# United States Securities and
Exchange CommissionWashington, D.C. 20549

_________________

FORM 10-Q

[X] Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

# For the quarterly
period ended September 30, 2004

or

[__] Transition Report
Pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934

_________________

# Commission File
#000-30521

Pavilion 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[__]

Indicate by check mark
 whether the  registrant  is an  accelerated  filer (as defined in Exchange Act Rule
12b-2). Yes [__]         No   [X]

As of October 25, 2004, there were
851,447 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.       | Financial Statements (Condensed)                                                  
|              | (a)           Condensed Consolidated Balance Sheet                                 | 3       
|              | (b)           Condensed Consolidated Statements of Income and Comprehensive Income | 4       
|              | (c)           Condensed Consolidated Statements of Cash Flows                      | 6       
|              | (d)           Notes to Condensed Consolidated Financial Statements                 | 7       
|              |                                                                                   
|Item 2.       | Management's Discussion and Analysis of                                           
|              | Financial Condition and Results of Operations                                      | 11      
|              |                                                                                   
|Item 3.       | Quantitative and Qualitative Disclosures About Market Risk                         | 23      
|              |                                                                                   
|Item 4.       | Controls and Procedures                                                            | 25      
|              |                                                                                   
|              |                                                                                   
|PART II       | OTHER INFORMATION                                                                 
|              |                                                                                   
|              | Report of Independent Accountants                                                 
|Item 1.       | Legal Proceedings                                                                  | 26      
|Item 2.       | Unregistered Sales of Equity Securities and Use of Proceeds                        | 27      
|Item 3.       | Defaults Upon Senior Securities                                                    | 27      
|Item 4.       | Submission of Matters to a Vote of Security Holders                                | 27      
|Item 5.       | Other Information                                                                  | 27      
|Item 6.       | Exhibits                                                                           | 27      
|             
|Signatures    | 29                                                                                
|              |                                                                                   
|Exhibit Index | 30                                                                                

Page 2

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# PART IFINANCIAL INFORMATION

ITEM 1- FINANCIAL
STATEMENTS (a) CONDENSED CONSOLIDATED BALANCE SHEETS In thousands of dollars

|                                                                             | September 30,2004(unaudited) | December 31,2003
|---------------------------------------------------------------------------- | ---------------------------- | ----------------
|                                                                             |                              |                 
|ASSETS                                                                       |                              |                 
|Cash and due from banks                                                      |                              |                 
|Securities available for sale, at fair value                                 |                              |                 
|Federal Home Loan Bank stock, at cost                                        |                              |                 
|Federal Reserve Bank stock, at cost                                          |                              |                 
|Loans held for sale                                                          |                              |                 
|Loans receivable                                                             |                              |                 
|Allowance for loan losses                                                    |                              |                 
|                                                                             |                              |                 
|Net loans                                                                    |                              |                 
|Premises and equipment, net                                                  |                              |                 
|Accrued interest receivable                                                  |                              |                 
|Mortgage servicing asset                                                     |                              |                 
|Other assets                                                                 |                              |                 
|Assets of discontinued operation                                             |                              |                 
|                                                                             |                              |                 
|Total Assets                                                                 |                              |                 
|                                                                             |                              |                 
|                                                                             |                              |                 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                         |                              |                 
|                                                                             |                              |                 
|Deposits:                                                                    |                              |                 
|Non-interest bearing                                                         |                              |                 
|Interest bearing                                                             |                              |                 
|                                                                             |                              |                 
|Total deposits                                                               |                              |                 
|                                                                             |                              |                 
|Borrowed Funds                                                               |                              |                 
|Accrued interest payable                                                     |                              |                 
|Other liabilities                                                            |                              |                 
|Trust preferred subordinated debt                                            |                              |                 
|Common stock subject to repurchase obligation in ESOP                        |                              |                 
|Liabilities of discontinued operation                                        |                              |                 
|                                                                             |                              |                 
|Total liabilities                                                            |                              |                 
|                                                                             |                              |                 
|Shareholders' equity                                                         |                              |                 
|Common stock and paid-in capital, no par value, 3,000,000 shares             |                              |                 
|authorized; 845,420 and 805,892 issued and outstanding at September 30, 2004 |                              |                 
|and December 31, 2003, respectively                                          |                              |                 
|Retained earnings                                                            |                              |                 
|Accumulated other comprehensive income (loss),                               |                              |                 
|net of tax                                                                   |                              |                 
|                                                                             |                              |                 
|Total shareholders' equity                                                   |                              |                 
|                                                                             |                              |                 
|Total liabilities and shareholders' equity                                   |                              |                 
|                                                                             |                              |                 

See accompanying notes
to condensed consolidated financial statements.

Page 3

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# PART IFINANCIAL INFORMATION

(b) CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME(unaudited) In thousands of dollars, except per share data

|                                                      | Three Months EndedSeptember 30 | Nine Months EndedSeptember 30
|----------------------------------------------------- | ------------------------------ | -----------------------------
|                                                      |                                |                              
|                                                      |                                |                              
|                                                      |                                |                              
|Interest and dividend income                          |                                |                              
|Loans, including fees                                 |                                |                              
|Securities                                            |                                |                              
|Federal funds sold and other                          |                                |                              
|                                                      |                                |                              
|                                                      |                                |                              
|Interest expense                                      |                                |                              
|Deposits                                              |                                |                              
|Federal Home Loan Bank advances                       |                                |                              
|Other                                                 |                                |                              
|                                                      |                                |                              
|Total interest expense                                |                                |                              
|                                                      |                                |                              
|Net interest income                                   |                                |                              
|Provision for loan and lease losses                   |                                |                              
|                                                      |                                |                              
|Net interest income after provision                   |                                |                              
|for loan and lease losses                             |                                |                              
|                                                      |                                |                              
|Non-interest income                                   |                                |                              
|Service charges and fees                              |                                |                              
|Gains on loan sales                                   |                                |                              
|Loan servicing fees, net of amortization              |                                |                              
|Other                                                 |                                |                              
|                                                      |                                |                              
|Total non-interest income                             |                                |                              
|                                                      |                                |                              
|Non-interest expense                                  |                                |                              
|Salaries and employee benefits                        |                                |                              
|Occupancy and equipment                               |                                |                              
|Professional services                                 |                                |                              
|Marketing                                             |                                |                              
|Data processing services                              |                                |                              
|Postage and mobile courier                            |                                |                              
|Director and shareholders                             |                                |                              
|Loan and collection                                   |                                |                              
|Other                                                 |                                |                              
|                                                      |                                |                              
|Total non-interest expense                            |                                |                              
|                                                      |                                |                              
|Income from continuing operations before income taxes |                                |                              
|Provision for income tax                              |                                |                              
|                                                      |                                |                              
|Income from continuing operations                     |                                |                              
|                                                      |                                |                              

