# FORM 10-Q
Securities and Exchange Commission
Washington, D.C. 20549

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|X|      Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934For the quarterly period ended June 30, 2002
or
|_|      Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

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Commission File #000-30521Pavilion Bancorp, Inc.
(Exact name of registrant as specified in its charter)

|Michigan
(State or other jurisdiction of
incorporation or organization) | 38-3088340
(I.R.S. Employer
Identification No.)
|----------------------------------------------------------------------- | -----------------------------------------------

135 East Maumee Street, Adrian, Michigan 49221
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (517) 265-5144, Fax (517) 265-3926

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 shorter periods 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           |_|
|----------------- | ----------------

As of August 2, 2002, there
were 839,926 outstanding shares of the registrants common stock, no par
value.

Page 1

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# CROSS REFERENCE TABLE

|ITEM NO. | DESCRIPTION | PAGE NO.
|-------- | ----------- | --------

# PART I - FINANCIAL INFORMATION

|Item 1.
Item 2.
Item 3. | Financial Statements (Condensed)
(a)       Report of Independent Accountants
(b)       Condensed Consolidated Balance Sheets
(c)       Condensed Consolidated Statements of Income
              and Comprehensive Income 
(d)       Condensed Consolidated Statements of Cash Flows 
(e)       Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of 
Financial Condition and Results of Operations 
Quantitative and Qualitative Disclosures About Market Risk | 3       
4       
5       
6       
7       
9       
13
|----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------

PART II -OTHER INFORMATION

|Item 1.   
Item 2.    
Item 3.    
Item 4.    
Item 5.    
Item 6. | Legal Proceedings
Changes in Securities and Use of Proceeds
Defaults Upon Senior Securities             
Submission of Matters to a Vote of Security Holders
Other Information                                   
Exhibits and Reports on Form 8-K | 14      
14      
14      
14      
15      
15
|------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------
|Signatures
Exhibits                                                | 16      
17                                                                                                                                                                                                                                       

Page 2

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REPORT OF INDEPENDENT ACCOUNTANTS

Shareholders and Board of Directors
Pavilion Bancorp, Inc.
Adrian, Michigan

We have reviewed the
condensed consolidated balance sheet of Pavilion Bancorp, Inc. as of June 30,
2002, the related condensed consolidated statements of income and comprehensive
income for the quarter and year to date periods ended June 30, 2002 and
2001 and the condensed consolidated statements of cash flows for the year to
date periods ended June 30, 2002 and 2001. These financial statements are the
responsibility of the Companys management.

We conducted our reviews in
accordance with standards established by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our reviews, we
are not aware of any material modifications that should be made to the
accompanying financial statements for them to be in conformity with generally
accepted accounting principles.

| | /s/ Crowe, Chizek and Company LLP
| | ---------------------------------

Grand Rapids, Michigan
July 29, 2002

Page 3

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# PART I
FINANCIAL INFORMATION

## ITEM 1-
FINANCIAL STATEMENTS

(b)  CONDENSED CONSOLIDATED BALANCE SHEETS

`June 30,
In thousands of dollars                                                        2002        December 31,
                                                                            (unaudited)        2001
                                                                            -----------        ----
ASSETS
Cash and due from banks                                                    $     12,828     $     15,987
Federal funds sold                                                                6,560            8,290
                                                                           ------------     ------------
     Total cash and cash equivalents                                             19,388           24,277

Securities available for sale                                                    23,404           25,969
Federal Home Loan Bank stock, at cost                                             2,504            2,504
Federal Reserve Bank stock, at cost                                                 480              480
Loans held for sale                                                               1,324              417

Loans receivable, net of allowance for loan losses:
  $2,321 - 2002, $2,200 - 2001                                                  221,483          212,590
Premises and equipment, net                                                       6,525            6,611
Accrued interest receivable                                                       1,834            1,877
Mortgage servicing asset                                                          2,280            2,066
Other assets                                                                      2,284            1,336
                                                                           ------------     ------------

