##### 



BOARD OF DIRECTORSWilliam R. Aikens
    
    Richard J. MillerChairman/ Owner, Spartan Finishing Group
    
    Former Executive Vice President &Harry Cendrowski
    
    Chief Financial OfficerPartner, Cendrowski Selecky, P.C.
    
    Bank of BirminghamDonald E. Copus
    
    Daniel P. ODonnellChief Financial Officer
    
    Principal/OwnerMagna Services Group, LTD
    
    Professional Furniture ServicesJohn M. Erb
    
    Charles T. PrydeVice President
    
    Member, Governmental Affairs StaffEdgemere Enterprises
    
    Ford Motor CompanyRobert E. Farr
    
    Donald RuffPresident & Chief Executive Officer
    
    Former ExecutiveBank of Birmingham
    
    First Federal of MichiganCharles Kaye
    
    Walter G. SchwartzPartner, Boyes, Wright, Pittman & Co., P.C.
    
    Principal, Gregory J. Schwartz & Co.Scott Mc Callum
    
    Henry G. SpellmanPrincipal Resource Financial Institutions
    
    Retired- former Vice PresidentGroup, Inc.
    
    International OperationsChrysler Financial CorporationCORPORATE OFFICERSWilliam Aikens, Chairman of the Board
    
    CORPORATE HEADQUARTERSINVESTOR RELATIONS ANDRobert E.
Farr, President & Chief Executive Officer
    
    SHAREHOLDER INFORMATIONRobert E. Farr, Acting Chief Financial Officer
    
    Birmingham Bloomfield Bancshares, Inc.Daniel P. ODonnell Corporate Secretary
    
    33583 Woodward AvenueBirmingham, MI 48009(248) 723-7200www.bankofbirmingham.net
 ANNUAL REPORT, FORM 10-KSB AND OTHER REPORTS
 www.sec.gov
 1




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##### 



2




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##### 



(PLANTE LOGO)
    
    Plante & Moran, PLLC
Suite 500
2601 Cambridge Court
Aubum Hills, MI 48326
Tel: 248.375.7100
Fax: 248.375.7101
plantemoran.com




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED BALANCE SHEET
 December 31,2007
    
    
    2006AssetsCash and cash equivalentsCash
    
    $
    1,265,119
    
    
    $
    809,848Federal funds sold
    
    
    3,874,007
    
    
    
    7,741,153Total cash and cash equivalents
    
    
    5,139,126
    
    
    
    8,551,001Securities, available for sale (Note 2)
    
    
    2,595,930
    
    
    
    Loans (Note 3)Total loans
    
    
    37,106,976
    
    
    
    12,913,577Less: allowance for loan losses
    
    
    (560,000
    )
    
    
    (195,000
    )Net loans
    
    
    36,546,976
    
    
    
    12,718,577Premises & equipment (Note 4)
    
    
    2,519,701
    
    
    
    2,318,880Interest receivable and other assets
    
    
    458,157
    
    
    
    115,494Total assets
    
    $
    47,259,890
    
    
    $
    23,703,952Liabilities and Shareholders EquityDeposits (Note 5)Non-interest bearing
    
    $
    5,385,200
    
    
    $
    1,415,180Interest bearing
    
    
    30,877,148
    
    
    
    8,813,768Total deposits
    
    
    36,262,348
    
    
    
    10,228,948Interest payable and other liabilities
    
    
    237,903
    
    
    
    136,817Total liabilities
    
    
    36,500,251
    
    
    
    10,365,765Shareholders equityCommon stock, no par valueAuthorized  4,500,000 sharesIssued and outstanding  1,800,000 shares
    
    
    17,034,330
    
    
    
    17,034,330Additional paid in capital-share based payments (Note 1)
    
    
    462,000
    
    
    
    420,000Accumulated deficit
    
    
    (6,799,150
    )
    
    
    (4,116,143
    )Accumulated other comprehensive income
    
    
    62,459
    
    
    
    Total shareholders equity
    
    
    10,759,639
    
    
    
    13,338,187Total liabilities and shareholders equity
    
    $
    47,259,890
    
    
    $
    23,703,952
  1




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF OPERATIONS
 For the Year Ended December31,2007
    
    
    2006Interest incomeLoans, including fees
    
    $
    1,687,617
    
    
    $
    146,540Taxable securities
    
    
    147,150
    
    
    
    Federal funds sold
    
    
    628,156
    
    
    
    238,610Total interest income
    
    
    2,462,923
    
    
    
    385,150Interest expenseDeposits
    
    
    1,089,767
    
    
    
