##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10 - Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 Commission File Number 000-52584
 
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-1132959(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 33583 Woodward Avenue, Birmingham, MI 48009  (Address of principal executive offices, including zip code)
 (248) 723-7200(Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



INDEX
 PART IFINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    15ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


24ITEM 4T. CONTROLS AND PROCEDURES
    
    
    25PART II. OTHER INFORMATION
    
    
    26ITEM 1. LEGAL PROCEEDINGS
    
    
    26ITEM 1A. RISK FACTORS
    
    
    26ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    26ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    26ITEM 4. [RESERVED]
    
    
    26ITEM 5. OTHER INFORMATION
    
    
    26ITEM 6. EXHIBITS
    
    
    26EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC  CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2010
    
    
    2009(unaudited)AssetsCash and cash equivalentsCash
    
    $
    15,250,255
    
    
    $
    4,644,416Federal funds sold
    
    
    34,492
    
    
    
    3,113,785Total cash and cash equivalents
    
    
    15,284,747
    
    
    
    7,758,201Securities, available for sale (Note 3)
    
    
    4,192,257
    
    
    
    3,835,082Net Loans (Note 4)
    
    
    89,037,349
    
    
    
    78,482,031Premises & equipment (Note 6)
    
    
    1,408,849
    
    
    
    1,488,689Interest receivable and other assets
    
    
    1,066,513
    
    
    
    1,072,770Total assets
    
    $
    110,989,715
    
    
    $
    92,636,773Liabilities and Shareholders EquityDeposits (Note 5)Non-interest bearing
    
    $
    11,815,643
    
    
    $
    8,494,903Interest bearing
    
    
    87,988,239
    
    
    
    72,970,583Total deposits
    
    
    99,803,882
    
    
    
    81,465,486Interest payable and other liabilities
    
    
    363,905
    
    
    
    443,354Total liabilities
    
    
    100,167,787
    
    
    
    81,908,840Shareholders equitySenior cumulative perpetual preferred stock series A
$1,000 liquidation value per share, 5%
Authorized, issued and outstanding  1,635 shares
    
    
    1,635,000
    
    
    
    1,635,000Discount on senior preferred stock series A
    
    
    (70,176
    )
    
    
    (79,427
    )Warrant cumulative perpetual preferred stock series B
$1,000 liquidation value per share, 9%
Authorized, issued and outstanding  82 shares
    
    
    82,000
    
    
    
    82,000Premium on warrant preferred stock series B
    
    
    7,628
    
    
    
    8,634Senior cumulative perpetual preferred stock series C
$1,000 liquidation value per share, 5%
Authorized, issued and outstanding  1,744 shares
    
    
    1,744,000
    
    
    
    1,744,000Common stock, no par value
Authorized  4,500,000 shares
Issued and outstanding  1,800,000 shares
    
    
    17,034,330
    
    
    
    17,034,330Additional paid in capital  share based payments
    
    
    493,154
    
    
    
    489,459Accumulated deficit
    
    
    (10,232,203
    )
    
    
    (10,299,436
    )Accumulated other comprehensive income
    
    
    128,195
    
    
    
    113,373Total shareholders equity
    
    
    10,821,928
    
    
    
    10,727,933Total liabilities and shareholders equity
    
    $
    110,989,715
    
    
    $
    92,636,773
  3




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest incomeLoans, including fees
    
    $
    1,398,742
    
    
    $
    893,654
    
    
    $
    2,640,890
    
    
    $
    1,736,475Taxable securities
    
    
    31,357
    
    
    
    37,105
    
    
    
    66,055
    
    
    
    74,511Federal funds sold
    
    
    519
    
    
    
    1,024
    
    
    
    1,248
    
    
    
    1,915Correspondent bank
    
    
    5,711
    
    
    
    6,256
    
    
    
    11,316
    
    
    
    7,596Total interest income
    
    
    1,436,329
    
    
    
    938,039
    
    
    
    2,719,509
    
    
    
    1,820,497Interest expenseDeposits
    
    
    351,733
    
    
    
    328,268
    
    
    
    675,979
    
    
    
    667,859Total interest expense
    
    
    351,733
    
    
    
    328,268
    
    
    
    675,979
    
    
    
    667,859Net interest income
    
    
    1,084,596
    
    
    
    609,771
    
    
    
    2,043,530
    
    
    
    1,152,638Provision for loan losses
    
    
    176,892
    
    
    
    115,276
    
    
    
    289,297
    
    
    
