                                          Common                 Accumulated
                                       Stock     Stock  Additional                               Stock      Deferred          Other
                                      Shares       Par     Paid-In   Retained  Treasury       Held for  Compensation  Comprehensive
                                 Outstanding     Value     Capital   Earnings     Stock  Benefit Plans    Obligation           Loss
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>           <C>       <C>        <C>       <C>             <C>          <C>            <C>
Balance at January 1, 2004        19,487,790    $  209    $159,628   $31,655   $(18,225)       $(2,491)     $  2,327       $(4,810)

Net Income                                                            21,913

Other comprehensive income:
   Net unrealized securities
     loss arising during the
     period, net of tax benefit
     of $98
                                                                                                                             (181)
   Reclassification adjustment
     of net loss for securities
     sold, net of tax benefit
     of $130                                                                                                                  187

   Other comprehensive income                                                                                                   6

Total comprehensive income

Five percent common stock
      Dividend                     1,055,985        10      23,795   (23,805)

Five percent common stock
     dividend on treasury stock      (88,325)

Cash dividends:
   Common ($0.34 per share)                                           (6,925)
   Junior preferred stock                                                (10)

Common stock options exercised
and related tax benefit              198,782         1         447                2,136

Purchases of treasury stock         (329,771)                                    (7,066)

ESOP shares committed to
   be released                                                 179                                  97

Deferred compensation
   obligation                                                                                     (121)          121
------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2004     20,324,461    $  220    $184,049  $ 22,828   $(23,155)       $(2,515)     $  2,448       $(4,804)
====================================================================================================================================
<CAPTION>
------------------------------------------------

                                          Total
                                  Stockholders'
                                         Equity
------------------------------------------------
<S>                                  <C>
Balance at January 1, 2004           $ 168,293

Net Income                              21,913

Other comprehensive income:
   Net unrealized securities
     loss arising during the
     period, net of tax benefit
     of $98
                                         (181)
   Reclassification adjustment
     of net loss for securities
     sold, net of tax benefit
     of $130                              187

   Other comprehensive income               6

Total comprehensive income             21,919

Five percent common stock
      Dividend                             --

Five percent common stock
     dividend on treasury stock            --

Cash dividends:
   Common ($0.34 per share)            (6,925)
   Junior preferred stock                 (10)

Common stock options exercised
and related tax benefit                 2,584

Purchases of treasury stock            (7,066)

ESOP shares committed to
   be released                             276

Deferred compensation
   obligation                               --
------------------------------------------------
Balance at September 30, 2004          $ 179,071
================================================
</TABLE>

     See notes to condensed consolidated financial statements.


                                       5
<PAGE>

U.S.B. HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

                           (000's, except share data)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                           Common  Common                                          Common
                                            Stock   Stock  Additional                               Stock     Deferred
                                           Shares     Par     Paid-In  Retained   Treasury       Held for Compensation
                                      Outstanding   Value     Capital  Earnings      Stock  Benefit Plans   Obligation
-----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>    <C>        <C>       <C>            <C>            <C>
Balance at January 1, 2003             18,501,580    $198   $ 140,054  $28,648   $(15,777)      $(1,691)       $1,398

Net Income                                                              22,596

Other comprehensive loss:
   Net unrealized securities
     loss arising during the
     period, net of tax benefit
     of $2,177
   Reclassification adjustment
     of net gains for securities
     sold, net of taxes of $1,835



   Other comprehensive loss

Total comprehensive income

Five percent common stock
    dividend                              994,545      10      18,638  (18,663)

Five percent common stock
    dividend on treasury stock            (70,401)

Cash dividends:
   Common ($0.28 per share)                                             (5,659)
   Junior preferred stock                                                  (10)

Common stock options exercised
    and related tax benefit               304,934       1         266               2,448

Purchases of treasury stock              (310,791)                                 (5,096)

ESOP shares committed to
   be released                                                    119                                97

Deferred compensation
   obligation                                                                                      (425)          425
-----------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2003          19,419,867    $209    $159,077  $26,912   $(18,425)      $(2,019)       $1,823
=======================================================================================================================
<CAPTION>
---------------------------------------------------------------------
                                         Accumulated
                                               Other         Total
                                       Comprehensive Stockholders'
                                       Income (Loss)        Equity
---------------------------------------------------------------------
<S>                                       <C>           <C>
Balance at January 1, 2003                $  3,181      $ 156,011

Net Income                                                 22,596

Other comprehensive loss:
   Net unrealized securities
     loss arising during the
     period, net of tax benefit
     of $2,177                              (3,150)        (3,150)
   Reclassification adjustment
     of net gains for securities
     sold, net of taxes of $1,835

                                            (2,656)        (2,656)
                                            ------        -------
   Other comprehensive loss                 (5,806)        (5,806)
                                                           -------
Total comprehensive income                                 16,790

Five percent common stock
    dividend                                                  (15)

Five percent common stock
    dividend on treasury stock                                 --

Cash dividends:
   Common ($0.28 per share)                                (5,659)
   Junior preferred stock                                     (10)

Common stock options exercised
    and related tax benefit                                 2,715

Purchases of treasury stock                                (5,096)

ESOP shares committed to
   be released                                                216

Deferred compensation
   obligation                                                  --
---------------------------------------------------------------------
Balance at September 30, 2003            $  (2,625)       $ 164,952
=====================================================================
</TABLE>

     See notes to condensed consolidated financial statements.


                                       6
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

1.    Principles of Consolidation

      The condensed consolidated financial statements include the accounts of
      U.S.B. Holding Co., Inc. and its wholly-owned subsidiaries (the
      "Company"), Union State Bank (the "Bank"), including its wholly-owned
      subsidiaries, Dutch Hill Realty Corp., U.S.B. Financial Services, Inc.,
      and USB Delaware Inc. (since the date of its incorporation September 12,
      2003), including its wholly-owned subsidiary, TPNZ Preferred Funding
      Corporation ("TPNZ"), and Ad Con, Inc. As of and for the three and nine
      months ended September 30, 2004, the condensed consolidated financial
      statements also include the Company's subsidiary Trusts, Union State
      Capital Trust I, Union State Statutory Trust II, USB Statutory Trust III,
      and Union State Statutory Trust IV (collectively, the "Trusts"). As
      required by the Financial Accounting Standards Board's revision of
      Interpretation No. 46, "Consolidation of Variable Interest Entities, ("FIN
      46R"), the Company has not consolidated the Trusts and recorded
      subordinated debt issued to the Trusts and the Company's investment in the
      common equity of the Trusts as of December 31, 2003. All significant
      intercompany accounts and transactions are eliminated in consolidation.

2.    Basis of Presentation

      In the opinion of management, the accompanying unaudited condensed
      consolidated financial statements include all adjustments (comprised of
      normal and recurring accruals) necessary to present fairly the financial
      position of the Company as of September 30, 2004, and its operations for
      the three and nine months ended September 30, 2004 and 2003, and its cash
      flows and changes in stockholders' equity for the nine months ended
      September 30, 2004 and 2003. For purposes of presenting the condensed
      consolidated financial statements of cash flows, cash and cash equivalents
      include cash and due from banks and federal funds sold.

      The Company distributed a five percent common stock dividend on September
      24, 2004 to stockholders of record on September 10, 2004. The weighted
      average common shares outstanding and per common share amounts have been
      adjusted to reflect all common stock dividends.

      The condensed consolidated financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America and predominant practices used within the banking
      industry. A summary of the Company's significant accounting policies is
      set forth in Note 3 to the consolidated financial statements included in
      the Company's 2003 Annual Report to Stockholders. In preparing such
      financial statements, management is required to make estimates and
      assumptions that affect the reported amounts of actual and contingent
      assets and liabilities as of the dates of the condensed consolidated
      statements of condition and the revenues and expenses for the periods
      reported. Actual results could differ significantly from those estimates.

      Estimates that are particularly susceptible to significant change are the
      determination of the allowance for loan losses, the related provision for
      credit losses, and valuation allowance for net deferred tax assets. In
      connection with the determination of estimates related to real estate
      loans, management obtains independent appraisals for significant
      properties that collateralize loans with real estate.


                                       7
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

3.    Reclassifications

      Certain reclassifications have been made to prior period accounts to
      conform to the current period's presentation.

4.    Pending Accounting Pronouncements

      Emerging Issues Task Force ("EITF") Issue No. 03-1, "The Meaning of
      Other-Than-Temporary Impairment and Its Application to Certain
      Investments" ("EITF 03-1"), provides application guidance that should be
      used to determine when an investment is considered impaired, whether that
      impairment is other than temporary, and the measurement of an impairment
      loss. The guidance also includes accounting considerations subsequent to
      the recognition of an other-than-temporary impairment and requires certain
      disclosures about unrealized losses that have not been recognized as
      other-than-temporary impairments. The recognition and measurement guidance
      of EITF 03-1 has been deferred pending issuance of a final Financial
      Accounting Standards Board ("FASB") Staff Position. Management does not
      believe that adoption of the recognition and measurement guidance of EITF
      03-1 will have an effect on the Company's consolidated financial
      statements given management's intent and ability to hold such investments
      until a forecasted recovery or maturity occurs.

5.    Acquisition of Reliance Bank

      As of the close of business on March 19, 2004, the Bank assumed
      approximately $23.9 million in deposits and acquired approximately $10.5
      million of single-family residential mortgage loans, $10.7 million of cash
      and cash equivalents, $2.2 million of other assets, and $0.3 million in
      other loans in connection with the acquisition of Reliance Bank. The
      premium paid for the deposits assumed was $2.2 million, or 9.4 percent,
      and $0.2 million, or 1.6 percent, for the single-family residential loans
      acquired. Reliance Bank was closed by the New York Superintendent of
      Banks, which appointed the FDIC as Receiver. Reliance Bank, which operated
      as a one branch bank at 1200 Mamaroneck Avenue, White Plains, New York
      became a Union State Bank branch effective immediately after its closing.

