##### 



ABOUT THE COVER OF THE ANNUAL REPORT:
 Motor City Memoirs
 BOARD OF DIRECTORSDonald J. Abood
     President, Donald Abood, Inc.
William R. Aikens
     Chairman/ Owner, Spartan Metal Finishing
Jane L. Brodsky
     Partner, Brodsky & Associates
Harry Cendrowski
     Partner, Cendrowski Selecky, P.C.
Donald E. Copus 
     Chief Financial Officer
     Magna Services Group, LTD.
Robert E. Farr
     President & Chief Executive Officer
     Bank of Birmingham
John M. Farr
     Retired- former President
     State Savings Bank of Fenton 
Charles Kaye
     Partner, Boyes, Wright, Pittman & Co., P.C.
Scott Mc Callum 
     Principal Resource Financial Institutions
Group, Inc.
    
    Richard J. Miller
     Executive Vice President & Chief
Financial Officer
     Bank of Birmingham
Daniel P. ODonnell
     Principal/Owner
     Professional Furniture Services
Charles T. Pryde
     Member, Governmental Affairs Staff
     Ford Motor Company
Donald Ruff
     Former Executive
     First Federal of Michigan
Walter G. Schwartz
     Investment Advisor, Schwartz & Co.
Henry G. Spellman
     Retired- former Vice President
     International Operations
     Chrysler Financial Corporation
Robert Stapleton
     Principal, TOS AdvisorsCORPORATE OFFICERS
William Aikens, Chairman of the Board
Robert E. Farr, President & Chief Executive
Officer
Richard J. Miller Chief Financial Officer &
Corporate Secretary
    
    CORPORATE HEADQUARTERS
INVESTOR RELATIONS AND
SHAREHOLDER INFORMATION
Birmingham Bloomfield Bancshares, Inc.
33583 Woodward Avenue
Birmingham, MI 48009
(248) 723-7200www.bankofbirmingham.net
 ANNUAL REPORT, FORM 10-KSB AND OTHER REPORTS
 www.sec.gov




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##### 








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##### 



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




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED BALANCE SHEET
 December 31,2006
    
    
    2005AssetsCash and cash equivalentsCash
    
    $
    809,848
    
    
    $
    32,754Federal funds sold
    
    
    7,741,153
    
    
    
    Total cash and cash equivalents
    
    
    8,551,001
    
    
    
    32,754Loans (Note 2)Total Loans
    
    
    12,913,577
    
    
    
    Less: allowance for loan losses
    
    
    (195,000
    )
    
    
    Net loans
    
    
    12,718,577
    
    
    
    Premises & equipment (Note 3)
    
    
    2,318,880
    
    
    
    140,108Deferred offering costs (Note 1)
    
    
    
    
    
    
    442,766Interest receivable and other assets
    
    
    115,494
    
    
    
    24,542Total Assets
    
    $
    23,702,952
    
    
    $
    640,170Liabilities and Shareholders Equity (Deficit)Deposits (Note 4)Non-interest bearing
    
    $
    1,415,180
    
    
    $
    Interest bearing
    
    
    8,813,768
    
    
    
    Total Deposits
    
    
    10,228,948
    
    
    
    Related party notes payable (Note 5)
    
    
    
    
    
    
    749,000Bank note payable (Note 6)
    
    
    
    
    
    
    960,000Interest payable and other liabilities
    
    
    136,817
    
    
    
    83,159Total Liabilities
    
    
    10,365,765
    
    
    
    1,792,159Shareholders equity (deficit)Common Stock, no par value
Authorized  4,500,000 shares
Issued and outstanding  1,800,000 shares at
December 31, 2006 and 100 shares at December 31,
2005
    
    
    17,034,330
    
    
    
    1,000Additional paid in capital
    
    
    420,000
    
    
    
    Accumulated deficit
    
    
    (4,116,143
    )
    
    
    (1,152,989
    )Total shareholders equity (deficit)
    
    
    13,338,187
    
    
    
    (1,151,989
    )Total liabilities and shareholders equity (deficit)
    
    $
    23,703,952
    
    
    $
    640,170
  1




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF OPERATIONS
 For the Year EndedDecember 31,2006
    
