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, 2005
                               ------------------------------

                                       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 an accelerated filer.
                                                Yes |_| No |X|

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

  Indicate the number of shares outstanding of each of the issuer's classes of
    common stock, as of the latest practicable date: as of April 26, 2005,
                    there were 1,682,401 shares outstanding.
                               -----------------------------

                                       1
<PAGE>
<TABLE>
<CAPTION>
                                    SALISBURY BANCORP, INC.

                                      TABLE OF CONTENTS



Part I. FINANCIAL INFORMATION                                                                       Page
<S>                                                                                                  <C>
Item 1.  Financial Statements:                                                                        3

         Condensed Consolidated Balance Sheets -March 31, 2005 (unaudited)
                                      and December 31, 2004                                           4
         Condensed Consolidated Statements of Income -three months ended March 31, 2005
                                      and 2004  (unaudited)                                           5
         Condensed Consolidated Statements of Cash Flows-three months ended March 31, 2005
                                      and 2004 (unaudited)                                            6

         Notes to Condensed Consolidated Financial Statements (unaudited)                             8

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations       11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                  17

Item 4.  Controls and Procedures                                                                     18


Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                           18

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 18

Item 3.  Defaults Upon Senior Securities                                                             18

Item 4.  Submission of Matters to a Vote of Security Holders                                         18

Item 5.  Other Information                                                                           18

Item 6.  Exhibits                                                                                    18

Signatures                                                                                           19

</TABLE>


                                              2
<PAGE>




                         Part I-- FINANCIAL INFORMATION
                          Item 1. Financial Statements




                                       3
<PAGE>
                             SALISBURY BANCORP, INC.
                             -----------------------

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------
                  (amounts in thousands, except per share data)
                      March 31, 2005 and December 31, 2004
                      ------------------------------------
<TABLE>
<CAPTION>
                                                                                March 31     December 31
                                                                                  2005          2004
                                                                                  ----          ----
ASSETS                                                                         (unaudited)
------
<S>                                                                             <C>          <C>
Cash and due from banks                                                         $   6,708    $   7,284
Interest bearing demand deposits with other banks                                   1,222        1,181
Money market mutual funds                                                             992          942
Federal funds sold                                                                    845        2,271
                                                                                ---------    ---------
Cash and cash equivalents                                                           9,767       11,678
Investments in available-for-sale securities (at fair value)                      151,669      178,655
Investments in held-to-maturity securities (fair values of $215,000 as of
   March 31, 2005 and $220,000 as of December 31, 2004)                               214          218
Federal Home Loan Bank stock, at cost                                               5,413        5,413
Loansheld-for-sale                                                                      0          375
Loans, less allowance for loan losses of $2,591,000 as of March 31, 2005
   and $2,512,000 as of December 31, 2004                                         202,943      201,978
Investment in real estate                                                              75           75
Premises and equipment                                                              6,431        5,934
Goodwill                                                                            9,509        9,509
Core deposit intangible                                                             1,781        1,822
Accrued interest receivable                                                         1,895        2,257
Cash surrender value of life insurance policies                                     3,323        3,294
Due from broker                                                                     1,090            0
Other assets                                                                        2,198        1,893
                                                                                ---------    ---------
           Total assets                                                         $ 396,308    $ 423,101
                                                                                =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
   Noninterest-bearing                                                          $  61,802    $  65,017
   Interest-bearing                                                               233,002      233,825
                                                                                ---------    ---------
   Total deposits                                                                 294,804      298,842
Federal Home Loan Bank advances                                                    58,739       79,213
Due to broker                                                                           0        1,083
Other liabilities                                                                   2,453        3,263
                                                                                ---------    ---------
           Total liabilities                                                      355,996      382,401
                                                                                ---------    ---------
Stockholders' equity:
   Common stock, par value $.10 per share; authorized 3,000,000 shares;
     issued and outstanding, 1,682,401 shares at March 31, 2005 and 1,682,401
     at December 31, 2004                                                             168          168
   Paid-in capital                                                                 13,032       13,032
   Retained earnings                                                               29,130       28,223
   Accumulated other comprehensive loss                                            (2,018)        (723)
                                                                                ---------    ---------
           Total stockholders' equity                                              40,312       40,700
                                                                                ---------    ---------
               Total liabilities and stockholders' equity                       $ 396,308    $ 423,101
                                                                                =========    =========
</TABLE>

