# Securities
and Exchange Commission
Washington, D.C. 20549

---

# FORM 10-Q

|X|      Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934For the quarterly period ended March 31, 2002
or
|_|      Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

---

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

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

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

Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

|Yes           |X| | No           |_|
|----------------- | ----------------

As of May 5, 2002, there
were 850,381 outstanding shares of the registrants common stock, no par
value.

Page 1

---

# CROSS
REFERENCE TABLE

`ITEM NO.                                        DESCRIPTION                                       PAGE NO.
----------------------------------------------------------------------------------------------------------

FINANCIAL INFORMATION

Item 1.    Financial Statements (Condensed)
           (a)    Report of Independent Accountants                                                   3
           (b)    Condensed Consolidated Balance Sheets                                               4
           (c)    Condensed Consolidated Statements of Income and Comprehensive Income                5
           (d)    Condensed Consolidated Statements of Cash Flows                                     6
           (e)    Notes to Condensed Consolidated Financial Statements                                7

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                                             10

Item 3.    Quantitative and Qualitative Disclosures About Market Risk                                14


                                            PART II -OTHER INFORMATION

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

Signatures                                                                                           15`

Page 2

---

REPORT OF INDEPENDENT ACCOUNTANTS

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

We have reviewed the
condensed consolidated balance sheet of Lenawee Bancorp, Inc. as of March 31,
2002 and the related condensed consolidated statements of income and
comprehensive income and cash flows for the three month periods ended March 31,
2002 and 2001. These financial statements are the responsibility of the
Companys management.

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

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

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

Grand Rapids, Michigan
May 1, 2002

Page 3

---

# PART I

# FINANCIAL
INFORMATION

`ITEM 1- FINANCIAL STATEMENTS

(b) CONDENSED CONSOLIDATED BALANCE SHEETS                                  March 31,
In thousands of dollars                                                     2002        December 31,
                                                                         (unaudited)        2001
                                                                         -----------        ----
ASSETS
Cash and due from banks                                                $     12,910     $     15,987
Federal funds sold                                                            4,220            8,290
                                                                       ------------     ------------
     Total cash and cash equivalents                                         17,130           24,277

Securities available for sale                                                30,322           25,969
Federal Home Loan Bank stock, at cost                                         2,504            2,504
Federal Reserve Bank stock, at cost                                             480              480
Loans held for sale                                                             595              417
Loans receivable, net of allowance for loan losses                          213,001          212,590
Premises and equipment, net                                                   6,627            6,611
Accrued interest receivable                                                   2,029            1,877
Mortgage servicing asset                                                      2,234            2,066
Other assets                                                                  1,820            1,336
                                                                       ------------     ------------
     Total assets                                                      $    276,742     $    278,127
                                                                       ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
     Noninterest bearing                                               $     44,889     $     45,488
     Interest bearing                                                       188,215          189,919
                                                                       ------------     ------------
         Total deposits                                                     233,104          235,407

Borrowed funds                                                                7,904            7,394
Accrued interest payable                                                        812              850
Other liabilities                                                             1,562            1,619
Capital securities                                                            4,832            4,850
                                                                       ------------     ------------
     Total liabilities                                                      248,214          250,120

Common stock subject to repurchase obligation in ESOP                         4,539            4,444

Shareholders' equity
     Common stock and paid-in capital, no par value:
       3,000,000 shares authorized; shares issued and
       outstanding: 850,381 - 2002 (unaudited);
         848,537 - 2001                                                      10,150           10,187
     Retained earnings                                                       13,702           13,124
     Accumulated other comprehensive income,
       net of tax                                                               137              252
                                                                       ------------     ------------
         Total shareholders' equity                                          23,989           23,563
                                                                       ------------     ------------

              Total liabilities and shareholders' equity               $    276,742     $    278,127
                                                                       ============     ============`

See accompanying notes to consolidated financial statements.

