SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                -----------------

                                    FORM 10-Q

(MARK ONE)

/X/           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1997

                                       OR

/ /           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission file number 0-20187

                                MSB BANCORP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                06-1341670
(STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                         IDENTIFICATION NO.)

                   35 MATTHEWS STREET, GOSHEN, NEW YORK 10924
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (914) 294-8100
               (REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)

                                       N/A
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed from last Report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No/ /.
 
         Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

                                                  Outstanding At
                    Class                         March 31, 1997
                    -----                         --------------
                Common Stock,                         2,837,136
                par value $.01
          

<PAGE>

                                TABLE OF CONTENTS


                         PART I -- FINANCIAL INFORMATION
                         -------------------------------

Item 1.  Financial Statements

         Consolidated Balance Sheets (Unaudited) -- March 31, 1997
         and December 31, 1996................................................1

         Consolidated Statements of Income (Unaudited) -- Quarters
         ended March 31, 1997 and 1996........................................2

         Consolidated Statements of Cash Flows (Unaudited) -- Quarters
         ended March 31, 1997 and 1996........................................3

         Notes to Unaudited Consolidated Financial Statements.................5

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................... 9

Item 3.  Quantitative and Qualitative Disclosures
         about Market Risk...................................................15


                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings...................................................16

Item 2.  Changes in Securities...............................................16

Item 3.  Defaults upon Senior Securities.....................................16

Item 4.  Submission of Matters to a Vote of Security Holders.................16

Item 5.  Other Information...................................................16

Item 6.  Exhibits and Reports on Form 8-K....................................16

         Signatures..........................................................17


<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

MSB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
              (UNAUDITED)
 (In thousands except shares and per share amounts)
<TABLE>
<CAPTION>
                                                                    MARCH 31,  DECEMBER 31,
                                                                      1997         1996
                                                                  ------------ ------------

<S>                                                               <C>          <C>         
ASSETS
  Cash and due from banks ......................................   $  16,736    $  16,375
  Federal funds sold ...........................................      34,225       32,590
  Securities available for sale ................................      53,511       50,685
  Mortgage-backed securities available for sale ................     301,031      323,428
  Loans, net ...................................................     343,076      338,491
  Premises and equipment, net ..................................      14,598       14,869
  Accrued interest receivable ..................................       4,715        5,552
  Real estate owned ............................................       1,056          915
  Goodwill .....................................................      31,913       32,835
  Other assets .................................................       9,818        5,176
                                                                   ---------    ---------
     Total assets ..............................................   $ 810,679    $ 820,916
                                                                   =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Liabilities
     Deposits ..................................................     729,546      736,161
     Mortgagors' escrow deposits ...............................       1,508        1,849
     Accrued expenses and other liabilities ....................      10,869       11,684
     ESOP obligations ..........................................         356          432
                                                                   ---------    ---------
     Total liabilities .........................................     742,279      750,126
                                                                   ---------    ---------
  Stockholders' Equity
   Preferred stock ($.01 par value; 1,000,000
     shares authorized; 600,000 shares issued at March 31,
     1997 and December 31, 1996) ...............................           6            6
   Common stock ($.01 par value; 5,000,000
    shares authorized; 3,045,000 shares issued
    at March 31, 1997 and December 31, 1996) ...................          30           30
      Additional paid-in capital ...............................      48,117       48,163
      Retained earnings ........................................      32,266       32,009
      Treasury stock, at cost (207,864 shares and 211,064
      shares at March 31, 1997 and December 31, 1996,
      respectively) ............................................      (4,069)      (4,137)
      Unallocated ESOP stock ...................................        (356)        (432)
      Unallocated BRP stock ....................................        (140)        (172)
      Net unrealized loss on securities available for sale .....      (7,454)      (4,677)
                                                                   ---------    ---------
           Total stockholders' equity ..........................      68,400       70,790
                                                                   ---------    ---------
           Total liabilities and stockholders' equity ..........   $ 810,679    $ 820,916
                                                                   =========    =========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

<PAGE>

MSB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME
              (UNAUDITED)
(In thousands except shares and per share amounts)
<TABLE>
<CAPTION>
                                                                   FOR THE QUARTER ENDED MARCH 31,
                                                                   -------------------------------
                                                                       1997                1996
                                                                   -----------         -----------
<S>                                                                <C>                 <C>          
INTEREST INCOME
  Mortgage loans ...............................................   $     6,506         $     5,216
  Other loans ..................................................           563                 495
  Mortgage-backed securities ...................................         5,269               5,218
  Securities ...................................................           838               1,384
  Federal funds sold ...........................................           350                 812
                                                                   -----------         -----------
        Total interest income ..................................        13,526              13,125

INTEREST EXPENSE
  Interest on deposits .........................................         7,437               7,561
  Interest on ESOP obligation ..................................             9                  15
                                                                   -----------         -----------
        Total interest expense .................................         7,446               7,576
                                                                   -----------         -----------
  Net interest income ..........................................         6,080               5,549
  Provision for loan losses ....................................           300                 250
                                                                   -----------         -----------
  Net interest income after provision for loan losses ..........         5,780               5,299

NON-INTEREST INCOME
  Service fees .................................................           895                 812
  Net realized gains (losses) on securities ....................            15                  (1)
  Realized gains on mortgage loans
    held for sale ..............................................            32                  48
  Other non-interest income ....................................            15                   4
                                                                   -----------         -----------
                                                                           957                 863
NON-INTEREST EXPENSE
  Salaries and employee benefits ...............................         2,140               2,040
  Occupancy and equipment ......................................           818                 768
  Federal deposit insurance premiums ...........................            82                 238
  Goodwill amortization ........................................           921                 755
  Other non-interest expense ...................................         1,217               1,338
                                                                   -----------         -----------
                                                                         5,178               5,139
                                                                   -----------         -----------
  Income before income taxes ...................................         1,559               1,023
  Income tax expense ...........................................           602                 435
                                                                   -----------         -----------
  Net income ...................................................   $       957         $       588
                                                                   ===========         ===========
  Earnings per share ...........................................   $      0.23                0.12
  Weighted average shares outstanding ..........................     2,874,830           2,720,314
                                                                   ===========         ===========
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.


