Thomas E. Hales, ;Chairman of the Board of U.S.B. Holding Co., Inc. , the parent company of Union State Bank, with ;consolidated assets of $3.0 billion, today announced that the Company's net ;income for the three months ended September 30, 2005 was $8.4 million compared ;to $7.5 million for the three months ended September 30, 2004, an increase of ;12.1 percent. Diluted earnings per common share for the quarter ended ;September 30, 2005 was $0.37 compared to $0.34 in the prior year period, an ;increase of 8.8 percent. The Company's third quarter 2005 net income resulted ;in a 17.05 percent return on average common stockholders' equity and a 1.18 ;percent return on average total assets, as compared to 17.47 percent and 1.02 ;percent, respectively, for the prior year period. For the nine months ended September 30, 2005, net income was $24.6 million ;compared to $21.9 million for the nine months ended September 30, 2004, an ;increase of 12.4 percent. Diluted earnings per common share was $1.10 for the ;nine months ended September 30, 2005 compared to $0.98 in the prior year ;period, an increase of 12.2 percent. The Company's net income for the nine ;months ended September 30, 2005 resulted in a 17.21 percent return on average ;common stockholders' equity and a 1.17 percent return on average total assets ;as compared to 17.00 percent and 1.00 percent, respectively, for the 2004 ;period. The increases in the 2005 third quarter and nine months ended September ;30, 2005 net income and diluted earnings per common share compared to the 2004 ;periods are due to an increase in net interest income of $1.3 million and $6.1 ;million, respectively, and gains on sales of loans, combined with reductions ;in the provision for credit losses and the effective rate for the provision ;for income taxes. The increases in net income for both 2005 periods were ;partially offset by an increase in non-interest expenses and a decrease in ;non-interest income, as compared to the prior year periods. The nine months ;ended September 30, 2004 also included gains on securities transactions of ;$1.2 million ($0.6 million after income tax and incentive compensation ;effect), while there were no gains on securities transactions for the 2005 ;period. Mr. Hales stated that, "The Company's increase in its core revenue, net ;interest income, combined with offering competitive products delivered with an ;exceptional level of service, has significantly contributed to the net income ;increases in both 2005 periods. The Bank's officers and employees continue to ;prudently operate our Company by working to expand the Bank's customer base ;and controlling expenses as evidenced by an efficiency ratio of approximately ;51 percent for both 2005 periods." Mr. Raymond J. Crotty, President and Chief Operating Officer of the ;Company and the Bank, added, "The Bank has prudently managed interest rate ;risk and credit risk in 2005 while increasing year-to-date net income at a ;double digit rate. Mr. Crotty also noted that, "The Company's current common ;stock cash dividend of $0.14 per share had been effectively increased by 5.0 ;percent after considering the 5.0 percent common stock dividend, which was ;distributed in the third quarter. These dividend increases are due to the ;Company's consistently strong earnings and strong capital position." Net interest income increased 5.7 percent to $23.8 million for the quarter ;ended September 30, 2005 and 9.4 percent to $70.7 million for the nine months ;ended September 30, 2005 compared to the prior year third quarter and nine ;month periods, respectively. The primary reason for the increase in net ;interest income in both 2005 periods was due to a significant increase in the ;tax equivalent net interest margin to 3.62 percent and 3.61 percent for the ;three and nine months ended September 30, 2005, as compared to 3.33 percent ;and 3.17 percent for the 2004 periods, respectively. These increases were ;partially offset by decreases in average interest earning assets of $69.4 ;million, or 2.5 percent, and $113.7 million, or 4.1 percent, for the September ;30, 2005 three and nine month periods, respectively, as compared to the prior ;year periods. Mr. Hales commented that, "The Company's net interest income has ;significantly benefited in 2005 from the net interest margin increases as a ;result of the Federal Reserve increasing short-term interest rates. This was a ;result of carefully positioning the asset/liability structure of the balance ;sheet. We did an excellent job in managing interest rate risk." Mr. Hales added, "However, the Company's balance sheet is currently in a ;relatively neutral asset/liability rate sensitive position at September 30, ;2005. The Company's net interest income could be negatively affected and ;compression of the net interest margin may occur if the U.S. treasury yield ;curve maintains a relatively flat position, continues to flatten further, or ;becomes inverted resulting in short-term interest rates at higher levels than ;medium- to long-term interest rates." The Company also continues to experience acceleration of loan payments, ;particularly in construction and land development loans, and increased ;competition for loan customers. Loans outstanding have decreased $38.4 million ;during the nine months ended September 30, 2005. A continued decrease in loans ;outstanding can also negatively affect net interest income. The provision for credit losses remained relatively flat for the 2005 ;third quarter and decreased to $0.6 million for the nine months ended ;September 30, 2005 compared to $0.7 million for the nine months ended ;September 30, 2004. The 2005 nine-month decrease was due to a lower level of ;loan growth in the 2005 period primarily as a result of prepayments on ;commercial loans. Non-performing assets continue to remain at low levels in ;relation to the overall loan portfolio. The ratio of non-performing assets to ;total assets at September 30, 2005 was 0.33 percent compared to 0.14 percent ;at September 30, 2004. As of September 30, 2005, loans related to two ;different customer relationships aggregating $8.8 million, which are not on ;nonaccrual status, are potential problem loans that may result in the loans ;being placed on nonaccrual status in the near future. All the loans in both ;the relationships are well secured and supported by personal guarantees. Non-interest income decreased $0.2 million and $0.3 million for the three ;and nine months ended September 30, 2005, respectively, compared to the prior ;2004 periods. The decreases for both periods were primarily due to decreases ;in service charges on deposit accounts, letter of credit fees, and loan ;prepayment fees, partially offset by increases in fee income on investment ;product sales and commission-based products. During the 2005 third quarter, ;$7.2 million of residential mortgages were sold to Freddie Mac. The ;transaction resulted in gains on sales of loans of $0.3 million. Non-interest expenses increased 2.7 percent to $13.4 million and 4.9 ;percent to $39.7 million for the three and nine months ended September 30, ;2005, respectively, as compared to the prior year periods. The increase in ;non-interest expense of $0.4 million and $1.9 million for the three and nine ;months ended September 30, 2005, respectively, as compared to the prior year ;periods was primarily a result of increases in salaries and benefits of $0.7 ;million and $2.3 million, resulting from higher levels of incentive and ;deferred compensation, and a decrease in the deferral of loan origination ;expenses. Also contributing to the increase in non-interest expenses for the ;nine months ended September 30, 2005 was an increase in medical benefits, and ;for the 2005 third quarter, an increase in advertising and business ;development expense of $0.2 million compared to the prior year periods. The increases in non-interest expenses for the third quarter and nine ;months ended September 30, 2005 were partially offset by decreases of $0.1 ;million in both occupancy and equipment expenses and communication expense, as ;compared to the 2004 periods. Also, partially offsetting the increase in non- ;interest expense for the nine month 2005 period was a decrease in advertising ;and business development expense of $0.1 million, as compared to the nine ;months ended September 30, 2004, and for the quarter ended September 30, 2005, ;a decrease in professional fees expense of $0.3 million as compared to the ;quarter ended September 30, 2004. The Bank's management remains focused on ;effectively controlling expenses while continuing to provide exceptional ;customer service. The effective rate for the provision for income taxes for the three and ;nine months ended September 30, 2005 decreased to 32.4 percent and 32.1 ;percent, respectively, compared to 33.8 percent and 33.9 percent for the 2004 ;periods. The decreases in both 2005 periods were primarily due to a decrease ;in the income tax reserves as a result of