SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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, 2007
                              -------------------------------------------------

                                       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 0-24751
                                                -------

                             Salisbury Bancorp, Inc.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

         Connecticut                                      06-1514263
--------------------------------------          --------------------------------
(State or Other Jurisdiction of                       (I.R.S. Employer
 Incorporation or Organization)                        Identification No.)

5 Bissell Street Lakeville Connecticut                       06039
--------------------------------------          --------------------------------
(Address of principal executive offices)                   (Zip Code)

Registrants Telephone Number, Including Area Code   (860) 435-9801
                                                   ----------------


              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since 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  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in rule 12b-2 of the Exchange  Act.  (Check
one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         The Company had 1,684,181shares outstanding as of May 9, 2007.

<page>

                     SALISBURY BANCORP, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS


Part I.  FINANCIAL INFORMATION                                              Page

Item 1.  Financial Statements:                                                 3

         Condensed  Consolidated  Balance Sheets -March 31, 2007
             (unaudited) and December 31, 2006                                 4

         Condensed  Consolidated  Statements of Income -three months
             ended March 31, 2007 and 2006 (unaudited)                         5

         Condensed  Consolidated  Statements  of Cash Flows -three
             months ended March 31, 2007 and 2006 (unaudited)                  6

         Notes to Condensed Consolidated Financial Statements (unaudited)      7

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk           16

Item 4.  Controls and Procedures                                              17

Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    17

Item 1A.  Risk Factors

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          17

Item 3.  Defaults Upon Senior Securities                                      17

Item 4.  Submission of Matters to a Vote of Security Holders                  17

Item 5.  Other Information                                                    17

Item 6.  Exhibits                                                             17

Signatures                                                                    17

                                     - 2 -
<page>

                         Part I-- FINANCIAL INFORMATION
                          Item 1. Financial Statements.




                                     - 3 -
<page>
<table>
<caption>

                                 SALISBURY BANCORP, INC. AND SUBSIDIARY
                                 --------------------------------------

                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                 -------------------------------------
                             (amounts in thousands, except per share data)
                                  March 31, 2007 and December 31, 2006


                                                                                  March 31    December 31
                                                                                    2007         2006
                                                                                    ----         ----

                                                                                  <c>            <c>
ASSETS                                                                          (unaudited)
------
Cash and due from banks                                                          $   6,043    $   8,988
Interest-bearing demand deposits with other banks                                    1,072          569
Money market mutual funds                                                            1,229        1,200
Federal funds sold                                                                     200        1,000
                                                                                 ---------    ---------
           Cash and cash equivalents                                                 8,544       11,757
Investments in available-for-sale securities (at fair value)                       146,632      156,493
Investments in held-to-maturity securities (fair values of $74 as of
   March 31, 2007 and $75 as of December 31, 2006)                                      74           75
Federal Home Loan Bank stock, at cost                                                4,946        4,664
Loans held-for-sale                                                                      0          304
Loans, less allowance for loan losses of $2,469 as of March 31, 2007
   and $2,474 as of December 31, 2006                                              246,053      252,464
Investment in real estate                                                               75           75
Premises and equipment                                                               6,296        6,135
Goodwill                                                                             9,509        9,509
Core deposit intangible                                                              1,452        1,493
Accrued interest receivable                                                          2,290        2,484
Cash surrender value of life insurance policies                                      3,585        3,555
Other assets                                                                         1,661        1,331
                                                                                 ---------    ---------
           Total assets                                                          $ 431,117    $ 450,339
                                                                                 =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
   Noninterest-bearing                                                           $  65,263    $  70,502
   Interest-bearing                                                                239,754      243,084
                                                                                 ---------    ---------
           Total deposits                                                          305,017      313,586
Federal Home Loan Bank advances                                                     76,863       87,093
Due to broker                                                                          699        1,580
Other liabilities                                                                    4,095        3,731
                                                                                 ---------    ---------
           Total liabilities                                                       386,674      405,990
                                                                                 ---------    ---------
Shareholders' equity:
   Common stock, par value $.10 per share; authorized 3,000,000 shares; issued
     and outstanding, 1,684,181 shares at March 31, 2007 and December 31, 2006         168          168
   Paid-in capital                                                                  13,100       13,100
   Retained earnings                                                                34,083       33,603
   Accumulated other comprehensive loss                                             (2,908)      (2,522)
                                                                                 ---------    ---------
           Total shareholders' equity                                               44,443       44,349
                                                                                 ---------    ---------
           Total liabilities and shareholders' equity                            $ 431,117    $ 450,339
                                                                                 =========    =========

                     The accompanying notes are an integral part of these condensed
                                  consolidated financial statements.

                                                 - 4 -
</table>
<page>

                     SALISBURY BANCORP, INC. AND SUBSIDIARY
                     --------------------------------------

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   -------------------------------------------

                  (amounts in thousands, except per share data)
                             March 31, 2007 and 2006
                                   (unaudited)