    148,776Net interest income after provision for loan losses
    
    
    907,704
    
    
    
    494,495
    
    
    
    1,754,233
    
    
    
    1,003,862Non-interest incomeLoan fees and charges
    
    
    5,147
    
    
    
    2,491
    
    
    
    13,562
    
    
    
    5,671Deposit fees and charges
    
    
    20,898
    
    
    
    17,015
    
    
    
    41,166
    
    
    
    34,726Other income
    
    
    15,981
    
    
    
    5,005
    
    
    
    22,734
    
    
    
    9,817Total non-interest income
    
    
    42,026
    
    
    
    24,511
    
    
    
    77,462
    
    
    
    50,214Non-interest expenseSalaries and benefits
    
    
    379,518
    
    
    
    406,766
    
    
    
    798,563
    
    
    
    778,094Occupancy & equipment expense
    
    
    136,332
    
    
    
    202,073
    
    
    
    290,543
    
    
    
    415,540Share based payments
    
    
    
    
    
    
    6,650
    
    
    
    3,695
    
    
    
    13,300Data processing expense
    
    
    49,580
    
    
    
    49,869
    
    
    
    105,130
    
    
    
    103,765Advertising and public relations
    
    
    40,055
    
    
    
    23,126
    
    
    
    45,334
    
    
    
    57,258Professional fees
    
    
    79,993
    
    
    
    116,795
    
    
    
    159,705
    
    
    
    197,314Printing and office supplies
    
    
    5,750
    
    
    
    7,004
    
    
    
    11,701
    
    
    
    16,022Other expense
    
    
    123,950
    
    
    
    179,182
    
    
    
    253,133
    
    
    
    258,193Total non-interest expense
    
    
    815,178
    
    
    
    991,465
    
    
    
    1,667,804
    
    
    
    1,839,486Net income (loss) before taxes
    
    
    134,552
    
    
    
    (472,459
    )
    
    
    163,891
    
    
    
    (785,410
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    134,552
    
    
    $
    (472,459
    )
    
    $
    163,891
    
    
    $
    (785,410
    )Dividend on senior preferred stock
    
    
    (45,062
    )
    
    
    (5,199
    )
    
    
    (88,413
    )
    
    
    (5,199
    )Amortization of discount on preferred stock
    
    
    (4,145
    )
    
    
    (3,052
    )
    
    
    (8,245
    )
    
    
    (3,052
    )Effective dividend on preferred stock
    
    
    (49,207
    )
    
    
    (8,251
    )
    
    
    (96,658
    )
    
    
    (8,251
    )Net income (loss) applicable to common shareholders
    
    $
    85,345
    
    
    $
    (480,710
    )
    
    $
    67,233
    
    
    $
    (793,661
    )Basic earnings (loss) per share
    
    $
    0.05
    
    
    $
    (0.26
    )
    
    $
    0.04
    
    
    $
    (0.44
    )Diluted earnings (loss) per share
    
    $
    0.05
    
    
    $
    (0.26
    )
    
    $
    0.04
    
    
    $
    (0.44
    )
  4




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
January 1, 2010 to June 30, 2010
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid in
    
    
    Accumulated
    
    
    ComprehensivePreferred Stock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at December 31, 2009
    
    $
    3,390,207
    
    
    $
    17,034,330
    
    
    $
    489,459
    
    
    $
    (10,299,436
    )
    
    $
    113,373
    
    
    $
    10,727,933Amortization of senior pref stock A
    
    
    9,251
    
    
    
    
    
    
    
    
    
    
    
    (9,251
    )
    
    
    
    
    
    
    Accretion of warrant pref stock B
    
    
    (1,006
    )
    
    
    
    
    
    
    
    
    
    
    1,006
    
    
    
    
    
    
    
    Preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,413
    )
    
    
    
    
    
    
    (88.413
    )Share based payments expense
    
    
    
    
    
    
    
    
    
    
    3,695
    
    
    
    
    
    
    
    
    
    
    
    3,695Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163,891
    
    
    
    
    
    
    
    163,891Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,822
    
    
    
    14,822Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,713Balance at June 30, 2010
    
    $
    3,398,452
    
    
    $
    17,034,330
    
    
    $
    493,154
    
    
    $
    (10,232,203
    )
    
    $
    128,195
    
    
    $
    10,821,928
  5




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months Ended June 30,2010
    
    
    2009Cash flows from operating activitiesNet income (loss)
    
    $
    163,891
    
    
    $
    (785,410
    )Share based payments expense
    
    
    3,695
    
    
    
