SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(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, 2002
                              ---------------------------


                                       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 1-14854
                                                -------

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

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

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


Registrant"s 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 [ ]

Transitional Small Business Disclosure Format:  Yes [ ]  No    [X]
Documents Incorporated by Reference:  None

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

  Indicate the number of shares outstanding of each of the issuer"s classes of
                       common stock, as of April 25, 2002
                                    1,422,358
                                    ---------


<PAGE>

<TABLE>
<CAPTION>

                             SALISBURY BANCORP, INC.

                                TABLE OF CONTENTS
<S>                                                                                   <C>
Part I. FINANCIAL INFORMATION                                                         Page

Item 1.  Condensed Financial Statements:

         Condensed Consolidated Balance Sheets - March 31, 2002 (unaudited)
                                                 and December 31, 2001                  4
         Condensed Consolidated Statements of Income - three months ended
                                                       March 31, 2002 and 2001          5
                                                       (unaudited)
         Condensed Consolidated Statements of Cash Flows - three months ended
                                                           March 31, 2002 and 2001      6
                                                           (unaudited)

         Notes to Consolidated Financial Statements                                     8

Item 2.  Management"s Discussion and Analysis                                          10

Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                             16

Item 2.  Changes in Securities and Use of Proceeds                                     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


</TABLE>
                                       2


<PAGE>


                          Part I--FINANCIAL INFORMATION

                     Item 1. Condensed Financial Statements


3


<PAGE>


<TABLE>
<CAPTION>
                             SALISBURY BANCORP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (amounts in thousands, except per share data)

                                                                       MARCH 31,     DECEMBER 31,
                                                                         2002            2001
                                                                         ----            ----
                                                                     (unaudited)
<S>                                                                   <C>             <C>
ASSETS Cash & due from banks:
      Non-Interest Bearing                                            $   6,587       $   7,184
      Interest Bearing                                                      712             258
   Federal funds sold                                                     3,000          18,150
   Money market mutual funds                                                489             618
         Cash and cash equivalents                                       10,788          26,210
   Investment Securities:
      Held to maturity securities at amortized cost                         329             400
      Available-for-sale securities at market value                     114,688         102,248
   Federal Home Loan Bank stock, at cost                                  2,945           2,945
   Loans:
      Commercial, financial and agricultural                              9,982          10,797
      Real estate-construction and land development                       4,286           3,935
      Real estate-residential                                            99,783         102,201
      Real estate-commercial                                             17,444          17,423
      Consumer                                                            9,601          10,030
      Other                                                                 131             125
      Allowance for loan losses                                          (1,455)         (1,445)
                                                                      ---------       ---------
         Net loans                                                      139,772         143,066
   Bank premises & equipment                                              2,665           2,683
   Investment in real estate                                                 75              75
   Accrued interest receivable                                            1,901           1,681
   Intangible assets on branch acquisition                                3,185           3,227
   Other assets                                                           1,152           1,067
                                                                      ---------       ---------
Total Assets                                                          $ 277,500       $ 283,602
                                                                      ---------       ---------

LIABILITIES AND SHAREHOLDERS' EQUITY
   Deposits:
      Demand                                                          $  33,048       $  37,702
      Savings & NOW                                                      50,630          48,435
      Money Market                                                       47,110          48,897
      Time                                                               67,801          66,317
                                                                      ---------       ---------
         Total Deposits                                                 198,589         201,351
   Federal Home Loan Bank advances                                       52,672          53,004
   Due to broker                                                            954           4,204
   Other liabilities                                                      1,649           1,680
                                                                      ---------       ---------
         Total Liabilities                                              253,864         260,239
                                                                      ---------       ---------
Shareholders' equity:
   Common stock, par value $.10 per share;
      Authorized 3,000,000 shares
      Issued and outstanding shares: 1,422,358 at March 31, 2002            142             142
      and 1,422,358 at December 31, 2001
   Additional paid-in capital                                             2,281           2,281
   Retained earnings                                                     21,628          21,219
   Accumulated other comprehensive loss                                    (415)           (279)
                                                                      ---------       ---------
         Total Shareholders' Equity                                      23,636          23,363
                                                                      ---------       ---------
Total Liabilities and Shareholders' Equity                            $ 277,500       $ 283,602
                                                                      =========       =========

