BOARD OF DIRECTORS
 William R. Aikens
    
    Scott McCallumChairman/Owner
    
    Consultant, Resource Financial InstitutionsWhyco Finishing Technologies
    
    Group, Inc.Harry Cendrowski
    
    Richard J. MillerPartner, Cendrowski Selecky, P.C.
    
    Financial Reporting OfficerDonald E. Copus
    
    Citizens First Savings BankChief Financial Officer
    
    Daniel P. ODonnellMagna Services Group, LTD
    
    Principal/OwnerJohn M. Erb
    
    Professional Furniture ServicesPresident
    
    Charles T. PrydeEdgemere Enterprises
    
    Manager, Governmental Affairs StaffRobert E. Farr
    
    Ford Motor CompanyPresident & Chief Executive Officer
    
    Walter G. SchwartzBank of Birmingham
    
    Investment Advisor, Gregory J. Schwartz & Co.Charles Kaye
    
    Henry G. SpellmanCharles Kaye, CPA.
    
    Retired- former Vice PresidentLance N. Krajacic
    
    International OperationsChief Credit
Officer/Chief Operations Officer
    
    Chrysler Financial CorporationBank of Birmingham
    
    Thomas J. WagnerRetired President/ CEOTCF BankCORPORATE OFFICERS
    
    CORPORATE HEADQUARTERSINVESTOR RELATIONS ANDWilliam Aikens, Chairman of the Board Robert E. Farr, President & Chief Executive
OfficerDeborah A. Thompson, Chief Financial OfficerLance N. Krajacic, Chief Credit Officer/Chief
Operating OfficerDaniel P. ODonnell Corporate Secretary
    
    SHAREHOLDER INFORMATIONBirmingham Bloomfield Bancshares, Inc.
33583 Woodward AvenueBirmingham, MI 48009
(248) 723-7200www.bankofbirmingham.net
 ANNUAL REPORT, FORM 10-K AND OTHER REPORTS
 www.sec.gov




---



##### 




    
    Are Well Capitalized
    
    Maintain Excellent Liquidity
    
    Maintain Excellent Credit Quality
 STOCK PRICE
 PRELIMINARY TARP APPROVAL: th st
 HOW YOU CAN HELP YOUR INVESTMENT




---



##### 



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




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED BALANCE SHEETS
 December 31,2008
    
    
    2007AssetsCash and cash equivalentsCash
    
    $
    1,201,318
    
    
    $
    1,265,119Federal funds sold
    
    
    3,462,179
    
    
    
    3,874,007Total cash and cash equivalents
    
    
    4,663,497
    
    
    
    5,139,126Securities, available for sale (Note 2 & 3)
    
    
    3,880,401
    
    
    
    2,595,930Loans (Note 4)Total loans
    
    
    56,840,675
    
    
    
    37,106,976Less: allowance for loan losses
    
    
    (710,000
    )
    
    
    (560,000
    )Net loans
    
    
    56,130,675
    
    
    
    36,546,976Premises & equipment (Note 5)
    
    
    2,232,317
    
    
    
    2,519,701Interest receivable and other assets
    
    
    391,646
    
    
    
    458,157Total assets
    
    $
    67,298,536
    
    
    $
    47,259,890Liabilities and Shareholders EquityDeposits (Note 6)Non-interest bearing
    
    $
    5,194,795
    
    
    $
    5,385,200Interest bearing
    
    
    52,553,240
    
    
    
    30,877,148Total deposits
    
    
    57,748,035
    
    
    
    36,262,348Interest payable and other liabilities
    
    
    238,532
    
    
    
    237,903Total liabilities
    
    
    57,986,567
    
    
    
    36,500,251Shareholders 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)
    
    
    466,553
    
    
    
    462,000Accumulated deficit
    
    
    (8,311,252
    )
    
    
    (6,799,150
    )Accumulated other comprehensive income
    
    
    122,338
    
    
    
    62,459Total shareholders equity
    
    
    9,311,969
    
    
    
    10,759,639Total liabilities and shareholders equity
    
    $
    67,298,536
    
    
    $
    47,259,890
  1




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Interest incomeLoans, including fees
    
    $
    3,052,072
    
    
    $
    1,687,617
    
    
    $
    139,975Taxable securities
    
    
    138,339
    
    
    
    147,150
    
    
    
    Federal funds sold
    
    
    116,000
    
    
    
    628,156
    
    
    
    238,611Correspondent bank
    
    
    2,258
    
    
    
    
    
    
    
    Total interest income
    
    
    3,308,669
    
    
    
    2,462,923
    
    
    
    378,586Interest expenseDeposits
    
    
    1,386,846
    
    
    
    1,089,767
    
    
    
    86,244Borrowings
    
    
    
    
    
    
    
    
    
    
    71,452Total interest expense
    
    
    1,386,846
    
    
    
    1,089,767
    
    
    
    157,696Net interest income
    
    
    1,921,823
    
    
    
    1,373,156
    
    
    
    220,890Provision for loan losses (Note 4)
    
    
    384,003
    
    
    
    465,000
    
    
    
    195,000Net interest income after
provision for loan losses
    
    
    1,537,820
    
    
    
    908,156
    
    
    
    25,890Non-interest incomeLoan fees and charges
    
    
    18,152
    
    
    
    63,122
    
    
    
    10,630Deposit fees and charges
    
    
    69,009
    
    
    
    48,278
    
    
    
    6,087Other income
    
    
    30,266
    
    
    
    20,603
    
    
    
    (3,742
    )Total non-interest income
    
    
    117,427
    
    
    
    132,003
    
    
    
    12,975Non-interest expenseSalaries and benefits
    
    
    1,418,221
    
    
    
    1,820,931
    
    
    
    1,556,015Occupancy & equipment expense (Note 5 & 9)
    
    
    820,491
    
    
    
    857,890
    
    
    
    473,592FAS 123R share based payments (Note 7)
    
    
    4,553
    
    
    
    42,000
    
    
    
    420,000Data processing expense
    
    
    185,211
    
    
    
    176,294
    
    
    
    58,025Advertising and public relations
    
    
    74,431
    
    
    
    185,950
    
    
    
    146,896Professional fees
    
    
    278,087
    
    
    
    261,228
    
    
    
    76,413Printing and office supplies
    
    
    25,066
    
    
    
    40,413
    
    
    
    57,271Other expense
    
    
    361,289
    
    
    
