##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10 - KSB
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 Commission
File Number 333-118859
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-3993452(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 33583 Woodward Avenue, Birmingham. MI 48009
 
  (248) 723-7200
 
      þ o
 þ
  o þ
    o
 Documents Incorporated by Reference:




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##### 



BIRMIGNHAM BLOOMFIELD BANCSHARES, INC.
   
 PAGEPART I
    
    
    
    
    2ITEM 1.
    
    BUSINESS.
    
    
    2ITEM 2.
    
    PROPERTIES.
    
    
    21ITEM 3.
    
    LEGAL PROCEEDINGS.
    
    
    21ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.
    
    
    22PART II
    
    
    
    
    23ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
    
    
    23ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.
    
    
    27ITEM 7.
    
    FINANCIAL STATEMENTS.
    
    
    31ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
    
    
    40ITEM 8A.
    
    CONTROLS AND PROCEDURES.
    
    
    40PART III
    
    
    
    
    41ITEM 9.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT.
    
    
    41ITEM 10.
    
    EXECUTIVE COMPENSATION.
    
    
    42ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
    
    
    44ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
    
    
    44ITEM 13.
    
    EXHIBITS.
    
    
    45ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES.
    
    
    46Code of EthicsCertification of Chief Executive Officer Pursuant to Rule 15d-15(e)Certification of Chief Financial Officer Pursuant to Rule 15d-15(e)Certification Pursuant to Rule 14d-14(b) and 18 U.S.C. Section 1350




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##### Table of Contents



PART I
 
 ITEM 1. Business.
 Overview
    Philosophy and strategy
   
    
    Capitalizing on the diverse community involvement, professional expertise and
personal and business contacts of our directors, organizers and executive officers;
    
    Hiring and retaining experienced and qualified banking personnel;
    
    Providing individualized attention with consistent, local decision-making authority;
    
    Utilizing technology and strategic outsourcing to provide a broad array of
convenient products and services;
    
    Operating from highly visible and accessible banking offices in close proximity to
a concentration of targeted commercial businesses and professionals;
    
    Attracting its initial customer base by offering competitive interest rates on
deposit accounts;
    
    Implementing a strong marketing program.
 2




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Market opportunities
 Primary service areas
 Local economy
  Competition
  3




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Deposit growth
 Business strategy
 Management philosophy
 Operating strategy
 
    
    Experienced senior management. The Banks proposed senior management possesses
extensive experience in banking industry, as well as substantial business and banking
contacts in our primary service areas. For example, the proposed President and Chief
Executive Officer, Robert Farr, has over twenty-five years of banking experience.
Richard Miller, the proposed Executive Vice President and Chief Financial Officer, and
Lance Krajacic, Jr., the proposed Executive Vice President and Chief Lending Officer,
each have more than twenty years of banking experience. Jeffrey S. Bonk, the proposed
Executive Vice President and Director of Sales and Marketing, has more than
twenty-five years of banking experience.
    
    Quality employees. Bank of Birmingham will strive to hire highly trained and
seasoned staff. The Bank plans to train its staff to answer questions about all of
its products and services so that the first employee the customer encounters can
resolve any questions the customer may have.
    
    Community-oriented board of directors. All of the Banks proposed directors are
either experienced bankers or local business and community leaders. Many of its
directors are residents of our primary service areas, and most have significant
business ties to the Banks primary service areas, enabling them to be sensitive and
responsive to the needs of the community. Additionally, the board of directors
represents a wide variety of business experience and community involvement. We expect
that the directors will bring substantial business and banking contacts to Bank of
Birmingham.
    
    Highly visible sites. The main office is highly visible and located in close
proximity to major traffic arteries. The main office location will be located at
33583 Woodward Avenue, Birmingham, Michigan in an area that will provide easy access
to potential banking customers traveling in the Birmingham area. The Bank will also
operate another full-service banking office at 4145 West Maple, Bloomfield Township,
Michigan, to serve the expanding Bloomfield area. We believe that these sites will
give the Bank a highly visible presence in a market that is dominated by branch
offices of Banks headquartered out of the area. We believe this will enhance the
banks image as a strong competitor.
 4




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
    
    Individual customer focus. Bank of Birmingham will focus on providing individual
service and attention to our target customers, which include local businesses,
professionals and individuals. As the employees, officers and directors become
familiar with the Banks customers on an individual basis, the Bank will be able to
respond to credit requests more quickly and be more flexible in approving complex
loans based on collateral quality and personal knowledge of the customer. The Banks
products and services will be delivered personally though two full-service offices and
supported by effective technical and non-technical service delivery systems. Clients
will enjoy the convenience of on-site visits by the banks business relationship
managers, a courier service for non-cash deposits and business consultation services.
    
