**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,**
**D.C.**
**20549**

**FORM**
**10-Q**

| x | Quarterly                  report pursuant to Section 13 or 15(d) of the Securities Exchange                  Act of                  1934 |
|---|--------------------------------------------------------------------------------------------------------------------------------------------|
|   | For the quarterly period ended June                30, 2006,                or |
|--------|--------------------------------------------------------------------------------|

| o | 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.**

----

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

**       **

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

**845-365-4600**

----

| **CLASS**                                                             |   | **NUMBER                OF SHARES****OUTSTANDING                AT AUGUST 1,                2006** |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|
|                                                                  |   |                                                                                               |
| Common                stock, par value $0.01 per                share |   | 21,760,268                                                                                         |

** **

----

**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 JUNE 30, 2006 ANDDECEMBER                    31, 2005                                    | 1                             |
|                                             |                                                                                                                                                                                |                          |
|                                             | CONDENSED                    CONSOLIDATED STATEMENTS OF INCOME                    FOR THE THREE MONTHS ENDED JUNE                    30, 2006 AND 2005                              | 2                             |
|                                             |                                                                                                                                                                                |                          |
|                                             | CONDENSED                    CONSOLIDATED STATEMENTS OF INCOME                    FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005                                                   | 3                             |
|                                             |                                                                                                                                                                                |                          |
|                                             | CONDENSED                    CONSOLIDATED STATEMENTS OF CASH                    FLOWS FOR THE SIX MONTHS ENDED JUNE                    30, 2006 AND 2005                            | 4                             |
|                                             |                                                                                                                                                                                |                          |
|                                             | CONDENSED                    CONSOLIDATED STATEMENTS OF CHANGES                    IN STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND                    2005 | 5                             |
|                                             |                                                                                                                                                                                |                          |
|                                             | NOTES                    TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                                             | 7                             |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 2.**                                      | MANAGEMENT'S                    DISCUSSION AND ANALYSIS OF FINANCIAL                    CONDITION AND RESULTS OF OPERATIONS                                                         | 22                            |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 3.**                                      | QUANTITATIVE                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                                         | 35                            |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 4.**                                      | CONTROLS                  AND PROCEDURES                                                                                                                                            | 36                            |
|                                             |                                                                                                                                                                                |                          |
| **PART                II. OTHER INFORMATION**    |                                                                                                                                                                                |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 1A.**                                     | RISK                  FACTORS                                                                                                                                                       | 37                            |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 2.**                                      | UNREGISTERED                  SALES OF EQUITY SECURITIES                                                                                                                            |                          |
|                                             | AND                  USE OF PROCEEDS                                                                                                                                                | 37                            |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 4.**                                      | SUBMISSION                  OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                | 37                            |
|                                             |                                                                                                                                                                                |                          |
| **ITEM 6.**                                      | EXHIBITS                                                                                                                                                                            | 38                            |
|                                             |                                                                                                                                                                                |                          |
| SIGNATURES                                       | 39                                                                                                                                                                                  |

----

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

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

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

----

|                                                                                                                                                         |   | **(000’s,                except share data)** |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------------|
| **ASSETS**                                                                                                                                                   |   | **June                30,****2006**                 |          | **December                31,****2005** |   |
| Cash                and due from banks                                                                                                                       |   | $                                                   | 41,200        |   | $ | 58,635 |   |
| Federal                funds sold                                                                                                                            |   |                                                | 63,300        |   |   | 22,300 |   |
| Cash                and cash equivalents                                                                                                                     |   |                                                | **104,500**   |   |   | **80,935** |   |
| Interest                bearing deposits in other banks                                                                                                      |   |                                                | 123           |   |   | 132 |   |
| Securities:                                                                                                                                                  |   |                                                |          |   |   |   |   |
| Available                for sale (at estimated fair value)                                                                                                  |   |                                                | 394,022       |   |   | 375,990 |   |
| Held                to maturity (estimated fair value of $714,018 as of 2006 and                $740,269 as of 2005)                                         |   |                                                | 738,713       |   |   | 746,851 |   |
| Loans,                net of allowance for loan losses of $16,260 as of 2006 and $15,164                as of                2005                            |   |                                                | 1,482,010     |   |   | 1,459,820 |   |
| Premises                and equipment, net                                                                                                                   |   |                                                | 14,154        |   |   | 13,762 |   |
| Accrued                interest receivable                                                                                                                   |   |                                                | 18,325        |   |   | 18,184 |   |
| Federal                Home Loan Bank of New York stock                                                                                                      |   |                                                | 32,273        |   |   | 30,776 |   |
| Intangible                assets, net                                                                                                                        |   |                                                | 3,216         |   |   | 3,826 |   |
| Goodwill                                                                                                                                                     |   |                                                | 1,380         |   |   | 1,380 |   |
| Other                assets                                                                                                                                  |   |                                                | 31,570        |   |   | 26,570 |   |
| **TOTAL                ASSETS**                                                                                                                              |   | **$**                                               | **2,820,286** |   | **$** | **2,758,226** |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                |   |                                                |          |   |   |   |   |
| **Liabilities:**                                                                                                                                             |   |                                                |          |   |   |   |   |
| Non-interest                bearing deposits                                                                                                                 |   | $                                                   | 308,966       |   | $ | 315,156 |   |
| Interest                bearing deposits:                                                                                                                    |   |                                                |          |   |   |   |   |
| NOW                accounts                                                                                                                                  |   |                                                | 174,137       |   |   | 163,295 |   |
| Money                market accounts                                                                                                                         |   |                                                | 193,769       |   |   | 158,286 |   |
| Savings                deposits                                                                                                                              |   |                                                | 424,415       |   |   | 442,386 |   |
| Time                deposits                                                                                                                                 |   |                                                | 765,452       |   |   | 768,079 |   |
| **Total                deposits**                                                                                                                            |   |                                                | **1,866,739** |   |   | **1,847,202** |   |
| Accrued                interest payable                                                                                                                      |   |                                                | 9,476         |   |   | 8,546 |   |
| Accrued                expenses and other liabilities                                                                                                        |   |                                                | 15,164        |   |   | 14,180 |   |
| Securities                sold under agreements to repurchase                                                                                                |   |                                                | 566,238       |   |   | 550,332 |   |
| Federal                Home Loan Bank of New York advances                                                                                                   |   |                                                | 91,818        |   |   | 71,827 |   |
| Subordinated                debt issued in connection with corporation-obligated mandatory                redeemable capital securities of subsidiary trusts |   |                                                | 61,858        |   |   | 61,858 |   |
| **Total                liabilities**                                                                                                                         |   |                                                | **2,611,293** |   |   | **2,553,945** |   |
| Minority-interest                in junior preferred stock of consolidated subsidiary                                                                        |   |                                                | 128           |   |   | 128 |   |
| Commitments                and contingencies (Note 11)                                                                                                       |   |                                                |          |   |   |   |   |
| **Stockholders’                equity:**                                                                                                               |   |                                                |          |   |   |   |   |
| Preferred                stock, no par value                                                                                                                 |   |                                                |          |   |   |   |   |
| Authorized                shares: 10,000,000; no shares outstanding as of 2006 and                2005                                                       |   |                                                | —       |   |   | — |   |
| Common                stock, $0.01 par value; authorized shares 50,000,000;Issued                shares of 23,120,733 as of 2006 and 2005                    |   |                                                | 231           |   |   | 231 |   |
| Additional                paid-in capital                                                                                                                    |   |                                                | 211,876       |   |   | 211,686 |   |
| Retained                earnings                                                                                                                             |   |                                                | 30,891        |   |   | 21,654 |   |
| Treasury                stock at cost, common shares 1,352,165 as of 2006 and 1,406,928 as                of                2005                             |   |                                                | (21,614       | ) |   | (21,670 | ) |
| Common                stock held for benefit plans                                                                                                           |   |                                                | (3,087        | ) |   | (2,927 | ) |
| Deferred                compensation obligation                                                                                                              |   |                                                | 3,087         |   |   | 2,927 |   |
| Accumulated                other comprehensive loss                                                                                                          |   |                                                | (12,519       | ) |   | (7,748 | ) |
| **Total                stockholders’ equity**                                                                                                          |   |                                                | **208,865**   |   |   | **204,153** |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                          |   | **$**                                               | **2,820,286** |   | **$** | **2,758,226** |   |

