##### 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 March 31, 2011
 Commission File Number 000-52584
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-3993452(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 33583 Woodward Avenue, Birmingham, MI 48009
 (248) 723-7200
  þ o
  o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)Smaller reporting company þ  o þ




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##### 



INDEX
 PART I. FINANCIAL INFORMATION
    
    
    3ITEM 1.
    
    FINANCIAL STATEMENTS (Unaudited)
    
    
    3ITEM 2.
    
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    28ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    28PART II. OTHER INFORMATION
    
    
    29ITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    29ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    29ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    29ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    29ITEM 5.
    
    OTHER INFORMATION
    
    
    29ITEM 6.
    
    EXHIBITS
    
    
    30EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CONSOLIDATED STATEMENTS OF CONDITION
 (Unaudited)March 31,
    
    
    December 31,2011
    
    
    2010AssetsCash and cash equivalentsCash
    
    $
    14,036,879
    
    
    $
    5,300,368Federal funds sold
    
    
    
    
    
    
    65,936Total cash and cash equivalents
    
    
    14,036,879
    
    
    
    5,366,304Securities, available for sale (Note 2)
    
    
    3,150,652
    
    
    
    3,200,002Federal Home Loan Bank stock
    
    
    160,200
    
    
    
    160,200Loans held for Sale
    
    
    
    
    
    
    322,500Loans (Note 3)Total portfolio loans
    
    
    98,205,105
    
    
    
    100,378,678Less: allowance for loan losses
    
    
    (1,487,099
    )
    
    
    (1,448,096
    )Net portfolio loans
    
    
    96,718,006
    
    
    
    98,930,582Premises & equipment, net
    
    
    1,435,426
    
    
    
    1,359,510Interest receivable and other assets
    
    
    1,019,575
    
    
    
    995,438Totals assets
    
    $
    116,520,738
    
    
    $
    110,334,536Liabilities and Shareholders EquityDeposits (Note 4)Non-interest bearing
    
    $
    12,477,840
    
    
    $
    14,190,295Interest bearing
    
    
    92,110,155
    
    
    
    83,060,199Total deposits
    
    
    104,587,995
    
    
    
    97,250,494Secured borrowings
    
    
    
    
    
    
    1,469,095Interest payable and other liabilities
    
    
    529,558
    
    
    
    629,422Total liabilities
    
    
    105,117,553
    
    
    
    99,349,011Shareholders 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
    
    
    (56,427
    )
    
    
    (61,027
    )Senior cumulative perpetual preferred stock series B
$1,000 liquidation value per share, 9%
Authorized, issued and outstanding  82 shares
    
    
    82,000
    
    
    
    82,000Premium on preferred stock series B
    
    
    6,134
    
    
    
    6,634Senior 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
    
    
    493,154
    
    
    
    493,154Accumulated deficit
    
    
    (9,647,177
    )
    
    
    (10,061,474
    )Accumulated other comprehensive income
    
    
    112,171
    
    
    
    112,908Total shareholders equity
    
    
    11,403,185
    
    
    
    10,985,525Total liabilities and shareholders equity
    
    $
    116,520,738
    
    
    $
    110,334,536
  3




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 For the three months ended March 31,2011
    
    
    2010Interest IncomeInterest and fees on loans
    
    $
    1,555,809
    
    
    $
    1,232,140Interest on securities
    
    
    27,911
    
    
    
    34,698Interest on federal funds and bank balances
    
    
    4,631
    
    
    
    6,334Total interest income
    
    
    1,588,351
    
    
    
    1,273,172Interest ExpenseInterest on deposits
    
    
    314,055
    
    
    
    324,246Interest on federal funds and short-term borrowings
    
    
    14,509
    
    
    
    Total interest expense
    
    
    328,564
    
    
    
    324,246Net Interest Income
    
    
    1,259,787
    
    
    
    948,926Provision for loan losses
    
    
    39,000
    
    
    
    112,405Net Interest Income After Provision for Loan Losses
    
    
    1,220,787
    
    
    
    836,521Non-interest IncomeService charges on deposit accounts
    
    
    11,572
    
    
    
    9,635Other income
    
    
    302,098
    
    
    
    17,387Mortgage banking activities
    
    
    11,439
    
    
    
    Total non-interest income
    
    
    325,109
    
    
    
    27,023Non-interest ExpenseSalaries and employee benefits
    
    
    582,017
    
    
    
    400,624Share based payments
    
    
    
    
    
    
    3,695Occupancy expense
    
    
    118,102
    
    
    
    118,634Equipment expense
    
    
    35,400
    
    
    
    35,577Advertising and public relations
    
    
    36,046
    
    
    
    5,280Data processing expense
    
    
    49,013
    
    
    
    55,550Professional fees
    
    
    111,524
    
    
    
    68,211Other expenses
    
    
    151,314
    
    
    
    146,633Total non-interest expense
    
    
    1,083,416
    
    
    
    834,204Net Income Before Federal Income Tax
    
    
    462,480
    
    
    
    29,339Federal income tax
    
    
    
    
    
    
    Net Income
    
    
    462,480
    
    
    
    29,339Dividend on senior preferred stock
    
    
    44,083
    
    
    
    43,351Accretion of discount on preferred stock
    
    
    4,100
    
    
    
    4,100Net Income (Loss) Applicable to Common Shareholders
    
    $
    414,297
    
    
    $
    (18,112
    )Basic and Diluted Income (Loss) per Share
    
    $
    0.23
    
    
    $
    (0.01
    )
  4




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##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (Unaudited)
 Three Months Ended March 31,Total Shareholders Equity
    
    
    2011
    
    
    2010Balance at beginning of period
    
    $
    10,985,525
    
    
    $
    10,727,933Net income
    
    
    462,480
    
    
    
    29,339Other comprehensive income:Net change in unrealized gains on securities available for sale
    
    
    (737
    )
    
    
    81Total comprehensive income
    
    
    461,743
    
    
    