</TABLE>


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


                                       4


<PAGE>


<TABLE>
<CAPTION>
                             SALISBURY BANCORP, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (amounts in thousands, except per share data)
                             March 31, 2002 and 2001
                                   (unaudited)

                                                                     Three Months Ended
                                                                         March 31
                                                               2002        2001
                                                               ----        ----

<S>                                                           <C>         <C>
Interest and dividend income:
   Interest and fees on loans                                 $2,569      $2,886
 Interest and dividends on securities:
   Taxable                                                       981       1,103
   Tax-exempt                                                    434         181
 Dividends on equity securities                                   35          60
 Other interest                                                   42          69
                                                              ------      ------
         Total interest and dividend income                    4,061       4,299
                                                              ------      ------
 Interest expense:
   Interest on deposits                                        1,088       1,450
   Interest on Federal Home Loan Bank advances                   710         754
                                                              ------      ------
         Total interest expense                                1,798       2,204
                                                              ------      ------
         Net interest and dividend income                      2,263       2,095
Provision for loan losses                                         37          37
                                                              ------      ------
         Net interest and dividend income after provision
               for loan losses                                 2,226       2,058
                                                              ------      ------
Other income:
   Trust department income                                       253         246
   Service charges on deposit accounts                           114         105
   Gain on sale of available-for-sale securities                  15          21
   Other income                                                  182         153
                                                              ------      ------
         Total other income                                      564         525
                                                              ------      ------
Other expense:
   Salaries and employee benefits                              1,052         929
   Occupancy expense                                              73          63
   Equipment expense                                             123         124
   Data processing                                               134         135
   Other expense                                                 433         361
                                                              ------      ------
         Total other expense                                   1,815       1,612
                                                              ------      ------
         Income before income taxes                              975         971
Income taxes                                                     253         329
                                                              ------      ------
         Net income                                           $  722      $  642
                                                              ======      ======
Earnings per common share outstanding                         $  .51      $  .44
                                                              ======      ======
Earnings per common share outstanding,
 assuming dilution                                            $  .51      $  .44
                                                              ======      ======
Dividends per share                                           $  .22      $  .21
                                                              ======      ======

</TABLE>


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


                                       5


<PAGE>


<TABLE>
<CAPTION>
                             SALISBURY BANCORP, INC.
                             -----------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                   Three months ended March 31, 2002 and 2001
                                   (unaudited)

                                                                              2002             2001
                                                                              ----             ----

<S>                                                                         <C>              <C>
Cash flows from operating activities:
   Net income                                                               $    722         $    642
   Adjustments to reconcile net income to net cash provided by
       operating activities:
         Accretion of securities, net                                            121              (42)
         Gain on sales of available-for-sale securities, net                     (14)             (20)
         Provision for loan losses                                                37               38
         Depreciation and amortization                                            80               84
         Amortization of intangible assets from branch acquisition                42                0
         Accretion of fair value adjustment on deposits                          (43)               0
         (Increase) decrease in interest receivable                             (220)             428
         Deferred tax benefit                                                    170                0
         Increase in prepaid expenses                                            (18)            (102)
         Increase in other assets                                               (134)            (251)
         Increase in taxes payable                                                34              436
         Decrease in accrued expenses                                           (164)            (164)
         Increase (decrease) in interest payable                                  (1)              50
                       Increase (decrease) in other liabilities                  100              (37)

Net cash provided by operating activities                                        712            1,062

Cash flows from investing activities:
  Purchase of Federal Home Loan Bank stock                                        (0)             (15)
  Purchases of available-for-sale securities                                 (29,760)         (41,089)
  Proceeds from sales of available-for-sale securities                         8,634           31,909
  Proceeds from maturities of available-for-sale securities                    5,076              230
  Proceeds from maturities of held-to-maturity securities                         71                2
  Net (increase) decrease  in loans                                            3,253           (5,165)
  Recoveries of loans previously charged-off                                       4               92
  Capital expenditures                                                           (62)             (46)