*See      notes to condensed consolidated financial statements.*

----

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

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

----

|                                                                                                                                                                                     |   | **(000’s,                except share                data)** |           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|----------------|
|                                                                                                                                                                                     |   | **Three                Months                Ended**               |           |
|                                                                                                                                                                                     |   | **June                30,**                                        |           |
|                                                                                                                                                                                     |   | **2006**                                                           |           | **2005** |   |
| **INTEREST                INCOME:**                                                                                                                                                      |   |                                                               |           |   |   |
| Interest                and fees on loans                                                                                                                                                |   | $                                                                  | 27,014         |   | $ | 24,990 |   |
| Interest                on federal funds sold                                                                                                                                            |   |                                                               | 390            |   |   | 173 |   |
| Interest                and dividends on securities:                                                                                                                                     |   |                                                               |           |   |   |   |   |
| U.S.                government agencies                                                                                                                                                  |   |                                                               | 9,945          |   |   | 8,680 |   |
| Mortgage-backed                securities                                                                                                                                                |   |                                                               | 4,549          |   |   | 4,260 |   |
| Obligations                of states and political subdivisions                                                                                                                          |   |                                                               | 1,102          |   |   | 1,003 |   |
| Corporate                and other                                                                                                                                                       |   |                                                               | 43             |   |   | 38 |   |
| Dividends                on Federal Home Loan Bank of New York stock                                                                                                                     |   |                                                               | 403            |   |   | 348 |   |
| **Total                interest income**                                                                                                                                                 |   |                                                               | **43,446**     |   |   | **39,492** |   |
| **INTEREST                EXPENSE:**                                                                                                                                                     |   |                                                               |           |   |   |   |   |
| Interest                on deposits                                                                                                                                                      |   |                                                               | 11,237         |   |   | 7,569 |   |
| Interest                on borrowings                                                                                                                                                    |   |                                                               | 7,962          |   |   | 6,826 |   |
| Interest                on subordinated debt issued in connection withcorporation                - obligated mandatory redeemable capital                securities of subsidiary trusts |   |                                                               | 1,382          |   |   | 1,182 |   |
| **Total                interest expense**                                                                                                                                                |   |                                                               | **20,581**     |   |   | **15,577** |   |
| **NET                INTEREST INCOME**                                                                                                                                                   |   |                                                               | **22,865**     |   |   | **23,915** |   |
| Provision                for credit losses                                                                                                                                               |   |                                                               | 998            |   |   | 85 |   |
| **Net                interest income after provision for credit losses**                                                                                                                 |   |                                                               | **21,867**     |   |   | **23,830** |   |
| **NON-INTEREST                INCOME:**                                                                                                                                                  |   |                                                               |           |   |   |   |   |
| Service                charges and fees                                                                                                                                                  |   |                                                               | 834            |   |   | 927 |   |
| Other                income                                                                                                                                                              |   |                                                               | 773            |   |   | 952 |   |
| **Total                non-interest income**                                                                                                                                             |   |                                                               | **1,607**      |   |   | **1,879** |   |
| **NON-INTEREST                EXPENSES:**                                                                                                                                                |   |                                                               |           |   |   |   |   |
| Salaries                and employee benefits                                                                                                                                            |   |                                                               | 8,000          |   |   | 8,268 |   |
| Occupancy                and equipment                                                                                                                                                   |   |                                                               | 1,942          |   |   | 1,812 |   |
| Advertising                and business development                                                                                                                                      |   |                                                               | 673            |   |   | 595 |   |
| Professional                fees                                                                                                                                                         |   |                                                               | 401            |   |   | 470 |   |
| Communications                                                                                                                                                                           |   |                                                               | 297            |   |   | 327 |   |
| Amortization                of intangibles                                                                                                                                               |   |                                                               | 276            |   |   | 285 |   |
| Stationery                and printing                                                                                                                                                   |   |                                                               | 143            |   |   | 152 |   |
| FDIC                insurance                                                                                                                                                            |   |                                                               | 64             |   |   | 70 |   |
| Other                expense                                                                                                                                                             |   |                                                               | 994            |   |   | 1,009 |   |
| **Total                non-interest expenses**                                                                                                                                           |   |                                                               | **12,790**     |   |   | **12,988** |   |
| Income                before income taxes                                                                                                                                                |   |                                                               | 10,684         |   |   | 12,721 |   |
| Provision                for income taxes                                                                                                                                                |   |                                                               | 3,459          |   |   | 3,912 |   |
| **NET                INCOME**                                                                                                                                                            |   | **$**                                                              | **7,225**      |   | **$** | **8,809** |   |
| **BASIC                EARNINGS PER COMMON SHARE**                                                                                                                                       |   | **$**                                                              | **0.33**       |   | **$** | **0.41** |   |
| **DILUTED                EARNINGS PER COMMON SHARE**                                                                                                                                     |   | **$**                                                              | **0.32**       |   | **$** | **0.39** |   |
| **WEIGHTED                AVERAGE COMMON SHARES**                                                                                                                                        |   |                                                               | **21,765,023** |   |   | **21,577,459** |   |
| **ADJUSTED                WEIGHTED AVERAGE COMMON SHARES**                                                                                                                               |   |                                                               | **22,771,764** |   |   | **22,418,588** |   |
| **DIVIDENDS                PER COMMON SHARE**                                                                                                                                            |   | **$**                                                              | **0.14**       |   | **$** | **0.13** |   |

*See      notes to condensed consolidated financial statements.*

----

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

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

----

|                                                                                                                                                                                      |   | **(000’s,                except share data)****Six                Months Ended****June                30,** |           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                                                                                                      |   | **2006**                                                                                                          |           | **2005** |   |
| **INTEREST                INCOME:**                                                                                                                                                       |   |                                                                                                              |           |   |   |
| Interest                and fees on loans                                                                                                                                                 |   | $                                                                                                                 | 52,955         |   | $ | 48,621 |   |
| Interest                on federal funds sold                                                                                                                                             |   |                                                                                                              | 619            |   |   | 528 |   |
| Interest                and dividends on securities:                                                                                                                                      |   |                                                                                                              |           |   |   |   |   |
| U.S.                government agencies                                                                                                                                                   |   |                                                                                                              | 19,880         |   |   | 16,366 |   |
| Mortgage-backed                securities                                                                                                                                                 |   |                                                                                                              | 8,768          |   |   | 8,533 |   |
| Obligations                of states and political subdivisions                                                                                                                           |   |                                                                                                              | 2,214          |   |   | 1,929 |   |
| Corporate                and other                                                                                                                                                        |   |                                                                                                              | 85             |   |   | 73 |   |
| Dividends                on Federal Home Loan Bank of New York stock                                                                                                                      |   |                                                                                                              | 781            |   |   | 663 |   |
| **Total                interest income**                                                                                                                                                  |   |                                                                                                              | **85,302**     |   |   | **76,713** |   |
| **INTEREST                EXPENSE:**                                                                                                                                                      |   |                                                                                                              |           |   |   |   |   |
| Interest                on deposits                                                                                                                                                       |   |                                                                                                              | 21,366         |   |   | 14,164 |   |
| Interest                on borrowings                                                                                                                                                     |   |                                                                                                              | 15,000         |   |   | 13,342 |   |
| Interest                on subordinated debt issued in connection with corporation                - obligated mandatory redeemable capital                securities of subsidiary trusts |   |                                                                                                              | 2,709          |   |   | 2,304 |   |
| **Total                interest expense**                                                                                                                                                 |   |                                                                                                              | **39,075**     |   |   | **29,810** |   |
| **NET                INTEREST INCOME**                                                                                                                                                    |   |                                                                                                              | **46,227**     |   |   | **46,903** |   |
| Provision                for credit losses                                                                                                                                                |   |                                                                                                              | 1,307          |   |   | 476 |   |
| **Net                interest income after provision for credit losses**                                                                                                                  |   |                                                                                                              | **44,920**     |   |   | **46,427** |   |
| **NON-INTEREST                INCOME:**                                                                                                                                                   |   |                                                                                                              |           |   |   |   |   |
| Service                charges and fees                                                                                                                                                   |   |                                                                                                              | 1,663          |   |   | 1,831 |   |
| Other                income                                                                                                                                                               |   |                                                                                                              | 1,901          |   |   | 1,875 |   |
| **Total                non-interest income**                                                                                                                                              |   |                                                                                                              | **3,564**      |   |   | **3,706** |   |
| **NON-INTEREST                EXPENSES:**                                                                                                                                                 |   |                                                                                                              |           |   |   |   |   |
| Salaries                and employee benefits                                                                                                                                             |   |                                                                                                              | 16,264         |   |   | 16,589 |   |
| Occupancy                and equipment                                                                                                                                                    |   |                                                                                                              | 3,890          |   |   | 3,862 |   |
| Advertising                and business development                                                                                                                                       |   |                                                                                                              | 1,275          |   |   | 1,170 |   |
| Professional                fees                                                                                                                                                          |   |                                                                                                              | 774            |   |   | 1,138 |   |
| Communications                                                                                                                                                                            |   |                                                                                                              | 643            |   |   | 668 |   |
| Amortization                of intangibles                                                                                                                                                |   |                                                                                                              | 561            |   |   | 576 |   |
| Stationery                and printing                                                                                                                                                    |   |                                                                                                              | 296            |   |   | 313 |   |
| FDIC                insurance                                                                                                                                                             |   |                                                                                                              | 136            |   |   | 146 |   |
| Other                expense                                                                                                                                                              |   |                                                                                                              | 1,919          |   |   | 1,870 |   |
| **Total                non-interest expenses**                                                                                                                                            |   |                                                                                                              | **25,758**     |   |   | **26,332** |   |
| Income                before income taxes                                                                                                                                                 |   |                                                                                                              | 22,726         |   |   | 23,801 |   |
| Provision                for income taxes                                                                                                                                                 |   |                                                                                                              | 7,386          |   |   | 7,601 |   |
| **NET                INCOME**                                                                                                                                                             |   | **$**                                                                                                             | **15,340**     |   | **$** | **16,200** |   |
| **BASIC                EARNINGS PER COMMON SHARE**                                                                                                                                        |   | **$**                                                                                                             | **0.71**       |   | **$** | **0.75** |   |
| **DILUTED                EARNINGS PER COMMON SHARE**                                                                                                                                      |   | **$**                                                                                                             | **0.67**       |   | **$** | **0.72** |   |
| **WEIGHTED                AVERAGE COMMON SHARES**                                                                                                                                         |   |                                                                                                              | **21,744,542** |   |   | **21,507,990** |   |
| **ADJUSTED                WEIGHTED AVERAGE COMMON SHARES**                                                                                                                                |   |                                                                                                              | **22,755,686** |   |   | **22,421,999** |   |
| **DIVIDENDS                PER COMMON SHARE**                                                                                                                                             |   | **$**                                                                                                             | **0.28**       |   | **$** | **0.26** |   |