    
    2005Interest IncomeLoans, including fees
    
    $
    146,540
    
    
    $
    Federal funds sold
    
    
    238,610
    
    
    
    Total interest income
    
    
    385,150
    
    
    
    Interest expenseDeposits
    
    
    86,244
    
    
    
    0Borrowings
    
    
    71,452
    
    
    
    13,553Total interest expense
    
    
    157,696
    
    
    
    13,553Net Interest Income
    
    
    227,454
    
    
    
    (13,553
    )Provision for loan losses
    
    
    195,000
    
    
    
    Net interest income after
provision for loan losses
    
    
    32,454
    
    
    
    (13,553
    )Non-interest incomeService charges and other fees
    
    
    4,987
    
    
    
    Other income
    
    
    1,424
    
    
    
    Total non-interest income
    
    
    6,411
    
    
    
    Non-interest expenseSalaries and benefits
    
    
    1,556,015
    
    
    
    505,745Occupancy & equipment expense
    
    
    473,592
    
    
    
    182,118Stock Based Compensation
    
    
    420,000
    
    
    
    Data processing expense
    
    
    42,498
    
    
    
    Advertising and public relations
    
    
    4,392
    
    
    
    Professional fees
    
    
    52,462
    
    
    
    227,944Printing and office supplies
    
    
    57,270
    
    
    
    7,472Other expense
    
    
    395,790
    
    
    
    58,626Total non-interest expense
    
    
    3,002,019
    
    
    
    981,905Net loss before taxes
    
    
    (2,963,154
    )
    
    
    (995,458
    )Income taxes (Note 7)
    
    
    
    
    
    
    Net loss
    
    
    ($2,963,154
    )
    
    
    ($995,458
    )Basic earnings/(loss) per share
    
    
    (4.19
    )
    
    
    (9,954.58
    )Diluted earnings/(loss) per share
    
    
    (4.19
    )
    
    
    (9,954.58
    )
  2




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (DEFICIT)
 Common
    
    
    Additional Paid in
    
    
    AccumulatedStock
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance 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
    )Issuance of 1,799,900 shares
common stock (net of offering
costs of $965,670)
    
    
    17,033,330
    
    
    
    
    
    
    
    
    
    
    
    17,033,330Stock based compensation
    
    
    
    
    
    
    420,000
    
    
    
    
    
    
    
    420,000Net loss
    
    
    
    
    
    
    
    
    
    
    (2,963,154
    )
    
    
    (2,963,154
    )Balance at December 31, 2006
    
    $
    17,034,330
    
    
    $
    420,000
    
    
    
    ($4,116,143
    )
    
    $
    13,338,187
  3




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED STATEMENT OF CASH FLOWS
 For the Year EndedDecember 31,2006
    
    
    2005Cash flows from operating activitiesNet loss
    
    
    ($2,963,154
    )
    
    
    ($995,458
    )Warrants expense
    
    
    420,000
    
    
    
    Provision for Loan Losses
    
    
    195,000
    
    
    
    Net (increase) decrease in other assets
    
    
    351,814
    
    
    
    (467,308
    )Net increase (decrease) in other liabilities
    
    
    53,658
    
    
    
    83,159Net cash used in operating activities
    
    
    (1,942,682
    )
    
    
    (1,379,607
    )Cash flows from investing activitiesIncrease in loans
    
    
    (12,913,577
    )
    
    
    Purchases of premises and equipment
    
    
    (2,178,772
    )
    
    
    (140,108
    )Net cash used in investing activities
    
    
    (15,092,349
    )
    
    
    (140,108
    )Cash flows from financing activitiesIncrease in deposits
    
    
    10,228,948
    
    
    
    Sale of Stock
    
    
    17,033,330
    
    
    
    1,000Increase in notes payable from related parties
    
    
    
    
    
    
    369,000Repayment of notes payable from related parties
    
    
    (749,000
    )
    
    
    Increase (decrease) in line of credit payable
    
    
    (960,000
    )
    
    
    960,000Net cash provided by financing activities
    
    
    25,553,278
    
    
    
    1,330,000Increase (decrease) in cash and cash equivalents
    
    
    8,518,247
    
    
    
    (189,715
    )Cash and cash equivalents at the
beginning of the period
    
    
    32,754
    
    
    