                                                        Three Months Ended
                                                            March 31,
                                                          2007     2006
                                                         ------   ------
Interest and dividend income:
   Interest and fees on loans                            $4,388   $3,628
   Interest on debt securities:
     Taxable                                              1,431    1,268
     Tax-exempt                                             526      495
   Dividends on equity securities                            78       60
   Other interest                                            14        9
                                                         ------   ------
         Total interest and dividend income               6,437    5,460
                                                         ------   ------
Interest expense:
   Interest on deposits                                   2,030    1,338
   Interest on Federal Home Loan Bank advances            1,041      829
                                                         ------   ------
         Total interest expense                           3,071    2,167
                                                         ------   ------
         Net interest and dividend income                 3,366    3,293
                                                         ------   ------
Noninterest income:
   Trust department income                                  530      485
   Loan commissions                                           4       14
   Service charges on deposit accounts                      180      177
   Gain on sales of available-for-sale securities, net      117       74
   Gain on sales of loans held-for-sale                      65       62
   Other income                                             228      214
                                                         ------   ------
         Total noninterest income                         1,124    1,026
                                                         ------   ------
Noninterest expense:
   Salaries and employee benefits                         1,952    1,703
   Occupancy expense                                        191      176
   Equipment expense                                        191      187
   Data processing                                          337      283
   Insurance                                                 38       31
   Printing and stationery                                   64       53
   Professional fees                                        165       90
   Legal expense                                             55       25
   Amortization of core deposit intangible                   41       41
   Other expense                                            285      248
                                                         ------   ------
         Total noninterest expense                        3,319    2,837
                                                         ------   ------
         Income before income taxes                       1,171    1,482
Income taxes                                                237      335
                                                         ------   ------
         Net income                                      $  934   $1,147
                                                         ======   ======

Earnings per common share                                $  .55   $  .68
                                                         ======   ======

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                     - 5 -
<page>
<table>
<caption>

                          SALISBURY BANCORP, INC. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (amounts in thousands)
                        Three months ended March 31, 2007 and 2006
                                        (unaudited)

                                                                       2007        2006
                                                                     --------    --------

                                                                     <c>         <c>
Cash flows from operating activities:
   Net income                                                        $    934    $  1,147
Adjustments to reconcile net income to net cash provided by
       operating activities:
         Amortization of securities, net                                   17          44
         Gain on sales of available-for-sale securities, net             (117)        (74)
         Provision for loan losses                                          0           0
         Change in loans held-for-sale                                    304        (444)
         Change in deferred loan costs, net                               (35)          0
         Net decrease in mortgage servicing rights                         28          30
         Depreciation and amortization                                    540         138
         Amortization of core deposit intangible                           41          41
         Accretion of fair value adjustment on deposits/borrowings        (36)        (37)
         Amortization of fair value adjustment on loans                    24          38
         Decrease in interest receivable                                  189         288
         Deferred tax benefit                                            (414)       (178)
         Decrease in taxes receivable                                     317         509
         Increase in prepaid expenses                                     (50)       (571)
         Increase in cash surrender value of insurance policies           (30)        (30)
         Increase in income taxes payable                                 323           0
         Increase in other assets                                          (7)          0
         Increase in accrued expenses                                      41        (486)
         Increase in interest payable                                      42          19
         Decrease in other liabilities                                    (57)        (72)
         Increase (decrease) in unearned income on loans                    1         (16)
                                                                     --------    --------

Net cash provided by operating activities                               2,055         346
                                                                     --------    --------

Cash flows from investing activities:
  Purchases of Federal Home Loan Bank stock                              (282)          0
  Purchases of available-for-sale securities                          (16,738)    (21,573)
  Proceeds from sales of available-for-sale securities                 25,219      22,169
  Proceeds from maturities of available-for-sale securities                 0       2,671
  Proceeds from maturities of held-to-maturity securities                   1           9
  Loan originations and principal collections, net                      7,229      (2,105)
  Purchases of loans                                                     (839)          0
  Recoveries of loans previously charged-off                               33           7
  Capital expenditures                                                   (690)        (22)
                                                                     --------    --------

Net cash provided by investing activities                              13,933       1,216
                                                                     --------    --------
Cash flows from financing activities:
   Net decrease in demand deposits, NOW and
       savings accounts                                                (2,371)     (8,881)
   Net (decrease) increase in time deposits                            (6,194)     11,296
   Federal Home Loan Bank advances                                      5,000      10,000
   Principal payments on advances from Federal Home Loan Bank         (10,198)       (295)
   Net change in short term advances from Federal Home Loan Bank       (5,000)     (9,834)
   Dividends paid                                                        (438)       (421)
                                                                     --------    --------

Net cash (used in) provided by financing activities                   (19,201)      1,865
                                                                     --------    --------

Net (decrease) increase in cash and cash equivalents                   (3,213)      3,427
Cash and cash equivalents at beginning of period                       11,757      10,204
                                                                     --------    --------
Cash and cash equivalents at end of period                           $  8,544    $ 13,631
                                                                     ========    ========
Supplemental disclosures:
   Interest paid                                                     $  3,029    $  2,203
   Income taxes paid                                                       11           5

              The accompanying notes are an integral part of these condensed
                            consolidated financial statements.

                                          - 6 -
</table>
<page>

                     SALISBURY BANCORP, INC. AND SUBSIDIARY
                     --------------------------------------

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (unaudited)

NOTE 1 - BASIS OF PRESENTATION
------------------------------

The  accompanying   condensed  consolidated  interim  financial  statements  are
unaudited and include the accounts of Salisbury  Bancorp,  Inc. (the "Company"),
its wholly owned subsidiary  Salisbury Bank and Trust Company (the "Bank"),  and
the  Bank's   subsidiaries,   S.B.T.  Realty,  Inc.  and  SBT  Mortgage  Service
Corporation (the "PIC") formed in April 2004. The condensed consolidated interim
financial statements have been prepared in accordance with accounting principles
generally  accepted in the United States of America (GAAP) for interim financial
information and with the instructions to SEC Form 10-Q. Accordingly, they do not
include  all  the  information  and  footnotes  required  by GAAP  for  complete
financial  statements.  All significant  intercompany  accounts and transactions
have been eliminated in the consolidation.  These financial  statements reflect,
in the  opinion  of  Management,  all  adjustments,  consisting  of only  normal
recurring  adjustments,  necessary  for a fair  presentation  of  the  Company's
financial  position and the results of its operations and its cash flows for the
periods  presented.  Operating results for the three months ended March 31, 2007
are not necessarily  indicative of the results that may be expected for the year
ending  December  31,  2007.  These  financial  statements  should  be  read  in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's 2006 Annual Report on Form 10-K

The year-end  condensed  balance  sheet data was derived from audited  financial
statements, but does not include all disclosures required by GAAP.