*See      notes to condensed consolidated financial statements.*

----

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

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

----

|                                                                                                                                |   | **(000’s)****Six                Months Ended****June                30,** |        |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|-------------|
|                                                                                                                                |   | **2006**                                                                        |        | **2005** |   |
| **OPERATING                ACTIVITIES:**                                                                                            |   |                                                                            |        |
| Net                income                                                                                                           |   | $                                                                               | 15,340      |   | $ | 16,200 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                     |   |                                                                            |        |   |   |   |   |
| Provision                for credit losses                                                                                          |   |                                                                            | 1,307       |   |   | 476 |   |
| Depreciation                and amortization                                                                                        |   |                                                                            | 1,648       |   |   | 1,751 |   |
| Amortization                of discounts on securities - net                                                                        |   |                                                                            | (102        | ) |   | (250 | ) |
| Deferred                income tax benefit, net                                                                                     |   |                                                                            | (428        | ) |   | (1,719 | ) |
| Gains                on securities transactions                                                                                     |   |                                                                            | (5          | ) |   | — |   |
| Share                based compensation                                                                                             |   |                                                                            | 499         |   |   | — |   |
| Excess                income tax benefits from share based payment arrangements                                                     |   |                                                                            | (731        | ) |   | — |   |
| Non-cash                benefit plan expense                                                                                        |   |                                                                            | 14          |   |   | 170 |   |
| Increase                in accrued interest receivable                                                                              |   |                                                                            | (141        | ) |   | (27 | ) |
| Increase                in accrued interest payable                                                                                 |   |                                                                            | 930         |   |   | 120 |   |
| Decrease                in accrued income tax payable                                                                               |   |                                                                            | (1,097      | ) |   | (800 | ) |
| Other                - net                                                                                                          |   |                                                                            | 899         |   |   | 6,878 |   |
| **Net                cash provided by operating activities**                                                                        |   |                                                                            | **18,133**  |   |   | **22,799** |   |
| **INVESTING                ACTIVITIES:**                                                                                            |   |                                                                            |        |   |   |   |   |
| Proceeds                from sales of securities available for sale                                                                 |   |                                                                            | 10          |   |   | — |   |
| Proceeds                from principal repayments, redemptions and maturities of:                                                   |   |                                                                            |        |   |   |   |   |
| Securities                available for sale                                                                                        |   |                                                                            | 25,427      |   |   | 165,748 |   |
| Securities                held to maturity                                                                                          |   |                                                                            | 16,117      |   |   | 31,130 |   |
| Purchases                of securities available for sale                                                                           |   |                                                                            | (51,098     | ) |   | (14,750 | ) |
| Purchases                of securities held to maturity                                                                             |   |                                                                            | (7,582      | ) |   | (270,233 | ) |
| Net                purchases of Federal Home Loan Bank of New York stock                                                            |   |                                                                            | (1,497      | ) |   | (3,707 | ) |
| Net                decrease in interest bearing deposits in other banks                                                             |   |                                                                            | 9           |   |   | 121 |   |
| Net                increase in loans outstanding                                                                                    |   |                                                                            | (23,602     | ) |   | (8,962 | ) |
| Purchases                of premises and equipment - net                                                                            |   |                                                                            | (1,430      | ) |   | (161 | ) |
| **Net                cash used for investing activities**                                                                           |   |                                                                            | **(43,646** | **)** |   | **(100,814** | **)** |
| **FINANCING                ACTIVITIES:**                                                                                            |   |                                                                            |        |   |   |   |   |
| Net                increase in non-interest bearing deposits, NOW, money market and                savings                accounts  |   |                                                                            | 22,164      |   |   | 41,291 |   |
| Net                decrease in time deposits, net of withdrawals and                maturities                                      |   |                                                                            | (2,627      | ) |   | (1,992 | ) |
| Net                (decrease) increase in securities sold under agreements to repurchase                -                short-term |   |                                                                            | (61,594     | ) |   | 73,654 |   |
| Proceeds                from securities sold under agreements to repurchase -                long-term                              |   |                                                                            | 160,000     |   |   | — |   |
| Repayment                of securities sold under agreement to repurchase -                long-term                                |   |                                                                            | (82,500     | ) |   | — |   |
| Proceeds                from Federal Home Loan Bank of New York advances -                long-term                                 |   |                                                                            | 50,000      |   |   | ― |   |
| Repayment                of Federal Home Loan Bank of New York advances - long term                                                 |   |                                                                            | (30,009     | ) |   | (873 | ) |
| Cash                dividends paid                                                                                                  |   |                                                                            | (6,103      | ) |   | (5,554 | ) |
| Excess                income tax benefits from share based payment arrangements                                                     |   |                                                                            | 731         |   |   | — |   |
| Proceeds                from exercise of common stock options                                                                       |   |                                                                            | 1,631       |   |   | 2,472 |   |
| Purchases                of treasury stock                                                                                          |   |                                                                            | (2,615      | ) |   | (1,409 | ) |
| **Net                cash provided by financing activities**                                                                        |   | **$**                                                                           | **49,078**  |   | **$** | **107,589** |   |
| **Increase                in Cash and Cash Equivalents**                                                                            |   | **$**                                                                           | **23,565**  |   | **$** | **29,574** |   |
| **Cash                and Cash Equivalents, Beginning of Period**                                                                   |   |                                                                            | **80,935**  |   |   | **65,295** |   |
| **Cash                and Cash Equivalents, End of Period**                                                                         |   | **$**                                                                           | **104,500** |   | **$** | **94,869** |   |
| **Supplemental                Disclosures:**                                                                                        |   |                                                                            |        |   |   |   |   |
| Interest                paid                                                                                                        |   | $                                                                               | (38,145     | ) | $ | (29,690 | ) |
| Income                tax payments                                                                                                  |   | $                                                                               | (8,227      | ) | $ | (9,090 | ) |
| Purchases                of held to maturity securities not yet settled, including interest                receivable               |   | $                                                                               | —     |   | $ | 3,247 |   |
| Amortization                of loss on transfer of available for sale securities to held to maturity                securities      |   | $                                                                               | 338         |   | $ | 339 |   |
| Change                in shares held in trust for deferred compensation                                                             |   | $                                                                               | (160        | ) | $ | (160 | ) |
| Change                in deferred compensation obligation                                                                           |   | $                                                                               | 160         |   | $ | 160 |   |
| Change                in accumulated other comprehensive income                                                                     |   | $                                                                               | (4,771      | ) | $ | 1,316 |   |
| Non-cash                exercise of stock options and related tax benefit                                                           |   | $                                                                               | 1,384       |   | $ | 3,725 |   |
| Non-cash                purchases of treasury stock related to the exercise of stock                options                         |   | $                                                                               | (197        | ) | $ | (2,805 | ) |
| Issuance                of treasury stock related to the exercise of stock options                                                  |   | $                                                                               | 2,869       |   | $ | 6,069 |   |