Net cash used in investing activities                                        (12,784)         (14,082)

</TABLE>


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


                                       6


<PAGE>


<TABLE>
<CAPTION>
                             SALISBURY BANCORP, INC.
                             -----------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                   Three months ended March 31, 2002 and 2001
                                   (unaudited)
                                   (continued)
                                                                      2002           2001
                                                                      ----           ----

<S>                                                                  <C>            <C>
Cash flows from financing activities:
   Net decrease in demand deposits, NOW and
       savings accounts                                              (4,203)        (3,362)
   Net increase (decrease) in time deposits                           1,484           (500)
   Advances from Federal Home Loan Bank                                   0         10,800
   Principal payments on advances from Federal Home Loan Bank          (332)          (359)
   Dividends paid                                                      (299)          (554)
   Net repurchase of common stock                                         0           (330)
                                                                   --------       --------

   Net cash provided by financing activities                         (3,350)         5,695

Net decrease in cash and cash equivalents                           (15,422)        (7,325)
Cash and cash equivalents at beginning of year                       26,210         13,759
                                                                   --------       --------
Cash and cash equivalents at end of year                           $ 10,788       $  6,434
                                                                   ========       ========


Supplemental disclosures:
   Interest paid                                                   $  1,799       $  2,154
   Income taxes paid                                                     49            102

</TABLE>


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


                                       7


<PAGE>



                             SALISBURY BANCORP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

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

The  accompanying  condensed  interim  financial  statements  are  unaudited and
include the  accounts of  Salisbury  Bancorp,  Inc.  (the  "Company"),  those of
Salisbury Bank and Trust Company (the "Bank"),  its wholly-owned  subsidiary and
the Bank"s subsidiary, S.B.T. Realty, Inc. The consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim financial  information and with the instructions to SEC Form 10-QSB.
Accordingly,  they do not include all the information and footnotes  required by
accounting  principles generally accepted in the United States of America (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,  2002  are not  necessarily  indicative  of the  results  that may be
expected  for the year ending  December  31, 2002.  These  financial  statements
should be read in  conjunction  with the financial  statements and notes thereto
included in the Company's 2001 Annual Report on Form 10-KSB.

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 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  one source of other
comprehensive income is the net unrealized gain (loss) on securities.

Comprehensive Income
                                    Three months ended
                                        March 31,
                                    2002         2001
                                    ----         ----

Net income                         $  722       $  642
Net unrealized (losses) gains
 on securities during period         (136)         642
                                   ------       -- ---
Comprehensive income               $  586       $1,286
                                   ======       ======


                                       8


<PAGE>



NOTE 3 - COMPUTATION OF EARNINGS PER SHARE

The Company has computed and presented  earnings per share ("EPS") in accordance
with Statement of Financial Accounting Standards No. 128.  Reconciliation of the
numerators and the  denominators of the basic and diluted per share  computation
for net income are as follows:

<TABLE>
<CAPTION>
                                                            (amounts in thousands, except per share data)
                                                                             (unaudited)

                                                                 Income         Shares        Per-Share
                                                               (Numerator)   (Denominator)      Amount
<S>                                                               <C>            <C>            <C>
Three months ended March 31, 2002
   Basic EPS
      Net income and income available to common stockholders      $ 722          1,422          $   .51
      Effect of dilutive securities, options                                         0
                                                                  -----          -----
   Diluted EPS
      Income available to common stockholders and assumed
         conversions                                              $ 722          1,422          $   .51
                                                                  =====          =====

Three months ended March 31, 2001
   Basic EPS
      Net income and income available to common stockholders      $ 642          1,447          $   .44
      Effect of dilutive securities, options                                         0
                                                                  -----          -----

   Diluted EPS
      Income available to common stockholders and assumed
         conversions                                              $ 642          1,447          $   .44
                                                                  =====          =====

</TABLE>


NOTE 4 - IMPACT OF NEW ACCOUNTING STANDARDS

In  June  1998,  the  FASB  issued  SFAS  No.  133  "Accounting  for  Derivative
Instruments and Hedging  Activities".  Statement No. 133, as amended by SFAS No.
138, establishes accounting and reporting standards for derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging activities. The Statement is effective for all fiscal quarters of fiscal
years  beginning  after June 15, 2000. The Company  adopted this statement as of
January 1, 2001. In management's  opinion,  the adoption of SFAS No. 133 did not
have a material effect on the Company's consolidated financial statements.