NOTE 2 - COMPREHENSIVE INCOME
-----------------------------

Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income,"  establishes  standards for disclosure of  comprehensive
income  which  includes  net income and any  changes  in equity  from  non-owner
sources  that are not recorded in the income  statement  (such as changes in the
net  unrealized  gains  (losses)  on  securities).   The  purpose  of  reporting
comprehensive income is to report a measure of all changes in equity that result
from recognized  transactions and other economic events of the period other than
transactions  with owners in their  capacity as owners.  The  Company's  primary
source of other  comprehensive  income is the net unrealized holding gain (loss)
on securities.

Comprehensive Income
                                                  Three months ended
                                                       March 31,
                                                    2007      2006
                                                   ------    ------
                                                 (amounts in thousands)

Net income                                         $  934    $1,147
Net change in unrealized holding gains or losses
 on securities and minimum pension liability
 adjustment, net of tax during period                (386)      313
                                                   ------    ------
Comprehensive income                               $  548    $1,460
                                                   ======    ======


NOTE 3 - IMPACT OF NEW ACCOUNTING STANDARDS
-------------------------------------------

In February 2006, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 155,  "Accounting for Certain Hybrid Instruments" (SFAS 155), which permits,
but does not require,  fair value accounting for any hybrid financial instrument
that contains an embedded derivative that would otherwise require bifurcation in
accordance  with SFAS 133. The  statement  also  subjects  beneficial  interests
issued by  securitization  vehicles to the  requirements  of SFAS No.  133.  The
statement is  effective  as of January 1, 2007.  The adoption of SFAS 155 is not
expected to have a material  impact on the  Company's  financial  condition  and
results of operations.

                                     - 7 -
<page>

In March  2006,  the FASB  issued  SFAS No. 156,  Accounting  for  Servicing  of
Financial  Assets- an amendment of FASB Statement No. 140 ("SFAS No. 156"). SFAS
156 requires any entity to  recognize a servicing  asset or servicing  liability
each time it undertakes  an obligation to service a financial  asset by entering
into a servicing contract in specific  situations.  Additionally,  the servicing
asset or servicing liability shall be initially measured at fair value; however,
an  entity  may elect the  "amortization  method"  or "fair  value  method"  for
subsequent  balance  sheet  reporting  periods.  SFAS 156 is  effective as of an
entity's first fiscal year beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year,  provided the entity
has not yet issued financial statements, including interim financial statements,
for any period of that fiscal year.  The Company does not expect the adoption of
this statement to have a material impact on its financial condition,  results of
operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157).  SFAS 157 defines fair value,  establishes a framework for measuring  fair
value  under  generally  accepted  accounting  principles  (GAAP)  and  enhances
disclosures about fair value  measurements.  SFAS 157 retains the exchange price
notion and clarifies that the exchange price is the price that would be received
for an asset or paid to  transfer  a  liability  (an exit  price) in an  orderly
transaction  between market  participants on the  measurement  date. SFAS 157 is
effective  for the  Company's  consolidated  financial  statements  for the year
beginning on January 1, 2008, with earlier adoption permitted.  The Company does
not expect  the  adoption  of this  statement  to have a material  impact on its
financial condition and results of operations.

In September  2006,  the FASB issued SFAS No. 158,  "Employer's  Accounting  for
Defined  Benefit Pension and other  Postretirement  Plans - an amendment of FASB
Statements  No. 87, 88, 106 and 132 (R)" ("SFAS 158").  SFAS 158 requires 1) the
recognition of an asset or liability for the over-funded or under-funded  status
of a defined  benefit plan, 2) the recognition of actuarial gains and losses and
prior service costs and credits in other comprehensive income, 3) measurement of
plan assets and benefit  obligations  as of the  employer's  balance sheet date,
rather than at interim measurement dates as currently allowed, and 4) disclosure
of  additional  information  concerning  actuarial  gains and  losses  and prior
service  costs  and  credits  recognized  in other  comprehensive  income.  This
statement is effective for financial  statements  with fiscal years ending after
December 15, 2006.  The Company does not believe the adoption of this  Statement
will have a material  impact on the  Company's  financial  position or result of
operations.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  including  an  amendment  of FASB
Statement  No. 115" (SFAS 159).  SFAS 159 permits  entities to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently  required to be measured at fair value.  The  objective  is to improve
financial  reporting  by providing  entities  with the  opportunity  to mitigate
volatility  in  reported   earnings  caused  by  measuring  related  assets  and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.   This  Statement  also  establishes   presentation  and  disclosure
requirements  designed to facilitate  comparisons  between  entities that choose
different  measurement  attributes for similar types of assets and  liabilities.
The new  standard is effective at the  beginning  of the  Company's  fiscal year
beginning  January  1,  2008,  and early  application  may be elected in certain
circumstances.  The Company is currently  evaluating  and has not yet determined
the impact the new  standard  is  expected  to have on its  financial  position,
results of operations or cash flows.

                                     - 8 -
<page>

NOTE 4 - DEFINED BENEFIT PENSION PLAN

The following  summarizes the net periodic benefit cost of the Company's defined
benefit pension plan for the periods indicated:

                                             Three Months Ended
                                                  March 31,
                                              2007          2006
                                           -----------------------

Components of net periodic benefit cost:
   Service cost                            $ 114,090     $ 121,433
   Interest cost                              88,977        81,748
   Expected return on plan assets            (77,164)      (71,417)
   Amortization of:
      Prior service costs                        223           223
      Actuarial loss                          21,173        24,132
                                           ---------     ---------
   Net periodic benefit cost               $ 147,299     $ 156,119
                                           =========     =========

The following  actuarial  weighted average  assumptions were used in calculating
net periodic benefit cost:


Discount rate                                  6.00%          6.00%
Average wage increase                      Graded table*   Graded table*
Return on plan assets                          7.50%          7.50%

*5% at age 20  grading  down  to 3% at age  60  and  beyond  (roughly  3.25%  on
average).