    Financial and information center.Bank of Birmingham plans to serve as a financial
and information center for the community, and will assemble and sponsor professionals
to conduct seminars and workshops on a variety of subjects of interest to assist
members of our community in developing or enhancing their personal and professional
effectiveness. The Bank also plans to sponsor periodic luncheons that will bring
clients and prospects of complimentary industries together to network and discuss
common business interests.
    
    Marketing and advertising. The Bank has engaged an experienced Director of Sales
and Marketing, who will provide leadership, direction and guidance to the sales
operation of the bank. The Director of Sales and Marketing will research, develop and
implement strategies for profitability and operating efficiency within the Banks
distribution of loan and deposit products.
 Growth strategies
 
    
    Capitalize on community orientation. We plan to capitalize on the Banks position
as an independent, locally-owned community bank to attract individuals, professionals
and local business customers that may be underserved by larger banking institutions in
our market area.
    
    Emphasize local decision-making. The Bank will emphasize local decision-making by
experienced bankers. This will help the Bank attract local businesses and
service-minded customers.
    
    Attract experienced lending officers. Bank of Birmingham will seek to hire
experienced, well-trained lending officers capable of soliciting loan business
immediately. By hiring experienced lending officers, the Bank will be able to grow
much more rapidly than it would if it hired inexperienced lending officers.
    
    Offer fee-generating products and services. The Banks range of services, pricing
strategies, interest rates paid and charged and hours of operation will be structured
to attract its target customers and increase its market share. Bank of Birmingham
will strive to offer the small business person, professional, entrepreneur and
consumer the best loan services available while charging competitively for these
services and utilizing technology and strategic outsourcing to increase fee revenues.
 5




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Lending services
 Lending policy
  Lending limits
 
    
    15% of the banks capital and surplus; or
    
    upon a 2/3 vote of the Banks board of directors, 25% of its capital and surplus.
  Credit risks
 Real estate loans
 
    
    Commercial real estate. Commercial real estate loan terms generally will be
limited to five years or less, although payments may be structured on a longer
amortization basis. Interest rates may be fixed or adjustable, although rates
typically will not be fixed for a period exceeding 12 months. Bank of Birmingham will
generally charge an origination fee for its services. The Bank generally will require
personal guarantees from the principal owners of the property supported by a review by
Bank management of the principal owners personal financial statements. Risks
associated with commercial real estate loans include fluctuations in the value of real
estate, new job creation trends, tenant vacancy rates and the quality of the
borrowers management. The Bank will limit its risk by analyzing borrowers cash flow
and collateral value on an ongoing basis.
 6




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
    
    Construction and development loans. Bank of Birmingham will consider making
owner-occupied construction loans with a pre-approved take-out loan. The Bank will
also consider construction and development loans on a pre-sold basis. If the borrower
has entered into an agreement to sell the property prior to beginning construction,
then the loan is considered to be on a pre-sold basis. If the borrower has not
entered into an agreement to sell the property prior to beginning construction, then
the loan is considered to be on a speculative basis. Construction and development
loans are generally made with a term of six to twelve months and interest is paid
quarterly. The ratio of the loan principal to the value of the collateral as
established by independent appraisal typically will not exceed industry standards.
Speculative loans will be based on the borrowers financial strength and cash flow
position. Loan proceeds will be disbursed based on the percentage of completion and
only after the project has been inspected by an experienced construction lender or
third-party inspector. Risks associated with construction loans include fluctuations
in the value of real estate and new job creation trends.
    
    Residential real estate. The Banks residential real estate loans will consist of
residential second mortgage loans, residential construction loans and traditional
mortgage lending for one-to-four family residences. The Bank expects that any
long-term fixed rate mortgages will be underwritten for resale to the secondary
market. It will offer primarily adjustable rate mortgages. The majority of fixed
rate loans will be sold in the secondary mortgage market. All loans will be made in
accordance with our appraisal policy with the ratio of the loan principal to the value
of collateral as established by independent appraisal not exceeding 80%, unless the
borrower has private mortgage insurance. The Bank expects that these loan-to-value
ratios will be sufficient to compensate for fluctuations in real estate market value
and to minimize losses that could result from a downturn in the residential real
estate market.
 Commercial loans
 Consumer loans
 Composition of portfolio
 7




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PercentageCommercial real estate
    
    
    45.5
    %Home equity
    
    
    20.0
    %Commercial
    
    
    19.5
    %Residential real estate
    
    
    8.0
    %Construction
    
    
    4.0
    %Consumer
    
    
    3.0
    %Total
    
    
    100
    %
 Investments
  Asset and liability management
  Deposit services
  Other banking services
  Employees
  8