                                       2.
<PAGE>


MSB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
              (UNAUDITED)
              (In thousands)
<TABLE>
<CAPTION>
                                                                   FOR THE QUARTER ENDED MARCH 31,
                                                                   -------------------------------
                                                                       1997                1996
                                                                   -----------         -----------
<S>                                                                <C>                 <C>       
 OPERATING ACTIVITIES
   Net Income ..................................................   $      957          $      588
   Adjustments to reconcile net income to net
    cash provided by operating activities:
   Realized gains on securities ................................          (15)                  1
   Realized gain on sale of mortgage loans .....................          (32)                (48)
   Amortization of premiums/discounts on securities ............          266                 183
   Proceeds from the sale of student loans .....................          302                 232
   Origination of mortgage loans held for sale .................       (3,643)             (2,905)
   Proceeds from the sale of mortgage loans ....................        3,740               3,478
   Amortization of net deferred loan origination fees ..........          (43)                (53)
   Depreciation and amortization ...............................          325                 305
   Provisions for loan losses ..................................          300                 250
   Write-downs on real estate ..................................           21                 116
   Goodwill amortization .......................................          921                 755
   Decrease (increase) in accrued interest receivable ..........          837              (2,404)
   Decrease (increase) in prepaid expenses and
    other assets ...............................................       (1,620)               (160)
   Increase (decrease) in accrued expenses and
    other liabilities ..........................................       (2,634)             (6,715)
   Net change in Federal and State income tax
    payables and receivables ...................................          458                 437
   Deferred income taxes .......................................          (60)               (115)
   Other .......................................................          280                (371)
                                                                   ----------          ----------
     Net cash provided by (used in) operating activities .......   $      360          $   (6,426)
                                                                   ----------          ----------

 INVESTING ACTIVITIES
   Net (increase) decrease in loans ............................   $   (5,784)         $   (7,047)
   Maturities and redemptions of debt securities ...............           --              10,400
   Purchases of securities available for sale ..................       (3,638)            (25,337)
   Proceeds from the sale of securities available for sale .....           --              17,801
   Purchases of mortgage-backed securities available for sale ..      (19,346)           (375,064)
   Proceeds from the sale of mortgage-backed securities
    available for sale .........................................       33,243              11,685
   Repayments of mortgage-backed securities available for sale .        4,446               6,406
   Repayments of asset backed securities .......................           --                 143
   Proceeds from the sale of real estate owned, net ............          425                  65
   Purchases of property and equipment .........................           (2)             (3,265)
   Cash received in branch acquisition .........................           --             380,299
                                                                   ----------          ----------
     Net cash provided by (used in) investing activities .......   $    9,344          $   16,086
                                                                   ----------          ----------
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.



                                       3.
<PAGE>

MSB BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
              (UNAUDITED)
              (In thousands)
<TABLE>
<CAPTION>
                                                                   FOR THE QUARTER ENDED MARCH 31,
                                                                   -------------------------------
                                                                       1997                1996
                                                                   -----------         -----------
<S>                                                                <C>                 <C>
FINANCING ACTIVITIES
  Net change in deposits .......................................   $   (6,615)         $  (25,049)
  Net increase (decrease) in mortgagors' escrow deposits .......         (341)               (502)
  Repayment of ESOP loan .......................................          (76)                (81)
  Proceeds from the sale of stock ..............................           --              32,078
  Payment of common stock dividends ............................         (708)               (260)
  Proceeds from the exercise of stock options ..................           32                  --
                                                                   ----------          ----------
        Net cash provided by (used in) financing activities ....       (7,708)         $    6,186
                                                                   ----------          ----------

  Increase (decrease) in cash and cash equivalents .............   $    1,996          $   15,846
  Cash and cash equivalents at beginning of period .............       48,965          $   26,814
                                                                   ----------          ----------
  Cash and cash equivalents at end of period ...................   $   50,961          $   42,660
                                                                   ==========          ==========

SUPPLEMENTAL INFORMATION
  Interest paid on savings deposits ............................   $    7,425          $    9,133
  Income taxes paid (received) .................................          136                 103

  Non-cash transactions:
   Transfer of balances from loans receivable to real
     estate owned ..............................................   $      644          $      307
                                                                   ==========          ==========
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.


                                       4.
<PAGE>

MSB BANCORP, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       Basis of Presentation

         In September, 1992, MSB Bancorp, Inc. (the "Company") completed the
issuance of 1,840,000 shares of common stock in connection with the conversion
of Middletown Savings Bank (the "Bank") from a mutual to a stock savings bank
(the "Conversion"). Concurrent with the Conversion, the Company acquired all of
the Bank's common stock.

         On January 10, 1996, the Company sold 1,100,000 shares of common stock
at $18 per share and 600,000 shares of its 8.75% Cumulative Convertible
Preferred Stock, Series A at $21.60 per share. On February 7, 1996, the Company
sold an additional 105,000 shares of Common Stock pursuant to the underwriters'
exercise of their over-allotment option. The issuance and sale of the shares of
Common Stock and Preferred Stock on January 10 and February 7 are hereinafter
collectively referred to as the "Offering." Proceeds from the Offering amounted
to $32.1 million. The purpose of the Offering was to raise a significant portion
of the additional capital necessary to permit the Bank to qualify as "adequately
capitalized" for regulatory capital purposes immediately following the
consummation of the acquisition (the "Acquisition") of certain branches of First
Nationwide Bank, A Federal Savings Bank ("First Nationwide").