      The assumption of deposits and acquisition of certain assets of Reliance
      Bank has been accounted for as a business combination in accordance with
      Statement of Financial Accounting Standards (SFAS") No.141, "Accounting
      for Business Combinations." Assets, time deposits, and other liabilities
      acquired have been recorded at their estimated fair values as of March 19,
      2004, and a core deposit intangible of $0.7 million was recorded based on
      a core deposit valuation study. Goodwill of $1.5 million was also
      recorded. Both the core deposit intangible and goodwill are classified in
      other assets on the balance sheet. In accordance with SFAS No. 142,
      "Goodwill and Other Intangible Assets," the core deposit intangible will
      be amortized over an estimated average life of six years and the goodwill
      component will be tested for impairment annually at year end. The results
      of Reliance Bank operations related to the assets acquired and deposits
      assumed are included in the Company's statements of income from the date
      of its acquisition. Pro forma information as if the transaction occurred
      at the beginning of the period is not material.


                                       8
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

6.    Intangible Assets

      As of September 30, 2004 and December 31, 2003, the gross carrying amount
      and accumulated amortization of intangible assets acquired in connection
      with branch acquisitions were $9.0 million and $3.9 million, and $8.4
      million and $3.1 million, respectively. The intangible amortization
      expense for the three month periods ended September 30, 2004 and 2003 were
      $0.3 million, and for the nine month periods ended September 30, 2004 and
      2003 were $0.8 million, respectively. The annual amortization expense for
      the five succeeding fiscal years will be approximately $1.1 million.

7.    Accounting for Stock-Based Compensation

      SFAS No. 148, "Accounting for Stock Based Compensation - Transition and
      Procedure" ("SFAS No. 148"), amends SFAS 123 "Accounting for Stock-Based
      Compensation" ("SFAS No. 123") to provide alternate methods of transition
      for an entity that voluntarily changes to the fair value based method of
      accounting for stock-based employee compensation. It also amends the
      disclosure provisions of that statement to require prominent disclosure
      about the effects on reported net income of an entity's accounting policy
      decisions with respect to stock-based employee compensation. Finally, this
      statement amends Accounting Principles Board ("APB") Opinion No. 28,
      "Interim Financial Reporting," to require disclosure about those effects
      in interim financial information.

      Information on the Company's stock option plans can be found in Note 17 to
      the Company's Consolidated Financial Statements for the year ended
      December 31, 2003, included in the 2003 Annual Report to Stockholders. The
      Company has elected to continue to measure compensation expense for its
      stock-based compensation plans under the recognition and measurement
      principles of APB Opinion No. 25, "Accounting for Stock Issued to
      Employees," and to provide pro forma disclosures of compensation expense
      measured by the fair value based method as prescribed by SFAS No. 123. No
      stock-based employee compensation is reflected in net income, as all
      options granted under the Company's plans had an exercise price at least
      equal to the market value of the underlying common stock on the date of
      grant.

      The following table compares the Company's net income and basic and
      diluted earnings per common share, as reported, to the pro forma results
      as if the fair value method of accounting for options prescribed by SFAS
      No. 123 had been applied for the three and nine months ended September 30,
      2004 and 2003. The fair value of options was estimated at the date of
      grant using a Black-Scholes option-pricing model and is recognized over
      the options' vesting period.


                                       9
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
=====================================================================================================
                                                              (000's, except share data)
                                                          Three                        Nine
                                                       Months Ended                Months Ended
                                                 Sept. 30,     Sept. 30,      Sept. 30,     Sept. 30,

                                                      2004          2003           2004          2003
-----------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>          <C>           <C>
Net income, as reported                             $7,519         $6,286       $21,913       $22,596

Less: preferred stock dividends                          -              -            10            10

Less: total stock-based compensation
expense determined under fair value based
method for all awards, net of related tax
effects                                              1,183            705         2,133         1,291
-----------------------------------------------------------------------------------------------------

Pro forma net income available to common
stockholders                                        $6,336         $5,581       $19,770       $21,295
=====================================================================================================

Earnings per common share:

         Basic - as reported                         $0.37         $ 0.31        $ 1.07        $ 1.10
         Basic - pro forma                            0.31           0.27          0.97          1.04

         Diluted - as reported                       $0.35         $ 0.30        $ 1.03         $1.08
         Diluted - pro forma                          0.30           0.27          0.93          1.02
=====================================================================================================
</TABLE>

      The following weighted average assumptions were used for Director Plan
      grants for the three months ended September 30, 2004 and 2003,
      respectively: dividend yields of 1.93 and 2.52 percent; volatility factors
      of the expected market price of the Company's common stock of 39.57 and
      41.33 percent; risk free interest rates of 3.89 and 2.47 percent; and
      expected lives of 7.63 and 7.62 years. The following weighted average
      assumptions were used for Director Plan grants for the nine months ended
      September 30, 2004 and 2003, respectively: dividend yields of 2.16 and
      2.52 percent; volatility factors of the expected market price of the
      Company's common stock of 40.25 and 41.33 percent; risk free interest
      rates of 3.34 and 2.47 percent; and expected lives of 7.63 and 7.62 years.

      The following weighted average assumptions were used for Employee Plan
      grants for the three months ended September 30, 2004 and 2003,
      respectively: dividend yields of 1.93 and 2.52 percent; volatility factors
      of the expected market price of the Company's common stock of 39.59 and
      41.63 percent; risk free interest rates of 3.58 and 3.08 percent; and
      expected lives of 8.52 and 8.97 years. The following weighted average
      assumptions were used for Employee Plan grants for the nine months ended
      September 30, 2004 and 2003, respectively: dividend yields of 2.00 and
      2.52 percent; volatility factors of the expected market price of the
      Company's common stock of 39.77 and 41.63 percent; risk-free interest
      rates of 3.60 and 3.08 percent; and expected lives of 8.50 and 8.97 years.

8.    Earnings Per Common Share ("EPS")

      The computation of basic and diluted earnings per common share for the
      three and nine months ended September 30 is as follows:


                                       10
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CODENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
===========================================================================================================
                                                                   (000's except share data)
                                                          Three Months Ended         Nine Months Ended
                                                        Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,
                                                             2004          2003          2004          2003
-----------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>           <C>           <C>
Numerator:
  Net income                                          $     7,519   $     6,286   $    21,913   $    22,596
  Less preferred stock dividends                               --            --            10            10
-----------------------------------------------------------------------------------------------------------
Net income for basic and diluted
   earnings per common share - net income
   available to common stockholders                   $     7,519   $     6,286   $    21,903   $    22,586
===========================================================================================================
Denominator:
  Denominator for basic earnings per
     common share - weighted average shares            20,324,406    20,372,623    20,407,604    20,446,035

  Effects of dilutive securities:
      Director and employee - stock options               893,290       624,707       900,503       525,669
-----------------------------------------------------------------------------------------------------------
  Denominator for diluted earnings per
     common share - adjusted weighted
     average shares                                    21,217,696    20,997,330    21,308,107    20,971,704
===========================================================================================================
Basic earnings per common share                       $      0.37   $      0.31   $      1.07   $      1.10
Diluted earnings per common share                     $      0.35   $      0.30   $      1.03   $      1.08
===========================================================================================================
</TABLE>

9.    Securities

      In accordance with SFAS No. 115, "Accounting for Certain Investments in
      Debt and Equity Securities," the Company's investment policies include a
      determination of the appropriate classification of securities at the time
      of purchase. Securities that may be sold as part of the Company's
      asset/liability or liquidity management, or in response to or in
      anticipation of changes in interest rates and resulting prepayment risk,
      or for similar factors, are classified as available for sale. Securities
      that the Company has the ability and positive intent to hold to maturity
      are classified as held to maturity and carried at amortized cost. Realized
      gains and losses on the sales of all securities, determined by using the
      specific identification method, are reported in earnings. Securities
      available for sale are shown in the condensed consolidated statements of
      condition at estimated fair value and the resulting net unrealized gains
      and losses, net of tax, are shown in accumulated other comprehensive
      income (loss).

      The decision to sell securities available for sale is based on
      management's assessment of changes in economic or financial market
      conditions, interest rate risk, and the Company's financial position and
      liquidity. Estimated fair values for securities are based on quoted market
      prices, where available. If quoted market prices are not available,
      estimated fair values are based on quoted market prices of similar
      instruments. Securities in an unrealized loss position are periodically
      evaluated for other-than-temporary impairment. Management considers the
      effect of interest rates, credit ratings and other factors on the
      valuation of such securities, as well as the Company's intent and ability
      to hold such securities until a forecasted recovery or maturity occurs.
      The Company does not acquire securities for the purpose of engaging in
      trading activities.


                                       11
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

      During the nine-month periods ended September 30, 2004 and 2003, the
      Company had gross realized gains from sales of securities available for
      sale of $1,197,000, and $8,383,000, respectively. The Company did not have
      gross realized gains or losses during both the three month periods ended
      September 30, 2004 and 2003.

      A summary of the amortized cost, estimated fair values, and related gross
      unrealized gains and losses of securities at September 30, 2004 and
      December 31, 2003 is as follows:

<TABLE>
<CAPTION>
=======================================================================================================
                                                                           (000's)
                                                                       Gross        Gross    Estimated
                                                      Amortized   Unrealized   Unrealized         Fair
September 30, 2004:                                        Cost        Gains       Losses        Value
-------------------------------------------------------------------------------------------------------
Available for Sale:
<S>                                                    <C>          <C>          <C>          <C>
U.S. government agencies                               $515,139     $    241     $    163     $515,217
Mortgage-backed securities                              383,511        3,274        1,504      385,281
Obligations of states and political subdivisions            920           61           --          981
Corporate securities                                        116           24           --          140
-------------------------------------------------------------------------------------------------------
Total securities available for sale                    $899,686     $  3,600     $  1,667     $901,619
=======================================================================================================

Held to Maturity:
U.S. government agencies                               $418,193     $  6,892     $  1,026     $424,059
Obligations of states and political subdivisions         85,419        3,977          276       89,120
-------------------------------------------------------------------------------------------------------
Total securities held to maturity                      $503,612     $ 10,869     $  1,302     $513,179
=======================================================================================================
<CAPTION>
==============================================================================================================
                                                                               (000's)
                                                                           Gross          Gross     Estimated
                                                        Amortized     Unrealized     Unrealized          Fair
December 31, 2003:                                           Cost          Gains         Losses         Value
--------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>            <C>
Available for Sale:
U.S. government agencies                               $  637,582     $       30     $    6,034     $  631,578
Mortgage-backed securities                                450,381          1,000          3,295        448,086
Obligations of states and political subdivisions            1,400             84             --          1,484
Corporate securities                                          152             81              1            232
--------------------------------------------------------------------------------------------------------------
Total securities available for sale                    $1,089,515     $    1,195     $    9,330     $1,081,380
==============================================================================================================

Held to Maturity:
U.S. government agencies                               $  164,821     $      748     $    1,733     $  163,836
Obligations of states and political subdivisions           73,177          4,118            379         76,916
--------------------------------------------------------------------------------------------------------------
Total securities held to maturity                      $  237,998     $    4,866     $    2,112     $  240,752
==============================================================================================================
</TABLE>

      As of July 16, 2004, the Company transferred at fair value available for
      sale U.S. government agency securities with an amortized cost basis and
      fair value of approximately $307.6 million and $298.2 million,
      respectively, to held to maturity. The U.S. government agency securities
      had an unrealized loss of $9.4 million, $6.2 million net of tax, which is
      included in other comprehensive income (loss) and will be accreted over
      the remaining life of the securities.