     Total assets                                                          $    281,506     $    278,127
                                                                           ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
     Noninterest bearing                                                   $     47,995     $     45,488
     Interest bearing                                                           189,354          189,919
                                                                           ------------     ------------
         Total deposits                                                         237,349          235,407

Borrowed funds                                                                    7,999            7,394
Accrued interest payable                                                            615              850
Other liabilities                                                                 2,157            1,619
Capital securities                                                                4,833            4,850
                                                                           ------------     ------------
     Total liabilities                                                          252,953          250,120

Common stock subject to repurchase obligation in ESOP                             4,022            4,444

Shareholders' Equity
     Common stock and paid-in capital, no par value                              10,130           10,187
     Retained earnings                                                           14,074           13,124
     Accumulated other comprehensive income,
       net of tax                                                                   327              252
                                                                           ------------     ------------
         Total shareholders' equity                                              24,531           23,563
                                                                           ------------     ------------

              Total liabilities and shareholders' equity                   $    281,506     $    278,127
                                                                           ============     ============`

See accompanying notes to condensed consolidated financial statements.

Page 4

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(c)  CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)

`Three Months Ended                Six Months Ended
In thousands of dollars, except per share data                        June 30,                         June 30,
                                                            ----------------------------     ----------------------------
                                                                2002           2001              2002            2001
                                                                ----           ----              ----            ----
Interest and dividend income
     Loans receivable, including fees                       $      4,327    $      4,940     $      8,699    $      9,936
     Securities available for sale                                   338             364              726             674
     Federal funds sold and other                                     21             115               42             218
                                                            ------------    ------------     ------------    ------------
         Total interest and dividend income                        4,686           5,419            9,467          10,828

Interest expense
     Deposits                                                      1,384           2,129            2,832           4,303
     Federal Home Loan Bank advances                                  77              84              155             166
     Other                                                            85              41              160              59
                                                            ------------    ------------     ------------    ------------
         Total interest expense                                    1,546           2,254            3,147           4,528
                                                            ------------    ------------     ------------    ------------

Net interest income                                                3,140           3,165            6,320           6,300
     Provision for loan losses                                       150              44              256             144
                                                            ------------    ------------     ------------    ------------

Net interest income after provision
  for loan losses                                                  2,990           3,121            6,064           6,156

Noninterest income
     Service charges and fees                                        522             372            1,141             662
     Net gains on loan sales                                         423             579            1,099             984
     Other                                                            14              62               66             124
                                                            ------------    ------------     ------------    ------------
                                                                     959           1,013            2,306           1,770

Noninterest expense
     Salaries and employee benefits                                1,860           1,790            3,845           3,335
     Occupancy and equipment                                         598             498            1,188             975
     Other                                                           666             791            1,412           1,483
                                                            ------------    ------------     ------------    ------------
                                                                   3,124           3,079            6,445           5,793
                                                            ------------    ------------     ------------    ------------
Income before income tax                                             825           1,055            1,925           2,133
     Income tax expense                                              265             332              619             677
                                                            ------------    ------------     ------------    ------------

Net income                                                  $        560    $        723     $      1,306    $      1,456
                                                            ============    ============     ============    ============

Comprehensive income                                        $        750    $        790     $      1,381    $      1,688
                                                            ============    ============     ============    ============
Basic earnings per share                                    $        .66    $        .85     $       1.54    $       1.71
                                                            ============    ============     ============    ============
Diluted earnings per share                                  $        .66    $        .84     $       1.53    $       1.69
                                                            ============    ============     ============    ============
Dividends per share                                         $        .22    $        .20     $        .42    $        .40
                                                            ============    ============     ============    ============`

See accompanying notes to condensed consolidated financial statements.