         The Bank entered into an Asset Purchase and Sale Agreement (as amended,
the "First Nationwide Agreement") with First Nationwide for the acquisition of
certain assets and the assumption of certain liabilities relating to eight First
Nationwide branch offices located in Carmel, Liberty, Mahopac, Monticello, Port
Jervis, Spring Valley, Warwick and Washingtonville, New York (the "First
Nationwide Branches"). The closing took place on January 12, 1996 (the "Closing
Date"), whereupon the Bank assumed the deposits (the "First Nationwide
Deposits") of the First Nationwide Branches.

         On January 12, 1996, the First Nationwide Deposits totaled $414.8
million. In addition, the Bank acquired certain assets related to the Acquired
Branches, including branch facilities and fixed operating assets associated with
the Acquired Branches (the "First Nationwide Assets") at a purchase price of
approximately $2.9 million, and certain savings account and overdraft loans (the
"First Nationwide Loans"), which totaled $1.0 million at January 12, 1996, at
face value.

         On October 27, 1995, the Bank converted from a New York state-chartered
savings bank to a federal savings bank in order to facilitate the Acquisition as
well as future expansion. In addition, the Bank changed its name to MSB Bank. As
a consequence of the conversion, the Company became a savings and loan holding
company subject to the regulation, examination and supervision of the Office of
Thrift Supervision (the "OTS"). Prior to the conversion of the Bank to a federal
savings bank, the Company was a bank holding company subject to the regulation,
examination and supervision of the Federal Reserve Board ("FRB").

         The Bank provides banking services to individual and corporate
customers, with its business activities concentrated in the New York counties of
Orange, Putnam and Sullivan, and the surrounding areas.

         The consolidated financial statements included herein have been
prepared by the Company without audit. In the opinion of management, the
quarterly unaudited financial statements include all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation of the consolidated
financial position and results of operations for the periods presented. Certain
information and footnote disclosures normally included in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The
Company believes that the 


                                       5.
<PAGE>

disclosures are adequate to make the information presented not misleading,
however, the results for the periods presented are not necessarily indicative of
results to be expected for the entire year.

         The unaudited quarterly and year to date financial statements presented
herein should be read in conjunction with the annual audited consolidated
financial statements of the Company for the fiscal year ended December 31, 1996.

         The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, MSB Bank, and the Bank's
wholly owned subsidiaries, MSB Financial Services, Inc. and MSB Travel, Inc.
("Travel"). Significant inter-company transactions and amounts have been
eliminated. In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses. Estimates that are particularly
susceptible to significant change in the near-term relate to the determination
of the allowances for losses and real estate investments.

2.       Earnings Per Share

         Primary earnings per common share is calculated based upon the weighted
average common shares outstanding adjusted for common stock equivalents that
have a dilutive effect on the per share data. Earnings for the purpose of
computing primary earnings per share consists of net income for the period less
dividends on preferred stock. Common stock equivalents include stock options.
During the first quarter of 1996, the Company sold 600,000 shares of its 8.75%
Cumulative Convertible Preferred Stock, Series A in the Offering. This stock is
not considered a common stock equivalent but is used in the calculation of fully
diluted earnings per share. Since the preferred stock has an anti-dilutive
effect on earnings per share for the quarters ended March 31, 1997 and 1996, it
has not been incorporated in the calculation; fully diluted and primary earnings
per share are the same.

3.       Allowance for Loan Losses

         The allowance for loan losses is increased by provision charged to
operations and decreased by charge-offs (net of recoveries). Loans are charged
off when, in the opinion of management, the recorded investment in the loan is
uncollectible. Management's periodic evaluation of the adequacy of the allowance
considers factors such as the Bank's past loan experience, known and inherent
risks in the portfolio, adverse situations that may affect the borrowers'
ability to repay, estimated value of any underlying collateral and current and
prospective economic conditions. Management believes that the allowance for loan
losses is adequate. While management estimates loan losses using the best
available information, such as independent appraisals for significant collateral
properties, no assurance can be made that future adjustments to the allowance
will not be necessary based on changes in economic and real estate market
conditions, further information obtained regarding known problem loans,
identification of additional problem loans and other factors, both within and
outside of management's control.



                                       6.
<PAGE>

         Activity in the allowance for loan losses for the periods indicated is
summarized as follows:
<TABLE>
<CAPTION>
                                                     QUARTER ENDED
                                                        MARCH 31,            YEAR ENDED
                                                -----------------------     DECEMBER 31,
                                                   1997          1996           1996
                                                ---------     ---------     ------------
                                                         (DOLLARS IN THOUSANDS)
<S>                                             <C>           <C>           <C>       
Balance at beginning of period .............    $  1,960      $  1,659      $  1,659
Provision for loan losses ..................         300           250         1,400
LOANS CHARGED OFF
          Real estate ......................         121           210           634
          Other loans ......................          91            51           485
                                                --------      --------      --------
Total loans charged off ....................         212           261         1,119
                                                --------      --------      --------
     RECOVERIES
          Real estate ......................           6            --             1
          Other loans ......................          20             4            19
                                                --------      --------      --------
        Total recoveries ...................          26             4            20
                                                --------      --------      --------
          Net charge-offs ..................         186           257         1,099
                                                --------      --------      --------
Balance at end of period ...................    $  2,074      $  1,652      $  1,960
                                                ========      ========      ========
Ratio of net charge-offs to average
  net loans outstanding (annualized) .......        0.23%         0.36%         0.36%
</TABLE>

4.       Legal Proceedings

         Except as described below, the Company is not involved in any pending
legal proceedings other than routine legal proceedings occurring in the ordinary
course of business. Such routine legal proceedings in the aggregate are believed
by management to be immaterial to the Company's financial condition and results
of operations.