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Special cautionary notice regarding forward-looking information
  
    
    the Company and Bank must receive regulatory approvals before the Bank may open
for business;
    
    the Bank must satisfy certain conditions following regulatory approval before it
may open for business;
    
    any delay in beginning banking operations will result in additional losses;
    
    the Company has no operating history upon which to base an estimate of its future
financial performance;
    
    the Company expects to incur losses during its initial years of operations;
    
    failure of the Company or the Bank to implement its business strategies may
adversely affect its financial performance.
    
    departures of key personnel or directors may impair the Banks operations;
    
    the Bank will face intense competition from a variety of competitors;
    
    the Banks legal lending limits may impair its ability to attract borrowers;
    
    an economic downturn, especially one affecting the Banks primary service areas,
may have an adverse effect on the Companys financial performance;
    
    adverse economic conditions in the automobile manufacturing and related service
industries may impact the Companys banking business;
    
    monetary policy and other economic factors could adversely affect the Banks profitability;
    
    the common stock of the Company is not an insured deposit;
 9




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
    
    your share ownership may be diluted in the future
    
    the Bank could be negatively affected by changes in interest rates;
    
    the determination of the offering price in the initial public offering was
arbitrary, and shareholders may be unable to resell their shares at or above the offering
price;
    
    the Company does not intend to pay dividends in the foreseeable future;
    
    the Company and Bank are subject to extensive regulatory oversight, which could
restrain growth and profitability;
    
    the Company may not be able to raise additional capital on terms favorable to it;
    
    subscribers will incur immediate and substantial dilution in the book value per
share of any shares that they purchase in the offering;
    
    the liquidity of the Companys common stock will be affected by its limited
trading market
    
    the Companys articles of incorporation and bylaws, and the employment agreements
of the Companys executive officers, contain provisions that could make a takeover more
difficult;
    
    management of the Bank may be unable to adequately measure and limit credit risk
associated with the loan portfolio, which would affect the Companys profitability; and,
    
    the Companys directors and executive officers could have the ability to
influence shareholder actions in a manner that may be adverse to a shareholders personal
investment objectives.
  SUPERVISION AND REGULATION
   10




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Birmingham Bloomfield Bancshares, Inc.
 General
  Certain acquisitions
   Change in bank control
 Permitted activities
 11




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
    
    factoring accounts receivable;
    
    making, acquiring, brokering or servicing loans and usual related activities;
    
    leasing personal or real property;
    
    operating a non-bank depository institution, such as a savings association;
    
    trust company functions;
    
    financial and investment advisory activities;
    
    conducting discount securities brokerage activities;
    
    underwriting and dealing in government obligations and money market instruments;
    
    providing specified management consulting and counseling activities;
    
    performing selected data processing services and support services;
    
    acting as agent or broker in selling credit life insurance and other types of
insurance in connection with credit transactions; and
    
    performing selected insurance underwriting activities.
  
    
    lending, exchanging, transferring, investing for others, or safeguarding money or
securities;
    
    insuring, guaranteeing or indemnifying against loss or harm, or providing and
issuing annuities, and acting as principal, agent or broker for these purposes, in any
state;
    
    providing financial, investment or advisory services;
    
    issuing or selling instruments representing interests in pools of assets
permissible for a bank to hold directly;
    
    underwriting, dealing in or making a market in securities;
    
    other activities that the Federal Reserve may determine to be so closely related to
banking or managing or controlling banks as to be a proper incident to managing or
controlling banks;
    
    foreign activities permitted outside of the United States if the Federal Reserve
has determined them to be usual in connection with banking operations abroad;
 12




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
    
    merchant banking through securities or insurance affiliates; and
    
    insurance company portfolio investments.
  Sound banking practice
  Anti-tying restrictions
 Dividends
 Bank of Birmingham
  13




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Branching and interstate banking
 Deposit insurance assessments
 Expanded financial activities
 14




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Community Reinvestment Act
 Other regulations
 
    
    the federal Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;
    
    the Home Mortgage Disclosure Act of 1975, requiring financial institutions to
provide information to enable the public and public officials to determine whether a
financial institution is fulfilling its obligation to help meet the housing needs of
the community it serves;
    
    the Equal Credit Opportunity Act, prohibiting discrimination on the basis of
race, creed or other prohibited factors in extending credit;
    
    the Fair Credit Reporting Act of 1978, governing the use and provision of
information to credit reporting agencies;
    
    the Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; and
    
    the rules and regulations of the various federal agencies charged with the
responsibility of implementing these federal laws.
  
    
    the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for complying
with administrative subpoenas of financial records; and
    
    the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve
to implement that act, which govern automatic deposits to and withdrawals from deposit
accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
 Dividends
 15