Page 5

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(d)   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

`Six Months Ended
In thousands of dollars                                                             June 30,
                                                                          -----------------------------
                                                                               2002           2001
                                                                               ----           ----
Cash flows from operating activities
     Net income   $                                                       $      1,306     $      1,456
     Adjustments to reconcile net income to
       net cash from operating activities
         Depreciation                                                              447              395
         Provision for loan losses                                                 256              144
         Net amortization and accretion on securities
           available for sale                                                      154               37
         Amortization of mortgage servicing rights                                 282              274
         Loans originated for sale                                             (59,280)         (58,644)
         Proceeds from sale of mortgage loans                                   58,976           58,076
         Net gains on sales of mortgage loans                                   (1,099)            (984)
         Net gains on sales of securities                                           (9)               -
     Net change in:
         Accrued interest receivable                                                43              144
         Other assets                                                             (948)             373
         Accrued interest payable                                                 (235)             (31)
         Other liabilities                                                         499               29
                                                                          ------------     ------------
              Net cash from operating activities                                   392            1,269
                                                                          ------------     ------------

Cash flows from investing activities
     Proceeds from:
         Maturities, calls and principal payments on
           securities available for sale                                        14,139            3,902
         Sales of securities available for sale                                  3,500                -
     Purchases of:
         Federal Reserve Bank stock                                                  -             (120)
         Securities available for sale                                         (15,105)         (10,525)
         Premises and equipment, net                                              (361)          (1,001)
     Net increase in loans                                                      (9,149)          (2,997)
                                                                          ------------     ------------
              Net cash from investing activities                                (6,976)         (10,741)

Cash flows from financing activities
     Net change in deposits                                                      1,942            6,977
     Net change in borrowed funds and capital securities                           588           (1,006)
     Change in shareholders' equity                                               (835)            (486)
                                                                          ------------     ------------
              Net cash from financing activities                                 1,695            5,485
                                                                          ------------     ------------

Net change in cash and cash equivalents                                         (4,889)          (3,987)

Cash and cash equivalents at beginning of period                                24,277           12,992
                                                                          ------------     ------------

Cash and cash equivalents at end of period                                $     19,388     $      9,005
                                                                          ============     ============

     Cash paid for:
         Interest $                                                       $      3,382     $      4,559
         Income taxes                                                              505              662`

See accompanying notes to condensed consolidated financial statements.

Page 6

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(e)  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT (unaudited)

## NOTE 1 
PRINCIPLES OF CONSOLIDATION AND NATURE OF OPERATIONS

The unaudited condensed
consolidated financial statements include the accounts of Pavilion Bancorp, Inc.
(the Company) and its wholly-owned subsidiaries, Bank of Lenawee and
Bank of Washtenaw (together the Banks). The Bank of Lenawee includes
its wholly-owned subsidiaries, Pavilion Financial Services and Pavilion Mortgage
Company (the Mortgage Company). It should be noted that the name
change to Pavilion Bancorp, Inc. previously Lenawee Bancorp, Inc. was approved
by the shareholders on April 18, 2002. All significant intercompany balances and
transactions have been eliminated in consolidation.

The Company is a two-bank
holding company which conducts limited business activities. The Banks perform
the majority of the Companys business activities.

The Banks provide a full
range of banking services to individuals, agricultural businesses, commercial
business and light industries located in its service area. The Banks maintain
diversified loan portfolios, including loans to individuals for home mortgages,
automobiles and personal expenditures, and loans to business enterprises for
current operations and expansion. The Banks offer a variety of deposit products,
including checking, savings, money market, individual retirement accounts and
certificates of deposit.

## NOTE 2 - BASIS
OF PRESENTATION

The unaudited condensed
consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2002. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2001.

