SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

                       THE SECURITIES EXCHANGE ACT OF 1934

         For the Quarter Ended June 30, 1998 Commission File No. 010950
                               -------------

                            U.S.B. HOLDING CO., INC.
                            ------------------------
             (Exact name of registrant as specified in its charter)

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

                 100 DUTCH HILL ROAD, ORANGEBURG, NEW YORK 10962
                 -----------------------------------------------
              (Address of principal executive office with zip code)

                                  914-365-4600
                                  ------------
               (Registrant's telephone number including area code)

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

                               YES |X|   NO |_|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            CLASS                           OUTSTANDING AT AUGUST 4, 1998
            -----                           -----------------------------

    Common stock, par value
         $0.01 per share                             12,521,584

<PAGE>

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

                                TABLE OF CONTENTS

                                                                        PAGE NO.
                                                                        --------

PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

            CONSOLIDATED STATEMENTS OF CONDITION AS OF
            JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997                1

            CONSOLIDATED STATEMENTS OF INCOME FOR THE
            THREE MONTHS ENDED JUNE 30, 1998 AND 1997
            (UNAUDITED)                                                    2

            CONSOLIDATED STATEMENTS OF INCOME FOR THE
            SIX MONTHS ENDED JUNE 30, 1998 AND 1997  
            (UNAUDITED)                                                    3

            CONSOLIDATED STATEMENTS OF CASH FLOWS FOR  
            THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
            (UNAUDITED)                                                    4

            CONSOLIDATED STATEMENTS OF CHANGES IN                         
            STOCKHOLDERS' EQUITY FOR THE SIX MONTHS                       
            ENDED JUNE 30, 1998 and 1997 (UNAUDITED)                       6

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    
            (UNAUDITED)                                                    8

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF                       
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS                 20

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES                      
            ABOUT MARKET RISK                                             27

PART II. OTHER INFORMATION AND SIGNATURES

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY                   
            HOLDERS                                                       28

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K                              28


                                      - i -
<PAGE>

                         PART I - FINANCIAL INFORMATION

U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>
                                                           (Unaudited)
                                                             June 30,     December 31,
                                                               1998           1997
                                                           -----------    -----------
ASSETS                                                     (000's, except share data)
<S>                                                        <C>            <C>        
Cash and due from banks                                    $    24,370    $    19,622
Federal funds sold                                                  --         25,800
                                                           -----------    -----------
Cash and cash equivalents                                       24,370         45,422
Securities:
   Available for sale (at estimated fair value)                333,362        243,723
   Held to maturity (estimated fair value       
      $70,315 in 1998 and $139,871 in 1997)                     67,482        137,177
Loans held for sale                                                 --            340
Loans, net of allowance for loan losses of
   $8,092 in 1998 and $7,558 in 1997                           606,692        555,769
Premises and equipment, net                                     10,569         10,387
Accrued interest receivable                                      6,928          7,287
Other real estate owned                                          1,743          2,021
Federal Home Loan Bank of New York stock                        13,723         13,723
Due from brokers                                                22,100             --
Other assets                                                    13,809          7,551
                                                           -----------    -----------
TOTAL ASSETS                                               $ 1,100,778    $ 1,023,400
                                                           ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Non-interest bearing deposits                              $   127,175    $   106,038
Interest bearing deposits:
   NOW accounts                                                 54,708         46,512
   Money market accounts                                        40,870         42,126
   Savings deposits                                            276,134        244,224
   Time deposits                                               401,884        358,895
                                                           -----------    -----------
Total deposits                                                 900,771        797,795
Accrued interest payable                                         4,084          3,665
Accrued expenses and other liabilities                           4,788          5,361
Securities sold under agreements to repurchase                  81,780         74,643
Federal Home Loan Bank of New York  advances                    19,582         59,160
                                                           -----------    -----------
Total liabilities                                            1,011,005        940,624
Corporation-Obligated mandatory redeemable capital
   securities of subsidiary trust                               20,000         20,000
Minority interest-junior preferred stock of consolidated
   subsidiary                                                      137            137
Commitments and contingencies (Note 11)
Stockholders' equity:
   Common stock, $0.01 par value in 1998 and $5.00 par   
      value in 1997; authorized shares 30,000,000; issued  
      shares of 12,672,011 in 1998 and 12,558,022 in 1997          127         62,790
   Additional paid-in capital                                   64,288            212
   Retained earnings                                             7,113            645
   Treasury stock at cost, 163,671 shares                
      in 1998 and 128,122 shares in 1997                        (1,613)          (866)
   Shares held in trust for deferred compensation               (1,336)        (1,441)
   Accumulated other comprehensive income                        1,057          1,299
                                                           -----------    -----------
Total stockholders' equity                                      69,636         62,639
                                                           -----------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 1,100,778    $ 1,023,400
                                                           ===========    ===========
</TABLE>

See notes to consolidated financial statements.


                                       1
<PAGE>

U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                                                             Three Months Ended
                                                           June 30,     June 30,
                                                             1998         1997
                                                           --------    --------
                                                           (000's, except share
                                                                   data)
INTEREST INCOME:
Interest and fees on loans                                 $ 13,304    $ 11,813
Interest on federal funds sold                                  220         162
Interest and dividends on securities:
        Mortgage-backed securities                            4,458       2,176
        U.S. Treasury and government agencies                 1,062       2,558
        Obligations of states and political subdivisions        795         797
        Corporate and other                                       5          10
Dividends on Federal Home Loan Bank of New York stock           255         106
                                                           --------    --------
Total interest income                                        20,099      17,622
                                                           ========    ========

INTEREST EXPENSE:
Interest on deposits                                          8,835       7,515
Interest on borrowings                                        1,343       1,288
Interest on Corporation - Obligated mandatory redeemable
        capital securities of subsidiary trust                  488         488
                                                           --------    --------
Total interest expense                                       10,666       9,291
                                                           --------    --------

NET INTEREST INCOME                                           9,433       8,331
Provision for loan losses                                       300         830
                                                           --------    --------
Net interest income after provision for loan losses           9,133       7,501
                                                           --------    --------
NON-INTEREST INCOME:
Gain on securities transactions - net                           686         507
Gain on loans held for sale - net                                --           2
Service charges and fees                                        642         646
Other income                                                    242         366
                                                           --------    --------
Total non-interest income                                     1,570       1,521
                                                           ========    ========
NON-INTEREST EXPENSE:
Salaries and employee benefits                                3,634       2,796
Occupancy and equipment expense                               1,125         968
Advertising and business development                            345         266
Professional fees                                               424         333
Communications                                                  192         175
Stationery and printing                                         165         117
FDIC insurance                                                   24          21
Other expenses                                                  621         748
                                                           --------    --------
Total non-interest expense                                    6,530       5,424
                                                           ========    ========
Income before income taxes                                    4,173       3,598
Provision (benefit) for income taxes                           (779)      1,098
                                                           --------    --------
NET INCOME                                                 $  4,952    $  2,500
                                                           ========    ========
BASIC EARNINGS PER SHARE                                   $   0.40    $   0.20*
                                                           ========    ========
DILUTED EARNINGS PER SHARE                                 $   0.36    $   0.19*
                                                           ========    ========

* Adjusted for two-for-one stock split in December 1997 

See notes to consolidated financial statements.


                                       2
<PAGE>

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

                                                             Six Months Ended
                                                           June 30,    June 30,
                                                             1998        1997
                                                           --------    --------
                                                            (000's, except share
                                                                    data)
INTEREST INCOME:
Interest and fees on loans                                 $ 26,072    $ 23,130
Interest on federal funds sold                                  500         341
Interest and dividends on securities:
        Mortgage-backed securities                            6,895       4,011
        U.S. Treasury and government agencies                 3,841       4,304
        Obligations of states and political subdivisions      1,611       1,585
        Corporate and other                                      12          29
Dividends on Federal Home Loan Bank of New York stock           505         175
                                                           --------    --------
Total interest income                                        39,436      33,575
                                                           ========    ========
INTEREST EXPENSE:
Interest on deposits                                         17,173      14,262
Interest on borrowings                                        2,827       2,190
Interest on Corporation - Obligated mandatory redeemable
        capital securities of subsidiary trust                  976         776
                                                           --------    --------
Total interest expense                                       20,976      17,228
                                                           ========    ========
NET INTEREST INCOME                                          18,460      16,347
Provision for loan losses                                       600       1,460
                                                           --------    --------
Net interest income after provision for loan losses          17,860      14,887
                                                           --------    --------
NON-INTEREST INCOME:
Gain on securities transactions - net                         1,004         504
Gain on loans held for sale - net                                --           9
Service charges and fees                                      1,264       1,295
Other income                                                    494         571
                                                           --------    --------
Total non-interest income                                     2,762       2,379
                                                           ========    ========
NON-INTEREST EXPENSE:
Salaries and employee benefits                                6,756       5,461
Occupancy and equipment expense                               2,240       1,912
Advertising and business development                            622         456
Professional fees                                               706         687
Communications                                                  394         369
Stationery and printing                                         326         235
FDIC insurance                                                   50          43
Other expenses                                                1,145       1,160
                                                           --------    --------
Total non-interest expense                                   12,239      10,323
                                                           ========    ========
Income before income taxes                                    8,383       6,943
Provision for income taxes                                      480       2,111
                                                           --------    --------
NET INCOME                                                 $  7,903    $  4,832
                                                           ========    ========
BASIC EARNINGS PER SHARE                                   $   0.63    $   0.39*
                                                           ========    ========
DILUTED EARNINGS PER SHARE                                 $   0.58    $   0.36*
                                                           ========    ========

* Adjusted for two-for-one stock split in December 1997.