FASB has  issued  SFAS No.  140,  Accounting  for  Transfers  and  Servicing  of
Financial Assets and  Extinguishments  of Liabilities.  This Statement  replaces
SFAS No. 125,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments  of Liabilities,  and rescinds SFAS Statement No. 127, "Deferral
of the Effective Date of Certain Provisions of FASB Statement No. 125". SFAS No.
140 provides  accounting and reporting  standards for transfers and servicing of
financial assets and  extinguishments  of liabilities.  This statement  provides
consistent  standards for distinguishing  transfers of financial assets that are
sales from  transfers that are secured  borrowings.  This statement is effective
for  transfers  and  servicing  of  financial  assets  and   extinguishments  of
liabilities  occurring after March 31, 2001; however, the disclosure  provisions
are effective for fiscal years ending after  December 15, 2000. In  management's
opinion,  the  adoption  of SFAS No. 140 did not have a  material  effect on the
Company's consolidated financial statements.

Statement of Financial  Accounting Standards No. 141 improves the consistency of
the  accounting  and reporting for business  combinations  by requiring that all
business  combinations  be  accounted  for under a single  method - the purchase
method. Use of the pooling-of-interests method is no longer permitted. Statement
No. 141  requires  that the purchase  method be used for  business  combinations
initiated  after June 30,  2001.  The impact of adopting  this  Statement on the
consolidated financial statements was not material.

Statement of Financial  Accounting  Standards  No. 142 requires that goodwill no
longer be  amortized to earnings,  but instead be reviewed for  impairment.  The
amortization of goodwill  ceases upon adoption of the Statement,  which for most
companies,  was January 1, 2002.  The impact of adopting  this  Statement on the
consolidated financial statements was not material.


                                       9


<PAGE>


                         Part I - FINANCIAL INFORMATION


                  Item 2. Management's Discussion and Analysis


                                       10


<PAGE>




Overview:
---------

Salisbury  Bancorp,  Inc. (the  "Company"),  a Connecticut  corporation,  is the
holding  company for  Salisbury  Bank and Trust  Company,  (the "Bank") which is
headquartered  in Lakeville,  Connecticut.  The Company's sole subsidiary is the
Bank,  which has a full service Trust Department and offers  commercial  banking
products and services  through four full service offices in the towns of Canaan,
Lakeville, Salisbury and Sharon, Connecticut.

The following is Management's  discussion of the financial condition and results
of operations on a consolidated basis of Salisbury Bancorp,  Inc. which includes
the accounts of Salisbury Bank and Trust Company. Management's discussion should
be read in  conjunction  with  Salisbury  Bancorp,  Inc.'s Annual Report on Form
10-KSB for the year ended December 31, 2001.

In order to  provide a strong  foundation  for  building  shareholder  value and
serving its  customers,  the  Company  remains  committed  to  investing  in the
technological  and human  resources  necessary  to  implement  new  personalized
financial  products  and to deliver  them with the  highest  quality of service.
During 2001, the Bank introduced a new Internet banking product called "SBTNET".
It now has over 1000 customers  signed up and using the product.  Just recently,
the Bank's home page of the website was remodeled to  accommodate  the expansion
of its new "free" online services "SBT VCARD" and "SBT PAL". Future enhancements
are  planned  as the Bank  continues  to  develop  additional  Internet  banking
products for its customers.