Page 4

---

`(c)  CONDENSED CONSOLIDATED STATEMENTS OF
     INCOME AND COMPREHENSIVE INCOME (unaudited)                              Three Months Ended
In thousands of dollars, except per share data                                    March 31,
                                                               -----------------------------
                                                                              2002           2001
                                                                             ----           ----
Interest and dividend income
     Loans receivable, including fees                                  $      4,372     $      4,996
     Taxable securities                                                         329              245
     Nontaxable securities                                                       59               65
     Federal funds sold and other                                                21              103
                                                                       ------------     ------------
         Total interest and dividend income                                   4,781            5,409

Interest expense
     Deposits                                                                 1,448            2,174
     Federal Home Loan Bank advances                                             78               82
     Other                                                                       75               18
                                                                       ------------     ------------
         Total interest expense                                               1,601            2,274
                                                                       ------------     ------------

Net interest income                                                           3,180            3,135
     Provision for loan losses                                                  106              100
                                                                       ------------     ------------

Net interest income after provision for loan losses                           3,074            3,035

Noninterest income
     Service charges and fees                                                   619              237
     Net gains on loan sales                                                    676              405
     Other                                                                       52              115
                                                                       ------------     ------------
                                                                              1,347              757
Noninterest expense
     Salaries and employee benefits                                           1,985            1,545
     Occupancy and equipment                                                    590              477
     Other                                                                      745              692
                                                                       ------------     ------------
                                                                              3,320            2,714
                                                                       ------------     ------------

Income before income tax                                                      1,101            1,078
     Income tax expense                                                         354              345
                                                                       ------------     ------------

Net income                                                             $        747     $        733
                                                                       ============     ============

Comprehensive income                                                   $        632     $        898
                                                                       ============     ============
Basic earnings per share                                               $        .88     $       0.86
                                                                       ============     ============
Diluted earnings per share                                             $        .87     $       0.85
                                                                       ============     ============
Dividends per share                                                    $        .20     $       0.20
                                                                       ============     ============`

See accompanying notes to condensed consolidated financial statements.

Page 5

---

`(d)  CONDENSED CONSOLIDATED STATEMENTS OF
     CASH FLOWS (unaudited)                                                     Three Months Ended
In thousands of dollars                                                              March 31,
                                                                  -----------------------------
                                                                                2002           2001
                                                                                ----           ----
Cash flows from operating activities
     Net income                                                            $    747        $     733
     Adjustments to reconcile net income to
       net cash from operating activities
         Depreciation                                                           224              177
         Provision for loan losses                                              106              100
         Net amortization and accretion on securities
           available for sale                                                    72               14
         Amortization of mortgage servicing rights                              144              132
         Loans originated for sale                                          (34,801)         (23,594)
         Proceeds from sale of mortgage loans                                34,987           23,327
         Net gains on sales of mortgage loans                                  (676)            (405)
     Net change in:
         Accrued interest receivable                                           (152)             (77)
         Other assets                                                          (484)             165
         Accrued interest payable                                               (38)              16
         Other liabilities                                                       11              156
                                                                       ------------     ------------
              Net cash from operating activities                                140              744
                                                                       ------------     ------------

Cash flows from investing activities
     Securities available for sale:
         Maturities, calls and principal payments                             3,117              947
         Purchases                                                           (7,725)          (2,000)
     Purchase of Federal Reserve Bank stock                                       -             (120)
     Net premises and equipment expenditures                                   (240)            (514)
     Net increase in loans                                                     (517)          (3,317)
                                                                       ------------     ------------
              Net cash from investing activities                             (5,365)          (5,004)
                                                                       ------------     ------------

Cash flows from financing activities
     Net change in deposits                                                  (2,303)          20,477
     Net change in borrowed funds                                               492             (872)
     Change in shareholders' equity                                            (111)             (85)
                                                                      -------------     ------------
              Net cash from financing activities                             (1,922)          19,520
                                                                       ------------     ------------

Net change in cash and cash equivalents                                      (7,147)          15,260

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

Cash and cash equivalents at end of period                             $     17,130     $     28,252
                                                                       ============     ============

     Cash paid for:
         Interest                                                       $     1,654      $     2,258
         Income taxes                                                           180                -`

See accompaying notes to condensed consolidated financial statements.