         The Company and its directors are defendants in a lawsuit, POHLI V. MSB
BANCORP, INC. ET AL., commenced by a stockholder in the Delaware Court of
Chancery, New Castle County, on or about November 7, 1995. The plaintiff,
purporting to represent a class consisting of all stockholders except the
stockholder defendants and those affiliated with the stockholder defendants,
alleges that the defendant directors have breached and continue to breach their
fiduciary duties to stockholders by, among other things, failing to give due
consideration to proposals to acquire the Company or its assets, for failing to
maximize stockholder value and for failing to disclose all material facts to
stockholders. The plaintiff, on behalf of the purported class, seeks unspecified
money damages and an affirmative injunction directing the director defendants to
consider and negotiate all bona fide offers or proposals to acquire the Company.
On December 4, 1995, the Company filed an answer denying all of the substantive
allegations contained in the complaint and seeking, among other things, an order
dismissing the complaint with prejudice. As of April 30, 1997, we understand
that there was an agreement in principle between the plaintiff in transaction
and the plaintiffs in the action described below to consolidate this action with
the action below. This action has been dormant. No discovery requests have been
served by the plaintiffs. The Company intends to vigorously contest the
allegations of wrongdoing in this action.

         The Company and its directors are defendants in a lawsuit, KAHN
BROTHERS & CO., INC. ET AL. V. MSB BANCORP, INC. ET AL., commenced by
stockholders in the Delaware Court of Chancery, New Castle County, on or about
November 22, 1995. The plaintiffs, who own in excess of 5% of the outstanding
shares of the Common Stock and purport to represent a class consisting of all
stockholders except the stockholder defendants, allege that the defendant
directors breached their duty of care by failing to become fully informed about
the proposals of HUBCO, Inc. ("HUBCO"); breached their duty of disclosure to
stockholders by not notifying the public or the Company's stockholders of
HUBCO's proposals; and breached their duty of good faith and fair representation
by, among other things, not investigating whether the Acquisition constituted a
reasonable 


                                       7.
<PAGE>

alternative for building stockholder value. The plaintiffs further
allege that the Company's offering of Common Stock in connection with the
Acquisition (the "Common Stock Offering") was not intended to enhance
stockholder value, but rather was for the purpose of diluting the ownership and
voting strength of existing stockholders and further entrenching existing
management and the Board. The plaintiffs sought to enjoin the Common Stock
Offering and are also seeking damages equal to the difference between the market
price of the Common Stock on September 7, 1995, and $35 (approximately
$14,989,000 in the aggregate) or, in the alternative, the difference between the
market price of the Common Stock on October 26, 1995, and $25 (approximately
$7,394,000 in the aggregate), including interest and attorneys' and other
professional fees. In connection with this action, plaintiffs filed a motion
seeking expedited discovery and scheduling. On December 6, 1995, in response to
the plaintiffs' motion for expedited proceedings, which was treated by the court
as an application for a temporary restraining order with respect to the Common
Stock Offering, the court denied the plaintiffs' application for such order. On
December 12, 1995, the court denied the plaintiffs' motion for re-argument. On
December 18, 1995, the Company filed an answer denying all of the substantive
allegations in the complaint and seeking, among other things, an order
dismissing the complaint with prejudice. Plaintiffs amended their complaint to
include allegations relating to an unsolicited merger proposal received by the
Company from the First Empire State Corporation ("First Empire") on December 28,
1995. Specifically, the amended complaint alleges, among other things, that the
Company's Board of Directors, in breach of its duties of care, loyalty and
disclosure, relied on the advice of Bear, Stearns & Co., Inc. ("Bear Stearns"),
the Company's financial advisor and underwriter for the Offering, knowing that
Bear Stearns could not render independent financial advice regarding the First
Empire proposal. The plaintiffs are seeking alternative damages based on these
allegations in an amount equal to the difference between the market price of the
Common Stock on December 28, 1995 and $26 (approximately $11,560,000 in the
aggregate). The Company filed its amended answer on February 1, 1996 denying all
of the substantive allegations in the amended complaint and seeking, among other
things, an order dismissing the amended complaint with prejudice. The parties
have engaged in substantial written discovery and plaintiffs have deposed eight
of the directors and have requested the depositions of the remaining director
defendants. The Company intends to continue to vigorously contest the
allegations of wrongdoing in this action.

         While the Company believes that it has meritorious defenses in these
legal actions and is vigorously defending these suits, the legal responsibility
and financial impact with respect to these litigation matters cannot presently
be ascertained and, accordingly, there is risk that the final resolution of
these matters could result in the payment of monetary damages which would be
material in relation to the consolidated financial condition or results of
operations of the Company. The Company does not believe that the likelihood of
such a result is probable and has not established any specific litigation
reserves with respect to such matters.

                                       8.
<PAGE>

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

GENERAL

         MSB  Bancorp,  Inc.  (the  "Company")  is the  holding  company for MSB
Bank ("MSB" or the "Bank"). The financial conditions and results of operations
of the Company are primarily dependent upon the operations of the Bank.

         January 10, 1996, the Company sold 1,100,000 shares of Common Stock at
$18 per share and 600,000 shares of its Series A Preferred Stock at $21.60 per
share. On February 7, 1996 the Company sold an additional 105,000 shares of
Common Stock pursuant to the underwriters' exercise of their over-allotment
option. The issuance and sales of the shares of Common Stock and Series A
Preferred Stock on January 10 and February 7 are hereinafter referred to,
collectively, as the "Offering." Net proceeds from the Offering amounted to
approximately $32.1 million. The purpose of the Offering was to raise a
significant portion of the additional capital necessary to permit the Bank to
qualify as "adequately capitalized" for regulatory capital purposes immediately
following the acquisition of seven branches (the "Acquired Branches") from First
Nationwide Bank, A Federal Savings Bank ("First Nationwide"), in January, 1996
(the "Acquisition").

