_________________
|X| Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
or
[ ] Transition Report
Pursuant to Section 13 or 15(d)
of the Securities
Exchange Act of 1934
_________________
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 May 13, 2005 there were 859,506 outstanding shares of the registrant’s common stock, no par value.
Page 1
| ITEM NO. | DESCRIPTION | PAGE NO. |
PART I - FINANCIAL INFORMATION | ||
|---|---|---|
Item 1 |
Financial Statements (Condensed and Unaudited) | |
| (a) Report of Independent Registered Public Accounting Firm | 3 | |
| (b) Condensed Consolidated Balance Sheets | 4 | |
| (c) Condensed Consolidated Statements of Income | 5 | |
| (d) Condensed Consolidated Statements of Changes in Shareholders' Equity | 6 | |
| (e) Condensed Consolidated Statements of Cash Flows | 7 | |
| (f) Notes to Condensed Consolidated Financial Statements | 8 | |
| Item 2 | Management's Discussion and Analysis of | |
| Financial Condition and Results of Operations | 12 | |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 20 |
| Item 4 | Controls and Procedures | 21 |
| PART II -OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 21 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
| Item 3 | Defaults Upon Senior Securities | 21 |
| Item 4 | Submission of Matters to a Vote of Security Holders | 21 |
| Item 5 | Other Information | 21 |
| Item 6 | Exhibits | 21 |
| Signatures | 23 | |
| Exhibit Index | 24 | |
Page 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Pavilion
Bancorp, Inc.
Adrian, Michigan
We have reviewed the condensed consolidated balance sheet of Pavilion Bancorp, Inc. (the “Corporation”) as of March 31, 2005, and the related condensed consolidated statements of income, shareholders’ equity, and cash flows for the three month periods ended March 31, 2005 and 2004, 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 the 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 condensed consolidated interim financial statements for them to be in conformity with generally accepted accounting principles in the United States of America.
/s/ Plante & Moran, PLLC
Auburn Hills, Michigan
May
11, 2005
Page 3
CONDENSED CONSOLIDATED
BALANCE SHEETS
(000’s omitted)
| March 31, 2005 (unaudited) |
December 31, 2004 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Cash and due from banks | $ | 6,695 | $ | 11,700 | ||||
| Federal funds sold | 11,930 | - | ||||||
| Total cash and cash equivalents | 18,625 | 11,700 | ||||||
| Securities available for sale | 28,772 | 27,886 | ||||||
| Federal Home Loan Bank, Freddie Mac, FNMA stock | 2,767 | 2,738 | ||||||
| Federal Reserve Bank stock | 360 | 360 | ||||||
| Loans held for sale | 812 | 322 | ||||||
| Loans receivable, net of allowance for loan losses | 210,944 | 204,664 | ||||||
| Premises and equipment, net | 5,579 | 5,727 | ||||||
| Accrued interest receivable | 1,590 | 1,429 | ||||||
| Mortgage servicing rights | 2,948 | 2,827 | ||||||
| Other assets | 1,580 | 1,669 | ||||||
| Total assets | $ | 273,977 | $ | 259,322 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Deposits | ||||||||
| Noninterest bearing | $ | 43,395 | $ | 44,207 | ||||
| Interest bearing | 173,449 | 155,785 | ||||||
| Total deposits | 216,844 | 199,992 | ||||||
| Federal funds purchased | - | 1,450 | ||||||
| Repurchase agreements | 3,849 | 2,482 | ||||||
| Federal Home Loan Bank advances | 9,110 | 8,586 | ||||||
| Accrued interest payable | 417 | 233 | ||||||
| Other liabilities | 2,281 | 5,178 | ||||||
| Subordinated debentures | 5,000 | 5,000 | ||||||
| Common stock in ESOP subject to repurchase obligation | 4,654 | 4,544 | ||||||
| Total liabilities | 242,155 | 227,465 | ||||||
| Shareholders' equity | ||||||||
| Common stock and paid-in capital, no par value: shares issued and | ||||||||
| and outstanding: 858,981 at 3/31/05; 852,140 at 12/31/04 | 10,342 | 10,190 | ||||||
| Retained earnings | 21,766 | 21,713 | ||||||
| Accumulated other comprehensive loss | (286 | ) | (46 | ) | ||||
| Total shareholders' equity | 31,822 | 31,857 | ||||||
| Total liabilities and shareholders' equity | $ | 273,977 | $ | 259,322 | ||||
See accompanying notes to the condensed consolidated financial statements
Page 4
CONDENSED CONSOLIDATED
STATEMENTS OF
INCOME (unaudited)
(000's omitted, except per share data)
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 | 2004 | |||||||
| Interest and Dividend Income | ||||||||
| Loans receivable, including fees | $ | 3,335 | $ | 3,442 | ||||