Page 7

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## NOTE 3 -
EARNING PER SHARE

A reconciliation of the
numerators and denominators of the basic earnings and diluted earnings per share
computations for the three and six months ended June 30, 2002 and 2001 is
presented below in thousands, except for per share information:

`Three Months Ended                Six Months Ended
                                                               June 30,                         June 30,
                                                     -----------------------------    -----------------------------
                                                          2002            2001             2002            2001
                                                          ----            ----             ----            ----
Basic earnings per share
------------------------
Net income available to common shareholders          $        560     $        723    $      1,306     $      1,456
                                                     ============     ============    ============     ============
Weighted average common shares outstanding                    844              850             847              851
                                                     ============     ============    ============     ============
Basic earnings per share                             $        .66     $       .85     $       1.54     $       1.71
                                                     ============     ===========     ============     ============

Diluted earnings per share
--------------------------
Net income available to common shareholders          $        560     $        723    $      1,306     $      1,456
                                                     ============     ============    ============     ============
Weighted average common shares outstanding                    844              850             847              851
Add:  Dilutive effects of exercise of stock options             7               10               7               10
                                                     ------------     ------------    ------------     ------------
Weighted average common and dilutive
  potential shares outstanding                                851              860             854              861
                                                     ============     ============    ============     ============
Diluted earnings per share                           $        .66     $        .84    $       1.53     $       1.69
                                                     ============     ============    ============     ============`

Page 8

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion provides
information about the consolidated financial condition and results of operations
of the Company as of June 30, 2002 and for the three and six month periods
ending June 30, 2002 and 2001.

## FINANCIAL
CONDITION

Securities
The balance of the
Companys securities portfolio decreased by $2.6 million during the first
half of 2002. Purchases of securities available for sale totaling $15.1 million
were offset by principal repayments on mortgage backed securities and maturities
within the portfolio totaling $14.1 million and sales of securities available
for sale of $3.5 million. The securities portfolio has decreased as a result of
the additional funds being used to fund loan growth.

Loans
Loan growth continued
through the first half of 2002. During the first six months of 2002, annualized
loan growth was 8.4%. The mix of the loan portfolio remains relatively unchanged
from prior periods. The Banks continue to originate residential mortgage and
business loans on a sustained basis.

In addition to the increase
in portfolio loans, the Company experienced a decrease in the volume of its
residential mortgage loans sold into the secondary market when compared to the
first half of 2001. The significant decrease in short-term interest rates during
the first half of 2002 has also caused a decline in mortgage interest rates,
however, the refinancing volumes existing for mortgage loans did level off, as
compared to prior periods.

Credit QualityThe Company continuously
monitors the asset quality of its loan portfolios utilizing both internal and
external loan review specialists. Periodically, reports are submitted to the
Banks Senior Management and Boards of Directors regarding the credit
quality of the loan portfolios. These reviews are independent of the loan
approval process. Also, management continues to monitor delinquencies,
nonperforming assets and potential problem loans to assess the continued quality
of the Companys loan portfolio.

Nonperforming loans are
comprised of (1) loans accounted for on a nonaccrual basis, (2) loans
contractually past due 90 days or more as to interest or principal payments (but
not included in the nonaccrual loans in (1) above) and (3) other nonperforming
loans (but not included in (1) or (2) above) which consist of loan arrangements
under the Business Manager program. The aggregate amount of nonperforming loans,
in thousands of dollars, is shown in the table below. The Companys
classifications of nonperforming loans are generally consistent with loans
identified as impaired.

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The chart below shows the
makeup of the Companys nonperforming assets by type, in thousands of
dollars, as of June 30, 2002 and 2001, and December 31, 2001.

`6/30/2002      12/31/2001      6/30/2001
                                                                ---------      ----------      ---------

     Nonaccrual loans                                           $     261      $      230      $     145
     90 days or more past due & still accruing                      1,325           1,046            535
                                                                ---------      ----------      ---------
         Total nonperforming loans                                  1,586           1,276            680
     Other real estate                                              1,900             879            435
                                                                ---------      ----------      ---------
         Total nonperforming assets                             $   3,486      $    2,155      $   1,115
                                                                =========      ==========      =========