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

                                       4
<PAGE>

                             SALISBURY BANCORP, INC.
                             -----------------------

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   -------------------------------------------
                  (amounts in thousands, except per share data)
                             March 31, 2005 and 2004
                             -----------------------
                                   (unaudited)
                                   -----------

                                                                 2005     2004
                                                                ------   ------
Interest and dividend income:
   Interest and fees on loans                                   $3,210   $2,163
   Interest on debt securities:
    Taxable                                                      1,102    1,022
     Tax-exempt                                                    656      532
   Dividends on equity securities                                   48       26
   Other interest                                                   18       12
                                                                ------   ------
         Total interest and dividend income                      5,034    3,755
                                                                ------   ------
Interest expense:
   Interest on deposits                                            908      619
   Interest on Federal Home Loan Bank advances                     737      650
                                                                ------   ------
         Total interest expense                                  1,645    1,269
                                                                ------   ------
         Net interest and dividend income                        3,389    2,486
Provision for loan losses                                           90       60
                                                                ------   ------
         Net interest and dividend income after provision for
           loan losses                                           3,299    2,426
                                                                ------   ------
Noninterest income:
   Trust Department income                                         388      354
   Service charges on deposit accounts                             144      145
   Gain on sales of available-for-sale securities, net             486      356
   Gain on sales of loans held-for-sale                             91       51
   Other income                                                    280      186
                                                                ------   ------
         Total noninterest income                                1,389    1,092
                                                                ------   ------
Noninterest expense:
   Salaries and employee benefits                                1,808    1,262
   Occupancy expense                                               186       90
   Equipment expense                                               187      131
   Trust department expense                                         96       49
   Data processing                                                 197      151
   Insurance                                                        40       29
   Printing and stationery                                          59       45
   Professional fees                                                74       57
   Legal expense                                                    26       25
   Amortization of core deposit intangible                          41       17
   Other expense                                                   312      221
                                                                ------   ------
         Total noninterest expense                               3,026    2,077
                                                                ------   ------
         Income before income taxes                              1,662    1,441
Income taxes                                                       333      369
                                                                ------   ------
         Net income                                             $1,329   $1,072
                                                                ======   ======

Earnings per common share                                       $  .79   $  .75
                                                                ======   ======

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

                                       5
<PAGE>

                             SALISBURY BANCORP, INC.
                             -----------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                   Three months ended March 31, 2005 and 2004
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                 2005        2004
                                                                 ----        ----
<S>                                                            <C>         <C>
Cash flows from operating activities:
   Net income                                                  $  1,329    $  1,072
Adjustments to reconcile net income to net cash provided by
       operating activities:
         Amortization of securities, net                             79          60
         Gain on sales of available-for-sale securities, net       (486)       (356)
         Provision for loan losses                                   90          60
         Change in loans held-for-sale                              375          67
         Depreciation and amortization                              126          17
         Amortization of core deposit intangible                     41           0
         Amortization of fair value adjustments, net                 13          12
         Decrease in interest receivable                            357           0
         Increase in prepaid expenses                              (101)        (57)
         (Increase) decrease in other assets (848) 128
         Increase (decrease) in taxes payable                       217        (457)
         Decrease in accrued expenses                              (374)       (333)
         (Decrease) increase in interest payable                    (31)         19
         Increase in other liabilities                              790         516
                                                               --------    --------

Net cash provided by operating activities                         1,577         748
                                                               --------    --------