                                     - 9 -
<page>

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

The following  provides  Management's  comments on the  financial  condition and
results of operations of Salisbury Bancorp, Inc. (the "Company"),  a Connecticut
corporation  which is the holding  company for Salisbury  Bank and Trust Company
(the "Bank").  The Company's sole subsidiary is the Bank, which has six (6) full
service offices  including a Trust and Investment  Services  Division located in
the towns of Canaan, Lakeville,  Salisbury and Sharon, Connecticut and Sheffield
and South Egremont,  Massachusetts. The Company and Bank were formed in 1998 and
1848,  respectively.  In  order to  provide  a strong  foundation  for  building
shareholder  value and servicing  customers,  the Company  remains  committed to
investing in the technological  and human resources  necessary to developing new
personalized  financial  products and  services to meet the needs of  customers.
This discussion  should be read in conjunction  with Salisbury  Bancorp,  Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2006.

RESULTS OF OPERATIONS
---------------------

Overview
--------

The Company's net income for the three months ended March 31, 2007 was $934,000.
This  compares to earnings of $1,147,000  for the same period in 2006.  Earnings
per share for the three  months  ended  March 31, 2007  totaled  $.55 per share,
compared to earnings per share of $.68 for the corresponding period in 2006. The
decrease in earnings is  primarily  attributable  to an increase in  noninterest
expense,  specifically,  additional  staff to support new marketing  strategies,
growth and our branch expansion into New York State.  Total noninterest  expense
for  the  first  quarter  of  2007   increased   16.99%  when  compared  to  the
corresponding period in 2006.

The Company's  assets at March 31, 2007 totaled  $431,117,000  compared to total
assets of  $450,339,000  at December 31, 2006.  During the first three months of
2007, net loans outstanding decreased $6,411,000 to $246,053,000.  This compares
to total net loans  outstanding  of  $252,464,000  at  December  31,  2006.  The
decrease is  attributable  to the  $12,000,000 in Term Fed Funds that matured in
the first  quarter  of 2007,  and has been  partially  offset by loan  portfolio
growth.  Non-performing  loans totaled $829,000 at March 31, 2007 as compared to
non-performing  loans totaling  $886,000 at December 31, 2006. This represents a
decrease of $57,000 or 6.4%.  The Bank  continues  to monitor the quality of the
loan  portfolio to ensure that loan quality will not be sacrificed for growth or
otherwise  compromise  the  Company's  objectives.  Deposits  at March 31,  2007
totaled  $305,017,000  as compared to total deposits of $313,586,000 at December
31, 2006. The decrease at quarter end is primarily attributable to seasonal cash
flows and a $4,582,000  brokered CD, which  matured the end of March and was not
replaced.

As of March 31,  2007,  the most recent  notification  from the Federal  Deposit
Insurance  Corporation  categorized  the Bank as "well  capitalized"  under  the
regulatory  framework for prompt corrective  action. The Bank's total risk based
capital ratio was 13.38%;  the Tier 1 capital ratio was 12.52%; and the leverage
ratio  was  8.28%.  As  a  result  of  the  Company's  first  quarter  financial
performance,  the Board of Directors  declared a first  quarter cash dividend of
$.27 per  common  share,  which was paid on April 30,  2007 to  shareholders  of
record as of March 31, 2007. This compared to a cash dividend of $.26 per common
share that was paid for the first quarter of 2006.

Critical Accounting Estimates
-----------------------------

In preparing the Company's financial statements,  management selects and applies
numerous accounting policies.  In applying these policies,  management must make
estimates and  assumptions.  The accounting  policy that is most  susceptible to
critical  estimates  and  assumptions  is the  allowance  for loan  losses.  The
determination  of an  appropriate  provision  is based on an  estimation  of the
probable  amount of future  credit  losses in the loan  portfolio.  Many factors
influence  the  amount of future  loan  losses,  relating  to both the  specific
characteristics of the loan portfolio and general economic conditions nationally
and locally.  While management  carefully considers these factors in determining
the amount of the allowance for loan losses, future adjustments may be necessary
due to  changed  conditions,  which  could have an  adverse  impact on  reported
earnings in the future. See "Provisions and Allowance for Loan Losses."

                                     - 10 -
<page>

                        THREE MONTHS ENDED MARCH 31, 2007
                AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2006

Net Interest Income
-------------------

The Company's  earnings are primarily  dependent  upon net interest and dividend
income,  and to a lesser  extent  its  noninterest  income,  from its  community
banking  operations.  Net interest and dividend income is the difference between
interest and dividends earned on the loan and securities  portfolio and interest
paid on  deposits  and  advances  from the Federal  Home Loan Bank.  Noninterest
income is primarily  derived  from the Trust and  Investment  Service  Division,
service  charges and other fees  related to deposit and loan  accounts  and from
gains recognized on the sale of available-for-sale securities. For the following
discussion,   net  interest  and  dividend   income  is  presented  on  a  fully
taxable-equivalent ("FTE") basis. FTE interest income restates reported interest
income on tax exempt  securities as if such interest were taxed at the Company's
federal tax rate of 34% for all periods presented.