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

----

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

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

----

**FOR      THE SIX MONTHS ENDED JUNE 30, 2006**

**(000’s      except share data)**

|                                                                                                                                |   | **Common****Stock****Shares****Outstanding** |           | **Common****Stock****Par****Value** |   |  **Additional****Paid-In****Capital** |   |   **Retained****Earnings** |        |   **Treasury****Stock** |   | **Common****Stock****Held                for****Benefit                Plans** |   |  **Deferred****Compensation****Obligation** |        | **Accumulated****Other****Comprehensive****Loss** |   |  **Total****Stockholders’****Equity** |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------------|-------------------------------------|--------|--------------------------------------------|--------|--------------------------------------|-------------|-----------------------------------|--------|--------------------------------------------------------------------------------|--------|--------------------------------------------------|-------------|---------------------------------------------------|--------|--------------------------------------------------|--------|
| Balance                at January 1, 2006                                                                                           |   |                                         | 21,713,805     |                                | $      | 231                                        |   | $                                    | 211,686     |                              | $      | 21,654                                                                         |   | $                                                | (21,670     | )                                                 | $      | (2,927                                           | )      | $ | 2,927 |   | $ | (7,748 | ) | $ | 204,153 |   |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                                                                                           |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | 15,340                                                                         |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 15,340 |   |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive              loss:                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized securities loss                arising during the period, net                of tax benefit of $2,567 |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (4,768 | ) |   | (4,768 | ) |
| Reclassification                adjustment of net                gain for securities sold, net                of tax of $2          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (3 | ) |   | (3 | ) |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Other                comprehensive loss                                                                                             |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   | (4,771 | ) |   | (4,771 | ) |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Total                comprehensive income                                                                                           |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 10,569 |   |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Cash              dividends:                                                                                                        |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                ($0.28 per share)                                                                                             |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (6,093                                                                         | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (6,093 | ) |
| Junior                preferred stock                                                                                               |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (10                                                                            | )      |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | (10 | ) |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                stock options exercised and                related tax benefit                                                |   |                                         | 183,985        |                                |   |                                       |   |                                 | 147         |                              |   |                                                                           |   |                                             | 2,869       |                                              |   |                                             |   |   |   |   |   |   |   |   | 3,016 |   |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Amortization                related to stock options                vested during the period                                        |   |                                         |           |                                |   |                                       |   |                                 | 499         |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   | 499 |   |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Purchases                of treasury stock                                                                                          |   |                                         | (129,222       | )                                   |   |                                       |   |                                 | (456        | )                                 |   |                                                                           |   |                                             | (2,813      | )                                                 |   |                                             |   |   |   |   |   |   |   |   | (3,269 | ) |
|                                                                                                                                |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Deferred                compensation obligation                                                                                     |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |        |                                              |   | (160                                             | )      |   | 160 |   |   |   |   |   | ― |   |
| **Balance                at June 30, 2006**                                                                                         |   |                                         | **21,768,568** |                                | **$**  | **231**                                    |   | **$**                                | **211,876** |                              | **$**  | **30,891**                                                                     |   | **$**                                            | **(21,614** | **)**                                             | **$**  | **(3,087**                                       | **)**  | **$** | **3,087** |   | **$** | **(12,519** | **)** | **$** | **208,865** |   |

*See      notes to condensed consolidated financial statements.*

----

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

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

----

**FOR      THE SIX MONTHS ENDED JUNE 30, 2005**

**(000’s      except share data)**

|                                                                                                                              |   | **Common****Stock****Shares****Outstanding** |           | **Common****Stock****Par****Value** |   |  **Additional****Paid-In****Capital** |   |   **Retained****Earnings** |        |   **Treasury****Stock** |   | **Common****Stock****Held                for****Benefit                Plans** |   |  **Deferred****Compensation****Obligation** |    | **Accumulated****Other****Comprehensive****Loss** |   |  **Total****Stockholders’****Equity** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------------|-------------------------------------|--------|--------------------------------------------|--------|--------------------------------------|-------------|-----------------------------------|--------|--------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|---------------------------------------------------|--------|--------------------------------------------------|--------|
| Balance                at January 1, 2005                                                                                         |   |                                         | 20,346,814     |                                | $      | 220                                        |   | $                                    | 184,166     |                              | $      | 26,336                                                                         |   | $                                                | (22,855 | )                                                 | $      | (2,780                                           | )      | $ | 2,746 |   | $ | (5,787 | ) | $ | 182,046 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | 16,200                                                                         |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   | 16,200 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Other              comprehensive income:                                                                                          |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized securities gain                arising during the period, net                of tax benefit of $709 |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   | 1,316 |   |   | 1,316 |   |
| Other                comprehensive income                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   | 1,316 |   |   | 1,316 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Total                comprehensive income                                                                                         |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   | 17,516 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Cash              dividends:                                                                                                      |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                ($0.26 per share)                                                                                           |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (5,544                                                                         | )      |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   | (5,544 | ) |
| Junior                preferred stock                                                                                             |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   | (10                                                                            | )      |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   | (10 | ) |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Common                stock options exercised and related tax benefit                                                             |   |                                         | 442,926        |                                |   |                                       |   |                                 | 128         |                              |   |                                                                           |   |                                             | 6,069   |                                              |   |                                             |   |   |   |   |   |   |   |   | 6,197 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Purchases                of treasury stock                                                                                        |   |                                         | (189,595       | )                                   |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             | (4,214  | )                                                 |   |                                             |   |   |   |   |   |   |   |   | (4,214 | ) |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| ESOP                shares committed to be                released                                                                |   |                                         |           |                                |   |                                       |   |                                 | 65          |                              |   |                                                                           |   |                                             |    |                                              |   | 34                                               |   |   |   |   |   |   |   |   | 99 |   |
|                                                                                                                              |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Deferred                compensation obligation                                                                                   |   |                                         |           |                                |   |                                       |   |                                 |        |                              |   |                                                                           |   |                                             |    |                                              |   | (160                                             | )      |   | 160 |   |   |   |   |   | ― |   |
| **Balance                at June 30, 2005**                                                                                       |   |                                         | **20,600,145** |                                | **$**  | **220**                                    |   | **$**                                | **184,359** |                              | **$**  | **36,982**                                                                     |   | **$**                                            | (21,000 | )                                                 | **$**  | (2,906                                           | )      | **$** | **2,906** |   | **$** | (4,471 | ) | **$** | **196,090** |   |

*See      notes to condensed consolidated financial statements.*

----

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

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

----

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

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

----

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

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

----

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

**Accounting      for Exchanges of Nonmonetary Assets: **

**Accounting      Changes and Error Corrections: **

**Other-Than-Temporary      Impairment: **

----

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

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

----

**Pending      Accounting Pronouncement:**

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

----

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

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

----

|                                                                                                                  |   |        |        | **2006**                                              |   | **($                in 000’s)**           |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|-------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                                                  |   | **Options** |        | **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value** |   |
| Vested                outstanding at January 1,                                                                       |   |        | 558,082     |                                                  | $      | 13.09                                           |   | $ | 5,216 |   |
| Unvested                outstanding at January 1,                                                                     |   |        | 94,811      |                                                  |   | 20.14                                           |   |   | 224 |   |
| **Outstanding                at January 1,**                                                                          |   |        | **652,893** |                                                  |   | **14.11**                                       |   |   | **5,440** |   |
| Granted                                                                                                               |   |        | 97,486      |                                                  |   | 21.88                                           |   |   | 60 |   |
| Exercised                                                                                                             |   |        | (55,667     | )                                                     |   | 9.20                                            |   |   | (704 | ) |
| **Outstanding                at June 30,**                                                                            |   |        | **694,712** |                                                  |   | **15.60**                                       |   |   | **4,796** |   |
| Unvested                outstanding at June 30                                                                        |   |        | (97,486     | )                                                     |   | 21.88                                           |   |   | (60 | ) |
| **Exercisable                at June 30,**                                                                            |   |        | **597,226** |                                                  | **$**  | **14.57**                                       |   | **$** | **4,736** |   |
| Weighted                average fair value of options grantedduring                the six months ended June 30, 2006 |   |        |        |                                                  | $      | 7.38                                            |   |   |   |   |

|                                                           |   | **Options                Outstanding** |    | **Options                Exercisable**   |   |
|----------------------------------------------------------------|--------|----------------------------------------|---------|------------------------------------------|--------|
|     Range                of Exercise Price |   |    NumberOutstanding    |    | Weighted-AverageRemainingContractualLife |   |  Weighted-AverageExercisePrice |   |    NumberExercisable |   |  Weighted-AverageExercisePrice |   |
| $                7.06 to $10.76                                |   |                                   | 149,951 |                                     |   | 2.87 |   | $ | 9.82 |   |   | 149,951 |   | $ | 9.82 |   |
| 10.77                to 13.32                                  |   |                                   | 59,191  |                                     |   | 4.88 |   |   | 10.98 |   |   | 59,191 |   |   | 10.98 |   |
| 13.33                to 17.87                                  |   |                                   | 201,145 |                                     |   | 5.85 |   |   | 13.97 |   |   | 201,145 |   |   | 13.97 |   |
| 17.88                to 21.88                                  |   |                                   | 284,425 |                                     |   | 8.93 |   |   | 20.76 |   |   | 186,939 |   |   | 20.17 |   |
| $                7.06 to $21.88                                |   |                                   | 694,712 |                                     |   | 6.38 |   | $ | 15.60 |   |   | 597,226 |   | $ | 14.57 |   |