    29,420Share based payments expense
    
    
    
    
    
    
    3,695Preferred dividends
    
    
    (44,083
    )
    
    
    (43,351
    )Balance at end of period
    
    $
    11,403,185
    
    
    $
    10,717,697
  5




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activitiesNet income
    
    $
    462,480
    
    
    $
    29,339Share based payment expense
    
    
    
    
    
    
    3,695Provision for loan losses
    
    
    39,000
    
    
    
    112,405Gain on sale of loans
    
    
    (8,697
    )
    
    
    Proceeds for sales of loans originated for sale
    
    
    436,197
    
    
    
    Loans originated for sale
    
    
    (105,000
    )
    
    
    Accretion of securities
    
    
    (1,576
    )
    
    
    (2,018
    )Depreciation expense
    
    
    43,669
    
    
    
    44,618Net decrease (increase) in other assets
    
    
    (24,137
    )
    
    
    (76,171
    )Net increase (decrease) in other liabilities
    
    
    (99,863
    )
    
    
    (83,580
    )Net cash provided by (used) in operating activities
    
    
    742,073
    
    
    
    28,288Cash flows from investing activitiesNet change in portfolio loans
    
    
    2,173,575
    
    
    
    (6,528,521
    )Purchase of securities
    
    
    
    
    
    
    (352,546
    )Proceeds from calls or maturities of securities
    
    
    
    
    
    
    393,699Principal payments on securities
    
    
    50,189
    
    
    
    Purchases of premises and equipment
    
    
    (119,585
    )
    
    
    Net cash provided by (used) in investing activities
    
    
    2,104,179
    
    
    
    (6,487,368
    )Cash flows from financing activitiesIncrease in deposits
    
    
    7,337,501
    
    
    
    6,267,016Net change in short term borrowings
    
    
    (1,469,095
    )
    
    
    Dividend on senior preferred stock
    
    
    (44,083
    )
    
    
    (43,351
    )Net cash provided by financing activities
    
    
    5,824,323
    
    
    
    6,223,665(Decrease) increase in cash and cash equivalents
    
    
    8,670,575
    
    
    
    (235,415
    )Cash and cash equivalents  beginning of period
    
    
    5,366,304
    
    
    
    7,758,201Cash and cash equivalents  end of period
    
    $
    14,036,879
    
    
    $
    7,522,786Supplemental Information:Interest paid
    
    $
    642,745
    
    
    $
    316,907Income tax paid
    
    
    
    
    
    
    Loans transferred to other real estate
    
    
    
    
    
    
    
  6




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Note 1  Summary of Significant Accounting Policies
 Basis of Statement Presentation
    Principles of Consolidation
  Changes in Significant Accounting Policies
 Income Recognition on Small Business Administration Loan Sales
 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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##### Table of Contents



Note 1
 Summary of Significant Accounting Policies  Continued
 ASU No. 2011-02, A Creditors Determination of Whether a Restructuring Is a Troubled Debt
Restructuring (TDR)
 Note 2  Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueMarch 31, 2011U. S. Government agency securities
    
    $
    1,349
    
    
    $
    10
    
    
    $
    
    
    
    $
    1,359Municipal securities
    
    
    650
    
    
    
    5
    
    
    
    
    
    
    
    655Mortgage backed securities
    
    
    790
    
    
    
    89
    
    
    
    
    
    
    
    879Corporate bonds
    
    
    250
    
    
    
    8
    
    
    
    
    
    
    
    258Sub-total available for sale
    
    $
    3,039
    
    
    $
    112
    
    
    $
    
    
    
    $
    3,151FHLB Stock
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    160Total securities
    
    $
    3,199
    
    
    $
    112
    
    
    $
    
    
    
    $
    3,311December 31, 2010U. S. Government agency securities
    
    $
    1,350
    
    
    $
    11
    
    
    $
    
    
    
    $
    1,361Municipal securities
    
    
    650
    
    
    
    7
    
    
    
    
    
    
    
    657Mortgage backed securities
    
    
    837
    
    
    
    91
    
    
    
    
    
    
    
    928Corporate bonds
    
    
    250
    
    
    
    4
    
    
    
    
    
    
    
    254Sub-total available for sale
    
    $
    3,087
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,200FHLB Stock
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    160Total Securities
    
    $
    3,247
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,360
    8




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##### Table of Contents



Note 2  Securities  Continued
  Amortized cost
    
    
    Estimated fair valueDue in one year or less
    
    $
    1,200
    
    
    $
    1,202Due in one year through five years
    
    
    1,839
    
    
    
    1,949Due in five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Total
    
    $
    3,039
    
    
    $
    3,151
 Note 3  Loans
  March 31,
    
    
    December 31,2011
    
    
    2010Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    3,368
    
    
    $
    3,380Multifamily
    
    
    12,439
    
    
    
    12,355Commercial
    
    
    47,507
    
    
    
    49,029Construction
    
    
    3,058
    
    
    
    2,024Second mortgage
    
    
    117
    
    
    
    118Equity lines of credit
    
    
    11,730
    
    
    
    11,794Total mortgage loans on real estate
    
    
    78,219
    
    
    
    78,700Commercial loans
    
    
    19,258
    
    
    
    20,776Consumer installment loans
    
    
    811
    
    
    
    964Total loans
    
    
    98,288
    
    
    
    100,440Less: Allowance for loan losses
    
    
    (1,487
    )
    
    
    (1,448
    )Net deferred loan fees
    
    
    (83
    )
    
    
    (61
    )Net loans
    
    $
    96,718
    
    
    $
    98,931
 9




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##### Table of Contents



Note 3  Loans  Continued
  Three months ended March 31, 2011
 Home
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010Allowance for Loan Losses
    
    
    Commercial
    
    
    Equity
    
    
    Residential
    
    
    Consumer
    
    
    Total
    
    
    TotalBeginning balance
    
    $
    1,070
    
    
    $
    352
    
    
    $
    14
    
    
    $
    12
    
    
    $
    1,448
    
    
    $
    1,174Charge-offs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )Recoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision
    