     Nonperforming loans as a percent of total loans                 .71%            .59%           .31%
     Nonperforming assets as a percent of total loans               1.56%           1.00%           .51%
     Nonperforming loans as a percent of the allowance
       for loan losses                                             68.33%          58.00%         29.30%`

Total  nonperforming  assets  increased  $1.3  million  or 62% during the six months  ending  June 30,  2002.  This
significant  increase is attributable to real estate  properties  acquired in foreclosure as well as multiple small
loan  customers  that  are  experiencing  financial  difficulties  in an  economically  challenging  period.  These
nonperforming  assets have  collateral  values or, in the case of other real  estate,  values  sufficient  to avoid
any material loss to the Banks.

Due to the  challenging  economic  conditions  during  the last  quarter  of 2001 and the first  half of 2002,  the
Company  intensified  its  utilization  of independent  third party loan review  specialists in order to verify the
overall  quality of the loan portfolio.  The Company  increased the provision for loan losses 78% for the six month
period  ending June 30, 2002 when  compared to the same period of the prior year as a result of the increase in net
charge-offs  and  nonperforming  loans.  The  provision  for loan losses  provides  for  probable  incurred  losses
inherent in the loan portfolio.

Deposits
Total  deposit  growth  for the  first  half of 2002 was  approximately  $1.9  million  or  approximately  2% on an
annualized  basis.  This increase is primarily the result of an increase in noninterest  bearing deposits which was
partially  offset by a small decrease in interest  bearing deposits Theses results were primarily the effect of the
expansion of liquidity in the local and national  market.  The Company  anticipates  moderate deposit growth during
2002 as a result of continued expansion into new and existing markets.

Capital Resources
At June 30,  2002 and  December  31,  2001,  equity  capital  totaled  $24.5 and $23.6  million.  This  increase is
primarily  the  result of the  Company's  net income for the six months  ended June 30,  2002  partially  offset by
dividends  declared  during the six months  ended June 30,  2002.  Management  monitors  the capital  levels of the
Company and the banks to provide for current and future business  opportunities  and to meet regulatory  guidelines
for "well capitalized"  institutions.  "Well capitalized"  institutions are eligible for reduced FDIC premiums, and
also enjoy other reduced regulatory restrictions.

At June 30, 2002 and  December  31,  2001,  the Company  and the banks  exceeded  all  regulatory  minimum  capital
requirements and are considered to be "well capitalized."

Page 10

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Liquidity
The  Company  anticipates  that  deposit and loan growth  will cause  continued  variation  in its short term funds
position.  The  Company  has a number of  additional  liquidity  sources  should  the need  arise,  and  management
believes that the Company's liquidity position is adequate.

The Company's  federal funds sold position  dropped during the first six months of 2002 as compared to December 31,
2001.  The  decrease is mainly  attributable  to funding  needed for loan growth,  although  the Company  generally
moves in and out of the federal funds market as liquidity needs vary.

Results of Operations
Net Income
Net income  decreased  10.3%,  diluted  earnings per share  decreased  from $1.69 to $1.53 and  dividends per share
increased  from $.40 to $.42 when  comparing  the results of the six months  ended June 30, 2002 to the same period
in 2001.  Net income  decreased  22.5%,  diluted  earnings per share  decreased from $.84 to $.66 and dividends per
share  increased  from $.20 to $.22 when  comparing the results of the three months ended June 30, 2002 to the same
period in 2001.
The  decrease in net income for the three and six months  ended June 30, 2002 when  compared to the same periods of
2001,  is primarily the result of reduced revenue from the sale of mortgage loans into the secondary market, increased  noninterest  expense and an increase in the provision for loan losses.
The  decrease in net income  during the six months ended June 30, 2002,  was offset by a one time  increase  during
the first quarter in non-interest  income of $283,000  resulting from processing  errors occurring over a period of
time  relating  to the  recognition  of fee  income  on  foreign  ATM  transactions.  The  Company  has  taken  the
appropriate measures to ensure that these processing errors do not occur in the future.Net Interest Income
The yield on interest  earning  assets  decreased  for the three and six months  ended June 30, 2002 as compared to
the same  periods in the prior year  primarily  as a result of the  general  decline in industry  rates  during the
first half of 2002 and the  continued  repricing of the Company's  interest  earning  assets.  The cost of funds on
interest  bearing  liabilities  decreased  for the three and six months ended June 30, 2002 as compared to the same
periods during the prior year primarily as a result of the declining  interest rate  environment  and the continued
repricing of customer  deposit  accounts.  Despite the economic  challenges  during the past eighteen  months,  the
Company's net interest  margin  remains quite strong,  and the Company  continues to take steps to neutralize  some
portion of this risk.
The  following  table shows the year to date daily  average  balances  for  interest  earning  assets and  interest
bearing  liabilities,  interest  earned or paid,  and the  annualized  effective  rate or yield,  for the six month
periods ended June 30, 2002 and 2001.