                                       12
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

10.   Loans

      Nonaccrual loans were $4.3 million at September 30, 2004 and $6.1 million
      at December 31, 2003. Restructured loans were $0.1 million at both
      September 30, 2004 and December 31, 2003, respectively.

      Substantially all of the nonaccruing and restructured loans are
      collateralized by real estate. The Company has agreed to provide
      additional funding of up to $0.3 million with respect to a nonaccruing
      real estate construction loan in the amount of $3.6 million at September
      30, 2004 (see discussion below). The Company had and continues to have no
      other commitments to lend additional funds to any customers with
      nonaccrual or restructured loan balances. Accruing loans that are
      contractually past due 90 days or more at September 30, 2004 are
      immaterial.

      At September 30, 2004 and December 31, 2003, the recorded investment in
      loans that are considered to be impaired approximated $3.6 million and
      $5.6 million, of which $3.6 million and $5.5 million were in nonaccrual
      status, respectively. The average recorded investment in impaired loans
      for the nine months ended September 30, 2004 and 2003, and for the year
      ended December 31, 2003 was $4.9 million, $9.9 million, and $9.1 million,
      respectively. Interest income recognized by the Company on impaired loans
      for the September 30, 2004 and 2003 three and nine month periods was not
      material.

      As applicable, each impaired loan has a related allowance for loan losses.
      The total allowance for loan losses specifically allocated to one impaired
      real estate construction loan with balances of $3.6 million and $5.5
      million was $0.3 million and $0.2 million as of September 30, 2004 and
      December 31, 2003, respectively. No valuation allowance for this loan with
      a balance of $7.0 million was considered necessary at September 30, 2003.

      In November 2000, the Company reclassified the real estate construction
      loan referred to above in the amount at that date of $19.7 million as a
      non-performing asset and placed the loan on nonaccrual status. At December
      31, 2003, the recorded loan balance was $5.5 million, and the specific
      allocation of the allowance for loan losses was $0.2 million. At September
      30, 2004, the recorded loan balance was $3.6 million with a $0.3 million
      specific allocation of the allowance for loan losses. The recorded loan
      balance was reduced during the nine month 2004 period by principal
      payments and charge-offs totaling $0.3 million. The loan is collateralized
      by a mortgage on certain condominium units and other real estate
      collateral. As of October 22, 2004, of the original 83 units, one unit
      remains unsold and is currently under contract for sale. The Bank
      continues to proceed with foreclosure of its $2.9 million mortgage on
      other real estate that also collateralizes the loan, and to pursue its
      claim against the borrower and guarantors for any deficiency. The
      guarantors have filed counter claims in this case, which the Bank is
      vigorously defending. A trial commenced on July 12, 2004 and concluded on
      August 3, 2004. A decision by the court is expected by the end of the
      calendar year. The guarantees on this loan have not been considered in
      determining the amounts of the allowance for loan losses required.


                                       13
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

11.   Borrowings and Stockholders' Equity

      The Company utilizes short-term and long-term borrowings primarily to meet
      funding requirements for its asset growth, balance sheet leverage, and to
      manage its interest rate risk.

      Short-term borrowings include securities sold under agreements to
      repurchase, federal funds purchased, and short-term Federal Home Loan Bank
      of New York ("FHLB") advances. Short-term securities sold under agreements
      to repurchase generally mature between one and 365 days. The Bank has
      borrowing availability under master security sale and repurchase
      agreements through four primary investment firms, the FHLB, and to a
      lesser extent, its customers. At September 30, 2004, the Bank had
      short-term repurchase agreements outstanding with the FHLB of $265.0
      million at a weighted average interest rate of 1.88 percent. These
      short-term borrowings with the FHLB were collateralized by securities with
      an aggregate carrying value and estimated fair value of $292.2 million and
      $293.4 million, respectively. There were no short-term repurchase
      agreements with the FHLB at December 31, 2003.

      There were no short-term repurchase agreements outstanding with primary
      investment firms at September 30, 2004. At December 31, 2003, outstanding
      short-term repurchase agreements with primary investment firms totaled
      $280.0 million at a weighted average interest rate of 1.16 percent and
      were collateralized by securities having an aggregate carrying value of
      $300.3 million and estimated fair value of $300.0 million. At both
      September 30, 2004 and December 31, 2003, the Bank had short-term
      repurchase agreements with customers of $0.7 million and $1.6 million at a
      weighted average interest rate of 1.53 percent and 0.84 percent,
      respectively. These short-term customer borrowings were collateralized by
      securities with an aggregate carrying value and estimated fair value of
      $0.7 million and $1.7 million at September 30, 2004 and December 31, 2003,
      respectively.

      Federal funds purchased represent overnight funds. The Bank has federal
      funds purchase lines available with six financial institutions for a total
      of $73.0 million. At September 30, 2004 and December 31, 2003, the Bank
      had no federal funds purchased balances outstanding.

      Short-term FHLB advances are borrowings with original maturities between
      one and 365 days. There were no short-term FHLB advances outstanding at
      September 30, 2004. At December 31, 2003, outstanding short-term FHLB
      advances totaled $10.5 million at a weighted average interest rate of 1.06
      percent and were collateralized by a pledge to the FHLB of a security
      interest in certain mortgage-related assets having an aggregate book value
      of $12.2 million, respectively.

      Additional information with respect to short-term borrowings as of and for
      the nine months ended September 30, 2004 and 2003 is presented in the
      following table.


                                       14
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

================================================================================
                                                    (000's except percentages)
Short-Term Borrowings                                  2004                2003
--------------------------------------------------------------------------------
Balance at September 30                           $ 265,651           $ 150,480
Average balance outstanding                       $ 153,040            $ 29,582
Weighted-average interest rate:
     As of September 30                               1.88%               1.12%
     Paid during period                               1.23%               1.14%
================================================================================

      The Bank had long-term borrowings, which have original maturities of over
      one year, of $532.0 million and $507.0 million in securities sold under
      agreements to repurchase at September 30, 2004 and December 31, 2003. At
      both September 30, 2004 and December 31, 2003, these borrowings have an
      original term of between five and ten years at interest rates of 1.94
      percent to 6.08 percent that are callable on certain dates after an
      initial noncall period at the option of the counterparty to the repurchase
      agreements. As of September 30, 2004 and December 31, 2003, these
      borrowings are collateralized by securities with an aggregate carrying
      value of $532.2 million and $531.6 million, and an estimated fair value of
      $536.9 million and $531.1 million, respectively.

      At September 30, 2004 and December 31, 2003, long-term FHLB advances
      totaled $83.1 million and $94.4 million, respectively, at interest rates
      of between 4.55 percent to 6.05 percent. At September 30, 2004, borrowings
      totaling $3.1 million are amortizing advances having scheduled payments
      and $10.0 million are payable only at maturity. Other borrowings totaling
      $70.0 million have an original term of ten years that are callable on
      certain dates after an initial noncall period at the option of the
      counterparty to the advance. Advances at December 31, 2003 include $4.4
      million of amortizing advances having scheduled periodic payments, $20.0
      million that are payable at maturity, and $70.0 million that are callable
      on certain dates after an initial noncall period at the option of the
      insurer. The long-term FHLB advances may not be repaid in full prior to
      maturity without penalty. At September 30, 2004 and December 31, 2003,
      these borrowings were collateralized by a pledge to the FHLB of a security
      interest in certain mortgage-related assets having an aggregate carrying
      value of $96.9 million and $109.9 million, respectively.

      A summary of long-term, fixed-rate borrowings distributed based upon
      remaining contractual payment date and expected option call date at
      September 30, 2004, with comparative totals for December 31, 2003, is as
      follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                       (000's except percentages)
                                                 After 1
                                    Within      But Within      After          2004         2003
Long-Term Borrowings                1 Year       5 Years       5 Years        Total         Total
-----------------------------------------------------------------------------------------------------
<S>                                <C>           <C>           <C>           <C>           <C>
Contractual Payment Date:
Total long-term borrowing          $ 11,301      $135,081      $468,752      $615,134      $601,374
Weighted-average interest rate         4.99%         5.15%         3.99%         4.26%         4.21%
-----------------------------------------------------------------------------------------------------
</TABLE>


                                       15
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                                           (000's except percentages)
                                                   After 1
                                       Within     But Within       After         2004         2003
Long-Term Borrowings                   1 Year      5 Years        5 Years       Total         Total
------------------------------------------------------------------------------------------------------
Expected Call Date:
<S>                                   <C>          <C>           <C>           <C>           <C>
Total long-term borrowing             $ 28,301     $250,081      $336,752      $615,134      $601,374
Weighted-average interest rate            3.15%        4.02%         4.54%         4.26%         4.21%
------------------------------------------------------------------------------------------------------
</TABLE>

      At September 30, 2004 and December 31, 2003 the Bank held 467,567 shares
      and 305,937 shares of capital stock of the FHLB with a carrying value of
      $46.8 million and $30.6 million, respectively, which is required in order
      to borrow under the short- and long-term advance and securities sold under
      agreements to repurchase programs from the FHLB. The FHLB generally limits
      borrowings up to an aggregate of 30 percent of total assets, or for
      collateral pledged by TPNZ, 75 percent of net equity, excluding securities
      sold under agreements to repurchase. All FHLB borrowings require
      prerequisite purchase of shares of FHLB stock. Any advances made from the
      FHLB are required to be collateralized by the FHLB stock and certain other
      assets of the Bank.