    338,461
    
    
    
    213,807Total non-interest expense
    
    
    3,167,349
    
    
    
    3,723,167
    
    
    
    3,002,019Net loss before taxes
    
    
    (1,512,102
    )
    
    
    (2,683,008
    )
    
    
    (2,963,154
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (1,512,102
    )
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )Basic loss per share
    
    $
    (0.84
    )
    
    $
    (1.49
    )
    
    $
    (4.19
    )Diluted loss per share
    
    $
    (0.84
    )
    
    $
    (1.49
    )
    
    $
    (4.19
    )
  2




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS 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
    )Change in unrealized gain on
securities  Net of reclassification
adjustment of $13,586 (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    10,759,639Share based payments expense
    
    
    
    
    
    
    4,553
    
    
    
    
    
    
    
    
    
    
    
    4,553Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (1,512,102
    )
    
    
    
    
    
    
    (1,512,102
    )Change in unrealized gain on
securities  Net of reclassification
adjustment of $19,270 (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,879
    
    
    
    59,879Total comprehensive loss
    
    
    
    
    
    
    4,553
    
    
    
    (1,512,102
    )
    
    
    59,879
    
    
    
    (1,447,670
    )Balance at December 31, 2008
    
    $
    17,034,330
    
    
    $
    466,553
    
    
    $
    (8,311,252
    )
    
    $
    122,338
    
    
    $
    9,311,969
  3




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (1,512,102
    )
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )Share based payments expense
    
    
    4,553
    
    
    
    42,000
    
    
    
    420,000Provision for loan losses
    
    
    384,003
    
    
    
    465,000
    
    
    
    195,000Accretion of securities
    
    
    (30,604
    )
    
    
    (26,516
    )
    
    
    Gain on calls and sales of securities
    
    
    (19,270
    )
    
    
    (13,586
    )
    
    
    Depreciation expense
    
    
    312,660
    
    
    
    362,326
    
    
    
    67,400Loss on disposal of equipment
    
    
    
    
    
    
    37,842
    
    
    
    Net decrease (increase) in other assets
    
    
    66,511
    
    
    
    (342,663
    )
    
    
    351,814Net increase in other liabilities
    
    
    629
    
    
    
    101,086
    
    
    
    53,658Net cash used in operating activities
    
    
    (793,620
    )
    
    
    (2,057,519
    )
    
    
    (1,875,282
    )Cash flows from investing activitiesOrigination of loans, net of principal repayments
    
    
    (19,967,702
    )
    
    
    (24,293,399
    )
    
    
    (12,913,577
    )Purchase of securities
    
    
    (3,990,436
    )
    
    
    (6,042,502
    )
    
    
    Proceeds from sales, calls or maturities of securities
    
    
    2,815,718
    
    
    
    3,549,134
    
    
    
    Purchases of premises and equipment
    
    
    (25,276
    )
    
    
    (600,989
    )
    
    
    (2,246,172
    )Net cash used in investing activities
    
    
    (21,167,696
    )
    
    
    (27,387,756
    )
    
    
    (15,159,749
    )Cash flows from financing activitiesIncrease in deposits
    
    
    21,485,687
    
    
    
    26,033,400
    
    
    
    10,228,948Sale of stock
    
    
    
    
    
    
    
    
    
    
    17,033,330Repayment of notes payable from related parties
    
    
    
    
    
    
    
    
    
    
    (749,000
    )Decrease in line of credit payable
    
    
    
    
    
    
    
    
    
    
    (960,000
    )Net cash provided by financing activities
    
    
    21,485,687
    
    
    
    26,033,400
    
    
    
    25,553,278(Decrease) increase in cash and cash equivalents
    
    
    (475,629
    )
    
    
    (3,411,875
    )
    
    
    8,518,247Cash and cash equivalents at the
beginning of the period
    
    
    5,139,126
    
    
    
    8,551,001
    
    
    
    32,754Cash and cash equivalents at the
end of the period
    
    $
    4,663,497
    
    
    $
    5,139,126
    
    
    $
    8,551,001Supplemental cash flow information:Cash paid for interest:
    
    $
    1,297,064
    
    
    $
    1,043,275
    
    
    $
    83,757
  4




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED 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 CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies  continued
    Allowance for Loan Losses
   6




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies  continued
    Off-balance-sheet Instruments
 Property and Equipment
 Income Taxes 
 7




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies  continued
 Other Comprehensive Income
 Earnings per Share
 Reclassification
 FASB 123R Share Based Payments
    Dividend yield or expected dividends
    
    
    0.00
    %Risk free interest rate
    
    
    4.50
    %Expected life
    
    5 yrs.Expected volatility
    
    
    12.18
    %
  8




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting
  Valuation Hierarchy
  
    
    Level 1  inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets which the Corporation can participate.
    
    Level 2  inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3  inputs to the valuation methodology are unobservable and significant to the
fair value measurement, and include inputs that are available in situations where there is
little, if any, market activity for the related asset or liability.
   Assets
 Securities available for sale
  9




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting  continued
   Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance atAssets
    
    
    Inputs
    
    
    Inputs
    
    
    DecemberLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    31, 2008Securities available for sale
    
    $
    
    
    
    $
    3,880
    
    
    $
    
    
    
    $
    3,880
 Note 3  Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value2008U. S. Government agency
securities
    
    $
    2,004
    
    
    $
    30
    
    
    $
    
    
    
    $
    2,034Mortgage backed securities
    
    
    1,250
    
    
    
    92
    
    
    
    
    
    
    
    1,342Corporate bonds
    
    
    504
    
    
    
    
    
    
    
    
    
    
    
    504Total
    
    $
    3,758
    
    
    $
    122
    
    
    $
    
    
    
    $
    3,8802007U. S. Government agency
securities
    
    $
    678
    
    
    $
    7
    
    
    $
    
    
    
    $
    685Mortgage backed securities
    
    
    1,855
    
    
    
    56
    
    
    
    
    
    
    
    1,911Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,533
    
    
    $
    63
    
    
    $
    
    
    
    $
    2,596
  10




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3
 Securities - continued
  EstimatedAmortized
    
    
    FairCost
    
    
    ValueDue in one year or less
    
    $
    499
    
    
    $
    500Due in one year through five years
    
    
    2,009
    
    
    
    2,038Due in five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Subtotal
    
    
    2,508
    
    
    
    2,538Mortgage backed securities
    
    
    1,250
    
    
    