    86,244Borrowings
    
    
    
    
    
    
    71,452Total interest expense
    
    
    1,089,767
    
    
    
    157,696Net interest income
    
    
    1,373,156
    
    
    
    227,454Provision for loan losses (Note 3)
    
    
    465,000
    
    
    
    195,000Net interest income after
provision for loan losses
    
    
    908,156
    
    
    
    32,454Non-interest incomeService charges and other fees
    
    
    36,201
    
    
    
    4,987Security gains
    
    
    13,586
    
    
    
    Other income
    
    
    82,216
    
    
    
    1,424Total non-interest income
    
    
    132,003
    
    
    
    6,411Non-interest expenseSalaries and benefits
    
    
    1,820,931
    
    
    
    1,556,015Occupancy & equipment expense (Note 4&8)
    
    
    857,890
    
    
    
    473,592FAS 123R share based payments (Note 6)
    
    
    42,000
    
    
    
    420,000Data processing expense
    
    
    128,616
    
    
    
    42,498Advertising and public relations
    
    
    176,990
    
    
    
    4,392Professional fees
    
    
    225,021
    
    
    
    52,462Printing and office supplies
    
    
    40,412
    
    
    
    57,270Other expense
    
    
    431,307
    
    
    
    395,790Total non-interest expense
    
    
    3,723,167
    
    
    
    3,002,019Net loss before taxes
    
    
    (2,683,008
    )
    
    
    (2,963,154
    )Income taxes (Note 7)
    
    
    
    
    
    
    Net loss
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )Basic earnings/(loss) per share
    
    $
    (1.49
    )
    
    $
    (4.19
    )Diluted earnings/(loss) per share
    
    $
    (1.49
    )
    
    $
    (4.19
    )
  2




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid in
    
    
    Accumulated
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at January 1, 2006
    
    $
    1,000
    
    
    $
    
    
    
    $
    (1,152,988
    )
    
    $
    
    
    
    $
    (1,151,988
    )Issuance of 1,799,900 shares
common stock (net of offering
costs of $965,670)
    
    
    17,033,330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,033,330Share based payments expense
    
    
    
    
    
    
    420,000
    
    
    
    
    
    
    
    
    
    
    
    420,000Net loss
    
    
    
    
    
    
    
    
    
    
    (2,963,154
    )
    
    
    
    
    
    
    (2,963,154
    )Balance at December 31, 2006
    
    $
    17,034,330
    
    
    $
    420,000
    
    
    $
    (4,116,142
    )
    
    
    
    
    
    $
    13,338,188Share based payments expense
    
    
    
    
    
    
    42,000
    
    
    
    
    
    
    
    
    
    
    
    42,000Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (2,683,008
    )
    
    
    
    
    
    
    (2,683,008
    )Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,459
    
    
    
    62,459Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (2,683,008
    )
    
    
    62,459
    
    
    
    (2,620,549
    )Balance at December 31, 2007
    
    $
    17,034,330
    
    
    $
    462,000
    
    
    $
    (6,799,150
    )
    
    $
    62,459
    
    
    $
    10,759,639
  3




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF CASH FLOWS
 For the Year Ended December31,2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    
    ($2,683,008
    )
    
    
    ($2,963,154
    )Share based payments expense
    
    
    42,000
    
    
    
    420,000Provision for Loan Losses
    
    
    465,000
    
    
    
    195,000Accretion of securities
    
    
    (26,516
    )
    
    
    Gain on sale of securities
    
    
    (13,586
    )
    
    
    Depreciation expense
    
    
    362,326
    
    
    
    67,400Loss on disposal of equipment
    
    
    37,842
    
    
    
    Net (increase) decrease in other assets
    
    
    (342,663
    )
    
    
    351,814Net increase (decrease) in other liabilities
    
    
    101,086
    
    
    
    53,658Net cash used in operating activities
    
    
    (2,057,519
    )
    
    
    (1,875,282
    )Cash flows from investing activitiesIncrease in loans
    
    
    (24,293,399
    )
    
    
    (12,913,577
    )Purchase of securities
    
    
    (6,042,502
    )
    
    
    Proceeds from sales, calls or maturities of
securities
    
    
    3,549,134
    
    
    
    Purchases of premises and equipment
    
    
    (600,989
    )
    
    
    (2,246,172
    )Net cash used in investing activities
    
    
    (27,387,756
    )
    
    
    (15,159,749
    )Cash flows from financing activitiesIncrease in deposits
    
    
    26,033,400
    
    
    
    10,228,948Sale of stock
    
    
    
    
    