See notes to consolidated financial statements.


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                  June 30,     June 30,
                                                                    1998         1997
                                                                 ---------    ---------
                                                                        (000's)
<S>                                                              <C>          <C>      
OPERATING ACTIVITIES
Net income                                                       $   7,903    $   4,832
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Provision for loan losses                                           600        1,460
   Depreciation and amortization                                       823          739
   Amortization/accretion of premiums (discounts)
      on securities - net                                              293          140
   Deferred income taxes                                              (389)        (639)
   Gain on securities transactions - net                            (1,004)        (504)
   Gain on loans held for sale - net                                    --           (9)
Origination of loans held for sale                                      --         (479)
Proceeds from sales of loans held for sale                              --          481
Decrease (increase) in accrued interest receivable                     359         (761)
Net increase in income taxes receivable                             (3,242)        (144)
Other - net                                                         (2,494)      (1,855)
                                                                 ---------    ---------
Net cash provided by operating activities                            2,849        3,261
                                                                 =========    =========
INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale                51,869       52,138
Proceeds from principal paydowns, redemptions and maturities
   of securities available for sale                                 44,903       16,915
Proceeds from redemptions and maturities of securities held to
   maturity                                                         70,489        4,699
Purchases of securities available for sale                        (208,148)    (146,257)
Purchases of securities held to maturity                              (865)     (26,091)
Net decrease in interest bearing deposits in other banks                --           99
Loans originated, net of principal collections                     (51,183)     (36,444)
Purchases of premises and equipment - net                             (999)        (863)
Proceeds from sales of OREO                                            267          357
Purchase of Federal Home Loan Bank of New York stock                    --       (4,304)
                                                                 ---------    ---------
Net cash used for investing activities                             (93,667)    (139,751)
                                                                 ---------    ---------
FINANCING ACTIVITIES:
Net increase in non-interest bearing deposits,
   NOW, money market and savings accounts                           59,987       26,677
Increase in time deposits, net of withdrawals and maturities        42,989       70,171
Net (decrease) increase in securities sold under agreements
   to repurchase -  short-term                                     (12,863)      32,034
Net (decrease) increase in Federal Home Loan Bank of New York
   advances - short-term                                           (34,000)       5,000
Proceeds from securities sold under agreements to
   repurchase - long-term                                           20,000           --
Repayment of Federal Home Loan Bank of New York
    advances - long-term                                            (5,578)        (546)
Net proceeds from issuance of Corporation-Obligated mandatory
   redeemable capital securities of subsidiary trust                    --       18,921
Redemption of preferred stock                                           --       (3,250)
Cash dividends paid                                                 (1,435)      (1,149)
Proceeds from sale of junior preferred stock of
    consolidated subsidiary                                             --          137
Proceeds from issuance of common stock and tax benefit of
    stock options                                                    1,413           28
Proceeds from sale of treasury stock                                     1          370
Purchase of treasury stock                                            (748)        (105)
                                                                 ---------    ---------
Net cash provided by financing activities                           69,766      148,288
                                                                 =========    =========
        -Continued-
</TABLE>


                                       4
<PAGE>

U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (cont'd)

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                  June 30,     June 30,
                                                                    1998         1997
                                                                 ---------    ---------
                                                                         (000's)
<S>                                                              <C>          <C>      
(Decrease) Increase in Cash and Cash Equivalents                 $ (21,052)   $  11,798
Cash and Cash Equivalents, Beginning of Period                      45,422       29,621
                                                                 ---------    ---------
Cash and Cash Equivalents, End of Period                         $  24,370    $  41,419
                                                                 =========    =========
Supplemental Disclosures:
   Interest paid                                                 $  20,557    $  16,363
                                                                 ---------    ---------
   Income tax payments                                           $   3,562    $   2,894
                                                                 ---------    ---------
   Transfer of assets to OREO - net                              $      --    $   1,756
                                                                 ---------    ---------
   Transfer of loans held for sale to loans held to
      maturity at lower of cost or fair value                    $     338    $      58
                                                                 ---------    ---------
   Change in shares held in trust for deferred compensation      $     105    $      --
                                                                 ---------    ---------
   Change in net unrealized gain (loss) on securities
      available for sale - net of tax                            $    (242)   $    (298)
                                                                 ---------    ---------
   Increase in due from brokers due to unsettled sale
      of securities available for sale                           $  22,100    $      --
                                                                 ---------    ---------
</TABLE>

See notes to consolidated financial statements.


                                       5
<PAGE>

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

                     FOR THE SIX MONTHS ENDED JUNE 30, 1998
                           (000's, except share data)

<TABLE>
<CAPTION>
                                                                                      Shares Held    Accumulated
                           COMMON STOCK              Additional                       in Trust for     Other
                              Shares         Par       Paid-in   Retained  Treasury     Deferred    Comprehensive
                           Outstanding      Value      Capital   Earnings    Stock    Compensation     Income
                           -----------      -----      -------   --------    -----    ------------     ------
<S>                        <C>           <C>        <C>          <C>       <C>          <C>           <C>   
Balance at
   January 1, 1998         12,429,900    $  62,790  $     212    $    645  $  (866)     $(1,441)      $1,299

Net income                                                          7,903

Cash dividends:
   Common
   ($.115 per share)                                               (1,435)

Common Stock Issued:  
   Employee stock         
   options exercised      
   ($2.15 to $16.688      
      per share)              105,153          107        713
                       
   Director stock
   options exercised
   ($2.25 per share)            8,836           44        (24)

Tax benefit of stock
   options                                                573

Reduction of par value
   of common stock
   from $5.00 per share
   to $0.01 per share                      (62,814)    62,814

Purchase of treasury
   stock                      (35,649)                                        (748)

Sale of treasury stock            100                                            1

Change in shares held
   in trust for deferred
   compensation                                                                             105

Change in net unrealized
   gain on securities
   available for sale,
   net of tax                                                                                           (242)
                           ----------    ---------  ---------    --------  -------      -------       ------
Balance at
June 30, 1998              12,508,340    $     127  $  64,288    $  7,113  $(1,613)     $(1,336)      $1,057
                           ==========    =========  =========    ========  =======      =======       ======
</TABLE>

See notes to consolidated financial statements.


                                       6
<PAGE>

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

                     FOR THE SIX MONTHS ENDED JUNE 30, 1997
                           (000's, except share data)

<TABLE>
<CAPTION>
                            Preferred                                                             Accumulated
                             Stock          COMMON STOCK        Additional                           Other
                             No Par        Shares      Par       Paid-in    Retained   Treasury  Comprehensive
                             Value      Outstanding   Value      Capital    Earnings    Stock        Income
                             -----      -----------   -----      -------    --------    -----        ------
<S>                         <C>          <C>         <C>         <C>        <C>        <C>          <C>     
Balance at
   January 1, 1997          $  3,250     6,183,036   $31,634     $10,783    $12,664    $  ( 895)    $  (570)

Net income                                                                    4,832

Cash dividends:
   Common
   ($0.09* per share)                                                        (1,115)
   Preferred                                                                    (34)

Common Stock Issued:
   Incentive stock
   options exercised
   ($1.43* to $2.45*
   per share)                                9,192        46         (18)
Purchase of treasury stock                  (5,000)                                        (105)

Sale of treasury stock                      16,250                   266                    104

Redemption of preferred
   stock                      (3,250)

Change in net
   unrealized gain on
   securities available for
   sale, net of tax                                                                                    (298)
                            --------     ---------   -------     -------    -------    --------        ---- 
Balance at
June 30, 1997               $     --     6,203,478   $31,680     $11,031    $16,347    $   (896)       (868)
                            ========     =========   =======     =======    =======    ========        ==== 
</TABLE>

*Adjusted for two-for-one stock split in December 1997.