    
    43
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    39
    
    
    
    112Ending balance
    
    $
    1,113
    
    
    $
    350
    
    
    $
    14
    
    
    $
    10
    
    
    $
    1,487
    
    
    $
    1,255Percent of principal balance
    
    
    1.29
    %
    
    
    3.47
    %
    
    
    1.22
    %
    
    
    1.23
    %
    
    
    1.51
    %Ending balance: individually
evaluated for impairment
    
    $
    56
    
    
    $
    212
    
    
    $
    
    
    
    $
    
    
    
    $
    268Ending balance: collectively
evaluated for impairment
    
    $
    1,057
    
    
    $
    138
    
    
    $
    14
    
    
    $
    10
    
    
    $
    1,219Portfolio LoansEnding unpaid principal balance
    
    $
    86,233
    
    
    $
    10,099
    
    
    $
    1,145
    
    
    $
    811
    
    
    $
    98,288Ending unpaid principal
balance: individually
evaluated for impairment
    
    $
    699
    
    
    $
    888
    
    
    $
    
    
    
    $
    
    
    
    $
    1,587Ending unpaid principal
balance: collectively
evaluated for impairment
    
    $
    85,534
    
    
    $
    9,211
    
    
    $
    1,145
    
    
    $
    811
    
    
    $
    96,701
 Year ended December 31, 2010
 HomeAllowance for Loan Losses
    
    
    Commercial
    
    
    Equity
    
    
    Residential
    
    
    Consumer
    
    
    TotalBeginning balance
    
    $
    991
    
    
    $
    166
    
    
    $
    10
    
    
    $
    7
    
    
    $
    1,174Charge-offs
    
    
    (141
    )
    
    
    (225
    )
    
    
    
    
    
    
    
    
    
    
    (366
    )Recoveries
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Provision
    
    
    174
    
    
    
    410
    
    
    
    4
    
    
    
    6
    
    
    
    594Ending balance
    
    $
    1,070
    
    
    $
    351
    
    
    $
    14
    
    
    $
    13
    
    
    $
    1,448Percent of principal balance
    
    
    1.21
    %
    
    
    3.45
    %
    
    
    1.21
    %
    
    
    1.25
    %
    
    
    1.44
    %Ending balance: individually
evaluated for impairment
    
    $
    25
    
    
    $
    212
    
    
    $
    
    
    
    $
    
    
    
    $
    237Ending balance: collectively
evaluated for impairment
    
    $
    1,045
    
    
    $
    139
    
    
    $
    14
    
    
    $
    13
    
    
    $
    1,211Portfolio LoansEnding unpaid principal balance
    
    $
    88,080
    
    
    $
    10,166
    
    
    $
    1,153
    
    
    $
    1,041
    
    
    $
    100,440Ending unpaid principal
balance: individually
evaluated for impairment
    
    $
    2,107
    
    
    $
    887
    
    
    $
    
    
    
    $
    
    
    
    $
    2,994Ending unpaid principal
balance: collectively
evaluated for impairment
    
    $
    85,973
    
    
    $
    9,279
    
    
    $
    1,153
    
    
    $
    1,041
    
    
    $
    97,446
 10




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##### Table of Contents



Note 3  Loans continued
     March 31, 2011
 Commercial Loans
    
    
    Commercial
    
    
    Commercial
    
    
    Commercial
    
    
    CommercialCredit Quality
    
    
    Real Estate
    
    
    Term
    
    
    LOC
    
    
    Construction1  pass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2  pass
    
    
    388
    
    
    
    
    
    
    
    
    
    
    
    3  pass
    
    
    16,814
    
    
    
    3,753
    
    
    
    4,775
    
    
    
    4  pass
    
    
    38,890
    
    
    
    5,484
    
    
    
    4,039
    
    
    
    1,2505  special mention
    
    
    3,064
    
    
    
    3,561
    
    
    
    910
    
    
    
    1,8086  substandard
    
    
    1,437
    
    
    
    60
    
    
    
    
    
    
    
    7  doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8  loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    60,593
    
    
    $
    12,858
    
    
    $
    9,724
    
    
    $
    3,058
 Consumer Loans
    
    
    Home Equity
    
    
    Residential
    
    
    Home Equity
    
    
    Consumer
    
    
    ConsumerCredit Quality
    
    
    LOC
    
    
    Mortgage
    
    
    Term
    
    
    Installment
    
    
    LOCPass
    
    $
    8,742
    
    
    $
    1,029
    
    
    $
    116
    
    
    $
    387
    
    
    $
    394Special mention
    
    
    343
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    Substandard
    
    
    1,014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,099
    
    
    $
    1,029
    
    
    $
    116
    
    
    $
    417
    
    
    $
    394
 11




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##### Table of Contents



Note 3  Loans continued
 December 31, 2010
 Commercial Loans
    
    
    Commercial
    
    
    Commercial
    
    
    Commercial
    
    
    CommercialCredit Quality
    
    
    Real Estate
    
    
    Term
    
    
    LOC
    
    
    Construction1  pass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2  pass
    
    
    392
    
    
    
    
    
    
    
    
    
    
    
    3  pass
    
    
    16,845
    
    
    
    3,994
    
    
    
    4,416
    
    
    
    4  pass
    
    
    40,348
    
    
    
    6,265
    
    
    
    5,071
    
    
    
    1,2505  special mention
    
    
    2,994
    
    
    
    1,249
    
    
    
    1,574
    
    
    
    7746  substandard
    
    
    1,441
    
    
    
    857
    
    
    
    610
    
    
    
    7  doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8 - loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    62,020
    