Cash flows from investing activities:
  Purchase of Federal Home Loan Bank stock                            0         (97)
  Purchases of available-for-sale securities                    (25,750)    (50,317)
  Proceeds from sales of available-for-sale securities           25,877      22,335
  Proceeds from maturities of available-for-sale securities      22,975       9,112
  Proceeds from maturities of held-to-maturity securities             4          49
  Loan originations and principal collections, net               (1,106)      1,380
  Recoveries of loans previously charged-off                          5           2
  Capital expenditures                                             (615)       (103)
                                                               --------    --------

Net cash provided by (used in) investing activities              21,390     (17,639)
                                                               --------    --------
</TABLE>

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

                                       6
<PAGE>

                             SALISBURY BANCORP, INC.
                             -----------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                   Three months ended March 31, 2005 and 2004
                                   (unaudited)
                                   (continued)
<TABLE>
<CAPTION>

                                                                  2005        2004
                                                                  ----        ----
<S>                                                              <C>          <C>
Cash flows from financing activities:
   Net decrease in demand deposits, NOW and
       savings accounts                                           (1,828)     (2,423)
   Net (decrease) increase in time deposits                       (2,204)      2,535
   Federal Home Loan Bank advances                                     0      15,000
   Principal payments on advances from Federal Home Loan Bank    (20,442)       (262)
   Dividends paid                                                   (404)       (328)
                                                                --------    --------

Net cash (used in) provided by financing activities              (24,878)     14,522
                                                                --------    --------

Net decrease  in cash and cash equivalents                        (1,911)     (2,369)
Cash and cash equivalents at beginning of year                    11,678      12,129
                                                                --------    --------
Cash and cash equivalents at end of period                      $  9,767    $  9,760
                                                                ========    ========

Supplemental disclosures:
   Interest paid                                                $  1,676    $  1,250
   Income taxes paid                                                 116         130

</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  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.. SBT Mortgage Service Corporation
(the  "PIC")  formed in April  2004 and CNB  Insurance  Agency,  Inc.  (acquired
September 10, 2004). The consolidated 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, 2005 are not  necessarily  indicative  of the
results  that may be  expected  for the year ending  December  31,  2005.  These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's 2004 Annual Report on Form 10-K.

On September 10, 2004 Canaan  National  Bancorp,  Inc.  merged with and into the
Company.  The merger was accounted for using the purchase  method of accounting.
Accordingly,  the assets acquired and liabilities  assumed have been recorded by
the Company at their fair values at the consummation date.  Financial  statement
amounts  for  Canaan  National  Bancorp,  Inc.  are  included  in the  Company's
consolidated financial statements.

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

Comprehensive Income
                                   Three months ended
                                        March 31
                                    2005        2004
                                    ----        ----
                                 (amounts in thousands)

Net income                        $ 1,329      $ 1,072
Net unrealized (losses) gains
 on securities during period       (1,295)         808
                                  -------      -------
Comprehensive income              $    34      $ 1,880
                                  =======      =======

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

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable  Interest  Entities"  ("FIN  46"),  in an  effort  to  expand  upon and
strengthen  existing  accounting  guidance that  addresses when a company should
include in its financial  statements the assets,  liabilities  and activities of
another entity. In December 2003, the FASB revised  Interpretation  No. 46, also
referred  to as  Interpretation  46 (R) ("FIN  46(R)").  The  objective  of this
interpretation  is not to restrict the use of variable  interest entities but to
improve  financial  reporting  by  companies  involved  with  variable  interest
entities.  Until now, one company  generally has included  another entity in its
consolidated  financial  statements  only if it  controlled  the entity  through
voting  interests.  This  interpretation  changes  that by  requiring a variable
interest  entity to be consolidated by a company only if that company is subject
to a majority of the risk of loss from the variable interest entity's activities
or entitled to receive a majority of the

                                       8
<PAGE>

entity's  residual  returns or both. The Company is required to apply FIN 46, as
revised,  to all  entities  subject  to it no later  than  the end of the  first
reporting  period  ending after March 15, 2004.  However,  prior to the required
application of FIN 46, as revised,  the Company shall apply FIN 46 or FIN 46 (R)
to those entities that are considered to be  special-purpose  entities as of the
end of the first fiscal year or interim  period ending after  December 15, 2003.
The  adoption  of this  interpretation  did not have an impact on the  Company's
consolidated financial statements.