Page 6

---

## (e)   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

The unaudited condensed
consolidated financial statements include the accounts of Lenawee Bancorp, Inc.
(the Company) and its wholly-owned subsidiaries, Bank of Lenawee and
Bank of Washtenaw (together the Banks). The Bank of Lenawee includes
its wholly-owned subsidiaries, Lenawee Financial Services and Pavilion Mortgage
Company (the Mortgage Company). All significant intercompany
balances and transactions have been eliminated in consolidation.

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

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

## NOTE 2 - BASIS
OF PRESENTATION

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

## NOTE 3 -
EARNING PER SHARE

A reconciliation of the
numerators and denominators of the basic earnings and diluted earnings per share
computations for the three months ended March 31, 2002 and 2001 is presented
below:

`2002            2001
                                                                         ----            ----
      Basic earnings per share
      ------------------------
      Net income available to common shareholders                     $    747,000    $    733,000
                                                                      ============    ============
      Weighted average common shares outstanding                           849,620         851,884
                                                                      ============    ============
      Basic earnings per share                                        $       0.88    $       0.86
                                                                      ============    ============`

Page 7

---

## NOTE 3 - EARNING PER SHARE (Continued)

`2002              2001
                                                                              ----              ----
      Diluted earnings per share
      --------------------------
      Net income available to common shareholders                          $    747,000    $    733,000
                                                                           ============    ============
      Weighted average common shares outstanding                                849,620         851,884
      Add:  Dilutive effects of exercise of stock options                         7,505           9,951
                                                                           ------------    ------------
      Weighted average common and dilutive
        potential shares outstanding                                            857,125         861,835
                                                                           ============    ============
      Diluted earnings per share                                           $       0.87    $       0.85
                                                                           ============    ============`

## NOTE 4 
ACCOUNTING FOR STOCK BASED COMPENSATION

The following proforma
information presents net income and basic and diluted earnings per share had the
fair value method been used to measure compensation for stock options granted.
The exercise price of options granted is generally equivalent to the market
price, compensation underlying stock at the grant date. For stock options
granted below market price, compensation expense is based upon the difference
between the market value and the exercise price at the date of grant and is
recorded over the vesting period of the options. Compensation expense actually
recognized for stock options was not significant for the three months ended
March 31, 2002 and 2001.

`2002              2001
                                                                           ----              ----

     Net income as reported                                           $    747,000    $    733,000
     Proforma net income                                                   726,000         721,000
     Reported earnings per common share
         Basic                                                        $       0.88    $       0.86
         Diluted                                                              0.87            0.85
     Proforma earnings per common share
         Basic                                                                0.85            0.85
         Diluted                                                              0.84            0.84`

The weighted average fair
value of stock options granted during the three months ended March 31, 2002 was
$16.69 and was estimated using an option pricing model with the following
weighted average information as of the grant date; risk-free interest rate of
4.78%, expected option life of 8 years, expected stock price volatility of 0.23
and expected dividends of 1.38%. In future years, as additional options are
granted, the proforma effect on net income and earnings per share may increase.
No options were granted during the quarter ended March 31, 2001.

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 vest
over five years. Information about options available for grant and options
granted follows:

`Weighted-
                                                                      Average
                                                 Available            Options              Exercise
                                                 For Grant          Outstanding              Price
                                                 ---------          -----------              -----

     Balance at December 31, 2001                   42,800               35,080         $      33.53
         Options issued                             (7,200)               7,200                51.50
                                              -------------        ------------
     Balance at March 31, 2002                      35,600               42,280                36.59
                                              ============         ============`

Page 8

---

## NOTE 4 - ACCOUNTING FOR STOCK BASED COMPENSATION(Continued)

At March 31, 2002, options
outstanding had a weighted average remaining life of 7.1 years. There were
27,328 options exercisable at March 31, 2002 with a weighted-average exercise
price of $29.81.