----

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

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

----

|                                                          |   |                  |          | **2006**                                              |   | **($                in 000’s)**           |   |
|---------------------------------------------------------------|--------|-----------------------|---------------|-------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                          |   | ** ****Options** |          | **Weighted-Average****Exercise                Price** |   | **Aggregate****Intrinsic                Value** |   |
| Vested                outstanding at January 1,               |   |                  | 2,651,175     |                                                  | $      | 14.16                                           |   | $ | 22,072 |   |
| Unvested                outstanding at January 1,             |   |                  | 1,560         |                                                  |   | 22.26                                           |   |   | — |   |
| **Outstanding                at January 1, 2006**             |   |                  | **2,652,735** |                                                  |   | **14.16**                                       |   |   | **2****2,072** |   |
| Granted                                                       |   |                  | 321,586       |                                                  |   | 21.96                                           |   |   | 174 |   |
| Exercised                                                     |   |                  | (128,318      | )                                                     |   | 10.26                                           |   |   | (1,521 | ) |
| Expired                                                       |   |                  | (69,300       | )                                                     |   | 22.37                                           |   |   | (9 | ) |
| **Outstanding                at June 30, 2006**               |   |                  | **2,776,703** |                                                  |   | **1****5.04**                                   |   |   | **20,716** |   |
| Unvested                outstanding at June 30,               |   |                  | (319,803      | )                                                     |   | 21.96                                           |   |   | (174 | ) |
| **Exercisable                at June 30, 2006**               |   |                  | **2,456,900** |                                                  | **$**  | **14.14**                                       |   | **$** | **20,542** |   |
| Weighted                average fair value of options granted |   |                  |          |                                                  |   |                                            |   |   |   |   |
| during                the six months ended June 30, 2006      |   |                  |          |                                                  | $      | 6.92                                            |   |   |   |   |

----

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

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

----

|                                                           |   | **Options                Outstanding** |      | **Options                Exercisable**   |   |
|----------------------------------------------------------------|--------|----------------------------------------|-----------|------------------------------------------|--------|
|     Range                of Exercise Price |   |    NumberOutstanding    |      | Weighted-AverageRemainingContractualLife |   |  Weighted-AverageExercisePrice |   |    NumberExercisable |   |  Weighted-AverageExercisePrice |   |
| $                7.06 to $11.38                                |   |  956,775                          |      |  3.48                               |   | $10.47 |   |  956,775 |   | $10.47 |   |
| 11.39                to 15.71                                  |   |                                   | 858,930   |                                     |   | 5.04 |   |   | 14.01 |   |   | 858,930 |   |   | 14.01 |   |
| 15.72                to 20.04                                  |   |                                   | 511,423   |                                     |   | 8.27 |   |   | 19.58 |   |   | 511,423 |   |   | 19.58 |   |
| 20.05                to 24.34                                  |   |                                   | 449,575   |                                     |   | 9.34 |   |   | 21.58 |   |   | 129,772 |   |   | 20.64 |   |
| $                7.06 to $24.34                                |   |                                   | 2,776,703 |                                     |   | 5.79 |   | $ | 15.04 |   |   | 2,456,900 |   | $ | 14.14 |   |

|                                           |   | **Three                months ended** |   | **Six                months ended** |   |
|------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
| **Director                Plan Assumptions:**  |   | **June                30, 2006**      |   | **June                30, 2005**    |   | **June                30, 2006** |   | **June                30, 2005** |   |
| Expected                stock price volatility |   |                                  | 32.22  | %                                   |   | 35.45 | % |   | 32.22 | % |   | 35.45 | % |
| Risk-free                interest rate         |   |                                  | 4.56   |                                |   | 3.98 |   |   | 4.56 |   |   | 3.98 |   |
| Expected                dividend yield         |   |                                  | 2.51   |                                |   | 2.36 |   |   | 2.51 |   |   | 2.36 |   |
| Expected                annual forfeitures     |   |                                  | 1.70   |                                |   | n/a |   |   | 1.70 |   |   | n/a |   |
| Expected                life (in years)        |   |                                  | 7.75   |                                |   | 7.67 |   |   | 7.75 |   |   | 7.67 |   |
|                                           |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **Employee                Plan Assumptions:**  |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Expected                stock price volatility |   |                                  | 30.52  | %                                   |   | 32.46 | % |   | 30.54 | % |   | 33.67 | % |
| Risk-free                interest rate         |   |                                  | 5.03   |                                |   | 4.06 |   |   | 5.03 |   |   | 4.06 |   |
| Expected                dividend yield         |   |                                  | 2.43   |                                |   | 2.60 |   |   | 2.43 |   |   | 2.60 |   |
| Expected                annual forfeitures     |   |                                  | 1.29   |                                |   | n/a |   |   | 1.29 |   |   | n/a |   |
| Expected                life (in years)        |   |                                  | 6.86   |                                |   | 7.26 |   |   | 6.87 |   |   | 7.31 |   |

----

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

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

----

|                                                                                                                                                                             |   | **(000’s,                except share data)**              |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|----------|
|                                                                                                                                                                             |   | **Three                Months Ended****June                30, 2005** |     | **Six                Months Ended****June                30, 2005** |   |
| Net                income, as reported                                                                                                                                           |   | $                                                                     | 8,809    |   | $ | 16,200 |   |
| Less:                junior preferred stock dividends                                                                                                                            |   |                                                                  | 10       |   |   | 10 |   |
| Less:                total stock based compensation expensedetermined                under the fair value based method for                all awards, net of related tax effects |   |                                                                  | 692      |   |   | 872 |   |
| Pro                forma net income available to common stockholders                                                                                                             |   | $                                                                     | 8,107    |   | $ | 15,318 |   |
| Earnings                per common share:                                                                                                                                        |   |                                                                  |     |   |   |   |   |
| Basic                - as reportedBasic                - pro forma                                                                                                               |   | $                                                                     | 0.410.38 |   | $ | 0.750.71 |   |
| Diluted                - as reportedDiluted                - pro forma                                                                                                           |   | $                                                                     | 0.390.36 |   | $ | 0.720.68 |   |

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

----

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

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

----

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

|                                                                                                                                                |   | **Three                Months Ended****June                30,** |       | **Six                Months Ended****June                30,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|----------------------------------------------------------------|--------|
|                                                                                                                                                |   | **2006**                                                         |       | **2005**                                                       |   | **2006** |   | **2005** |   |
|                                                                                                                                                |   |                                                             |       |                                                           |   |   |   |   |   |
| **Numerator:**                                                                                                                                      |   |                                                             |       |                                                           |   |   |   |   |   |
| Net                Income                                                                                                                           |   | $                                                                | 7,225      |                                                           | $      | 8,809 |   | $ | 15,340 |   | $ | 16,200 |   |
| Less:                preferred dividends                                                                                                            |   |                                                             | 10         |                                                           |   | 10 |   |   | 10 |   |   | 10 |   |
| Net                income for basic and dilutedearnings                per common share - net incomeavailable                to common stockholders |   | $                                                                | 7,215      |                                                           | $      | 8,799 |   | $ | 15,330 |   | $ | 16,190 |   |
| **Denominator:**                                                                                                                                    |   |                                                             |       |                                                           |   |   |   |   |   |   |   |   |   |
| Denominator                for basic earnings percommon                share - weighted average shares                                              |   |                                                             | 21,765,023 |                                                           |   | 21,577,459 |   |   | 21,744,542 |   |   | 21,507,990 |   |
| Effects                of dilutive securities:director                and employee - stock options                                                  |   |                                                             | 1,006,741  |                                                           |   | 841,129 |   |   | 1,011,144 |   |   | 914,009 |   |
| Denominator                for diluted earnings percommon                share - adjusted weighted average                shares                    |   |                                                             | 22,771,764 |                                                           |   | 22,418,588 |   |   | 22,755,686 |   |   | 22,421,999 |   |
| Basic                earnings per common share                                                                                                      |   | $                                                                | 0.33       |                                                           | $      | 0.41 |   | $ | 0.71 |   | $ | 0.75 |   |
| Diluted                earnings per common share                                                                                                    |   |                                                             | 0.32       |                                                           |   | 0.39 |   |   | 0.67 |   |   | 0.72 |   |