    
    17,033,330Repayment of notes payable from related
parties
    
    
    
    
    
    
    (749,000
    )Increase (decrease) in line of credit payable
    
    
    
    
    
    
    (960,000
    )Net cash provided by financing activities
    
    
    26,033,400
    
    
    
    25,553,278Increase (decrease) in cash and cash equivalents
    
    
    (3,411,875
    )
    
    
    8,518,247Cash and cash equivalents at the
beginning of the period
    
    
    8,551,001
    
    
    
    32,754Cash and cash equivalents at the
end of the period
    
    $
    5,139,126
    
    
    $
    8,551,001Supplemental cash flow information:Cash paid for interest:
    
    $
    1,043,275
    
    
    $
    83,757
  4




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO FINANCIAL STATEMENTS
 Note 1  Summary of Significant accounting principles
 Basis of Presentation 
 Organization
 Use of Estimates
 Nature of Operations
 Cash and Cash Equivalents
 Loans
  5




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO FINANCIAL STATEMENTS
    Allowance for Loan Losses
    6




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
    Off-balance-sheet Instruments
 Property
and Equipment
 Income
Taxes
 Other Comprehensive Income
 Earnings per Share
 Reclassification
 FASB 123R Share Based Payments
 7




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
    Dividend yield or expected dividends
    
    
    0.00
    %Risk free interest rate
    
    
    4.50
    %Expected life
    
    5 yrs.Expected volatility
    
    
    12.18
    %
  Recent Accounting Pronouncements  FASB No. 157 and FASB No. 159  Fair Value Measurement and
The Fair Value Option for Financial Assets and Financial Liabilities 
 Recent Accounting Pronouncements  FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes
 8




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 2  Securities
  2007EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU. S. Government agency
securities
    
    $
    678
    
    
    $
    7
    
    
    $
    0
    
    
    $
    685Mortgage backed securities
    
    
    1,855
    
    
    
    56
    
    
    
    0
    
    
    
    1,911Total
    
    $
    2,533
    
    
    $
    63
    
    
    $
    0
    
    
    $
    2,596
   EstimatedAmortized
    
    
    MarketCost
    
    
    ValueDue in one year or less
    
    $
    
    
    
    $
    Due in one year through five years
    
    
    678
    
    
    
    685Due in five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Subtotal
    
    
    678
    
    
    
    685Mortgage backed securities
    
    
    1,855
    
    
    
    1,911Total
    
    $
    2,533
    
    
    $
    2,596
   9




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 3  Loans
  2007
    
    
    2006Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    1,816
    
    
    $
    1,442Multifamily
    
    
    1,864
    
    
    
    399Commercial
    
    
    13,601
    
    
    
    3,207Construction
    
    
    2,348
    
    
    
    453Second mortgage
    
    
    758
    
    
    
    628Equity lines of credit
    
    
    8,696
    
    
    
    3,229Total mortgage loans on real estate
    
    
    29,083
    
    
    
    9,358Commercial loans
    
    
    7,898
    
    
    
    3,186Consumer installment loans
    
    
    177
    
    
    
    375Total loans
    
    
    37,158
    
    
    
    12,919Less:Allowance for loan losses
    
    
    560
    
    
    
    195Net deferred loan fees
    
    
    51
    
    
    
    5Net loans
    
    $
    36,547
    
    
    $
    12,719
  2007
    
    
    2006Balance at beginning of year
    
    $
    195
    
    
    $
    Provision for loan losses
    
    
    465
    
    
    
    195Loans charged off
    
    
    (100
    )
    
    
    0Recoveries of loans previously charged off
    
    
    0
    
    
    
    0Balance at end of year
    
    $
    560
    
    
    $
    195
   10




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
  Maturing or repricing inless than
    
    
    1 to 5
    
    
    after1 year
    
    
    years
    
    
    5 years
    
    
    TotalCommercial, financial and
agricultural
    
    $
    3,247
    
    
    $
    3,062
    
    
    $
    1,589
    
    
    $
    7,898Real estate  construction
    
    
    2,348
    
    
    
    0
    
    
    
    0
    
    
    
    2,348Real estate  mortgage
    
    
    7,908
    
    
    
    7,598
    
    
    
    11,178
    
    
    
    26,684Installment loans to individuals
    
    
    151
    
    
    
    26
    
    
    
    0
    
    
    
    177Total loans
    
    $
    13,654
    
    
    $
    10,686
    
    
    $
    12,767
    
    
    $
    37,107
  Fixed rate
    
    $
    23,254Variable rate
    
    $
    7,541
  Note 4  Bank Premises and Equipment
  2007
    
    
    2006Leasehold improvements
    
    $
    2,124
    
    
    $
    1,954Furniture and equipment
    
    
    452
    
    
    