    222,469Cash and cash equivalents at the
end of the period
    
    $
    8,551,001
    
    
    $
    32,754Supplemental cash flow information:Cash paid for interest:
    
    $
    83,757
    
    
    
    
  4




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  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
 Organization and Preopening Costs
 Deferred Offering Costs
 5




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Loans
    Allowance
for Loan Losses
   6




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Off-balance-sheet Instruments
 Property and Equipment
 Income Taxes 
 Earnings per Share
 Reclassification
 Recent Accounting Pronouncement  FASB 123R Share Based Payments
 7




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Dividend yield or expected dividends
    
    
    0.00
    %Risk free interest rate
    
    
    4.50
    %Expected life
    
    5 yrs.Expected volatility
    
    
    12.18
    %
  Financial Accounting Standard Number 157 Fair Value Measurements 
 FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an interpretation of
FASB Statement No. 109 (FIN 48) 
 8




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Loans
  2006Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    1,442Multifamily
    
    
    399Commercial
    
    
    3,207Construction
    
    
    453Second mortgage
    
    
    628Equity lines of credit
    
    
    3,229Total mortgage loans on real estate
    
    
    9,358Commercial loans
    
    
    3,186Consumer installment loans
    
    
    375Total loans
    
    
    12,919Less:Allowance for loan losses
    
    
    195Net deferred loan fees
    
    
    5Net loans
    
    $
    12,719
  2006Balance at beginning of year
    
    $
    Provision for loan losses
    
    
    195Loans charged off
    
    
    0Recoveries of loans previously charged off
    
    
    0Balance at end of year
    
    $
    195
   9




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Bank Premises and Equipment
  2006
    
    
    2005Leasehold improvements
    
    $
    1,954
    
    
    $
    Furniture and equipment
    
    
    197
    
    
    
    140Computer Equipment & Software
    
    
    235
    
    
    
    Total
    
    
    2,386
    
    
    
    140Less: Accumulated depreciation
    
    
    67
    
    
    
    Net Premises and Equipment
    
    $
    2,319
    
    
    $
    140
  Note 4  Deposits
  2006
    
    
    2005Non-interest bearing deposits
    
    $
    1,415
    
    
    $
    NOW accounts
    
    
    1,370
    
    
    
    Savings and money market accounts
    
    
    4,441
    
    
    
    Certificates of Deposit <$100,000
    
    
    1,995
    
    
    
    Certificates of Deposit >$100,000
    
    
    1,008
    
    
    
    Total
    
    $
    10,229
    
    
    $
    
  <$100,000
    
    
    >$100,000
    
    
    Total2007
    
    $
    1,995
    
    
    $
    
    
    
    $
    1,9952008
    
    
    8
    
    
    
    1,000
    
    
    $
    1,008Total
    
    $
    2,003
    
    
    $
    1,000
    
    
    $
    3,003
 Note 5  Related Party Notes Payable
  10




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6  Notes Payable
  Note 7  Income Taxes
   2006
    
    
    2005Deferred tax assets:Allowance for loan losses
    
    $
    56,100
    
    
    $
    Organizational costs
    
    
    487,877
    
    
    
    338,456Net operating loss carryforward
    
    
    644,547
    
    
    
    Other
    
    
    5,406
    
    
    
    Total deferred tax assets
    
    
    1,193,930
    
    
    
    338,456Less valuation allowance
    
    
    1,171,185
    
    
    
    338,456Deferred tax liabilities:Other
    
    
    22,745
    
    
    
    Total deferred tax liabilities
    
    $
    22,745
    
    
    $
    Net deferred tax assets
    
    
    
    
    
    
    
  2006
    
    
    2005Current expense
    
    $
    
    
    
    $
    Deferred (benefit) expense
    
    
    
    
    
    
    Total income tax expense
    
    $
    
    
    
    $
    
 11




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2006
    
    
    2005Loss before income taxes
    
    
    ($2,963,154
    )
    
    
    ($995,458
    )Income tax benefit at federal
statutory rate of 34 percent
    
    
    (1,007,472
    )
    
    
    (338,456
    )Increases resulting from
nondeductible expenses
    
    
    23,800
    
    
    
    0Other
    
    
    150,943
    
    
    