    1,342Total
    
    $
    3,758
    
    
    $
    3,880
   11




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Loans
  2008
    
    
    2007Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    2,745
    
    
    $
    1,816Multifamily
    
    
    7,676
    
    
    
    1,864Commercial
    
    
    23,085
    
    
    
    13,601Construction
    
    
    3,000
    
    
    
    2,348Second mortgage
    
    
    736
    
    
    
    758Equity lines of credit
    
    
    10,381
    
    
    
    8,696Total mortgage loans on real estate
    
    
    47,623
    
    
    
    29,083Commercial loans
    
    
    8,242
    
    
    
    7,898Consumer installment loans
    
    
    1,007
    
    
    
    177Total loans
    
    
    56,872
    
    
    
    37,158Less:Allowance for loan losses
    
    
    710
    
    
    
    560Net deferred loan fees
    
    
    31
    
    
    
    51Net loans
    
    $
    56,131
    
    
    $
    36,547
  2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    560
    
    
    $
    195
    
    
    $
    Provision for loan losses
    
    
    384
    
    
    
    465
    
    
    
    195Loans charged off
    
    
    (318
    )
    
    
    (100
    )
    
    
    Recoveries of loans previously
charged off
    
    
    84
    
    
    
    
    
    
    
    Balance at end of year
    
    $
    710
    
    
    $
    560
    
    
    $
    195
   2008
    
    
    2007Balance at January 1
    
    $
    1,038
    
    
    $
    331Loans no longer related-party
    
    
    (72
    )
    
    
    New loans
    
    
    950
    
    
    
    1,088Repayments
    
    
    (443
    )
    
    
    (381
    )Balance at December 31
    
    $
    1,473
    
    
    $
    1,038
 12




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 5  Bank Premises and Equipment
  2008
    
    
    2007Leasehold improvements
    
    $
    2,126
    
    
    $
    2,124Furniture and equipment
    
    
    454
    
    
    
    452Computer equipment & software
    
    
    394
    
    
    
    373Total
    
    
    2,974
    
    
    
    2,949Less: accumulated depreciation
    
    
    742
    
    
    
    429Net premises and equipment
    
    $
    2,232
    
    
    $
    2,520
  Note 6  Deposits
  2008
    
    
    2007Non-interest bearing deposits
    
    $
    5,195
    
    
    $
    5,385NOW accounts
    
    
    7,882
    
    
    
    9,727Savings and money market accounts
    
    
    10,571
    
    
    
    11,620Certificates of deposit <$100,000
    
    
    13,089
    
    
    
    2,008Certificates of deposit >$100,000
    
    
    21,011
    
    
    
    7,522Total
    
    $
    57,748
    
    
    $
    36,262
  <$100,000
    
    
    >$100,000
    
    
    Total2009
    
    $
    12,208
    
    
    $
    20,480
    
    
    $
    32,6882010
    
    
    871
    
    
    
    531
    
    
    
    1,4022011
    
    
    10
    
    
    
    
    
    
    
    10Total
    
    $
    13,089
    
    
    $
    21,011
    
    
    $
    34,100
 13




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Stock Option Plan
      14




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7
 Stock Option Plan - continued
  Calculated volatility
    
    
    12.40
    %Weighted average dividends
    
    
    0.00
    %Expected term (in years)
    
    
    5Risk-free rate
    
    
    4.50
    %
  Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicOptions
    
    Shares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    ValueOutstanding, January 1, 2008
    
    
    140,000
    
    
    $
    10.00
    
    
    
    9.25
    
    
    $
    Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (50,000
    )
    
    
    10.00Outstanding, December 31, 2008
    
    
    90,000
    
    
    $
    10.00
    
    
    
    8.25
    
    
    $
    Options exercisable, end of
period
    
    
    23,333
    
    
    $
    10.00
    
    
    
    8.25
    
    
    $
    
   Weighted
    
    
    Weighted Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicOptions
    
    Shares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    ValueOutstanding, January 1, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Granted
    
    
    180,000
    
    
    
    10.00
    
    
    
    10.00Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (40,000
    )
    
    
    10.00
    
    
    
    
    
    
    
    Outstanding, December 31, 2007
    
    
    140,000
    
    
    $
    10.00
    
    
    
    9.25
    
    
    $
    Options exercisable, end of
period
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
 15




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7
 Stock Option Plan - continued
  WeightedAverageGrant DateNon-vested Shares
    
    Shares
    
    
    Fair ValueNon-vested at January 1, 2008
    
    
    140,000
    
    
    $
    0.89Granted
    
    
    
    
    
    
    Vested
    
    
    (23,333
    )
    
    
    0.89Forfeited
    
    
    (50,000
    )
    
    
    Non-vested at December 31, 2008
    
    
    66,667
    
    
    $
    0.89
   WeightedAverageGrant DateNon-vested Shares
    
    Shares
    
    
    Fair ValueNon-vested at January 1, 2007
    
    
    
    
    
    $
    Granted
    
    
    180,000
    
    
    
    0.89Vested
    
    
    
    
    
    
    Forfeited
    
    
    (40,000
    )
    
    
    Non-vested at December 31, 2007
    
    
    140,000
    
    
    $
    0.89
 Note 8  Income Taxes
  16




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8
 Income Taxes - continued
  2008
    
    
    2007
    
    
    2006Deferred tax assets:Allowance for loan losses
    
    $
    142,662
    
    
    $
    136,550
    
    
    $
    35,795Organizational costs
    
    
    590,375
    
    
    
    637,922
    
    
    
    685,469Net operating loss carry-forward
    
    
    2,049,105
    
    
    
    1,455,197
    
    
    
    585,334Share based compensation
    
    
    158,628
    
    
    
    157,080
    
    
    
    142,800Other
    
    
    48,626
    
    
    
    32,167
    
    
    
    13,550Total deferred tax assets
    
    
    2,989,396
    
    
    
    2,418,916
    
    
    
    1,462,948Less valuation allowance
    
    
    2,808,334
    
    
    
    2,301,211
    
    
    
    1,394,209Deferred tax liabilities:Fixed assets
    
    
    134,261
    
    
    
    96,771
    
    
    
    54,983Other
    
    
    46,801
    
    
    
    20,934
    
    
    
    13,756Total deferred tax liabilities
    
    
    181,062
    
    
    
    117,705
    
    
    
    68,739Net deferred tax assets
    
    $
    
    
    