In  December  2003,  the FASB issued SFAS No. 132  (revised  2003),  "Employers'
Disclosures about Pensions and Other  Postretirement  Benefits - an amendment of
SFAS No. 87, SFAS No. 88 and SFAS No. 106" ("SFAS No. 132 (revised 2003)"). This
Statement  revises   employers'   disclosures  about  pension  plans  and  other
postretirement  benefit plans. It does not change the measurement or recognition
of those plans  required by SFAS No. 87,  "Employers'  Accounting for Pensions,"
SFAS No. 88, "Employers'  Accounting for Settlements and Curtailments of Defined
Benefit  Pension  Plans  and  for  Termination  Benefits,"  and  SFAS  No.  106,
"Employers'  Accounting for  Postretirement  Benefits Other Than Pensions." This
Statement  retains  the  disclosure  requirements  contained  in SFAS  No.  132,
"Employers' Disclosures About Pensions and Other Postretirement Benefits," which
it  replaces.  It  requires  additional  disclosures  to those  in the  original
Statement 132 about  assets,  obligations,  cash flows and net periodic  benefit
cost of defined benefit  pension plans and other defined benefit  postretirement
plans.  This Statement is effective for financial  statements  with fiscal years
ending after December 15, 2003 and interim periods  beginning after December 15,
2003. Adoption of this Statement did not have a material impact on the Company's
consolidated financial statements.

In December  2003,  the  American  Institute  of  Certified  Public  Accountants
("AICPA") issued Statement of Position 03-3 ("SOP 03-3") "Accounting for Certain
Loans or Debt  Securities  Acquired  in a  Transfer."  SOP 03-3  requires  loans
acquired  through a transfer,  such as a business  combination,  where there are
differences  in expected  cash flows and  contractual  cash flows due in part to
credit quality be recognized at their fair value. The excess of contractual cash
flows over  expected  cash flows is not to be  recognized  as an  adjustment  of
yield,  loss accrual,  or valuation  allowance.  Valuation  allowances cannot be
created nor "carried  over" in the initial  accounting  for loans  acquired in a
transfer on loans subject to SFAS 114,  "Accounting  by Creditors for Impairment
of a Loan." This SOP is effective for loans  acquired in fiscal years  beginning
after December 15, 2004,  with early adoption  encouraged.  The Company does not
believe the  adoption of SOP 03-3 will have a material  impact on the  Company's
financial position or results of operations.

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payments"  ("SFAS  123R").  This  Statement  revises  FASB  Statement  No.  123,
"Accounting  for Stock Based  Compensation"  and  supersedes APB Opinion No. 25,
"Accounting  for Stock  Issued to  Employees,"  and its  related  implementation
guidance.  SFAS  123R  requires  that the cost  resulting  from all  share-based
payment transactions be recognized in the consolidated financial statements.  It
establishes   fair  value  as  the  measurement   objective  in  accounting  for
share-based payment arrangements and requires all entities to apply a fair-value
based measurement method in accounting for share-based payment transactions with
employees except for equity  instruments held by employee share ownership plans.
This  Statement  was  effective for the Company as of the beginning of the first
interim or annual  reporting  period that begins after June 15,  2005.  However,
since the issuance of SFAS 123R, the SEC has delayed the effective date. The new
effective  date is January 1, 2006. The Company does not believe the adoption of
this Statement will have a material impact on the Company's  financial  position
or results of operations.