Page 4

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|                                                       |  |  |   |     |  |   |      |   |   |       |  |   |       |  
|------------------------------------------------------ |  |  | - | --- |  | - | ---- | - | - | ----- |  | - | ----- | -
|Discontinued operations                                |  | 
|Income (loss) from operation of discontinued component |  |  |   | 177 |  |   | (31  | ) |   | 291   |  |   | (106  | )
|Provision (benefit) for income taxes                   |  |  |   | 61  |  |   | (11  | ) |   | 101   |  |   | (36   | )
|                                                       |  |  |   |     |  |   |      |  
|Income from discontinued operation                     |  |  |   | 116 |  |   | (20  | ) |   | 190   |  |   | (70   | )
|                                                       |  |  |   |     |  |   |      |  
|                                                       |  | 
|Net income                                             |  |  | $ | 692 |  | $ | 882  |   | $ | 2,310 |  | $ | 2,590 |  
|                                                       |  |  |   |     |  |   |      |  
|                                                       |  | 
|Earnings per share from continuing operations          |  | 
|Basic                                                  |  |  | $ | .68 |  | $ | 1.11 |   | $ | 2.51  |  | $ | 3.25  |  
|                                                       |  |  |   |     |  |   |      |  
|Diluted                                                |  |  | $ | .67 |  | $ | 1.10 |   | $ | 2.48  |  | $ | 3.23  |  
|                                                       |  |  |   |     |  |   |      |  
|Earnings per share from discontinued operations        |  | 
|Basic                                                  |  |  | $ | .14 |  | $ | (.02 | ) | $ | .22   |  | $ | (.09  | )
|                                                       |  |  |   |     |  |   |      |  
|Diluted                                                |  |  | $ | .14 |  | $ | (.02 | ) | $ | .22   |  | $ | (.08  | )
|                                                       |  |  |   |     |  |   |      |  
|Net earnings per share                                 |  | 
|Basic                                                  |  |  | $ | .82 |  | $ | 1.09 |   | $ | 2.73  |  | $ | 3.16  |  
|                                                       |  |  |   |     |  |   |      |  
|Diluted                                                |  |  | $ | .81 |  | $ | 1.08 |   | $ | 2.70  |  | $ | 3.15  |  
|                                                       |  |  |   |     |  |   |      |  

See accompanying notes
to condensed consolidated financial statements.

Page 5

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(c) CONDENSED
CONSOLIDATED STATEMENTS OFCASH FLOWS (unaudited)In thousands of dollars

|                                                    | Nine Months EndedSeptember 30,
|--------------------------------------------------- | ------------------------------
|                                                    |                               
|                                                   
|                                                    |                               
|Cash flows from operating activities                |                               
|Net income from continuing operations               |                               
|Adjustments to reconcile net income to              |                               
|net cash from operating activities                  |                               
|Depreciation                                        |                               
|Provision for loan losses                           |                               
|Net amortization and accretion on securities        |                               
|available for sale                                  |                               
|Net change in:                                      |                               
|Accrued interest receivable                         |                               
|Loans held for sale                                 |                               
|Gains on sale of loans                              |                               
|Other assets                                        |                               
|Accrued interest payable                            |                               
|Other liabilities                                   |                               
|                                                    |                               
|Net cash provided by operating activities           |                               
|                                                    |                               
|Cash flows from investing activities                |                               
|Proceeds from:                                      |                               
|Maturities, calls and principal payments on         |                               
|securities available for sale                       |                               
|Purchases of:                                       |                               
|Federal Reserve Bank stock                          |                               
|Securities available for sale                       |                               
|Premises and equipment, net                         |                               
|Net increase in loans                               |                               
|                                                    |                               
|Net cash used in investing activities               |                               
|                                                    |                               
|Cash flows from financing activities                |                               
|Net increase in deposits                            |                               
|Net change in borrowed funds and capital securities |                               
|Change in shareholders' equity                      |                               
|                                                    |                               
|Net cash provided by financing activities           |                               
|                                                    |                               
|Net change in cash and cash equivalents             |                               
|                                                    |                               
|Cash and cash equivalents at beginning of period    |                               
|                                                    |                               
|                                                    |                               
|Cash and cash equivalents at end of period          |                               
|                                                    |                               
|                                                    |                               
|Cash paid for:                                      |                               
|Interest                                            |                               
|Income taxes                                        |                               

Page 6

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(d)
          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 (the
Bank) and Bank of Washtenaw (together with Bank of Lenawee, the
Banks). The Company consummated sale of the Bank of Washtenaw effective
October 29, 2004. Please refer to Note 5  Discontinued Operations for information
regarding activity related to the Bank of Washtenaw. The Bank of Lenawee includes its
wholly-owned subsidiaries, Pavilion Financial Services and Pavilion Mortgage Company (the
Mortgage Company). All significant inter-company balances and transactions
have been eliminated in consolidation.

The Bank provides a range of banking
services to individuals, commercial businesses, light industries and municipal entities
located in its service area. The Bank maintains a diversified loan portfolio with loans to
business enterprises for current operations and expansion and loans to individuals for
home mortgages, automobiles and personal expenditures. The Bank offers traditional bank
deposit products, including checking, savings, money market savings, individual retirement
accounts, certificates of deposit as well as a mobile banking courier service.

# NOTE 2  BASIS OF
PRESENTATION

The unaudited condensed consolidated
financial statements of Pavilion Bancorp, Inc. (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 adjustments) considered
necessary for a fair presentation of financial position, results of operations and cash
flows, have been included. Operating results for the nine month period ended
September 30, 2004 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2004. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys Annual Report on
Form 10 for the year ended December 31, 2003.

Page 7

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# NOTE 3  ACCOUNTING
FOR STOCK-BASED COMPENSATION

Compensation expense under stock
options is reported using the intrinsic value method. The exercise price of stock options
is generally equivalent to the market price of the underlying common stock as of the date
of grant. No stock-based compensation cost is reflected in net income for stock options
granted with an exercise price equal to or greater than the market price of the underlying
common stock at date of grant. For stock options granted below market price, compensation
expense is based upon the difference between the market price and the exercise price at
the date of grant and is recorded over the vesting period of the options. Compensation
expense actually recognized for the three and nine months ended September 30, 2004 and
2003 was not significant. The following table illustrates the effect on net income and
earnings per share had the company applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation as indicated in the pro forma
amounts below.

|                                                      | Three Months EndedSeptember 30 | Nine Months EndedSeptember 30
|----------------------------------------------------- | ------------------------------ | -----------------------------
|                                                      |                                |                              
|                                                      |                                |                              
|                                                      |                                |                              
|                                                      |                                |                              
|Income from continuing operations                     |                                |                              
|                                                      |                                |                              
|Less:  Stock-based compensation                       |                                |                              
|expense determined under fair value                   |                                |                              
|based method                                          |                                |                              
|                                                      |                                |                              
|                                                      |                                |                              
|Pro forma income                                      |                                |                              
|                                                      |                                |                              
|Basic earnings per share from continuing operations   |                                |                              
|Pro forma basic earnings per share                    |                                |                              
|                                                      |                                |                              
|Diluted earnings per share from continuing operations |                                |                              
|Pro forma diluted earnings per share                  |                                |                              

The weighted average fair value of
stock options granted during the nine months ended September 30, 2004 and 2003 were $10.15
and $16.69. The fair value of options granted during the nine months ended September 30,
2004 and 2003 were estimated using an option pricing model with the following weighted
average information as of the grant dates:

|                           | 2004 | 2003
|-------------------------- | ---- | ----
|                           |      |     
|Risk free rate of interest |      |     
|Expected option life       |      |     
|Expected dividend yield    |      |     
|Expected volatility        |      |     

In future years, as additional
options are granted, the pro-forma effect on net income and earnings per share may
decrease. Stock options are used to reward directors and certain executive officers and
provide them with an additional equity interest. Options are issued for ten year periods
and have varying vesting schedules.

Page 8

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# NOTE 4  EARNINGS
PER SHARE

Basic earnings per share is
calculated by dividing net income by the weighted  average number of common shares
outstanding during the period. Diluted earnings per share reflects additional common
shares that would have been outstanding if dilutive potential common shares had been
issued. Potential common shares that may be issued relate to outstanding stock options.