      The ability of the Company and Bank to pay cash dividends in the future is
      restricted by various regulatory requirements. The Company's ability to
      pay cash dividends to its stockholders is primarily dependent upon the
      receipt of dividends from the Bank. The Bank's dividends to the Company
      may not exceed the sum of the Bank's undistributed net income for that
      year and its undistributed net income for the preceding two years, less
      any required transfers to additional paid-in capital. At September 30,
      2004, the Bank could pay dividends of $63.9 million to the Company without
      having to obtain prior regulatory approval.

      On December 17, 2003, the Company's Board of Directors authorized the
      repurchase of up to 315,000 (adjusted for the five percent common stock
      dividend) common shares, or approximately 1.5 percent, of the Company's
      outstanding common stock at that date. Repurchases of common stock are
      authorized to be made from time to time in open-market and private
      transactions throughout 2004 as, in the opinion of management, market
      conditions may warrant. The repurchased common shares are held as treasury
      stock and are available for general corporate purposes. The December 17,
      2003 stock repurchase plan replaces the previous December 18, 2002
      repurchase plan for up to 165,375 common shares (adjusted for the five
      percent common stock dividend). For the nine months ended September 30,
      2004, the Company purchased 265,860 shares of common stock (adjusted for
      the five percent common stock dividend) under its repurchase plan at an
      aggregate cost of approximately $5.5 million. The Company purchased
      278,759 shares of common stock (adjusted for the five percent common stock
      dividend) under its repurchase plan at an aggregate cost of approximately
      $4.2 million for the nine months ended September 30, 2003. Purchases of
      common stock of 80,400 and 63,715 common shares (adjusted for the five
      percent common stock dividend) were acquired in connection with stock
      option exercises during the nine-month period ended September 30, 2004 and
      2003, respectively.


                                       16
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

12.   Subordinated Debt Issued in Connection with Corporation-Obligated
      Mandatory Redeemable Capital Securities of Subsidiary Trusts

      On March 25, 2004, the Company completed its fourth issuance of junior
      subordinated debt in connection with the issuance of Capital Securities
      totaling $10.3 million that raised $10.0 million of regulatory capital
      ($9,975,000 net proceeds after issuance costs).

      The Capital Securities and related subordinated debt issued in the 2004
      first quarter pay dividends and interest on a floating rate basis at a
      rate equal to three month LIBOR plus 280 basis points (current rate as of
      September 30, 2004 of 4.40 percent). Dividend and interest payments, as
      well as the reset of the interest rate, occurs in June, October, January,
      and March of each calendar year. These Capital Securities, due March 25,
      2034, were issued by Union State Statutory Trust IV ("Trust IV"), a
      Delaware business trust that was formed by the Company solely to issue the
      Capital Securities and related common stock. Trust IV advanced the
      proceeds to the Company by purchasing junior subordinated debt of the
      Company. These Capital Securities and related subordinated debt may not be
      redeemed, except under limited circumstances, until March 2009, at par.

      The total amount of Capital Securities outstanding as of September 30,
      2004 is $60 million. Such Capital Securities are included in Tier I
      regulatory capital in an amount not in excess of 25 percent of Tier I
      Capital, with the remainder included in Tier II Capital. At September 30,
      2004, Tier I Capital totaled $237.2 million, which included $60.0 million
      of Capital Securities. As a result of the changes in accounting as
      described in Note 1, the Federal Reserve Bank has reevaluated the
      regulatory implications of this accounting change on the capital treatment
      of the Capital Securities and has issued a proposal that will retain the
      Tier I Capital treatment of capital securities with certain modifications.

13.   Commitments and Contingencies

      In the normal course of business, various commitments to extend credit are
      made which are not reflected in the accompanying condensed consolidated
      financial statements. At September 30, 2004, formal credit lines, and
      commercial and residential loan commitments (including home equity
      commitments), both of which are primarily loans collateralized by real
      estate, approximated $412.7 million, $73.2 million and $22.9 million,
      respectively. Outstanding letters of credit totaled $42.5 million. Such
      amounts represent the maximum risk of loss on these commitments.

      Standby letters of credit are issued to guarantee financial performance or
      obligations of the Bank's customers. Generally, standby letters of credit
      are either partially or fully collateralized by cash, real estate, or
      other assets, and, in some cases, are not collateralized. In most cases,
      personal guarantees are obtained. Standby letters of credit are considered
      in the Bank's evaluation of its reserve for unfunded loan commitments.

      The Company is party to employment agreements with the Company's Chief
      Executive Officer, Senior Executive Vice President and Chief Credit
      Officer, and Senior Executive Vice President and Chief Financial Officer,
      which is described in Note 16 to the Company's 2003 Annual Report to
      Stockholders. The contracts with the two Senior Executive Vice Presidents
      were renewed on July 28, 2004, with substantially the same terms as the
      previous contracts.


                                       17
<PAGE>

U.S.B. HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================

      Other commitments are also described in Note 16 to the consolidated
      financial statements of the Company for the year ended December 31, 2003,
      which is included in the Company's 2003 Annual Report to Stockholders.

      In the ordinary course of business, the Company is party to various legal
      proceedings arising in the ordinary course of business, including counter
      claims and related litigation in connection with loan collections and
      foreclosures of loan collateral. In the opinion of management, based on
      advice from legal counsel, such legal proceedings will not have a material
      adverse effect on the Company's consolidated financial statements.

14.   Segment Information

      The Company has one reportable segment, "Community Banking." All of the
      Company's activities are interrelated, and each activity is dependent and
      assessed based on how each of the activities of the Company supports the
      others. For example, commercial lending is dependent upon the ability of
      the Bank to fund itself with deposits and other borrowings and to manage
      interest rate and credit risk. This situation is also similar for consumer
      and residential mortgage lending. Accordingly, all significant operating
      decisions are based upon analysis of the Company as one operating segment
      or unit.

      The Company operates only in the U.S. domestic market, specifically the
      lower Hudson Valley, which includes the counties of Rockland, Westchester,
      Orange, Putnam and Dutchess, New York, as well as New York City and Long
      Island, New York, Northern New Jersey and Southern Connecticut. For the
      nine months ended September 30, 2004 and 2003, there is no customer that
      accounted for more than ten percent of the Company's revenue.


                                       18
<PAGE>

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

ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

Forward-Looking Statements

The Company has made, and may continue to make, various forward-looking
statements with respect to earnings, credit quality and other financial and
business matters for periods subsequent to September 30, 2004. The Company
cautions that these forward-looking statements are subject to numerous
assumptions, risks, and uncertainties, and that statements relating to
subsequent periods increasingly are subject to greater uncertainty because of
the increased likelihood of changes in underlying factors and assumptions.
Actual results could differ materially from forward-looking statements.

In addition to those factors previously disclosed by the Company and those
factors identified elsewhere herein, the following factors could cause actual
results to differ materially from such forward-looking statements: competitive
pressures on loan and deposit product pricing; other actions of competitors;
changes in economic conditions, including changes in interest rates and the
shape of the U.S. Treasury yield curve; wartime events or terrorist activity and
the related impact on the credit quality of borrowers; the extent and timing of
actions of the Federal Reserve Board; customer deposit disintermediation;
changes in customers' acceptance of the Company's products and services;
increase in Federal and state income taxes and/or the Company's effective income
tax rate; and the extent and timing of legislative and regulatory actions and
reform.

The Company's forward-looking statements are only as of the date on which such
statements are made. By making any forward-looking statements, the Company
assumes no duty to update them to reflect new, changing or unanticipated events
or circumstances.

OVERVIEW

The Company's primary business is obtaining deposits through its retail branch
system, and commercial and municipal relationships, and lending to both a retail
and commercial customer base. A substantial amount of loans are secured by real
estate, including construction projects. The Company also acquires triple-A
credit rated securities to invest deposits in excess of loan production and
borrows on a wholesale basis to leverage capital and manage interest rate risk.
The Company operates through its 29 full service branches and its four loan
centers in Rockland, Westchester, and Orange counties in New York, New York City
and Stamford, Connecticut.

The Company's primary source of revenue is net interest income, which is the
difference between interest income on earning assets and interest expense on
interest bearing liabilities. The Company also derives income from non-interest
income sources such as service charges on deposit accounts, gains on sales of
securities and other forms of income. Net interest income and non-interest
income support the Company's operating expenses and provision for credit losses.

As the Company's primary source of income is net interest income, the interest
rate environment has a significant effect on revenue. The market for and credit
quality of loans is also impacted by interest rates, as well as the local
economy. Deposits are also sensitive to interest rates, local economic
conditions, and the attractiveness of alternative investments, such as stocks,
bonds, mutual funds, and annuities.

Critical Accounting Policies

The Company's significant accounting policies are disclosed in Note 3 to the
consolidated financial statements included in the Company's 2003 Annual Report
to Stockholders. The more critical policies given the Company's current business
strategy and asset/liability structure are the accounting for non-performing
loans, the allowance for loan losses and the related provision for credit
losses, the classification of securities as either held to maturity or available
for sale, and the valuation allowance for net deferred tax assets. In addition
to Note 3 to the 2003 consolidated financial statements, the Company's practice
on each of these accounting policies is further described in the applicable
sections of Management's Discussion and Analysis of Financial Condition and
Results of Operations, also included in the 2003 Annual Report to Stockholders.


                                       19
<PAGE>

FINANCIAL CONDITION

At September 30, 2004, the Company had total assets of $3,138.9 million, an
increase of $232.5 million from December 31, 2003. Cash equivalents, loans, and
deposits of $10.7 million, $10.8 million and $23.9 million, respectively, were
acquired or assumed in connection with the Reliance Bank acquisition on March
19, 2004 (see Note 5 to the condensed consolidated financial statements
(unaudited)) . This acquisition is consistent with the Company's initiatives to
expand its commercial and retail customer base and further penetrate the
Westchester County market.

The securities portfolio, including investments in Federal Home Loan Bank of New
York ("FHLB") stock, totaled $1,452.0 million and $1,350.0 million at September
30, 2004 and December 31, 2003, respectively, an increase of $102.0 million
during the nine months ended September 30, 2004. The securities portfolio
consists of securities held to maturity at amortized cost of $503.6 million and
$238.0 million, securities available for sale at estimated fair value totaling
$901.6 million and $1,081.4 million, and FHLB stock of $46.8 million and $30.6
million at September 30, 2004 and December 31, 2003, respectively.