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Check Clearing for the 21st Century Act
 
    
    allowing check truncation without making it mandatory;
    
    demanding that every financial institution communicate to accountholders in
writing a description of its substitute check processing program and their rights
under the law;
    
    legalizing substitutions for and replacements of paper checks without
agreement from consumers;
    
    retaining in place the previously mandated electronic collection and return
of checks between financial institutions only when individual agreements are in place;
    
    requiring that when accountholders request verification, financial
institutions produce the original check (or a copy that accurately represents the
original) and demonstrate that the account debit was accurate and valid; and
    
    requiring recrediting of funds to an individuals account on the next
business day after a consumer proves that the financial institution has erred.
  Capital adequacy
  16




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Prompt corrective action regulations
 
    
    well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and
10% total risk-based capital);
    
    adequately capitalized (at least 4% leverage capital, 4% Tier 1 risk-based capital
and 8% total risk-based capital);
    
    undercapitalized (less than 8% total risk-based capital, 4% Tier 1 risk-based
capital or 3% leverage capital);
    
    significantly undercapitalized (less than 6% total risk-based capital, 3% Tier 1
risk-based capital or 3% leverage capital); and
    
    critically undercapitalized (less than 2% tangible capital).
  17




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Restrictions on transactions with affiliates and loans to insiders
 
    
    the Banks loans or extensions of credit to affiliates;
    
    the Banks investment in affiliates;
    
    assets that the Bank may purchase from affiliates, except for real and personal
property exempted by the Federal Reserve;
    
    the amount of loans or extensions of credit to third parties collateralized by the
securities or obligations of affiliates; and
    
    the Banks guarantee, acceptance or letter of credit issued on behalf of an
affiliate.
    Privacy
 18




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Anti-terrorism
legislation th
  
    
    to conduct enhanced scrutiny of account relationships to guard against money
laundering and report any suspicious transaction;
    
    to ascertain the identity of the nominal and beneficial owners of, and the source
of funds deposited into, each account as needed to guard against money laundering and
report any suspicious transactions;
    
    to ascertain for any foreign bank, the shares of which are not publicly traded, the
identity of the owners of the foreign bank and the nature and extent of the ownership
interest of each such owner; and
    
    to ascertain whether any foreign bank provides correspondent accounts to other
foreign banks and, if so, the identity of those foreign banks and related due
diligence information.
    
    
    expeditiously search its records to determine whether it maintains or has
maintained accounts, or engaged in transactions with individuals or entities, listed
in a request submitted by the Financial Crimes Enforcement Network (FinCEN);
    
    notify FinCEN if an account or transaction is identified;
    
    designate a contact person to receive information requests;
 19




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
    
    limit use of information provided by FinCEN to: (1) reporting to FinCEN, (2)
determining whether to establish or maintain an account or engage in a transaction and
(3) assisting the financial institution in complying with the Bank Secrecy Act; and
    
    maintain adequate procedures to protect the security and confidentiality of FinCEN
requests.
   Sarbanes-Oxley Act of 2002
   Proposed legislation and regulatory action
 20




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Effect of governmental monetary policies
 All of the above laws and regulations add significantly to the cost of operating Birmingham
Bloomfield Bancshares and Bank of Birmingham and thus have a negative impact on our profitability.
We would also note that there has been a tremendous expansion experienced in recent years by
certain financial service providers that are not subject to the same rules and regulations as
Birmingham Bloomfield Bancshares and Bank of Birmingham. These institutions, because they are not
so highly regulated, have a competitive advantage over us and may continue to draw large amounts of
funds away from traditional banking institutions, with a continuing adverse effect on the banking
industry in general.
 
 ITEM 2. Description of Property.
    
 ITEM 3. Legal Proceedings.
  21




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ITEM 4. Submission of Matters to a Vote of Security Holders.
  22




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PART II
 
 ITEM 5. Market for Common Equity and Related Stockholder Matters.
 Market Information
  Holders
  Dividends
  Securities Authorized For Issuance Under Equity Compensation Plans
  General
   23




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Administration
 Option terms
    Termination of options
 24




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Recapitalizations and reorganizations
 Amendment and termination of the plan
 Federal income tax consequences
 
    
    Incentive stock options. A participant will not be taxed upon the grant or
exercise of all or any portion of an incentive stock option. Instead, the participant
will be taxed when he or she sells the shares of common stock purchased upon exercise
of the incentive stock option. The participant will be taxed on the difference
between the price he or she paid for the common stock and the amount for which he or
she sells the common stock. If the participant does not sell the shares of common
stock prior to two years from the date of grant of the incentive stock option and one
year from the date the common stock is transferred to him or her, any gain will be a
capital gain, and we will not be entitled to a corresponding deduction. If the
participant sells the shares of common stock at a gain before that time, the
difference between the amount the participant paid for the common stock and the lesser
of its fair market value on the date of exercise or the amount for which the stock is
sold will be taxed as ordinary income, and we will be entitled to a corresponding
deduction. If the participant sells the shares of common stock for less than the
amount he or she paid for the stock prior to the one- or two-year period indicated, no
amount will be taxed as ordinary income, and the loss will be taxed as a capital loss.
Exercise of an incentive stock option may subject a participant to, or increase a
participants liability for, the alternative minimum tax.
    