    $
    
    
    
    $
    
  2008
    
    
    2007
    
    
    2006Current expense
    
    $
    
    
    
    $
    
    
    
    $
    Deferred (benefit) expense
    
    
    
    
    
    
    
    
    
    
    Total income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    
  2008
    
    
    2007
    
    
    2006Income tax benefit at federal
statutory rate of 34 percent
    
    $
    (514,115
    )
    
    $
    (912,223
    )
    
    $
    (1,007,472
    )Increases resulting from
nondeductible expenses
    
    
    6,992
    
    
    
    5,221
    
    
    
    5,281Other
    
    
    
    
    
    
    
    
    
    
    (53,562
    )Change in valuation allowance
    
    
    507,123
    
    
    
    907,002
    
    
    
    1,055,753Income tax expense
    
    $
    
    
    
    $
    
    
    
    $
    
 17




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9  Leases and Commitments
   2009
    
    $
    279,8072010
    
    
    285,6952011
    
    
    291,6932012
    
    
    297,8162013
    
    
    304,083thereafter
    
    
    3,365,767Total
    
    $
    4,824,861
 18




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10  Restrictions on dividends, loans and advances
    Note 11  Fair Value of Financial Instruments
   Cash and Cash Equivalents
 Securities
 19




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 11
 Fair Value of Financial Instruments - continued
 Loans Receivable
 Deposit Liabilities
 Accrued Interest
 Other Financial Instruments
  2008
    
    2007Estimated
    
    

    
    EstimatedCarrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    4,663
    
    
    $
    4,663
    
    
    $
    5,139
    
    
    $
    5,139Securities available for
sale
    
    
    3,880
    
    
    
    3,880
    
    
    
    2,596
    
    
    
    2,596Loans
    
    
    56,841
    
    
    
    57,273
    
    
    
    37,107
    
    
    
    37,396Accrued interest
receivable
    
    
    293
    
    
    
    293
    
    
    
    203
    
    
    
    203Financial liabilities:Deposits
    
    
    57,748
    
    
    
    57,897
    
    
    
    36,262
    
    
    
    36,262Accrued interest payable
    
    
    153
    
    
    
    153
    
    
    
    63
    
    
    
    63
 Note 12  Retirement Plans
  20




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13  Parent Only Financial Statements
   December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    555,817
    
    
    $
    717,097Investment in subsidiary
    
    
    8,757,652
    
    
    
    10,112,542Total assets
    
    $
    9,313,469
    
    
    $
    10,829,639Liabilities and Shareholders EquityOther liabilities
    
    $
    1,500
    
    
    $
    70,000Shareholders equity
    
    
    9,311,969
    
    
    
    10,759,639Total liabilities and
shareholders equity
    
    $
    9,313,469
    
    
    $
    10,829,639
 21




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13  Parent Only Financial Statements  continued
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Interest income
    
    $
    
    
    
    $
    
    
    
    $
    Interest expense
    
    
    
    
    
    
    
    
    
    
    71,452Net interest income
    
    
    
    
    
    
    
    
    
    
    (71,452
    )Non-interest expenseSalaries and benefits
    
    
    (44,875
    )
    
    
    
    
    
    
    (460,230
    )Occupancy & equipment expense
    
    
    
    
    
    
    
    
    
    
    (183,833
    )FAS 123R share based payments
    
    
    4,553
    
    
    
    42,000
    
    
    
    420,000Professional fees
    
    
    101,100
    
    
    
    98,760
    
    
    
    (310,245
    )Printing and office supplies
    
    
    
    
    
    
    
    
    
    
    (2,502
    )Other expense
    
    
    36,555
    
    
    
    30,032
    
    
    
    (9,190
    )Total non-interest expense
    
    
    97,333
    
    
    
    170,792
    
    
    
    (546,000
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    Net
(loss) income before equity in undistributed loss of subsidiary
    
    
    (97,333
    )
    
    
    (170,792
    )
    
    
    474,548Equity in undistributed loss of subsidiary
    
    
    (1,414,769
    )
    
    
    (2,512,216
    )
    
    
    (3,437,702
    )Net loss
    
    
    ($1,512,102
    )
    
    
    ($2,683,008
    )
    
    
    ($2,963,154
    )
 22




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13  Parent Only Financial Statements  continued
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (1,512,102
    )
    
    $
    (2,683,008
    )
    
    $
    (2,963,154
    )Undistributed loss of subsidiary
    
    
    1,414,769
    
    
    
    2,512,216
    
    
    
    3,437,702Share based payments expense
    
    
    4,553
    
    
    
    42,000
    
    
    
    420,000Net decrease in other assets
    
    
    
    
    
    
    
    
    
    
    467,308Net decrease in other liabilities
    
    
    (68,500
    )
    
    
    
    
    
    
    (13,159
    )Net cash (used in) provided by operating
activities
    
    
    (161,280
    )
    
    
    (128,792
    )
    
    
    1,348,697Cash flows from investing activitiesInvestment in subsidiary
    
    
    
    
    
    
    
    
    
    
    (16,000,000
    )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
    )Decrease in line of credit payable
    
    
    
    
    
    
    
    
    
    
    (960,000
    )Net cash provided by financing activities
    
    
    
    
    
    
    
    
    
    
    15,324,330(Decrease) increase in cash and cash equivalents
    
    
    (161,280
    )
    
    
    (128,792
    )
    
    
    813,135Cash and cash equivalents at the
beginning of the period
    
    
    717,097
    
    
    
    845,889
    
    
    
    32,754Cash and cash equivalents at the
end of the period
    
    $
    555,817
    
    
    $
    717,097
    
    
    $
    845,889
 Note 14  Off Balance Sheet Risk
 Credit-related Financial Instruments
  23




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 14
 Off Balance Sheet Risk - continued
  Contract Amount2008
    
    2007Commitments to grant loans
    
    $
    2,400,000
    
    
    $
    4,983,000Unfunded commitments under lines of credit
    
    $
    11,655,000
    
    
    $
    14,672,000Commercial and standby letters of credit
    
    $
    110,000
    
    
    $
    110,000
    Collateral Requirements
  Legal Contingencies
 24




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 15
 Minimum Regulatory Capital Requirements
   For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    RatioAs of December 31, 2008Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,345
    
    
    
    16.6
    %
    
    $
    4,491
    
    
    
    8.0
    %
    
    $
    5,614
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,635
    
    
    