During the nine months ended September 30, 2004, U.S. government agency
securities increased $137.0 million due primarily to purchases totaling $594.7
million, an increase in the estimated fair value of $6.1 million, and discount
accretion of $0.6 million, partially offset by redemptions of $455.0 million of
callable bonds, and a decrease as a result of a write down to market value at
the time of a transfer from available for sale to held to maturity of $9.4
million. Mortgage-backed securities decreased by $62.8 million primarily due to
principal paydowns of $120.4 million, net premium amortizations of $0.1 million,
sales of $104.2 million, partially offset by purchases of $157.8 million, and an
increase in the estimated fair value of available for sale securities of $4.1
million. The Bank's investment in obligations of states and political
subdivisions, or municipal securities, increased by $11.7 million primarily due
to purchases of $26.7 million during the nine month period ended September 30,
2004, partially offset by maturities of $15.0 million. Municipal securities are
considered core investments having favorable tax equivalent yields and
diversified maturities. The obligations are principally New York State political
subdivisions with diversified maturities, and substantially all are classified
as held to maturity. Purchases of municipal securities are dependent upon their
availability in the marketplace and the comparative tax equivalent yields of
such securities compared to other securities of similar credit risk and
maturity.

The Company invests in medium-term corporate debt securities and other
securities that are rated investment grade by nationally recognized credit
rating organizations at the time of purchase. The Company had outstanding
balances in equity securities of $0.1 million and $0.2 million at September 30,
2004 and December 31, 2003, respectively.


                                       20
<PAGE>

The Company continues to exercise its conservative approach to investing by
primarily purchasing high credit quality investments and controlling interest
rate risk by purchasing both fixed and floating rate securities through the
averaging of investments in medium-term maturities. Emphasis has been placed on
investing in floating rate securities and mortgage-backed securities with
favorable cash flow characteristics to maintain an asset sensitive position in
anticipation of an increase in interest rates, as well as investment in fixed
rate callable securities to enhance yield. At September 30, 2004, the weighted
average yield on a tax equivalent basis and weighted average life of the
investment portfolio was 4.39 percent and 6.7 years, respectively. The Company
will continue to utilize the investment portfolio to invest excess cash flow and
leverage capital, while managing interest rate risk.

At September 30, 2004, loans outstanding were $1,487.6 million, a net increase
of $38.9 million or 2.7 percent compared to December 31, 2003. The increase in
outstanding loan balances reflects increases of: $13.0 million in home equity
loans; $11.6 million in residential mortgages; $9.5 million in land,
acquisition, and construction loans; $9.1 million in time secured loans; $8.8
million in time unsecured loans; $0.5 million in credit card loans; and $1.9
million in other loans. The increase was partially offset by decreases of $14.6
million in commercial mortgages, $0.6 million in commercial installment loans;
and $0.3 million in personal installment loans. The net increase in residential
mortgages is substantially due to residential mortgages of $10.5 million
acquired from Reliance Bank. The Company had approximately $412.7 million in
formal credit lines, $96.1 million in loan commitments outstanding, which are
loans primarily collateralized by real estate, and $42.5 million of standby
letters of credit outstanding. Management considers its liquid resources to be
adequate to fund loans in the foreseeable future, principally by utilizing
excess funds temporarily placed in federal funds sold, increases in deposits and
borrowings, loan repayments and maturing securities.

The Company's allowance for loan losses increased $0.4 million, or 2.6 percent,
to $15.1 million at September 30, 2004, from $14.8 million at December 31, 2003.
The allowance for loan losses represents 1.02 percent of gross loans outstanding
at both September 30, 2004 and December 31, 2003, respectively. The allowance
reflects a provision of $0.7 million and net charge-offs of $265,000 recorded
for the nine months ended September 30, 2004. In addition to the allowance for
loan losses, a reserve for credit losses related to unfunded loan commitments of
$0.6 million at September 30, 2004 and $0.5 million at December 31, 2003, is
included in other liabilities. At September 30, 2004, there are loans
aggregating approximately $0.4 million, which are not on nonaccrual status, that
were potential problem loans which may result in their being placed on
nonaccrual status in the future.

Management takes a prudent and cautious position in evaluating various business
and economic uncertainties in relation to the Company's loan portfolio. In
management's judgment, the allowance for loan losses and reserve for unfunded
loan commitments appropriately reflect the risk elements in the total loan
portfolio at September 30, 2004. There is no assurance that the Company will not
be required to make future adjustments to the allowance for loan losses and
reserve for unfunded loan commitments in response to changing economic
conditions or regulatory examinations.

Total deposits increased $221.4 million, or 12.5 percent, for the nine-month
period ended September 30, 2004 to $1,996.4 million from $1,775.0 at December
31, 2003. The total deposit increase resulted from net increases in municipal
deposits of $184.8 million, retail and commercial deposits of $11.7 million, and
brokered deposits of $24.9 million. The retail and commercial deposit increase
includes $23.9 million assumed as part of the Reliance Bank acquisition.


                                       21
<PAGE>

As of September 30, 2004, municipal demand, NOW, money market, and savings
deposits increased $93.0 million, $90.1 million, $19.9 million, and $0.4
million, respectively, as compared to December 31, 2003. The increases in
municipal demand and NOW accounts were primarily related to the receipt of
temporary seasonal tax deposits. The increase in municipal money market deposits
reflects higher deposit levels and a greater number of municipal customers. The
increase in total municipal deposits was partially offset by a decrease in
municipal time deposits of $18.6 million at September 30, 2004, compared to
December 31, 2003. The decrease was due to municipalities' decision to place
funds in short-term liquid accounts at competitive rates.

The increase in retail, commercial, and brokered deposits at September 30, 2004
was due to increases in demand, NOW, time, and money market deposits of $14.5
million, $11.0 million, $30.0 million, and $1.5 million, respectively, as
compared to December 31, 2003. The increase was partially offset by a decrease
in retail and commercial savings deposits of $20.4 million, as compared to
December 31, 2003. The increase in retail, commercial, and brokered time
deposits at September 30, 2004 includes $13.2 million assumed from Reliance
Bank, the acquisition of medium-term brokered deposits of $24.9 million, which
was a result of securing longer-term funds, and increases in IRA and KEOGH
deposits of $3.6 million, partially offset by decreases in time deposits under
and over $100,000 of $6.2 million and $5.5 million, respectively, compared to
December 31, 2003. The decrease in retail and commercial time deposits under and
over $100,000 was partially due to customers moving deposits to short-term
liquid accounts to better react to a rising interest rate environment. Retail
and commercial demand, NOW, and money market deposits also increased from the
Bank expanding and adding relationships in its existing and contiguous markets,
as well as from the assumption of $4.9 million in retail and commercial demand
deposits from Reliance Bank. Retail and commercial savings deposits decreased
due to customers seeking more competitive products as a result of lower yields
offered during this period of low interest rates, partially offset by $5.8
million of savings deposits assumed from Reliance Bank.

During the nine months ended September 30, 2004, the Bank decreased its net
borrowings $12.7 million. Borrowings, combined with the seasonal municipal tax
deposits of approximately $170.0 million, are primarily used to provide funding
for the securities portfolio, including investment in FHLB stock, which
increased $102.0 million during the nine months ended September 30, 2004. As the
temporary municipal tax deposits decrease, the Bank will replace the funding for
the securities portfolio with short-term borrowings. Short-term borrowings
provide management with the ability to react to changes in levels of earning
assets. Management will continue to evaluate the interest rate environment in
order to determine the most effective combination of borrowings and deposits.

Stockholders' equity increased to $179.1 million at September 30, 2004 from the
December 31, 2003 balance of $168.3 million, an increase of 6.4 percent. The
increase primarily results from: $21.9 million of net income for the nine month
period ended September 30, 2004; $2.6 million of stock options exercised; and
$0.3 million of shares committed to be released under benefit plans; partially
offset by treasury stock transactions of $7.1 million and common stock dividends
paid of $6.9 million.


                                       22
<PAGE>

The Company's leverage ratio at September 30, 2004 was 8.07 percent, compared to
7.54 percent at December 31, 2003. The Company's Tier I and total capital ratios
under the risk-based capital guidelines were 13.62 percent and 14.52 percent at
September 30, 2004, and 12.80 percent and 13.70 percent at December 31, 2003,
respectively. In addition, the Bank exceeds all current regulatory capital
requirements and was in the "well-capitalized" category at September 30, 2004
and December 31, 2003. The increase in the Company's capital ratios are due to
the increase in stockholders' equity, excluding accumulated other comprehensive
loss, for the nine months ended September 30, 2004, as well as the issuance of
$10 million of capital securities (see Note 12 to the condensed consolidated
financial statements (unaudited)).

RESULTS OF OPERATIONS

Earnings

Net income for the nine months ended September 30, 2004 was $21.9 million
compared to $22.6 million for the nine months ended September 30, 2003, a
decrease of 3.0 percent. Diluted earnings per common share were $1.03 for the
nine months ended September 30, 2004 compared to $1.08 per common share in the
prior year period, a decrease of 4.6 percent. The Company's net income for the
nine months ended September 30, 2004 resulted in a 17.00 percent return on
average common stockholders' equity and a 1.00 percent return on average total
assets, as compared to 18.70 percent and 1.16 percent, respectively, for the
nine months ended September 30, 2003.

The decrease in the net income and diluted earnings per common share for the
nine months ended September 30, 2004 compared to the prior year periods is due
to a significant decrease in security gains from sales of available for sale
securities of $8.4 million in the 2003 period compared to security gains of $1.2
million in the current year period. The security gains for the nine months ended
September 30, 2003 resulted in an increase in net income, after the effect of
income taxes and incentive compensation, of approximately $4.6 million, compared
to approximately $0.7 million for the 2004 period. Although net income decreased
for the nine months ended September 30, 2004 period, primarily as a result of
significantly lower security gains, net interest income significantly increased,
non-interest income increased, the provision for credit losses decreased, and
the effective income tax rate also decreased, while operating expenses increased
as compared to the prior year period.

