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                 September 30, 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
Incorporation or Organization)              (I.R.S. Employer Identification No.)

   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 November 1, 2002
                                    1,423,238
                                    ---------

                                       1

<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 -September 30, 2002 (unaudited)
                                                 and December 31, 2001                                        4
         Condensed Consolidated Statements of Income -three and nine months ended
                                           September 30, 2002 and 2001                                        5
                                           (unaudited)
         Condensed Consolidated Statements of Cash Flows -nine months ended September 30, 2002 and 2001       6
                                           (unaudited)

         Notes to Consolidated Financial Statements                                                           8

Item 2.  Management"s Discussion and Analysis                                                                12

Item 3.  Controls and Procedures                                                                             20

Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                   21

Item 2.  Changes in Securities and Use of Proceeds                                                           21

Item 3.  Defaults Upon Senior Securities                                                                     21

Item 4.  Submission of Matters to a Vote of Security Holders                                                 21

Item 5.  Other Information                                                                                   21

Item 6.  Exhibits and Reports on Form 8-K                                                                    21

Signatures                                                                                                   22

Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                     23
</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)
                                                                         SEPTEMBER 30,   DECEMBER 31,
                                                                             2002            2001
                                                                             ----            ----
                                                                          (unaudited)
<S>                                                                       <C>             <C>
ASSETS
   Cash & due from banks:
      Non-Interest Bearing                                                $   5,793       $   7,184
      Interest Bearing                                                           85             258
   Federal funds sold                                                             0          18,150
   Money market mutual funds                                                    527             618
                                                                          ---------       ---------
         Cash and cash equivalents                                            6,405          26,210
   Investment Securities:
      Held to maturity securities at amortized cost                             324             400
      Available-for-sale securities at market value                         129,853         102,248
   Federal Home Loan Bank stock, at cost                                      2,945           2,945
   Loans:
      Commercial, financial and agricultural                                  9,269          10,797
      Real estate-construction and land development                           4,653           3,935
      Real estate-residential                                                98,860         102,201
      Real estate-commercial                                                 17,258          17,423
      Consumer                                                                8,436          10,030
      Other                                                                     190             125
      Allowance for loan losses                                              (1,383)         (1,445)
                                                                          ---------       ---------
         Net loans                                                          137,283         143,066
   Bank premises & equipment                                                  2,774           2,683
   Investment in real estate                                                     75              75
   Accrued interest receivable                                                1,851           1,681
   Intangible assets on branch acquisition                                        0           3,227
   Goodwill                                                                   2,358               0
   Core deposit intangible                                                      817               0
   Due from broker                                                              477               0
   Other assets                                                                 455           1,067
                                                                          ---------       ---------
Total Assets                                                              $ 285,617       $ 283,602
                                                                          =========       =========
LIABILITIES AND SHAREHOLDERS' EQUITY
   Deposits:
      Demand                                                              $  35,724       $  37,702
      Savings & NOW                                                          58,987          48,435
      Money Market                                                           40,919          48,897
      Time                                                                   67,118          66,317
                                                                          ---------       ---------
         Total Deposits                                                     202,748         201,351
   Federal Home Loan Bank advances                                           53,151          53,004
   Due to broker                                                                  0           4,204
   Other liabilities                                                          2,733           1,680
                                                                          ---------       ---------
         Total Liabilities                                                  258,632         260,239
                                                                          ---------       ---------
Shareholders' equity:
   Common stock, par value $.10 per share;
      Authorized 3,000,000 shares
      Issued and outstanding shares: 1,423,238 at September 30, 2002            142             142
      and 1,422,358 at December 31, 2001
   Additional paid-in capital                                                 2,304           2,281
   Retained earnings                                                         22,759          21,219
   Accumulated other comprehensive income (loss)                              1,780            (279)
                                                                          ---------       ---------
         Total Shareholders' Equity                                          26,985          23,363
                                                                          ---------       ---------
Total Liabilities and Shareholders' Equity                                $ 285,617       $ 283,602
                                                                          =========       =========
</TABLE>

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

                                       4

<PAGE>


                             SALISBURY BANCORP, INC.
                             -----------------------
<TABLE>
<CAPTION>
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (amounts in thousands, except per share data)
                           September 30, 2002 and 2001
                                   (unaudited)
                                                                Nine Months Ended        Three Months Ended
                                                                   September 30              September 30
                                                                 2002        2001         2002          2001
                                                                 ----        ----         ----          ----