Net Income for the three months ended March 31, 2002 increased $80,000 or 12.46%
to $722,000  or $.51 per diluted  share as compared to net income of $642,000 or
$.44  per  diluted  share  for the  three  months  ended  March  31,  2001.  The
improvement  in net income is primarily  the result of improved net interest and
dividend  income,  reductions  in interest  expense,  as well as a reduction  in
income taxes which resulted from increased income from tax exempt securities.

During the first calendar  quarter of 2002, the Company's total assets decreased
by $6,102,000 or 2.15% and totaled $277,500,000,  which compares to $283,602,000
at December 31, 2001.  This  decrease is not  considered to be indicative of any
trend.  During the first quarter of 2002, the asset mix has changed resulting in
an  increase in interest  income.  Federal  funds sold  totaled  $18,150,000  at
December  31,  2001.  This  total is  somewhat  higher  than the  Bank's  normal
operating  range of funds and was primarily the result of the cash received from
the  acquisition  of the  Canaan  branch.  During  the first  quarter  of 2002 a
significant  amount of these funds were invested in the securities  portfolio of
the Bank which  increased  12.05% to  $115,017,000 at March 31, 2002 compared to
$102,648,000 at December 31, 2001.  Competition for loans remains  aggressive in
the  Bank's  market  area.  This is  coupled  with an  economic  environment  of
generally  lower  interest  rates that promote  refinancing to longer term fixed
rate  products  and has  resulted  in a  decrease  in the  loan  portfolio  to $
139,772,000 at March 31, 2002 as compared to  $143,066,000 at December 31, 2001.
The Company  continues  to carefully  monitor the quality of its assets.  During
this period, nonperforming loans increased from $587,000 at December 31, 2001 to
$1,022,000  at March 31, 2002 which  continues  to represent  approximately  one
percent  of total  loans.  Presently,  the  Company  does  not  have any  assets
classified  as Other Real Estate Owned;  therefore,  total  nonperforming  loans
represent total nonerforming  assets as well. Deposits decreased to $198,589,000
at March 31, 2002.  This compares to total deposits of  $201,351,000 at December
31, 2001. This decrease  represents the  traditional  seasonal cash flows of the
Company's deposit customers.

As a result of the Company's first quarter financial  performance,  the Board of
Directors  declared a first quarter cash dividend of $.22 per common share. This
compares to a cash dividend of $.21 per common share that was paid for the first
quarter of 2001.  The  dividend  was paid on April 26, 2002 to  shareholders  of
record as of March 29, 2002. This represents a dividend payout ratio of 43.14%.

The Company's  risk-based  capital ratios at March 31, 2002,  which included the
risk weighted  assets and capital of the  Salisbury  Bank and Trust Company were
15.34% for Tier 1 capital and 16.45% for total capital.  The Company's  leverage
ratio was 7.58% at March 31, 2002.


                                       11


<PAGE>


                        THREE MONTHS ENDED MARCH 31, 2002
                AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2001
Net Interest Income
-------------------

The Company's  earnings are  primarily  dependent  upon net interest  income and
noninterest  income from its  community  banking  operations  with net  interest
income being the largest  component of the Company's  revenue.  Net interest and
dividend income is the difference  between  interest and dividends earned on the
loan and  securities  portfolios and interest paid on deposits and advances from
the Federal Home Loan Bank. For the following discussion, net interest income is
presented on a fully  taxable-equivalent  ("FTE")  basis.  FTE  interest  income
restates  reported interest income on tax exempt loans and securities as if such
interest  were  taxed at the  Company's  federal  income tax rate of 34% for all
periods presented.

(amounts in thousands)
Three months ended March 31                        2002        2001
---------------------------                        ----        ----

Interest and Dividend Income
----------------------------
(financial statements)                            $4,061      $4,299
Tax Equivalent Adjustment                            224          93
                                                  ------      ------
     Total interest income (on an FTE basis)       4,285       4,392
Interest Expense                                   1,798       2,204
                                                  ------      ------
Net Interest and Dividend Income-FTE              $2,487      $2,188
                                                  ======      ======

Interest  and  dividend  income on an FTE basis for the three months ended March
31, 2002 totaled  $4,285,000 as compared to $4,392,000  for the same time period
in 2001.  Although  there is an increase  in earning  assets,  this  decrease of
$107,000 or 2.44% in interest and dividend  income is primarily the result of an
economic  environment of generally lower interest rates.  This is coupled with a
change in the asset mix of  earning  assets,  which now  includes  an  increased
portfolio of tax exempt securities, and results in a significant increase in the
tax  equivalent  adjustment  to $224,000 in 2002 compared to $93,000 a year ago.
This is an increase of $131,000 or 141%.