(amounts in thousands)
Three Months ended March 31,                     2007     2006
                                                ------   ------
Total interest and dividend income              $6,437   $5,460
(financial statements)
Tax equivalent adjustment                          271      255
                                                ------   ------
Total interest and dividend income
      (on an FTE basis)                          6,708    5,715
Total interest expense                           3,071    2,167
                                                ------   ------
Net interest and dividend income-FTE            $3,637   $3,548
                                                ======   ======

Total  interest and  dividend  income on an FTE basis for the three months ended
March 31, 2007, when compared to the same period in 2006,  increased $993,000 or
approximately  17.4%.  The increase was  primarily  attributable  to an economic
environment of increased interest rates.

Interest  expense  on  deposits  for the  first  three  months  of 2007  totaled
$2,030,000, an increase of $692,000 or 51.7% that compared to $1,338,000 for the
same  period in 2006.  This  increase  is  primarily  the result of an  economic
environment of generally higher interest rates.  Although Federal Home Loan Bank
advances  have  decreased  during the  three-month  period ended March 31, 2007,
interest expense on these advances increased 25.6% to $1,041,000.  This increase
in interest expense is attributable to the increased  monthly average balance of
overnight  borrowings.  Total interest  expense for the three months ended March
31, 2007 was  $3,071,000,  an increase of $904,000 or 41.7% when compared to the
same period in 2006.

Overall, net interest and dividend income (on an FTE basis) increased $89,000 or
2.5% to $3,637,000 for the period ended March 31, 2007 when compared to the same
period in 2006.

Noninterest Income
------------------

Noninterest income totaled $1,124,000 for the three months ended March 31, 2007,
an increase of $98,000 or 9.6% compared to noninterest  income of $1,026,000 for
the three  months  ended  March  31,  2006.  Continuing  growth of the Trust and
Investment  Service  Division  has  resulted in an  increase in trust  income of
$45,000 or 9.3% to $530,000 for the first three  months of 2007.  Gains on sales
of available-for-sale  securities, net increased 58.1% to $117,000 for the first
three months of 2007 compared to the corresponding period in 2006. This increase
is primarily  the result of the movement of market rates during the year,  which
made it possible to take  advantage of  opportunities  presented by the positive
slope of yields  during  that time.  Other  income  consists  primarily  of fees
associated  with  transaction  accounts  and in  addition,  fees  related to the
origination  and  servicing of mortgage  loans and gains  related to the sale of
mortgage loans. Other income for the first three months of 2007 totaled $228,000
compared to $214,000 for the same period in 2006.

                                     - 11 -
<page>

Noninterest Expense
-------------------

Noninterest  expense  increased  16.99%  for the first  three  months of 2007 as
compared to the same period in 2006. The increases in the  noninterest  expenses
listed in the table below are  primarily  attributable  to  additional  staff to
support new marketing strategies,  growth and our branch expansion into New York
State  and fees  associated  with  various  projects  under  consideration.  The
components of noninterest  expense and the changes in the period were as follows
(amounts in thousands):
                                            2007      2006     Change   % Change
--------------------------------------------------------------------------------
Salaries and employee benefits            $  1,952  $  1,703  $    249     14.62
Occupancy expense                              191       176        15      8.52
Equipment expense                              191       187         4      2.14
Data processing                                337       283        54     19.08
Insurance                                       38        31         7     22.58
Printing and stationery                         64        53        11     20.75
Professional fees                              165        90        75     83.33
Legal expense                                   55        25        30    120.00
Amortization of core deposit intangible         41        41         0         0
Other expense                                  285       248        37     14.92
                                          --------  --------  --------  --------
      Total noninterest expense           $  3,319  $  2,837  $    482     16.99
                                          ========  ========  ========

Income Taxes
------------

The income tax provision for the first three months of 2007 totaled  $237,000 in
comparison  to $335,000 for the same  three-month  period in 2006 as a result of
less taxable income.

Net Income
----------

Overall,  net income totaled  $934,000 for the three months ended March 31, 2007
and  represents  earnings  of $.55 per  share.  This  compares  to net income of
$1,147,000 or $.68 per share for the same period in 2006.

FINANCIAL CONDITION
-------------------

Total assets at March 31, 2007 were  $431,117,000,  compared to  $450,339,000 at
December 31, 2006, a decrease of  approximately  4.3%. The decrease is primarily
the result of a decrease in earning assets during the quarter.

Securities
----------

During the three months ended March 31, 2007,  the securities  portfolio,  which
includes  Federal  Home  Loan  Bank  stock,  decreased  $9,580,000  or  5.9%  to
$151,652,000 from $161,232,000 at December 31, 2006. The decrease is primarily a
reflection  of  portfolio  available-for-sale  securities  being sold and called
during the period with the proceeds being used primarily to fund loan growth and
seasonal cash flow of transaction accounts.

The make up of the  securities  portfolio is diversified  among U.S.  Government
sponsored agencies,  mortgage-backed  securities and securities issued by states
of the United States and political subdivisions of the states.

Securities   are   classified   in   the   portfolio   as   either    securities
available-for-sale  or securities  held-to-maturity.  Almost all  securities are
classified as available-for-sale.  The securities reported as available-for-sale
are stated at fair value in the financial statements of the Company.  Unrealized
holding gains and losses on  available-for-sale  securities  (accumulated  other
comprehensive  loss) are not  included in  earnings,  but are  reported as a net
amount (less expected tax) in a separate component of capital until realized. At
March 31, 2007, the unrealized loss net of tax was $1,589,000.  This compares to
an unrealized loss net of tax of $1,190,000 at December 31, 2006. The unrealized
losses in these securities are attributable to changes in market interest rates.
Management  deems  the  securities  that are  currently  in an  unrealized  loss
position as not other than  temporarily  impaired.  The  securities  reported as
securities held-to-maturity are stated at amortized cost.