A reconciliation of the numerators
and denominators of the basic earnings and diluted earnings per share computations for the
three and nine months ended September 30, 2004 and 2003 is presented below in thousands,
except for per share information:

|                                                     | Three Months EndedSeptember 30 | Nine Months EndedSeptember 30
|---------------------------------------------------- | ------------------------------ | -----------------------------
|                                                     |                                |                              
|                                                     |                                |                              
|                                                     |                                |                              
|                                                     |                                |                              
|Income from continuing operations                    |                                |                              
|                                                     |                                |                              
|Average number of common shares                      |                                |                              
|outstanding to calculate basic                       |                                |                              
|earnings per common share from continuing operations |                                |                              
|                                                     |                                |                              
|Effect on diluted stock offerings                    |                                |                              
|                                                     |                                |                              
|Average number of common shares                      |                                |                              
|outstanding used to calculate                        |                                |                              
|diluted earnings per common share from               |                                |                              
|continuing operations                                |                                |                              
|                                                     |                                |                              

Page 9

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# NOTE 5 
DISCONTINUED OPERATIONS

On July 16, 2004 Pavilion Bancorp,
Inc. announced that it had signed a definitive agreement to sell the Bank of Washtenaw for
$15,000,000. Sale of Bank of Washtenaw was initiated to concentrate the Companys
resources in the Lenawee County market, where the Board of Directors concluded more profit
and growth potential exists. In accordance with Financial Accounting Standard 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, which became
effective for the company on January 1, 2002, the financial position and results of
operations of Bank of Washtenaw are removed from the detail line items in the
companys financial statements and presented separately as discontinued
operations. The sale was completed on October 29, 2004.

A condensed balance sheet and
Statement of Operations for Bank of Washtenaw follows (in thousands):

|                                | September 30,2004 | December 31,2003
|------------------------------- | ----------------- | ----------------
|                                |                   |                 
|ASSETS                          |                   |                 
|Cash and federal funds sold     |                   |                 
|Securities available for sale   |                   |                 
|Loans, net                      |                   |                 
|Premises and equipment, net     |                   |                 
|Other assets                    |                   |                 
|                                |                   |                 
|Total assets                    |                   |                 
|                                |                   |                 
|                                |                   |                 
|LIABILITIES                     |                   |                 
|Deposits                        |                   |                 
|Federal Home Loan Bank advances |                   |                 
|Other liabilities               |                   |                 
|                                |                   |                 
|Total liabilities               |                   |                 
|                                |                   |                 
|Equity                          |                   |                 
|                                |                   |                 
|Total liabilities and equity    |                   |                 
|                                |                   |                 

|                          | For the Three
 Months Ended | For the Nine
Months Ended
|------------------------- | --------------------------- | -------------------------
|                          |                             |                          
|                          |                             |                          
|                          |                             |                          
|Interest income           |                             |                          
|Interest expense          |                             |                          
|                          |                             |                          
|Net interest income       |                             |                          
|                          |                             |                          
|Provision for loan losses |                             |                          
|Non-interest income       |                             |                          
|Non-interest expense      |                             |                          
|Income tax (benefit)      |                             |                          
|                          |                             |                          
|Net (loss)                |                             |                          
|                          |                             |                          

Page 10

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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
September 30, 2004 and for the three and nine month periods ended September 30, 2004
and 2003.

# Forward-Looking
Statements

This report includes
forward-looking statements as that term is used in the securities laws. All
statements regarding our expected financial position, business and strategies are
forward-looking statements. In addition, the words anticipates,
believes, estimates, seeks, expects,
plans, intends, and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. The presentation and
discussion of the provision and allowance for loan losses, determining the fair value of
securities and other financial instruments, the valuation of mortgage servicing rights and
statements concerning future profitability or future growth or increases, are examples of
inherently forward looking statements in that they involve judgments and statements of
belief as to the outcome of future events. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which could have a
material adverse affect on our operations and our future prospects include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S. Government,
including policies of the U.S. Treasury and the Federal Reserve Board, the quality or
composition of the loan or investment portfolios, demand for loan products, deposit flows,
competition, demand for financial services in our market area and accounting principles,
policies and guidelines. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such statements.
Further information concerning us and our business, including additional factors that
could materially affect our financial results, is included in our filings with the
Securities and Exchange Commission.

# Critical Accounting
Policies

Certain of the Companys
accounting policies are important to the portrayal of the Companys financial
condition, since they require management to make difficult, complex or subjective
judgments, some of which may relate to matters that are inherently uncertain. Estimates
associated with these policies are susceptible to material changes as a result of changes
in facts and circumstances. Facts and circumstances which could affect these judgments
include, but without limitation, changes in interest rates, in the performance of the
economy or in the financial condition of borrowers. Management believes that its critical
accounting policies include determining the allowance for loan losses, determining the
fair value of securities and other financial instruments and the valuation of mortgage
servicing rights.

# Allowance for Loan and
Lease Losses

The allowance for loan and lease
losses is managements estimate of losses inherent in the Banks loan and lease
portfolio. Management relies on a number of factors and sources of information in
preparing this estimate. These include, but are not limited to, internal credit analyses
and loan risk ratings, local economic conditions and trends, regulatory requirements,
collateral values, loan types and loan documentation. Accordingly, the allowance for loan
and lease losses includes a reserve calculation based on an evaluation of loans determined
to be impaired, risk ratings, historical losses, loan types and other subjective factors
management may believe to be relevant and/or material.

Page 11

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# Loan Classifications

The Company has established a risk
rating system for loans that evaluates a variety of credit quality-related characteristics
of each loan being rated. Initial risk ratings for loans are established by the
originating (or assigned) lending official. The lending official is responsible for the
continuing accuracy of the risk rating and is authorized to downgrade a loan to a lower
risk rating if warranted by any information received. Loan risk ratings are also evaluated
for accuracy through several processes that are independent of the loan origination
process. The Bank retains independent consultants to review the accuracy of loan risk
ratings on an annual basis. These results are reported to senior management of the Bank,
as well as the Audit Committee and the Board of Directors. Additionally, the Banks
Chief Credit Officer monitors individual loan risk ratings and overall credit quality
through several monitoring systems and reports. The Chief Credit Officer reports directly
to the CEO of the Bank and is independent of the loan origination process. Criticized
loans have been risk-rated 5 and are individually included on a monthly Loan Watch Report
submitted to senior management and the Board of Directors of the Bank. Classified loans
have been risk-rated 6, 7 or 8 and are individually included on a monthly Problem Loan
Report submitted to senior management and the Board of Directors of the Bank. The
Banks Loan Policy specifically defines the characteristics of each risk rating as
follows:

1 Rating: Essentially risk free
credit. Credit to premier customers having the banks highest credit rating based on
an extremely strong financial condition, which compares favorably with industry standards
(upper quartile of RMA ratios). Secured by readily marketable liquid collateral (traded
stocks, bonds, certificates of deposit, savings account, etc.) with comfortable margins.
Highly profitable firms that have a track record of always servicing their debts. Possible
characteristic of such accounts:

| | - | Substantial
net worth
| | - | ---------------------

| | - | Low
debt to worth ratio
| | - | -----------------------

| | - | Significantly
above average working capital
| | - | -------------------------------------------

| | - | Current
accounts payable
| | - | ------------------------

| | - | Deposits
are 15% of outstanding loans
| | - | -------------------------------------

| | - | 25%
of assets are liquid"
| | - | -------------------------

2 Rating: Low risk. Multiple
strong sources of repayment. Debt of borrower is modest relative to the
borrowers financial strength and ability to pay. Borrower must be profitable, have a
demonstrated track record, very strong cash flow and margins above projected needs. Loan
supported by unaudited financial statements containing strong balance sheets and five
consecutive years of profits combined with a satisfactory relationship with the Bank.
Customer demonstrates the ability to manage the working capital position and term
financing requirements. Possessing a sound repayment source (and a secondary source) which
definitely will allow repayment in a reasonable period of time. Individual loans backed by
liquid personal assets, established history and unquestionable character. Other
characteristics:

| | - | Significant
net worth
| | - | ---------------------

| | - | Better
than average debt to worth ratio (e.g. 2.0 to 1 or less)
| | - | ---------------------------------------------------------------

| | - | Above
average working capital ratio
| | - | -----------------------------------

| | - | Current
accounts payable
| | - | ------------------------

| | - | Secured
loans must have collateral Loan/value ratio of 70% or lower
| | - | -------------------------------------------------------------------

| | - | 10%
of assets are liquid
| | - | -------------------------

Page 12

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3 Rating: Moderate risk.
Good primary and secondary sources of repayment. Debt of the borrower is
reasonable relative to borrowers financial strength and ability to pay. Borrower
must be profitable, have a demonstrated track record, exhibits sufficient cash flow and
margins above projected needs. Borrowers have satisfactory asset quality and liquidity,
adequate debt capacity and coverage, and good management in critical positions. Earning
statements may reflect a one year loss, but borrowers have sufficient strength and
financial flexibility to offset this event. Occasionally has a need for working capital
and or term financing. Other characteristics:

| | - | Acceptable
net worth
| | - | --------------------

| | - | Acceptable
industry average for debt to worth ratio
| | - | ---------------------------------------------------

| | - | Adequate
working capital
| | - | ------------------------

| | - | Not
significantly slow in paying accounts payable
| | - | -------------------------------------------------

| | - | Cash
flow ratio = 1.3 or above
| | - | -------------------------------

4 Rating:   Acceptable
risk.  Sufficient  primary source of repayment and acceptable  secondary source of
repayment has either:

| | - | Minimum
net worth
| | - | -----------------

| | - | Fairly
high debt to worth ratio  - Adequate cash flow ratio (1.2 or above) with higher than
desired leverage; or marginal cash flow (1.2 or below) with strong capitalization and
liquidity.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Declining
earnings, limited additional debt capacity, or market fundamentals that indicate above
average risks.
| | - | ----------------------------------------------------------------------------------------------------------------

5 Rating: Borderline
risk, potential weaknesses. Borrowers who exhibit potential credit weaknesses or downward
trends deserving bank managements attention. If not checked or corrected, these
trends will weaken the banks asset position. Acceptable primary source of
repayment, but less than preferable secondary source of repayment. Credit will have
minimal excess cash flow, and financially will be moderately or highly leveraged. A satisfactory credit
exhibits manageable credit risk with two measurable sources of repayment. Loans may
lack technical or legal support, including deficiencies in loan documentation.

| | - | Little
or no net worth
| | - | ----------------------

| | - | High
debt to worth ratio
| | - | ------------------------

| | - | Cash
Flow ratio = 1.1 or above
| | - | ------------------------------

| | - | Start
up or deteriorating industries or with a poor and declining market share in an average
industry
| | - | -----------------------------------------------------------------------------------------------------

| | - | An
element of asset quality, financial flexibility, or management is below average
| | - | -----------------------------------------------------------------------------------

6 Rating: Substandard. A loan
with well-defined credit weakness or weaknesses that jeopardize liquidation of the debt. A
substandard loan is inadequately protected by the current sound worth and paying capacity
of the obligor or of the collateral pledged, if any. These may be loans that have been
restructured so that payment terms and collateral represent major concessions to the
borrower when compared to normal loan terms. Also, this category should include those
loans with contemplated or pending foreclosure or legal action due to the apparent
deterioration in the credit. Loans are characterized by the distinct possibility that a
bank will sustain loss if the deficiencies are not corrected. Loss potential, while
existing in aggregate amount of substandard assets, does not have to exist in individual
assets classified substandard.

Page 13

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7 Rating: Doubtful. A loan with
weaknesses inherent to a substandard loan. The loan also has the added provision that the
weaknesses make collection of debt in full, on the basis of currently existing facts,
conditions, and values, highly questionable and improbable. The possibility of loss is
extremely high, but because of certain known factors which may work to the advantage and
strengthening of the asset, (i.e., capital injection, perfecting liens on additional
collateral, refinancing plans, etc.) its classification as an estimated loss is deferred
until its more exact status may be determined.

8 Rating: Loss. Loans
classified as Loss are considered uncollectible and of such nominal value that their
continuance as bankable assets is not warranted. This classification does not mean that
the loan has absolutely no recovery or salvage value, but rather it is unpractical or
desirable to defer writing-off this basically worthless asset, even though partial
recovery may be affected in the future. Losses should be taken in the period in which they
surface as uncollectible. Known losses should be in process of charge off.

# Mortgage Servicing
Rights (MSR)

The Bank records the original MSR
based on market data. A periodic independent third party valuation is completed to
determine potential impairment of MSR as a result of changes in interest rates and
expected future loan repayment speeds. Significant changes in interest rates or repayment
speeds could have a significant impact on the carrying value of the MSR asset. Beginning
with the third party independent valuation completed as of September 30, 2004, periodic
valuations will be completed quarterly. Previously, independent third party valuations
were completed twice per year.

# Income Taxes

Deferred income tax assets and
liabilities are determined using the liability (or balance sheet) method. Under this
method, the net deferred tax asset or liability is determined based upon the tax effects
of the various temporary differences between book and tax bases of the various balance
sheet asset and liabilities and gives current recognition to changes in tax rates and
laws. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amounts expected to be realized.

# Financial Overview

Total assets increased by $17.3
million or 5.45% from December 31, 2003 to September 30, 2004. This increase was primarily
the result of an increase in loans outstanding. Total loans, net of the allowance for loan
and lease losses, increased by $8.8 million or 4.2% from December 31, 2003 to September
30, 2004. Investment securities available for sale increased $1.7 million or 8% from
December 31, 2003 to September 30, 2004. Total deposits increased $13.9 million or 6.9%
from December 31, 2003 to September 30. 2004. Borrowed funds decreased $931,000 or 8.9%.
Net income from continuing operations for the three months ended September 30, 2004 was
$576,000 compared to $902,000 for the same period in 2003. For the nine months ended
September 30, 2004, net income from continuing operations was $2.1 million compared to
$2.7 million for the same period in 2003. Consolidated net income for the three months
ended September 30, 2004 was $692,000 compared to $882,000 for the same period in 2003.
Consolidated net income for the nine months ended September 30, 2004 was $2.3 million,
compared to $2.6 million for the same period in 2003. Basic earnings per share
(EPS) from continuing operations and diluted EPS from continuing operations
for the three months ended September 30, 2004 were $.68 per share and $.67 per share,
respectively. For the same period in 2003 basic and diluted EPS from continuing operations
were $1.11 and $1.10, respectively. For the nine months ended September 30, 2004, basic
and diluted EPS from continuing operations were $2.51 and $2.48, respectively. For the
same period in 2003 basic and diluted EPS from continuing operations were $3.25 and $3.23,
respectively.

Page 14

---



# FINANCIAL CONDITION

# Investments and Fed
Funds Sold

Total investments comprising
securities available for sale were $22.2 million at September 30, 2004, compared to $20.5
million at December 31, 2003. The increase is attributable to growth in deposits beyond
funds required to meet existing loan demand. Investments in the Federal Reserve Bank of
Chicago and the Federal Home Loan Bank of Indianapolis remained unchanged at $266,000 and
$2.6 million, respectively. The Bank did not have any Fed Funds Sold at September 30, 2004
or December 31, 2003.