<S>                                                            <C>          <C>          <C>          <C>
Interest and dividend income:
   Interest and fees on loans                                  $ 7,373      $ 8,590      $ 2,366      $ 2,842
Interest and dividends on securities:
   Taxable                                                       3,070        3,147        1,062        1,043
   Tax-exempt                                                    1,488          687          523          254
 Dividends on equity securities                                    144          161           72           47
Other interest                                                      97          239           25          124
                                                               -------      -------      -------      -------
Total interest and dividend income                              12,172       12,824        4,048        4,310
                                                               -------      -------      -------      -------
 Interest expense:
   Interest on deposits                                          3,145        4,067        1,007        1,290
   Interest on Federal Home Loan Bank advances                   2,143        2,267          720          764
                                                               -------      -------      -------      -------
         Total interest expense                                  5,288        6,334        1,727        2,054
                                                               -------      -------      -------      -------
         Net interest and dividend income                        6,884        6,490        2,321        2,256
Provision for loan losses                                          112          112           37           37
                                                               -------      -------      -------      -------
         Net interest and dividend income after provision
               for loan losses                                   6,772        6,378        2,284        2,219
                                                               -------      -------      -------      -------
Other income:
   Trust department income                                         767          751          256          240
   Service charges on deposit accounts                             352          353          117          107
   Gain on sale of available-for-sale securities                   465           88          259           45
   Other income                                                    664          543          270          208
                                                               -------      -------      -------      -------
         Total other income                                      2,248        1,735          902          600
                                                               -------      -------      -------      -------
Other expense:
   Salaries and employee benefits                                3,168        2,833        1,056          969
   Occupancy expense                                               225          162           77           47
   Equipment expense                                               361          367          120          121
   Data processing                                                 382          388          129
                                                                                                          135
   Amortization of core deposit intangible                          51            7
                                                                                              17            7
   Other expense                                                 1,444        1,118          481          362
                                                               -------      -------      -------      -------
         Total other expense                                     5,631        4,875        1,880        1,641
                                                               -------      -------      -------      -------
         Income before income taxes                              3,389        3,238        1,306        1,178
Income taxes                                                       909        1,067          328          384
                                                               -------      -------      -------      -------
         Net income                                            $ 2,480      $ 2,171      $   978      $   794
                                                               =======      =======      =======      =======
Earnings per common share outstanding                          $  1.74      $  1.51      $   .69      $   .56
                                                               =======      =======      =======      =======
Earnings per common share outstanding,
 assuming dilution                                             $  1.74      $  1.51      $   .69      $   .56
                                                               =======      =======      =======      =======
Dividends per share                                            $   .66      $   .63      $   .22      $   .21
                                                               =======      =======      =======      =======

</TABLE>

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

                                       5

<PAGE>


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

<TABLE>
<CAPTION>
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                  Nine months ended September 30, 2002 and 2001
                                   (unaudited)

                                                                                 2002           2001
                                                                                 ----           ----
<S>                                                                            <C>            <C>
Cash flows from operating activities:
   Net income                                                                  $  2,480       $  2,171
   Adjustments to reconcile net income to net cash provided by
       operating activities:
         Accretion of securities, net                                               380            (55)
         Gain on sales of available-for-sale securities, net                       (465)           (88)
         Provision for loan losses                                                  112            112
         Depreciation and amortization                                              232            261
         Amortization of core deposit intangible                                     52              7
         Accretion of fair value adjustment on deposits                             (90)           (21)
         (Increase) decrease in interest receivable                                (170)           192
         (Increase) decrease in prepaid expenses                                     46            (68)
         (Increase) decrease in other assets                                        222
                                                                                                    74
         Increase in taxes payable                                                  153              0
         Increase (decrease) in accrued expenses                                    (67)            47
         Decrease in interest payable                                               (28)           (24)
                       Increase (decrease) in other liabilities                      10            (16)
                                                                                -------        -------

Net cash provided by operating activities                                         2,867          2,592

Cash flows from investing activities:
  Purchase of Federal Home Loan Bank stock                                           (0)           (15)
  Purchases of available-for-sale securities                                    (88,594)       (58,599)
  Proceeds from sales of available-for-sale securities                           37,174         40,555
                Proceeds from maturities of available-for-sale securities        22,600         12,330
  Proceeds from maturities of held-to-maturity securities                            68              7
  Net (increase) decrease  in loans                                               5,657          8,037
  Recoveries of loans previously charged-off                                         14            101
  Capital expenditures                                                             (323)          (197)
                                                                                -------        -------
Net cash used in investing activities                                           (23,404)       (13,855)
                                                                                -------        -------
</TABLE>


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

                                       6

<PAGE>



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

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                             (amounts in thousands)
                  Nine months ended September 30, 2002 and 2001
                                   (unaudited)
                                   (continued)
                                                                      2002           2001
                                                                      ----           ----