    Non-qualified stock options. A participant will not be taxed upon the grant of a
non-qualified stock option or at any time before the exercise of the option or a
portion of the option. When the participant exercises a non-qualified stock option or
portion of the option, he or she will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the common stock
on the date the option is exercised over the price paid for the common stock, and we
will then be entitled to a corresponding deduction. Depending upon the time period for
which shares of common stock are held after exercise of a non-qualified stock option,
the sale or other taxable disposition of shares acquired through the exercise of a
non-qualified stock option generally will result in a short- or long-term capital gain
or loss equal to the difference between the amount realized on the disposition and the
fair market value of such shares when the non-qualified stock option was exercised.
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Warrants
     Recent Sales of Unregistered Securities
  26




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ITEM 6. Managements Discussion and Analysis of Financial Condition and Results of Operation.
  OVERVIEW
     
    
    seeking, interviewing and selecting the organizers, directors and officers of the Company and the Bank;
    
    preparing the business plan; and
    
    applying with the Federal Reserve to become a bank holding company.
 PLAN OF OPERATION
  27




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FINANCIAL RESULTS
    FUNDING OF OPERATIONS AND LIQUIDITY
   28




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CAPITAL EXPENDITURES
  Liquidity and interest rate sensitivity
      29




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Capital adequacy
    30




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ITEM 7. Financial Statements.
        
 31




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ASSETSCash
    
    $
    32,754Deferred offering costs (note 1)
    
    
    442,766Other Assets
    
    
    24,542Property and equipment
    
    
    140,108Total Assets
    
    $
    640,170LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Related party notes payable (note 2)
    
    $
    749,000Bank note payable (note 3)
    
    
    960,000Other liabilities (note 4)
    
    
    83,159Total Liabilities
    
    
    1,792,159Shareholders equity (deficit)Common Stock, no par valueAuthorized
 4,500,000 sharesIssued and
outstanding  100 shares at December 31, 2005
    
    
    1,000Accumulated deficit
    
    
    (1,152,989
    )Total shareholders equity (deficit)
    
    
    (1,151,989
    )Total liabilities and shareholders equity (deficit)
    
    $
    640,170
  32




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Period fromThree
    
    
    February 26,Months
    
    
    2004Ended
    
    
    (inception) toDecember 31,
    
    
    December 31,2005
    
    
    2005Total Revenue
    
    $
    0
    
    
    $
    0Operating ExpensesManagement Consulting Agreements
    
    
    505,745
    
    
    
    530,760Legal Fees
    
    
    76,354
    
    
    
    97,405Consulting
    
    
    136,240
    
    
    
    230,740Accounting & Auditing
    
    
    15,350
    
    
    
    22,050Rent (note 6)
    
    
    133,583
    
    
    
    133,583Building Maintenance & Utilities
    
    
    48,535
    
    
    
    50,250Interest Expense
    
    
    13,553
    
    
    
    13,553Miscellaneous
    
    
    66,098
    
    
    
    74,648Total Operating Expenses
    
    $
    995,458
    
    
    $
    1,152,989Income Taxes (note 5)
    
    
    
    
    
    
    Net Loss
    
    
    ($995,458
    )
    
    
    ($1,152,989
    )Net Loss per Share
    
    
    ($9,954.58
    )
    
    
    ($11,529.89
    )Weighted average shares
    
    
    100
    
    
    
    100
  33




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Deficit AccumulatedCommon
    
    
    During the DevelopmentStock
    
    
    Stage
    
    
    TotalBalance at February
26, 2004
    
    
    
    
    
    
    
    
    
    
    Issuance of 100
shares Common Stock
    
    $
    1,000
    
    
    
    
    
    
    $
    1,000Net Loss
    
    
    
    
    
    
    ($157,531
    )
    
    
    (157,531
    )Balance at December
31, 2004
    
    
    1,000
    
    
    
    (157,531
    )
    
    
    (156,531
    )Net Loss
    
    
    
    
    
    
    (995,458
    )
    