See notes to consolidated financial statements.


                                       7
<PAGE>

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

1.    Principles of Consolidation

      The consolidated financial statements include the accounts of U.S.B.
      Holding Co., Inc. (the "Company"), and its wholly-owned subsidiaries,
      Union State Bank (including its wholly-owned subsidiaries, U.S.B. Realty
      Corp., U.S.B. Financial Services, Inc., and Dutch Hill Realty Corp.) (the
      "Bank"), and the Company's non-bank subsidiaries, Ad Con, Inc. and Union
      State Capital Trust I.

2.    Reclassifications

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

3.    Basis of Presentation

      In the opinion of Management, the accompanying unaudited consolidated
      financial statements include all adjustments (comprising only normal
      recurring accruals) necessary to present fairly the financial position of
      the Company as of June 30, 1998, operations for the three and six month
      periods ended June 30, 1998 and 1997, and cash flows and changes in
      stockholders' equity for the six month periods ended June 30, 1998 and
      1997. A summary of the Company's significant accounting policies is set
      forth in Note 2 to the consolidated financial statements included in the
      Company's 1997 Annual Report to Shareholders.

      The consolidated financial statements have been prepared in accordance
      with generally accepted accounting principles and predominant practices
      used within the banking industry. In preparing such financial statements,
      management is required to make estimates and assumptions that affect the
      reported amounts of assets and liabilities as of the dates of the
      consolidated statements of condition and the revenues and expenses for the
      periods reported. Actual results could differ significantly from those
      estimates.

      Estimates that are particularly susceptible to significant change relate
      to the determination of the allowance for loan losses and the valuation of
      other real estate acquired in connection with foreclosures or in
      satisfaction of loan receivables. In connection with the determination of
      the allowance for loan losses and other real estate owned, management
      obtains independent appraisals for significant properties.

4.    Forward-Looking Statements

      The Company has made, and may continue to make, various forward-looking
      statements with respect to earnings, credit quality and other financial
      and business matters for periods subsequent to June 30, 1998. The Company
      cautions that these forward-looking statements are subject to numerous
      assumptions, risks and uncertainties, and that statements relating to
      subsequent periods increasingly are subject to greater uncertainty because
      of the increased likelihood of changes in underlying factors and
      assumptions.


                                       8
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      Actual results could differ materially from forward-looking statements.

      In addition to those factors previously disclosed by the Company and those
      factors identified elsewhere herein, the following factors could cause
      actual results to differ materially from such forward-looking statements:
      competitive pressures on loan and deposit product pricing; other actions
      of competitors; changes in economic conditions; the extent and timing of
      actions of the Federal Reserve Board; customer deposit disintermediation;
      changes in customers' acceptance of the Company's products and services;
      ability to achieve cost savings, acquisition charge estimates, and other
      assumptions related to the acquisition of Tappan Zee Financial, Inc.;
      achievement of compliance with the Year 2000 issues more fully discussed
      in Management's Discussions and Analysis of Financial Condition and
      Results of Operations; and the extent and timing of legislative and
      regulatory actions and reform.

      The Company's forward-looking statements speak 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.

5.    Earnings Per Share

      On March 3, 1997, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
      per Share." SFAS No. 128 is effective for financial statements issued for
      periods ending after December 15, 1997, including interim periods. The
      Company adopted SFAS No. 128 for the year ended December 31, 1997 and
      Earnings Per Share ("EPS") data is presented based on the requirements of
      this statement.

      SFAS No. 128 establishes standards for computing and presenting "Basic"
      and "Diluted" EPS. SFAS No. 128 states that Basic EPS excludes dilution
      and is computed by dividing net income available to common stockholders
      (net income after preferred stock dividend requirements) by the
      weighted-average number of common shares outstanding for the period.
      Diluted EPS reflects the potential dilution that could occur if securities
      or other contracts to issue common stock were exercised or converted into
      common stock or resulted in the issuance of common stock that would then
      share in the earnings of the entity. Diluted EPS is computed similarly to
      "Fully Diluted EPS" pursuant to Accounting Principles Board ("APB")
      Opinion No. 15. Diluted EPS is based on net income available to common
      stockholders divided by the weighted average number of common shares
      outstanding and common equivalent shares ("adjusted weighted average
      shares"). Stock options granted but not yet exercised under the Company's
      stock option plans are considered common stock equivalents for Diluted EPS
      calculations.


                                       9
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      The following table sets forth the computation of Basic and Diluted
      earnings per share:

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    (000's, except share data)
                                        Three Months Ended              Six Months Ended
                                       June 30,      June 30,        June 30,     June 30,
                                         1998          1997            1998         1997
                                         ----          ----            ----         ----
<S>                                  <C>           <C>            <C>           <C>        
Numerator:
   Net income                        $     4,952   $     2,500    $     7,903   $     4,832
   Less preferred stock dividends             --            --             --            34
                                     -----------   -----------    -----------   -----------
Numerator for Basic and Diluted
   earnings per share - net income
   available to common stockholders  $     4,952   $     2,500    $     7,903   $     4,798
                                     -----------   -----------    -----------   -----------
Denominator:
   Denominator for Basic earnings
      per share - weighted
      average shares                  12,467,786    12,396,382     12,456,024    12,385,556
   Effects of dilutive securities:
      Director and employee
      stock options                    1,229,868     1,096,968      1,241,399     1,017,990
                                     -----------   -----------    -----------   -----------
   Denominator for Diluted earnings
      per share - adjusted weighted
      average shares                  13,697,654    13,493,350     13,697,423    13,403,546
                                     ===========   ===========    ===========   =========== 
Basic earnings per share             $      0.40   $      0.20*   $      0.63   $      0.39*
Diluted earnings per share           $      0.36   $      0.19*   $      0.58   $      0.36*
                                     ===========   ===========    ===========   =========== 
</TABLE>

* Adjusted for two-for-one stock split in December 1997.

6.    Reporting Comprehensive Income

      Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
      Comprehensive Income," which establishes standards for reporting and
      display of comprehensive income and its components in a full set of
      general purpose financial statements. This statement requires that all
      items that are required to be recognized under accounting standards as
      components of comprehensive income be reported in a financial statement
      that is displayed with the same prominence as are the financial
      statements, except for interim financial reporting periods where
      disclosure is made in the notes to consolidated financial statements.
      Comprehensive income is defined as "the change in equity (net assets) of a
      business enterprise during a period from transactions and other events and
      circumstances from non-owner sources. It includes all changes in equity
      during a period, except those resulting from investments by owners and
      distributions to owners.


                                       10
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      The following table details the Company's comprehensive income for the
      three and six months ended June 30, 1998 and 1997:

--------------------------------------------------------------------------------

                                 Three Months Ended    Six Months Ended
                                      June 30,             June 30,
Description                       1998       1997       1998       1997
-----------                       ----       ----       ----       ----
                                                 (000's)

Net Income                      $ 4,952    $ 2,500    $ 7,903    $ 4,832
Other comprehensive income,
   net of tax:
   Unrealized holding gains
   (losses) on securities
   available for sale arising
   during the periods               716      1,087        297       (144)

Reclassification adjustment,
   net of tax, for net gains
   realized in the periods
   that were held at the
   beginning of the periods        (308)      (167)      (539)      (154)
                                -------    -------    -------    -------
Net gain (loss) recognized in
   other comprehensive income       408        920       (242)      (298)
                                -------    -------    -------    -------
Comprehensive Income            $ 5,360    $ 3,420    $ 7,661    $ 4,534
                                =======    =======    =======    =======

      These unrealized holding gains (losses), net of tax benefit, represent an
      increase (decrease) in unrealized appreciation of available for sale
      securities, net of tax, during the periods reported. The cumulative
      balance of this unrealized gain, net of tax, at June 30, 1998 is
      $1,057,000.

7.    Disclosures About Segments of an Enterprise and Related Information

      In September 1997, the FASB issued SFAS No. 131 "Disclosures About
      Segments of an Enterprise and Related Information." This statement is
      effective for the Company's consolidated financial statements for the year
      ending December 31, 1998.

      SFAS No. 131 establishes standards for the way public business enterprises
      report information about operating segments in annual financial statements
      and requires that those enterprises report selected information about
      operating segments in subsequent interim financial reports issued to
      shareholders. It also establishes standards for related disclosure about
      products and services, geographic areas, and major customers. The
      statement requires that a public business enterprise report financial and
      descriptive information about its reportable operating segments. Operating
      segments are components of an enterprise about which separate financial
      information is available that is evaluated regularly by the chief
      operating decision maker in deciding how to allocate resources and assess


                                       11
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      performance. The statement requires that public business enterprises
      report a measure of segment profit or loss, certain specific revenue and
      expense items and segment assets. It also requires that information be
      reported about revenues derived from the enterprises' products or
      services, or about the countries in which the enterprises earn revenues
      and holds assets, and about major customers, regardless of whether that
      information is used in making operating decisions.