    
    $
    12,365
    
    
    $
    11,671
    
    
    $
    2,024
 Consumer Loans
    
    
    Home Equity
    
    
    Residential
    
    
    Home Equity
    
    
    Consumer
    
    
    ConsumerCredit Quality
    
    
    LOC
    
    
    Mortgage
    
    
    Term
    
    
    Installment
    
    
    LOCPass
    
    $
    8,808
    
    
    $
    1,035
    
    
    $
    118
    
    
    $
    335
    
    
    $
    673Special mention
    
    
    344
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    Substandard
    
    
    1,014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Doubtful
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,166
    
    
    $
    1,035
    
    
    $
    118
    
    
    $
    368
    
    
    $
    673
   March 31, 2011
 Pre-
    
    Post-Number of
    
    Modification
    
    ModificationTrouble Debt Restructuring
    
    
    Contracts
    
    Investment
    
    InvestmentCommercial Real Estate
    
    
    1
    
    
    $
    699
    
    
    $
    699Commercial Term
    
    
    
    
    
    
    
    
    
    
    Commercial LOC
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    Home Equity
    
    
    
    
    
    
    
    
    
    
    Residential Mortgage
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
 December 31, 2010
 Trouble Debt RestructuringCommercial Real Estate
    
    
    1
    
    
    $
    699
    
    
    $
    699Commercial Term
    
    
    
    
    
    
    
    
    
    
    Commercial LOC
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    Home Equity
    
    
    
    
    
    
    
    
    
    
    Residential Mortgage
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
 12




---



##### Table of Contents



Note 3  Loans continued
    
 Year to DateRecorded
    
    Unpaid
    
    
    
    
    
    Average
    
    InterestInvestment
    
    Principal
    
    Allowance
    
    Investment
    
    RecognizedMarch 31, 2011Impaired
loansNo related allowance recorded:Home Equity Line of Credit
    
    $
    298
    
    
    $
    298
    
    
    $
    
    
    
    $
    298
    
    
    $
    Allowance recorded:Commercial Line of Credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial Real Estate
    
    
    699
    
    
    
    699
    
    
    
    56
    
    
    
    675
    
    
    
    4Home Equity Line of Credit
    
    
    590
    
    
    
    590
    
    
    
    212
    
    
    
    378
    
    
    
    7Total:Commercial
    
    $
    699
    
    
    $
    699
    
    
    $
    56
    
    
    $
    675
    
    
    $
    4Home Equity
    
    $
    888
    
    
    $
    888
    
    
    $
    212
    
    
    $
    676
    
    
    $
    7December 31, 2010Impaired
loansNo related allowance recorded:Home Equity Line of Credit
    
    $
    298
    
    
    $
    298
    
    
    $
    
    
    
    $
    256
    
    
    $
    Allowance recorded:Commercial Line of Credit
    
    
    1,407
    
    
    
    1,407
    
    
    
    17
    
    
    
    1,418
    
    
    
    99Commercial Real Estate
    
    
    699
    
    
    
    699
    
    
    
    8
    
    
    
    117
    
    
    
    7Home Equity Line of Credit
    
    
    590
    
    
    
    590
    
    
    
    212
    
    
    
    197
    
    
    
    10Total:Commercial
    
    $
    2,107
    
    
    $
    2,107
    
    
    $
    25
    
    
    $
    1,535
    
    
    $
    106Home Equity
    
    $
    887
    
    
    $
    887
    
    
    $
    212
    
    
    $
    453
    
    
    $
    10
 13




---



##### Table of Contents



Note 3  Loans continued
   March 31, 2011
 Loans past due
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    Non-
    
    
    >90 days30 - 59
    
    
    60 - 90
    
    
    Over 90
    
    
    Past Due
    
    
    Current
    
    
    Loans
    
    
    Accrual
    
    
    AccruingCommercial real estate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    60,593
    
    
    $
    60,593
    
    
    $
    
    
    
    $
    Commercial term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,858
    
    
    
    12,858
    
    
    
    
    
    
    
    Commercial LOC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,724
    
    
    
    9,724
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,058
    
    
    
    3,058
    
    
    
    
    
    
    
    Home equity LOC
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    298
    
    
    
    9,801
    
    
    
    10,099
    
    
    
    298
    
    
    
    Residential mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,029
    
    
    
    1,029
    
    
    
    
    
    
    
    Home equity term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116
    
    
    
    116
    
    
    
    
    
    
    
    Consumer installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    417
    
    
    
    417
    
    
    
    
    
    
    
    Consumer LOC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394
    
    
    
    394
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    298
    
    
    $
    298
    
    
    $
    97,990
    
    
    $
    98,288
    
    
    $
    298
    
    
    $
    
 December 31, 2010
 Loans past due
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    Non-
    
    
    >90 days30 - 59
    
    
    60 - 90
    
    
    Over 90
    
    
    Past Due
    
    
    Current
    
    
    Loans
    
    
    Accrual
    
    
    AccruingCommercial real estate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    62,020
    
    
    $
    62,020
    
    
    $
    
    
    
    $
    Commercial term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,365
    
    
    
    12,365
    
    
    
    
    
    
    
    Commercial LOC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,671
    
    
    
    11,671
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    2,024
    
    
    
    
    
    
    
    Home equity LOC
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    298
    
    
    
    9,868
    
    
    
    10,166
    
    
    
    298
    
    
    
    Residential mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,035
    
    
    
    1,035
    
    
    
    
    
    
    
    Home equity term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118
    
    
    
    118
    
    
    
    
    
    
    
    Consumer installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    368
    
    
    
    
    
    
    
    Consumer LOC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    673
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    298
    
    
    $
    298
    
    
    $
    100,142
    
    
    $
    100,440
    
    
    $
    298
    
    
    $
    
 14




---



##### Table of Contents



Note 4  Deposits
 Deposits are summarized as follows (000s omitted):
 March 31, 2011
    
    
    December 31, 2010Balance
    
    
    Percentage
    
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    12,478
    
    
    
    11.93
    %
    
    $
    14,190
    
    
    
    14.59
    %NOW accounts
    
    
    8,860
    
    
    
    8.47
    %
    
    
    7,897
    
    
    