<S>                                                                <C>            <C>
Cash flows from financing activities:
   Net increase in deposits                                           1,487         23,595
   Advances from Federal Home Loan Bank                               1,005         10,000
   Principal payments on advances from Federal Home Loan Bank          (857)        (4,028)
   Dividends paid                                                      (925)        (1,156)
   Net repurchase of common stock                                        22           (691)
                                                                   --------       --------
   Net cash provided by financing activities                            732         27,720
                                                                   --------       --------
Net decrease in cash and cash equivalents                           (19,805)        16,457
Cash and cash equivalents at beginning of period                     26,210         13,759
                                                                   --------       --------
Cash and cash equivalents at end of period                         $  6,405       $ 32,216
                                                                   ========       ========


Supplemental disclosures:
   Interest paid                                                   $  5,316       $  6,358
   Income taxes paid                                                    680          1,137

</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 nine months  ended
September  30, 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.

<TABLE>
<CAPTION>
Comprehensive Income
                                      Three months ended           Nine months ended
                                         September 30,               September 30,
                                      2002          2001          2002          2001
                                      ----          ----          ----          ----

<S>                                  <C>           <C>           <C>           <C>
Net income                           $  978        $  794        $2,480        $2,171
Net unrealized (losses) gains
 on securities during period            964           625         2,059           931
                                     ------        ------        ------        ------
Comprehensive income                 $1,942        $1,419        $4,539        $3,102
                                     ======        ======        ======        ======

</TABLE>

                                       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>
Nine months ended September 30, 2002
   Basic EPS
      Net income and income available to common stockholders        $2,480         1,423        $   1.74
      Effect of dilutive securities, options                                           0
                                                                    ------         -----
 Diluted EPS
      Income available to common stockholders and assumed
         conversions                                                $2,480         1,423        $   1.74
                                                                    ======         =====
Nine months ended September 30, 2001
   Basic EPS
      Net income and income available to common stockholders        $2,177         1,435        $   1.51
      Effect of dilutive securities, options                                           0
                                                                    ------         -----
   Diluted EPS
      Income available to common stockholders and assumed
         conversions                                                $2,177         1,435        $   1.51
                                                                    ======         =====


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

                                                                   Income        Shares        Per-Share
                                                                 (Numerator)  (Denominator)      Amount
                                                                 -----------  -------------      ------
<S>                                                                 <C>            <C>          <C>
Three months ended September 30, 2002
   Basic EPS
      Net income and income available to common stockholders        $  978         1,423        $   .69
      Effect of dilutive securities, options                                           0
                                                                    ------         -----
   Diluted EPS
      Income available to common stockholders and assumed
         conversions
                                                                    $  978         1,423        $   .69
                                                                    ======         =====
Three months ended September 30, 2001
   Basic EPS
      Net income and income available to common stockholders        $  794         1,424        $   .56
      Effect of dilutive securities, options                                           0
                                                                    ------         -----
   Diluted EPS
      Income available to common stockholders and assumed
         conversions                                                $  794         1,424        $   .56
                                                                    ======         =====
</TABLE>

                                       9


<PAGE>


NOTE 4 - IMPACT OF NEW ACCOUNTING STANDARDS
-------------------------------------------

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.

In October 2002, the FASB issued SFAS No. 147 "Acquisitions of Certain Financial
Institutions",  an Amendment of SFAS Nos. 72 and 144 and FASB Interpretation No.
9. SFAS No.  72  "Accounting  for  Certain  Acquisitions  of  Banking  or Thrift
Institutions" and FASB Interpretation No. 9 "Applying APB Opinions No. 16 and 17
When a Savings and Loan  Association  or a Similar  Institution Is Acquired in a
Business Combination Accounted for by the Purchase Method" provided interpretive
guidance on the  application of the purchase method to acquisitions of financial
institutions.  Except for transactions  between two or more mutual  enterprises,
FASB Statement No. 147 removes  acquisitions of financial  institutions from the
scope  of  both  Statement  72 and  Interpretation  9 and  requires  that  those
transactions  be  accounted  for in  accordance  with FASB  Statements  No.  141
"Business  Combinations"  and No. 142  "Goodwill and Other  Intangible  Assets".
Thus,  the  requirement  in  paragraph  5 of  Statement  72  to  recognize  (and
subsequently  amortize) any excess of the fair value of liabilities assumed over
the fair value of tangible and  identifiable  intangible  assets  acquired as an
unidentifiable  intangible  asset no longer applies to  acquisitions  within the
scope of FASB Statement No. 147. In addition, FASB Statement No. 147 amends FASB
Statement  No. 144  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets"  to  include  in its scope  long-term  customer-relationship  intangible
assets of financial  institutions  such as depositor- and  borrower-relationship
intangible assets and credit cardholder intangible assets.  Consequently,  those
intangible assets are subject to the same undiscounted cash flow  recoverability
test and  impairment  loss  recognition  and  measurement  provisions  that FASB
Statement No. 144 requires for other long-lived assets that are held and used.