the satisfactory completion of ;Federal and State tax examinations for prior income tax years. The Company operates through its banking subsidiary, Union State Bank, a ;commercial bank currently with 28 branches, of which 25 are located in ;Rockland and Westchester Counties, New York, and one branch each in Stamford, ;Connecticut, Goshen, Orange County, New York, and Manhattan, New York City. ;The Bank also operates four loan production offices in Rockland, Westchester, ;and Orange Counties, New York, and Stamford, Connecticut. Further information ;on the Company can be found on the Bank's website at ;http://www.unionstate.com. ; Forward-Looking Statements: This Press Release contains a number of ;"forward-looking statements" within the meaning of Section 27A of the ;Securities Act of 1933, as amended, and Section 21E of the Securities Exchange ;Act of 1934, as amended. These forward-looking statements may be identified by ;the use of such words as "believe," "expect," "anticipate," "intend," ;"should," "will," "would," "could," "may," "planned," "estimated," ;"potential," "outlook," "predict," "project" and similar terms and phrases, ;including references to assumptions. Forward-looking statements are based on various assumptions and analyses ;made by us in light of our management's experience and its perception of ;historical trends, current conditions and expected future developments, as ;well as other factors we believe are appropriate under the circumstances. ;These statements are not guarantees of future performance and are subject to ;risks, uncertainties and other factors (many of which are beyond our control) ;that could cause actual results to differ materially from future results ;expressed or implied by such forward-looking statements. These factors ;include, without limitation, the following: the timing and occurrence or non- ;occurrence of events may be subject to circumstances beyond our control; there ;may be increases in competitive pressure among financial institutions or from ;non-financial institutions; changes in the interest rate environment may ;reduce interest margins or affect the value of investments; changes in deposit ;flows, loan demand or real estate values may adversely affect our business; ;changes in accounting principles, policies or guidelines may cause our ;financial condition to be perceived differently; general economic conditions, ;either nationally or locally in some or all of the areas in which we do ;business, or conditions in the securities markets or the banking industry may ;be less favorable than we currently anticipate; legislative or regulatory ;changes may adversely affect our business; applicable technological changes ;may be more difficult or expensive than we anticipate; success or consummation ;of new business initiatives may be more difficult or expensive than we ;anticipate; or litigation or matters before regulatory agencies, whether ;currently existing or commencing in the future, may delay the occurrence or ;non-occurrence of events longer than we anticipate. The Company's forward-looking statements are only as of the date on which ;such statements are made. By making any forward-looking statements, the ;Company assumes no duty to update them to reflect new, changing or ;unanticipated events or circumstances. You should consider these risks and ;uncertainties in evaluating forward-looking statements and you should not ;place undue reliance on these statements. ; ; ;U.S.B. HOLDING CO., INC. SELECTED FINANCIAL INFORMATION - UNAUDITED (in thousands, except ratios and share amounts) ;Nine Months EndedThree Months Ended September 30, September 30, 2005 2004 2005 2004 Consolidated summary of operations: Interest income$117,259 $107,026$40,546 $36,750 Interest expense 46,57142,400 16,76114,258 Net interest income 70,68864,626 23,78522,492 Provision for credit losses 571 66495 110 Non-interest income 5,555 5,851 1,849 2,008 Gains on securities transactions- 1,197 -- Gains on sales of loans 314- 314- Non-interest expenses 39,72237,863 13,39013,035 Income before income taxes 36,26433,147 12,46311,355 ; Provision for income taxes 11,63311,234 4,032 3,836 ; Net income $24,631 $21,913 $8,431$7,519 ; Consolidated common share data:(1) Basic earnings per share $1.14 $1.02 $0.39 $0.35 Diluted earnings per share $1.10 $0.98 $0.37 $0.34 Weighted average shares21,567,925 21,427,984 21,685,896 21,340,626 Adjusted weighted averag ;hares 22,466,223 22,373,511 22,605,328 22,278,580 ; Cash dividends