         Management's strategy is to increase stockholder value by remaining a
community bank and growing both internally and through acquisitions of other
institutions or branches of other institutions while not precluding
consideration of other strategic alternatives that could increase stockholder
value. In furtherance of that strategic direction, the Bank has, from time to
time, approached financial institutions in its market areas seeking to acquire
one or more branches from such institutions and submitted proposals to acquire
one or more branches from such other institutions. In 1995, the Bank initiated
discussions with the seller of the Central Valley branch, which resulted in the
signing of a definitive agreement to acquire that branch in April 1995. The
acquisition of that branch closed on November 10, 1995, with the Bank thereby
assuming approximately $21.8 million in deposits. In addition, the Company
entered into the branch acquisition agreement with First Nationwide during 1995.
The Acquisition closed on January 12, 1996 with the Bank assuming $414.8 million
of deposits. The Bank also acquired the related branch facilities and operating
assets at a purchase price of $2.9 million and certain deposit-related loans
with a face value of $1.0 million.

RESULTS OF OPERATIONS

         The Bank's results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
its loan and securities portfolios and its cost of funds, consisting primarily
of the interest paid on its deposits. The Bank's operating expenses principally
consist of employee compensation, occupancy expenses, federal deposit insurance
premiums and other general and administrative expenses. The Bank's results of
operations are also significantly affected by its periodic provision for loan
losses and write-downs of real estate owned. Such results are also significantly
affected by general economic and competitive conditions, particularly changes in
market interest rates, government policies and actions of regulatory
authorities.

         The Company is subject to certain legal proceedings that, if adversely
determined, could materially and adversely affect the Company's results of
operations. See Part II, Item 1, "Legal Proceedings."

         The following table sets forth information relating to the Company's
balance sheet and statements of income for the quarters ended March 31, 1997
and 1996 and reflect the average yield (not on a tax equivalent basis) on assets
and average cost of liabilities for the periods indicated. Such yields and costs
are derived by dividing income or expense by the average balances of assets or
liabilities, respectively, for the periods shown. Average balances are derived
from average daily balances. The average balances of securities available for
sale and trading securities are calculated based on amortized cost. The yields
and costs include fees, which are considered adjustments to yields.


                                       9.
<PAGE>


<TABLE>
<CAPTION>
                                                                           FOR THE QUARTER ENDED MARCH 31,
                                                   -------------------------------------------------------------------------------
                                                                  1997                                       1996
                                                   ------------------------------------       ------------------------------------
                                                                                AVERAGE                                    AVERAGE
                                                    AVERAGE                      YIELD/        AVERAGE                      YIELD/
                                                    BALANCE       INTEREST       COST          BALANCE       INTEREST       COST
                                                   ---------      --------      -------       ---------      --------      -------
                                                                             (DOLLARS IN THOUSANDS)
ASSETS:
  Interest-earning assets:
<S>                                                <C>            <C>           <C>           <C>            <C>           <C>  
    Mortgage loans, net(1) ..................      $ 318,097      $  6,506         8.29%      $ 265,433      $  5,216         7.90%
    Other loans(1) ..........................         23,239           563         9.83          17,703           495        11.25
    Mortgage-backed securities ..............        322,626         5,269         6.62         319,539         5,218         6.57
    Other securities ........................         54,224           838         6.26          89,081         1,384         6.25
    Federal funds, overnight ................         27,216           350         5.22          67,107           812         4.87
                                                   ---------      --------      -------       ---------      --------      -------
    Total interest-earning assets ...........        745,402        13,526         7.36         758,863        13,125         6.96
  Non-interest earning assets ...............         65,089                                     68,236
                                                   ---------                                  ---------
    Total assets ............................      $ 810,491                                  $ 827,099
                                                   =========                                  =========
LIABILITIES AND RETAINED EARNINGS:
  Interest-bearing liabilities:
    Deposits:
      Savings accounts ......................      $ 195,697         1,570         3.25%      $ 196,854         1,442         2.95%
      Super NOW accounts ....................         39,148           185         1.92          40,315           196         1.96
      Money market accounts .................         51,158           525         4.16          50,084           388         3.12
      Time deposits .........................        396,456         5,157         5.28         403,289         5,535         5.52
    ESOP obligation .........................            431             9         8.47             726            15         8.31
                                                   ---------      --------      -------       ---------      --------      -------
    Total interest-bearing
      liabilities ...........................        682,890         7,446         4.42         691,268         7,576         4.41
  Other liabilities .........................         56,097                                     63,307                           
                                                   ---------                                  ---------                           
       Total liabilities ....................        738,987                                    754,575                           
  Retained earnings .........................         71,504                                     72,524                           
                                                   ---------                                  ---------                           
       Total liabilities and
         retained earnings ..................      $ 810,491                                  $ 827,099                           
                                                   =========                                  =========                           
  Net interest income/
   interest rate spread(2) ..................                     $  6,080         2.94%                     $  5,549         2.55%
                                                                  ========      =======                      ========      =======
  Net earning assets/net
   interest margin(3) .......................      $  62,512                       3.31%      $  67,595                       2.94%
                                                   =========                    =======       =========                    =======
  Ratio of interest-earning assets
   to interest-bearing liabilities ..........                                     1.09x                                      1.10x
</TABLE>

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

(1) In computing the average balance of loans, non-accrual loans have been
    included.

(2) Interest rate spread represents the difference between the average yield
    on interest-earning assets and the average cost of interest-bearing
    liabilities.

(3) Net interest margin represents net interest income divided
    by average interest-earning assets.