    8.12
    %Money market
    
    
    8,778
    
    
    
    8.40
    %
    
    
    8,179
    
    
    
    8.41
    %Savings
    
    
    18,932
    
    
    
    18.10
    %
    
    
    16,521
    
    
    
    16.99
    %Time deposits under $100,000
    
    
    11,957
    
    
    
    11.43
    %
    
    
    12,153
    
    
    
    12.50
    %Time deposits over $100,000
    
    
    43,583
    
    
    
    41.67
    %
    
    
    38,310
    
    
    
    39.39
    %Total deposits
    
    $
    104,588
    
    
    
    100.0
    %
    
    $
    97,250
    
    
    
    100.0
    %
 At March 31, 2011, the scheduled maturities of time deposits are as follows (000s omitted):
 <$100,000
    
    
    >$100,000
    
    
    Total2011
    
    $
    4,277
    
    
    $
    23,260
    
    
    $
    27,5372012
    
    
    5,968
    
    
    
    15,094
    
    
    
    21,0622013
    
    
    976
    
    
    
    3,242
    
    
    
    4,2182014
    
    
    450
    
    
    
    1,361
    
    
    
    1,8112015
    
    
    12
    
    
    
    
    
    
    
    12Thereafter
    
    
    274
    
    
    
    626
    
    
    
    900Total
    
    $
    11,957
    
    
    $
    43,583
    
    
    $
    55,540
 Note 5  Leases and Commitments
 The Corporation has entered into a lease agreement for its main office facility. Payments began
in February 2005 and the initial term of the lease expires in October 2015. In October 2007,
the Corporation exercised its first renewal option on the property which expires in October
2025. The main office lease has one additional ten year renewal option. The Corporation also
entered into a lease agreement for its former branch office in Bloomfield Township which
provided for lease payments to begin in March 2006 and expire February 2016. The Bloomfield
Township branch office lease was terminated effective January 18, 2010 pursuant to an agreement
with the leaseholder. The termination agreement called for a one-time payment of $110,000 to
the leaseholder to end the lease. In October 2010, the Corporation entered into a one year lease
agreement for a lending production office (LPO) in Bay City, Michigan. The lease has two, one
year renewal options. In March 2011, a new one year lease was signed for additional office
space in the building adjacent to the main office at a rate of $2,800 per month. The lease has
two, five year renewal options. Rent expense under these agreements was $64,100 and $67,900 for
the three month period ended March 31, 2011 and 2010, respectively.
 The following is a schedule of future minimum rental payments under operating leases on a
calendar year basis:
 2011
    
    $
    2082012
    
    
    2432013
    
    
    2392014
    
    
    2442015
    
    
    249Thereafter
    
    
    2,473Total
    
    $
    3,656
 15




---



##### Table of Contents



Note 6  Fair Value of Financial Instruments
 The fair value of a financial instrument is the current amount that would be exchanged between
willing parties, other than in a forced liquidation. Fair value is best determined based upon
quoted market prices. However, in many instances, there are no quoted market prices for the
Corporations various financial instruments. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in
an immediate settlement of the instrument. FASB ASC 825 excludes certain financial instruments
and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate
fair value amounts presented may not necessarily represent the underlying fair value of the
Corporation.
 The following methods and assumptions were used by the Corporation in estimating fair value
disclosures for financial instruments:
 Cash and Cash Equivalents The carrying values of cash and cash equivalents approximate fair
values.
 Securities Fair values of securities are based on quoted market prices. If a quoted market
price is not available, fair value is estimated using quoted market prices for similar
securities.
 Loans Receivable For variable-rate loans that re-price frequently and with no significant
change in credit risk, fair values are based on carrying values. Fair values for other loans
are estimated using discounted cash flow analyses, using interest rates currently being offered
for loans with similar terms to borrowers of similar credit quality. Fair values of
nonperforming loans are estimated using discounted cash flow analyses or underlying collateral
values, where applicable.
 Deposit Liabilities The fair values disclosed for demand deposits are, by definition, equal to
the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying
amounts of variable-rate, fixed-term money market accounts and certificates of deposit
approximate their fair values at the reporting date. Fair values for fixed-rate certificates of
deposit are estimated using a discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated expected monthly maturities
on time deposits.
 Accrued Interest The carrying value of accrued interest approximates fair value.
 Other Financial Instruments The fair value of other financial instruments, including loan
commitments and unfunded letters of credit, based on discounted cash flow analyses, is not
material.
 The carrying values and estimated fair values of financial instruments at March 31, 2011 and
December 31, 2010, are as follows (in thousands):
 March 31, 2011
    
    December 31, 2010Estimated
    
    
    
    
    
    EstimatedCarrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    14,037
    
    
    $
    14,037
    
    
    $
    5,366
    
    
    $
    5,366Securities available for
sale
    
    
    3,311
    
    
    
    3,311
    
    
    
    3,360
    
    
    
    3,360Loans
    
    
    96,718
    
    
    
    97,407
    
    
    
    98,931
    
    
    
    99,786Loans held for sale
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    323Accrued interest
receivable
    
    
    432
    
    
    
    432
    
    
    
    440
    
    
    
    440Financial liabilities:Deposits
    
    
    104,588
    
    
    
    104,913
    
    
    
    97,250
    
    
    
    97,688Secured borrowings
    
    
    
    
    
    
    
    
    
    
    1,469
    
    
    
    1,469Accrued interest payable
    
    
    125
    
    
    
    125
    
    
    
    115
    
    
    
    115
 16




---



##### Table of Contents



Note 7  Fair Value Accounting
 Valuation Hierarchy
 Accounting standards establish a three-level valuation hierarchy for fair value measurements. The
valuation hierarchy prioritizes valuation techniques based upon the transparency of inputs to the
valuation of an asset or liability as of the measurement date and are the primary method of
valuation used by Birmingham Bloomfield Bancshares, Inc. A financial instruments categorization
within the valuation hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. The three levels are defined as follows.
 