## NOTE 5 
NEW ACCOUNTING PRONOUNCEMENT

On January 1, 2002, the
Company adopted a new accounting standard which addresses accounting for
goodwill and other intangible assets arising from business combinations.
Identifiable intangible assets must be separated from goodwill. Identifiable
intangible assets with finite useful lives will be amortized under the new
standard, whereas goodwill, both amounts previously recorded and future amounts
purchased, will cease being amortized. Annual impairment testing will be
required for goodwill with impairment being recorded if the carrying amount of
goodwill exceeds its implied fair value. Adoption of this standard on January 1,
2002 did not have a material effect on the Companys consolidated financial
position or results of operations.

In August 2001, the
Financial Accounting Standards Board issued SFAS No. 143, Accounting for
Asset Retirement Obligations which will be adopted by the Company on
January 1, 2003. The new accounting standard addresses accounting for
obligations associated with the retirement of tangible, long-lived assets and
requires a liability to be recognized for the fair value of any such
obligations. Adoption of this standard on January 1, 2003 is not expected to
have a material effect on the Companys consolidated financial position or
results of operations.

On January 1, 2002, the
Company adopted SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This new accounting standard establishes more
restrictive requirements for the classification of assets as held for
sale and also expands the types of dispositions that are to be accounted
for as discontinued operations. Adoption of this standard on January 1, 2002 did
not have a material effect on the Companys consolidated financial position
or results of operations.

Page 9

---

## 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 March 31, 2002 and for the three month periods ending
March 31, 2002 and 2001.

## FINANCIAL
CONDITION

Cash and cash equivalents
The decrease in cash and
cash equivalents of approximately 30%, or $7.2 million, during the first three
months of 2002 was primarily related to the use of cash to purchase securities
available for sale.

Securities
The Companys
investment securities portfolio increased during the first quarter of 2002.
Maturities, calls and principal repayments of securities available for sale were
more than offset by the purchases of $7.7 million during the period. The mix of
the securities portfolio remains relatively unchanged from period to period over
the long term.

Loans
During the first three
months of 2002, loans, net of allowance for loan losses, remained relatively
stable. The mix of the loan portfolio continues to remain relatively unchanged
from prior periods. Over the long term, the trend continues toward an increased
percentage of residential mortgage and business loans.

Credit Quality
The Company continues to
monitor the asset quality of the loan portfolio utilizing a loan review officer
who, combined with external loan review specialists, periodically submits
reports to the Chief Lending Officer and to the Board of Directors regarding the
credit quality of the loan portfolio. This review is independent of the loan
approval process. Also, management continues to monitor delinquencies,
nonperforming assets and potential problem loans to assess the continued quality
of the Companys loan portfolio.

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

Page 10

---

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

`3/31/2002      12/31/2001       3/31/2001
                                                            ---------      ----------       ---------

     Nonaccrual loans                                      $       263    $        230     $        112
     90 days or more past due & still accruing                   1,800           1,046              214
                                                           -----------    ------------     ------------
         Total nonperforming loans                               2,063           1,276              326
     Other real estate                                           1,888             879              583
                                                           -----------    ------------     ------------
         Total nonperforming assets                        $     3,951    $      2,155     $        909
                                                           ===========    ============     ============

     Nonperforming loans as a percent of total loans              .96%            .59%             .15%
     Nonperforming assets as a percent of total loans            1.84%           1.00%             .41%
     Nonperforming loans as a percent of the allowance
       for loan losses                                          93.35%          58.00%           14.04%`

Total  nonperforming  assets  increased  $1.8  million  or 83%  during the  quarter.  This is an  unusual  level of
increase and is  attributable  to multiple small loan customers that are  experiencing  financial  difficulties  in
economically  unusual times.  These  nonperforming  assets have collateral with values sufficient to compensate for
the loan obligations in the event that these customers are unable to return to traditional economic vitality.