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

----

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

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

----

|                                                            |   | **(000’s)**           |                  |
|-----------------------------------------------------------------|--------|-----------------------------|-----------------------|
|   **June                30, 2006**                    |   |  **Amortized****Cost** |                  | **Gross****Unrealized****Gains** |   | **Gross****Unrealized****Losses** |   | **Estimated****Fair****Value** |   |
| **Available                for Sale:**                          |   |                        |                  |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 72,924                |   | $ | ― |   | $ | 3,333 |   | $ | 69,591 |   |
| Mortgage-backed                securities                       |   |                        | 331,878               |   |   | 1,714 |   |   | 9,542 |   |   | 324,050 |   |
| Obligations                of states and political subdivisions |   |                        | 230                   |   |   | 12 |   |   | ― |   |   | 242 |   |
| Corporate                securities                             |   |                        | 109                   |   |   | 30 |   |   | ― |   |   | 139 |   |
| **Total                securities available for sale**          |   | **$**                       | **405,141**           |   | **$** | **1,756** |   | **$** | **12,875** |   | **$** | **394,022** |   |
| **Held                to Maturity:**                            |   |                        |                  |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 639,478               |   | $ | — |   | $ | 24,868 |   | $ | 614,610 |   |
| Obligations                of states and political subdivisions |   |                        | 99,235                |   |   | 1,420 |   |   | 1,247 |   |   | 99,408 |   |
| **Total                securities held to maturity**            |   | **$**                       | **738,713**           |   | **$** | **1,420** |   | **$** | **26,115** |   | **$** | **714,018** |   |
|                                                            |   |                        |                  |   |   |   |   |   |   |   |   |   |   |
|                                                            |   | **(000’s)**           |                  |
| **December                31, 2005**                            |   |                        | **Amortized****Cost** |   |   | **Gross****Unrealized****Gains** |   |   | **Gross****Unrealized****Losses** |   |   | **Estimated****Fair****Value** |   |
| **Available                for Sale:**                          |   |                        |                  |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 72,921                |   | $ | — |   | $ | 1,616 |   | $ | 71,305 |   |
| Mortgage-backed                securities                       |   |                        | 306,166               |   |   | 2,053 |   |   | 3,930 |   |   | 304,289 |   |
| Obligations                of states and political subdivisions |   |                        | 230                   |   |   | 17 |   |   | ― |   |   | 247 |   |
| Corporate                securities                             |   |                        | 115                   |   |   | 34 |   |   | ― |   |   | 149 |   |
| **Total                securities available for sale**          |   | **$**                       | **379,432**           |   | **$** | **2,104** |   | **$** | **5,546** |   | **$** | **375,990** |   |
| **Held                to Maturity:**                            |   |                        |                  |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                         |   | $                           | 639,111               |   | $ | 31 |   | $ | 8,702 |   | $ | 630,440 |   |
| Obligations                of states and political subdivisions |   |                        | 107,740               |   |   | 2,470 |   |   | 381 |   |   | 109,829 |   |
| **Total                securities held to maturity**            |   | **$**                       | **746,851**           |   | **$** | **2,501** |   | **$** | **9,083** |   | **$** | **740,269** |   |

----

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

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

----

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

| **June                30, 2006**                                               |   | **Less                Than 12 Months**    |    | **12                Months or More** |   | **Total**                                 |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------------------------------------|--------|-------------------------------------------|--------|
|                                                                           |   |   **Fair                Value** |    | **Gross****Unrealized****Losses**    |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |
| U.S.                government agencies                                        |   | $                                         | 382,300 |                                 | $      | 12,173                                    |   | $ | 301,902 |   | $ | 16,027 |   | $ | 684,202 |   | $ | 28,200 |   |
| Mortgage-backed                Securities                                      |   |                                      | 79,754  |                                 |   | 1,681                                     |   |   | 126,874 |   |   | 7,861 |   |   | 206,628 |   |   | 9,542 |   |
| Obligations                of states and political                subdivisions |   |                                      | 44,312  |                                 |   | 750                                       |   |   | 9,237 |   |   | 498 |   |   | 53,549 |   |   | 1,248 |   |
| Total                temporarily impaired securities                           |   | $                                         | 506,366 |                                 | $      | 14,604                                    |   | $ | 438,013 |   | $ | 24,386 |   | $ | 944,379 |   | $ | 38,990 |   |

| **December                31, 2005**                                           |   | **Less                Than 12 Months** |    | **12                Months or More** |   | **Total**                                 |   |
|--------------------------------------------------------------------------------|--------|----------------------------------------|---------|--------------------------------------|--------|-------------------------------------------|--------|
|   ** **                                                         |   | **Fair                Value**          |    | **Gross****Unrealized****Losses**    |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |   **Fair                Value** |   | **Gross****Unrealized****Losses** |   |
| U.S.                government agencies                                        |   | $                                      | 594,442 |                                 | $      | 7,381                                     |   | $ | 91,977 |   | $ | 2,937 |   | $ | 686,419 |   | $ | 10,318 |   |
| Mortgage-backed                securities                                      |   |                                   | 116,585 |                                 |   | 2,349                                     |   |   | 49,274 |   |   | 1,581 |   |   | 165,859 |   |   | 3,930 |   |
| Obligations                of states and political                subdivisions |   |                                   | 36,850  |                                 |   | 164                                       |   |   | 6,190 |   |   | 217 |   |   | 43,040 |   |   | 381 |   |
| Total                temporarily impaired securities                           |   | $                                      | 747,877 |                                 | $      | 9,894                                     |   | $ | 147,441 |   | $ | 4,735 |   | $ | 895,318 |   | $ | 14,629 |   |

----

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

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

----

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

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

----

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

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

----

|                                           |   | **(000’s                except percentages)** |   |
|------------------------------------------------|--------|-----------------------------------------------------|--------|
| **Short-Term                Borrowings**       |   | **2006**                                            |   | **2005** |   |
| Balance                at June 30              |   | $                                                   | 738    |   | $ | 100,977 |   |
| Average                balance outstanding     |   | $                                                   | 62,716 |   | $ | 19,416 |   |
| Weighted-average                interest rate: |   |                                                |   |   |   |   |   |
| As                of June 30                   |   |                                                | 3.75   | % |   | 3.29 | % |
| Paid                during period              |   |                                                | 4.67   | % |   | 2.90 | % |

----

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

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

----

|                                                |   | **(000’s                except percentages)** |    |
|-----------------------------------------------------|--------|-----------------------------------------------------|---------|
|   **Long-Term                Borrowings** |   |  **Within****1                Year**           |    | **After                1****But                Within****5                Years** |   |  **After****5                Years** |   |  **2006****Total** |   |  2005Total |   |
| Contractual                Payment Date:            |   |                                                |    |   |   |   |   |   |   |   |   |
| Total                long-term borrowing            |   | $                                                   | 19      |   | $ | 242,589 |   | $ | 414,710 |   | $ | 657,318 |   | $ | 559,828 |   |
| Weighted                average interest rate       |   |                                                | 5.99    | % |   | 5.43 | % |   | 3.90 | % |   | 4.46 | % |   | 4.37 | % |
| Expected                Call Date:                  |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                long-term borrowing            |   | $                                                   | 214,519 |   | $ | 441,089 |   | $ | 1,710 |   | $ | 657,318 |   | $ | 559,828 |   |
| Weighted                average interest rate       |   |                                                | 4.25    | % |   | 4.56 | % |   | 5.99 | % |   | 4.46 | % |   | 4.37 | % |

----

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

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

----

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

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

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

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

----

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

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

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

----

***Forward-Looking      Statements***

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

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

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

**OVERVIEW**

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

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

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**Critical      Accounting Policies**

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

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

----

**COMPARISON      OF FINANCIAL CONDITION AS OF JUNE 30, 2006 AND DECEMBER 31,      2005**

----

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

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

----

|                                               |   |                             |      | **(000’s)**                    |   |                        |   |
|----------------------------------------------------|--------|----------------------------------|-----------|--------------------------------------|--------|-----------------------------|--------|
|                                               |   | **June                30, 2006** |      | **December                31, 2005** |   | **Increase/****(Decrease)** |   |
| Time                and demand loans               |   | $                                | 156,992   |                                 | $      | 147,734                     |   | $ | 9,258 |   |
| Installment                loans                   |   |                             | 7,983     |                                 |   | 7,248                       |   |   | 735 |   |
| Credit                Card                         |   |                             | 6,849     |                                 |   | 6,769                       |   |   | 80 |   |
| Real                Estate                         |   |                             |      |                                 |   |                        |   |   |   |   |
| -                Commercial                        |   |                             | 574,089   |                                 |   | 586,073                     |   |   | (11,984 | ) |
| -                Residential                       |   |                             | 282,639   |                                 |   | 277,211                     |   |   | 5,428 |   |
| -                Construction and land development |   |                             | 389,765   |                                 |   | 366,457                     |   |   | 23,308 |   |
| -                Home equity                       |   |                             | 78,925    |                                 |   | 83,782                      |   |   | (4,857 | ) |
| Other                                              |   |                             | 3,340     |                                 |   | 2,538                       |   |   | 802 |   |
| Gross                loans                         |   |                             | 1,500,582 |                                 |   | 1,477,812                   |   |   | 22,770 |   |
| Deferred                net loan commitment fees   |   |                             | (2,312    | )                                    |   | (2,828                      | )      |   | 516 |   |
| Total                loans                         |   |                             | 1,498,270 |                                 |   | 1,474,984                   |   |   | 23,286 |   |
| Allowance                for loan losses           |   |                             | (16,260   | )                                    |   | (15,164                     | )      |   | (1,096 | ) |
| Total                loans, net                    |   | $                                | 1,482,010 |                                 | $      | 1,459,820                   |   | $ | 22,190 |   |