    0Change in valuation allowance
    
    
    832,729
    
    
    
    338,456Income tax expense
    
    $
    0
    
    
    $
    0
 Note 8  Leases and Commitments
   2007
    
    $
    268,2712008
    
    
    274,0372009
    
    
    279,8072010
    
    
    285,6952011
    
    
    291,693thereafter
    
    
    1,187,293Total
    
    $
    2,586,796
  12




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9  Restrictions on dividends, loans and advances
    Note 10  Fair Value of Financial Instruments
   Cash
and Cash Equivalents
 Loans
Receivable
 Deposit
Liabilities
 13




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Other
Borrowings
 Accrued
Interest
 Other
Financial Instruments
  Note 11  Retirement Plans
  14




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 12  Parent Only Financial Statements
   December 31,2006
    
    
    2005AssetsCash and cash equivalentsCash
    
    $
    845,889
    
    
    $
    32,754Total cash and cash equivalents
    
    
    845,889
    
    
    
    32,754Investment in Subsidiary
    
    
    12,562,298
    
    
    
    Premises & Equipment
    
    
    
    
    
    
    140,108Deferred offering costs
    
    
    
    
    
    
    442,766Interest receivable and other assets
    
    
    
    
    
    
    24,542Total Assets
    
    $
    13,408,187
    
    
    $
    640,170Liabilities and Shareholders Equity (Deficit)Related party notes payable
    
    
    
    
    
    $
    749,000Bank note payable
    
    
    
    
    
    
    960,000Interest payable and other liabilities
    
    
    70,000
    
    
    
    83,159Total Liabilities
    
    
    70,000
    
    
    
    1,792,159Shareholders equity (deficit)Common Stock, no par value
    
    
    17,034,330
    
    
    
    1,000Additional paid in capital  share based payments
    
    
    420,000
    
    
    
    Accumulated deficit
    
    
    (4,116,143
    )
    
    
    (1,152,989
    )Total shareholders equity (deficit)
    
    
    13,338,187
    
    
    
    (1,151,989
    )Total liabilities and shareholders equity (deficit)
    
    $
    13,408,187
    
    
    $
    640,170
 15




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  For the Year EndedDecember 31,2006
    
    
    2005Interest Income
    
    $
    
    
    
    $
    Interest expense
    
    
    71,452
    
    
    
    13,553Net Interest Income
    
    
    (71,452
    )
    
    
    (13,553
    )Non-interest expenseSalaries and benefits
    
    
    (460,230
    )
    
    
    505,745Occupancy & equipment expense
    
    
    (183,833
    )
    
    
    182,118Stock based compensation
    
    
    420,000
    
    
    
    Professional fees
    
    
    (310,245
    )
    
    
    227,944Printing and office supplies
    
    
    (2,502
    )
    
    
    7,472Other expense
    
    
    (9,190
    )
    
    
    58,626Total non-interest expense
    
    
    (546,000
    )
    
    
    981,905Income taxes
    
    
    
    
    
    
    Net income (loss) before equity in
undistributed loss of subsidiary
    
    
    474,548
    
    
    
    (995,458
    )Equity in undistributed income of subsidiary
    
    
    (3,437,702
    )
    
    
    Net loss
    
    
    ($2,963,154
    )
    
    
    ($995,458
    )
 16




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  For the Year EndedDecember 31,2006
    
    
    2005Cash flows from operating activitiesNet loss
    
    
    ($2,963,154
    )
    
    
    ($995,458
    )Stock based compensation
    
    
    420,000
    
    
    
    Net (increase) decrease in other assets
    
    
    467,308
    
    
    
    (467,308
    )Net increase (decrease) in other liabilities
    
    
    (13,159
    )
    
    
    83,159Net cash used in operating activities
    
    
    (2,089,005
    )
    
    
    (1,379,607
    )Cash flows from investing activitiesInvestment in subsidiary
    
    
    (12,562,298
    )
    
    
    (Increase) decrease in premises and equipment
    
    
    140,108
    
    
    
    (140,108
    )Net cash used in investing activities
    
    
    (12,422,190
    )
    
    
    (140,108
    )Cash flows from financing activitiesSale of Stock
    
    
    17,033,330
    
    
    