    15.4
    %
    
    $
    2,246
    
    
    
    4.0
    %
    
    $
    3,369
    
    
    
    6.0
    %Tier
I capital
(to average assets)
Bank of Birmingham
    
    $
    8,635
    
    
    
    12.8
    %
    
    $
    2,695
    
    
    
    4.0
    %
    
    $
    3,369
    
    
    
    5.0
    %As of December 31, 2007Total
risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,553
    
    
    
    26.8
    %
    
    $
    3,152
    
    
    
    8.0
    %
    
    $
    3,940
    
    
    
    10.0
    %Tier
I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,050
    
    
    
    25.5
    %
    
    $
    1,576
    
    
    
    4.0
    %
    
    $
    2,364
    
    
    
    6.0
    %Tier
I capital
(to average assets)
Bank of Birmingham
    
    $
    10,050
    
    
    
    20.3
    %
    
    $
    1,984
    
    
    
    4.0
    %
    
    $
    2,480
    
    
    
    5.0
    %
 25




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 16  QUARTERLY RESULTS OF OPERATIONS
  For the Three-Month Period endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312008Interest income
    
    $
    728
    
    
    $
    797
    
    
    $
    883
    
    
    $
    901Interest expense
    
    
    314
    
    
    
    340
    
    
    
    352
    
    
    
    381Net interest income
    
    
    414
    
    
    
    457
    
    
    
    531
    
    
    
    520Provision for loan losses
    
    
    50
    
    
    
    95
    
    
    
    109
    
    
    
    130Net interest income after
provision for loan losses
    
    
    364
    
    
    
    362
    
    
    
    422
    
    
    
    390Noninterest income
    
    
    38
    
    
    
    24
    
    
    
    35
    
    
    
    20Noninterest expense
    
    
    1,027
    
    
    
    785
    
    
    
    692
    
    
    
    663Net loss before income taxes
    
    
    (625
    )
    
    
    (399
    )
    
    
    (235
    )
    
    
    (253
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (625
    )
    
    $
    (399
    )
    
    $
    (235
    )
    
    $
    (253
    )Net loss per shareBasic
    
    $
    (0.35
    )
    
    $
    (0.22
    )
    
    $
    (0.13
    )
    
    $
    (0.14
    )Diluted
    
    $
    (0.35
    )
    
    $
    (0.22
    )
    
    $
    (0.13
    )
    
    $
    (0.14
    )
 26




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 16
 QUARTERLY RESULTS OF OPERATIONS
 For the Three-Month Period endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312007Interest income
    
    $
    416
    
    
    $
    565
    
    
    $
    711
    
    
    $
    771Interest expense
    
    
    170
    
    
    
    274
    
    
    
    330
    
    
    
    316Net interest income
    
    
    246
    
    
    
    291
    
    
    
    381
    
    
    
    455Provision for loan losses
    
    
    35
    
    
    
    85
    
    
    
    155
    
    
    
    190Net interest income after
provision for loan losses
    
    
    211
    
    
    
    206
    
    
    
    226
    
    
    
    265Noninterest income
    
    
    38
    
    
    
    28
    
    
    
    28
    
    
    
    38Noninterest expense
    
    
    900
    
    
    
    979
    
    
    
    916
    
    
    
    928Net loss before income taxes
    
    
    (651
    )
    
    
    (745
    )
    
    
    (662
    )
    
    
    (625
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (651
    )
    
    $
    (745
    )
    
    $
    (662
    )
    
    $
    (625
    )Net loss per shareBasic
    
    $
    (0.36
    )
    
    $
    (0.41
    )
    
    $
    (0.37
    )
    
    $
    (0.35
    )Diluted
    
    $
    (0.36
    )
    
    $
    (0.41
    )
    
    $
    (0.37
    )
    
    $
    (0.35
    )
 27




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD LOOKING STATEMENTS
   OVERVIEW
   28




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    CRITICAL ACCOUNTING POLICIES
 Allowance for loan losses
  29




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  PLAN OF OPERATION
    30




---



##### 



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 31,2008
    
    
    2007
    
    
    2006
    
    
    2005Total assets
    
    $
    67,299
    
    
    $
    47,260
    
    
    $
    23,704
    
    
    $
    640Gross loans
    
    
    56,841
    
    
    
    37,107
    
    
    
    12,914
    
    
    
    Allowance for loan losses
    
    
    710
    
    
    
    560
    
    
    
    195
    
    
    
    Total deposits
    
    
    57,748
    
    
    
    36,262
    
    
    
    10,229
    
    
    
    Borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,709Total shareholders equity (deficit)
    
    
    9,312
    
    
    
    10,760
    
    
    
    13,338
    
    
    
    (1,151
    )Summary of operationsInterest income
    
    
    3,309
    
    
    
    2,463
    
    
    
    379
    
    
    
    Interest expense
    
    
    1,387
    
    
    
    1,090
    
    
    
    158
    
    
    
    14Net interest income
    
    
    1,922
    
    
    
    1,373
    
    
    
    221
    
    
    
    (14
    )Provision for loan losses
    
    
    384
    
    
    
    465
    
    
    
    195
    
    
    
    Noninterest income
    
    
    117
    
    
    
    132
    
    
    
    13
    
    
    
    Noninterest expense
    
    
    3,167
    
    
    
    3,723
    
    
    
    3,002
    
    
    
    981Loss before taxes
    
    
    (1,512
    )
    
    
    (2,683
    )
    
    
    (2,963
    )
    
    
    (995
    )Provision for income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (1,512
    )
    
    $
    (2,683
    )
    
    $
    (2,963
    )
    
    $
    (995
    )Per share data:Basic loss per share
    
    $
    (0.84
    )
    
    $
    (1.49
    )
    
    $
    (4.19
    )
    
    $
    (9,954.59
    )Diluted loss per share
    
    $
    (0.84
    )
    
    $
    (1.49
    )
    
    $
    (4.19
    )
    
    $
    (9,954.59
    )Dividend declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 31




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  For the Year EndedDecember 31,2008
    
    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
    
    
    1.25
    %
    
    
    1.50
    %
    
    
    1.50
    %
    
    
    Return on average assets
    
    
    -2.47
    %
    
    
    -6.43
    %
    
    
    -37.62
    %
    
    
    -199.09
    %Return on average equity
    
    
    -15.19
    %
    
    
    -21.42
    %
    
    
    -44.89
    %
    
    
    Net interest margin
    
    
    3.31
    %
    
    
    3.63
    %
    
    
    4.90
    %
    
    
    Average equity to average assets
    
    
    16.28
    %
    
    
    30.01
    %
    
    
    -83.82
    %
    
    
    