    
    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 other 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.
 Following is a description of the inputs and valuation methodologies used for instruments
measured at fair value on a recurring basis and recognized in the accompanying consolidated
balance sheets, as well as general classification of those instruments under the valuation
hierarchy.
 Available-for-sale Securities
 Quoted market prices in an active market are used to value securities when such prices are
available. Those securities are classified within Level 1 of the valuation hierarchy. If quoted
market prices are not available, the fair values are estimated by using pricing models, quoted
prices of securities with similar characteristics, or discounted cash flows using reasonable
inputs. Level 2 securities include U.S. Government agency securities, mortgage backed securities,
obligations of states and municipalities, and certain corporate securities. Matrix pricing is a
mathematical technique widely used in the banking industry to value investment securities without
relying exclusively on quoted prices for specific investment securities, but rather relying on
the investment securities relationship to other benchmark quoted investment securities. In
certain cases where Level 1 or Level 2 inputs are not available, securities would be classified
within Level 3 of the hierarchy.
 The following table presents the fair value measurements of assets recognized in the accompanying
consolidated balance sheets measured at fair value on a recurring basis and the level within the
valuation hierarchy in which the fair value measurements fall at March 31, 2011 and December 31,
2010 (000s omitted):
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueMarch 31, 2011U.S. government agency
    
    $
    
    
    
    $
    1,359
    
    
    $
    
    
    
    $
    1,359Municipal securities
    
    
    
    
    
    
    655
    
    
    
    
    
    
    
    655Mortgage backed securities
    
    
    
    
    
    
    879
    
    
    
    
    
    
    
    879Corporate bonds
    
    
    
    
    
    
    258
    
    
    
    
    
    
    
    258Securities available for sale
    
    $
    
    
    
    $
    3,151
    
    
    $
    
    
    
    $
    3,151December 31, 2010U.S. government agency
    
    $
    
    
    
    $
    1,361
    
    
    $
    
    
    
    $
    1,361Municipal securities
    
    
    
    
    
    
    657
    
    
    
    
    
    
    
    657Mortgage backed securities
    
    
    
    
    
    
    928
    
    
    
    
    
    
    
    928Corporate bonds
    
    
    
    
    
    
    254
    
    
    
    
    
    
    
    254Securities available for sale
    
    $
    
    
    
    $
    3,200
    
    
    $
    
    
    
    $
    3,200
 17




---



##### Table of Contents



Note 7  Fair Value Accounting  continued
 Following is a description of the inputs and valuation methodologies used for instruments
measured at fair value on a non-recurring basis and recognized in the accompanying consolidated
balance sheets, as well as general classification of those instruments under the valuation
hierarchy.
 Impaired Loans
 Loans for which it is probable the Corporation will not collect all principal and interest due
according to the contractual terms are measured for impairment. The fair value of impaired loans
is estimated using one of three methods; market value, collateral value, or discounted cash flow.
Those impaired loans not requiring an allowance represent loans for which the fair value of
collateral exceeds the recorded investment. When the fair value of the collateral is based on an
observable market price or current appraised value, the impaired loan is classified within Level
2. When a market value is not available or management applies a discount factor to the appraised
value, the Corporation records the impaired loan in Level 3.
 The following table presents the fair value measurements of assets recognized in the accompanying
consolidated balance sheets measured at fair value on a non-recurring basis and the level within
the valuation hierarchy in which the fair value measurements fall at March 31, 2010 (000s
omitted):
 March 31, 2011
    
    
    Balance
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    LossesImpaired Loans
    
    $
    1,587
    
    
    $
    
    
    
    $
    
    
    
    $
    1,587
    
    
    $
    200
 18




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##### Table of Contents



Note 8  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
four classifications, well capitalized, adequately capitalized, undercapitalized and critically
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 was well-capitalized as of March 31, 2011. At
March 31, 2011, the Corporation qualifies for an exemption from regulatory capital requirements
due to its asset size.
 The Banks actual capital amounts and ratios as of March 31, 2011 and December 31, 2010 are
presented in the following table (000s omitted):
 For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of March 31, 2011Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,818
    
    
    
    11.3
    %
    
    $
    7,638
    
    
    
    8.0
    %
    
    $
    9,548
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,621
    
    
    
    10.1
    %
    
    $
    3,819
    
    
    
    4.0
    %
    
    $
    5,729
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    9,621
    
    
    
    8.3
    %
    
    $
    4,618
    
    
    
    4.0
    %
    
    $
    5,772
    
    
    
    5.0
    %As of December 31, 2010Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,344
    
    
    
    10.6
    %
    
    $
    7,834
    
    
    
    8.0
    %
    
    $
    9,792
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,117
    
    
    
    9.3
    %
    
    $
    3,917
    
    
    
    4.0
    %
    
    $
    5,875
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    9,117
    
    
    
    8.1
    %
    
    $
    4,477
    
    
    
    4.0
    %
    
    $
    5,597
    
    
    
    5.0
    %
 19




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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
   20




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
  OPERATIONS
   FINANCIAL CONDITION
   Cash and Cash Equivalents
  21




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##### Table of Contents



Investments
   March 31,
    
    
    December 31,2011
    
    
    2010
    
    
    ChangeU.S. Government agency securities
    
    $
    1,359
    
    
    
    41.1
    %
    
    $
    1,361
    
    
    
    40.4
    %
    
    $
    (2
    )Municipal securities
    
    
    655
    
    
    
    19.8
    %
    
    
    657
    
    
    
    19.6
    %
    
    
    (2
    )Mortgage backed securities
    
    
    879
    
    
    
    26.5
    %
    
    
    928
    
    
    
    27.6
    %
    
    
    (49
    )Corporate bonds
    
    
    258
    
    
    
    7.8
    %
    
    
    254
    
    
    
    7.6
    %
    
    
    4Sub-total available for sale
    
    
    3,151
    
    
    
    95.2
    %
    
    
    3,200
    
    
    