Page 11

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`Yield Analysis of Consolidated Average Assets and Liabilities
-------------------------------------------------------------
Dollars in thousands                                   6/30/2002                                 6/30/2001
                                                       ---------                                 ---------
                                         Average       Interest                    Average       Interest
                                       Outstanding      Earned/     Yield/       Outstanding      Earned/     Yield/
                                         Balance         Paid        Rate          Balance         Paid        Rate
                                         -------         ----        ----          -------         ----        ----

Interest earning assets:
Loans (1)                             $   216,196     $     8,699      8.05%    $   215,639    $     9,936      9.22%
Investment securities (2) (3)              30,726             726      4.64%         24,670            674      5.46%
Federal funds sold and other                5,926              42      1.42%          8,860            218      4.92%
                                      -----------     -----------               -----------    -----------
     Total int. earning assets            252,848           9,467      7.49%        249,169         10,828      8.70%

Interest bearing liabilities:
Interest bearing demand
  deposits                            $    55,487     $       355      1.28%    $    54,573    $       712      2.61%
Savings deposits                           26,784             129       .96%         23,787            176      1.48%
Time deposits                             105,500           2,348      4.45%        118,133          3,415      5.78%
Other borrowings                           12,613             315      4.99%          7,650            225      5.88%
                                      -----------     -----------               -----------    -----------
     Total int. bearing liabilities       200,384           3,147      3.14%        204,143          4,528      4.44%
                                                      -----------                              ------------

Net interest income (3)                               $     6,320                              $     6,300
                                                      ===========                              ===========
Net spread (3)                                                         4.35%                                    4.26%
                                                                      ======                                   ======
Net interest margin (3)                                                5.00%                                    5.06%
                                                                      ======                                   ======
Ratio of interest earning assets to
  interest bearing liabilities               1.26                                      1.22
                                      ===========                               ===========

(1)   Non-accrual loans and overdrafts are included in the average balances of loans.
(2)   Includes Federal Home Loan Bank stock.
(3)   Interest income on tax-exempt securities has not been adjusted to a taxable equivalent basis.`

Noninterest IncomeFor the three and six
months ended June 30, 2002, noninterest income from banking products and
services has decreased 5.3% and increased 30.3% as compared to the same periods
in 2001. Increases in service charges and fees primarily contributed to the
overall growth in noninterest income for the six month period ended June 30,
2002; however, this growth in service charges and fee income was offset by a
decline in net gains on loan sales during the three months ended June 30, 2002,
as a result of mortgage loan originations decreasing during the quarter. The
Company also experienced a significant increase in service charges and fees
during the first quarter of 2002 due to a one-time increase of $283,000
resulting from processing errors occurring over a period of time related to the
recognition of fee income on foreign ATM transactions.