----

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

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

----

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

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

----

|                                                                                                      |   |                                |      |  **(000’s)**              |   |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|--------------------------------------|--------|
|                                                                                                      |   | **June                30,****2006** |      | **December                31, 2005** |   | **Increase/****(Decrease)** |   |
| **Non-interest                bearing deposits:**                                                         |   |                                |      |                                 |   |   |   |
| Individuals,                partnerships, and corporations                                                |   | $                                   | 288,896   |                                 | $      | 294,350 |   | $ | (5,454 | ) |
| Certified                and official checks                                                              |   |                                | 8,129     |                                 |   | 10,499 |   |   | (2,370 | ) |
| States                and political subdivisions                                                          |   |                                | 11,941    |                                 |   | 10,307 |   |   | 1,634 |   |
| Total                non-interest bearing deposits                                                        |   |                                | 308,966   |                                 |   | 315,156 |   |   | (6,190 | ) |
| **Interest                bearing deposits:**                                                             |   |                                |      |                                 |   |   |   |   |   |   |
| NOW                accounts                                                                               |   |                                | 122,045   |                                 |   | 117,512 |   |   | 4,533 |   |
| Money                market accounts                                                                      |   |                                | 160,292   |                                 |   | 134,711 |   |   | 25,581 |   |
| Savings                deposits                                                                           |   |                                | 421,826   |                                 |   | 440,299 |   |   | (18,473 | ) |
| States                and political subdivisions - NOW, money market, and                savings deposits |   |                                | 88,158    |                                 |   | 71,445 |   |   | 16,713 |   |
| Time                deposits of individuals, partnerships, corporations under                $100,000     |   |                                | 370,012   |                                 |   | 354,140 |   |   | 15,872 |   |
| Time                deposits of individuals, partnerships, corporations over                $100,000      |   |                                | 176,160   |                                 |   | 156,393 |   |   | 19,767 |   |
| Brokered                time deposits                                                                     |   |                                | —   |                                 |   | 49,499 |   |   | (49,499 | ) |
| States                and political subdivisions - time deposits                                          |   |                                | 124,887   |                                 |   | 119,170 |   |   | 5,717 |   |
| IRAs                and Keoghs                                                                            |   |                                | 94,393    |                                 |   | 88,877 |   |   | 5,516 |   |
| Total                interest bearing deposits                                                            |   |                                | 1,557,773 |                                 |   | 1,532,046 |   |   | 25,727 |   |
| Total                deposits                                                                             |   | $                                   | 1,866,739 |                                 | $      | 1,847,202 |   | $ | 19,537 |   |

----

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

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

----

**COMPARISON      OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND      2005**

**Earnings**

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

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

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**Net      Interest Income**

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

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

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|                                                                                             |   |                               |      | **(000’s,                except percentages)****For                the three months ended June 30,** |   |
|--------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------|------------------------------------------------------------------------------------------------------------|--------|
|                                                                                             |   | **2006**                           |      | **2005**                                                                                                   |   |
|                                                                                             |   | **Average                Balance** |      |  **Interest**                                                                                         |   | **Average                Yield/Rate** |   | **Average                Balance** |   |  **Interest** |   | **Average                Yield/Rate** |   |
| **ASSETS**                                                                                       |   |                               |      |                                                                                                       |   |   |   |   |   |   |   |   |   |
| Interest                earning assets:                                                          |   |                               |      |                                                                                                       |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                                |   | $                                  | 31,333    |                                                                                                       | $      | 390 |   |   | 4.92 | % | $ | 23,509 |   | $ | 173 |   |   | 2.91 | % |
| Securities:                                                                                      |   |                               |      |                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                                                          |   |                               | 712,282   |                                                                                                       |   | 9,945 |   |   | 5.58 |   |   | 613,991 |   |   | 8,680 |   |   | 5.65 |   |
| Mortgage-backed                securities                                                        |   |                               | 338,019   |                                                                                                       |   | 4,549 |   |   | 5.38 |   |   | 386,360 |   |   | 4,260 |   |   | 4.41 |   |
| Obligations                of states and                political subdivisions                   |   |                               | 106,182   |                                                                                                       |   | 1,695 |   |   | 6.39 |   |   | 92,337 |   |   | 1,543 |   |   | 6.68 |   |
| Corporate                securities, FHLB of                New York stock, and other securities |   |                               | 36,142    |                                                                                                       |   | 446 |   |   | 4.95 |   |   | 33,801 |   |   | 386 |   |   | 4.58 |   |
| Loans,                net                                                                        |   |                               | 1,486,197 |                                                                                                       |   | 27,060 |   |   | 7.26 |   |   | 1,513,975 |   |   | 25,036 |   |   | 6.60 |   |
| Total                interest earning assets                                                     |   |                               | 2,710,155 |                                                                                                       |   | 44,085 |   |   | 6.49 | % |   | 2,663,973 |   |   | 40,078 |   |   | 6.01 | % |
| Non-interest                earning assets                                                       |   |                               | 92,969    |                                                                                                       |   |   |   |   |   |   |   | 128,976 |   |   |   |   |   |   |   |
| **TOTAL**                                                                                        |   | $                                  | 2,803,124 |                                                                                                       |   |   |   |   |   |   | $ | 2,792,949 |   |   |   |   |   |   |   |

**LIABILITIES      AND STOCKHOLDERS’ EQUITY**

| Deposits:                                                                                                                                                                                                   |   |   |      |   |   |   |   |   |   |   |   |      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| NOW                                                                                                                                                                                                         |   | $      | 170,669   |   | $      | 475    |   |   | 1.12   | %      | $      | 175,515   |   | $ | 307 |   |   | 0.70 | % |
| Money                market                                                                                                                                                                                 |   |   | 150,347   |   |   | 782    |   |   | 2.09   |   |   | 170,674   |   |   | 658 |   |   | 1.55 |   |
| Savings                                                                                                                                                                                                     |   |   | 420,709   |   |   | 2,237  |   |   | 2.13   |   |   | 421,024   |   |   | 1,183 |   |   | 1.12 |   |
| Time                                                                                                                                                                                                        |   |   | 772,002   |   |   | 7,743  |   |   | 4.01   |   |   | 762,003   |   |   | 5,421 |   |   | 2.85 |   |
| Total                interest bearing deposits                                                                                                                                                              |   |   | 1,513,727 |   |   | 11,237 |   |   | 2.93   |   |   | 1,529,216 |   |   | 7,569 |   |   | 1.96 |   |
| Federal                funds purchased, securities                sold under agreements                to repurchase and                FHLB advances                                                       |   |   | 699,842   |   |   | 7,962  |   |   | 4.50   |   |   | 632,113   |   |   | 6,826 |   |   | 4.32 |   |
| Subordinated                debt issued in connection                with corporation                - obligated mandatory                redeemable capital securities                of subsidiary trusts |   |   | 61,858    |   |   | 1,382  |   |   | 8.94   |   |   | 61,858    |   |   | 1,182 |   |   | 7.64 |   |
| Total                interest bearing liabilities                                                                                                                                                           |   |   | 2,275,427 |   |   | 20,581 |   |   | 3.57   | %      |   | 2,223,187 |   |   | 15,577 |   |   | 2.79 | % |
| Non-interest                bearing liabilities and                stockholders’ equity:                                                                                                              |   |   |      |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |
| Demand                deposits                                                                                                                                                                              |   |   | 306,889   |   |   |   |   |   |   |   |   | 337,076   |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                                                                                            |   |   | 12,647    |   |   |   |   |   |   |   |   | 42,976    |   |   |   |   |   |   |   |
| Stockholders’                equity                                                                                                                                                                   |   |   | 208,161   |   |   |   |   |   |   |   |   | 189,710   |   |   |   |   |   |   |   |
| **TOTAL**                                                                                                                                                                                                   |   | $      | 2,803,124 |   |   |   |   |   |   |   | $      | 2,792,949 |   |   |   |   |   |   |   |
| **NET                INTEREST INCOME**                                                                                                                                                                      |   |   |      |   | $      | 23,504 |   |   |   |   |   |      |   | $ | 24,501 |   |   |   |   |
| **NET                YIELD ON INTEREST EARNING ASSETS (NET INTEREST                MARGIN)**                                                                                                                |   |   |      |   |   |   |   |   | 3.47   | %      |   |      |   |   |   |   |   | 3.68 | % |