    95.2
    %
    
    
    (49
    )FHLBI Stock
    
    
    160
    
    
    
    4.8
    %
    
    
    160
    
    
    
    4.8
    %
    
    
    Total securities
    
    $
    3,311
    
    
    
    100.0
    %
    
    $
    3,360
    
    
    
    100.0
    %
    
    $
    (49
    )
 Loans, Credit Quality and Allowance for Loan Losses
  March 31,
    
    
    December 31,2011
    
    
    2010
    
    
    ChangeReal estate mortgage
    
    $
    75,161
    
    
    $
    76,676
    
    
    $
    (1,515
    )Construction
    
    
    3,058
    
    
    
    2,024
    
    
    
    1,034Commercial and industrial
    
    
    19,258
    
    
    
    20,776
    
    
    
    (1,518
    )Consumer installment
    
    
    811
    
    
    
    964
    
    
    
    (153
    )Deferred loan fees and costs
    
    
    (83
    )
    
    
    (61
    )
    
    
    (22
    )Total loans
    
    $
    98,205
    
    
    $
    100,379
    
    
    $
    (2,174
    )
    22




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##### Table of Contents



Premises and Equipment
  Deposits and Short-term Financing
  As of March 31, 2011
    
    
    As of December 31, 2010Balance
    
    
    Percentage
    
    
    Balance
    
    
    PercentageNon-interest bearing demand
    
    $
    12,478
    
    
    
    11.93
    %
    
    $
    14,190
    
    
    
    14.59
    %NOW accounts
    
    
    8,860
    
    
    
    8.47
    %
    
    
    7,897
    
    
    
    8.12
    %Money market
    
    
    8,778
    
    
    
    8.40
    %
    
    
    8,179
    
    
    
    8.41
    %Savings
    
    
    18,932
    
    
    
    18.10
    %
    
    
    16,521
    
    
    
    16.99
    %Time deposits < $100,000
    
    
    11,957
    
    
    
    11.43
    %
    
    
    12,153
    
    
    
    12.50
    %Time deposits >$100,000
    
    
    43,583
    
    
    
    41.67
    %
    
    
    38,310
    
    
    
    39.39
    %Total deposits
    
    $
    104,588
    
    
    
    100.00
    %
    
    $
    97,250
    
    
    
    100.00
    %
  23




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##### Table of Contents



RESULTS OF OPERATIONS
   Quarter EndedMarch 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2011
    
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010Income StatementInterest Income
    
    $
    1,588
    
    
    $
    1,554
    
    
    $
    1,506
    
    
    $
    1,418
    
    
    $
    1,273Interest Expense
    
    
    329
    
    
    
    327
    
    
    
    337
    
    
    
    352
    
    
    
    324Net Interest Income
    
    
    1,259
    
    
    
    1,226
    
    
    
    1,170
    
    
    
    1,067
    
    
    
    949Provision for loan loss
    
    
    39
    
    
    
    49
    
    
    
    256
    
    
    
    177
    
    
    
    112Non-interest income
    
    
    325
    
    
    
    37
    
    
    
    24
    
    
    
    37
    
    
    
    27Non-interest expense
    
    
    1,083
    
    
    
    1,046
    
    
    
    840
    
    
    
    792
    
    
    
    834Income (loss) before Income Taxes
    
    
    462
    
    
    
    169
    
    
    
    98
    
    
    
    135
    
    
    
    29Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (Loss)
    
    
    462
    
    
    
    169
    
    
    
    98
    
    
    
    135
    
    
    
    29Dividend and accretion
on preferred stock
    
    
    48
    
    
    
    48
    
    
    
    48
    
    
    
    49
    
    
    
    47Net Income (Loss) applicable to common
    
    $
    414
    
    
    $
    121
    
    
    $
    50
    
    
    $
    85
    
    
    $
    (18
    )Income (loss) per share  basic & diluted
    
    $
    0.23
    
    
    $
    0.07
    
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    (0.01
    )Performance MeasurementsNet interest margin (tax equivalent)
    
    
    4.49
    %
    
    
    4.69
    %
    
    
    4.41
    %
    
    
    4.13
    %
    
    
    4.06
    %Return on average assets (annualized) (1)
    
    
    1.62
    %
    
    
    0.60
    %
    
    
    0.35
    %
    
    
    0.50
    %
    
    
    0.12
    %Return on average common equity (annualized)
(1)
    
    
    24.26
    %
    
    
    8.89
    %
    
    
    5.21
    %
    
    
    7.32
    %
    
    
    1.62
    %Efficiency ratio
    
    
    68.36
    %
    
    
    82.78
    %
    
    
    70.39
    %
    
    
    71.78
    %
    
    
    85.48
    %Tier 1 Leverage Ratio (Bank only)
    
    
    8.33
    %
    
    
    8.15
    %
    
    
    8.20
    %
    
    
    8.50
    %
    
    
    8.80
    %Equity / Assets
    
    
    9.79
    %
    
    
    9.96
    %
    
    
    9.80
    %
    
    
    10.80
    %
    
    
    10.85
    %Total loans / Total deposits
    
    
    93.9
    %
    
    
    103.2
    %
    
    
    94.3
    %
    
    
    90.7
    %
    
    
    98.2
    %Book value per share
    
    $
    4.44
    
    
    $
    4.21
    
    
    $
    4.16
    
    
    $
    4.12
    
    
    $
    4.07Income (loss) per share  basic & diluted
    
    $
    0.23
    
    
    $
    0.07
    
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    (0.01
    )Shares outstanding
    
    
    1,800,000
    
    
    
    1,800,000
    
    
    
    1,800,000
    
    
    
    1,800,000
    
    
    
    1,800,000
 
 (1)
    
    Amount is computed on net income before preferred dividends. 24




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##### Table of Contents



Net Interest Income
    Three Months Ended March 31,2011
    
    
    2010Average
    
    
    
    
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/RateInterest-earning assets:Loans receivable
    