                                       9
<PAGE>

NOTE 4 -  DEFINED BENEFIT PENSION PLAN
--------------------------------------

The  following  summarizes  the net  periodic  benefit cost for the three months
March 31:

                                                   Three Months Ended
                                                     March 31, 2005
                                                     --------------
Components of net periodic benefit cost:
   Service cost                                        $  83,542
   Interest cost                                          60,930
   Expected return on plan assets                        (50,228)
   Amortization of:
      Prior service costs                                    223
      Transition obligation (asset)                          693
      Actuarial (gain) loss                               17,412
Settlements and curtailments                                   0
                                                       ---------
Net periodic benefit cost                              $ 112,572
                                                       =========


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

   Discount rate                                           6.00%
   Average wage increase                          Graded table%*
   Return on plan assets                                   7.25%


The Company  changed  actuary for the pension  plan during the first  quarter of
2004. Information for the first quarter of 2004 10Q was not made available.

* 5%  at  age  20  grading  down  to 3% at  age  60  and  beyond  (effective  to
approximately 3.25%)

                                       10
<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 and Bank were formed in 1998 and 1848,  respectively,
and the Company's  sole  subsidiary is the Bank,  which has six (6) full service
offices,  including  a Trust  Department,  located  in the  towns of  Lakeville,
Salisbury,  Sharon  and  North  Canaan,  Connecticut  and  Sheffield  and  South
Egremont,  Massachusetts.  The sixth branch in Sheffield,  Massachusetts  opened
March 14, 2005. 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 the Company's Annual Report on Form 10-K for
the year ended December 31, 2004.

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

The  Company's  net  income  for the  three  months  ended  March  31,  2005 was
$1,329,000. This compares to earnings of $1,072,000 for the same period in 2004.
Earnings  per share for the three  months  ended March 31, 2005 totaled $.79 per
share which compared to earnings per share of $.75 for the corresponding  period
in 2004.  The increase is primarily the result of an increase in earning  assets
resulting from the merger with Canaan  National  Bancorp.  Inc. on September 10,
2004. The Company's  assets at March 31, 2005 totaled  $396,308,000 and compares
to total assets of  $423,101,000 at December 31, 2004. The decrease is primarily
attributable to a reduction in the securities  portfolio.  Non-performing  loans
totaled  $2,278,000  at March 31,  2005 and  compares  to  non-performing  loans
totaling  $2,267,000  at December 31,  2004.  Deposits at March 31, 2005 totaled
$294,804,000 as compared to total deposits of $298,842,000 at December 31, 2004.
The decrease is primarily attributable to normal seasonal cash flows.

As a result of the Company's first quarter financial  performance,  the Board of
Directors  declared a first  quarter  cash  dividend  of $.25 per common  share,
payable  April 27, 2005 to  shareholders  of record as of March 31,  2005.  This
compares to a cash dividend of $.24 per common share that was paid for the first
quarter of 2004.

The Company's  risk-based  capital  ratios at March 31, 2005,  which include the
risk weighted assets and capital of the Bank, were 12.57% for tier 1 capital and
13.69% for total risk based capital.  The Company's  leverage ratio was 8.82% at
March 31, 2005.

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."

                                       11
<PAGE>

                        THREE MONTHS ENDED MARCH 31, 2005
                AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2004

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 portfolios and interest
paid on  deposits  and  advances  from the Federal  Home Loan Bank.  Noninterest
income is primarily derived from the Trust Department, service charges and other
fees  related to deposit and loan  accounts  and from gains taken 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                    2005            2004
                                               ----            ----
Total Interest and Dividend Income            $5,034          $3,755
(financial statements)
Tax Equivalent Adjustment                        338             274
                                              ------          ------
Total Interest and Dividend Income
      (on an FTE basis)                        5,372           4,029
Total Interest Expense                         1,645           1,269
                                              ------          ------
Net Interest and Dividend Income-FTE          $3,727          $2,760
                                              ======          ======

Total  interest  and  dividend  income on a FTE basis for the three months ended
March 31, 2005, as compared to the same period in 2004,  increased $1,343,000 or
approximately  33.3%. The increase was primarily  attributable to an increase in
earning assets as well as an economic  environment  experiencing  an increase in
interest rates.