 FINANCIAL CONDITION
    Cash and Cash Equivalents
  Investments
  32




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  After One but
    
    
    After Five but
    
    
    
    
    
    
    
    
    
    
    Mortgage-BackedWithin One Year
    
    
    Within Five Years
    
    
    within Ten
    
    
    After Ten Years
    
    
    Securities
    
    
    TotalAmount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldU.S. Treasury &
Government agencies
    
    $
    500
    
    
    
    2.81
    %
    
    $
    1,534
    
    
    
    3.89
    %
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    2,034
    
    
    
    3.63
    %Corporate bonds
    
    
    
    
    
    
    
    
    
    
    504
    
    
    
    4.09
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504
    
    
    
    4.09
    %Mortgage-backed
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,342
    
    
    
    5.77
    %
    
    
    1,342
    
    
    
    5.77
    %Total
    
    $
    500
    
    
    
    
    
    
    $
    2,038
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    1,342
    
    
    
    
    
    
    $
    3,880
  Loans, Credit Quality and Allowance for Loan Losses
  2008
    
    
    2007
    
    
    2006Commercial,
financial and agricultural
    
    $
    8,242
    
    
    $
    7,898
    
    
    $
    3,186Real estate-construction
    
    
    3,000
    
    
    
    2,348
    
    
    
    453Real estate-mortgage
    
    
    44,592
    
    
    
    26,684
    
    
    
    8,900Consumer
    
    
    1,007
    
    
    
    177
    
    
    
    375Total
    
    $
    56,841
    
    
    $
    37,107
    
    
    $
    12,914
  33




---



##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  Due After 1Due Within 1
    
    
    but Within 5
    
    
    Due After 5Year
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    Fixed
    
    
    VariableCommercial, financial and agricultural
    
    $
    5,323
    
    
    $
    1,030
    
    
    $
    1,889
    
    
    $
    8,242
    
    
    $
    7,526
    
    
    $
    716Real estate  construction
    
    
    2,707
    
    
    
    293
    
    
    
    
    
    
    
    3,000
    
    
    
    1,100
    
    
    
    1,900Real estate  mortgage
    
    
    12,620
    
    
    
    18,709
    
    
    
    13,263
    
    
    
    44,592
    
    
    
    36,996
    
    
    
    7,596Consumer
    
    
    800
    
    
    
    207
    
    
    
    
    
    
    
    1,007
    
    
    
    993
    
    
    
    14Total
    
    $
    21,450
    
    
    $
    20,239
    
    
    $
    15,152
    
    
    $
    56,841
    
    
    $
    46,615
    
    
    $
    10,226
    2008
    
    
    2007
    
    
    2006Balance at beginning of year
    
    $
    560
    
    
    $
    195
    
    
    $
    Provision for loan losses
    
    
    384
    
    
    
    465
    
    
    
    195Loans charged off
    
    
    (318
    )
    
    
    (100
    )
    
    
    Recoveries
of loans previously charged off
    
    
    84
    
    
    
    
    
    
    
    Balance at end of year
    
    $
    710
    
    
    $
    560
    
    
    $
    195Net charge-off rate
    
    
    0.48
    %
    
    
    0.43
    %
    
    
    N/A
   34




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
    2008
    
    
    2007% of Total
    
    
    % of Loans to
    
    
    
    
    
    
    % of Total
    
    
    % of Loans toAllowance
    
    
    Allowance
    
    
    Total Loans
    
    
    Allowance
    
    
    Allowance
    
    
    Total LoansCommercial
    
    $
    103
    
    
    
    14.51
    %
    
    
    14.55
    %
    
    $
    120
    
    
    
    21.43
    %
    
    
    21.39
    %Real estate  construction
    
    
    37
    
    
    
    5.21
    %
    
    
    5.27
    %
    
    
    35
    
    
    
    6.25
    %
    
    
    6.32
    %Real estate  mortgage
    
    
    557
    
    
    
    78.45
    %
    
    
    78.41
    %
    
    
    402
    
    
    
    71.78
    %
    
    
    71.81
    %Consumer
    
    
    13
    
    
    
    1.83
    %
    
    
    1.77
    %
    
    
    3
    
    
    
    0.54
    %
    
    
    0.48
    %$
    710
    
    
    
    100.00
    %
    
    
    100.00
    %
    
    $
    560
    
    
    
    100.00
    %
    
    
    100.00
    %
 Criticized and Classified Loans
  Loan Risk RatingsSpecialMention
    
    
    Substandard
    
    
    Doubtful
    
    
    Loss
    
    
    TotalLoan TypeDecember 31, 2008Commercial
    
    $
    1,447
    
    
    $
    381
    
    
    $
    
    
    
    $
    
    
    
    $
    1,828Real estate  construction
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,900Real estate  mortgage
    
    
    5,216
    
    
    
    710
    
    
    
    
    
    
    
    
    
    
    
    5,926Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    8,563
    
    
    $
    1,091
    
    
    $
    
    
    
    $
    
    
    
    $
    9,654December 31, 2007Commercial
    
    $
    277
    
    
    $
    441
    
    
    $
    
    
    
    $
    
    
    
    $
    718Real estate  construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    2,888
    
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    3,009Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    3,165
    
    
    $
    562
    
    
    $
    
    
    
    $
    
    
    
    $
    3,727
  35




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Off-Balance Sheet Items
  2008
    
    
    2007Commitments to extend credit
    
    $
    2,400
    
    
    $
    4,983Unfunded commitments under lines of credit
    
    
    11,655
    
    
    
    14,672Commercial and standby letters of credit
    
    
    110
    
    
    
    110Total
    
    $
    14,165
    
    
    $
    19,765
  Deposits
  36




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 As of December 31, 2008
    
    
    As of December 31, 2007(dollars in thousands)
    
    Balance
    
    
    Percentage
    
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    5,195
    
    
    
    9.00
    %
    
    $
    5,385
    
    
    
    14.85
    %NOW accounts
    
    
    7,882
    
    
    
    13.65
    %
    
    
    9,727
    
    
    
    26.83
    %Money market
    
    
    9,480
    
    
    
    16.42
    %
    
    
    11,322
    
    
    