Paragraph 5 of FASB Statement No. 147,  which relates to the  application of the
purchase method of accounting,  is effective for acquisitions for which the date
of  acquisition  is on or after October 1, 2002.  The  provisions in paragraph 6
related to  accounting  for the  impairment  or  disposal  of certain  long-term
customer  -relationship  intangible  assets  are  effective  on October 1, 2002.
Transition provisions for previously recognized unidentifiable intangible assets
in paragraphs  8-14 are effective on October 1, 2002,  with earlier  application
permitted.

In  accordance  with  paragraph 9 of FASB  Statement  No. 147, the Company,  has
reclassified,  as of September 30, 2002 its recognized unidentifiable intangible
asset related to branch acquisition(s).  This asset was reclassified as goodwill
(reclassified  goodwill).  The amount reclassified was $2,357,884,  the carrying
amount as of January 1, 2002. The  reclassified  goodwill is being accounted for
and reported  prospectively  as goodwill  under FASB  Statement No. 142, with no
amortization expense. Accordingly, the consolidated financial statements for the
nine-months  ended September 30, 2002 do not reflect  amortization in the amount
of $71,572 that would have been recorded if FASB  Statement No. 147 had not been
issued.

                                       10


<PAGE>


FASB Statement No. 147 requires that the Company's  reclassified  goodwill shall
be tested for  impairment  as of January 1, 2002 and that such test be completed
by December 31, 2002.

Also in accordance  with  paragraph 9 of FASB Statement No. 147, as of September
30,  2002,  the  Company  reclassified  its core  deposit  intangible  asset and
accounted for it as an asset apart from the unidentifiable  intangible asset and
not as goodwill.

The Company  has no  goodwill  other than  reclassified  goodwill.  The test for
impairment of the reclassified goodwill will be completed by December 31, 2002.

The effect of the Company's  adoption of SFAS No. 147 was to increase net income
for the nine and three months  periods  ended  September 30, 2002 by $43,692 and
$14,564, respectively.

The Company's  amortization expense related to reclassified  goodwill was $3,974
and  $3,974 for the nine and three  month  periods  ended  September  30,  2001,
respectively.


                                       11

<PAGE>


                         Part I - FINANCIAL INFORMATION

                  Item 2. Management's Discussion and Analysis

                                       12


<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 condensed 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.

The Company  continues  to focus on providing a strong  foundation  for building
shareholder  value  and  for  serving  its  customers,  and  therefore,  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. The Bank's internet product which is called "SBTNET"
for example,  was introduced just over a year ago and now has approximately 1300
customers using the product.  Also, as previously reported the Bank expanded its
online  services to include "SBT V-CARD" and "SBT PAL" earlier this year.  These
additional  services have proven popular with our  customers.  The Bank plans to
continue enhancing its Internet banking products for customers.

Net income for the nine months  ended  September  30, 2002  increased  14.23% to
$2,480,000 or $1.74 per diluted share as compared to net income of $2,171,000 or
$1.51 per diluted  share for the nine  months  ended  September  30,  2001.  The
improvement in net income is primarily the result of an increase in net interest
and  dividend  income,  an  increase  in gains  on  sales of  available-for-sale
securities  coupled with reductions in interest expense,  as well as a reduction
in income taxes that resulted from increased income from tax exempt securities.

Total assets at September 30, 2002 were $285,617,000 compared to $283,602,000 at
December 31, 2001.  This  represents an increase of $2,015,000 or just less than
one  percent.  As reported  previously,  the asset mix  continues to change when
comparing  the  balance  sheet of  December  31,  2001 to the  balance  sheet of
September  30, 2002, as the cash  received  from the  acquisition  of the Canaan
branch that was primarily invested in Federal Funds at December 31, 2001 has now
been invested in the  securities  portfolio  which has increased  $27,529,000 or
26.07% to  $133,122,000  at  September  30,  2002  compared to  $105,593,000  at
December 31, 2001.  This increase in the securities  portfolio has also been the
result of a continuing  economic  environment of generally  lower interest rates
that targets  refinancing  opportunities to longer term fixed rate products that
are offered by the secondary mortgage market. This has resulted in a decrease in
total net loans  outstanding of 4.04% to $137,283,000 at September 30, 2002 from
$143,066,000  at  December  31,  2001.  During  the first  nine  months of 2002,
nonperforming  loans  increased $ 494,000 to $1,081,000.  This compares to total
nonperforming  loans of $587,000 at December 31, 2001.  Although  this  increase
represents an increase of 84.16%,  total nonperforming loans continue to be less
than  one  percent  of  total  outstanding  loans  and is not  considered  to be
significant or indicative of any trend.  At September 30, 2002, the Company does
not have any assets  classified  as Other Real Estate  Owned;  therefore,  total
nonperforming  loans represent total  nonperforming  assets as well. Deposits at
September 30, 2002 totaled  $202,748,000 which represents a slight increase over
December  31,  2001 total  deposits  of $  201,351,000.  Federal  Home Loan Bank
advances  totaled  $53,151,000  at September 30, 2002 compared to $53,004,000 at
December 31, 2001. This slight increase represents  overnight borrowings used to
fund some daily cash flow needs of the Company.