# Loans and Allowance for
Loan and Lease Losses

The following table summarizes the
Companys loan portfolio and loan mix at September 30, 2004 and December 31, 2003:

|Consolidated Loans Outstanding, net of deferred fees/costs
|----------------------------------------------------------
|(000's omitted)                                           
|                                                          
|                                                          
|Commercial                                                
|Agricultural                                              
|Real Estate Mortgage                                      
|Real Estate Construction                                  
|Loans held for Sales                                      
|Consumer                                                  
|                                                          
|Gross loans receivable                                    
|Deferred loan origination fees/costs, net                 
|                                                          
|Total loans, net of deferred fees/costs                   
|                                                          

The Companys loan portfolio
increased 4.7% to $219.7 million at September 30, 2004 from $209.9 million at December 31,
2003. Increases in the consumer loan, agricultural loan and real estate mortgages
accounted for the overall increase. The consumer loan portfolio grew by $2.2 million or
7.2% between December 31, 2003 and September 30, 2004 primarily from heightened demand for
home equity loans and home equity lines of credit. The agricultural loan portfolio
increased $2.5 million or 7.4% between December 31, 2003 and September 30, 2004. Increased
demand in response to business development initiatives was the primary source of the
increases. Loans held for sale increased moderately, from $433,000 at December 31, 2003 to
$1.5 million at September 30, 2004. The outstanding amount of loans held for sale
fluctuates based on demand for residential mortgage loans and the timing of receipt of
funds from secondary market sources for residential mortgage loans. Overall, demand for
residential mortgage loans declined significantly compared to earlier periods as interest
rates have increased moderately thus far in 2004. Management anticipates that residential
mortgage demand will remain at reduced levels pending any favorable change in interest
rates.

Page 15

---



# Off-Balance Sheet Items

The following is a summary of
outstanding commitments by the Company to grant loans, unfunded commitments under lines of
credit and letters of credit at September 30, 2004 and December 31, 2003:

|                                    | September 30, 2004 | December 31, 2003
|----------------------------------- | ------------------ | -----------------
|                                    |                    |                  
|Loan Category:                      |                    |                  
|Revolving, 1-4 family residences    |                    |                  
|Construction, residential           |                    |                  
|Other commitments to grant loans    |                    |                  
|Credit card program                 |                    |                  
|Financial standby letters of credit |                    |                  
|                                    |                    |                  
|Total                               |                    |                  
|                                    |                    |                  

Outstanding commitments to grant
loans, lines of credit and letters of credit increased $9.4 million or 16.7% at September
30, 2004 from $56.5 million at December 31, 2003. The increase in such off-balance sheet
items is due primarily to increased loan demand coupled with continued business
development activities. Included in these totals are commitments to lend on 1-4 family
residences. Such loans are generally sold to the secondary market. Management does not
expect that all commitments will result in funded loans.

# Classified Loans

The following tables present
criticized and classified loans of the Company as of September 30, 2004 and December 31,
2003:

|Consolidated Classified Loans by TypeSeptember 30, 2004
|-------------------------------------------------------
|(in thousands)                                         
|                                                       
|                                                       
|Commercial                                             
|Agricultural                                           
|Residential real estate mortgage                       
|Consumer                                               
|                                                       
|Total                                                  
|                                                       

|Consolidated Classified Loans by TypeDecember 31, 2003
|------------------------------------------------------
|(in thousands)                                        
|                                                      
|                                                      
|Commercial                                            
|Agricultural                                          
|Residential real estate mortgage                      
|Consumer                                              
|                                                      
|Total                                                 
|                                                      

Page 16

---



Total criticized and classified
assets of the Company decreased 23% from $28.7 million at December 31, 2003 to $22.2
million at September 30, 2004. The largest decrease was noted in loans risk-rated 5, which
decreased $10.0 million or 45% from $22.4 million at December 31, 2003 to $12.4 million at
September 30, 2004. Other categories of risk ratings, however, registered increases.
Specifically, loans risk-rated 6 increased $3.4 million or 54% from $6.3 million at
December 31, 2003 to $9.7 million at September 30, 2004. Loans risk-rated 7 increased by
$105,000 or 350% over the same period. The majority of the decrease in loans risk-rated 5
was due to continued efforts to closely monitor such loans and work with the respective
borrowers to affect corrective action. The Banks credit administration function is
designed to provide increased information on adversely rated loans to ensure that any
increase is identified in as timely a manner as possible. Accordingly, these internal
controls were responsible for identifying loans where credit related weaknesses were
identified and risk-rated 6. Some of these loans have migrated from a 5 risk rating, thus
accounting for an increase in one category of risk rating while total classified assets
decreased.

Management continues to closely
monitor each loan adversely classified and institute appropriate measures to eliminate the
basis of criticism. Please refer to the section entitled Critical Accounting
policies located with Managements Discussion and Analysis of Financial
Condition and Results of Operations for the definition of each loan risk rating.

# Nonperforming Assets

Nonperforming loans are comprised of
loans accounted for on a nonaccrual basis, loans contractually past due 90 days or more as
to interest or principal payments but still accruing interest and other nonperforming
loans, such as the Banks program to purchase commercial accounts receivable from
business customers. Our classifications of nonperforming loans are generally consistent
with loans identified as impaired.

The following table sets forth
information with respect to the Companys impaired loans at September 30, 2004 and
December 31, 2003:

|                                                 | 2004 | 2003
|------------------------------------------------ | ---- | ----
|                                                 |      |     
|Nonaccrual loans                                 |      |     
|90 days or more past due & still accruing        |      |     
|                                                 |      |     
|Total nonperforming loans                        |      |     
|Other real estate                                |      |     
|                                                 |      |     
|Total nonperforming assets                       |      |     
|                                                 |      |     
|Nonperforming loans as a percent of total loans  |      |     
|Nonperforming assets as a percent of total loans |      |     
|Nonperforming loans as a percent of the          |      |     
|allowance for loan losses                        |      |     

At September 30, 2004 total
nonperforming assets decreased $508,000 or 22% from December 31, 2003. The decline is
primarily attributable to the Banks effort at maintaining overall loan quality and
closely monitoring and managing nonperforming loans to determine and implement corrective
action to improve the quality of nonperforming assets. The dollar amount in Other Real
Estate is the result of several mortgage foreclosure proceedings, however, management does
not expect significant losses with respect to the sale of this real estate awaiting
disposition.

The consolidated activity in the
allowance for loan and lease losses for the three months and nine months ended September
30, 2004 and 2003 is presented in the following table:

Page 17

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|                          | Three Months Ended September 30, | Nine Months Ended September 30,
|------------------------- | -------------------------------- | -------------------------------
|                          |                                  |                                
|                          |                                  |                                
|                          |                                  |                                
|Beginning balance         |                                  |                                
|Loan charge-offs          |                                  |                                
|Loan recoveries           |                                  |                                
|                          |                                  |                                
|Net loan charge-offs      |                                  |                                
|Provision for loan losses |                                  |                                
|                          |                                  |                                
|Ending balance            |                                  |                                
|                          |                                  |                                

For the three months ended September
30, 2004, net loan charge-offs declined $47,000 or 65% compared to the same period in
2003, falling to $25,000 from $72,000 in 2003. The decrease in net charge-offs was a
primary reason for a decline in the provision for loan losses. For the three months ended
September 30, 2004 provision for loan losses declined $72,000 or 53% to $63,000 from
$135,000 for the same period in 2003. Improved credit quality, together with problem loan
workout activities and an improved economy were the primary reasons for the reduced
charge-off activity. Activity for the nine months ended September 30, 2004 registered a
similar trend. Net loan charge-offs declined $135,000 or 53% to $121,000 for the nine
months ended September 30, 2004 from $256,000 for the same period in 2003. Consequently,
for the nine months ended September 30, 2004, provision for loan losses declined $240,000
or 53% to $215,000 from $455,000 for the same period in 2003. The reasons for the
reduction in net loan charge-offs and provision for loan losses for the nine months ended
September 30, 2004 are substantially the same as noted above.

The allowance for loan and lease
losses (allowance) as a percentage of total loans was 1.09% at September 30,
2004, compared to 1.10% at December 31, 2003.