                                     - 12 -
<page>

Lending
-------

Total loans outstanding of $248,319,000 at March 31, 2007 decreased  compared to
total loans outstanding of $254,773,000 at December 31, 2006. This is a decrease
of $6,454,000 or 2.53%. New business  development  during the first three months
of 2007  coupled  with a  small  increase  in  loan  demand  nearly  offset  the
$12,000,000  maturity  in Term  Federal  Funds  that  was  included  in the loan
portfolio at December 31, 2006.  Competition for loans remains aggressive in the
Bank's market area, especially in the residential mortgage loan market.

The following  table  represents the  composition of the loan portfolio at March
31, 2007 and December 31, 2006:

                                           March 31, 2007     December 31, 2006
                                           --------------     -----------------
                                                (amounts in thousands)
Commercial, financial and agricultural      $     17,722       $     16,465
Real Estate-construction and land
     development                                  22,288             21,169
Real Estate-residential                          149,736            145,395
Real Estate-commercial                            50,108             50,859
Consumer                                           8,395              8,816
Term federal funds                                     0             12,000
Other                                                 71                 69
                                            ------------       ------------
                                                 248,320            254,773
Deferred costs, net                                  204                168
Unearned income                                       (2)                (3)
Allowance for loan losses                         (2,469)            (2,474)
                                            ------------       ------------
Net Loans                                   $    246,053       $    252,464
                                            ============       ============

At March 31, 2007 and December 31,  2006,  approximately  90% of the Bank's loan
portfolio was related to real estate products.

Provisions and Allowance for Loan Losses
----------------------------------------

Credit risk is inherent in the business of extending  loans.  The Bank  monitors
the loan portfolio to ensure that loan quality will not be sacrificed for growth
or otherwise  compromise the Bank's objectives.  Because of this risk associated
with extending  loans, the Bank maintains an Allowance for Loan and Lease Losses
("ALLL") through charges to earnings.  The Bank determined that no provision for
loan losses was warranted for the first three month period of 2007 and 2006.

The Bank  evaluates the adequacy of the allowance no less  frequently  than on a
quarterly basis. No material changes have been made in the estimation methods or
assumptions  that the Bank uses in making this  determination  during the period
ended  March 31,  2007.  Such  evaluations  are based on  assessments  of credit
quality and "risk  rating" of loans by senior  management,  which is reviewed by
the Bank's Loan  Committee on a regular  basis.  Loans are initially  risk rated
when originated.  If there is  deterioration  in the credit,  the risk rating is
adjusted accordingly

The allowance also includes a component  resulting  from the  application of the
measurement  criteria of Statements of Financial  Accounting  Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" ("SFAS 114").  Impaired loans
receive  individual  evaluation of the allowance  necessary on a monthly  basis.
Loans to be considered  for  impairment are defined in the Bank's Loan Policy as
commercial  loans with balances  outstanding of $100,000 or more and residential
real  estate  mortgages  with  balances  of  $300,000  or more.  Such  loans are
considered  impaired  when it is  probable  that  the  Bank  will not be able to
collect all principal and interest due according to the terms of the note.

Any such  commercial  loan and/or  residential  mortgage will be considered  for
impairment under any of the following circumstances:

      1.    Non-accrual status;
      2.    Loans over 90 days delinquent;

                                     - 13 -
<page>

      3.    Troubled debt restructures consummated after December 31, 1994;
      4.    Loans  classified as "doubtful",  meaning that they have weaknesses,
            which make  collection or  liquidation  in full,  based on currently
            existing facts,  conditions,  and values,  highly  questionable  and
            improbable.

The  individual  allowance for any impaired loan is based upon the present value
of expected future cash flows discounted at the loan's  effective  interest rate
or the  fair  value  of the  collateral  if the  loan is  collateral  dependent.
Specifically  identifiable and quantifiable  losses are immediately  charged off
against the allowance.

In addition, a risk of loss factor is applied in evaluating  categories of loans
generally as part of the  periodic  analysis of the  Allowance  for Loan Losses.
This  analysis  reviews the  allocations  of the  different  categories of loans
within the portfolio  and it considers  historical  loan losses and  delinquency
figures as well as any recent delinquency trends.

The credit card delinquency and loss history is separately evaluated and given a
special loan loss factor because management  recognizes the higher risk involved
in such  loans.  Concentrations  of credit and local  economic  factors are also
evaluated on a periodic  basis.  Historical  average net losses by loan type are
examined as well as trends by type.  The Bank's loan mix over the same period is
also analyzed.  A loan loss  allocation is made for each type of loan multiplied
by the loan mix  percentage  for each loan type to  produce a  weighted  average
factor.

Nonperforming  loans,  which include all loans that are on a non-accrual  status
along  with  loans  that are 90 days or more  past due and still  accruing,  are
closely monitored by management.  At March 31, 2007, nonperforming loans totaled
$829,000 or 0.33% of total loans outstanding of $248,320,000.  The allowance for
loan losses totaled $2,469,000,  representing 297.83% of nonperforming loans and
..99% of total loans outstanding at March 31, 2007.  Nonperforming  loans totaled
$964,000 or .38% of total loans  outstanding  of  $254,773,000  at December  31,
2006. The allowance for loan losses totaled  $2,474,000 at December 31, 2006 and
represented  256.91% of nonperforming loans and 1.02% of total loans outstanding
net of term  federal  funds sold. A total of $39,000 of loans was charged off by
the Bank during the three months ended March 31, 2007. These  charged-off  loans
consisted primarily of credit card and consumer installment loans. This compares
to loans  charged off during the three  months  period ended March 31, 2006 that
totaled  $41,000.  A total  of  $33,000  of  previously  charged-off  loans  was
recovered during the three month period ended March 31, 2007. Recoveries for the
same period in 2006 totaled $7,000. While management estimates loan losses using
the best available information, no assurances can be given that future additions
to the  allowance  will not be  necessary  based on changes in economic and real
estate market conditions,  further information obtained regarding problem loans,
identification  of  additional  problem  loans or other  factors.  Additionally,
future additions to the allowance may be necessary to maintain adequate coverage
ratios.