As a result of the  Company's  financial  performance,  the  Board of  Directors
declared a third quarter cash  dividend of $.22 per common share.  This compares
to a cash dividend of $.21 per common share that was paid for the  corresponding
period of 2001.  This dividend was paid on October 25, 2002 to  shareholders  of
record as of September 30, 2002.  Dividends  year-to-date  total $.66 per common
share  for 2002 and  represent  a payout  ratio of  approximately  37.93%.  This
compares to  dividends  year-to-date  of $.63 for the same nine month  period in
2001.  The  Company's  risk based capital  ratios at September  30, 2002,  which
included the risk weighted  assets and capital of the  Salisbury  Bank and Trust
Company  were  15.85%  for tier 1 capital  and  16.88%  for total  capital.  The
Company's leverage ratio was 7.81% at September 30, 2002.

                                       13


<PAGE>


                      NINE MONTHS ENDED SEPTEMBER 30, 2002
               AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2001

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

The Company's  earnings are  primarily  dependent  upon net interest  income and
noninterest  income from its community banking  operations with the net interest
income being the largest  component of the Company'  revenues.  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 and from service charges and other fees related to deposit and
loan accounts. 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 tax rate of 34% for all periods presented.

(amounts in thousands)(unaudited)
Nine months ended September 30                          2002              2001
                                                        ----              ----

Interest and Dividend Income                          $ 12,172         $ 12,824
  (financial statements)
Tax Equivalent Adjustment                                  767              354
       Total Interest Income (on an FTE basis)          12,939           13,178
Interest Expense                                        (5,288)          (6,334)
                                                      --------         --------
Net Interest Income-FTE                               $  7,651         $  6,844
                                                      --------         --------

Interest and dividend income on an FTE basis for the nine months ended September
30, 2002 totaled $12,939,000 as compared to $13,178,000 for the same time period
in 2001. This is a decrease of $239,000 or 1.81%.  Although there is an increase
in earning  assets,  this decrease in interest and dividend  income is primarily
the result of an economic  environment  of generally  lower  interest  rates.  A
continuing  change in the mix of earnings  assets which  reflects an increase in
tax  exempt  securities  has  resulted  in a  significant  increase  in the  tax
equivalent  adjustment to $767,000 for the nine months ended  September 30, 2002
as  compared to  $354,000  for the same  period in 2001.  This is an increase of
$413,000 or approximately 117%.

Interest  expense  on  deposits  for the first  nine  months  of 2002  decreased
$922,000 or 22.67% and totaled  $3,145,000.  This compares to $4,067,000 for the
corresponding  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 expense for Federal Home Loan Bank advances decreased $124,000 or 5.47%
when  comparing the nine month period ended  September 30, 2002 to the same nine
month  period in 2001.  There was an  increase  in  borrowings  of  $147,000  to
$53,151,000  at  September  30,  2002,  when  compared  to total  borrowings  of
$53,004,000 at September 30, 2001, however, the average of borrowed funds during
the nine month  period  ended  September  30,  2002 is less than the  average of
borrowed funds for the  corresponding  period in 2001,  which  attributes to the
decrease in interest  expense for  borrowed  funds.  Although  interest  margins
continue to be pressured by generally  lower  interest  rates and by  aggressive
competition,  net interest income (on an FTE basis) increased $807,000 or 11.80%
and  totaled  $7,651,000  at  September  30,  2002,  compared to  $6,844,000  at
September 30, 2001.