    197Computer equipment & software
    
    
    373
    
    
    
    235Total
    
    
    2,949
    
    
    
    2,386Less: Accumulated depreciation
    
    
    429
    
    
    
    67Net premises and equipment
    
    
    2,520
    
    
    
    2,319
  11




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 5  Deposits
  2007
    
    
    2006Non-interest bearing deposits
    
    $
    5,385
    
    
    $
    1,415NOW accounts
    
    
    9,727
    
    
    
    1,370Savings and money market accounts
    
    
    11,620
    
    
    
    4,441Certificates of Deposit <$100,000
    
    
    2,008
    
    
    
    1,995Certificates of Deposit >$100,000
    
    
    7,522
    
    
    
    1,008Total
    
    $
    36,262
    
    
    $
    10,229
  <$100,000
    
    
    >$100,000
    
    
    Total2008
    
    $
    2,008
    
    
    $
    7,522
    
    
    $
    9,5302009
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,008
    
    
    $
    7,522
    
    
    $
    9,530
 Note 6  Stock Option Plan
     12




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
    Calculated volatility
    
    
    12.40
    %Weighted average dividends
    
    
    0.00
    %Expected term (in years)
    
    
    5Risk-free rate
    
    
    4.50
    %
  WeightedAverageWeighted
    
    RemainingNumber of
    
    Average
    
    Contractual
    
    AggregateOptions
    
    Shares
    
    Exercise Price
    
    Term (in years)
    
    Intrinsic ValueOutstanding at January 1, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Granted
    
    
    180,000
    
    
    
    10.00
    
    
    
    10.00
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (40,000
    )
    
    
    10.00
    
    
    
    
    
    
    
    Outstanding at December 31,
2007
    
    
    140,000
    
    
    $
    10.00
    
    
    
    9.25
    
    
    $
    
  13




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 7  Income Taxes
   2007
    
    
    2006Deferred tax assets:Allowance for loan losses
    
    $
    136,550
    
    
    $
    35,795Organizational costs
    
    
    637,922
    
    
    
    685,469Net operating loss carryforward
    
    
    1,451,797
    
    
    
    585,334Share based compensation
    
    
    157,080
    
    
    
    142,800Other
    
    
    35,567
    
    
    
    13,550Total deferred tax assets
    
    
    2,418,916
    
    
    
    1,462,948Less valuation allowance
    
    
    2,301,211
    
    
    
    1,394,209Deferred tax liabilities:Fixed assets
    
    
    96,771
    
    
    
    54,983Other
    
    
    20,934
    
    
    
    13,759Total deferred tax liabilities
    
    
    117,705
    
    
    $
    68,739Net deferred tax assets
    
    $
    
    
    
    $
    
  2007
    
    
    2006Current expense
    
    $
    
    
    
    $
    Deferred (benefit) expense
    
    
    
    
    
    
    Total income tax expense
    
    $
    
    
    
    $
    
 14




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
  2007
    
    
    2006Income tax benefit at federal
statutory rate of 34 percent
    
    
    (912,223
    )
    
    
    (1,007,472
    )Increases resulting from
nondeductible expenses
    
    
    5,221
    
    
    
    5,281Other
    
    
    
    
    
    
    (53,562
    )Change in valuation allowance
    
    
    907,002
    
    
    
    1,055,753Income tax expense
    
    $
    
    
    
    $
    
 Note 8  Leases and Commitments
   2008
    
    $
    274,0372009
    
    
    279,8072010
    
    
    285,6952011
    
    
    291,6932012
    
    
    297,816thereafter
    
    
    3,669,850Total
    
    $
    5,098,898
 Note 9  Restrictions on dividends, loans and advances
   15




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
   Note 10  Fair Value of Financial Instruments
   Cash and Cash Equivalents
 Securities
 Loans Receivable
 Deposit Liabilities
 Accrued Interest
 16




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Other Financial Instruments
  2007
    
    2006Carrying
    
    Estimated
    
    Carrying
    
    EstimatedFair
    
    
    
    
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    5,139
    
    
    $
    5,139
    
    
    $
    8,551
    
    
    $
    8,551Securities available for sale
    
    
    2,596
    
    
    
    2,596
    
    
    
    
    
    
    
    Loans
    
    
    37,107
    
    
    
    37,396
    
    
    
    12,914
    
    
    
    12,914Accrued interest receivable
    
    
    203
    
    
    