      This statement requires disclosures that the Company must make in its
      financial statements or notes thereto to the extent applicable.
      Accordingly, implementation of this statement will not have any effect on
      the Company's financial condition or results of operations. However,
      additional information will be provided to users of these financial
      statements as to the financial condition and operations of the Company.

8.    Loans

      Nonaccrual loans were $3.9 million at June 30, 1998 and $5.8 million at
      December 31, 1997. Restructured loans were $0.5 million and $0.6 million
      at June 30, 1998 and December 31, 1997, respectively.

      Substantially, all of the nonaccruing loans are collateralized by real
      estate, except for certain loans made by the Bank to Bennett Funding Group
      ("Bennett"), which are collateralized by cash and lease receivables. At
      June 30, 1998, the Company has no commitments to lend additional funds to
      any customers with nonaccrual or restructured loan balances.

      At June 30, 1998, there are loans aggregating approximately $0.5 million,
      which are not on nonaccrual status, that were potential problem loans
      which may result in their being placed on nonaccrual status in the future.

      At June 30, 1998 and December 31, 1997, the recorded investment in loans
      that are considered to be impaired under SFAS No. 114 "Accounting for
      Impairment of a Loan" approximated $3.2 million and $4.6 million at June
      30, 1998 and December 31, 1997, respectively ($2.8 million and $4.2
      million at June 30, 1998 and December 31, 1997, respectively, which were
      in nonaccrual status). Included in these loan balances are loans to
      Bennett. Each impaired loan has a related allowance for loan losses
      determined in accordance with SFAS No. 114. The total allowance for loan
      losses related to impaired loans was $1.1 million and $1.8 million as of
      June 30, 1998 and December 31, 1997, respectively. The average recorded
      investment in impaired loans for the six months ended June 30, 1998 and
      year ended December 31, 1997 was approximately $3.9 million and $6.2
      million, respectively. For the three and six months ended June 30, 1998
      and year ended December 31, 1997, interest income recognized by the
      Company on impaired loans was not material.

      Restructured loans in the amounts of $0.4 million at both June 30, 1998
      and December 31, 1997, respectively, that are considered to be impaired
      due to a reduction in the contractual interest rate are on accrual status
      because the collateral securing these loans is sufficient to protect the
      contractual principal and interest of the restructured loans. These loans
      have been performing for a reasonable period of time. Interest accrued on
      these loans and not


                                       12
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      yet collected as of June 30, 1998 is immaterial.

      The Bank has approximately $2.0 million of outstanding loans,
      collateralized by cash and lease receivables, to Bennett, a lease finance
      company, which filed for bankruptcy protection during the first quarter of
      1996. Collection of the Bank's loans continues to be delayed by the
      bankruptcy proceedings. However, as a result of a favorable ruling by the
      Bankruptcy Court with jurisdiction over Bennett, the Bank collected an
      initial payment of $1.3 million, reducing the original balance of $3.3
      million to $2.0 million. Substantial additional collections are
      anticipated. The ruling by the Bankruptcy Court is subject to appeal by
      the Trustee. The Bank has not yet determined the extent of losses that
      will be sustained on these loans, if any. Based upon Bennett's filing, the
      loans have been placed on nonaccrual status and a specific reserve
      included in the allowance for loan losses of $1.0 million has been
      established in accordance with SFAS No. 114 as of June 30, 1998.

9.    Securities

      In accordance with SFAS No. 115 "Accounting for Certain Investments in
      Debt and Equity Securities," the Bank's investment policy includes a
      determination of the appropriate classification of securities at the time
      of purchase. Securities that may be sold as part of the Company's
      asset/liability or liquidity management, or in response to or in
      anticipation of changes in interest rates and resulting prepayment risk,
      or for similar factors, are classified as available for sale and carried
      at fair value. Securities that the Company has the ability and positive
      intent to hold to maturity are classified as held to maturity and carried
      at amortized cost. Realized gains and losses on the sales of all
      securities, determined by using the specific identification method, are
      reported in earnings. Securities available for sale are shown in the
      Consolidated Statements of Condition at estimated fair value and the
      resulting net unrealized gains and losses, net of tax, are shown as a
      separate component of stockholders' equity.

      The decision to sell available for sale securities is based on
      management's assessment of changes in economic or financial market
      conditions, interest rate risk, and the Company's financial position and
      liquidity. Estimated fair values for securities are based on quoted market
      prices, where available. If quoted market prices are not available,
      estimated fair values are based on quoted market prices of comparable
      instruments. The Company does not acquire securities for the purpose of
      engaging in trading activities.

      At June 30, 1998, the effect of SFAS No. 115 resulted in an increase of
      securities available for sale of $1,831,000, representing the net
      unrealized gain, which, after the applicable tax effect, resulted in an
      increase to stockholders' equity of $1,057,000. At December 31, 1997, the
      effect of SFAS No. 115 resulted in an increase of securities available for
      sale of $2,250,000, which, after the applicable tax effect, resulted in an
      increase to stockholders' equity of $1,299,000.

      A summary of the amortized cost and estimated fair value of securities and
      related gross unrealized gains and losses at June 30, 1998 and December
      31, 1997, follows:


                                       13
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(Cont'd)

--------------------------------------------------------------------------------

                                                       (000's)
                                                  Gross      Gross     Estimated
                                      Amortized Unrealized Unrealized    Fair
                                        Cost      Gains      Losses      Value
June 30, 1998:                        ========= ========== ==========  =========
Available for Sale:
U.S. Treasury and
   government agencies                $ 78,993   $    873   $      9   $ 79,857
Mortgage-backed securities             251,258      1,253        341    252,170
Obligations of states and
   political subdivisions                1,166         55         --      1,221
Other                                      114         --         --        114
                                      --------   --------   --------   --------
Total securities available for sale   $331,531   $  2,181   $    350   $333,362
                                      ========   ========   ========   ========
Held to Maturity:
Mortgage-backed securities            $  9,784   $    281   $     --   $ 10,065
Obligations of states and
   political subdivisions               57,698      2,552         --     60,250
                                      --------   --------   --------   --------
Total securities held to maturity     $ 67,482   $  2,833   $     --   $ 70,315
                                      ========   ========   ========   ========

                                                       (000's)
                                                  Gross      Gross     Estimated
                                      Amortized Unrealized Unrealized    Fair
                                        Cost      Gains      Losses     Value
December 31, 1997:                    ========= ========== ==========  =========
Available for Sale:
U.S. Treasury and
   government agencies                $117,495   $  1,067   $     43   $118,519
Mortgage-backed securities             122,698      1,223         58    123,863
Obligations of states and
   political subdivisions                1,166         61         --      1,227
Other                                      114         --         --        114
                                      --------   --------   --------   --------
Total securities available for sale   $241,473   $  2,351   $    101   $243,723
                                      ========   ========   ========   ========
Held to Maturity:
U.S. Treasury and
   government agencies                $ 44,988   $     --   $    236   $ 44,752
Mortgage-backed securities              29,791        212        142     29,861
Obligations of states and
   political subdivisions               62,398      2,860         --     65,258
                                      --------   --------   --------   --------
Total securities held to maturity     $137,177   $  3,072   $    378   $139,871
                                      ========   ========   ========   ========


                                       14
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

10.   Borrowings and Stockholders' Equity

      The Company utilizes borrowings primarily to meet the funding requirements
      for its asset growth and to manage its interest rate risk. Borrowings
      include securities sold under agreements to repurchase, federal funds
      purchased, and Federal Home Loan Bank of New York ("FHLB") advances.

      Short-term securities sold under agreements to repurchase generally mature
      between one and 365 days. The Bank may borrow up to $50.0 million from two
      primary investment firms under master security sale and repurchase
      agreements. In addition, the Bank also has the ability to borrow under
      similar master security sale and repurchase agreements from the FHLB and,
      to a lesser extent, its customers. At June 30, 1998 and December 31, 1997,
      the Bank had $22.0 million and $34.9 million, respectively, of such
      short-term borrowings outstanding with terms between 30 and 365 days, at
      interest rates between 5.60 percent and 6.00 percent. At June 30, 1998 and
      December 31, 1997, the borrowings were collateralized by securities with
      an aggregate amortized cost of $22.8 million and $35.5 million and
      estimated fair value of $22.7 million and $35.6 million, respectively.