Interest  expense  on  deposits  for the  first  three  months  of 2005  totaled
$908,000,  an  increase  of 46.7%  compared  to the same  period  in 2004.  This
increase is primarily the result of an increase in deposits  resulting  from the
merger with  Canaan  National  Bancorp,  Inc.  in  September  2004 as well as an
economic  environment of generally  higher interest rates.  Interest  expense on
Federal  Home Loan Bank  advances  increased  $87,000 when  comparing  the first
quarter  of  2005 to  2004.  Although  Federal  Home  Loan  Bank  advances  have
decreased,  when  comparing  March 31, 2005 to December  31,  2004,  the closing
balance at March 31, 2005  reflects the lowest  total of advances  taken for the
first quarter.  In addition,  borrowing rates on advances acquired in connection
with the Canaan National  Bancorp,  Inc. are generally  higher than those of the
Company.  Total interest  expense for the three months ending March 31, 2005 was
$1,645,000, an increase of $376,000 or 29.6% when compared to the same period in
2004.

Overall,  net interest and dividend income (on an FTE basis) increased  $967,000
or 35.0% to $3,727,000  for the period ended March 31, 2005 when compared to the
same period in 2004.

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

Noninterest income totaled $1,389,000 for the three months ended March 31, 2005.
This is an  increase of $297,000  or 27.2%  compared to the three  months  ended
March 31, 2004.  Continuing  growth of the Trust  Department  has resulted in an
increase in Trust Department income of $34,000 or 9.6% to $388,000 for the first
three  months of 2005,  compared to the same  period in 2004.  Gains on sales of
available-for-sale  securities  increased  36.5% to $486,000 for the first three
months of 2005 compared to the  corresponding  period in 2004.  This increase is
primarily  attributable to  management's  efforts to maximize the spreads in the
portfolio.  During the three  month  period  ended  March 31,  2005,  there were
opportunities  in the  market  that  resulted  in  taking  gains on sales  while
increasing the yields in the portfolio at the same time. Service charges totaled
$144,000 on deposit  accounts and was  consistent  when comparing 2005 and 2004.
Gains on sale of loans  held-for-sale  increased $40,000 or 78.4% to $91,000 for
the first three months of 2005.  The increase is  primarily  attributable  to an
increase in secondary mortgage market activity during the quarter.  Other income
increased   $94,000   or  50.5%  to  $280,000  in   2005  compared  to  $186,000

                                       12
<PAGE>

for the  corresponding  period in 2004.  The increase is primarily the result of
increased activity in the secondary mortgage market business.

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

Noninterest  expense  increased  45.7%  for the  first  three  months of 2005 as
compared to the same period in 2004. The increases in the  noninterest  expenses
listed in the table  below are all  primarily  attributable  to the merger  with
Canaan  National  Bancorp,  Inc. The components of  noninterest  expense and the
changes in the period were as follows (amounts in thousands):

                                            2005      2004     Change   % Change
--------------------------------------------------------------------------------
Salaries and employee benefits             $1,808    $1,262    $  546      43.3%
Occupancy expense                             186        90        96     106.7
Equipment expense                             187       131        56      42.8
Trust Department                               96        49        47      95.9
Data processing                               197       151        46      30.5
Insurance                                      40        29        11      37.9
Printing and stationery                        59        45        14      31.1
Professional fees                              74        57        17      29.8
Legal expense                                  26        25         1       4.0
Amortization of core deposit intangible        41        17        24     141.2
Other expense                                 312       221        91      41.2
                                           ------    ------    ------     -----
       Total other expense                 $3,026    $2,077    $  949      45.7%
                                           ======    ======    ======     =====

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

The income tax provision for the first three months of 2005 totaled  $333,000 in
comparison to $369,000 for the same three month period in 2004.  Although income
before taxes increased, there was a decrease in taxable income. In addition, the
Company  formed a passive  investment  company  in 2004.  A  passive  investment
company's  structure  is such that income  earned  results in a reduction of tax
liability for the Company.