    203
    
    
    
    54
    
    
    
    54Financial liabilities:Deposits
    
    
    36,262
    
    
    
    36,262
    
    
    
    10,229
    
    
    
    10,229Accrued interest payable
    
    
    63
    
    
    
    63
    
    
    
    16
    
    
    
    16
 Note 11  Retirement Plans
  17




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 12  Parent Only Financial Statements
   December 31,2007
    
    
    2006AssetsCash and cash equivalents
    
    $
    717,097
    
    
    $
    845,889Investment in subsidiary
    
    
    10,112,542
    
    
    
    12,562,298Total assets
    
    $
    10,829,639
    
    
    $
    13,408,187Liabilities and Shareholders EquityOther liabilities
    
    $
    70,000
    
    
    $
    70,000Shareholders equity
    
    
    10,759,639
    
    
    
    13,338,187Total liabilities and shareholders equity
    
    $
    10,829,639
    
    
    $
    13,408,187
 18




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
  For the Year Ended December 31,2007
    
    
    2006Interest income
    
    $
    
    
    
    $
    Interest expense
    
    
    
    
    
    
    71,452Net interest income
    
    
    
    
    
    
    (71,452
    )Non-interest expenseSalaries and benefits
    
    
    
    
    
    
    (460,230
    )Occupancy & equipment expense
    
    
    
    
    
    
    (183,833
    )FAS 123R share based payments
    
    
    42,000
    
    
    
    420,000Professional fees
    
    
    98,760
    
    
    
    (310,245
    )Printing and office supplies
    
    
    
    
    
    
    (2,502
    )Other expense
    
    
    30,032
    
    
    
    (9,190
    )Total non-interest expense
    
    
    170,792
    
    
    
    (546,000
    )Income taxes
    
    
    
    
    
    
    Net income (loss) before equity in
undistributed loss of subsidiary
    
    
    (170,792
    )
    
    
    474,548Equity in undistributed loss of subsidiary
    
    
    (2,512,216
    )
    
    
    (3,437,702
    )Net loss
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )
 19




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
  For the Year Ended December 31,2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )Undistributed loss of subsidiary
    
    $
    2,512,216
    
    
    $
    3,437,702Share based payments expense
    
    
    42,000
    
    
    
    420,000Net (increase) decrease in other assets
    
    
    
    
    
    
    467,308Net increase (decrease) in other liabilities
    
    
    
    
    
    
    (13,159
    )Net cash used in operating activities
    
    
    (128,792
    )
    
    
    1,348,697Cash flows from investing activitiesInvestment in subsidiary
    
    
    
    
    
    
    (16,000,000
    )(Increase) decrease in premises and equipment
    
    
    
    
    
    
    140,108Net cash used in investing activities
    
    
    
    
    
    
    (15,859,892
    )Cash flows from financing activitiesSale of stock
    
    
    
    
    
    
    17,033,330Repayment of notes payable from related parties
    
    
    
    
    
    
    (749,000
    )Increase (decrease) in line of credit payable
    
    
    
    
    
    
    (960,000
    )Net cash provided by financing activities
    
    
    
    
    
    
    15,324,330Increase (decrease) in cash and cash equivalents
    
    
    (128,792
    )
    
    
    813,135Cash and cash equivalents at the
beginning of the period
    
    
    845,889
    
    
    
    32,754Cash and cash equivalents at the
end of the period
    
    $
    717,097
    
    
    $
    845,889
 Note 13  Off Balance Sheet Risk
 Credit-related Financial Instruments
  20




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
  Contract Amount2007
    
    2006Commitments to grant loans
    
    $
    4,983,000
    
    
    $
    $797,000Unfunded commitments under lines of credit
    
    $
    14,672,000
    
    
    $
    2,498,000Commercial and standby letters of credit
    
    $
    110,000
    
    
    
    
    Collateral Requirements
  Legal Contingencies
 21




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 Note 14  Minimum Regulatory capital Requirements
   For Capital
    
    
    To beActual
    
    
    Adequacy Purposes
    
    
    Well-CapitalizedRatio
    
    
    
    
    
    
    Ratio
    
    
    
    
    
    
    RatioAs of December 31, 2007
    
    Amount
    
    
    (Percent)
    
    
    Amount
    
    
    (Percent)
    
    
    Amount
    
    
    (Percent)Total risk-based capital(to risk weighted assets)Bank of Birmingham
    
    
    10,553
    
    
    
    26.78
    
    
    
    3,152
    
    
    
    8.00
    
    
    
    3,940
    
    
    
    10.00Consolidated
    
    
    11,201
    
    
    