    13,300Provision for loan losses
    
    
    289,297
    
    
    
    148,776Accretion of securities
    
    
    (2,672
    )
    
    
    (2,626
    )Gain on sales or calls of securities
    
    
    
    
    
    
    (3,027
    )Depreciation expense
    
    
    89,288
    
    
    
    150,450Net decrease (increase) in other assets
    
    
    6,257
    
    
    
    (29,571
    )Net (decrease) increase in other liabilities
    
    
    (79,449
    )
    
    
    6,563Net cash provided by (used in) operating activities
    
    
    470,307
    
    
    
    (501,545
    )Cash flows from investing activitiesIncrease in loans
    
    
    (10,890,241
    )
    
    
    (9,601,870
    )Purchase of securities
    
    
    (1,775,955
    )
    
    
    (952,100
    )Proceeds from sales, calls or maturities of securities
    
    
    1,436,274
    
    
    
    1,860,846Recoveries on loans charged off
    
    
    45,626
    
    
    
    Purchases of premises and equipment
    
    
    (9,448
    )
    
    
    (11,765
    )Net cash used in investing activities
    
    
    (11,193,744
    )
    
    
    (8,704,889
    )Cash flows from financing activitiesIncrease in deposits
    
    
    18,338,396
    
    
    
    15,578,716Proceeds from sale of senior preferred stock
    
    
    
    
    
    
    1,635,000Dividend on senior preferred stock
    
    
    (88,413
    )
    
    
    (5,199
    )Net cash provided by financing activities
    
    
    18,249,983
    
    
    
    17,208,517Increase in cash and cash equivalents
    
    
    7,526,546
    
    
    
    8,002,083Cash and cash equivalents at the
beginning of the period
    
    
    7,758,201
    
    
    
    4,663,497Cash and cash equivalents at the
end of the period
    
    $
    15,284,747
    
    
    $
    12,665,580Supplemental cash flow information:Cash paid for interest:
    
    $
    654,151
    
    
    $
    723,512
  6




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies
 Basis of Statement Presentation
   Principles of Consolidation
  Recent Accounting Developments
 Accounting Standards Update (ASU) No. 2010-20, Receivables (Topic 310): Disclosure about Credit
Quality of Financing Receivables and the Allowance For Credit Losses
 7




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BIRMINGHAM BLOOMFIELD BANCSHARES
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
    Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs
    
    
    Balance at JuneLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    30,2010Securities available for sale
    
    $
    
    
    
    $
    4,030
    
    
    $
    
    
    
    $
    4,030
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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting -continued
  Note 3  Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairJune 30, 2010 (unaudited)
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueU.S. Government agency securities
    
    $
    2,275
    
    
    $
    11
    
    
    $
    
    
    
    $
    2,286State and local government securities
    
    
    450
    
    
    
    4
    
    
    
    
    
    
    
    454Mortgage backed securities
    
    
    927
    
    
    
    113
    
    
    
    
    
    
    
    1,040Corporate bonds
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250Subtotal Available for Sale
    
    $
    3,902
    
    
    $
    128
    
    
    $
    
    
    
    $
    4,030FHLB Stock
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    162Total
    
    $
    4,064
    
    
    $
    128
    
    
    $
    
    
    
    $
    4,192
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairDecember 31, 2009
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueU.S. Government agency securities
    
    $
    2,342
    
    
    $
    18
    
    
    $
    
    
    
    $
    2,360State and local government securities
    
    
    200
    
    
    
    4
    
    
    
    
    
    
    
    204Mortgage backed securities
    
    
    1,018
    
    
    
    91
    
    
    
    
    
    
    
    1,109Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subtotal Available for Sale
    
    $
    3,560
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,673FHLB Stock
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    162Total
    
    $
    3,722
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,835
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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Securities continued
   EstimatedAmortized
    
    
    faircost
    
    
    valueDue in one year or less
    
    $
    200
    
    
    $
    204Due in one year through five years
    
    
    2,775
    
    
    
    2,786Due in five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Subtotal
    
    
    2,975
    
    
    
    2,990Mortgage backed securities
    
    
    927
    
    
    
    1,040FHLB Stock
    
    
    162
    
    
    
    162Total
    
    $
    4,064
    
    
    $
    4,192
 Note 4  Loans
  June 30,
    
    
    December 31,2010
    
    
    2009(unaudited)Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    2,987
    
    
    $
    1,353Multifamily
    
    
    12,509
    
    
    