Management maintains an allowance for
loan and lease losses believed to be sufficient to absorb estimated probable credit losses
inherent in the loan portfolio, recognizing the imprecision inherent in the process of
estimating credit losses. The allowance represents managements estimate of probable
net loan charge-offs in the portfolio at each balance sheet date. The allowance contains
provisions for probable losses that have been identified relating to specific borrowing
relationships as well as probable losses believed to be inherent in the loan portfolio and
loan relationships not specifically identified.

The amount of provisions for loan
losses recognized by the Company is based on managements evaluation as to the
amounts required to maintain an allowance adequate to provide for potential losses
inherent in the loan portfolio. The level of the allowance is dependent upon the total
amount of classified loans, past due and non-performing loans, historical charge-off
experience, general economic conditions and managements assessment of potential
losses based upon internal credit evaluation of the loan portfolio and particular loans.
In determining the provision for loan losses, management first determines the estimated
allowance required for any specifically identified classified loans. Management then
estimates potential charge-offs based on historical experience. Management also evaluates
the general loan portfolio for credit risk based upon, but not limited to, the criteria
noted above, and allocates an amount believed to be sufficient to cover estimated loan
charge-offs inherent in the general loan portfolio. Management may then add, at its
discretion, an allocation amount to adjust for current economic conditions, any additional
perceived credit risk in the portfolio and any other information that management considers
relevant. Please refer to Item 4  Controls and Procedures, subparagraph (b) 
Changes in Internal Controls for additional information regarding charges against the
Allowance for Loan and Lease Losses related to accounting for unpaid accrued interest
receivable.

Page 18

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# Deposits and Borrowed
Funds

Total deposits increased $13.9
million, or 6.9%, from $202.4 million at December 31, 2003 to $216.3 million at September
30, 2004. Non-interest-bearing accounts increased $2.8 million or 6.6%, from $42.7 million
at December 31, 2003 to $45.5 million at September 30, 2004. Interest-bearing accounts
also registered an increase from $159.7 million at December 31, 2003 to $170.8 million at
September 30, 2004, for an $11.1 million or a 7% increase. Continued business development
efforts represent the primary reason for the rise in overall deposit levels. Though
periodic fluctuations occur on a regular basis, management expects to retain and/or
increase deposits in the future.

Borrowed funds remained stable,
though decreasing moderately, from $10.5 million at December 31, 2003 to $9.5 million at
September 30, 2004.

# Capital Resources

Actual and certain regulatory minimum
capital ratios as of September 30, 2004 and December 31, 2003, are shown in the
following table:

|                                         |  | Minimum Required
   For Capital Adequacy Purposes | Minimum Required
     To Be Well
 Capitalized Under
 Prompt Corrective
 Action Regulations
    For Capital
 Adequacy Purposes
|---------------------------------------- |  | ------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------
|(Dollar amounts in millions)             |  |                                                   |                                                                                                                              
|                                         |  |                                                   |                                                                                                                              
|As of September 30, 2004                 |  |                                                   |                                                                                                                              
|Total capital (to risk-weighted assets)  |  |                                                  
|Consolidated                             |  |                                                   | $                                                                                                                            
|Bank of Lenawee                          |  |                                                   |                                                                                                                              
|Tier 1 capital (to risk-weighted assets) |  |                                                  
|Consolidated                             |  |                                                   |                                                                                                                              
|Bank of Lenawee                          |  |                                                   |                                                                                                                              
|Tier 1 capital (to average assets)       |  |                                                  
|Consolidated                             |  |                                                   |                                                                                                                              
|Bank of Lenawee                          |  |                                                   |                                                                                                                              
|                                         |  |                                                  
|As of December 31, 2003                  |  |                                                  
|Total capital (to risk-weighted assets)  |  |                                                  
|Consolidated                             |  |                                                   | $                                                                                                                            
|Bank of Lenawee                          |  |                                                   |                                                                                                                              
|Tier 1 capital (to risk-weighted assets) |  |                                                  
|Consolidated                             |  |                                                   |                                                                                                                              
|Bank of Lenawee                          |  |                                                   |                                                                                                                              
|Tier 1 capital (to average assets)       |  |                                                  
|Consolidated                             |  |                                                   |                                                                                                                              
|Bank of Lenawee                          |  |                                                   |                                                                                                                              

Page 19

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The Company and the Bank continue to
maintain sufficient risk-based capital levels to remain categorized as
well-capitalized under federal regulatory requirements. On a consolidated
basis the Company improved its overall risk-based ratios in each measurement. Total
risk-based capital (RBC) to risk-weighted assets (RWA) increased from 13.3% at December
31, 2003 to 16.5% at September 30, 2004. Similarly, Tier 1 capital to RWA declined from
12.3% at December 31, 2003 to 15.0% at September 30, 2004. Tier 1 capital to average
assets declined from 11.6% to 9.5% for the same respective dates. No significant risk is
associated with the decline in the Tier 1 capital to average assets ratio, as it remains
well above regulatory requirements. The Company expects all risk-based capital ratios to
remain above the well-capitalized thresholds.

The Companys overall
capitalization will register a significant increase as a result of the sale of the Bank of
Washtenaw. As the Companys Board of Directors determines the most appropriate form
of permanent deployment of this additional capital, overall capitalization may change.

# Liquidity

The Company must maintain an adequate
liquidity position in order to respond to extensions of credit, the short-term demand for
funds caused by withdrawals from deposit accounts, and for payment of operating expenses.
Maintaining adequate liquidity is accomplished through management of a combination of
liquid assets  those which can be converted into cash  and access to
additional sources of funds. Primary liquid assets of the Company are cash and amounts due
from banks, federal funds sold, investments held as available for sale, and
maturing loans. The Company views Federal funds purchased and advances from the Federal
Home Loan Bank system as a primary source of immediate liquidity, should the need arise.
The Company anticipates renewing selected advances to fund liquidity requirements, as
necessary. Maturities in the Companys loan and investment portfolios are monitored
regularly to avoid matching short-term deposits with long-term investments and loans.
Other assets and liabilities are also monitored to provide the proper balance between
liquidity, safety, and profitability. This monitoring process must be continuous due to
the constant flow of cash that is inherent in a financial institution.

At September 30, 2004, the Company
held cash and cash equivalents of $3.9 million and $22.2 million of the Companys
investment securities were classified as available for sale. However, available-for-sale
securities with a market value of $5.99 million were pledged as collateral for Treasury
Tax & Loan accounts and repurchase agreements and therefore were not available for
liquidity needs. The amortized cost of the available for sale securities was more than the
fair value at quarter-end, primarily as the result of increasing interest rates, which
resulted in an unrealized loss within the investment portfolio. This unrealized loss,
however, is normal given interest rate changes and does not represent a material risk to
capital, in managements opinion. Management does not believe the sale of any of the
Companys securities would materially affect the overall financial condition of the
Company. Management believes it has sufficient liquidity and sources of liquidity to meet
its obligations.

On October 29, 2004 with the
consummation of the sale of the Bank of Washtenaw, the Company received approximately $15
million in cash. These proceeds will have a significant positive impact on the liquidity
of the Company. Proceeds from the sale of Bank of Washtenaw will be invested in marketable
investment securities in the short term. The Companys Board of Directors is
considering various options for long-term deployment of these funds.

Page 20

---



# Results of Operations

# Net Income

Net income from continuing operations
decreased $326,000 or 36% for the three months ended September 30, 2004 to $576,000 from
$902,000 for the same period in 2003. Similarly, consolidated net income decreased
$190,000 or 22% for the three months ended September 30, 2004 to $692,000 from $882,000
for the same period in 2003. The decrease in earnings is primarily attributable to a lower
level of residential mortgage-related fee income. Residential mortgage volume has declined
as market interest rates have increased. Please refer to section entitled Loans and
Allowance for Loan and Lease Losses for additional discussion regarding residential
mortgage activity.