    27.97
    
    
    
    3,204
    
    
    
    8.00
    
    
    
    4,005
    
    
    
    10.00Tier I Capital(to risk weighted assets)Bank of Birmingham
    
    
    10,050
    
    
    
    25.51
    
    
    
    1,576
    
    
    
    4.00
    
    
    
    2,364
    
    
    
    6.00Consolidated
    
    
    10,698
    
    
    
    26.71
    
    
    
    1,602
    
    
    
    4.00
    
    
    
    2,403
    
    
    
    6.00Tier I Capital(to average assets)Bank of Birmingham
    
    
    10,050
    
    
    
    20.26
    
    
    
    1,984
    
    
    
    4.00
    
    
    
    2,480
    
    
    
    5.00Consolidated
    
    
    10,698
    
    
    
    21.29
    
    
    
    2,010
    
    
    
    4.00
    
    
    
    2,513
    
    
    
    5.00
 22




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
 For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedRatio
    
    
    
    
    
    Ratio
    
    
    
    
    
    RatioAs of December 31, 2006
    
    Amount
    
    (Percent)
    
    Amount
    
    (Percent)
    
    Amount
    
    (Percent)Total risk-based capital(to risk weighted assets)Bank of Birmingham
    
    
    12,758
    
    
    
    75.91
    
    
    
    1,345
    
    
    
    8.00
    
    
    
    1,681
    
    
    
    10.00Consolidated
    
    
    13,603
    
    
    
    93.23
    
    
    
    1,167
    
    
    
    8.00
    
    
    
    1,459
    
    
    
    10.00Tier I Capital(to risk weighted assets)Bank of Birmingham
    
    
    12,563
    
    
    
    74.75
    
    
    
    672
    
    
    
    4.00
    
    
    
    1,008
    
    
    
    6.00Consolidated
    
    
    13,408
    
    
    
    91.89
    
    
    
    584
    
    
    
    4.00
    
    
    
    875
    
    
    
    6.00Tier I Capital(to average assets)Bank of Birmingham
    
    
    12,563
    
    
    
    61.50
    
    
    
    817
    
    
    
    4.00
    
    
    
    1,021
    
    
    
    5.00Consolidated
    
    
    13,408
    
    
    
    64.27
    
    
    
    834
    
    
    
    4.00
    
    
    
    1,043
    
    
    
    5.00
 23




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD LOOKING STATEMENTS
   OVERVIEW
   24




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
     CRITICAL ACCOUNTING POLICIES
 Allowance for loan losses
  25




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   PLAN OF OPERATION
    26




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Selected Financial Information
  (dollars in thousands):
 For the Year EndedDecember 31,2007
    
    
    2006
    
    
    2005Total assets
    
    $
    47,260
    
    
    $
    23,704
    
    
    $
    640Gross loans
    
    
    37,107
    
    
    
    12,914
    
    
    
    Allowance for loan losses
    
    
    560
    
    
    
    195
    
    
    
    Total deposits
    
    
    36,262
    
    
    
    10,229
    
    
    
    Borrowings
    
    
    
    
    
    
    
    
    
    
    1,709Total stockholders equity (deficit)
    
    
    10,760
    
    
    
    13,338
    
    
    
    (1,151
    )Summary of operationsInterest income
    
    
    2,463
    
    
    
    385
    
    
    
    Interest expense
    
    
    1,090
    
    
    
    158
    
    
    
    14Net interest income
    
    
    1,373
    
    
    
    227
    
    
    
    (14
    )Provision for loan losses
    
    
    465
    
    
    
    195
    
    
    
    Noninterest income
    
    
    132
    
    
    
    7
    
    
    
    Noninterest expense
    
    
    3,723
    
    
    
    3,002
    
    
    
    981Income before taxes
    
    
    (2,683
    )
    
    
    (2,963
    )
    
    
    (995
    )Provision for income tax
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    (2,683
    )
    
    $
    (2,963
    )
    
    $
    (995
    )Per share data:Basic earnings
    
    $
    (1.49
    )
    
    $
    (4.19
    )
    
    $
    (9,954.58
    )Diluted earnings
    
    $
    (1.49
    )
    
    $
    (4.19
    )
    
    $
    (9,954.58
    )Dividend declared
    
    
    
    
    
    
    
    
    
    
    
 27




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  For the Year EndedDecember 31,2007
    
    2006
    
    2005Total nonperforming assets as a
percentage of total assets
    
    
    
    
    
    
    
    
    
    
    Total nonperforming loans as a
percentage of total loans
    
    
    
    
    