      Federal funds purchased represent overnight funds. The Bank has federal
      funds purchase lines available with four financial institutions totaling
      $28.0 million. At June 30, 1998 and December 31, 1997, the Bank had no
      federal funds purchased balances outstanding.

      Short-term FHLB advances are borrowings with original maturities of
      between one and 365 days. At June 30, 1998 and December 31, 1997, the Bank
      had short-term FHLB advances of $1.0 million and $35.0 million
      outstanding, respectively, at interest rates ranging from 5.63 percent to
      6.13 percent.

      Additional information with respect to short-term borrowings for the six
      months ended June 30, 1998 and 1997 is presented in the table below.

      --------------------------------------------------------------------------
                                                 (000's, except percentages)
      Short-Term Borrowings                       1998               1997
      --------------------------------------------------------------------------
      Balance at June 30                       $   23,000       $   71,459
      Average balance outstanding                  17,698           45,464
      Weighted-average interest rate*
           As of June 30                             5.64%            5.67%
           Paid during period                        5.92%            5.73%
      ==========================================================================
      *The weighted-average interest rates have been adjusted to reflect the
      effect of an interest rate swap used to convert a variable rate borrowing
      to a fixed rate.

      At June 30, 1998 and December 31, 1997, long-term FHLB advances totaled
      $18.6 million and $24.2 million, respectively. At June 30, 1998, long-term
      FHLB advances aggregating $14.0 million are single principal payments and
      are not repayable prior to maturity without penalty. Long-term FHLB
      advances aggregating $4.6 million are amortizing advances having scheduled
      payments, but may not be repaid in full prior to maturity without penalty.


                                       15
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      The Bank also has long-term borrowings of $59.8 million and $39.7 million
      in securities sold under agreements to repurchase as of June 30, 1998 and
      December 31, 1997, respectively. At June 30, 1998, these borrowings
      include $9.8 million having an original term of three years at an interest
      rate of 6.08 percent, and $50.0 million having original terms of between
      five and ten years at interest rates between 5.28 percent and 5.67 percent
      that are callable on certain dates after an initial noncall period at the
      option of the counter party to the repurchase agreement. The borrowings
      are collateralized by securities with an aggregate amortized cost of $62.0
      million and estimated fair value of $63.0 million.

      At June 30, 1998 and December 31, 1997, the Bank owns 13,723,422 shares of
      capital stock in the FHLB with a carrying value of $13.7 million, which is
      required in order to borrow under the short and long-term advance and
      securities sold under agreements to repurchase programs from the FHLB. The
      FHLB generally limits borrowings up to an aggregate of 30 percent of total
      assets, excluding securities sold under agreements to repurchase, upon the
      prerequisite purchase of additional shares of FHLB stock. Any advances
      made from the FHLB are required to be collateralized by the FHLB stock
      purchased and certain other assets of the Bank.

      The following table is a summary of long-term debt, all of which was fixed
      rate, distributed based upon remaining contractual maturity at June 30,
      1998, with a comparative total for December 31, 1997:

--------------------------------------------------------------------------------
                                          (000's, except percentages)
                                         After 1
                               Within   But Within   After     1998      1997
                               1 Year    5 Years    5 Years    Total     Total
--------------------------------------------------------------------------------
Total long-term debt           $ 9,000   $29,362   $ 40,000   $78,362   $63,940
Weighted-average interest rate    6.31%     5.84%      5.64%     5.79%     5.92%
--------------------------------------------------------------------------------

      The dividend rate on the Company's Series "A" preferred stock issued to a
      single investor was determined quarterly and was subject to certain
      minimum and maximum per annum dividend rates as specified in the
      agreement. For the six month period ended June 30, 1997, the weighted
      average dividend rate was 8.4 percent (the minimum rate). Basic and
      diluted earnings per share reflect the preferred stock dividend declared
      and accrued totaling $34,000 for the six month period ended June 30, 1997.
      The Company redeemed the remaining outstanding amount of preferred stock
      of $3,250,000 on February 14, 1997.

      The Company issued a two-for-one stock split in the form of a 100% stock
      dividend on December 24, 1997. The weighted average shares outstanding and
      per share amounts for the three and six months ended June 30, 1997 have
      been adjusted to reflect the stock dividend distributed in 1997.

      At the Company's annual meeting of shareholders held on May 20, 1998, an
      amendment to the Company's Certificate of Incorporation was approved by
      the shareholders of the Company. This amendment increased the authorized
      number of shares of Common Stock from


                                       16
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      20,000,000 to 30,000,000, and reduced the par value of the Common Stock
      from $5.00 per share to $0.01 per share.

      The Company and the Bank's ability to pay cash dividends in the future are
      restricted by various regulatory requirements. The Company's ability to
      pay cash dividends to its shareholders is primarily dependent upon the
      receipt of dividends from the Bank. The Bank's dividends to the Company
      may not exceed the sum of the Bank's net income for that year and its
      undistributed net income for the preceding two years, less any required
      transfers to additional paid-in capital. At June 30, 1998, the Bank could
      pay dividends to the Company of $24.7 million without having to obtain
      prior regulatory approval.

11.   Commitments and Contingencies

      At June 30, 1998, the Company and Bank are committed under an employment
      agreement (as amended by action of the Company's and Bank's Boards of
      Directors on February 18, 1998), with a key officer, director and
      shareholder requiring annual salary and other payments of $530,000,
      increasing annually by $30,000 during the term of the contract, annual
      bonus payments equal to 6 percent of net income of the Company under the
      executive compensation plan, annual stock option grants of 96,800 shares
      issued at fair value (110 percent of fair value for incentive stock
      options if the key officer's ownership of the Company equals or exceeds 10
      percent at the date of grant), and other benefits for the term of the
      contract expiring July 1, 1999.

      In the normal course of business, various commitments to extend credit are
      made which are not reflected in the accompanying consolidated financial
      statements. At June 30, 1998, formal credit line and loan commitments
      which are primarily loans collateralized by real estate and credit card
      lines approximated $189.6 million and outstanding letters of credit
      totaled $22.3 million. Such amounts represent the maximum risk of loss on
      these commitments.

      In connection with its asset and liability management program, the Bank
      entered into a protected rate agreement ("cap") which has a remaining
      aggregate notional amount of $2.5 million at June 30, 1998. The premium
      paid in the amount of $85,000 is deferred and is being amortized over the
      five year life of the cap which expires in 1999. Under the terms of the
      cap, the Bank will be reimbursed for increases in one-month LIBOR for any
      month during the term of the agreement in which such rate exceeds the
      "strike level" of 8.1875 percent. Interest rate cap agreements allow the
      Bank to limit its exposure to unfavorable interest rate fluctuations over
      and above the "capped" rate. The purchased cap hedges income payments on
      floating rate mortgage-backed securities that have maximum lifetime
      interest rate caps. The Bank has also entered into an interest rate swap
      contract which effectively adjusts the short-term interest rate on certain
      fundings to a long-term fixed interest rate. Under the terms of the
      contract, the Bank is required to pay a fixed interest rate payment equal
      to 6.16 percent on a notional amount of $10.0 million, and receive a
      payment equal to three-month LIBOR. The agreement expires on October 2,
      1998. This agreement is subject to the counter party's ability to perform
      in accordance with the terms of the agreement. The Bank's risk of loss on
      the interest rate cap is equal to the unamortized premium paid to enter
      into this agreement, while the risk of loss on the interest rate swap is
      the fair value amount to be paid to terminate the contract, which was
      $22,000 (liability) at June 30, 1998.


                                       17
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      The Bank enters into forward commitments to sell residential first
      mortgage loans to reduce market risk associated with originating and
      holding loans for sale. A risk associated with these commitments arises
      from the Bank's potential inability to generate loans to fulfill the
      contracts. To control the risk associated with changes in interest rates,
      the Bank may also use options to hedge loans closed and expected to close.
      No such contracts were outstanding at June 30, 1998.

      In the ordinary course of business, the Company is party to various legal
      proceedings, none of which, in the opinion of management, will have a
      material effect on the Company's consolidated financial position or
      results of operations.

12.   Acquisition of Tappan Zee Financial, Inc.

      On March 6, 1998, the Company and Tappan Zee Financial, Inc. ("Tappan
      Zee"), the parent company of Tarrytowns Bank, FSB, jointly announced that
      they have signed a definitive agreement pursuant to which they will enter
      into a business combination. The transaction is intended to be a tax free
      exchange of common shares and will be accounted for as a pooling of
      interests. Tappan Zee will be merged into the Company and Tarrytowns Bank,
      FSB will operate as a wholly-owned subsidiary of the Company.