Net income from continuing operations
of $2.1 million for the nine months ended September 30, 2004 was $540,000 or 20% below net
income from continuing operations of $2.7 million for the same period in 2003. Consolidated net income
of $2.3 million for the nine months ended September 30, 2004 was $280,000 or 11% below consolidated net
income of $2.6 million for the same period in 2003. The primary reasons for this decline
are the same as noted above.

# Net Interest Margin

Following are the net interest margin
calculations for the three and nine months ended September 30, 2004 and 2003:

|                                       | Three months ended
|-------------------------------------- | ------------------
|Dollars in thousands                   |                   
|                                       |                   
|                                       |                   
|                                       |                   
|Interest earnings assets:              |                   
|Loans(1)                               |                   
|Investment securities (2)(3)           |                   
|Federal funds sold and other           |                   
|                                       |                   
|Total int. earning assets              |                   
|                                       |                   
|Interest bearing liabilities:          |                   
|Interest bearing demand                |                   
|deposits                               |                   
|Savings deposits                       |                   
|Time  deposits                         |                   
|Other borrowings                       |                   
|                                       |                   
|Total int. bearing liabilities         |                   
|                                       |                   
|Net interest income (3)                |                   
|                                       |                   
|Net spread (3)                         |                   
|                                       |                   
|Net interest margin (3)                |                   
|                                       |                   
|Ratio of  interest  earning  assets to |                   
|interest bearing liabilities           |                   
|                                       |                   

Page 21

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|                                       | Nine months ended
|-------------------------------------- | -----------------
|Dollars in thousands                   |                  
|                                       |                  
|                                       |                  
|                                       |                  
|Interest earnings assets:              |                  
|Loans(1)                               |                  
|Investment securities (2)(3)           |                  
|Federal funds sold and other           |                  
|                                       |                  
|Total int. earning assets              |                  
|                                       |                  
|Interest bearing liabilities:          |                  
|Interest bearing demand                |                  
|deposits                               |                  
|Savings deposits                       |                  
|Time  deposits                         |                  
|Other borrowings                       |                  
|                                       |                  
|Total int. bearing liabilities         |                  
|                                       |                  
|Net interest income (3)                |                  
|                                       |                  
|Net spread (3)                         |                  
|                                       |                  
|Net interest margin (3)                |                  
|                                       |                  
|Ratio of  interest  earning  assets to |                  
|interest bearing liabilities           |                  
|                                       |                  

|(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.
|--- | -------------------------------------------------------------------------------------------------------

The Banks net interest margin
decreased to 5.72% for the three months ended September 30, 2004 from 6.04% for the same
period in 2003. Declines in the net interest margin continue to reflect the low rate
environment as new loans being originated have lower rates than the average yield in the
loan portfolio. Similarly, cost of funds for deposits and borrowed funds declined as
market rates for various interest-bearing deposits and borrowed funds were lower than the
average cost of funds currently on the Banks books. The decline in cost of funds,
however, was not sufficient to fully offset the decline in earning asset yields, thus
producing a reduction in the net interest margin.

For the nine months ended September
30, 2004, the net interest margin was 5.63% compared to 5.76% for the same period in 2003.
The decline in the net interest margin for the nine months ended September 30, 2004 was
due to substantially the same reasons noted above.

The net interest margin is expected
to continue a moderate downward trend for substantially the same reasons noted above.
However, Bank management does not expect such a decline to pose a significant risk to
earnings. Other factors that may affect the net interest margin are growth rates, loan
demand, local competition, local economic conditions and product offerings.

Page 22

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# Noninterest Income

Total non-interest income decreased
$816,000 or 48% to $874,000 for the three months ended September 30, 2004 compared to
$1.69 million for the same period in 2003. A substantial decline in gains on residential
mortgage loan sales accounted for the reduction. For the three months ended September 30,
2004 gains on loan sales totaled $303,000 compared to $1.61 million for the same period in
2003. As interest rates for secondary market residential mortgage loans increased, demand
for such loans declined significantly.

For the nine months ended September
30, 2004, total non-interest income declined $2.1 million or 43% to $2.8 million, compared
to $4.95 million for the same period in 2003. For the nine months ended September 30, 2004
gains on loan sales totaled $1.2 million compared to $5.4 million for the same period in
2003. The cause of this decline is substantially the same as noted above.

# Noninterest Expense

For the three months ended September
30, 2004, total non-interest expenses declined $200,000 or 6.2% to $3.05 million from
$3.25 million for the same period in 2003. Reduced salaries and employee benefits
accounted for the overall decrease as salary incentives related to residential mortgage
origination declined as the overall volume of residential mortgage originations declined.
Professional fees increased 100%, to $140,000 for the three months ended September 30,
2004 from $70,000 for the same period in 2003. Increased professional fees were associated
with increased legal and audit fees in connection Sarbanes-Oxley, the sale of Bank of
Washtenaw, and increased internal and external audit fees. Other categories did not
register a significant change.

Total non-interest expenses for the
nine months ended September 30, 2004 decreased $736,000 or 7.9% to $8.64 million from
$9.38 million during the same period in 2003. The decrease is attributable to the same
causes noted above. Professional fees for the nine months ended September 30, 2004 was
$396,000 compared to $184,000 for the same period in 2003. The reason for the increase was
substantially the same as noted above. There were no significant changes in other
non-interest expense categories.

# Federal Income Tax

The provision for federal income tax
was $251,000 or 30.4% of pretax income from continuing operations for the three months
ended September 30, 2004, compared to $431,000 or 32.3% for the same period in 2003. The
reduction in the income tax provision reflects the moderately lower amount of net income
generated in the three months ended September 30, 2004 versus the same period in 2003. The
provision for federal income tax was $912,000 or 30.1% of pretax income from continuing
operations for the nine months ended September 30, 2004, compared to $1.3 million or 32.1%
for the same period in 2003. The cause of the reduction in income tax provision for the
nine months ended September 30, 2004 are substantially the same as noted above. The
difference between the statutory rate and the effective tax rate is due to tax-exempt
income and non-deductible expenses.

# ITEM 3 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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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 our
earnings and capital base. Accordingly, effective risk management that maintains IRR at
prudent levels is essential to the Companys safety and soundness. The Board of
Directors has instituted a policy setting limits on the amount of interest rate risk that
may be assumed. Management provides information to the Board of Directors on a monthly
basis detailing interest rate risk estimates and activities to control such risk.

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 consistency and
continuity. Evaluating the quantitative level of IRR exposure requires the Company to
assess the existing and potential future effects of changes in interest rates on its
consolidated financial condition, including capital adequacy, earnings, liquidity, and,
where appropriate, asset quality.