For the three months ended September 30, 2004, net income was $7.5 million
compared to $6.3 million for the three months ended September 30, 2003, an
increase of 19.6 percent. The increase in net income for the quarter reflects a
significant increase in net interest income, a decrease in the provision for
credit losses, and a lower effective income tax rate as compared to the prior
year. Diluted earnings per common share for the quarter ended September 30, 2004
was $0.35 compared to $0.30 in the 2003 period, an increase of 16.7 percent. The
Company's third quarter 2004 net income resulted in a 17.47 percent return on
average common stockholders' equity and a 1.02 percent return on average total
assets, as compared to 15.45 percent and 0.91 percent, respectively, for the
prior year period.

A discussion of the factors impacting the changes in the various components of
net income follows.


                                       23
<PAGE>

Net Interest Income

Net interest income, the difference between interest income and interest
expense, is a significant component of the Company's consolidated earnings. For
the three and nine month periods ended September 30, 2004, net interest income
increased 17.0 percent and 14.3 percent to $22.5 million and $64.6 million from
$19.2 million and $56.5 million for the three and nine month periods ended
September 30, 2003, respectively. Net interest income increased in the current
periods due to increases in the volume of earning assets, combined with
increases in both the net interest spread and margin on a tax equivalent basis.

The increase in the net interest income for the three and nine months ended
September 30, 2004 was partially due to an increase in average earning assets of
5.4 percent to $2.77 billion and 12.6 percent to $2.79 billion from $2.63
billion and $2.48 billion, respectively. The growth was a result of increases
primarily in average net loans of $78.6 million (5.6 percent) and $96.8 million
(7.0 percent), and average securities of $143.2 million (12.8 percent) and
$264.4 million (25.9 percent) for the three and nine months ended September 30,
2004, respectively, as compared to the prior year periods.

Average interest bearing liabilities also increased $157.2 million (7.1 percent)
and $306.8 million (14.7 percent) for the three and nine months ended September
30, 2004, respectively, as compared to the prior year periods. The increase
substantially funded the growth in earning assets. The increase in average
interest bearing liabilities was primarily due to increases in average interest
bearing deposits of $87.9 million (6.0 percent) and $149.1 million (10.6
percent), and borrowings of $57.4 million (8.3 percent) and $149.1 million (23.6
percent), respectively, for the three and nine month periods ended September 30,
2004, as compared to the prior year periods.

The increase in the net interest income was also due to an increase in the net
interest margin and net interest spread on a tax equivalent basis. The net
interest margin on a tax equivalent basis increased to 3.33 percent and 3.17
percent for the three and nine months ended September 30, 2004, as compared to
3.01 percent and 3.13 percent for the comparable 2003 periods. The net interest
spread on a tax equivalent basis increased to 3.27 percent and 3.10 percent for
the three and nine months ended September 30, 2004, as compared to 2.90 percent
and 3.01 percent for the comparable 2003 periods.

The increase in the net interest margin on a tax equivalent basis for the three
months ended September 30, 2004 was due to an increase in tax equivalent yields
on average earning assets and a decrease in yields on interest bearing
liabilities. For the three months ended September 30, 2004, tax equivalent
yields on interest earning assets increased to 5.37 percent from 5.06 percent,
and yields on interest bearing liabilities decreased to 2.10 percent from 2.16
percent, as compared to the 2003 period, respectively. The increase in tax
equivalent yields on earning assets for the three months ended September 30,
2004 was primarily due to an increase in yields on average securities to 4.70
percent from 4.07 percent, as compared to the 2003 period, respectively. For the
three months ended September 30, 2004, the decrease in yields on interest
bearing liabilities was primarily due to a decrease in yields on interest
bearing deposits to 1.51 percent from 1.61 percent, as compared to the 2003
third quarter, respectively.


                                       24
<PAGE>

The increase in the net interest margin on a tax equivalent basis for the nine
months ended September 30, 2004 was due to a reduction in yields on interest
bearing liabilities at a faster rate than tax equivalent yields on average
earning assets. For the nine months ended September 30, 2004, yields on interest
bearing liabilities decreased to 2.08 percent from 2.28 percent, and tax
equivalent yields on interest earning assets decreased to 5.18 percent from 5.29
percent. The decrease in yields on interest bearing liabilities for the nine
months ended September 30, 2004 was primarily due to a decrease in yields on
borrowings from 4.17 percent to 3.68 percent, and yields on interest bearing
deposits from 1.70 percent to 1.53 percent, as compared to the 2003 period,
respectively. For the nine months ended September 30, 2004, the decrease in tax
equivalent yields on earning assets was primarily due to a decrease in yields on
average loans from 6.27 percent to 5.95 percent, as compared to the 2003 period,
respectively.

The net interest margin is positioned to continue to widen if short-term
interest rates continue to increase. This is due to the asset sensitivity
position of the Company's balance sheet, primarily from significant investments
in floating rate securities and commercial loans, which reprice based on spreads
over LIBOR and the prime rate. If interest rates were to decline, or if
prepayments of loans and securities accelerated, the Company's net interest
income would be negatively effected. Management continues to use its strong
capital position to prudently leverage the balance sheet by purchasing
government securities funded by borrowings. Although the leverage strategy
results in narrower net interest spreads, the strategy increases net interest
income without significant credit risk or increase in operating expenses.
Management will continue to evaluate and manage the effect of the changing
interest rate environment on the Company's present and future operations, while
continuing to competitively price its products and services throughout the
markets it serves.

Management also realizes gains on available-for-sale securities when market
conditions warrant. Security gains decreased $7.2 million to $1.2 million for
the nine months ended September 30, 2004 compared to $8.4 million for the
similar 2003 period. During the first nine months of 2004, approximately $104.2
million of available for sale mortgage-backed investment securities were sold to
restructure and enhance the yield of the security portfolio by reinvesting sale
proceeds in a combination of fixed rate callable U.S. government agencies and
mortgage-backed securities. The gains for the 2003 period on sales of available
for sale securities were significantly higher, primarily as a result of the
larger dollar amount of securities sold ($414.7 million) at higher premiums in
that period, especially on securities that would have otherwise been prepaid at
par. Management will continue to evaluate the effect of the changing interest
rate environment on the Company's security portfolio.

Provision for Credit Losses

The provision for credit losses decreased $0.3 million to $0.1 million and $1.4
million to $0.7 million for the three and nine month periods ended September 30,
2004, respectively, compared to the same periods in 2003. The decrease in the
provision for the three and nine month 2004 periods was primarily attributable
to an improvement in credit quality of the loan portfolio, and for the nine
months ended September 30, 2004, a significant decrease in provisions related to
one non-performing real estate construction loan, as compared to the prior year
periods. The Company's non-performing assets to total assets decreased to 0.14
percent at September 30, 2004 from 0.24 percent at September 30, 2003. During
the three and nine months ended September 30, 2004, net charge-offs totaled
$130,000 and $265,000, as compared to $82,000 and $1.8 million for the 2003
periods, respectively. Net charge-offs primarily resulted from the partial
charge-off of a real estate construction loan on nonaccrual status for the three
and nine months ended September 30, 2004, and for the nine months ended
September 30, 2003.
Nonaccrual loans were $4.3 million and $7.1 million at September 30, 2004 and
2003, respectively, compared to $6.1 million at December 31, 2003. Total
nonaccrual loans at September 30, 2004 primarily consisted of a real estate
construction loan that was $5.5 million at December 31, 2003, reduced to $3.6
million at September 30, 2004 due to principal paydowns and a $0.3 million
charge-off.


                                       25
<PAGE>

It is the Company's policy to discontinue the accrual of interest on loans when,
in the opinion of management, a reasonable doubt exists as to the timely
collectibility of the amounts due. Regulatory requirements generally prohibit
the accrual of interest on certain loans when principal or interest is due and
remains unpaid for 90 days or more (with the exception of credit card loans for
which the criteria is 180 days past due). Net income is adversely impacted by
the level of non-performing assets caused by the deterioration of borrowers'
ability to meet scheduled interest and principal payments. In addition to
forgone revenue, the Company must increase the level of provisions for credit
losses, incur collection costs, and other costs associated with the management
and disposition of foreclosed properties.

An evaluation of the quality of the loan portfolio is performed by management on
a quarterly basis as an integral part of the credit administration function,
which includes the identification of past due loans, non-performing loans and
impaired loans, assessments of the expected effects of the current economic
environment and industry, geographic and customer concentrations in the loan
portfolio, and review of historical loss experience. Management takes a prudent
and cautious position in evaluating various business and economic uncertainties
in relation to the Company's loan portfolio. In management's judgment, the
allowance is considered appropriate to absorb losses inherent in the credit
portfolio at September 30, 2004.

A substantial portion (88.4 percent at September 30, 2004) of total gross loans
of the Company is collateralized by real estate, primarily located in the New
York Metropolitan area. Accordingly, the collectibility of the loan portfolio of
the Company is subject to changes in the real estate market in which the Company
operates. The provisions for credit losses established in 2004 and 2003 and the
related allowance for loan losses reflects net charge-offs and losses incurred
with respect to real estate, time and demand, installment, credit card and other
loans, and the effect of the real estate market and general economic conditions
of the New York Metropolitan area on the loan portfolio. In addition to the
allowance for loan losses, a reserve for credit losses related to unfunded loan
commitments is included in other liabilities. There is no assurance that the
Company will not be required to make future adjustments to the allowance in
response to changing economic conditions or regulatory examinations.

Non-Interest Income

Non-interest income decreased for the three months ended September 30, 2004 to
$2.0 million from $2.1 million for the 2003 comparable period. The decrease was
primarily due to a reduction in loan prepayment fees ($0.2 million), partially
offset by an increase in letter of credit fees ($0.1 million). For the nine
month period ended September 30, 2004, non-interest income decreased by $7.0
million to $7.1 million from $14.1 million for the 2003 comparable period. The
decrease is primarily due to decreases in security gains of $7.2 million from
$8.4 million in 2003 to $1.2 million for the nine months ended 2004. The
decrease was partially offset by increases in service charges on deposit
accounts ($0.3 million).