per share $0.40 $0.32 $0.14 $0.12 ; September 30, December 31, September 30, Selected balance sheet data at period end:2005 20042004 Securities available for sale,at estimated fair value $404,370 $589,572 $901,619 Securities held to maturity 721,789 502,201 503,612 Loans, net of unearned income 1,469,703 1,508,0981,487,599 Allowance for loan losses15,16315,226 15,134 Total assets2,983,847 2,746,2703,138,932 Deposits 2,076,835 1,858,2181,996,437 Borrowings 592,255 625,032 880,785 Subordinated debt issued i ;onnection with Corporation-Obligated mandatory redeemabl ;apital securities o ;ubsidiary trusts 61,85861,858 61,858 Stockholders' equity 200,024 182,046 179,071 Tier 1 capital261,478 241,494 237,161 Book value per common share(1) $9.20 $8.52 $8.39 Common shares outstanding(1)21,732,559 21,364,155 21,340,684 ; Selected balance sheet financial ratios: Leverage ratio 9.15% 8.15% 8.07% Allowance for loan losses t ;otal loans 1.03% 1.01% 1.02% Non-performing assets to tota ;ssets 0.33% 0.06% 0.14% ; ; ; Selected income statement Nine Months EndedThree Months Ended data for the period ended:Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2005 2004 2005 2004 Return on average total assets1.17%1.00% 1.18% 1.02% Return on average common stockholders' equity 17.21% 17.00% 17.05% 17.47% Efficiency ratio 50.93% 52.54% 51.02% 52.08% Net interest spread - tax equivalent 3.50%3.10% 3.53%3.27% Net interest margin - tax equivalent 3.61%3.17% 3.62%3.33% ; ;U.S.B. HOLDING CO., INC. ; AVERAGE BALANCE INFORMATION - UNAUDITED ;Nine Months Ended Three Months Ended September 30, September 30,2005 2004 20052004 ASSETS (000's) (000's) ; Federal funds sold $55,226 $28,905 $82,855 $25,321 Securities(2) 1,120,353 1,283,481 1,135,286 1,260,066 Loans(3) 1,500,116 1,477,016 1,480,898 1,483,012 Earning assets 2,675,695 2,789,402 2,699,039 2,768,399 Total Assets $2,801,004 $2,921,867 $2,861,898 $2,946,521 ; LIABILITIES AND STOCKHOLDERS' EQUITY Non-interest bearing deposits $341,446$316,251$354,861$333,323 Interest bearing deposits 1,551,099 1,555,069 1,576,474 1,551,713 Total deposits 1,892,545 1,871,320 1,931,335 1,885,036 Borrowings 611,937 780,072 602,716 745,991 Subordinated debt issued in connection with Corporation-Obligated mandatory redeemable capital securities of subsidiary trusts61,858 58,643 61,858 61,858 Interest bearing liabilities 2,224,894 2,393,784 2,241,048 2,359,562 Stockholders' Equity $190,761$171,790$197,818$172,179 ; ;U.S.B. HOLDING CO., INC. ; SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED ; ;Consolidated Balance Sheet Data At September 30,2005 2004 (000's) Commercial (time and demand) loans $159,892 $162,912 Construction and land development loans 351,206 390,654 Commercial mortgages 609,128 600,419 Residential mortgages259,336 250,286 Home equity loans81,780 73,495 Personal installment loans 1,6322,103 Credit card loans 6,5646,111 Other loans 2,9955,770 Deferred commitment fees 2,8304,151 Intangibles 4,1535,385 Goodwill1,3801,457 Nonaccrual loans 9,9024,264 Restructured loans 134 139 Reserve for unfunded loan commitments and standby letters of credit(4) 1,116 558 Non-interest bearing deposits 442,211 403,713 Interest bearing deposits 1,634,624 1,592,724 ; ; Consolidated Income Statement Data for the Nine Months Ended Three Months Ended September 30,September 30, 2005 2004 2005 2004(000's) (000's) ; Interest income - FTE $119,007 $108,617 $41,159 $37,277 Net interest income - FTE 72,436 66,217 24,398 23,019 Deposit service charges 2,7493,2069181,038 Other income 2,8062,645931 970 Salaries and employee benefits ; expense 24,866 22,571 8,2777,554 Occupancy and equipment expense 5,7835,863 1,9212,049 Advertising and business development expense1,9742,099804 620 Professional fees expense 1,7261,739588 875 Communications expense9701,104302 424 Stationery and printing expense 423 532110 148 Amortization of intangibles 861 835285 290 Other expense 3,1193,120 1,1031,075 Net charge-offs 61 265 68 130 ; ; (1) Share amounts are adjusted for the five percent common stock dividend distributed in September 2005. ; (2) Securities exclude mark-to-market adjustment required by FASB No. 115. ; (3) Loans are net of unearned discount and the allowance for loan losses. Nonaccruing loans are included in average balances for purposes of computing average loans, average earning assets, and total assets. ; (4) The reserve for standby letters of credit of $0.4 million in 2004 was included in the allowance for loan losses. ; ; ; ;

Source: PR Newswire