Noninterest ExpenseNoninterest expense has increased
during the three and six months ended June 30, 2002 when compared to the same
periods of 2001, reflecting the Companys continued growth and expansion.
Total noninterest expense for the three and six month periods ended June 30,
2002 was 1.5% and 11.3% above the same periods of 2001. Increases in salaries
and employee benefits for the three and six month periods ended June 30, 2002 of
approximately 3.9% and 15.3% were the primary factors contributing to the
overall increase. These increases, along with increases in occupancy and
equipment, offset by decreases in other expenses, are mainly attributable to the
Companys continued efforts to expand its services into new and existing
markets.

Page 12

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Federal Income TaxThe Companys changes in
income tax expense continue to be relatively consistent with the Companys
change in income before income tax.

Forward-Looking StatementsThis discussion and
analysis of financial condition and results of operations and other sections of
this Form 10-Q contain forward looking statements that are based on
managements beliefs, assumptions, current expectations, estimates and
projections about the financial services industry, the economy and about the
Company itself. Words such as anticipates, believes,
estimates, expects, forecasts,
foresee, intends, is likely,
plans, projects, variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions (Future Factors) that are difficult to
predict with regard to timing, extent, likelihood and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what may be
expressed or forecasted in such forward-lookingstatements. Furthermore,
the Company undertakes no obligation to update, amend or clarify forward-looking
statements, whether as a result of new information, future events or otherwise.
Future Factors include:

- changes in interest rates and interest rate relationships; demand for products and services;
- the degree of competition by traditional and non-traditional competitors;
- changes in banking regulations;
- changes in tax laws;
- changes in prices, levies and assessments;
- the impact of technology, governmental and regulatory policy changes;
- the outcome of pending and future litigation and contingencies;
- trends in customer behavior as well as their ability to repay loans; and
- changes in the national and local economies.

These are representative of
the Future Factors that could cause a difference between an actual outcome and a
forward-looking statement.

## ITEM 3 -
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys primary
market risk exposure is interest rate risk and liquidity risk. All of its
transactions are denominated in U.S. dollars with no specific foreign exchange
exposure. The Company has a limited exposure to commodity prices related to
agricultural loans. Any impacts that changes in foreign exchange rates and
commodity prices would have on interest rates are assumed to be insignificant.

Interest rate risk (IRR) is
the exposure of a banking organizations financial condition to adverse
movements in interest rates. Accepting this risk can be an important source of
profitability and stockholder value; however, excessive levels of IRR could pose
a significant threat to the Companys earnings and capital base.
Accordingly, effective risk management that maintains IRR at prudent levels is
essential to the Companys safety and soundness.

Evaluating a financial
institutions exposure to changes in interest rates includes assessing both
the adequacy of the management process used to control IRR and the
organizations quantitative level of exposure. When assessing the IRR
management process, the Company seeks to ensure that appropriate policies,
procedures, management information systems and internal controls are in place to
maintain IRR at prudent levels with consistence and continuity. Evaluating the
quantitative level of IRR exposure requires management to assess the existing
and potential future effects of changes in interest rates on its the
Companys consolidated financial condition, including capital adequacy,
earnings, liquidity, and, where appropriate, asset quality.

Page 13

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The Company has not
experienced a material change in its financial instruments that are sensitive to
changes in interest rates since December 31, 2001, which information can be
located in the Companys Annual Report on Form 10-K.

# PART II

OTHER INFORMATION

## ITEM 1 - LEGAL
PROCEEDINGS

There are no material legal
proceedings pending against the Company. The Companys wholly-owned
subsidiaries, Bank of Lenawee and Bank of Washtenaw, are involved in ordinary
routine litigation incident to their business; however, no such proceedings are
expected to result in any material adverse effect on the operations or earnings
of the Banks. Neither the Banks nor the Company are involved in any proceedings
to which any director, principal officer, affiliate thereof, or person who owns
of record or beneficially five percent (5%) or more of the outstanding stock of
the Company or the Banks, or any associate of the foregoing, is a party or has a
material interest adverse to the Company or the Banks.

## ITEM 2 -
CHANGES IN SECURITIES

No changes in the
securities of the Company occurred during the quarter ended June 30, 2002.