      Under the terms of the agreement, each Tappan Zee shareholder will receive
      Company common stock that is anticipated to have a value of $22.00 per
      share for each Tappan Zee share. The exchange ratio will be finalized
      after all regulatory approvals are received. The minimum exchange ratio
      will be .88 Company shares for each Tappan Zee share if the Company's
      common stock has a value of $25.00 per share or higher, and, subject to
      the exception below, the maximum exchange ratio will be 1.24 Company
      shares for each Tappan Zee share if the Company's common stock has a value
      of $17.75 or lower. If the Company's common stock has a value of between
      $17.75 and $25.00 per share, the exchange ratio will be established to
      provide a value to Tappan Zee shareholders of $22.00 per share. If the
      Company's common stock falls below $15.00 per share, Tappan Zee will have
      the right to terminate the transaction subject to the Company's right to
      adjust the exchange ratio so as to assure that Tappan Zee shareholders
      receive a value of $18.60 per Tappan Zee share. Based on the Company's
      closing price per common share on March 6, 1998 and June 30, 1998 of
      $22.25 and $19.75 per share, each Tappan Zee share would be exchanged for
      0.99 and 1.11 shares, respectively, of Company common stock. The total
      value of the transaction is approximately $33.8 million, which represents
      1.51 times Tappan Zee's book value as of December 31, 1997.

      As of June 30, 1998, Tappan Zee has approximately $140 million in assets
      and operates a single banking facility in the Village of Tarrytown,
      Westchester County, New York. Had the business combination occurred as of
      June 30, 1998, the Company would have had approximately $1.240 billion in
      assets. After an acquisition charge of approximately $3 million to $3.5
      million (net of tax) in 1998, the transaction is expected to be accretive
      to earnings per share in 1999.


                                       18
<PAGE>

U.S.B HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Cont'd)

      The acquisition is contingent upon the satisfaction of necessary bank
      regulatory approvals, the approval of the shareholders of Tappan Zee and
      other customary conditions. The parties anticipate that the merger will be
      consummated in the third quarter of 1998.

      In connection with the merger agreement, Tappan Zee has granted the
      Company an option, exercisable under certain circumstances, to purchase
      294,134 shares, or 19.9%, of Tappan Zee's currently outstanding common
      stock.

13.   Dissolution of U.S.B. Realty Corp.

      On April 16, 1998, the Company announced that it intended to dissolve its
      Real Estate Investment Trust subsidiary, U.S.B. Realty Corp. ("Realty
      Corp"), in a tax free liquidation. A proxy statement was mailed to the
      common and junior preferred shareholders of Realty Corp., and a special
      meeting was held on April 29th, at which time the shareholders of Realty
      Corp. approved the proposal. The Company believes that dissolution of
      Realty Corp. will make Realty Corp. assets available for collateralization
      of Bank borrowings and will result in a reduction of the cost of
      administration.

      Dissolution of Realty Corp., subject to a number of conditions and
      factors, will have a significant positive impact on the Company's 1998 tax
      provision, but may increase the effective tax rate slightly in future
      years. For the three and six month periods ended June 30, 1998, net income
      includes a reduction of tax expense, net of associated expenses, of $2.0
      million resulting from liquidating distributions of earnings from Realty
      Corp.


                                       19
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION

FINANCIAL CONDITION

At June 30, 1998 the Company had total assets of $1,100.8 million, an increase
of $77.4 million from December 31, 1997.

Total deposits increased $103.0 million for the six month period ended June 30,
1998 to $900.8 million, which represents a 12.9 percent increase from December
31, 1997. Time deposits increased $43.0 million accounting for the greatest
component of deposit increases. Retail time deposits under $100,000 increased by
$5.4 million due primarily to time deposit promotions, and other time deposits
over $100,000 decreased by $0.8 million during the six month period ended June
30, 1998. Time deposits greater than $100,000 from local municipalities, which
are obtained on a bidding basis with maturities of 30 to 180 days, increased by
$38.8 million as part of the Bank's overall leveraging strategy. IRA and Keogh
time deposit accounts decreased by $0.4 million due to significant competition
for this product. Savings deposits increased by $31.9 million, as the Company's
"Golden Statement" and "Liquid Gold" accounts, which provide attractive yields
for high balance accounts, continued to attract additional deposits. NOW
accounts and demand deposits increased by $8.2 million and $21.1 million,
respectively. Money market deposits decreased by $1.3 million, as customers
generally switched money market account balances to higher yielding deposit
products.

The securities portfolio, including investment in FHLB stock, of $414.6 million
and $394.6 million at June 30, 1998 and December 31, 1997, respectively,
consists of securities held to maturity at amortized cost of $67.5 million and
$137.2 million, securities available for sale at estimated fair value totaling
$333.4 million and $243.7 million, respectively, and FHLB stock of $13.7 million
in each period.

During the six months ended June 30, 1998, U.S. Treasury and government agency
obligations decreased $83.7 million due primarily to sales and redemptions of
securities totaling $104.5 million and a net decrease in the market value of
available for sale securities of $0.2 million, partially offset by purchases of
$1.0 million in U.S. Treasury Notes and $20.0 million in callable bonds.
Mortgage-backed securities increased by $108.3 million primarily due to
purchases of $187.2 million, which were offset by a net decrease in the market
value of available for sale securities of $0.3 million, sales and redemptions
totaling $63.0 million and principal amortizations of $15.4 million.
Mortgage-backed security purchases are fixed-rate securities having expected
weighted-average lives of less than ten years at the time of purchase. The
mortgage-backed securities sold have low yields or expectations to prepay in the
near-term and were also sold to take advantage of favorable market conditions.
The Company's investment in obligations of states and political subdivisions, or
municipal securities, decreased by $4.7 million principally due to maturities of
$5.5 million that were offset by purchases of $0.9 million during the first six
months of 1998. Municipal securities are considered core investments which are
high yielding on a tax equivalent basis and have diversified maturities.
Purchases of municipal securities are dependent upon their availability in the
marketplace and the comparative tax equivalent yield of such securities to other
securities of comparable credit risk and maturity. The Company currently has no
outstanding holdings in corporate bonds. Medium-term corporate debt securities
which are rated investment grade by nationally recognized credit rating
organizations will continue to be evaluated for investment in the future.


                                       20
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

FINANCIAL CONDITION (Cont'd)

The Company continues to exercise its conservative approach to investing by
making high quality investments and controlling interest rate risk by purchasing
both fixed and floating rate securities and through the averaging of investments
in medium-term maturities.

At June 30, 1998, loans were $614.8 million, a net increase of $51.5 million or
9.1 percent over December 31, 1997. The primary increases of outstanding loan
balances were $6.4 million in time secured loans, $19.4 million in land
acquisition and construction loans, $8.3 million in commercial mortgages, $7.5
million in commercial installment loans, and $13.0 million in residential
mortgages, offset by a net reduction of $3.1 million in all other loan
categories. The Bank had approximately $189.6 million in formal credit lines and
loan commitments outstanding. Management considers its liquid resources to be
adequate to fund loans in the foreseeable future, principally by utilizing
excess funds temporarily placed in federal funds sold, increases in deposits and
borrowings, loan repayments and maturing securities.

The Bank has approximately $2.0 million of loans, collateralized by cash and
lease receivables, to Bennett Funding Group ("Bennett"), a lease finance
company, which filed for bankruptcy protection during the first quarter of 1996.
Collection of these loans continue to be delayed by the bankruptcy proceedings.
However, as a result of a favorable ruling by the Bankruptcy Court with
jurisdiction over Bennett, the Bank collected an initial payment of $1.3
million, reducing the original balance of $3.3 million to $2.0 million.
Substantial additional collections are anticipated. The Bank has not yet
determined the extent of losses that will be sustained on these loans, if any.
However, based upon Bennett's filing, the loans have been placed on nonaccrual
status. Including the Bennett loans, the Bank's nonaccrual loans and other real
estate owned were approximately 0.5 percent of total assets at June 30, 1998.

The Bank's allowance for loan losses increased $0.5 million or 7.1 percent to
$8.1 million at June 30, 1998, from $7.6 million at December 31, 1997. The
allowance for loan losses represents 1.32 percent of gross loans outstanding at
June 30, 1998, compared to 1.34 percent at December 31, 1997. The allowance
reflects a provision of $600,000 and net charge-offs of $66,000 recorded thus
far in 1998. Management takes a prudent and cautious position in evaluating
various business and economic uncertainties in relation to the Bank's loan
portfolio. In management's judgment, the allowance is considered adequate to
absorb potential losses inherent in the loan portfolio.