Due to the unusual prevailing  economic  conditions,  during the course of the fourth quarter of 2001 and the first
quarter of 2002, the Company  intensified  its  utilization of independent  third party loan review  specialists in
order to verify the overall quality of the loan portfolio assets as of March 31, 2002.

The Company  slightly  increased  its  provision  for loan losses over the same period in 2001 due to  increases in
nonperforming  loans and net charge-offs.  The provision provides for currently  anticipated losses inherent in the
current  portfolio.  Activity in the  allowance  for loan losses,  in  thousands  of dollars,  for the three months
ended March 31, 2002 and 2001 follows:

`2002             2001
                                                                          ----             ----

     Balance at beginning of period                                   $      2,200    $      2,287
     Loan charge-offs net of recoveries                                        (96)            (65)
     Provision charged to operations                                           106             100
                                                                      ------------    ------------
     Balance at end of period                                         $      2,210    $      2,322
                                                                      ============    ============`

Deposits
Total deposits decreased
slightly during the quarter to $233.1 million at March 31, 2002 from $235.4
million at December 31, 2001. This decrease is considered to be normal deposit
activity. Management anticipates moderate deposit growth during 2002 as a result
of continued expansion in the Companys new and existing markets.

Liquidity
The Banks average
federal funds sold position dropped during the first quarter of 2002 compared to
the same period during 2001. This decrease is mainly attributable to the
purchase of securities available for sale. Borrowings increased slightly during
the first quarter of 2002, and management anticipates loan and deposit growth
will cause continued variation in the

Page 11

---

short-term funds position of the Company.
The Company has a number of additional liquidity sources should the need arise,
and management has no concerns of the liquidity position of the Company.

## Results of
Operations

Net Income
Net income increased 1.9%,
basic earnings per share increased from $0.86 to $0.88 and dividends per share
remained constant at $.20 when comparing the results of the first three months
of 2002 to the same period in 2001.

Significantly impacting the
results of the first quarter of 2002, was a one-time increase in noninterest
income of $283,000 resulting from processing errors occurring over a period of
time related to the recognition of fee income on foreign ATM transactions. The
Company has taken the appropriate measures to ensure these processing errors do
not occur in the future.

Net Interest
Income
The yield on interest
earning assets decreased for the quarter ended March 31, 2002 as compared to the
same period in the prior year primarily as a result of the general decline in
industry rates over the 2001 fiscal year. The cost of funds on interest bearing
liabilities also decreased for the quarter ended March 31, 2002 as compared to
the same period during the prior year due to the declining rate environment that
has been experienced over the prior twelve months. While interest rates have
decreased, the Company has been able to maintain the net interest margin by
decreasing the cost of funds at a rate proportional to the corresponding decline
of the yields on interest bearing assets. Despite the economic challenges that
have been presented during the first three months of 2002, the Companys
net interest margin remains quite strong, and management continues to take steps
to neutralize some portion of this risk.

Page 12

---

The following table shows
the year to date daily average balances for interest earning assets and interest
bearing liabilities, interest earned or paid, and the annualized effective rate
or yield, for the three month periods ended March 31, 2002 and 2001.