During the first  quarter of 2002,  interest  expense on  deposits  amounted  to
$1,088,000 as compared  with  $1,450,000  for the same period in 2001.  Although
deposits  increased,  primarily as the result of the Canaan  Branch  acquisition
during the fourth  quarter of 2001,  generally  lower interest rates resulted in
the decrease in interest  expense.  Interest on Federal Home Loan Bank  advances
decreased to $710,000 in 2002 from $754,000 for the same period in 2001. This is
the  result  of a  decrease  in  funds  borrowed  to  $52,672,000  in 2002  from
$53,004,000 in 2001.

Overall,  net  interest  and  dividend  income  (on an FTE  basis)  amounted  to
$2,487,000 for the three months ended March 31, 2002 as compared with $2,188,000
for the same  period in 2001.  This  increase of  $299,000  represents  a 13.67%
increase in net interest and dividend income.

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

Noninterest  income totaled  $564,000 for the quarter ended March 31, 2002. This
compares to $525,000 for the comparable quarter in 2001. Trust Department income
increased  $7,000 to  $253,000  from  $246,000  a year ago.  Service  charges on
deposit  accounts have increased  $9,000 to $114,000 during the first quarter of
2002  compared to $105,000 for the same period last year.  This is primarily the
result  of an  increase  of  deposit  accounts  transactions.  Gains on sales of
available-for-sale  securities  totaled $15,000, a slight decrease from gains of
$21,000  in 2001.  Other  noninterest  income  increased  $29,000  or  18.95% to
$182,000  for the three  months  ended  March 31,  2002  from  $153,000  for the
corresponding  period in 2001.  This is  primarily  the result of an increase in
fees earned from sales of mortgages in the secondary mortgage market.


                                       12


<PAGE>


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

Noninterest  expense  amounted to $1,815,000 for the first quarter of 2002. This
is an increase of $203,000 or 12.59% over the  $1,612,000  reported for the same
period of 2001.  Salaries and employee  benefits  increased  $123,000 or 13.24%.
This is  primarily  the result of the  additional  staff  hired to  service  the
increase in new business  coupled with annual pay increases and increasing costs
of employee benefits.  Occupancy and equipment expenses remained consistent when
comparing  the two  periods.  Data  processing  costs  also  remained  generally
unchanged when comparing the first quarter of 2002 to the first quarter of 2001.
Other operating  expenses  increased $72,000 or 19.94% to $447,000 for the three
months period ended March 31, 2002. This increase is primarily the result of the
amortization  of  intangible  assets  from the Canaan  branch  acquisition  that
occurred during the last quarter of 2001. First quarter amortization expense for
2002  amounted to  $41,000.  The balance of the  increase  represents  increases
normally  associated  with the operations of the Company.  Total other operating
expenses amounted to $361,000 for the same period on 2001.

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

The income tax provision for the first three months of 2002 totaled  $253,000 in
comparison  to $329,000  for the same period in 2001.  The decrease is primarily
the result of the impact of an increase  in tax exempt  interest  income  earned
from the securities portfolio.

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

Overall, net income totaled $722,000 for the three months period ended March 31,
2002.  This compares to net income of $642,000 for the  corresponding  period in
2001. This is an increase of $80,000 or 12.46% and represents earnings per share
of $.51 per diluted  share.  This compares to earnings per diluted share of $.44
for the same  period in 2001.  The  improvement  in net  income is  primarily  a
reflection of an increase in interest  earning assets,  which has resulted in an
increase in total net interest income.