                                      10.
<PAGE>


FINANCIAL CONDITION

         The Company's total assets were $810.7 million at March 31, 1997 as
compared to $820.9 million at December 31, 1996. Securities and mortgage-backed
securities available for sale decreased $19.6 million to $354.5 million at March
31, 1997 as compared to $374.1 million at December 31, 1996. Loans, net
increased $4.6 million to $343.1 million at March 31, 1997 as compared to $338.5
million at December 31, 1996. Goodwill decreased $922,000 to $31.9 million at
March 31, 1997 as compared to $32.8 million at December 31, 1996. For these same
dates, deposits decreased $6.6 million to $729.5 million.

         Total stockholders equity decreased $2.4 million to $68.4 million at
March 31, 1997 as compared to $70.8 million at December 31, 1996. This decrease
is due primarily to a $2.8 million increase in the net unrealized loss on
securities available for sale.

         COMPARISON OF RESULTS OF OPERATIONS

         GENERAL.  Net income for the first quarter of 1997 amounted to $957,000
as compared to $588,000 for the comparable quarter in 1996.

         NET INTEREST INCOME. Net interest income for the first quarter of 1997
totaled $6.1 million as compared to $5.5 million for the same quarter in 1996.
This increase is due to a 39 basis point increase in interest rate spread to
2.94% during the first quarter of 1997 as compared to 2.55% for the first
quarter of 1996. For those same periods, the Company's net interest margin
increased 37 basis points to 3.31% as compared to 2.94%. These increases are
primarily a result of the Acquisition. The proceeds from the Acquisition were
invested in securities which, in the aggregate, yield less than the Bank's loan
portfolio. The purchases of these securities were not completed until the last
week of January, 1996 until which time they earned interest at the Federal funds
rate of 5.25%. As a result, the Company earned virtually no interest rate spread
on the Acquired Deposits during that time.

         INTEREST INCOME. Interest income in the first quarter of 1997 totaled
$13.5 million as compared to $13.1 million for the first quarter of 1996. This
increase is due primarily to a 40 basis point increase in the yield earned on
interest earning assets to 7.36% for the first quarter of 1997 as compared to
6.96% in 1996. The increase in the yield earned was partially offset by a
decrease in average interest earning assets of $13.5 million to $745.4 million
in the first quarter of 1997 as compared to $758.9 million for the same quarter
of 1996. The increase in the yield earned is a result of management's strategy
to re-deploy funds received in the Acquisition from the securities portfolio to
the loan portfolio. The decrease in the balance of average interest earning
assets was due primarily to an $8.1 million decrease in the average balance of
deposits. The decrease in deposits was primarily a result of run-off following
the Acquisition.

         Interest income on mortgage loans amounted to $6.5 million for the
first quarter of 1997 as compared to $5.2 million for the first quarter of 1996.
The average balance of mortgage loans increased $52.7 million to $318.1 million
for the first quarter of 1997 as compared to $265.4 million for the first
quarter of 1996, and the average yield earned increased 39 basis points to
8.29%.

         The growth in the average balance of mortgage loans was due primarily
to management's strategy to re-deploy funds received in the Acquisition from the
securities portfolio to the loan portfolio and continued loan demand. The
increase in the yields earned are primarily a result of a new ARM product
offered by the Bank. The ARMs originated by the Bank in 1996 were primarily
5-year fixed rate loans that convert to 1-year ARMs after the initial 5-year
period. These loans are not offered at introductory rates. The increase in the
yield earned on mortgage loans is also due to the repricing of one-year ARMs
that were originated in 1994 and 1995 at introductory rates. These ARMs repriced
to higher rates due to the expiration of their initial lower introductory rates.

                                      11.
<PAGE>

         Interest income on other loans amounted to $563,000 during the first
quarter of 1997, an increase of $68,000 from the same quarter in 1996. The
average balance of other loans during the first quarter of 1997 amounted to
$23.2 million, and the average yield on these loans was 9.83%. For the first
quarter of 1996, the average balance was $17.7 million, and the average yield
was 11.25%. The increase in the average balances is due primarily to improved
demand for commercial and consumer loans.

         Interest income on mortgage-backed securities totaled $5.3 million
during the first quarter of 1997 as compared to $5.2 million during the first
quarter of 1996. The average balance of mortgage-backed securities increased
$3.1 million to $322.6 million for the first quarter of 1997 as compared to
$319.5 million for the first quarter of 1996. The average yield earned on
mortgage-backed securities increased 5 basis points to 6.62% in the first
quarter of 1997 as compared to the same quarter in 1996.

         Interest income on other securities, which includes investments held to
maturity and securities available for sale, decreased $547,000 or 39.5% to
$837,000 in the first quarter of 1997 as compared to the same quarter in 1996.
This decrease is due primarily to a $34.9 million decrease in the average
balance of other securities to $54.2 million during the first quarter of 1997 as
compared to $89.1 million for the first quarter of 1996. The decrease in the
average balance of other securities is a result of management's strategy to
redeploy funds currently invested in securities into the loan portfolio, which
typically provides greater yields.

         Interest income on Federal funds decreased $462,000 to $350,000 for the
first quarter of 1997 as compared to $812,000 in the first quarter of 1996. This
was due to a $39.9 million decrease in the average balance of Federal funds to
$27.2 million, which was partially offset by an 35 basis point increase in yield
to 5.22%. The decrease in the average balance of Federal funds is due to
proceeds from the Acquisition which were invested in Federal funds until
securities were purchased.

         INTEREST EXPENSE. Interest expense was $7.4 million for the first
quarter of 1997 as compared to $7.6 million for the first quarter of 1996. This
decrease is due primarily to an $8.4 million decrease in interest-bearing
liabilities to $682.9 million during the first quarter of 1997 as compared to
$691.3 million during the first quarter in 1996. The average cost of
interest-bearing liabilities remained virtually unchanged at 4.42% as compared
to 4.41% during the first quarter 1996.