| Debt securities: | ||||||||
| Taxable | 197 | 154 | ||||||
| Tax-exempt | 33 | 31 | ||||||
| Dividend income | 34 | 39 | ||||||
| Federal funds sold and other | 37 | 12 | ||||||
| Total interest and dividend income | 3,636 | 3,678 | ||||||
| Interest Expense | ||||||||
| Deposits | 637 | 587 | ||||||
| Subordinated debentures | 84 | 67 | ||||||
| Other borrowed funds | 99 | 86 | ||||||
| Total interest expense | 820 | 740 | ||||||
| Net interest income | 2,816 | 2,938 | ||||||
| Provision for loan losses | 30 | 64 | ||||||
| Net interest income after provision for loan losses | 2,786 | 2,874 | ||||||
| Noninterest income | ||||||||
| Service charges and fees | 295 | 339 | ||||||
| Net gains on sale of loans | 312 | 389 | ||||||
| Loan servicing fees, net of amortization | 194 | 118 | ||||||
| Other | 138 | 97 | ||||||
| 939 | 943 | |||||||
| Noninterest expense | ||||||||
| Compensation and employee benefits | 2,100 | 1,635 | ||||||
| Occupancy and equipment | 346 | 360 | ||||||
| Professional services | 207 | 88 | ||||||
| Outside service fees | 251 | 244 | ||||||
| Other | 424 | 507 | ||||||
| 3,328 | 2,834 | |||||||
| Income from continuing operations before income taxes | 397 | 983 | ||||||
| Income taxes from continuing operations | 138 | 313 | ||||||
| Income from continuing operations | 259 | 670 | ||||||
| Discontinued operations: | ||||||||
| Income from discontinued operation (net of income taxes of $0, $16) | - | 89 | ||||||
| Net income | $ | 259 | $ | 759 | ||||
| Earnings per share from continuing operations | ||||||||
| Basic | $ | 0.30 | $ | 0.88 | ||||
| Diluted | $ | 0.30 | $ | 0.87 | ||||
| Earnings per share from discontinued operations | ||||||||
| Basic | - | $ | 0.03 | |||||
| Diluted | - | $ | 0.03 | |||||
| Net earnings per share | ||||||||
| Basic | $ | 0.30 | $ | 0.91 | ||||
| Diluted | $ | 0.30 | $ | 0.90 | ||||
| Dividends per share | $ | 0.24 | $ | 0.22 | ||||
See accompanying notes to condensed consolidated financial statements
Page 5
| (000's omitted) | Common Stock Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income/(Loss) |
Total Shareholders' Equity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance January 1, 2004 | $ | 10,675 | $ | 15,616 | $ | 233 | $ | 26,524 | ||||||
| Comprehensive income: | ||||||||||||||
| Net income | - | 759 | - | 759 | ||||||||||
| Unrealized (losses) on securities | ||||||||||||||
| available for sale | - | - | (15 | ) | ||||||||||
| Tax effect | - | - | (5 | ) | ||||||||||
| Total other comprehensive loss | - | - | (10 | ) | (10 | ) | ||||||||
| Total comprehensive income | - | - | 749 | |||||||||||
| Change in common stock subject to repurchase | (190 | ) | - | (190 | ) | |||||||||
| Stock option expense | 11 | - | - | 11 | ||||||||||
| Cash dividends - $.22 per share | - | (201 | ) | - | (201 | ) | ||||||||
| Balance March 31, 2004 | $ | 10,496 | $ | 16,174 | $ | 223 | $ | 26,893 | ||||||
| Balance January 1, 2005 | $ | 10,190 | $ | 21,713 | $ | (46 | ) | $ | 31,857 | |||||
| Comprehensive income: | ||||||||||||||
| Net income | - | 259 | - | 259 | ||||||||||
| Unrealized (losses) on securities | ||||||||||||||
| available for sale | - | - | (364 | ) | ||||||||||
| Tax effect | - | - | (124 | ) | ||||||||||
| Total other comprehensive loss | - | - | (240 | ) | (240 | ) | ||||||||
| Total comprehensive income | - | - | 19 | |||||||||||
| Change in common stock subject to repurchase | (110 | ) | - | (110 | ) | |||||||||
| Stock option expense | 7 | - | - | 7 | ||||||||||
| Stock options exercised | 255 | - | - | 255 | ||||||||||
| Cash dividends - $.24 per share | - | (206 | ) | - | (206 | ) | ||||||||
| Balance March 31, 2005 | $ | 10,342 | $ | 21,766 | $ | (286 | ) | $ | 31,822 | |||||
See accompanying notes to the condensed consolidated financial statements
Page 6
CONDENSED CONSOLIDATED
STATEMENTS OF
CASH FLOWS (unaudited)
In
thousands of dollars
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2005 | 2004 | |||||||
| Cash Flows from operating activities | ||||||||
| Net income | $ | 259 | $ | 759 | ||||
| Adjustments to reconcile net income to | ||||||||
| net cash from operating activities | ||||||||
| Depreciation | 168 | 130 | ||||||
| Stock Option Expense | 7 | 11 | ||||||
| Provision for loan losses | 30 | 64 | ||||||
| Amortization on securities available for sale | 13 | 36 | ||||||
| Amortization of mortgage servicing rights | 40 | 116 | ||||||
| Origination of mortgage loans held for sale | (13,114 | ) | (25,103 | |||||