The following table details earning
assets and interest-bearing liabilities, timing of repricing and average interest rates:

|Pavilion Bancorp, Inc.
Schedule of Repricing Earning Assets and Interest-
                Bearing Liabilities
                September 30, 2004
|------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                
|(in thousands)                                                                                                                                  
|                                                                                                                                                
|Assets                                                                                                                                          
|Total cash & due from banks                                                                                                                     
|Average interest rate                                                                                                                           
|Investment securities                                                                                                                           
|Average interest rate                                                                                                                           
|Loans                                                                                                                                           
|Fixed rate                                                                                                                                      
|Average interest rate                                                                                                                           
|Variable rate                                                                                                                                   
|Average interest rate                                                                                                                           
|                                                                                                                                                
|Total                                                                                                                                           
|                                                                                                                                                
|                                                                                                                                                
|Liabilities                                                                                                                                     
|Deposits:                                                                                                                                       
|Non-maturity deposits                                                                                                                           
|Average interest rate                                                                                                                           
|Certificates of deposit                                                                                                                         
|Average interest rate                                                                                                                           
|Other borrowings                                                                                                                                
|Average interest rate                                                                                                                           
|                                                                                                                                                
|                                                                                                                                                
|Total                                                                                                                                           

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Interest-bearing liabilities
repricing in the remainder of 2004, totaling $128.5 million, exceeds earning assets that
are repricing in the same time period. Earning assets repricing in the remainder of 2004
total $62.0 million. Thus, interest-bearing liabilities repricing in 2004 exceed repricing
earning assets in 2004 by 52%. Such repricing disparity is typical as most non-maturity
deposits, such as savings accounts, may reprice immediately (at Bank managements
discretion). Management does not place significant risk with such a disparity as
nonmaturity deposits are believed to be stable and not as price sensitive as other types
of interest-bearing liabilities. Price changes for non-maturity deposits tend to be more
gradual, thus mitigating interest rate risk.

Beyond the end of 2004 the amount of
earning assets that are scheduled to reprice in any given period tend to exceed
interest-bearing liabilities that are scheduled to reprice in the same time period.

Currently, management does not
believe that interest rate risk poses a significant risk to the Companys earnings
and capital.

# ITEM 4  CONTROLS
AND PROCEDURES

| | (a) | Evaluation of Disclosure Controls and Procedures. The Companys
               Chief Executive Officer and Chief Financial Officer, after evaluating the
               effectiveness of the Companys disclosure controls and procedures (as
               defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
               period covered by this Form 10-Q Quarterly Report, have concluded that the
               Companys disclosure controls and procedures were adequate and effective to
               ensure that material information relating to the Company would be made known to
               them by others within the Company, particularly during the period in which this
               Form 10-Quarterly Report was being prepared.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Changes in Internal Controls. During the period covered by this report,
               there have been no changes in the Companys internal control over financial
               reporting that have materially affected or are reasonably likely to materially
               affect the Companys internal control over financial reporting. Subsequent
               to the end of the period covered by this Form 10-Q Quarterly Report Bank
               management discovered errors in the accounting for unpaid accrued interest
               receivable for loans placed on non-accrual or charged-off. A detailed review
               indicated a significant number of loans charged-off in prior years where unpaid
               accrued interest receivable was not written off against the allowance for loan
               and lease losses or, where required, reversed against current year interest
               income. To correct this situation, approximately $160,000 in prior years
               unpaid accrued interest receivable will be written off against the allowance for
               loan and lease losses, to be recognized in the fourth quarter of 2004. As
               reported at September 30, 2004 the allowance for loan and lease losses was
               sufficient to absorb this amount and remain adequate. Please refer to the
               section entitled Loans and Allowance for Loan and Lease Losses for
               additional information regarding the Allowance for Loan and Lease Losses.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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# PART IIOTHER INFORMATION

REPORT OF INDEPENDENT
ACCOUNTANTS

Shareholders and Board of
DirectorsPavilion Bancorp, Inc.Adrian, Michigan

We have reviewed the
condensed consolidated balance sheet of Pavilion Bancorp, Inc. (the "Corporation") as of
September 30, 2004, and the related condensed consolidated statements of income, and cash
flows for the three and nine month periods then ended, included in the Corporation's SEC
Form 10-Q.  These interim financial statements are the responsibility of the
Corporation's management.

We conducted our reviews
in accordance with standards established by the Public Company Accounting Oversight Board
(United States).  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 auditing standards of the Public Company Accounting
Oversight Board, 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 consolidated
interim financial statements for them to be in conformity with generally accepted
accounting principles in the United States of America.

| | Plante & Moran, PLLC
Auburn Hills, Michigan
November 12, 2004
| | -------------------------------------------------------------

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# ITEM 1  LEGAL
PROCEEDINGS

There are no material legal
proceedings pending against the Company. The Bank of Lenawee and The 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 
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

No changes in the securities of the
Company occurred during the quarter ended September 30, 2004.

# 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 September 30, 2004.

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

There
were no matters submitted to security holders.

# ITEM 5  OTHER
INFORMATION

| | The
sale of Pavilion Bancorp, Inc.s wholly owned subsidiary, Bank of Washtenaw, to
Dearborn Bancorp, Inc. was completed on October 29, 2004, in accordance with the
definitive agreement dated July 16, 2004. In accordance with the terms of the definitive
agreement the Company received a cash payment of $15 million. These proceeds will be
deployed in liquid investment securities in the short term. The Board of Directors is
currently considering various options for long-term use of these proceeds.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ITEM 6  EXHIBITS

|(a) | Listing
of Exhibits (numbered as in Item 601 of Regulation S-K):
|--- | ----------------------------------------------------------------

| | 10.1 | Stock
Purchase  Agreement  Between Pavilion Bancorp,  Inc. and Dearborn Bancorp,  Inc. dated as of
July                   16, 2004, as amended.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certificate
 of the Chief  Executive  Officer of  Pavilion  Bancorp,  Inc.  pursuant to 15 U.S.C.
                  Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certificate
 of the Chief  Financial  Officer of  Pavilion  Bancorp,  Inc.  pursuant to 15 U.S.C.
                  Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | 32.1 | 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.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certificate
 of the 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.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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# SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|Date: November 12, 2004Date: November 12, 2004 |  | Pavilion Bancorp, Inc./s/ Douglas L. Kapnick
Douglas L. KapnickChief Executive Officer/s/ William A. Kirsten
William A. KirstenChief Financial Officer
|---------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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EXHIBIT INDEX

|Exhibit | Description
|------- | -----------

|10.1 | Stock
Purchase  Agreement  Between Pavilion Bancorp,  inc. and Dearborn Bancorp,  Inc. dated as of
July                   16, 2004, as amended.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------

|31.1 | Certificate
 of the Chief  Executive  Officer of  Pavilion  Bancorp,  Inc.  pursuant to 15 U.S.C.
                  Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Certificate
 of the Chief  Financial  Officer of  Pavilion  Bancorp,  Inc.  pursuant to 15 U.S.C.
                  Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 | 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.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 | Certificate
 of the 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.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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# Exhibit 31.1

I, Douglas L. Kapnick, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Pavilion Bancorp, Inc.;
|-- | -----------------------------------------------------------------------------

|2. | Based on my knowledge, this 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 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 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-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, 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 report is being prepared;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 12, 2004

| |  | /s/ Douglas L. Kapnick
Douglas L. KapnickChief Executive Officer
| |  | ------------------------------------------------------------------------------

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# Exhibit 31.2

I, William A. Kirsten, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Pavilion Bancorp, Inc.;
|-- | -----------------------------------------------------------------------------

|2. | Based on my knowledge, this 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 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 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-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, 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 report is being prepared;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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---



| | (b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 12, 2004

| |  | /s/ William A. Kirsten
William A. KirstenChief Financial Officer
| |  | ------------------------------------------------------------------------------

Page 34

---



# Exhibit 32.1

I, Douglas L. Kapnick,
 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 September 30,
          2004 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 September 30, 2004 fairly presents, in all material respects, the
          financial condition and results of operations of Pavilion Bancorp, Inc..
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 12, 2004

| |  | /s/ Douglas L. Kapnick
Douglas L. KapnickChief Executive Officer
| |  | ------------------------------------------------------------------------------

Page 35

---



# Exhibit 32.2

I, William A. Kirsten,
 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 September 30,
          2004 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 September 30, 2004 fairly presents, in all material respects, the
          financial condition and results of operations of Pavilion Bancorp, Inc.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: November 12, 2004

| |  | /s/ William A. Kirsten
William A. KirstenChief Financial Officer
| |  | ------------------------------------------------------------------------------

Page 36