`Dollars in thousands                           3/31/2002                           3/31/2001
                                               ---------                           ---------
                                   Average      Interest                 Average     Interest
                                 Outstanding     Earned/     Yield/    Outstanding    Earned/     Yield/
                                   Balance        Paid        Rate       Balance       Paid        Rate
                                   -------        ----        ----       -------       ----        ----
Interest earning assets:
Loans (1)                        $  212,388     $   4,372     8.23%    $  217,001    $  4,996      9.21%
Investment securities (2) (3)        32,772           388     4.74%        22,048         310      5.62%
Federal funds sold and other          5,916            21     1.42%         7,883         103      5.23%
                                 ----------     ---------              ----------    --------
  Total int. earning assets         251,076         4,781     7.62%       246,932       5,409      8.76%

Interest bearing liabilities:
Interest bearing demand
  deposits                       $   58,348     $     178     1.22%    $   55,532    $    378      2.72%
Savings deposits                     25,886            67     1.04%        23,215          85      1.46%
Time deposits                       103,646         1,203     4.64%       113,657       1,711      6.02%
Other borrowings                     12,369           153     4.95%         7,782         100      5.15%
                                 ----------     ---------               ----------    --------
  Total int. bearing
    liabilities                     200,249         1,601     3.20%       200,186       2,274      4.54%

Net interest income (3)                         $   3,180                            $  3,135
                                                =========                            ========
Net spread (3)                                                4.42%                                4.22%
                                                             ======                                =====
Net interest margin (3)                                       5.05%                                5.08%
                                                             ======                                =====
Ratio of interest
  earning assets to
  interest bearing
  liabilities                          1.25                                  1.23
                                 ==========                            ==========

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

Noninterest
Income
For the first quarter of
2002, noninterest income from banking products and services has increased 78% as
compared to the same period in 2001. Low interest rates during the first quarter
of 2002 have increased the originations of residential mortgage loans and,
accordingly, the Companys volume of loan sales. An increase in net gains
on loan sales of $271,000 was one of the factors contributing to the overall
noninterest income growth. The Company also experienced a significant increase
in service charges and fees during the first quarter of 2002 due to a one-time
increase of $283,000 resulting from processing errors occurring over a period of
time related to the recognition of fee income on foreign ATM transactions.

Noninterest
Expense
Noninterest expense has also
increased over the same period of 2001, reflecting continued growth and
expansion of the Company. Total noninterest expense, excluding provision for
loan losses, for the first three months of 2002 was 22% above the same period
for 2001. An increase in salaries and employee benefits of approximately 29% was
the primary factor contributing to the overall increase. The 29% increase in
salaries and employee benefits is primarily the result of the continued
expansion of the Bank of Washtenaw. Increases in occupancy and equipment and
other expense, are mainly attributable to the additional staffing needed for
general Company growth.

Federal Income
Tax
The slight increase in
federal income taxes during the first quarter of 2002 is directly related to the
increase in income before income taxes.

Page 13

---

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

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

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

Page 14

---

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

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

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

Evaluating a financial
institutions exposure to changes in interest rates includes assessing both
the adequacy of the management process used to control IRR and the
organizations quantitative level of exposure. When assessing the IRR
management process, the Company seeks to ensure that appropriate policies,
procedures, management information systems and internal controls are in place to
maintain IRR at prudent levels with consistence and continuity. Evaluating the
quantitative level of IRR exposure requires 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 Company has not
experienced a material change in its financial instruments that are sensitive to
changes in interest rates since December 31, 2001, which information can be
located in the Form 10-K document.

# PART II

# OTHER
INFORMATION

## ITEM 1 - LEGAL
PROCEEDINGS

The Company is not involved
in any material legal proceedings. The Companys wholly-owned subsidiaries,
Bank of Lenawee and Bank of Washtenaw, are involved in ordinary routine
litigation incident to their business; however, no such proceedings are expected
to result in any material adverse effect on the operations or earnings of the
Banks. Neither the Banks nor the Company are involved in any proceedings to
which any director, principal officer, affiliate thereof, or person who owns of
record or beneficially five percent (5%) or more of the outstanding stock of the
Company or the Banks, or any associate of the foregoing, is a party or has a
material interest adverse to the Company or the Banks.

## ITEM 2 -
CHANGES IN SECURITIES

No changes in the
securities of the Company occurred during the quarter ended March 31, 2002.

Page 15

---

## 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 March 31, 2002.

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

No matters were submitted
to a vote of security holders during the quarter ended March 31, 2002.