    1,000Increase in notes payable from related parties
    
    
    
    
    
    
    369,000Repayment of notes payable from related
parties
    
    
    (749,000
    )
    
    
    Increase (decrease) in line of credit payable
    
    
    (960,000
    )
    
    
    960,000Net cash provided by financing activities
    
    
    15,324,330
    
    
    
    1,330,000Increase (decrease) in cash and cash equivalents
    
    
    813,135
    
    
    
    (189,715
    )Cash and cash equivalents at the beginning of the period
    
    
    32,754
    
    
    
    222,469Cash and cash equivalents at the end of the period
    
    $
    845,889
    
    
    $
    32,754
 Note 13  Off balance sheet risk
 Credit-related
Financial Instruments
  17




---



##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 At December 31, 2006 and 2005, the following financial instruments were outstanding whose
contract amounts represent credit risk:
 Contract Amount2006
    
    
    2005Commitments to grant loans
    
    $
    797,000
    
    
    $
    Unfunded commitments under lines of credit
    
    $
    2,498,000
    
    
    
    Commercial and standby letters of credit
    
    
    
    
    
    
    
 Commitments to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. The commitments
for equity lines of credit may expire without being drawn upon. Therefore, the total commitment
amounts do not necessarily represent future cash requirements. The amount of collateral
obtained, if it is deemed necessary by the Corporation, is based on managements credit
evaluation of the customer.Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft
protection agreements are commitments for possible future extensions of credit to existing
customers. These lines of credit are collateralized and usually do not contain a specified
maturity date and may not be drawn upon to the total extent to which the Corporation is
committed.Commercial and standby letters of credit are conditional commitments issued by the Corporation
to guarantee the performance of a customer to a third party. Those letters of credit are used
primarily to support public and private borrowing arrangements. Essentially all letters of
credit issued have expiration dates within one year. The credit risk involved is extending loan
facilities to customers. The Corporation generally holds collateral supporting those
commitments if deemed necessary.Collateral Requirements   To reduce credit risk related to the use of credit-related financial
instruments, the Corporation might deem it necessary to obtain collateral. The amount and
nature of the collateral obtained are based on the Corporations credit evaluation of the
customer. Collateral held varies but may include cash, securities, accounts receivable,
inventory, property, plant, and equipment, and real estate.If the counterparty does not have the right and ability to redeem the collateral or the
Corporation is permitted to sell or repledge the collateral on short notice, the Corporation
records the collateral in its balance sheet at fair value with a corresponding obligation to
return it.Legal Contingencies  Various legal claims also arise from time to time in the normal course of
business which, in the opinion of management, will have no material effect on the Corporations
financial statements.
 18




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##### 



BIRMINGHAM BLOOMFIELD BANCSHARES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 14  Minimum regulatory capital requirements
 Banks and bank holding companies are subject to regulatory capital requirements administered by
federal banking agencies. Capital adequacy guidelines and, additionally for Banks, prompt
corrective action regulations, involve quantitative measures of assets, liabilities, and certain
off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by regulators. Failure to meet capital
requirements can initiate regulatory action. The prompt corrective action regulations provide
five classifications, well capitalized, adequately capitalized, undercapitalized and critical
undercapitalized, although these terms are not used to represent overall financial condition. If
adequately capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans
for capital restoration are required. The Bank and the Corporation were well-capitalized as of
September 30, 2006.The Banks and Corporations actual capital amounts and ratios as of December 31, 2006 are
presented in the following table (dollars in thousands):
 For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedRatio
    
    
    
    
    
    Ratio
    
    
    
    
    
    RatioAmount
    
    (Percent)
    
    Amount
    
    (Percent)
    
    Amount
    
    (Percent)Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    
    12,758
    
    
    
    75.91
    
    
    
    1,345
    
    
    
    8.00
    
    
    
    1,681
    
    
    
    10.00Consolidated
    
    
    13,603
    
    
    
    93.23
    
    
    
    1,167
    
    
    
    8.00
    
    
    
    1,459
    
    
    
    10.00Tier I Capital
(to risk weighted assets)
Bank of Birmingham
    
    
    12,563
    
    
    
    74.75
    
    
    
    672
    
    
    
    4.00
    
    
    