    
    (995,458
    )Balance at December
31, 2005
    
    $
    1,000
    
    
    
    ($1,152,989
    )
    
    
    ($1,151,989
    )
  34




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##### Table of Contents



Period fromFebruary26, 2004Year Ended
    
    
    (inception) toDecember
    
    
    December31, 2005
    
    
    31, 2005CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    
    ($995,458
    )
    
    
    ($1,152,989
    )Net increase in other assets and deferred offering costs
    
    
    (467,308
    )
    
    
    (467,308
    )Net increase in other liabilities
    
    
    83,159
    
    
    
    83,159Net cash used in operating activities
    
    
    (1,379,607
    )
    
    
    (1,537,138
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchases of equipment
    
    
    (140,108
    )
    
    
    (140,108
    )CASH FLOWS FROM FINANCING ACTIVITIESSale of Stock
    
    
    1,000
    
    
    
    1,000Increase in notes payable from related parties
    
    
    369,000
    
    
    
    749,000Increase in bank note payable
    
    
    960,000
    
    
    
    960,000Net cash provided by financing activities
    
    
    1,330,000
    
    
    
    1,710,000INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (189,715
    )
    
    
    32,754CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
    
    
    222,469
    
    
    
    CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
    
    $
    32,754
    
    
    $
    32,754
  35




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##### Table of Contents



Note 1  Summary of Significant accounting principles
 Organization
 Basis of Presentation
 Organization and Preopening Costs
 Deferred Offering Costs
 Property and Equipment
 Income Taxes 
 Earnings per Share
 36




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##### Table of Contents



Note 2
 Related Party Notes Payable
  Note 3  Notes Payable
  Note 4  Other Liabilities
  Note 5  Income Taxes
 Income Taxes
  Deferred tax assets:Net operating loss carryforward
    
    $
    393,000Less valuation allowance
    
    
    (393,000
    )Total net deferred tax asset
    
    $
    
 37




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##### Table of Contents



Note 5  Income Taxes (Continued)
  Period fromFebruary26, 2004Year ended
    
    
    (inception)December 31,
    
    
    to2005
    
    
    31, 2005Loss before income taxes
    
    $
    995,458
    
    
    $
    1,152,989Income tax benefit at federal statutory rate of 34 percent
    
    
    338,456
    
    
    
    392,016Other
    
    
    544
    
    
    
    984Change in valuation allowance
    
    
    339,000
    
    
    
    393,000Total income tax expense
    
    $
    
    
    
    $
    
 Note 6  Leases and Commitments
   2006
    
    
    257,1192007
    
    
    269,0222008
    
    
    274,0372009
    
    
    279,8072010
    
    
    285,6952011 and after
    
    
    1,478,986Total
    
    $
    2,844,666
  38




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##### Table of Contents



Note 7  Stock Options and Stock Warrants
  39




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##### Table of Contents



ITEM 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 ITEM 8A. Controls and Procedures.
     ITEM 8B. Other Information
  40




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##### Table of Contents



PART III
 
 ITEM 9. Directors and Executive Officers of the Registrant.
   Position(s) with the Company andName (Age)
    
    Director Since
    
    Business experienceDonald J. Abood (51)
    
    
    2005
    
    
    Director; real estate investor and
car wash owner/operatorWilliam R. Aikens (72)
    
    
    2005
    
    
    Director; owner and Chairman of
Spartan Companies, real estate
investor and attorneyJane L. Brodsky (53)
    
    
    2005
    
    
    Director; Certified Public AccountantHarry Cendrowski (51)
    
    
    2005
    
    
    Director; Certified Public AccountantDonald E. Copus (49)
    
    
    2005
    
    
    Director; owner, Magna Service, Inc.
and Certified Public AccountantMichael T. Cromwell (54)
    
    
    2005
    
    
    Director; owner of Cromwell
Communications and Stanley Thomas
Associates, Inc.John M. Farr (78)
    
    
    2005
    
    
    Director; Retired Banker and former
CEO of State Savings Bank of FentonRobert E. Farr (49)
    
    
    2005
    
    
    Director, President and CEOCharles Kaye (82)
    
    
    2005
    
    
    Director; Certified Public AccountantRichard J. Miller (47)
    
    
    2005
    
    
    Director; Chief Financial Officer,
former Senior Consultant, Plante &
Moran PLLCDaniel P. ODonnell (46)
    
    
    2005
    
    
    Director; owner of Professional
Furniture ServicesCharles T. Pryde (50)
    
    
    2005
    
    
    Director; Governmental Affairs
Staff, Ford Motor Company
 41




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##### Table of Contents



Position(s) with the Company andName (Age)
    