    
    
    
    
    
    Total allowance for loan losses as a
percentage of total loans
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    Return on average assets
    
    
    -6.43
    %
    
    
    -37.62
    %
    
    
    -199.09
    %Return on average equity
    
    
    -21.39
    %
    
    
    -44.89
    %
    
    
    Net interest margin
    
    
    3.58
    %
    
    
    4.90
    %
    
    
    Average equity to average assets
    
    
    30.05
    %
    
    
    -83.82
    %
    
    
    
 ASSETS
       28




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
    Percent ofLoans ineachcategoryto totalAmount
    
    
    loansCommercial
    
    $
    120
    
    
    
    21.39
    %Real Estate Construction
    
    
    35
    
    
    
    6.32
    %Real Estate Mortgage
    
    
    402
    
    
    
    71.81
    %Consumer
    
    
    3
    
    
    
    0.48
    %$
    560
    
    
    
    100.00
    %
   29




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIABILITIES
   As of December 31, 2007
    
    
    As of December 31, 2006(dollars in thousands)
    
    Balance
    
    
    Percentage
    
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    5,385
    
    
    
    14.85
    %
    
    $
    1,415
    
    
    
    13.83
    %NOW accounts
    
    
    9,727
    
    
    
    26.82
    
    
    
    1,370
    
    
    
    13.38Money market
    
    
    11,322
    
    
    
    31.22
    
    
    
    4,328
    
    
    
    42.33Savings
    
    
    298
    
    
    
    0.82
    
    
    
    113
    
    
    
    1.10Time deposits under $100,000
    
    
    2,008
    
    
    
    5.54
    
    
    
    653
    
    
    
    6.38Time deposits over $100,000
    
    
    7,522
    
    
    
    20.75
    
    
    
    2,350
    
    
    
    22.98Total deposits
    
    $
    36,262
    
    
    
    100.00
    %
    
    $
    10,229
    
    
    
    100.00
    %
 SHAREHOLDERS EQUITY
  30




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 NET INTEREST INCOME
   31




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 (dollars in
thousands)
 Year Ended December 31, 2007
    
    
    Year Ended December 31, 2006Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateAssetsLoans
    
    $
    23,041
    
    
    $
    1,688
    
    
    
    7.33
    %
    
    $
    4,551
    
    
    $
    146
    
    
    
    7.70
    %Federal Funds Sold
    
    
    12,140
    
    
    
    628
    
    
    
    5.17
    
    
    
    10,071
    
    
    
    239
    
    
    
    5.69Investment Securities
    
    
    2,644
    
    
    
    147
    
    
    
    5.56
    
    
    
    
    
    
    
    
    
    
    
    Total Earning Assets/
    
    
    37,825
    
    
    $
    2,463
    
    
    
    6.51
    %
    
    
    14,622
    
    
    $
    385
    
    
    
    6.31
    %Total Interest Income/Average YieldCash and due from banks
    
    
    1,389
    
    
    
    
    
    
    
    
    
    
    
    1,319All other assets
    
    
    2,534
    
    
    
    
    
    
    
    
    
    
    
    1,912Total Assets
    
    $
    41,748
    
    
    
    
    
    
    
    
    
    
    $
    17,853Liabilities and EquityNOW accounts
    
    $
    6,469
    
    
    $
    246
    
    
    
    3.80
    %
    
    $
    578
    
    
    $
    4
    
    
    
    1.56
    %Money markets
    
    
    10,185
    
    
    
    440
    
    
    
    4.32
    
    
    
    1,974
    
    
    
    34
    
    
    
    4.18Savings
    
    
    221
    
    
    
    3
    
    
    
    1.49
    
    
    
    60
    
    
    
    0
    
    
    
    1.13Time deposits
    
    
    7,779
    
    
    
    401
    
    
    
    5.16
    
    
    
    2,225
    
    
    
    48
    
    
    
    5.16Total Interest Bearing Liabilities/
    
    
    24,654
    
    
    
    1,090
    
    
    
    4.42
    %
    
    
    4,837
    
    
    
    86
    
    
    
    4.28
    %Total Interest Expense/Average YieldNoninterest bearing demand deposits
    
    
    4,367
    
    
    
    
    
    
    
    
    
    
    
    185All other liabilities
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    12,544
    
    
    
    
    
    
    
    
    
    
    
    12,831Total Liabilities and Equity
    
    $
    41,748
    
    
    
    
    
    
    
    
    
    
    $
    17,853Net Interest Income/
    
    
    
    
    
    $
    1,373
    
    
    
    2.09
    
    
    