Deposits
--------

The Company offers a variety of deposit  accounts with a range of interest rates
and terms.  The following  table  illustrates  the  composition of the Company's
deposits at March 31, 2007 and December 31, 2006:

                         March 31, 2007      December 31, 2006
                         --------------      -----------------
                                (amounts in thousands)

Demand                       $ 65,263            $ 70,502
NOW                            24,648              21,461
Money Market                   55,908              57,015
Savings                        45,034              44,246
Time                          114,164             120,362
                             --------            --------
Total Deposits               $305,017            $313,586
                             ========            ========

Deposits constitute the principal funding source of the Company's assets.

Borrowings
----------

The Company  utilizes  advances  from the Federal  Home Loan Bank as part of its
operating  strategy to supplement  deposit  growth and fund its asset growth,  a
strategy that is designed to increase  interest income.  These advances are made
pursuant to various credit programs, each of which has its own interest rate and
range of  maturities.  At  March  31,  2007,  the  Company  had  $76,863,000  in
outstanding  advances from the Federal Home Loan Bank compared to $87,093,000 at
December 31, 2006.  Management  expects that it will  continue  this strategy of
supplementing deposit growth with advances from the Federal Home Loan Bank.

                                     - 14 -
<page>

Interest Rate Risk
------------------

Interest rate risk is the most  significant  market risk  affecting the Company.
Interest  rate risk is defined as an exposure  to a movement  in interest  rates
that could have an adverse effect on net interest income. Net interest income is
sensitive to interest rate risk to the degree that interest-bearing  liabilities
mature or reprice on a different  basis than  earning  assets.  In an attempt to
manage its  exposure  to  changes  in  interest  rates,  the  Bank's  assets and
liabilities are managed in accordance with policies  established and reviewed by
the Bank's Board of Directors.  The Bank's Asset/Liability  Management Committee
monitors asset and deposit levels,  developments,  and trends in interest rates,
liquidity  and capital.  One of the primary  financial  objectives  is to manage
interest  rate risk and  control  the  sensitivity  of  earnings  to  changes in
interest rates in order to prudently  improve net interest income and manage the
maturities and interest rate sensitivities of assets and liabilities.

To  quantify  the extent of these  risks,  both in its current  position  and in
actions it might take in the future,  interest rate risk is monitored  using gap
analysis which identifies the differences  between assets and liabilities  which
mature or reprice during specific time frames and model simulation which is used
to "rate shock" the Company's assets and liability  balances to measure how much
of the Company's net interest income is "at risk" from sudden rate changes.

An interest rate sensitivity gap is defined as the difference between the amount
of interest-earning  assets maturing or repricing within a specific time and the
amount of  interest-bearing  liabilities  maturing or repricing within that same
period. A gap is considered  positive when the amount of interest rate sensitive
assets  exceeds  the amount of interest  rate  sensitive  liabilities.  A gap is
considered  negative  when the amount of  interest  rate  sensitive  liabilities
exceeds the amount of interest rate  sensitive  assets.  At March 31, 2007,  the
Company maintains a slight asset sensitive  (positive gap) position.  This would
suggest that during a period of rising interest rates, the Company would be in a
better  position  to invest in higher  yielding  assets  resulting  in growth in
interest income.  To the contrary,  during a period of falling interest rates, a
positive  gap would  result  in a  decrease  in  interest  income.  The level of
interest rate risk at March 31, 2007 is within the limits  approved by the Board
of Directors.

Liquidity
---------

Liquidity is the ability to raise funds on a timely basis at an acceptable  cost
in  order  to meet  cash  needs.  Adequate  liquidity  is  necessary  to  handle
fluctuations in deposit levels,  to provide for customers'  credit needs, and to
take advantage of investment  opportunities  as they are presented.  The Company
manages  liquidity  primarily  with readily  marketable  investment  securities,
deposits and loan repayments. The Company's subsidiary, the Bank, is a member of
the Federal Home Loan Bank of Boston.  This enhances the  liquidity  position by
providing a source of available  borrowings.  At March 31, 2007, the Company had
approximately  $52,550,000 in loan commitments outstanding.  Management believes
that the current  level of  liquidity is ample to meet the  Company's  needs for
both the present and foreseeable future.

Capital
-------

At March 31, 2007,  the Company had  $44,443,000  in  shareholders'  equity,  an
increase  of .2 % when  compared  to  December  31,  2006  shareholders'  equity
totaling $44,349,000. Net income for the three-month period ended March 31, 2007
totaled $934,000. Market conditions resulted in an increase in accumulated other
comprehensive  loss to $2,908,000 at March 31, 2007 from  $2,522,000 at December
31, 2006.