ITEM
5 - OTHER INFORMATION None.

## ITEM 6 -
EXHIBITS AND REPORTS ON FORM 8-K

|(a) | Listing of Exhibits (numbered as in Item 601 of Regulation S-K):
Exhibit 3 - Amendment to Articles of Incorporation Changing the Registrant's name to Pavilion Bancorp, Inc.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                             
|(b) | The Company has filed no reports on Form 8-K during the quarter ended March 31, 2002.                                                                                       

Page 16

---

# SIGNATURES

Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
to be signed on its behalf by the undersigned hereunto duly authorized.

Pavilion Bancorp, Inc. (formerly known as Lenawee Bancorp, Inc.)

|Date:  May 14, 2002 /s/ Patrick K. Gill
Patrick K. Gill
President and Chief Executive Officer | /s/ Loren V. Happel
Loren V. Happel
Chief Financial Officer
|--------------------------------------------------------------------------------------------- | -----------------------------------------------------------

Page 17

---

# EXHIBIT 3
AMENDMENT TO ARTICLES OF INCORPORATED
CHANGING THE REGISTRANT'S NAME
TO
PAVILION BANCORP, INC.



---

|MICHIGAN DEPARTMENT OF CONSUMER & INDUSTRY SERVICES
BUREAU OF COMMERCIAL SERVICES                                                      
|---------------------------------------------------------------------------------------------------------------------------------------
|Date Received                                                                                                                          
|                                                                                                                                       
|                                                                                                                                       
|Name
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP                                                                                          
|Address
P.O. BOX 352                                                                                                                   
|City
GRAND RAPIDS                                                                                                                      
|Document  will be  returned  to the name and address  you  enter above.
If left blank document will be mailed to the registered office.

CERTIFICATE OF AMENDMENT TO THE ARTICLES OF
INCORPORATIONFor use by Domestic Profit and Nonprofit Corporations
(Please read information and instructions on the last page)

Pursuant  to the provisions of Act 284,  Public Acts of 1972 (profit  corporations),  or
Act 162,  Public  Acts of 1982  (nonprofit  corporations),  the  undersigned  corporation  executes  the  following
Certificate:

|1. | The present name of the corporation is:
LENAWEE BANCORP, INC. 
|-- | --------------------------------------------------------------
|2. | The identification number assigned by the Bureau is:    504722

|3. | Article 1 of the Articles of Incorporation is hereby
amended to read as follows:
The name of the Corporation is Pavilion Bancorp, Inc.
|-- | --------------------------------------------------------------------------------------------------------------------------------------



---

COMPLETE ONLY ONE OF THE FOLLOWING:

|4.  (For  amendments  adopted by unanimous  consent of  incorporators  before the
first meeting of the board of
     directors or trustees.)
The  foregoing  amendment  to the  Articles  of  Incorporation  was  duly  adopted  on the
  day of ,
, in accordance  with the  provisions  of the Act by the  unanimous  consent of the  incorporator(s)
before the first meeting of the Board of Directors or Trustees.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Signed this  day of
,                                                                                                                                                                                                                                                                                                                                                                                                  
|(Signature)(Type or Print Name)(Signature)(Type or Print Name)                                                                                                                                                                                                                                                                                                                                                         

|5.  (For profit and nonprofit  corporations  whose Articles state the corporation is organized on a 
     stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly adopted on the
18 day of April,
2002, by the shareholders if a profit corporation, or by the shareholders or members if a nonprofit
corporation (check one of the following)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[ X ]                                                                                                                                                                                                                                                                                                                                                                                    
|[     ]                                                                                                                                                                                                                                                                                                                                                                                  
|[     ]                                                                                                                                                                                                                                                                                                                                                                                  
|[     ]                                                                                                                                                                                                                                                                                                                                                                                  
|[     ]                                                                                                                                                                                                                                                                                                                                                                                  
|[     ]                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                         
|By