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

Overall,  net income  totaled  $1,329,000  for the three  months ended March 31,
2005.  This compares to net income of $1,072,000 for the same period in 2004, an
increase  of 24% and  represents  earnings of $.79 per share.  This  compares to
earnings per share of $.75 for the corresponding period in 2004. The increase in
net income is primarily  the result of an increase in earning  assets  resulting
from the merger with Canaan National Bancorp, Inc.

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

Total assets at March 31, 2005 were  $396,308,000,  compared to  $423,101,000 at
December 31, 2004, a decrease of 6.3%.  The decrease is primarily  the result of
sales and calls of  available-for-sale  securities in the  portfolio  during the
quarter.

Securities
----------

During  the  three  months  ended  March 31,  2005,  the  securities  portfolio,
including  Federal  Home  Loan Bank  stock,  decreased  $26,990,000  or 14.7% to
$157,296,000  from  $184,286,000 at December 31, 2004. The decrease is primarily
the result of portfolio securities being sold and called during the quarter. 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
gains and losses on holdings  (accumulated other comprehensive  income/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,  2005,  the
unrealized loss net of tax was  $2,018,000.  This compares to an unrealized loss
net of tax of $723,000  at December  31,  2004.  The decline in market  price is

                                       13
<PAGE>

primarily  attributable to accelerated  prepayments on the underlying collateral
and the changes in market  interest rates. As management has the ability to hold
securities until maturity, or for the foreseeable future, no declines are deemed
to  be  other  than   temporary.   The   securities   reported   as   securities
held-to-maturity are stated at amortized cost.

Lending
-------

New  business  development  during  the first  quarter  of 2005  resulted  in an
increase in total loans  outstanding  to  $205,534,000  at March 31, 2005.  This
compares to total loans  outstanding of  $204,490,000 at December 31, 2004. This
is an increase of $1,044,000.

The following table  represents the composition of the loan portfolio  comparing
March 31, 2005 to December 31, 2004:

                                           March 31, 2005   December 31, 2004
                                           --------------   -----------------
                                                (amounts in thousands)
Commercial, financial and agricultural        $  14,930         $  15,127
Real Estate- construction and land
     development                                 15,468            14,290
Real Estate- residential                        129,208           130,414
Real Estate- commercial                          37,109            35,487
Consumer                                          8,772             9,122
Other                                                63                69
                                              ---------         ---------
                                                205,550           204,509
Unearned income                                     (16)              (19)
Allowance for loan losses                        (2,591)           (2,512)
                                              ---------         ---------
Loans, net                                    $ 202,943         $ 201,978
                                              =========         =========

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

Net loans at March 31, 2005 increased to $202,943,000 when compared to net loans
of $201,978,000 at December 31, 2004. At March 31, 2005 approximately 88% of the
Bank's loan  portfolio was related to real estate  products.  The  concentration
remained  consistent as  approximately  88% of the portfolio was related to real
estate at December 31, 2004.  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 Bank  monitors
the quality of the  portfolio to ensure that loan quality will not be sacrificed
for growth or otherwise  compromise the Bank's  objectives.  Because of the risk
associated with extending loans, the Bank maintains an allowance for loan losses
through charges to earnings.  The loan loss provision for the three-month period
ended March 31, 2005 was $90,000 compared to $60,000 in the comparable period of
2004.

The Bank evaluates 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, 2005. Such
evaluations  are based on  assessments  of credit  quality and "risk  rating" of
loans by senior management, which are submitted to the Bank's 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 ("SFAS No.  114").  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.  Any such
commercial loans and residential mortgages will be considered impaired under any
of the following  circumstances:

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

                                       14
<PAGE>

      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 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 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
three months ended March 31, 2005.

