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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 1934

For the quarterly period ended March 31, 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)

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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

As of May 6, 2004 there were 845,420 outstanding shares of the registrant’s common stock, no par value.

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CROSS REFERENCE TABLE

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Independent Accountant’s Report

We have reviewed the consolidated balance sheet of Pavilion Bancorp, Inc. (the Corporation) as of March 31, 2004, and the related consolidated statements of income, and cash flows for the three-month period then ended, included in the Corporation’s SEC Form 10-Q. These financial statements are the responsibility of the Corporation’s management.

We conducted our review 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 review, we are not aware of any material modifications that should be made to the consolidated financial statements referenced above for them to be in conformity with generally accepted accounting principles.

Plante & Moran, PLLC
Auburn Hills, MI
May 7, 2004

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PART I
FINANCIAL INFORMATION

ITEM 1- FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands of dollars, except share data

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

			Three Months Ended March 31,
			2004			2003
Interest and dividend income
Loans receivable, including fees			$	4,429		$	4,331
Securities				226			283
Federal funds sold and other				14			18
Total interest and dividend income				4,669			4,632
Interest expense
Deposits				913			1,059
Federal Home Loan Bank advances				83			46
Other				89			77
Total interest expense				1,085			1,182
Net interest income				3,584			3,450
Provision for loan losses				64			140
Net interest income after provision for loan losses				3,520			3,310
Noninterest income
Service charges and fees				496			471
Gains on loan sales				389			1,608
Loan servicing fees, net of amortization				118			(498	)
Other				5			(83	)
				1,008			1,498
Noninterest expense
Salaries and employee benefits				1,932			2,115
Occupancy and equipment				574			562
Other				934			886
				3,440			3,563
Income before income tax				1,088			1,245
Income tax expense				329			389
Net income			$	759		$	856
Basic earnings per share			$	.91		$	.98
Diluted earnings per share			$	.90		$	.98
Dividends per share			$	.22		$	.21

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CONDENSED CONSOLIDATED STATEMENT OF

CASH FLOWS (unaudited)

In thousands of dollars

			Three Months Ended March 31,
			2004			2003
Cash Flows from operating activities
Net income			$	759		$	856
Adjustments to reconcile net income to
net cash from operating activities
Depreciation				187			215
Provision for loan losses				64			140
Net amortization and accretion on securities
available for sale				35			88
Net change in:
Accrued interest receivable				(278	)		(165	)
Loans held for sale				(1,705	)		(3,693	)
Other assets				(206	)		1,337
Accrued interest payable				1			(15	)
Other liabilities				(651	)		298
Net cash from operating activities				(1,794	)		(939	)
Cash flows from investing activities
Securities available for sale:
Maturities, calls and principal payments				4,200			3,157
Purchases				(14,663	)		(3,000	)
Purchase of Federal Reserve Bank stock				0			(8	)
Purchase of Federal Home Loan Bank Stock				(33	)		0
Net premises and equipment expenditures				(54	)		(68	)
Net decrease (increase) in loans				3,663			(4,475	)
Net cash from investing activities				(6,887	)		(4,394	)
Cash flows from financing activities
Net change in deposits				9,999			7,941
Net change in borrowed funds				418			(1,542	)
Change in shareholders' equity				(204	)		(605	)
Net cash from financing activities				10,213			5,794
Net change in cash and cash equivalents				1,532			461
Cash and cash equivalents at beginning of period				10,103			11,223
Cash and cash equivalents at end of period			$	11,635		$	11,684
Cash paid for:
Interest			$	1,084		$	1,197
Income taxes				175			-

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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 Pavilion Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries, Bank of Lenawee and Bank of Washtenaw (together “the Banks”). Bank of Lenawee includes its wholly-owned subsidiaries, Pavilion Financial Services and Pavilion 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 range of banking services to individuals, commercial businesses, light industries and municipal entities located in their service areas. Each bank maintains 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 traditional bank deposit products, including checking, savings, money market savings, individual retirement accounts, and certificates of deposit as well as a mobile banking courier service.

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, 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-K for the year ended December 31, 2003.

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NOTE 3 — EARNINGS 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, 2004 and 2003 is presented below:

NOTE 4 – 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 months ending March 31, 2004 and 2003 was not significant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.

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The weighted average fair value of stock options granted during the three months ended March 31, 2004 and 2003 were $11.43 and $10.15. The fair value of options granted during the three months ended March 31, 2004 and 2003 were estimated using an option pricing model with the following weighted average information as of the grant dates:

In future years, as additional options are granted, the proforma effect on net income and earnings per share may increase. 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.

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, 2004 and for the three month periods ended March 31, 2004 and 2003.