A review and analysis of securities has determined that there has been no credit
deterioration and that the unrealized loss on securities  available-for-sale  is
due to the current interest rate environment and management deems the securities
to be not other than temporarily impaired. Under current regulatory definitions,
the Company and the Bank are  considered  to be "well  capitalized"  for capital
adequacy  purposes.  As a  result,  the Bank  pays the  lowest  federal  deposit
insurance deposit premiums possible. One primary measure of capital adequacy for
regulatory purposes is based on the ratio of risk-based capital to risk-weighted
assets.  This method of measuring  capital  adequacy helps to establish  capital
requirements  that are more sensitive to the differences in risk associated with
various assets.  It takes into account  off-balance  sheet exposure in assessing
capital  adequacy and it minimizes  disincentives  to holding  liquid,  low-risk
assets.  At March 31,  2007,  the  Company had a total  consolidated  risk based
capital  ratio of  13.38%,  a Tier 1 risk  based  capital  ratio of 12.52% and a
leverage  ratio of 8.28%.  This  compares  to a total  consolidated  risk  based
capital  ratio of  15.28%,  a Tier 1 risk  based  capital  ratio of 14.28% and a
leverage  ratio

                                     - 15 -
<page>

of 8.43% at December 31, 2006.  Maintaining  strong capital is essential to bank
safety and soundness.  However,  the effective  management of capital  resources
requires generating attractive returns on equity to build value for shareholders
while maintaining  appropriate levels of capital to fund growth, meet regulatory
requirements  and be  consistent  with prudent  industry  practices.  Management
believes  that the  capital  levels  of the  Company  and Bank are  adequate  to
continue to meet the foreseeable capital needs of the institutions.

Impact of Inflation and Changing Prices
---------------------------------------

The Company's  consolidated financial statements are prepared in conformity with
generally  accepted  accounting  principles,  which require the  measurement  of
financial  condition,  and  operating  results  in terms of  historical  dollars
without  considering  changes in the relative  purchasing  power of money,  over
time, due to inflation.  Unlike most industrial companies,  virtually all of the
assets and  liabilities  of the Company are monetary  and as a result,  interest
rates have a greater impact on the Company's  performance than do the effects of
general levels of inflation,  although interest rates do not necessarily move in
the same  direction  or with the  same  magnitude  as the  prices  of goods  and
services.  Although  not an influence in recent  years,  inflation  could impact
earnings in future periods.

Forward Looking Statements
--------------------------

This Form 10-Q and future  filings made by the Company with the  Securities  and
Exchange Commission,  as well as other filings,  reports and press releases made
or issued by the Company and the Bank,  and oral  statements  made by  executive
officers  of the Company and the Bank,  may include  forward-looking  statements
relating to such matters as:

(a)      assumptions  concerning  future  economic and business  conditions  and
         their  effect on the economy in general and on the markets in which the
         Company and the Bank do business; and

(b)      expectations for revenues and earnings for the Company and Bank.

Such forward-looking  statements are based on assumptions rather than historical
or current facts and, therefore,  are inherently  uncertain and subject to risk.
For those  statements,  the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Act of
1995.

The Company  notes that a variety of factors  could cause the actual  results or
experience  to  differ   materially  from  the  anticipated   results  or  other
expectations described or implied by such forward-looking  statements. The risks
and uncertainties  that may effect the operation,  performance,  development and
results of the Company and Bank's business include the following:

(a)      the risk of  adverse  changes in  business  conditions  in the  banking
         industry  generally  and in the  specific  markets  in  which  the Bank
         operates;
(b)      changes in the legislative and regulatory  environments that negatively
         impact the Company and Bank through increased operating expenses;
(c)      increased   competition   from  other   financial   and   non-financial
         institutions;
(d)      the impact of technological advances; and
(e)      other risks  detailed from time to time in the  Company's  filings with
         the Securities and Exchange Commission.

Such  developments  could have an adverse impact on the Company's and the Bank's
financial position and results of operations.

                                     - 16 -
<page>

       Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The main  components  of market risk for the Company are interest  rate risk and
liquidity  risk.  The Company  manages  interest  rate risk and  liquidity  risk
through an ALCO Committee  comprised of outside Directors and Senior Management.
The Committee monitors compliance with the Bank's Asset/Liability  Policy, which
provides  guidelines  to analyze and manage the interest rate  sensitivity  gap,
which is the  difference  between  the  amount  of  assets  and the  amounts  of
liabilities that mature or reprice during specific periods.  Model simulation is
used  to  measure  earnings  volatility  under  both  rising  and  falling  rate
scenarios.  Please refer to Interest Rate Risk and Liquidity  under Part I, Item
2,  Management's  Discussion and Analysis of Financial  Condition and Results of
Operation,  of this Form 10-Q.  The  Company's  interest rate risk and liquidity
position has not significantly changed from year-end 2006.


                                     - 17 -
<page>

                        Item 4. Controls and Procedures.

The Company's Chief  Executive  Officer and Chief  Financial  Officer  concluded
that,  based upon an evaluation as of March 31, 2007,  the Company's  disclosure
controls and  procedures  are effective and designed to ensure that  information
required  to be  disclosed  by the  Company in reports  that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported  within the time  periods  specified  in the SEC rules and forms and is
accumulated and  communicated to the Company's  Management,  including its Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
discussions  regarding required disclosure.  During the three month period ended
March 31, 2007,  there were no changes in the  Company's  internal  control over
financial  reporting  that  materially  affected,  or are  reasonably  likely to
materially affect, the Company's internal control over financial reporting.

                           Part II - OTHER INFORMATION

Item 1. - Legal Proceedings.  Not applicable

Item 1A. - Risk Factors.  Not applicable

Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds.

Item 3. - Defaults Upon Senior Securities.  Not applicable

Item 4. - Submission of Matters to a Vote of Security Holders. Not applicable

Item 5. - Other Information.  Not applicable

Item 6. - Exhibits.

              11 - Computation of Earnings per Share.

              31.1 - Rule 13a-14(a)/15d-14(a) Certification.

              31.2 - Rule 13a-14(a)/15d-14(a) Certification.

              32 - Section 1350 Certifications.

                                   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.


                                                  SALISBURY BANCORP, INC.

      Date: May 10, 2007                          by: /s/ John F. Perotti
          --------------                              -------------------
                                                      John F. Perotti
                                                      Chief Executive Officer

      Date: May 10, 2007                          by: /s/ John F. Foley
          --------------                              -----------------
                                                      John F. Foley
                                                      Chief Financial Officer

                                     - 18 -