    Director Since
    
    Business experienceDonald Ruff (69)
    
    
    2005
    
    
    Director, Retired Former Senior Vice
President First Federal of MichiganWalter F. Schwartz (41)
    
    
    2005
    
    
    Director; Investment advisor for
Schwartz & Co.Henry Spellman (62)
    
    
    2005
    
    
    Director, Retired. Former Vice President 
International Operations, Chrysler Financial
CorporationRobert Stapleton (51)
    
    
    2005
    
    
    Director; Investment Advisor TOS advisors
        Compliance withSection 16(a)of the Exchange Act
 Code of ethics
 
 ITEM 10. Executive Compensation.
 Consulting Arrangements
 42




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##### Table of Contents



Employment agreements
 Robert Farr
     Richard Miller
  43




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##### Table of Contents



Lance Krajacic, Jr.
 Jeffrey S. Bonk.
  Option grants during fiscal year 2005
  Options exercised in fiscal year 2005
  
 ITEM 11. Security Ownership of Certain Beneficial Owners and Management.
  
 ITEM 12. Certain Relationships and Related Transactions.
  44




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##### Table of Contents




    
    In the case of banking transactions, each
transaction will be on substantially the same
terms, including price or interest rate and
collateral, as those prevailing at the time for
comparable transactions with unrelated parties,
and any banking transactions will not be
expected to involve more than the normal risk
of collectibility or present other unfavorable
features to the Bank;
 
    
    In the case of business transactions, each
transaction will be on terms no less favorable
than could be obtained from an unrelated third
party; and
 
    
    In the case of all related party transactions,
each transaction will be approved by a majority
of the directors, including a majority of the
directors who do not have an interest in the
transaction.
 
 ITEM 13. Exhibits
 (a) Exhibits
 Number
    
    Description3.1
    
    Articles of incorporation #3.2
    
    Bylaws*4.1
    
    Specimen common stock certificate*4.2
    
    Form of Birmingham Bloomfield Bancorp, Inc. Organizers Warrant Agreement*4.3
    
    Form of Birmingham Bloomfield Bancorp, Inc. Shareholders Warrant Agreement*4.4
    
    See Exhibits 3.1 and 3.2 for provisions of the articles of incorporation and bylaws
defining rights of holders of the common stock10.1
    
    Form of engagement letter for consulting services by and between Bankmark &
Financial Marketing Services and Birmingham Bloomfield Bancorp, Inc., regarding
marketing*10.2
    
    Form of engagement letter for consulting services by and between Bankmark &
Financial Marketing Services and Birmingham Bloomfield Bancorp, Inc., regarding
regulatory application*10.3
    
    Birmingham Bloomfield Bancorp, Inc. 2005 Stock Incentive Plan +*10.4
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Robert Farr +*10.5
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Richard Miller +*10.6
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Jeffrey Bonk +*10.7
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Robert
Farr +*10.8
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Richard
Miller +*10.9
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Jeffrey
Bonk +*10.10
    
    Lease Agreement dated January 28, 2005, by and between Irving I. Rosen Family
Limited Partnership and Birmingham Bloomfield Bancorp, Inc.*10.11
    
    Lease Agreement, by and between Birmingham Bloomfield Bancorp, Inc. and Bloomfield
Plaza*10.12
    
    Data Processing Services Agreement, dated February 16, 2005, by and between Rurbanc
Data Services, Inc. and Bank of Birmingham*10.13
    
    Item Processing Services Agreement, dated February 16, 2005, by and between Rurbanc
Data Services, Inc. and Bank of Birmingham*10.14
    
    Form of Pre-Opening Funds Agreement by and between Birmingham Bloomfield Bancorp,
Inc. and organizers*
 45




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##### Table of Contents



10.15
    
    Form of Amendment to Pre-Opening Funds Agreement*10.16
    
    Fifth Third Bank Revolving Note, dated July 21, 2005 #14
    
    Code of Ethics31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 15d-15(e) of the
securities Exchange Act.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 15d-15(e) of the
securities Exchange Act.32
    
    Certification Pursuant to Rule 14d-14(b) of the Securities Exchange Act and 18
U.S.C. section 1350+
    
    Indicates a compensatory plan or contract.*
    
    Previously filed as an exhibit to the registration statement filed September 6, 2005#
    
    Previously filed as an exhibit to
the registration statement filed October 27,
2005
 (b) None
 
 ITEM 14. Principal Accounting Fees and Services.
  2005
    
    
    2004Audit fees
    
    $
    14,750
    
    
    
    Audit related fees
    
    
    6,300
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    $
    6,700-Total
    
    $
    21,050
    
    
    $
    6,700-
    46




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.By:
    