    12,647Commercial
    
    
    41,982
    
    
    
    35,917Construction
    
    
    2,966
    
    
    
    518Second mortgage
    
    
    167
    
    
    
    171Equity lines of credit
    
    
    11,012
    
    
    
    11,445Total mortgage loans on real estate
    
    
    71,623
    
    
    
    62,051Commercial loans
    
    
    18,007
    
    
    
    17,186Consumer installment loans
    
    
    711
    
    
    
    512Total loans
    
    
    90,341
    
    
    
    79,749Less:Allowance for loan losses
    
    
    1,167
    
    
    
    1,174Net deferred loan fees
    
    
    137
    
    
    
    93Net loans
    
    $
    89,037
    
    
    $
    78,482
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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Loans continued
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(unaudited)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of period
    
    $
    1,255
    
    
    $
    743
    
    
    $
    1,174
    
    
    $
    710Charge-offs
    
    
    (310
    )
    
    
    (18
    )
    
    
    (341
    )
    
    
    (18
    )Recoveries
    
    
    45
    
    
    
    
    
    
    
    45
    
    
    
    Provision for loan losses
    
    
    177
    
    
    
    115
    
    
    
    289
    
    
    
    148Balance at end of period
    
    $
    1,167
    
    
    $
    840
    
    
    $
    1,167
    
    
    $
    840
  Note 5  Deposits
  June 30,
    
    
    December 31,(unaudited)
    
    2010
    
    
    2009(unaudited)Non-interest bearing deposits
    
    $
    11,816
    
    
    $
    8,495NOW accounts
    
    
    8,048
    
    
    
    7,894Savings and money market accounts
    
    
    26,207
    
    
    
    19,600Certificates of deposit <$100,000
    
    
    12,865
    
    
    
    13,240Certificates of deposit >$100,000
    
    
    40,868
    
    
    
    32,236Total
    
    $
    99,804
    
    
    $
    81,465
  (unaudited)
    
    <$100,000
    
    
    >$100,000
    
    
    TotalWithin 12 months
    
    $
    4,596
    
    
    $
    13,501
    
    
    $
    18,097> 12 months
    
    
    8,269
    
    
    
    27,367
    
    
    
    35,636Total
    
    $
    12,865
    
    
    $
    40,868
    
    
    $
    53,733
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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6  Leases and Commitments
   2010
    
    $
    1132011
    
    
    2302012
    
    
    2342013
    
    
    2392014
    
    
    244Thereafter
    
    
    2,976Total
    
    $
    4,036
 Note 7  Fair Value of Financial Instruments
   Cash and Cash Equivalents
 Securities
 Loans Receivable
 12




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Fair Value of Financial Instruments  continued
 Deposit Liabilities
 Accrued Interest
 Other Financial Instruments
  (unaudited)June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimated(unaudited)
    
    Value
    
    
    Fair Value
    
    
    Value
    
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    15,285
    
    
    $
    15,285
    
    
    $
    7,758
    
    
    $
    7,758Securities available for
sale
    
    
    4,192
    
    
    
    4,192
    
    
    
    3,835
    
    
    
    3,835Loans
    
    
    89,037
    
    
    
    88,932
    
    
    
    78,482
    
    
    
    78,952Accrued interest
receivable
    
    
    415
    
    
    
    415
    
    
    
    335
    
    
    
    335Financial liabilities:Deposits
    
    
    99,804
    
    
    
    100,145
    
    
    
    81,465
    
    
    
    81,807Accrued interest payable
    
    
    98
    
    
    
    98
    
    
    
    77
    
    
    
    77
 13




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8  Minimum Regulatory Capital Requirements
   For Capital
    
    
    To be(unaudited)
    
    Actual
    
    
    Adequacy Purposes
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of June 30, 2010Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,839
    
    
    
    11.0
    %
    
    $
    7,141
    
    
    
    8.0
    %
    
    $
    8,926
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,723
    
    
    
    9.8
    %
    
    $
    3,570
    
    
    
    4.0
    %
    
    $
    5,355
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    8,723
    
    
    
    8.5
    %
    
    $
    4,091
    
    
    
    4.0
    %
    
    $
    5,113
    
    
    
    5.0
    %As of December 31, 2009Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,467
    
    
    
    12.0
    %
    
    $
    6,318
    
    
    
    8.0
    %
    
    $
    7,897
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,468
    
    
    
    10.7
    %
    
    $
    3,159
    
    
    
    4.0
    %
    
    $
    4,738
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    8,468
    
    
    