    1,008
    
    
    
    6.00Consolidated
    
    
    13,408
    
    
    
    91.89
    
    
    
    584
    
    
    
    4.00
    
    
    
    875
    
    
    
    6.00Tier I Capital
(to average assets)
Bank of Birmingham
    
    
    12,563
    
    
    
    61.50
    
    
    
    817
    
    
    
    4.00
    
    
    
    1,021
    
    
    
    5.00Consolidated
    
    
    13,408
    
    
    
    64.27
    
    
    
    834
    
    
    
    4.00
    
    
    
    1,043
    
    
    
    5.00
 19




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD LOOKING STATEMENTS
   OVERVIEW
  20




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
     CRITICAL ACCOUNTING POLICIES
 Allowance for loan losses
  21




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
   PLAN OF OPERATION
    22




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Selected Financial Information
   For the Year EndedDecember 31,2006
    
    
    2005
    
    
    2004Total assets
    
    $
    24,550
    
    
    $
    640
    
    
    $
    223Gross loans
    
    
    12,914
    
    
    
    
    
    
    
    Allowance for Loan Losses
    
    
    195
    
    
    
    
    
    
    
    Total deposits
    
    
    11,075
    
    
    
    
    
    
    
    Borrowings
    
    
    
    
    
    
    1,709
    
    
    
    380Total stockholders equity (deficit)
    
    
    13,338
    
    
    
    (1,151
    )
    
    
    (156
    )Summary of OperationsInterest income
    
    
    385
    
    
    
    
    
    
    
    Interest expense
    
    
    158
    
    
    
    14
    
    
    
    Net interest income
    
    
    227
    
    
    
    (14
    )
    
    
    Provision for loan losses
    
    
    195
    
    
    
    
    
    
    
    Noninterest income
    
    
    7
    
    
    
    
    
    
    
    Noninterest expense
    
    
    3,002
    
    
    
    981
    
    
    
    157Income before taxes
    
    
    (2,963
    )
    
    
    (995
    )
    
    
    (157
    )Provision for income tax
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    ($2,963
    )
    
    
    ($995
    )
    
    
    ($157
    )Per share Data:Basic earnings
    
    
    ($4.19
    )
    
    
    ($9,954.58
    )
    
    
    ($157.53
    )Diluted earnings
    
    
    ($4.19
    )
    
    
    ($9,954.58
    )
    
    
    ($157.53
    )Dividend declared
    
    
    
    
    
    
    
    
    
    
    
  For the Year EndedDecember 31,2006
    
    2005
    
    2004Total nonperforming assets as a
percentage of total assets
    
    
    
    
    
    
    n/a
    
    
    
    n/aTotal nonperforming loans as a
percentage of total loans
    
    
    
    
    
    
    n/a
    
    
    
    n/aTotal allowance for loan losses as a
percentage of total loans
    
    
    1.50
    %
    
    
    n/a
    
    
    
    n/aReturn on average assets
    
    
    (37.62
    %)
    
    
    (199.09
    %)
    
    
    (157.00
    %)Return on average equity
    
    
    (44.89
    %)
    
    
    n/a
    
    
    
    n/aNet interest margin
    
    
    4.90
    %
    
    
    n/a
    
    
    
    n/aAverage equity to average assets
    
    
    (83.82
    %)
    
    
    n/a
    
    
    
    n/a
 23




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 ASSETS
        24




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    LIABILITIES
   As of December 31,2006Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    1,415
    
    
    
    13.83
    %NOW accounts
    
    
    1,369
    
    
    
    13.38Money market
    
    
    4,329
    
    
    
    42.33Savings
    
    
    113
    
    
    
    1.10Time deposits under $100,000
    
    
    653
    
    
    
    6.38Time deposits over $100,000
    
    
    2,350
    
    
    
    22.98Total deposits
    
    $
    10,229
    
    
    
    100.00
    %
 25




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  SHAREHOLDERS EQUITY
  NET INTEREST INCOME
   26




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##### 



Birmingham Bloomfield Bancshares, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  Year Ended December 31, 2006InterestAverage
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    RateAssetsLoans
    
    $
    4,551
    
    
    $
    146
    
    
    
    7.70
    %Federal Funds Sold
    
    
    10,071
    
    
    