<PAGE>

Non-Interest Expenses

Non-interest expenses increased $1.9 million (17.1 percent) to $13.0 million and
$4.3 million (13.0 percent) to $37.9 million for the three and nine-month
periods ended September 30, 2004 from the comparable periods in 2003,
respectively. The primary reason for these increases results from higher levels
of salaries and benefits, occupancy expenses, advertising and business
development, professional fees, communications expense, and amortization of
intangibles.

Salaries and employee benefits, the largest component of non-interest expense,
increased by $0.8 million, or 11.5 percent, and $2.5 million, or 12.3 percent,
during the three and nine month periods ended September 30, 2004 compared to the
prior year periods. The increase occurred due to additional personnel employed
by the Company primarily to accommodate the increases in deposits and loans and
their related services, including the acquisition of Reliance Bank. In addition,
salaries and employee benefits increased due to additional expenses related to
medical plans, payroll taxes, deferred compensation plans, and expenses related
to bonus plan compensation. Increases in salaries and employee benefits expense
were partially offset by an increase in the deferral of loan origination
expenses, as compared to prior year periods.

Changes in the other components of non-interest expense for the three and nine
month periods ended September 30, 2004, respectively, compared to the prior year
periods, were primarily due to the following:

o     Increase of $342,000 (20.0 percent) and $746,000 (14.6 percent) in
      occupancy and equipment expense. The increase in both periods is primarily
      due to an increase from higher depreciation expense and other occupancy
      related costs associated with new branch locations and investments in
      technology.

o     Increase of $30,000 (5.1 percent) and $175,000 (9.1 percent) in
      advertising and business development. The increase reflects an increase in
      marketing expense that includes television advertising to support
      increases in market share, as well as additional costs to expand customer
      relationships.

o     Increase of $511,000 (140.4 percent) and $660,000 (61.2 percent) in
      professional fees. The increase is due to higher legal fees related to a
      non-performing real estate construction loan, costs related to compliance
      with the Sarbanes-Oxley Act of 2002, and fees related to strategic
      analysis and tax planning.

o     Increase of $124,000 (41.3 percent) and $195,000 (21.5 percent) in
      communications expense. The increase relates to higher costs from an
      upgrade in data lines to support the Bank's communications infrastructure
      at branch locations and corporate headquarters.

o     Increase of $37,000 (14.6 percent) and $74,000 (9.7 percent) in
      amortization of intangibles. The increase reflects amortization of an
      additional intangible asset related to the acquisition of Reliance Bank in
      the first quarter of 2004.

o     Increase of $150,000 (17.5 percent) and $81,000 (2.9 percent) in other
      expenses. The increase was primarily due to fees related to the security
      assessment of the Bank's computer systems, as well as software conversion
      costs related to the Reliance Bank acquisition.


                                       26
<PAGE>

Income Taxes

The effective income tax rates for the three and nine month periods ended
September 30, 2004 were 33.8 percent and 33.9 percent compared to 36.2 percent
and 35.5 percent, respectively, for the prior periods in 2003. The lower
effective income tax rate for the 2004 periods reflects lower state income
taxes.


                                       27
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES  ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk at December 31, 2003
were reported in the Company's 2003 Annual Report to Stockholders. There have
been no material changes in the Company's market risk exposures at September 30,
2004 compared to December 31, 2003. Interest rate risk continues to be the
Company's primary market risk exposure since all Company transactions are
denominated in U.S. dollars with no direct foreign currency exchange or changes
in commodity price exposures. Substantially all market risk sensitive
instruments continue to be held to maturity or available for sale with no
significant financial instruments entered into for trading purposes. The Company
does not use derivative financial instruments such as interest rate swaps and
caps extensively and has not been party to any derivative financial instruments
during the nine months ended September 30, 2004.

The Company continues to use two methods to evaluate its market risk to changes
in interest rates, a "Static Gap" evaluation and a simulation analysis of the
impact of changes in interest rates on the Company's net interest income and
cash flow. There have been no changes in the Company's policy limit of
acceptable variances to net interest income at September 30, 2004 as compared to
December 31, 2003. The Company's "Static Gap" at September 30, 2004 was a
positive cumulative $224.5 million in the one-year time frame compared to a
positive cumulative $305.0 million at December 31, 2003. If interest rates were
to gradually increase 200 basis points or decrease 50 basis points (normally 200
basis points during periods of higher interest rates) from current rates, the
percentage change in estimated net interest income for the subsequent twelve
month measurement period continues to be within the Company's policy limit of
not changing by more than 5.0 percent.


                                       28
<PAGE>

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

ITEM 4. CONTROLS AND PROCEDURES

The Company has evaluated the design and operation of its disclosure controls
and procedures to determine whether they are effective in ensuring that the
disclosure of required information is timely made in accordance with the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and forms of
the Securities and Exchange Commission. This evaluation was made under the
supervision and with the participation of management, including the Company's
chief executive officer and chief financial officer as of September 30, 2004,
prior to the filing of this Quarterly Report on Form 10-Q. The chief executive
officer and chief financial officer have concluded, based on their review, that
the Company's disclosure controls and procedures, as defined by Exchange Act
Rules 13a-15(e) and 15d-15(e), are effective to ensure that information required
to be disclosed by the Company in reports that it files under the Exchange Act
is recorded, processed, summarized, and reported within the time period
specified in Securities and Exchange Commission rules and forms. There was no
change to the Company's internal control over financial reporting that occurred
during the fiscal quarter ended September 30, 2004 that has materially affected
or is reasonably likely to materially affect the Company's internal control over
financial reporting.


                                       29
<PAGE>

                           PART II - OTHER INFORMATION

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

The following table sets forth information with respect to purchases made by the
Company of its common stock during the nine months ended September 30, 2004.

<TABLE>
<CAPTION>
===================================================================================================================
                                                                                                            Maximum
                                                                                    Total Number          Number of
                                                                                       of Shares        Shares that
                                                                                    Purchased as         may yet be
                                              Total Number         Average      Part of Publicly          Purchased
                                                 of Shares      Price Paid             Announced          Under the
2004 Periods                                  Purchased(2)    Per Share(2)              Programs     Programs(1)&(2)
-------------------------------------------------------------------------------------------------------------------
<S>                                                <C>              <C>                  <C>                 <C>
January 1 to January 31                              5,445          $18.40                   N/A            315,000
February 1 to February 29                            4,318           21.90                   N/A            315,000
March 1 to March 31                                  4,302           23.24                   N/A            315,000
April 1 to April 30                                     --              --                   N/A            315,000
May 1 to May 31                                    248,195           20.49               181,860            133,140
June 1 to June 30                                   52,500           20.20                52,500             80,640
July 1 to July 31                                       --              --                   N/A             80,640
August 1 to August 31                               27,930           19.65                27,930             52,710
September 1 to September 30                          3,570           20.95                 3,570             49,140
-------------------------------------------------------------------------------------------------------------------
Total                                              346,260          $20.40               265,860             49,140
===================================================================================================================
</TABLE>

Common stock purchased reflected in the above table are the result of purchases
of common stock under the Company's Treasury Stock Purchase Plan and the
purchase of common stock in connection with the exercise of stock options during
the nine months ended September 30, 2004.

(1)   The Company announced a common stock repurchase plan of up to 315,000
      shares (adjusted for the five percent common stock dividend distributed in
      September 2004) on December 17, 2003 to expire on December 31, 2004.

(2)   Share amounts and price paid per share are adjusted for the five percent
      common stock dividend distributed in September 2004.


                                       30
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)   Exhibits

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

(3)(a)      Restated Certificate of Incorporation of Registrant (incorporated
            herein by reference to Registrant's Quarterly Report on Form 10-Q
            for the quarter ended June 30, 2002 ("2002 Second Quarter Form
            10-Q"), Exhibit (3)(a)).

(3)(b)      Bylaws of Registrant (incorporated herein by reference from
            Registrant's Registration Statement on Form S-14 (file no. 2-79734),
            Exhibit 3(b)).

(4)(a)      Junior Subordinated Indenture, dated February 5, 1997, between
            Registrant and The Chase Manhattan Bank, as trustee (incorporated
            herein by reference to Registrant's Annual Report on Form 10-K for
            the year ended December 31, 1996 ("1996 10-K"), Exhibit (4)(a)).

(4)(b)      Guarantee Agreement, dated February 5, 1997, by and between
            Registrant and The Chase Manhattan Bank, as trustee for the holders
            of 9.58% Capital Securities of Union State Capital Trust I
            (incorporated herein by reference to Registrant's 1996 10-K, Exhibit
            (4)(b)).

(4)(c)      Amended and Restated Declaration of Trust of Union State Capital
            Trust I (incorporated herein by reference to Registrant's 1996 10-K,
            Exhibit (4)(c)).

(4)(d)      Junior Subordinated Indenture, dated July 31, 2001, between
            Registrant and State Street Bank and Trust Company of Connecticut,
            National Association, as trustee (incorporated herein by reference
            to Registrant's Quarterly report on Form 10-Q for the quarter ended
            September 30, 2001 ("2001 Third Quarter 10-Q"), Exhibit (4)(d)).

(4)(e)      Guarantee Agreement, dated July 31, 2001, by and between Registrant
            and State Street Bank and Trust Company of Connecticut, National
            Association, as trustee for the holders of Capital Securities of
            Union State Statutory Trust II (incorporated herein by reference to
            Registrant's 2001 Third Quarter 10-Q, Exhibit (4)(e)).

(4)(f)      Amended and Restated Declaration of Trust of Union State Statutory
            Trust II (incorporated herein by reference to Registrant's 2001
            Third Quarter 10-Q, Exhibit (4)(f)).

(4)(g)      Indenture, dated June 26, 2002, between Registrant and State Street
            Bank and Trust Company of Connecticut, National Association, as
            Trustee, (incorporated herein by reference to Registrant's 2002
            Second Quarter Form 10-Q, Exhibit (4) (g)).

(4)(h)      Guarantee Agreement, dated June 26, 2002, by and between Registrant
            and State Street Bank and Trust Company of Connecticut, National
            Association, as Trustee for the holders of Capital Securities of USB
            Statutory Trust III, (incorporated herein by reference to
            Registrant's 2002 Second Quarter Form 10-Q, Exhibit (4) (h)).

(4)(i)      Amended and Restated Declaration of Trust of USB Statutory Trust
            III, (incorporated herein by reference to Registrant's 2002 Second
            Quarter Form 10-Q, Exhibit (4)(i)).