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

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

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|                                                                                           |   |                               |      | **(000’s,                except percentages)****For                the six months ended June 30,** |   |
|------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------|----------------------------------------------------------------------------------------------------------|--------|
|                                                                                           |   | **2006**                           |      | **2005**                                                                                                 |   |
|                                                                                           |   | **Average                Balance** |      |  **Interest**                                                                                       |   | **Average                Yield/Rate** |   | **Average                Balance** |   |  **Interest** |   | **Average                Yield/Rate** |   |
| **ASSETS**                                                                                     |   |                               |      |                                                                                                     |   |   |   |   |   |   |   |   |   |
| Interest                earning assets:                                                        |   |                               |      |                                                                                                     |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                              |   | $                                  | 26,172    |                                                                                                     | $      | 619 |   |   | 4.70 | % | $ | 41,183 |   |   | 528 |   |   | 2.55 | % |
| Securities:                                                                                    |   |                               |      |                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies                                                        |   |                               | 712,189   |                                                                                                     |   | 19,880 |   |   | 5.58 |   |   | 592,211 |   |   | 16,366 |   |   | 5.53 |   |
| Mortgage-backed                securities                                                      |   |                               | 330,910   |                                                                                                     |   | 8,768 |   |   | 5.30 |   |   | 397,865 |   |   | 8,533 |   |   | 4.29 |   |
| Obligations                of statesand                political subdivisions                  |   |                               | 106,972   |                                                                                                     |   | 3,406 |   |   | 6.38 |   |   | 89,709 |   |   | 2,966 |   |   | 6.61 |   |
| Corporate                securities, FHLBof                New York stock, and othersecurities |   |                               | 34,704    |                                                                                                     |   | 866 |   |   | 5.03 |   |   | 32,979 |   |   | 736 |   |   | 4.50 |   |
| Loans,                net                                                                      |   |                               | 1,482,236 |                                                                                                     |   | 53,047 |   |   | 7.14 |   |   | 1,509,877 |   |   | 48,719 |   |   | 6.44 |   |
| Total                interest earning assets                                                   |   |                               | 2,693,183 |                                                                                                     |   | 86,586 |   |   | 6.43 | % |   | 2,663,824 |   |   | 77,848 |   |   | 5.84 | % |
| Non-interest                earning assets                                                     |   |                               | 101,648   |                                                                                                     |   |   |   |   |   |   |   | 113,494 |   |   |   |   |   |   |   |
| **TOTAL**                                                                                      |   | $                                  | 2,794,831 |                                                                                                     |   |   |   |   |   |   | $ | 2,777,318 |   |   |   |   |   |   |   |

**LIABILITIES      AND STOCKHOLDERS’ EQUITY**

| Deposits:                                                                                                                                                                                                   |   |   |      |   |   |   |   |   |   |   |   |      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| NOW                                                                                                                                                                                                         |   | $      | 194,081   |   | $      | 1,293  |   |   | 1.34   | %      | $      | 185,365   |   | $ | 626 |   |   | 0.68 | % |
| Money                market                                                                                                                                                                                 |   |   | 146,253   |   |   | 1,389  |   |   | 1.92   |   |   | 187,170   |   |   | 1,403 |   |   | 1.51 |   |
| Savings                                                                                                                                                                                                     |   |   | 428,709   |   |   | 4,301  |   |   | 2.02   |   |   | 414,509   |   |   | 1,864 |   |   | 0.91 |   |
| Time                                                                                                                                                                                                        |   |   | 762,795   |   |   | 14,383 |   |   | 3.79   |   |   | 751,158   |   |   | 10,271 |   |   | 2.75 |   |
| Total                interest bearing deposits                                                                                                                                                              |   |   | 1,531,838 |   |   | 21,366 |   |   | 2.81   |   |   | 1,538,202 |   |   | 14,164 |   |   | 1.85 |   |
| Federal                funds purchased, securities                sold under agreements                to repurchase and                FHLB advances                                                       |   |   | 669,292   |   |   | 15,000 |   |   | 4.46   |   |   | 616,624   |   |   | 13,342 |   |   | 4.35 |   |
| Subordinated                debt issued in connection                with corporation                - obligated mandatory                redeemable capital securities                of subsidiary trusts |   |   | 61,858    |   |   | 2,709  |   |   | 8.76   |   |   | 61,858    |   |   | 2,304 |   |   | 7.45 |   |
| Total                interest bearing liabilities                                                                                                                                                           |   |   | 2,262,988 |   |   | 39,075 |   |   | 3.46   | %      |   | 2,216,684 |   |   | 29,810 |   |   | 2.71 | % |
| Non-interest                bearing liabilities and                stockholders’ equity:                                                                                                              |   |   |      |   |   |   |   |   |   |   |   |      |   |   |   |   |   |   |   |
| Demand                deposits                                                                                                                                                                              |   |   | 310,310   |   |   |   |   |   |   |   |   | 334,612   |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                                                                                            |   |   | 14,242    |   |   |   |   |   |   |   |   | 38,532    |   |   |   |   |   |   |   |
| Stockholders’                equity                                                                                                                                                                   |   |   | 207,291   |   |   |   |   |   |   |   |   | 187,490   |   |   |   |   |   |   |   |
| **TOTAL**                                                                                                                                                                                                   |   | $      | 2,794,831 |   |   |   |   |   |   |   | $      | 2,777,318 |   |   |   |   |   |   |   |
| **NET                INTEREST INCOME**                                                                                                                                                                      |   |   |      |   | $      | 47,511 |   |   |   |   |   |      |   | $ | 48,038 |   |   |   |   |
| **NET                YIELD ON INTEREST EARNING ASSETS (NET INTEREST                MARGIN)**                                                                                                                |   |   |      |   |   |   |   |   | 3.53   | %      |   |      |   |   |   |   |   | 3.61 | % |

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

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

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**Provision      for Credit Losses**

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

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

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**Non-Interest      Income**

**Non-Interest      Expenses**

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

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

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| ·   | Increase                of $130,000 (7.2 percent) and $28,000 (0.7 percent) in occupancy                and                equipment expense. The increases primarily reflect higher rent expense                for                the Stamford, Connecticut, and Manhattan locations and real estate                taxes                and maintenance costs for various Bank owned locations. The increases                were                partially offset by lower levels of depreciation                expense. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase                  of $78,000 (13.1 percent) and $105,000 (9.0 percent) in advertising                  and                  business development expense. The increases primarily reflect higher                  costs                  related to television, print, and radio advertising, partially                  offset by                  decreases in business development                  expense. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Decrease                    of $69,000 (14.7 percent) and $364,000 (32.0 percent) in professional                    fees. The decreases were primarily due to higher legal fees during                    the                    2005 period related to a non-performing real estate construction                    loan and                    costs related to compliance with Section 404 of the Sarbanes-Oxley                    Act. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Income      Taxes**

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

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

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

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

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**PART      II - OTHER INFORMATION**

| **ITEM                1A.** | **RISK                FACTORS** |
|-----------------------------|---------------------------------|

| **ITEM                2.** | **UNREGISTERED SALES OF                EQUITY                SECURITIES AND                USE OF PROCEEDS** |
|----------------------------|--------------------------------------------------------------------------------------------------------------|

|     **Period** |   |   **Total                Number****of                Shares****Purchased****1** |    |    **Average****Price                Paid****Per                Share** |   | **Total                Number****of                Shares****Purchased                as****Part                of Publicly****Announced****Programs** |   | **Maximum****Number                of****Shares                that****may                yet be****Purchased****Under                the****Programs****2** |    |
|------------------------------------|--------|-------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| April                1 to April 30 |   |                                                                                      | ― |                                                                                   |   | ―                                                                                                                                                |   |                                                                                                                                                         | ― |   |   | 235,000 |   |
| May                1 to May 31     |   |                                                                                      | 35,555  |                                                                                   |   | 21.69                                                                                                                                                  |   |                                                                                                                                                         | 30,200  |   |   | 204,800 |   |
| June                1 to June 30   |   |                                                                                      | 25,100  |                                                                                   |   | 21.87                                                                                                                                                  |   |                                                                                                                                                         | 25,100  |   |   | 179,700 |   |
| **Total**                          |   |                                                                                      | 60,655  |                                                                                   |   | 21.76                                                                                                                                                  |   |                                                                                                                                                         | 55,300  |   |   | 179,700 |   |

|  | 1 | Includes                common stock acquired in connection with the exercise of stock                options. |
|--|---|----------------------------------------------------------------------------------------------------------------|

|  | 2 | The                Company authorized a common stock repurchase plan of up to 300,000                shares                on December 13, 2005 to                expire on December 31, 2006. |
|--|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM                4.** | **SUBMISSION OF MATTERS                TO A VOTE OF                SECURITY HOLDERS** |
|----------------------------|---------------------------------------------------------------------------------------|

| I. | Election                of three directors, Messrs. Thomas E. Hales, Raymond J. Crotty, and                Michael H. Fury, constituting Class III members of the Board of Directors,                to a three-year term of office. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Votes**                          |   | **For**    |   | **Withheld** |
|------------------------------------|--------|------------|--------|--------------|
| Thomas                  E. Hales   |   | 18,981,875 |   | 1,383,431    |
| Raymond                  J. Crotty |   | 19,007,220 |   | 1,358,076    |
| Michael                  H. Fury   |   | 18,379,946 |   | 1,785,350    |

| II. | The                appointment of the Company’s independent registered public accounting                firm, Deloitte & Touche, LLP, for the audit of the Company’s                consolidated financial statements for the year ending December 31,                2006                was ratified with 20,264,270 shares voting for, 88,817 shares voting                against, and 12,209 shares                abstaining. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| **ITEM              6.** | **EXHIBITS** |
|--------------------------|--------------|
|   |   |
|--------|--------|
| **Exhibit              No.** | **Exhibit** |
|------------------------------|-------------|
|   |   |
|--------|--------|
| (31.1) | Certification of Chief Executive Officer              Pursuant to Exchange Act Rule 13a-14(a). |
|--------|------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| (31.2) | Certification of Chief Financial Officer              Pursuant to Exchange Act Rule 13a-14(a). |
|--------|------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| (32) | Certification                of Chief Executive Officer and Chief Financial Officer Pursuant to                18                U.S.C. Section 1350. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

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

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

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