    239
    
    
    
    5.69
    %Total Earning Assets/Total Interest Income/Average Yield
    
    
    14,622
    
    
    
    385
    
    
    
    6.31
    %Cash and due from banks
    
    
    1,319All other assets
    
    
    1,912Total Assets
    
    
    17,853Laibilities and EquityNOW accounts
    
    
    578
    
    
    
    4
    
    
    
    1.56
    %Money markets
    
    
    1,974
    
    
    
    34
    
    
    
    4.18
    %Savings
    
    
    60
    
    
    
    0
    
    
    
    1.13
    %Time deposits
    
    
    2,225
    
    
    
    48
    
    
    
    5.16
    %Total Interest Bearing Liabilities/Total Interest Expense/Average Yield
    
    
    4,837
    
    
    
    86
    
    
    
    4.28
    %Noninterest bearing demand deposits
    
    
    185All other liabilities
    
    
    Shareholders Equity
    
    $
    12,831Net Interest Income/Interest Rate Spread
    
    
    
    
    
    $
    299
    
    
    
    2.03
    %Net Interest Margin (Net Interest
Income/Total Earning Assets)
    
    
    
    
    
    
    
    
    
    
    4.90
    %
 27




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 PROVISION FOR CREDIT LOSSES
  NONINTEREST INCOME
  NONINTEREST EXPENSE
  INCOME TAXES
  28




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT
      29




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##### 



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




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 After Three
    
    
    After OneWithin
    
    
    Months but
    
    
    Year But
    
    
    AfterThree
    
    
    Within
    
    
    Within
    
    
    FiveMonths
    
    
    One Year
    
    
    Five Years
    
    
    Years
    
    
    TotalInterest earning assetsFederal funds sold
    
    $
    7,741
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,741Loans
    
    
    5,027
    
    
    
    
    
    
    
    3,053
    
    
    
    3,120
    
    
    
    11,200Total
    
    
    12,768
    
    
    
    
    
    
    
    3,053
    
    
    
    3,120
    
    
    
    18,9410Interest bearing liabilitiesNow accounts
    
    
    1,369
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,369Money markets
    
    
    4,329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,329Savings
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113Time deposits less than $100,000
    
    
    7
    
    
    
    638
    
    
    
    8
    
    
    
    0
    
    
    
    653Time deposits greater than $100,000
    
    
    504
    
    
    
    846
    
    
    
    1,000
    
    
    
    
    
    
    
    2,350Total
    
    
    6,322
    
    
    
    1,484
    
    
    
    1,008
    
    
    
    
    
    
    $
    8,814Rate sensitivity gap
    
    $
    6,446
    
    
    
    ($1,484
    )
    
    $
    2,045
    
    
    $
    3,120Cumulative rate sensitivity gap
    
    
    
    
    
    $
    4,962
    
    
    $
    7,007
    
    
    $
    10,127Rate sensitivity gap ratio
    
    
    2.02
    
    x
    
    n/a
    
    x
    
    3.03
    
    x
    
    0.00
    
    xCumulative rate sensitivity gap ratio
    
    
    
    
    
    
    1.64
    
    x
    
    1.79
    
    x
    
    2.15
    
    x
 31




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##### 



Birmingham Bloomfield Bancshares, Inc.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 SEC FORM 10-KSB
  STOCK INFORMATION
  32




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##### 



BANK OF BIRMINGHAM SHAREHOLDER INFORMATION
 PRIMARY MARKET MAKERSHowe Barnes Hoefer and Arnett
    
    Hill, Thompson Magid & Co., Inc.222 South Riverside Plaza, 7th Floor
    
    15 Exchange PlaceChicago, IL 60606
    
    Jersey City, NJ 07302-3912Monroe Securities, Inc.
    
    Hudson Securities, Inc.100 North Riverside Plaza
    
    111 Pavonia AveSuite 1620
    
    Suite 1500AChicago, Illinois 60606
    
    Jersey City, NJ 07310
 STOCK REGISTRAR AND TRANSFER AGENT
 www.rtco.com
 INDEPENDENT AUDITOR
 www.plantemoran.com
 LEGAL COUNSEL
 www.h2law.com
 INFORMATION
  ANNUAL MEETING