## ITEM 3 -
DEFAULTS UPON SENIOR SECURITIES

There have been no defaults
upon senior securities relevant to the requirements of this section during the
three months ended June 30, 2002.

## ITEM 4 -
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of
shareholders was held on April 18, 2002. At that meeting, the following matters
were submitted to a vote of the shareholders. There were 842,044 voting shares
outstanding on April 18, 2002. 675,200 shares or 80.2% voted as follows:

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| | Directors elected for three year terms expiring in
2005:
| | --------------------------------------------------------
| |                                                         

| | Amendment to Articles of Incorporation
to change the name of the Company 
to Pavilion Bancorp, Inc. | For
593,467 | Against
66,377 | Abstained
15,356
| | --------------------------------------------------------------------------------------------------- | ----------- | -------------- | ----------------
| | Selection of Crowe, Chizek and 
Company LLP as Auditors for 2002                                    | For
669,601 | Against
944    | Abstained
4,655 

ITEM 5 - OTHER INFORMATION

| | None.
| | -----

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Exhibits      
|--- | --------------
|    | 99.1          
|    | 99.2          
|(b) | Reports on 8-K
|    | 1.            
|    | 2.            

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SIGNATURES

In accordance  with the  requirements of the Securities  Exchange Act of 1934, as amended,  the Registrant
has duly  caused  this  Quarterly  Report on Form 10-Q for the  quarter  ended June 30,  2002,  to be signed on its
behalf by the undersigned, thereunto duly authorized.

| | PAVILION BANCORP, INC.
/s/ Patrick K. Gill
Patrick K. Gill
President and Chief Executive Officer
/s/ Loren V. Happel
Loren V. Happel
Treasurer/Chief Financial Officer
(Principal Financial and Accounting Officer)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

DATE:  August 12, 2002

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EXHIBIT INDEX

|Exhibit | Description                                                                                                                                                                                                                                                         | Page
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|99.1    | Certificate of the Chief  Executive  Officer of Pavilion  Bancorp,  Inc.  pursuant to 18
                           U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                           2002.                       | 18  
|99.2    | Certificate  of the  Treasurer and Chief  Financial  Officer of Pavilion  Bancorp,  Inc.
                           pursuant  to 18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of the
                           Sarbanes-Oxley Act of 2002. | 19  

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EXHIBIT 99-1

I, Patrick K. Gill, Chief Executive  Officer of Pavilion  Bancorp,  Inc.,  certify,  pursuant to 18 U.S.C.  Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | (1) | the  Quarterly  Report on Form 10-Q for the  quarterly  period  ended  June 30,  2002  which this
                  statement  accompanies  fully  complies  with the  requirements  of Section 13(a) or 15(d) of the
                  Securities Exchange Act of 1934, and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | the  information  contained in the Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002 fairly presents,  in all material respects,  the financial condition and results of
                  operations of Pavilion Bancorp, Inc.

Dated: August 12, 2002

| | /s/ Patrick K. GillPatrick K. Gill
Chief Executive Officer
| | ----------------------------------------------------------

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EXHIBIT 99-2

I, Loren V. Happel,  Treasurer and Chief  Financial  Officer of Pavilion  Bancorp,  Inc.,  certify,  pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | (1) | the  Quarterly  Report on Form 10-Q for the  quarterly  period  ended  June 30,  2002  which this
                  statement  accompanies  fully  complies  with the  requirements  of Section 13(a) or 15(d) of the
                  Securities Exchange Act of 1934, and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | the  information  contained in the Quarterly  Report on Form 10-Q for the quarterly  period ended
                  June 30, 2002 fairly presents,  in all material respects,  the financial condition and results of
                  operations of Pavilion Bancorp, Inc.

Dated: August 12, 2002

| | /s/ Loren v. HappelLoren v. Happel
Treasurer and Chief Financial Officer
| | ------------------------------------------------------------------------

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