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

Noninterest  income totaled  $2,248,000 for the nine months ended  September 30,
2002 as compared to  $1,735,000  for the nine months ended  September  30, 2001.
Trust Department  income increased  slightly to $767,000 from $751,000.  Service
charges  decreased  $1,000 and totaled  $352,000 at  September  30,  2002.  This
compares to total services  charges of $353,000 at September 30, 2001.  Gains on
sales of  available-for-sale  securities totaled $465,000 at September 30, 2002.
This  represents an increase of $377,000 or 428% when  comparing  total gains on
sales of  available-for-sale  securities  of  $88,000  at  September  30,  2001.
Movement in the markets have presented  opportunities for the Company to enhance
the

                                       14


<PAGE>

return from the securities portfolio which has resulted in this increase.  Other
income  increased  $121,000 or 22.28% to $664,000 at September  30,  2002.  This
compares to total other income of $543,000 at September 30, 2001.  This increase
is  primarily  the  result of  increased  fees  generated  from the  refinancing
activities in the secondary mortgage market

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

Noninterest  expense increased 15.51% to $5,631,000 for the first nine months of
2002 as compared to $4,875,000 for the  corresponding  period in 2001.  Salaries
and  employee  benefits  totaled  $3,168,000  for the nine  month  period  ended
September 30, 2002 compared to $2,833,000  for the same period in 2001.  This is
an increase of $335,000 or 11.83% and is primarily the result of the addition of
staff for the Canaan  Branch that was opened in September  2001 coupled with the
additional  staff that also was hired to service the increase in new business at
the Bank's  other  facilities.  Annual pay  raises and the  increasing  costs of
employee benefits have also contributed to the increased expense.  Occupancy and
equipment  expenses  increased  $57,000 or 10.78% to $586,000.  This compares to
total  occupancy  and  equipment  expense of  $529,000  for the same nine months
period in 2001. The increase is primarily the result of expenses associated with
having an  additional  office to maintain.  The Company has also  incurred  some
onetime   maintenance  costs  relating  to  unscheduled  repairs  at  its  other
facilities.  Amortization  expense  of  the  "Core  Deposit  Intangible"  assets
associated  with the Canaan  Branch  acquisition  totaled  $51,000  for the nine
months ended September 30, 2002. This compares to amortization expense of $7,000
at  September  30, 2001.  The expense for 2002  represents a full nine months of
amortization  while the total expense for 2001 only represents one partial month
because the  acquisition  was  completed  in  September  2001.  Other  operating
expenses totaled $1,444,000 for the period ended September 30, 2002, compared to
other operating  expenses totaling  $1,118,000 for the  corresponding  period in
2001.  The increase of $326,000 or 29.16% is primarily  the result of additional
expenses  relating to the  operation  of the Canaan  Branch  acquired  last year
coupled with increased  expenses  relating to Trust operations as well as normal
increases in expenses associated with the operation of the Company.

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

The income tax provision  for the first nine months of 2002 totaled  $909,000 in
comparison to $1,067,000 for the corresponding  period in 2001. This 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  $2,480,000  for the nine months  ended  September
30,2002.  This compares to net income of $2,171,000 for the same period in 2001.
This is an increase of $309,000 or 14.23% and  represents  earnings of $1.74 per
diluted share. This compares to earnings per diluted share of $1.51 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.

                                       15


<PAGE>


                      THREE MONTHS ENDED SEPTEMBER 30, 2002
              AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2001

For the following  discussion,  interest  income is presented on a fully taxable
equivalent  ("FTE") basis.  FTE interest  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.

<TABLE>
<CAPTION>
(amounts in thousands)(unaudited)
Three months ended September 30                                       2002            2001
                                                                      ----            ----
<S>                                                                 <C>             <C>
Interest and Dividend Income                                        $ 4,048         $ 4,310
(financial statements)
Tax Equivalent Adjustment                                               269             131
        Total interest and dividend income (on an FTE basis)          4,317           4,441
Interest Expense                                                     (1,727)         (2,054)
                                                                    -------         -------
Net Interest and Dividend Income-FTE                                $ 2,590         $ 2,387
                                                                    -------         -------
</TABLE>

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

Interest and dividend  income on a FTE basis  equaled  $4,317,000  for the three
months ended September 30, 2002 as compared to $4,441,000 for the same period in
2001.  Although  there is an  increase  in  earning  assets , this  decrease  in
interest and dividend income is primarily the result of an economic  environment
of generally lower interest rates. As mentioned previously,  a change in the mix
of  earning  assets  has  resulted  in an  increased  portfolio  of  tax  exempt
securities  which in turn has  resulted  in a  significant  increase  in the tax
equivalent  adjustment  to  $269,000 in 2002 from  $131,000 in 2001.  This is an
increase of $138,000 or 105%.