    31.22
    %Savings
    
    
    1,091
    
    
    
    1.89
    %
    
    
    298
    
    
    
    0.82
    %Time deposits under $100,000
    
    
    13,089
    
    
    
    22.67
    %
    
    
    2,008
    
    
    
    5.54
    %Time deposits over $100,000
    
    
    21,011
    
    
    
    36.37
    %
    
    
    7,522
    
    
    
    20.74
    %Total deposits
    
    $
    57,748
    
    
    
    100.00
    %
    
    $
    36,262
    
    
    
    100.00
    %
 SHAREHOLDERS EQUITY
  37




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
 Net Loss
  Net Interest Income
 2008.
 2007.
 2006.
 38




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  2008
    
    
    2007
    
    
    2006Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans receivable
    
    $
    49,244
    
    
    $
    3,052
    
    
    
    6.20
    %
    
    $
    23,041
    
    
    $
    1,688
    
    
    
    7.32
    %
    
    $
    4,551
    
    
    $
    140
    
    
    
    7.70
    %Securities available for sale
    
    
    2,944
    
    
    
    139
    
    
    
    4.70
    %
    
    
    2,644
    
    
    
    147
    
    
    
    5.57
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %Federal funds sold
    
    
    5,349
    
    
    
    116
    
    
    
    2.17
    %
    
    
    12,140
    
    
    
    628
    
    
    
    5.17
    %
    
    
    10,071
    
    
    
    239
    
    
    
    5.69
    %Interest-bearing balances withother financial institutions
    
    
    464
    
    
    
    2
    
    
    
    0.49
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    0.00
    %Total interest-earning assets
    
    
    58,001
    
    
    
    3,309
    
    
    
    5.70
    %
    
    
    37,825
    
    
    
    2,463
    
    
    
    6.51
    %
    
    
    14,622
    
    
    
    379
    
    
    
    6.31
    %Noninterest-earning assets:Cash and due from banks
    
    
    1,157
    
    
    
    
    
    
    
    
    
    
    
    1,389
    
    
    
    
    
    
    
    
    
    
    
    1,319All other assets
    
    
    2,010
    
    
    
    
    
    
    
    
    
    
    
    2,534
    
    
    
    
    
    
    
    
    
    
    
    1,912Total assets
    
    $
    61,168
    
    
    
    
    
    
    
    
    
    
    $
    41,748
    
    
    
    
    
    
    
    
    
    
    $
    17,853Interest-bearing liabilities:NOW accounts
    
    $
    7,752
    
    
    
    153
    
    
    
    1.98
    %
    
    $
    6,469
    
    
    
    246
    
    
    
    3.80
    %
    
    $
    578
    
    
    
    4
    
    
    
    1.56
    %Money markets
    
    
    11,912
    
    
    
    267
    
    
    
    2.24
    %
    
    
    10,185
    
    
    
    440
    
    
    
    4.32
    %
    
    
    1,974
    
    
    
    34
    
    
    
    4.18
    %Savings deposits
    
    
    661
    
    
    
    12
    
    
    
    1.75
    %
    
    
    221
    
    
    
    3
    
    
    
    1.49
    %
    
    
    60
    
    
    
    
    
    
    
    1.13
    %Time deposits
    
    
    24,681
    
    
    
    955
    
    
    
    3.87
    %
    
    
    7,779
    
    
    
    401
    
    
    
    5.16
    %
    
    
    2,225
    
    
    
    48
    
    
    
    5.16
    %Total interest-bearing liabilities
    
    
    45,006
    
    
    
    1,387
    
    
    
    3.08
    %
    
    
    24,654
    
    
    
    1,090
    
    
    
    4.42
    %
    
    
    4,837
    
    
    
    86
    
    
    
    4.28
    %Non-interest bearing demand deposits
    
    
    5,935
    
    
    
    
    
    
    
    
    
    
    
    4,384
    
    
    
    
    
    
    
    
    
    
    
    185Other liabilities
    
    
    271
    
    
    
    
    
    
    
    
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    51,212
    
    
    
    
    
    
    
    
    
    
    
    29,221
    
    
    
    
    
    
    
    
    
    
    
    5,022Shareholders equity
    
    
    9,956
    
    
    
    
    
    
    
    
    
    
    
    12,527
    
    
    
    
    
    
    
    
    
    
    
    12,831Total liabilities and
shareholders equity
    
    $
    61,168
    
    
    
    
    
    
    
    
    
    
    $
    41,748
    
    
    
    
    
    
    
    
    
    
    $
    17,853Net interest income
    
    
    
    
    
    $
    1,922
    
    
    
    
    
    
    
    
    
    
    $
    1,373
    
    
    
    
    
    
    
    
    
    
    $
    293Net spread
    
    
    
    
    
    
    
    
    
    
    2.62
    %
    
    
    
    
    
    
    
    
    
    
    2.09
    %
    
    
    
    
    
    
    
    
    
    
    2.03
    %Net interest margin (1)
    
    
    
    
    
    
    
    
    
    
    3.31
    %
    
    
    
    
    
    
    
    
    
    
    3.63
    %
    
    
    
    
    
    
    
    
    
    
    4.90
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    128.87
    %
    
    
    
    
    
    
    
    
    
    
    153.42
    %
    
    
    
    
    
    
    
    
    
    
    302.29
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets.  39




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  2008-2007
    
    
    2007-2006Net
    
    
    Increase/(decrease) due to
    
    
    Net
    
    
    Increase/(decrease) due toChange
    
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    RateInterest-earning assets:Loans receivable
    
    $
    1,364
    
    
    $
    1,919
    
    
    $
    (555
    )
    
    $
    1,548
    
    
    $
    1,424
    
    
    $
    124Securities available-for-sale
    
    
    (8
    )
    
    
    17
    
    
    
    (25
    )
    
    
    147
    
    
    
    147
    
    
    
    Federal funds sold
    
    
    (512
    )
    
    
    (351
    )
    
    
    (161
    )
    
    
    389
    
    
    
    118
    
    
    
    271Interest-bearing balances with
other financial institutions
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest-earning assets
    
    
    846
    
    
    
    1,587
    
    
    
    (741
    )
    
    
    2,084
    
    
    
    1,689
    
    
    
    395Interest-bearing liabilities:NOW Accounts
    
    
    (93
    )
    
    
    49
    
    
    
    (141
    )
    
    
    242
    
    
    