         Interest expense on savings accounts increased $128,000 or 8.9% to $1.6
million during the quarter ended March 31, 1997 as compared to the comparable
1996 quarter. This increase is due primarily to a 30 basis point increase in the
average cost of savings accounts to 3.25% for the first quarter of 1997, as
compared to 2.95% for the first quarter in 1996. This was partially offset by a
$1.2 million decrease in the average balance of savings accounts to $195.7
million as compared to $196.9 million for the first quarter of 1996.

         Interest expense on time deposits amounted to $5.2 million for the
first quarter of 1997 as compared to $5.5 million for the same period in 1996.
This decrease is due to a $6.8 million decrease in the average balance of time
deposits to $396.5 million for the 1997 first quarter and a decrease in the
average cost of 24 basis points to 5.28%. The decrease in the average balance of
time deposits is a result of deposit run-off following the Acquisition.

         PROVISION FOR LOAN LOSSES. For the first quarter of 1997, the provision
for loan losses amounted to $300,000 as compared to $250,000 for the first
quarter of 1996. The $50,000 increase in the provision for loan losses in the
first quarter of 1997, as compared to the first quarter of 1996, is a result of
an increase in non-performing loans for those same periods. Non-performing loans
(loans that are 90 days or more past due) amounted to $4.0 million, or 1.16% of
total loans, at March 31, 1997, as compared to $4.8 million, or 1.40% of total
loans, at December 31, 1996 and $3.2 million or 1.10% of total loans, at March
31, 1996. The increase in non-performing loans at March 31, 1997, as compared to
March 31, 1996, is a result of loans originated in the mid-1980's where the
value of the underlying collateral has decreased, the growth in the size of the
loan portfolio and the amount of time required to complete foreclosure
proceedings. Non-performing assets amounted 


                                      12.
<PAGE>


to $5.1 million, or 0.62% of total assets, $5.7 million, or 0.69% of total
assets, and $4.2 million, or 0.49% of total assets, at March 31, 1997, December
31, 1996 and March 31, 1996, respectively.

         The allowance for loan losses amounted to $2.1 million and $1.7 million
at March 31, 1997 and 1996, respectively, which represented 51.8% and 51.0% of
non-performing loans at those respective dates. At December 31, 1996, the
allowance for loan losses amounted to $2.0 million or 41.1% of non-performing
loans. Charge-offs, net of recoveries, totaled $186,000 in the first quarter of
1997 as compared to $257,000 in the first quarter of 1996.

         In determining the adequacy of its allowance for loan losses,
management considers the level of non-performing loans, the current status of
the Bank's loan portfolio, changes in appraised values of collateral and general
economic conditions. Although the Bank maintains its allowance for loan losses
at a level which it considers to be adequate to provide for potential losses,
there can be no assurance that such losses will not exceed the current estimated
amounts. As a result, higher provisions for loan losses may be necessary in
future periods which would adversely affect operating results.

         NON-INTEREST INCOME. Non-interest income amounted to $957,000 for the
first quarter of 1997 as compared to $863,000 for the same period in 1996. The
increase was due primarily to an $83,000 or 10.2% increase in service fees to
$895,000 during the first quarter of 1997 as a result of the Acquisition as well
as increased lending activities.

         NON-INTEREST EXPENSE. Non-interest expense amounted to $5.2 million in
the first quarter of 1997 as compared to $5.1 million for the same period in
1996. Non-interest expense for the first quarter of 1997 includes approximately
$110,000 of legal and other costs associated with an employment-related
litigation that has since been settled. Salaries and employee benefits increased
$100,000 to $2.1 million for the first quarter of 1997 as compared to $2.0
million for the first quarter of 1996, due primarily to normal salary increases
and an increased commercial lending staff. Federal deposit insurance premiums
decreased $156,000 to $82,000 in the 1997 first quarter as compared to the 1996
first quarter. This decrease reflects the lower insurance rates that resulted
from the payment of the Savings Association Insurance Fund special assessment in
the third quarter of 1996. Goodwill amortization increased $166,000 to $921,000
reflecting a full quarter of amortization as compared to the first quarter of
1996 during which the Acquisition was completed. Other non-interest expense
decreased $121,000 to $1.2 million in the first quarter of 1997, due primarily
to the Acquisition costs incurred in the first quarter of 1996.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary sources of funds are deposits, the proceeds from
principal and interest payments on loans and the proceeds from the maturities of
investments. Proceeds from securities and loan sales are also a source of funds.
While maturities and scheduled amortization of loans and investments are a
predictable source of funds, deposit flows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition.

         The Bank is required to maintain an average daily balance of liquid
assets and short-term liquid assets as a percentage of net withdrawable deposit
accounts plus short-term borrowings as defined by the regulations of the OTS.
The minimum required liquidity and short-term liquidity ratios are currently
5.0% and 1.0%, respectively. At March 31, 1997 the Bank's liquidity ratio under
OTS regulations was 8.60%.

         The primary investing activity of the Company is the origination of
loans and the purchase of securities. During the first quarter of 1997 and for
the year ended December 31, 1996, the Company originated mortgage loans totaling
$17.1 million and $100.1 million, respectively. For those same periods, the
Company originated other loans totaling $4.4 million and $15.9 million,
respectively. The Company purchased securities totaling $3.6 million and $27.4
million for the first quarter of 1997 and during 1996, respectively. Other
investing activities for those same periods included the purchase of
mortgage-backed securities totaling $19.3 million and $386.3 million,
respectively.


                                      13.
<PAGE>

         The Company's most liquid assets are cash and cash equivalents, which
include investments in highly liquid, short-term securities. The levels of these
assets are dependent on the Bank's operating, financing, lending and investing
activities during any given period. The Company's ratios of cash and due from
banks, Federal Funds and investment securities with remaining maturities of one
year or less to total deposits were 7.6% at March 31, 1997 and 6.7% at December
31, 1996. At March 31, 1997, cash and cash equivalents, as defined above,
totaled $55.3 million as compared to $49.0 million at December 31, 1996.