During the six months ended June 30, 1998, the Bank decreased the amount of
outstanding short- and long-term advances with the Federal Home Loan Bank of New
York by $39.6 million, while borrowings under repurchase agreements increased by
$7.1 million. Overall, borrowings decreased, as such funding was replaced by
retail deposits and municipal deposits on a bid basis at a lower cost. As noted
above, municipal time deposits increased $38.8 million.

Stockholders' equity increased to $69.6 million at June 30, 1998 from the
December 31, 1997 balance of $62.6 million. The increase primarily results from
net income of $7.9 million for the six month period ended June 30, 1998, stock
options exercised ($0.8 million), a tax benefit from exercise of non qualified
of stock options of $0.6 million, and a decrease in shares held in trust for


                                       21
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

FINANCIAL CONDITION (Cont'd)

deferred compensation of $0.1 million, partially offset by a decrease in the net
unrealized gain on securities available for sale, net of tax, of $0.2 million,
and dividends paid of $1.4 million. During the first six months of 1998, the
Company also purchased 35,649 shares of treasury stock at market value for
$748,000, in connection with the exercise of stock options.

The Company's leverage ratio at June 30, 1998 was 8.34 percent, compared to 8.26
percent at December 31, 1997. The Company's Tier I and total capital ratios
under the risk-based capital guidelines were 12.71 percent and 13.87 percent at
June 30, 1998 and 12.63 percent and 13.80 percent at December 31, 1997,
respectively. In addition, the Bank exceeds all current regulatory capital
requirements and was in the "well-capitalized" category at June 30, 1998 and
December 31, 1997.

RESULTS OF OPERATIONS

Earnings

Net income for the three and six month periods ended June 30, 1998 increased
$2.5 million or 98.1 percent to $4,952,000 and $3.1 million or 63.6 percent to
$7,903,000, respectively, compared to the same periods in 1997. Basic earning
per share increased to $0.40 and $0.63 from $0.20 and $0.39 in the same periods
in 1997, respectively. Diluted earnings per share increased to $0.36 and $0.58
from $0.19 and $0.36 in the same period in 1997, respectively. The annualized
return on average total assets was 1.87 and 1.52 percent for the three and six
month periods ended June 30, 1998, compared to 1.07 and 1.09 percent for the
three and six month periods ended June 30, 1997. The annualized return on
average common equity was 29.69 and 24.19 percent for the three and six months
ended June 30, 1998, compared to 17.94 and 17.54 percent, respectively, for the
comparative period in 1997. The overall increase in earnings in the 1998 periods
primarily reflects a reduction in tax expense as a result of the liquidation of
U.S.B. Realty Corp., net of associated expenses, of $2.0 million, as well as
higher net interest income resulting from increased volume and effective
leveraging of the balance sheet, higher security gains, and a lower provision
for loan losses, offset by higher non-interest expenses to support increased
business and lower service charges and fees and other income. A discussion of
the factors impacting the changes in the various components of net income
follows.

Net Interest Income

Net interest income, the difference between interest income and interest
expense, is a significant component of the Company's consolidated earnings. For
the three and six month periods ended June 30, 1998, net interest income
increased 13.2 percent to $9.4 million from $8.3 million, and 12.9 percent to
$18.5 million from $16.3 million, respectively, compared to the year earlier
periods. Net interest income increased in the current year period due to volume
increases of average earning assets, partially offset by a decrease in the net
interest spread. For the three and six months ended June 30, 1998, the interest
spread (yield on earning assets less cost of interest-bearing funds) was 3.00
and 3.03 percent compared to 3.24 and 3.33 percent in the same period of 1997,
respectively.


                                       22
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

FINANCIAL CONDITION (Cont'd)

Yields on interest earning assets decreased during the three and six month
periods ended June 30, 1998, while the cost of funds increased compared to the
same periods in 1997, resulting in the negative impact on the net interest
spread. The decrease in asset yields is partially as a result of lower yields
available on security investments and redemptions of callable agency and other
securities at higher yields, as well as declining yields on loans due to
increased competition and a general decline in intermediate-term interest rates.
The cost of funds increased due to the leverage strategy discussed below and
growth of deposits in higher rate instruments, while costs of deposit products
generally remained stable due to the flat yield curve. The decrease in the
spread is affected by the Company's leverage strategy of purchasing government
securities funded by borrowings and/or municipal deposits at tighter spreads.
Although leverage strategies result in decreasing interest spreads, they have
the effect of increasing net interest income while managing interest rate risk.

Provision for Loan Losses

The provision for loan losses decreased $530,000 to $300,000 and $860,000 to
$600,000 for the three and six month periods ended June 30, 1998, respectively,
compared to the same period in 1997. Net charge-offs in the three and six month
periods ended June 30, 1998 totaled $25,000 and $66,000, respectively, compared
to net charge-offs of $150,000 and $257,000 for the three and six month periods
ended June 30, 1997. The net charge-offs in all periods primarily relate to
credit card loans. Nonaccrual loans were $3.9 million and $7.1 million,
respectively, at June 30, 1998 and 1997, compared to $5.8 million at December
31, 1997. The Bank has approximately $2.0 million of loans, collateralized by
cash and lease receivables, to Bennett, a lease finance company, which filed for
bankruptcy during the first quarter of 1996. The Bank does not yet know the
extent of losses that will be sustained on these loans, if any. However, based
upon Bennett's filing, the loans were placed on nonaccrual status in March 1996.
During the quarter ended June 30, 1998, the Company collected $1.3 million of
amounts due from Bennett (see notes to Consolidated Financial Statements
(Unaudited)). It is the Company's policy to discontinue the accrual of interest
on loans when, in the opinion of management, a reasonable doubt exists as to the
timely collectibility of the amounts due. Net income is adversely impacted by
the level of non-performing assets of the Company since, in addition to foregone
revenue, the Company must increase the level of provision for loan losses, and
incur other costs associated with collections of past due balances.

An evaluation of the quality of the loan portfolio is performed by management on
an ongoing basis as an integral part of the loan function, which includes the
identification of past due loans, the recognition of the current economic
environment and the review of the historical loan experience. Management has
taken a prudent and cautious position in evaluating various business and
economic uncertainties in relation to the Company's loan portfolio and believes
that the allowance for loan losses at June 30, 1998 reflects the risk elements
inherent in the total loan portfolio at this time. The changes in the provision
charged to income and the allowance for loan losses reflects such uncertainties
on an increasing loan portfolio. There is no assurance that the Company will not
be required to make future adjustments to the allowance in response to changing
economic conditions or regulatory examinations.


                                       23
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

Non-Interest Income

Non-interest income for the three and six months ended June 30, 1998 increased
by $49,000 to $1,570,000 and $383,000 to $2,762,000, respectively, compared to
the same periods of 1997. The increases are primarily related to higher net
gains on securities transactions ($179,000 and $500,000, respectively), offset
by decreases in service charges and fees ($4,000 and $31,000, respectively), and
lower other income ($124,000 and $77,000, respectively). Other income consists
of ATM fees, credit card fees, loan servicing income, letter of credit fees,
loan prepayments, wire transfer fees, safe deposit, and other fees.

Non-Interest Expenses

Non-interest expenses increased $1,106,000 to $6,530,000 and $1,916,000 to
$12,239,000 for the three and six month periods ended June 30, 1998,
respectively, from the comparable periods in 1997. The primary reason for this
increase results from an increase in the cost of salaries and other operating
costs to support the growth of the Bank and expenses of $413,000 associated with
the liquidation of U.S.B. Realty Corp. The following discusses each component of
non-interest expense.

Salaries and benefits, the largest component of non-interest expense, increased
by $838,000, or 30.0 percent and $1,295,000 or 23.7 percent during the three and
six month periods ended June 30, 1998 compared to the previous year periods. The
increases occurred due to additional personnel employed by the Bank to
accommodate the increases in deposits and loans and their related services,
increases in business development efforts, and annual merit increases. In
addition, employee benefits increased because of higher incentive compensation
programs which are based upon the Company's net income and overall financial
performance (approximately $225,000 which is attributable to the liquidation of
U.S.B. Realty Corp.), higher payroll taxes during 1998 due to the higher salary
base and increases in the cost of other employee benefit programs such as
medical coverage, tuition reimbursement, and training.

The changes in the other components of non-interest expenses for the three and
six month periods ended June 30, 1998 compared to June 30, 1997, were due to the
following:

o     Increase of $157,000 (16.2%) and $328,000 (17.2%), respectively, in
      occupancy and equipment expense. This increase is due principally to
      higher maintenance expenses relating to the Bank's branch and computer
      related equipment due to increased business volume, and additional rental
      and depreciation expense associated with two new branch openings, as well
      as additional space for corporate and administrative offices.

o     Increase of $79,000 (29.7%) and $166,000 (36.4%), respectively, in
      advertising and business development. The increase reflects increased
      emphasis on marketing, and the introduction of the Bank's new ad campaign,
      "Do business with us, do better with us," as well as advertising expense
      for the new branches and other business development efforts.