    92
    
    
    
    150Money markets
    
    
    (172
    )
    
    
    74
    
    
    
    (247
    )
    
    
    406
    
    
    
    343
    
    
    
    63Savings deposits
    
    
    8
    
    
    
    7
    
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    1Time deposits
    
    
    554
    
    
    
    871
    
    
    
    (317
    )
    
    
    353
    
    
    
    287
    
    
    
    66Total interest-bearing
liabilities
    
    
    (297
    )
    
    
    1,001
    
    
    
    (703
    )
    
    
    1,004
    
    
    
    724
    
    
    
    280Net change in net interest
income
    
    $
    549
    
    
    $
    585
    
    
    $
    (36
    )
    
    $
    1,080
    
    
    $
    965
    
    
    $
    115
 Provision for Loan Losses
 
 Noninterest Income
 2008.
 2007.
 40




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 2006.
 Noninterest Expense
 2008.
 2007.
 2006.
 41




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  Income Taxes
  42




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT
    Amount of commitment expiration per periodLess Than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsCommitments to grant loans
    
    
    $
    2,400
    
    
    $
    2,400
    
    
    $
    
    
    
    $
    
    
    
    $
    Unfunded commitments under lines of credit
    
    
    
    11,655
    
    
    
    5,185
    
    
    
    896
    
    
    
    338
    
    
    
    5,236Commercial and standby letters of credit
    
    
    
    110
    
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    $
    14,165
    
    
    $
    7,695
    
    
    $
    896
    
    
    $
    338
    
    
    $
    5,236
  Contractual Obligations
  Payments due by periodLess Than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsCertificates of deposit
    
    $
    34,100
    
    
    $
    32,688
    
    
    $
    1,412
    
    
    $
    
    
    
    $
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    4,825
    
    
    
    280
    
    
    
    577
    
    
    
    602
    
    
    
    3,366Purchase agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    38,925
    
    
    $
    32,968
    
    
    $
    1,989
    
    
    $
    602
    
    
    $
    3,366
 43




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Capital Resources
    INTEREST RATE SENSITIVITY MANAGEMENT
   44




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
     45




---



##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 (dollars in thousands)
 After
    
    
    
    
    
    
    AfterThree
    
    
    
    
    
    
    OneMonths
    
    
    
    
    
    
    Year ButWithin
    
    
    
    
    
    
    but
    
    
    
    
    
    
    Within
    
    
    
    
    
    
    AfterThree

    
    
    
    
    
    
    Within

    
    
    
    
    
    
    Five
    
    
    
    
    
    
    FiveMonths
    
    
    
    
    
    
    One Year
    
    
    
    
    
    
    Years
    
    
    
    
    
    
    Years
    
    
    
    
    
    
    TotalInterest earning assetsFederal funds sold
    
    $
    3,462
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    3,462Securities
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,038
    
    
    
    
    
    
    
    1,342
    
    
    
    
    
    
    
    3,880Loans
    
    
    15,658
    
    
    
    
    
    
    
    5,792
    
    
    
    
    
    
    
    20,239
    
    
    
    
    
    
    
    15,152
    
    
    
    
    
    
    
    56,841Total
    
    
    19,620
    
    
    
    
    
    
    
    5,792
    
    
    
    
    
    
    
    22,277
    
    
    
    
    
    
    
    16,494
    
    
    
    
    
    
    
    64,183Interest bearing liabilitiesNOW accounts
    
    
    7,882
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,882Money markets
    
    
    9,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,480Savings
    
    
    1,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,091Time deposits less than $100,000
    
    
    6,297
    
    
    
    
    
    
    
    5,911
    
    
    
    
    
    
    
    881
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,089Time deposits greater than $100,000
    
    
    9,118
    
    
    
    
    
    
    
    11,362
    
    
    
    
    
    
    
    531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,011Total
    
    
    33,868
    
    
    
    
    
    
    
    17,273
    
    
    
    
    
    
    
    1,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,553Rate sensitivity gap
    
    $
    (14,248
    )
    
    
    
    
    
    
    (11,481
    )
    
    
    
    
    
    
    20,865
    
    
    
    
    
    
    
    16,494Cumulative rate sensitivity gap
    
    
    
    
    
    
    
    
    
    $
    (25,729
    )
    
    
    
    
    
    $
    (4,864
    )
    
    
    
    
    
    $
    11,630Rate sensitivity gap ratio
    
    
    0.58
    
    
    
    X
    
    
    
    0.34
    
    
    
    X
    
    
    
    15.78
    
    
    
    X
    
    
    
    
    
    
    
    XCumulative rate sensitivity gap ratio
    
    
    
    
    
    
    
    
    
    
    0.50
    
    
    
    X
    
    
    
    0.91
    
    
    
    X
    
    
    
    1.22
    
    
    
    X
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   46




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##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Principal Amount Maturing In:
 2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Fair ValueRATE-SENSITIVE ASSETSGross loans
    
    $
    14,173
    
    
    $
    122
    
    
    $
    3,695
    
    
    $
    6,414
    
    
    $
    10,495
    
    
    $
    21,942
    
    
    $
    56,841
    
    
    $
    57,273Average interest rate
    
    
    5.1
    %
    
    
    3.7
    %
    
    
    6.3
    %
    
    
    6.6
    %
    
    
    6.1
    %
    
    
    5.6
    %Securities available for sale
    
    $
    500
    
    
    $
    504
    
    
    $
    1,017
    
    
    $
    517
    
    
    $
    
    
    
    $
    1,342
    
    
    $
    3,880
    
    
    $
    3,880Average interest rate
    
    
    2.8
    %
    
    
    4.1
    %
    
    
    4.1
    %
    
    
    3.5
    %
    
    
    0.0
    %
    
    
    5.8
    %Other interest-earning assets
    
    $
    3,865
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,865
    
    
    $
    3,865Average interest rate
    
    
    0.1
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %RATE-SENSITIVE LIABILITIESSavings & interest bearing
demand deposits
    
    $
    18,453
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,453
    
    
    $
    18,453Average interest rate
    
    
    1.6
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Time deposits
    
    $
    32,688
    
    
    $
    1,402
    
    
    $
    10
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    34,100
    
    
    $
    34,249Average interest rate
    
    
    3.5
    %
    
    
    3.6
    %
    
    
    3.5
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
 47




---



##### 



SEC FORM 10-K
  STOCK INFORMATION




---



##### 



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