    9.4
    %
    
    $
    3,590
    
    
    
    4.0
    %
    
    $
    4,488
    
    
    
    5.0
    %
 14




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 Disclosure Regarding Forward Looking Statements
   15




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
   OPERATIONS
   FINANCIAL CONDITION
  16




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cash and Cash Equivalents
  Investments
  Loans, Credit Quality and Allowance for Loan Losses
     17




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Premises and Equipment
  Deposits
  As of June 30,2010(000s omitted)
    
    Balance
    
    PercentageNoninterest bearing demand
    
    $
    11,816
    
    
    
    11.8
    %NOW accounts
    
    
    8,048
    
    
    
    8.1Money market
    
    
    9,627
    
    
    
    9.7Savings
    
    
    16,580
    
    
    
    16.6Time deposits under $100,000
    
    
    12,865
    
    
    
    12.9Time deposits over $100,000
    
    
    40,868
    
    
    
    40.9Total deposits
    
    $
    99,804
    
    
    
    100.0
    %
 18




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
Net Interest Income
   Three Months Ended June 30,2010
    
    
    2009Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    
    
    
    
    Yield/
    
    
    Balance
    
    
    
    
    
    
    Yield/(000s)
    
    
    Interest
    
    
    Rate
    
    
    (000s)
    
    
    Interest
    
    
    RateInterest-earning assetsLoans
    
    $
    89,468
    
    
    $
    1,398,742
    
    
    
    6.25
    %
    
    $
    62,027
    
    
    $
    893,654
    
    
    
    5.76
    %Securities
    
    
    3,568
    
    
    
    31,357
    
    
    
    3.52
    %
    
    
    3,507
    
    
    
    37,105
    
    
    
    4.23
    %Federal funds sold
    
    
    1,745
    
    
    
    519
    
    
    
    0.12
    %
    
    
    2,921
    
    
    
    1,024
    
    
    
    0.14
    %Interest-bearing balance with
other financial institutions
    
    
    10,327
    
    
    
    5,711
    
    
    
    0.22
    %
    
    
    4,548
    
    
    
    6,256
    
    
    
    0.55
    %Total interest-earning assets
    
    
    105,108
    
    
    
    1,436,329
    
    
    
    5.47
    %
    
    
    73,003
    
    
    
    938,039
    
    
    
    5.14
    %Cash and due from banks
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    1,484All other assets
    
    
    1,228
    
    
    
    
    
    
    
    
    
    
    
    1,688Total assets
    
    $
    106,960
    
    
    
    
    
    
    
    
    
    
    $
    76,175Interest-bearing liabilitiesNOW accounts
    
    $
    8,071
    
    
    
    10,394
    
    
    
    0.52
    %
    
    $
    7,908
    
    
    
    16,927
    
    
    
    0.86
    %Money market
    
    
    9,639
    
    
    
    15,836
    
    
    
    0.66
    %
    
    
    10,063
    
    
    
    30,157
    
    
    
    1.20
    %Savings
    
    
    14,863
    
    
    
    43,200
    
    
    
    1.16
    %
    
    
    9,122
    
    
    
    39,253
    
    
    
    1.72
    %Time deposits
    
    
    52,413
    
    
    
    282,303
    
    
    
    2.15
    %
    
    
    32,371
    
    
    
    241,931
    
    
    
    2.99
    %Total interest-bearing liabilities
    
    
    84,986
    
    
    
    351,733
    
    
    
    1.66
    %
    
    
    59,464
    
    
    
    328,268
    
    
    
    2.21
    %Non-interest bearing deposits
    
    
    10,574
    
    
    
    
    
    
    
    
    
    
    
    5,910All other liabilities
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    220Total liabilities
    
    
    95,881
    
    
    
    
    
    
    
    
    
    
    
    65,594Shareholders equity
    
    
    11,079
    
    
    
    
    
    
    
    
    
    
    
    10,581Total liabilities and shareholders
equity
    
    $
    106,960
    
    
    
    
    
    
    
    
    
    
    $
    76,175Net interest income
    
    
    
    
    
    $
    1,085,596
    
    
    
    
    
    
    
    
    
    
    $
    609,771Net spread
    
    
    
    
    
    
    
    
    
    
    3.81
    %
    
    
    
    
    
    
    
    
    
    
    2.93
    %Net interest margin (1)
    
    
    
    
    
    
    
    
    
    
    4.13
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    123.68
    %
    
    
    
    
    
    
    
    
    