    $
    100,976
    
    
    $
    1,555,809
    
    
    
    6.17
    %
    
    $
    80,923
    
    
    $
    1,232,139
    
    
    
    6.09
    %Securities available for sale
    
    
    3,389
    
    
    
    27,911
    
    
    
    3.41
    %
    
    
    3,837
    
    
    
    34,699
    
    
    
    3.62
    %Federal funds sold
    
    
    40
    
    
    
    13
    
    
    
    0.13
    %
    
    
    2,825
    
    
    
    729
    
    
    
    0.10
    %Interest-bearing balances
with other financial
institutions
    
    
    9,529
    
    
    
    4,618
    
    
    
    0.20
    %
    
    
    7,004
    
    
    
    5,605
    
    
    
    0.32
    %Total interest-earning assets
    
    
    113,934
    
    
    
    1,588,351
    
    
    
    5.59
    %
    
    
    94,589
    
    
    
    1,273,172
    
    
    
    5.38
    %Noninterest-earning assets:Cash and due from banks
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    1,598All other assets
    
    
    858
    
    
    
    
    
    
    
    
    
    
    
    1,333Total Assets
    
    $
    115,435
    
    
    
    
    
    
    
    
    
    
    $
    97,520Interest-bearing liabilities:NOW accounts
    
    $
    8,274
    
    
    $
    6,411
    
    
    
    0.31
    %
    
    $
    7,912
    
    
    $
    10,572
    
    
    
    0.53
    %Money market
    
    
    8,231
    
    
    
    11,262
    
    
    
    0.55
    %
    
    
    8,137
    
    
    
    13,343
    
    
    
    0.66
    %Savings
    
    
    17,670
    
    
    
    31,425
    
    
    
    0.72
    %
    
    
    13,498
    
    
    
    40,606
    
    
    
    1.20
    %Time deposits
    
    
    54,191
    
    
    
    264,957
    
    
    
    1.96
    %
    
    
    47,248
    
    
    
    259,725
    
    
    
    2.20
    %Short-term borrowing
    
    
    1,394
    
    
    
    14,509
    
    
    
    4.22
    %
    
    
    
    
    
    
    
    
    
    
    
    %Total interest-bearing liabilities:
    
    $
    89,760
    
    
    $
    328,564
    
    
    
    1.48
    %
    
    $
    76,795
    
    
    
    324,246
    
    
    
    1.69
    %Non-interest bearing demand deposits
    
    
    13,844
    
    
    
    
    
    
    
    
    
    
    
    9,554All other liabilities
    
    
    691
    
    
    
    
    
    
    
    
    
    
    
    448Total liabilities
    
    
    104,295
    
    
    
    
    
    
    
    
    
    
    
    86,734Shareholders Equity
    
    
    11,140
    
    
    
    
    
    
    
    
    
    
    
    10,723Total liabilities and shareholders equity
    
    $
    115,435
    
    
    
    
    
    
    
    
    
    
    $
    97,520Net Interest Income
    
    
    
    
    
    $
    1,259,787
    
    
    
    
    
    
    
    
    
    
    $
    948,926Net spread
    
    
    
    
    
    
    
    
    
    
    4.11
    %
    
    
    
    
    
    
    
    
    
    
    3.70
    %Net Interest Margin(1)
    
    
    
    
    
    
    
    
    
    
    4.49
    %
    
    
    
    
    
    
    
    
    
    
    4.06
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets. 25




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##### Table of Contents



Provision for Loans Losses
  Non-Interest Income
  March 31,
    
    
    March 31,Non-interest income
    
    
    2011
    
    
    2010
    
    
    ChangeService charge income
    
    $
    11,572
    
    
    $
    9,635
    
    
    $
    1,937Mortgage banking activities
    
    
    11,439
    
    
    
    
    
    
    
    11,439Other income
    
    
    302,098
    
    
    
    17,388
    
    
    
    284,710Total non-interest income
    
    $
    325,109
    
    
    $
    27,023
    
    
    $
    298,086
 Non-Interest Expense
  March 31,
    
    
    March 31,Non-interest expense
    
    
    2011
    
    
    2010
    
    
    ChangeSalaries and employee benefits
    
    $
    582,017
    
    
    $
    400,624
    
    
    $
    181,393Occupancy expense
    
    
    118,102
    
    
    
    118,634
    
    
    
    (532
    )Equipment expense
    
    
    35,400
    
    
    
    35,577
    
    
    
    (177
    )Advertising
    
    
    36,046
    
    
    
    5,280
    
    
    
    30,766Data processing
    
    
    49,013
    
    
    
    55,550
    
    
    
    (6,537
    )Professional fees
    
    
    111,524
    
    
    
    68,211
    
    
    
    43,313Other expense
    
    
    151,314
    
    
    
    150,328
    
    
    
    986Total non-interest expense
    
    $
    1,083,416
    
    
    $
    834,204
    
    
    $
    249,212
 Income Taxes
  26




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES; ASSET/LIABILITY MANAGEMENT
   Amount of commitment expiration by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsCommitments to grant loans
    
    $
    7,789
    
    
    $
    7,789
    
    
    $
    
    
    
    $
    
    
    
    $
    Unfunded commitments under lines of
credit
    
    
    14,587
    
    
    
    10,191
    
    
    
    846
    
    
    
    1,107
    
    
    
    2,443Commercial and standby letters of credit
    
    
    803
    
    
    
    803
    
    
    
    
    
    
    
    
    
    
    
    Total commitments
    
    $
    23,179
    
    
    $
    18,783
    
    
    $
    846
    
    
    $
    1,107
    
    
    $
    2,443
     27




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4.
    
    CONTROLS AND PROCEDURES
     28




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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.
  29




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##### Table of Contents



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.
 30




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##### Table of Contents



SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date: May 13, 2011
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate: May 13, 2011
    By:
    /s/ Thomas H. DorrThomas H. DorrChief Financial Officer 31




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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
 32