Interest expense on deposits  decreased  $283,000 for the quarter to $1,007,000,
compared to  $1,290,000  for the same quarter in 2001.  Although  deposits  have
increased  slightly,  this decrease is primarily  the result of generally  lower
interest rates. Interest expense on Federal Home Loan Bank advances decreased to
$720,000, as compared to $764,000 for the same period in 2001. The balance sheet
reflects an increase in advances as of September  30, 2002 compared to September
30, 2001.  However,  average  outstanding  advances for the three months  period
ending  September 30, 2002 is less than the same period in 2001 which results in
a  decrease  in  interest  expense.  This  is  a  reflection  of  the  Company's
utilization of these borrowings as a component of its funding strategy.

As a  result,  net  interest  and  dividend  income on a FTE basis for the three
months ended September 30, 2002 totaled $2,590,000 as compared to $2,387,000 for
the same period in 2001. The increase was $203,000 or 8.50%.

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

Noninterest  income  totaled  $902,000 for the three months ended  September 30,
2002,  as compared to $600,000 for the three months  ended  September  30, 2001.
Trust  Department  income  increased to $256,000 for the third  quarter of 2002.
Third quarter 2001 Trust  Department  income  totaled  $240,000.  Service charge
income  totaled  $117,000  for the quarter as compared to $107,000  for the same
period in 2001.  Other  income  increased  $62,000 or 29.81% to $270,000 for the
three months ended  September 30, 2002.  This compares to other income  totaling
$208,000  for the  corresponding  period in 2001.  The  increase  includes a non
recurring   life   insurance   benefit   of   $74,000.   Gains   on   sales   of
available-for-sale  securities  increased  $214,000 or 476% for the period ended
September 30, 2002 and totaled  $259,000  which compares to $45,000 for the same
period in 2001. Movements in the markets presented opportunities for the Company
to enhance the return from the securities portfolio and at the same time produce
an increase in gains on sale of certain available-for-sale securities.

                                       16


<PAGE>


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

Noninterest  expense totaled $1,880,000 for the three months ended September 30,
2002, as compared to $1,641,000 for the same period in 2001. This is an increase
of $239,000  or 14.56%.  Salaries  and  benefits  increased  $87,000 or 8.98% to
$1,056,000  for the three months ended  September  30,  2002.  This  compares to
expenditures  of $969,000  for the  corresponding  period in 2001.  As mentioned
previously,  additional staff was hired for the Canaan Branch that opened during
the fourth quarter of 2001 and these and other expenses  associated with the new
branch did not exist  during the first  three  quarters  of 2001 and  therefore,
reflect  increases  when  comparing  2002 to 2001.  Additionally,  annual salary
increases  and  increased  costs of employee  benefits  also  contribute  to the
increase  in salary and  employee  benefit  expenses.  Occupancy  and  equipment
expense  increased to $197,000 from $168,000.  This is an increase of $29,000 or
17.26%.  This  increase can also be primarily  attributed to the addition of the
Canaan Branch.  Other operating  expenses  totaled $481,000 for the three months
ended  September  30,  2002.  This is an  increase  of  $119,000  or 32.87% when
comparing the three months ended September 30, 2001 other operating  expenses of
$362,000.  The increase  encompasses  normal  increases  in operating  expenses,
however,  the most  significant  influence  to the  increase is related to costs
relating  to  Trust  operations  as well  as to the  payment  of life  insurance
benefits that totaled $41,000.  Amortization of "Core Deposit Intangible" assets
totaled  $17,000 for the three months  ended  September  30, 2002  compared to $
$7,000 for the same period in 2001. This increase  reflects three full months of
amortization  expense  for 2002  however,  it reflects  only a partial  month of
expense  for 2001.  Data  processing  expenses  have  remained  consistent  when
comparing the second quarter of 2002 to the second quarter of 2001.

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

The income tax provision  for the three months ended  September 30, 2002 totaled
$328,000 in  comparison  to an income tax  provision  of  $384,000  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  $978,000 for the third quarter of 2002 compared to
$794,000 for the comparable  period of 2001.  This is an increase of $184,000 or
23.17% and  represents  earnings of $.69 per  diluted  share.  This  compares to
earnings per diluted share of $.56 for the same period in 2001. The  improvement
in net income is a reflection of an increase in interest earning assets.

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

Total loans at  September  30, 2002 were  $138,666,000  which  compares to total
loans of  $144,511,000 at December 31, 2001. This is a decrease of $5,845,000 or
4.05%. At September 30, 2002  approximately 87% of the Bank's loan portfolio was
related to real estate products and although the portfolio  decreased during the
first  nine  months  of  2002,   the   concentration   remained   consistent  as
approximately  86% of the  portfolio  was related to real estate at December 31,
2001.  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 September 30, 2002 was $112,000 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 September 30,
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.