Provisions and Allowances for Loan Losses
-----------------------------------------

Total loans at March 31, 2002 were $141,227,000 which compares to total loans of
$144,511,000 at December 31, 2001. This is a decrease of $3,284,000 or 2.27%. At
March 31, 2002  approximately  86% of the Bank's loan  portfolio  was related to
real estate  products  and  although the  portfolio  decreased  during the first
quarter of 2002, the concentration  remained  consistent as approximately 86% of
the portfolio was related to real estate.  There were no material changes in the
composition of the loan portfolio during this period.

Credit  risk is  inherent  in the  business  of  extending  loans.  The  Company
maintains an allowance or reserve for credit losses through charges to earnings.
The loan loss  provision for the period ended March 31, 2002 was $37,000 and was
the same as the corresponding period of 2001.

The Bank formally  determines  the adequacy of the allowance on a monthly 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,
2002.  This  determination  is based on  assessment  of credit  quality or "risk
rating"  of loans by  senior  management,  which is  submitted  to the  Board of
Directors for approval. 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"  ("SFAS114").  Impaired loans
receive  individual  evaluation of the allowance  necessary on a monthly  basis.
Impaired loans are defined in the Bank's Loan Policy as residential  real estate
mortgages with balances of $300,000 or more and commercial  loans of $100,000 or
more 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. Such  commercial  loans and
residential  mortgages  will be considered  impaired  under any of the following
circumstances:


                                       13


<PAGE>


     1.   Non-accrual status;
     2.   Loans over 90 days delinquent;
     3.   Troubled debt restructures consummated after December 31, 1994; or
     4.   Loans  classified as  "doubtful",  meaning that they have  weaknesses,
          which  make  collection  or  liquidation  in  full,  on the  basis  of
          currently existing facts, conditions,  and values, highly questionable
          and improbable.

The individual  allowance for each 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 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 of time 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.
There have been no  reallocations  within the allowance  during the period ended
March 31, 2002.

At March 31, 2002, the allowance for loan losses totaled $1,455,000 representing
142.37% of nonperforming loans which totaled $1,022,000 and 1.03% of total loans
of   $141,227,000.   This  compares  to  $1,445,000   representing   246.17%  of
nonperforming  loans  which  totaled  $587,000  and  1.00%  of  total  loans  of
$144,511,000  at  December  31,  2001.  Management  does not  believe  that this
increase  of  $435,000  in  nonperforming  loans  represents  any trend  towards
increased  delinquency of loans,  which would be likely to have an effect on the
level of the  allowance  for loan losses.  A total of $32,000 loans were charged
off by the  Company  during  the three  month  period  ended  March 31,  2002 as
compared to $19,000 charged off during the  corresponding  period in 2001. These
charged off loans consisted primarily of loans to individuals. A total of $4,000
of  previously  charged off loans was  recovered  during the three month  period
ended March 31, 2002.  Recoveries for the  corresponding  period in 2001 totaled
$92,000. When comparing the two periods, and excluding the one large recovery in
2001 of $82,000,  net  charge-offs  were  $28,000 for the period ended March 31,
2002 and  $10,000 for the same  period in 2001,  neither of which  significantly
impacted the level of the  allowance for loan losses.  Management  believes that
the  allowance  for loan losses is adequate.  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 and other
factors,  both within and outside of management's  control.  Additionally,  with
expectations of the Company to grow its existing portfolio,  future additions to
the allowance may be necessary to maintain adequate coverage ratios.

Capital
-------

At March 31, 2002, the Company had $23,636,000 in shareholder equity compared to
$23,363,000 at December 31, 2001. This represents an increase of $273,000 or
1.17%. Several components contributed to the change since December 2001.
Earnings year to date totaled $722,000. Market conditions have resulted in a
negative adjustment to unrealized comprehensive income of $136,000. The Company
also declared a first quarter cash dividend in 2002 resulting in a decrease in
capital of $313,000. Under current regulatory definitions, the Bank is "well
capitalized", the highest rating defined under the Federal Deposit Insurance
Corporation Improvement Act. As a result, the Bank pays the lowest 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 in account off-


                                       14


<PAGE>


balance  sheet  exposure  in  assessing   capital   adequacy  and  it  minimizes
disincentives to holding liquid, low risk assets. At March 31, 2002, the Company
had a total  risk-based  capital ratio of 16.45%  compared to 16.21% at December
31, 2001. The leverage ratio at March 31, 2002 was 7.58% which compares to 7.87%
at December 31, 2001. These capital ratios  substantially  exceed all applicable
requirements for "well capitalized"  institutions as established by Federal Bank
supervisory standards.