         Liquidity management for the Bank is both a daily and long-term
function of the Bank's management strategy. Excess funds are generally invested
in short-term investments such as Federal funds. In the event that the Bank
should require funds beyond its ability to generate them internally, additional
sources of funds are available through a $46.0 million line of credit from the
Federal Home Loan Bank of New York. In addition, the Bank may access funds, if
necessary, through the Federal Reserve Bank of New York discount window.

         At March 31, 1997, the Bank had outstanding loan commitments of $46.8
million. The Bank anticipates that it will have sufficient funds available to
meet its current loan commitments. Time deposits scheduled to mature in one year
or less from March 31, 1997, totaled $310.0 million. Management believes that a
significant portion of such deposits will remain with the Bank.

         The Bank is subject to certain minimum leverage, tangible and
risk-based capital requirements established by regulations of the OTS. These
regulations require savings associations to meet three minimum capital
standards: a tangible capital ratio requirement of 1.5% of total assets as
adjusted under the OTS regulations; a leverage ratio requirement of 3.0% of core
capital to such adjusted total assets; and a risk-based capital ratio
requirement of 8.0% of core and supplementary capital to total risk-based
assets. The 3.0% core capital requirement has been effectively superseded by the
OTS' prompt corrective action regulations, which impose a 4.0% core capital
requirement for treatment as an "adequately capitalized" thrift and a 5.0% core
capital requirement for treatment as a "well capitalized" thrift. In determining
the amount of risk-weighted assets for purposes of the risk-based capital
requirement, a savings association must compute its risk-based assets by
multiplying its assets and certain off-balance sheet items by risk-weights,
which range from 0% for cash and obligations issued by the United States
Government or its agencies to 100% for consumer and commercial loans, as
assigned by the OTS capital regulation based on the risks OTS believes are
inherent in the type of assets. At March 31, 1997, the Bank exceeded all of the
OTS minimum regulatory capital requirements.

         The following table sets forth the capital position of the Bank as
calculated at March 31, 1997.

<TABLE>
<CAPTION>
                                               TANGIBLE               CORE              RISK-BASED
                                           -----------------    -----------------    -----------------
                                           AMOUNT    PERCENT    AMOUNT    PERCENT    AMOUNT    PERCENT
                                           -------   -------    -------   -------    -------   -------
                                                             (DOLLARS IN THOUSANDS)
<S>                                        <C>       <C>        <C>          <C>     <C>         <C>   
Capital as calculated under GAAP .......   $68,444      8.72%   $68,444      8.72%   $68,444     19.04%
Deduct goodwill ........................    31,913      4.07     31,913      4.07     31,913      8.88
Add qualifying general loan loss                --        --         --        --      2,072      0.58
 allowance, as limited by regulation ...
Add unrealized loss on securities            7,387      0.94      7,387      0.94      7,387      2.05
 available for sale, net of taxes ......
Deduct equity investments ..............                                                 162      0.05
Deduct servicing rights ................        12      0.00         12      0.00         12      0.00
                                           -------   -------    -------   -------    -------   -------
Capital, as calculated .................    43,906      5.59     43,906      5.59     45,816     12.74
Capital, as required ...................    11,775      1.50     31,399      4.00     28,759      8.00
                                           -------   -------    -------   -------    -------   -------
Excess .................................   $32,131      4.09%   $12,507      1.59%   $17,057      4.74%
                                           =======   =======    =======   =======    =======   =======
</TABLE>

                                      14.
<PAGE>

         The Board of Directors declared a cash dividend of $0.15 per common
share on March 21, 1997 that was payable to stockholders of record on March 31,
1997. The Company has been paying a quarterly cash dividend of $0.15 per common
share since the first quarter of 1995 and had been paying a quarterly cash
dividend of $0.13 per common share since the second quarter of 1994.

RECENT ACCOUNTING PRONOUNCEMENTS

         Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS 128) established standards for computing and presenting earnings
per share (EPS) and applies to entities with publicly held common stock or
potential common stock. SFAS 128 replaces the presentation of primary EPS with a
presentation of basic EPS and requires dual presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital
structures. SFAS 128 requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods, and earlier
application is not permitted. SFAS 128 also requires restatement of all prior
period EPS data presented. SFAS 128 is not expected to have a material effect on
the Bank's consolidated financial statements.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not Applicable.




                                      15.
<PAGE>

PART II--OTHER INFORMATION
         -----------------

ITEM 1.  LEGAL PROCEEDINGS

         The information set forth in Note 4 to the unaudited consolidated
financial statements ("Legal Proceedings") in Part I, Item 1, hereto is
incorporated herein by reference.


ITEM 2.  CHANGES IN SECURITIES

                           None


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                           None


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

                           None


ITEM 5.  OTHER INFORMATION

                           None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                           (A)      Exhibit 10 --Special Termination Agreement
                                    by and between MSB Bank, MSB Bancorp, Inc.
                                    and Catherine Terwilliger, adopted effective
                                    as of March 21, 1997
                                    Exhibit 11--Computation of Earnings Per
                                    Share
                                    Exhibit 27--Financial Data schedule*

                           (B)      Reports on Form 8-K

                                    None



______________________
* Submitted only with filing in electronic format.




                                      16.
<PAGE>

                                   SIGNATURES

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






                                       MSB BANCORP, INC.
                                       ----------------------------------------
                                       (Registrant)





                                  By:  /s/ Anthony J. Fabiano
                                       ----------------------------------------
                                       Anthony J. Fabiano
                                       Senior Vice President and Chief
                                       Financial and Accounting Officer

May 12, 1997


                                      17.