                                       24
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

o     Increase of $91,000 (27.3%) and $19,000 (2.8%), respectively, in
      professional fees. The increase relates to professional fees of $166,000
      associated with the liquidation of U.S.B. Realty Corp. for both periods,
      while professional fees primarily associated with loan collections,
      foreclosures and other litigation decreased.

o     Increase of $17,000 (9.7%) and $25,000 (6.8%), respectively, in
      communications is due to an increase in postage expenses that arose as a
      result of higher volume related to the growth in business.

o     Increase of $48,000 (41.0%) and $91,000 (38.7%), respectively, in
      stationery and printing. The increase occurred due to printing costs and
      supplies necessitated by increased loan and deposit volume and the opening
      of the Suffern and New Rochelle branches.

o     Increase of $3,000 and $7,000, respectively, in FDIC insurance premiums
      results from higher deposit balances.

o     Decrease of $127,000 (17.0%) and $15,000 (1.3%), respectively, in other
      expenses, primarily results from lower foreclosure related expenses and
      branch charge-offs.

Income Taxes

The effective tax rates for the three and six month periods ended June 30, 1998
and 1997 were (18.7) and 5.7 percent, and 30.5 and 30.4 percent, respectively.
The decrease in the overall effective tax rate in 1998 primarily reflects the
tax benefit associated with the liquidation of U.S.B. Realty Corp.

Year 2000 Issue

The Company continues to monitor the Year 2000 issue. As more fully described in
the Company's 1997 Annual Report and Form 10-K, the Company has identified all
systems that are Year 2000 compliant and received confirmation from software
vendors of such compliance. The Company's major core system software vendor has
certified that its software is Year 2000 compliant. For systems not yet
compliant, software vendors are in the process of providing updates to ensure
such systems are compliant. In addition, significant customers are being
contacted to determine their progress toward Year 2000 compliance to evaluate
the potential impact on the Company from their failure to remediate their Year
2000 issues.

The Company's Year 2000 Committee reports progress to the Company's and Bank's
Board of Directors on a quarterly basis. The Company expects to have tested all
significant Year 2000 sensitive systems by December 31, 1998. However, there can
be no guarantee that the systems of other entities on which the Company's
systems rely will be timely converted, or that a failure to convert by another
entity, or a conversion that is incompatible with the Company's systems, would
not have a material adverse effect on the Company.


                                       25
<PAGE>

U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont'd)

The Company's Year 2000 project cost to date and estimates to complete are not
expected to be significant. Such costs are being expensed as incurred. The cost
of the project and the date on which the Company plans to complete the Year 2000
modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the availability of
certain resources, third party modification plans and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those plans.

The Company will continue to evaluate all issues with respect to the Year 2000
problem to minimize the impact on its operations and financial condition.


                                       26
<PAGE>

U.S.B. HOLDING CO., INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk at December 31, 1997
were previously reported in the Company's 1997 Annual Report and Form 10-K.
There have been no material changes in the Company's market risk exposures at
June 30, 1998 compared to December 31, 1997. Interest rate risk continues to be
the Company's primary market risk exposure since all Company transactions are
denominated in U.S. dollars with no direct foreign currency exchange or changes
in commodity price exposures. All market risk sensitive instruments continue to
be held to maturity or available for sale with no financial instruments entered
into for trading purposes. The Company does not use derivative financial
instruments such as interest rate swaps and caps extensively. However, as
disclosed in Notes to Consolidated Financial Statements (Unaudited), two
interest rate contracts are in place to manage the Company's interest rate
exposure. The Company has not entered into any new derivative financial
instruments during the six months ended June 30, 1998.

The Company continues to use two methods to evaluate its market risk to changes
in interest rates, a "Static Gap" evaluation and a simulation analysis of the
impact of changes in interest rates on the Company's net interest income and
cash flow. There have been no changes in the Company's policy limit of
acceptable variances to net interest income at June 30, 1998 as compared to
December 31, 1997. The changes in the composition of the Company's assets and
liabilities for the six months ended June 30, 1998 as reported in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations have not materially affected the Company's overall interest rate risk
profile at June 30, 1998 as compared to December 31, 1997. The Company's "Static
Gap" at June 30, 1998 has not changed materially from December 31, 1997. If
interest rates were to gradually ramp up or down 200 basis points from current
rates, the percentage change in estimated net interest income for the subsequent
12 month measurement period continues to be within the Company's policy limit of
not declining by more than 5.0 percent.


                                       27
<PAGE>

                           PART II - OTHER INFORMATION

U.S.B. HOLDING CO., INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders of the Company was held on May 20, 1998 for
the purpose of considering and voting upon the following matters:

I.    Election of two directors, Messrs. Herbert Peckman and Howard V. Ruderman,
      constituting Class I members of the Board of Directors, to a three-year
      term of office.

II.   Amendment to the Certificate of Incorporation to increase the authorized
      number of shares of Common Stock, $5 par value per share, from 20,000,000
      to 30,000,000, and to reduce the par value of the Common Stock to $0.01
      per share.

III.  Approval of the 1998 Director Stock Option Plan.

IV.   Any other business which may be properly brought before the meeting or any
      adjournment thereof.

The results of votes for each of the items described above were as follows:

                                   ITEM I                 ITEM II     ITEM III
                          --------------------------     ----------  ----------
                          H. Peckman   H.V. Ruderman
                          ----------   -------------
Votes:
------
     For                 10,680,305      10,717,305      10,071,203  10,528,284
     Against or Withheld    195,578         158,578         680,350     286,106
     Abstentions                 --              --         124,330      61,493
     Broker No Votes             --              --              --          --

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)   Exhibits

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

(3)(a)         Amended and restated Certificate of Incorporation, as amended, of
               Registrant.*

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

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


                                       28
<PAGE>

U.S.B. HOLDING CO., INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (Continued)

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

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

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

(10)(a)        Agreement of Employment dated as of July 1, 1994 between the
               Company and the Bank and Thomas E. Hales (incorporated herein by
               reference to Registrant's Annual Report on Form 10-K for the year
               ended December 31, 1994 ("1994 10-K"), Exhibit (10)(a)).

(10)(b)        Registrant's 1984 Incentive Stock Option Plan (incorporated
               herein by reference from Form S-8 Registration Statement, file
               No. 2-90674, Exhibit 28 (b)).

(10)(c)        Registrant's 1993 Incentive Stock Option Plan (incorporated
               herein by reference from Registrant's Annual Report on Form 10-K
               for the year ended December 31, 1993 ("1993 10-K"), Exhibit
               (10)(c)).

(10)(d)        Registrant's Employee Stock Ownership Plan (With Code Section
               401(k) Provisions) (incorporated herein by reference from
               Registrant's 1993 10-K, Exhibit (10)(d)).

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

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

(10)(g)        Registrant's Key Employees' Supplemental Investment Plan, as
               amended July 1, 1997 (incorporated by reference to Registrant's
               Form 11-K for the year ended December 31, 1996).

(10)(h)        Purchase Agreement, dated January 31, 1997, by and among
               Registrant, Union State Capital Trust I and Keefe, Bruyette &
               Woods, Inc. (incorporated herein by reference to Registrant's
               1996 10-K, Exhibit (10)(h)).

(10)(i)        Registration Rights Agreement, dated February 5, 1997, by and
               among Registrant, Union State Capital Trust I and Keefe, Bruyette
               & Woods, Inc. (incorporated herein by reference to Registrant's
               1996 10-K, Exhibit (10)(i)).


                                       29
<PAGE>

U.S.B. HOLDING CO., INC.
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K (Continued)

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

(10)(j)        Registrant's 1997 Employee Stock Option Plan (incorporated herein
               by reference to Registrant's proxy statement filed April 18,
               1997).

(10)(k)        Agreement and Plan of Merger, dated as of March 6, 1998, between
               U.S.B. Holding Co., Inc. and Tappan Zee Financial, Inc.
               (incorporated herein by reference to Registrant's Current Report
               on Form 8-K dated as of March 6, 1998).

(10)(l)        Stock Option Agreement, dated as of March 6, 1998, between U.S.B.
               Holding Co., Inc. and Tappan Zee Financial, Inc. (incorporated
               herein by reference to Registrant's Current Report on Form 8-K
               dated as of March 6, 1998).

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

(11)           Computation of earnings per share.*

(27)           Financial Data Schedule.

* Filed Herewith.

(B) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the quarter ended June
30, 1998.

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on August 13, 1998.

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


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


                                       30