                                       17


<PAGE>


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:
     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
September 30, 2002.

At  September  30,  2002,  the  allowance  for loan  losses  totaled  $1,383,000
representing  127.94% of nonperforming  loans which totaled $1,081,000 and 1.00%
of  total  loans  outstanding  of  $138,666,000.  This  compared  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.  This is an  increase in
nonperforming loans of $494,000 or 84.16%. This increase, however, involves only
a few  isolated  accounts.  A total of  $189,000 in loans was charged off by the
Company during the nine month period ended September 30, 2002. These charged off
loans  consisted  primarily  of loans to  individuals.  A total  of  $14,000  of
previously  charged off loans was recovered  during the nine months period ended
September  30, 2002.  Recoveries  for the  corresponding  period in 2001 totaled
$101,000.  When comparing the two periods,  and excluding the one large recovery
in 2001 of $82,000, net charge-offs were $175,000 for the period ended September
30, 2002 and $53,000 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.

                                       18


<PAGE>


Capital
-------

At  September  30,  2002,  the Company had  $26,985,000  in  shareholder  equity
compared to  $23,363,000  at December 31, 2001.  This  represents an increase of
$3,622,000  or  15.50%.  Several  components  contributed  to the  change  since
December 2001. Earnings year to date totaled $2,480,000.  Market conditions have
resulted  in  a  positive  adjustment  to  unrealized  comprehensive  income  of
$2,059,000. The Company issued 880 new shares of common stock under the terms of
the  Director  Stock  Retainer  Plan  during  the  second  quarter of 2002 which
resulted in an increase in capital of $22,000.  The Company also declared  three
quarterly cash dividends in 2002 resulting in a decrease in capital of $939,000.
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
into account  off-balance  sheet exposure in assessing  capital  adequacy and it
minimizes  disincentives  to holding liquid,  low risk assets.  At September 30,
2002,  the Company had a total  risk-based  capital ratio of 16.88%  compared to
16.21% at December 31, 2001.  The leverage ratio at September 30, 2002 was 7.81%
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
September 30, 2002,  the Company's  interest rate position was asset  sensitive.
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  September  30, 2002,  the Company had  approximately
$25,573,000 in loan  commitments and unadvanced funds  outstanding.  The Company
maintains 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.

                                       19


<PAGE>


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:

(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 I - FINANCIAL INFORMATION


                         Item 3. Controls and Procedures


Based upon an  evaluation  within  the 90 days prior to the filing  date of this
report,  the  Company's  Chief  Executive  Officer and Chief  Financial  Officer
concluded that the Company's  disclosure  controls and procedures are effective.
There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect the Company's  internal controls
subsequent to the date of the evaluation,  including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                       20


<PAGE>


                           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 - 99.1 Certification of Chief Executive Officer pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002

               99.2 Certification of Chief Financial Officer pursuant to Section
                    906 of the Sarbanes-Oxley Act of 2002

B.        Reports on 8-K:

          The  Company  filed a Form  8-K on  August  20,  2002 to  report  that
          Director Craig E. Toensing voluntarily  submitted his resignation from
          the Boards of Salisbury  Bancorp,  Inc. and  Salisbury  Bank and Trust
          Company.

          The Company  filed a Form 8-K on  September 5, 2002 to report that the
          Company's  Board of Directors  declared a quarterly  cash  dividend of
          $.22 per  share to be paid on  October  25,  2002 to  shareholders  of
          record as of September 30, 2002.


                                       21


<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: November 12, 2002          by:  /s/ John F. Perotti
               -----------------               ---------------------------------
                                               John F. Perotti
                                               President/Chief Executive Officer

         Date: November 12, 2002          by:  /s/ John F. Foley
               -----------------               ---------------------------------
                                               John F. Foley
                                               Chief Financial Officer

                                       22


<PAGE>


                                 CERTIFICATIONS
                                 --------------

I, John F. Perotti, certify that:

1. I have reviewed this  quarterly  report on Form 10-QSB of Salisbury  Bancorp,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: November 12, 2002


By: /s/ John F. Perotti
-----------------------
President and CEO

                                       23


<PAGE>


                                 CERTIFICATIONS
                                 --------------

I, John F. Foley, certify that:

1. I have reviewed this  quarterly  report on Form 10-QSB of Salisbury  Bancorp,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
     information   relating  to  the  registrant,   including  its  consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
     procedures  as of a date  within 90 days prior to the  filing  date of this
     quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
     employees  who  have  a  significant  role  in  the  registrant's  internal
     controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date: November 12, 2002

By: /s/ John F. Foley
-----------------------
Chief Financial Officer