    
    
    
    $
    299
    
    
    
    2.03Interest Rate SpreadNet Interest Margin (Net Interest
    
    
    
    
    
    
    
    
    
    
    3.63
    %
    
    
    
    
    
    
    
    
    
    
    4.90
    %
 32




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 RATE / VOLUME ANALYSIS OF NET INTEREST INCOME.
 (dollars in thousands).
 Difference from prior year due to:positive (negative)Balance
    
    
    Rate
    
    
    Mix
    
    
    TotalLoans
    
    $
    1,424
    
    
    $
    (86
    )
    
    $
    204
    
    
    $
    1,542Fed Funds Sold
    
    
    118
    
    
    
    (63
    )
    
    
    334
    
    
    
    389Investment Securities
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    1471,688
    
    
    
    (149
    )
    
    
    538
    
    
    
    2,078NOW accounts
    
    
    92
    
    
    
    145
    
    
    
    5
    
    
    
    242Money markets
    
    
    343
    
    
    
    14
    
    
    
    49
    
    
    
    406Savings
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    3Time deposits
    
    
    287
    
    
    
    (0
    )
    
    
    67
    
    
    
    353724
    
    
    
    159
    
    
    
    121
    
    
    
    1,004Total
    
    $
    965
    
    
    $
    (308
    )
    
    $
    417
    
    
    $
    1,074
  PROVISION FOR CREDIT LOSSES
  NONINTEREST INCOME
   NONINTEREST EXPENSE
  33




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   INCOME TAXES
  34




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT
      35




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
     36




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 (dollars in thousands)
 AfterThree
    
    
    AfterMonths
    
    
    OneWithin
    
    
    but
    
    
    Year But
    
    
    AfterThree
    
    
    Within
    
    
    Within
    
    
    FiveMonths
    
    
    One Year
    
    
    Five Years
    
    
    Years
    
    
    TotalInterest earning assetsFederal funds sold
    
    $
    3,874
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,874Securities
    
    
    
    
    
    
    
    
    
    $
    685
    
    
    $
    1,911
    
    
    
    2,596Loans
    
    
    12,331
    
    
    $
    1,322
    
    
    
    10,687
    
    
    
    12,767
    
    
    
    37,107Total
    
    
    16,205
    
    
    
    1,322
    
    
    
    11,372
    
    
    
    14,678
    
    
    
    43,5770Interest bearing liabilitiesNow accounts
    
    
    9,727
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,727Money markets
    
    
    11,322
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,322Savings
    
    
    298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298Time deposits less than $100,000
    
    
    994
    
    
    
    1,014
    
    
    
    
    
    
    
    
    
    
    
    2,008Time deposits greater than $100,000
    
    
    3,490
    
    
    
    4,032
    
    
    
    
    
    
    
    
    
    
    
    7,522Total
    
    
    25,831
    
    
    
    5,046
    
    
    
    0
    
    
    
    0
    
    
    $
    30,877Rate sensitivity gap
    
    $
    (9,626
    )
    
    
    (3,724
    )
    
    
    11,372
    
    
    
    14,678Cumulative rate sensitivity gap
    
    
    
    
    
    $
    (13,350
    )
    
    $
    (1,978
    )
    
    $
    12,700Rate sensitivity gap ratio
    
    
    0.63
    X
    
    
    0.26
    X
    
    
    ---
    X
    
    
    ---
    XCumulative rate sensitivity gap ratio
    
    
    
    
    
    
    0.57
    X
    
    
    0.94
    X
    
    
    1.41
    X
 37




---



##### 



SEC FORM 10-KSB
  STOCK INFORMATION




---



##### 



BANK OF BIRMINGHAM SHAREHOLDER INFORMATION
 PRIMARY MARKET MAKERS
 Howe Barnes Hoefer and Arnett222 South Riverside Plaza, 7th FloorChicago, IL 60606Hill, Thompson Magid & Co., Inc.
    
    Hudson Securities, Inc.15 Exchange Place, Suite 800
    
    111 Town Square Place, Suite 1500AJersey City, NJ 07302
    
    Jersey City, NJ 07310Knight Capital Group
    
    Monroe Securities, Inc.545 Washington Boulevard
    
    100 North Riverside Plaza, Suite 1620Jersey City, New Jersey 07310
    
    Chicago, Illinois 60606
 STOCK REGISTRAR AND TRANSFER AGENT
 www.rtco.com
 INDEPENDENT AUDITOR
 www.plantemoran.com
 LEGAL COUNSEL
 www.h2law.com
 INFORMATION
  ANNUAL MEETING