(10)(a)     Agreement of Employment dated as of November 16, 2003 between the
            Company and the Bank and Thomas E. Hales (incorporated herein by
            reference to Registrant's Annual Report on Form 10-K for the year
            ended December 31, 2003, Exhibit 10)(a)).


                                       31
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (cont'd)

(10)(b)     Agreement of Employment dated as of July 28, 2004, between the
            Company and the Bank and Raymond J. Crotty (incorporated herein by
            reference to Registrant's Quarterly Report on Form 10-Q for the
            quarter ended June 30, 2004 ("2004 Second Quarter Form 10-Q"),
            Exhibit (3)(a)).

(10)(c)     Agreement of Employment dated as of July 28, 2004, between the
            Company and the Bank and Steven T. Sabatini (incorporated herein by
            reference to Registrant's 2004 Second Quarter Form 10-Q), Exhibit
            (3)(b)).

(10)(d)     Registrant's 1993 Incentive Stock Option Plan (incorporated herein
            by reference from Registrant's Quarterly Report on Form 10-Q for the
            quarter ended September 30, 1999 ("1999 Third Quarter 10-Q"),
            Exhibit (10)(e)).

(10)(e)     Registrant's U.S.B. Holding Co., Inc. Employee Stock Ownership Plan
            (With 401(k) Provisions) (incorporated herein by reference from
            Registrant's Annual Report on Form 10-K for the year ended December
            31, 2001 ("2001 10-K"), Exhibit (10)(g)).

(10)(f)     Registrant's Dividend Reinvestment and Stock Purchase Plan
            (incorporated herein by reference from Registrant's Form S-3
            Registration Statement (file No. 33-72788).

(10)(g)     Registrant's Director Stock Option Plan (incorporated herein by
            reference to Registrant's 1996 10-K, Exhibit (10)(f)).

(10)(h)     Registrant's 1998 Director Stock Option Plan (incorporated herein by
            reference to Registrant's Form S-8 Registration Statement, filed
            June 5, 1998, Exhibit (10)(d)).

(10)(i)     Registrant's Key Employees' Supplemental Investment Plan, as amended
            July 1, 1997 and September 1, 1998 (incorporated herein by reference
            to the Plan's Annual Report on Form 11-K for the year ended December
            31, 1998, Exhibit (10)(j)).

(10)(j)     Registrant's Key Employees' Supplemental Diversified Investment Plan
            dated September 1, 1998 (incorporated herein by reference to the
            Plan's Annual Report on Form 11-K for the year ended December 31,
            1998, Exhibit (10)(k)).

(10)(k)     Registrant's 1997 Employee Stock Option Plan (incorporated herein by
            reference to Registrant's Proxy Statement filed April 18, 1997).

(10)(l)     Tappan Zee Financial, Inc. 1996 Stock Option Plan for Officers and
            Employees ("Employee Stock Option Plan") (incorporated herein by
            reference to Exhibit B to Tappan Zee Financial, Inc.'s Proxy
            Statement for use in connection with its 1996 Annual Meeting of
            Shareholders ("Tappan Zee 1996 Proxy Statement")).

(10)(m)     Amendment No. 1 to the Employee Stock Option Plan (incorporated
            herein by reference to Tappan Zee Financial, Inc.'s Annual Report on
            Form 10-K for the fiscal year ended March 31, 1997 ("Tappan Zee 1997
            10-K"), Exhibit 10.1.1).

(10)(n)     Amendment No. 2 to the Employee Stock Option Plan (incorporated
            herein by reference to Exhibit A to Tappan Zee Financial, Inc.'s
            Proxy Statement for use in connection with its 1997 Annual Meeting
            of Shareholders ("Tappan Zee 1997 Proxy Statement")).


                                       32
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (cont'd)

(10)(o)     Tappan Zee Financial, Inc. 1996 Stock Option Plan for Outside
            Directors ("Outside Director Option Plan") (incorporated herein by
            reference to Exhibit B to the Tappan Zee 1997 Proxy Statement).

(10)(p)     Amendment No. 1 to the Outside Director Option Plan (incorporated
            herein by reference to the Tappan Zee 1997 10-K, Exhibit 10.2.1).

(10)(q)     Amendment No. 2 to the Outside Director Option Plan (incorporated
            herein by reference to Exhibit B to the Tappan Zee 1997 Proxy
            Statement).

(10)(r)     Loan Agreement to the Employee Stock Ownership Plan Trust of Tappan
            Zee Financial, Inc. and Certain Affiliates (incorporated herein by
            reference to the Tappan Zee Financial, Inc.'s Annual Report on Form
            10-K for the fiscal year ended March 31, 1996, Exhibit 10.7).

(10)(s)     Deferred Compensation Plan for Directors of Tarrytowns Bank, FSB
            (Incorporated herein by reference to the Registration Statement on
            Form S-1 (file No. 33-94128), filed on June 30, 1995, as amended,
            Exhibit 10.7).

(10)(t)     Forms of Stock Option Agreement by and between Tappan Zee Financial,
            Inc. and recipients of stock options granted pursuant to the
            Employee Option Plan and the Outside Director Option Plan
            (incorporated herein by reference to the Tappan Zee 1997 10-K,
            Exhibit 10.16).

(10)(u)     Registrant's Retirement Plan for Non-Employee Directors of U.S.B.
            Holding Co., Inc. and Certain Affiliates dated effective as of May
            19, 1999 and as amended March 20, 2002 (incorporated herein by
            reference to the Registrant's Annual Report on Form 10-K for the
            year ended December 31, 2001, (Exhibit (10)(w)).

(10)(v)     Asset Purchase and account Assumption Agreement by and between Union
            State Bank and La Jolla bank dated May 25, 2000 (incorporated herein
            by reference to the Registrant's Quarterly Report on Form 10-Q for
            the six months ended June 30, 2000, Exhibit (10)(00)).

(10)(w)     U.S.B. Holding Co., Inc. Severance Plan dated January 30, 2002
            (incorporated herein by reference from Registrant's 2001 10-K,
            Exhibit (10)(y)).

(10)(x)     Asset Purchase and Liability Assumption Agreement dated as of June
            14, 2002, by and between Union State Bank and Fourth Federal Savings
            Bank, (incorporated herein by reference to Registrant's 2002 Second
            Quarter Form 10-Q, Exhibit (10)(z)).

(10)(y)     U.S.B. Holding Co., Inc. Executive Incentive Bonus Plan as amended
            February 24, 1999 (incorporated herein by reference to Registrant's
            Proxy Statement filed April 27, 1999).

(10)(z)     Amendment No. 2 to the Key Employees' Supplemental Investment Plan
            dated September 1, 2003 (incorporated by reference to the
            Registrant's Quarterly Report on Form 10-Q for the quarter ended
            September 30, 2003 ("2003 Third Quarter 10-Q"), Exhibit (10)(ab)).


                                       33
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (cont'd)

(10)(aa)    Amendment No. 1 to the Key Employees' Diversified Investment Plan
            dated September 1, 2003 (incorporated by reference to the
            Registrant's 2003 Third Quarter 10-Q, Exhibit (10)(ab)).

(10)(ab)    Amended and Restated Declaration of Trust of Union State Statutory
            Trust IV dated March 25, 2004 (incorporated by reference to the
            Registrant's Report on Form 10-Q for the quarter ended March 31,
            2004 ("2004 First Quarter 10-Q"), Exhibit (10)(ad)).

(10)(ac)    Indenture dated March 25, 2004 between Registrant and Wilmington
            Trust Company, as Trustee (incorporated by reference to the
            Registrant's 2004 First Quarter 10-Q, Exhibit (10)(ae)).

(10)(ad)    Guarantee Agreement dated March 24, 2004 by and between Registrant
            and Wilmington Trust Company, as Trustee for the holders of Capital
            Securities of Union State Bank Statutory Trust IV (incorporated by
            reference to the Registrant's 2004 First Quarter 10-Q, Exhibit
            (10)(af)).

(10)(ae)    Purchase and Assumption Agreement among the Federal Deposit
            Insurance Corporation, Receiver of Reliance Bank, White Plains, New
            York and Union State Bank, Nanuet, New York dated as of March 19,
            2004 (incorporated by reference to the Registrant's 2004 First
            Quarter 10-Q, Exhibit (10)(ag)).

(10)(af)    Loan Sale Agreement by and between the Federal Deposit Insurance
            corporation in its Receivership Capacity and Union State Bank,
            Nanuet, New York (incorporated by reference to the Registrant's 2004
            First Quarter 10-Q, Exhibit (10)(ah)).

(14)(a)     Business Code of Conduct (incorporated by reference to the
            Registrant's Annual Report on Form 10-K for the year ended December
            31, 2003, Exhibit (14)(a)).

(14)(b)     Code of Ethics applicable to Financial Officers and the Chief
            Executive Officer (incorporated by reference to the Registrant's
            Annual Report on Form 10-K for the year ended December 31, 2003,
            Exhibit (14)(b)).

(31.1)      Certification of Chief Executive Officer Pursuant to 18 U.S.C.
            Section 1350, As Adopted Pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002.*

(31.2)      Certification of Chief Financial Officer Pursuant to 18 U.S.C.
            Section 1350, As Adopted Pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002.*

(32)        Certification of Chief Executive Officer and Chief Financial Officer
            Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.*

*Filed Herewith.

(B)   Reports on Form 8-K

      The Company filed a report on Form 8-K on July 30, 2004 regarding the
      three and six months ended June 30, 2004 earnings. Selected Company
      financial information was included in such Form 8-K. The Company also
      filed reports on Form 8K on August 26, 2004 and September 24, 2004
      regarding the declaration of a five percent common stock dividend and
      increase in the quarterly cash dividend, and the Company engaging Keefe,
      Bruyette, & Woods, Inc. to evaluate strategic opportunities, respectively.


                                       34
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on November 9, 2004.

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


/s/ Thomas E. Hales                     /s/ Steven T. Sabatini
-----------------------------------     ----------------------------------------
Thomas E. Hales                         Steven T. Sabatini
Chairman of the Board, President,       Senior Executive Vice President,
Chief Executive Officer and Director    Chief Financial Officer, Assistant
                                        Secretary and Director
                                        (Principal Financial and
                                        Accounting Officer)


                                       35