    
    122.77
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets. 19




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Six Months Ended June 30,2010
    
    
    2009Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    
    
    
    
    Yield/
    
    
    Balance
    
    
    
    
    
    
    Yield/(000s)
    
    
    Interest
    
    
    Rate
    
    
    (000s)
    
    
    Interest
    
    
    RateInterest-earning assetsLoans
    
    $
    85,219
    
    
    $
    2,640,890
    
    
    
    6.20
    %
    
    $
    60,231
    
    
    $
    1,736,475
    
    
    
    5.77
    %Securities
    
    
    3,707
    
    
    
    66,055
    
    
    
    3.56
    %
    
    
    3,443
    
    
    
    74,511
    
    
    
    4.33
    %Federal funds sold
    
    
    2,298
    
    
    
    1,248
    
    
    
    0.11
    %
    
    
    2,659
    
    
    
    1,915
    
    
    
    0.14
    %Interest-bearing balance with
other financial institutions
    
    
    9,047
    
    
    
    11,316
    
    
    
    0.25
    %
    
    
    3,340
    
    
    
    7,596
    
    
    
    0.45
    %Total interest-earning assets
    
    
    100,271
    
    
    
    2,719,509
    
    
    
    5.42
    %
    
    
    69,673
    
    
    
    1,820,497
    
    
    
    5.23
    %Cash and due from banks
    
    
    784
    
    
    
    
    
    
    
    
    
    
    
    1,727All other assets
    
    
    1,211
    
    
    
    
    
    
    
    
    
    
    
    1,755Total assets
    
    $
    102,266
    
    
    
    
    
    
    
    
    
    
    $
    73,155Interest-bearing liabilitiesNOW accounts
    
    $
    7,992
    
    
    
    20,966
    
    
    
    0.52
    %
    
    $
    7,735
    
    
    
    38,840
    
    
    
    1.00
    %Money market
    
    
    8,892
    
    
    
    29,179
    
    
    
    0.66
    %
    
    
    10,061
    
    
    
    64,689
    
    
    
    1.29
    %Savings
    
    
    14,184
    
    
    
    83,806
    
    
    
    1.18
    %
    
    
    6,472
    
    
    
    55,952
    
    
    
    1.73
    %Time deposits
    
    
    49,845
    
    
    
    542,028
    
    
    
    2.17
    %
    
    
    32,929
    
    
    
    508,378
    
    
    
    3.09
    %Total interest-bearing liabilities
    
    
    80,913
    
    
    
    675,979
    
    
    
    1.67
    %
    
    
    57,197
    
    
    
    667,859
    
    
    
    2.34
    %Non-interest bearing deposits
    
    
    10,054
    
    
    
    
    
    
    
    
    
    
    
    5,849All other liabilities
    
    
    352
    
    
    
    
    
    
    
    
    
    
    
    227Total liabilities
    
    
    91,319
    
    
    
    
    
    
    
    
    
    
    
    63,273Shareholders equity
    
    
    10,947
    
    
    
    
    
    
    
    
    
    
    
    9,882Total liabilities and shareholders
equity
    
    $
    102,266
    
    
    
    
    
    
    
    
    
    
    $
    73,155Net interest income
    
    
    
    
    
    $
    2,043,530
    
    
    
    
    
    
    
    
    
    
    $
    1,152,638Net spread
    
    
    
    
    
    
    
    
    
    
    3.75
    %
    
    
    
    
    
    
    
    
    
    
    2.89
    %Net interest margin (1)
    
    
    
    
    
    
    
    
    
    
    4.08
    %
    
    
    
    
    
    
    
    
    
    
    3.31
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    123.92
    %
    
    
    
    
    
    
    
    
    
    
    121.81
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets. 20




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Provision for Loans Losses
   Non-Interest Income
   21




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  Non-Interest Expense
   Income Taxes
  22




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT
     23




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT (continued)
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     24




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 
 ITEM 4T. CONTROLS AND PROCEDURES
     25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. [RESERVED].
 
 ITEM 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS.
 Exhibit Number
    
    Description of Exhibit31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer.31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 26




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##### Table of Contents



SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date: August 16, 2010
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate: August 16, 2010
    By:
    /s/ Deborah A. ThompsonDeborah A. ThompsonChief Financial Officer 27




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description of Exhibit31.1
    
    Certification pursuant to Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act31.2
    
    Certification pursuant to Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act32.1
    
    Certification pursuant to Rules 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act  and 18 U.S.C. §1350
 28