At  March  31,  2005,  the  allowance  for  loan  losses   totaled   $2,591,000,
representing 113.7% of nonperforming  loans, which totaled $2,278,000,  and 1.3%
of total loans of $205,550,000. This compares to an allowance for loan losses of
$2,512,000,   representing   110.8%  of  nonperforming   loans,   which  totaled
$2,267,000,  and 1.1% of total loans of  $204,509,000  at December  31,  2004. A
total of $15,000 of loans were  charged off by the Bank during the three  months
ended March 31, 2005. These  charged-off  loans consisted  primarily of consumer
loans.  This  compares to loans  charged off during the three month period ended
March  31,  2004  which  totaled  $18,000.  A  total  of  $5,000  of  previously
charged-off  loans was  recovered  during the three month period ended March 31,
2005.  Recoveries for the same period in 2004 totaled $2,000.  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, 2005 and December 31, 2004:

                          March 31, 2005       December 31, 2004
                          --------------       -----------------
                                  (amounts in thousands)

Demand                       $ 61,802               $ 65,017
NOW                            26,563                 29,569
Money Market                   50,737                 49,206
Savings                        66,450                 63,588
Time                           89,252                 91,462
                             --------               --------
Total Deposits               $294,804               $298,842
                             ========               ========

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,  2005,  the  Company  had  $58,739,000  in
outstanding  advances from the Federal Home Loan Bank compared to $79,213,000 at
December 31, 2004.  Management has reduced the balance of  outstanding  advances
during the first  quarter  of 2005,  however,  this  strategy  of  supplementing
deposit growth with advances from the Federal Home Loan Bank will continue.

                                       15
<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,  it is important  that the Bank maintain an
appropriate  process and set of  measurement  tools to enable it to identify and
quantify its primary  sources of interest  rate risk.  The Bank also  recognizes
that  effective  management of interest rate risk  includes  understanding  when
potential  changes in interest  rates will flow through the earnings  statement.
Accordingly,  the Bank manages its position in order to monitor both  short-term
and long-term interest rate exposure. The primary tool used in managing interest
rate risk in this manner will be the income  simulations  which will be utilized
to quantify the potential  impact on earnings and capital of changes in interest
rates.  The level of  interest  rate risk at March 31, 2005 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, 2005 the Company had approximately  $50,610,000 in loan commitments
outstanding. Management believes that the current level of liquidity is adequate
to meet the Company's needs for both the present and foreseeable future.

Capital
-------

At March 31, 2005, the Company had $40,312,000 in shareholders' equity. Earnings
for the three  month  period  ended March 31, 2005  totaled  $1,329,000.  Market
conditions  resulted in an increase in accumulated other  comprehensive  loss of
$1,295,000.  A review and analysis of such  securities has determined that there
has been no credit deterioration and that the market price decline is due to the
current interest rate environment.  Per Management, no securities were deemed to
be other than  temporarily  impaired.  The Company has declared a first  quarter
dividend in 2005  resulting in a decrease in capital of $421,000.  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, 2005, the Company had a total risk-based
capital  ratio of 12.13%  compared to 12.13% at December 31,  2004.  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.

                                       16
<PAGE>

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 they 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's 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  environment  that  negatively
      impact the Company  and Bank  through  increased  operating  expenses  and
      capital requirements;
(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.

       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 gap, which is the difference  between
the amount of assets  and the  amounts of  liabilities  which  mature or reprice
during  specific  time  frames.  Model  simulation  is used to measure  earnings
volatility under both rising and falling rate scenarios.  The Company's interest
rate risk and  liquidity  position has not  significantly  changed from year end
2004. (See discussion regarding Interest Rate Risk above.)

                                       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, 2005,  the Company's  disclosure
controls and procedures are effective 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.  During the three
month  period  ended  March 31,  2005 there  were no  changes  in the  Company's
internal control over financial  reporting that has materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.


                           Part II - OTHER INFORMATION

Item 1. - Legal Proceedings.  Not applicable

Item 2. - Unregistered  Sales of Equity  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


            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.


                                       18
<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 11, 2005                        by:  /s/ John F. Perotti
      ------------                             -------------------
                                               John F. Perotti
                                               President/Chief Executive Officer

Date: May 11, 2005                        by: /s/ John F. Foley
      ------------                            ----------------------------
                                              John F. Foley
                                              Chief Financial Officer





                                       19