    /s/ Robert E. FarrRobert E. FarrPresident and Chief Operating Officer
  SIGNATURE
    
    TITLE
    
    DATE/s/ Donald J. Abood

Donald J. Abood
    
    Director
    
    March  27, 2006/s/ William R. Aikens

William R. Aikens
    
    Director
    
    March 27, 2006/s/ Jane L. Brodsky

Jane L. Brodsky
    
    Director
    
    March 27, 2006/s/ Harry Cendrowski

Harry Cendrowski
    
    Director
    
    March 27, 2006/s/ Donald E. Copus

Donald E. Copus
    
    Director
    
    March 27, 2006/s/ Michael T. Cromwell

Michael T. Cromwell
    
    Director
    
    March 27, 2006/s/ John M. Farr

John M. Farr
    
    Director
    
    March 27, 2006/s/ Robert E. Farr

Robert E. Farr
    
    Director,
President & Chief
Executive Officer
    
    March 27, 2006
 47




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##### Table of Contents



SIGNATURE
    
    TITLE
    
    DATE/s/ Charles Kaye

Charles Kaye
    
    Director
    
    March 27, 2006/s/ Richard J. Miller

Richard J. Miller
    
    Director,
Chief Financial
Officer
    
    March 27, 2006/s/ Daniel P. ODonnell

Daniel P. ODonnell
    
    Director
    
    March 27, 2006/s/ Charles T. Pryde

Charles T. Pryde
    
    Director
    
    March 27, 2006/s/ Donald Ruff

Donald Ruff
    
    Director
    
    March 27, 2006/s/ Walter F. Schwartz

Walter F. Schwartz
    
    Director
    
    March 27, 2006/s/ Henry Spellman

Henry Spellman
    
    Director
    
    March 27, 2006/s/ Robert Stapleton

Robert Stapleton
    
    Director
    
    March 27, 2006
 48




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##### Table of Contents



Exhibit No.
    

Description
 Number
    
    Description3.1
    
    Articles of incorporation #3.2
    
    Bylaws*4.1
    
    Specimen common stock certificate*4.2
    
    Form of Birmingham Bloomfield Bancorp, Inc. Organizers Warrant Agreement*4.3
    
    Form of Birmingham Bloomfield Bancorp, Inc. Shareholders Warrant Agreement*4.4
    
    See Exhibits 3.1 and 3.2 for provisions of the articles of incorporation and bylaws
defining rights of holders of the common stock10.1
    
    Form of engagement letter for consulting services by and between Bankmark &
Financial Marketing Services and Birmingham Bloomfield Bancorp, Inc., regarding
marketing*10.2
    
    Form of engagement letter for consulting services by and between Bankmark &
Financial Marketing Services and Birmingham Bloomfield Bancorp, Inc., regarding
regulatory application*10.3
    
    Birmingham Bloomfield Bancorp, Inc. 2005 Stock Incentive Plan +*10.4
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Robert Farr +*10.5
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Richard Miller +*10.6
    
    Form of Employment Agreement by and between Birmingham Bloomfield Bancorp, Inc. and
Jeffrey Bonk +*10.7
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Robert
Farr +*10.8
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Richard
Miller +*10.9
    
    Consulting Agreement by and between Birmingham Bloomfield Bancorp, Inc. and Jeffrey
Bonk +*10.10
    
    Lease Agreement dated January 28, 2005, by and between Irving I. Rosen Family
Limited Partnership and Birmingham Bloomfield Bancorp, Inc.*10.11
    
    Lease Agreement, by and between Birmingham Bloomfield Bancorp, Inc. and Bloomfield
Plaza*10.12
    
    Data Processing Services Agreement, dated February 16, 2005, by and between Rurbanc
Data Services, Inc. and Bank of Birmingham*10.13
    
    Item Processing Services Agreement, dated February 16, 2005, by and between Rurbanc
Data Services, Inc. and Bank of Birmingham*10.14
    
    Form of Pre-Opening Funds Agreement by and between Birmingham Bloomfield Bancorp,
Inc. and organizers*10.15
    
    Form of Amendment to Pre-Opening Funds Agreement*10.16
    
    Fifth Third Bank Revolving Note, dated July 21, 2005 #14
    
    Code of Ethics31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 15d-15(e) of the
securities Exchange Act.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 15d-15(e) of the
securities Exchange Act.32
    
    Certification Pursuant to Rule 14d-14(b) of the Securities Exchange Act and 18
U.S.C. section 1350+
    
    Indicates a compensatory plan or contract.*
    
    Previously filed as an exhibit to the registration statement filed September 6, 2005#
    
    Previously filed as an exhibit to
the registration statement filed October 27,
2005
 49