Maintaining  strong  capital is  essential  to bank safety and  soundness  which
influence customer confidence, potential investors, regulators and shareholders.
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,  meeting  regulatory  requirements
and being consistent with prudent industry  practices.  Management believes that
the capital  ratios of the Company and Bank are adequate to continue to meet the
foreseeable capital needs of the institution.

Liquidity
---------

The Bank's  Asset/Liability  Management  Committee  which operates in accordance
with  policies  established  and  reviewed  by the  Bank's  Board of  Directors,
implements  and monitors  compliance  with these  policies  regarding the Bank's
asset/liability   management  practices  with  regard  to  interest  rate  risk,
liquidity  and  capital.  Interest  rate risk  measures the  sensitivity  of the
Company's  income to short and long term changes in interest  rates.  One of the
primary  objectives of the  Committee is to manage the  Company's  interest rate
risk and control  the  sensitivity  of earnings to changes in interest  rates in
order to improve net interest income and interest rate margins and to manage the
maturities and interest rate  sensitivities of assets and liabilities.  At March
31, 2002, the Company's interest rate position was "asset sensitive". Therefore,
an increase in interest  rates  would  generally  have the effect of  increasing
income  as  the  Bank's  assets  reprice  more  quickly  than  its  liabilities.
Alternatively,  a  decrease  in  interest  rates  would  likely  have a somewhat
detrimental  effect on income as assets  reprice to such rates more quickly than
liabilities.  However,  the level of  interest  rate risk is within  the  limits
approved  by the Board of  Directors.  Management  of  liquidity  is designed to
provide for the Bank's cash needs at a reasonable  cost. These needs include the
withdrawal of deposits on demand or at maturity,  the repayment of borrowings as
they mature and lending opportunities.  The Company's subsidiary, Salisbury Bank
and Trust  Company  is a member of the  Federal  Home  Loan  Bank  system  which
provides  credit  to its  members.  This  enhances  the  liquidity  position  by
providing a source of available  borrowings.  At March 31, 2002, the Company had
approximately  $26,130,000 in loan commitments and unadvanced funds outstanding.
Management believes that the Company has ample liquidity to meet its present and
foreseeable needs.

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

This Form 10-QSB 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 there
     effect on the  economy in general  and on the  markets in which the Company
     and the Bank do business, and

(b)  expectations  for increased  revenues and earnings for the Company and Bank
     through growth resulting from  acquisitions,  attraction of new deposit and
     loan customers and the introduction of new products and services.

Such forward-looking  statements are based on assumptions rather than historical
or current facts and, therefore,  are inherently  uncertain and subject to risk.
Forth 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's and Bank's business include the following:


                                       15


<PAGE>


(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 an regulatory environment 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.

                           Part II - OTHER INFORMATION

Item 1. - Legal Proceedings-Not applicable

Item 2. - Changes in Securities and Use of Proceeds-Not applicable

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 and Reports on Form 8-K


a.       Exhibits - None

b.       Reports on Form 8-K:

         The Company filed a Form 8-K on February 28, 2002 to report that the
         Company's Board of Directors declared a quarterly cash dividend of $.22
         per share to be paid on April 26, 2002 to shareholders of record as of
         March 29, 2002.


                                       16


<PAGE>


                             SALISBURY BANCORP, INC.

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 13, 2002                    by:  /s/ John F. Perotti
               ------------                    ------------------------------
                                               John F. Perotti
                                               President/Chief Executive Officer

         Date: May 13, 2002                    by:  /s/ John F. Foley
               ------------                    ------------------------------
                                               John F. Foley
                                               Chief Financial Officer