##### 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, 2008
 Commission File Number 000-52584
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-1132959(State or other jurisdiction
ofincorporation or organization)
    
    (I.R.S. EmployerIdentification No.)
 33583 Woodward Avenue, Birmingham, MI 48009
 (248) 723-7200
  þ o
  Large accelerated filer oAccelerated filer oNon-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
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    15ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    25ITEM 4T. CONTROLS AND PROCEDURES
    
    
    26PART II. OTHER INFORMATION
    
    
    27ITEM 1. LEGAL PROCEEDINGS
    
    
    27ITEM 1A. RISK FACTORS
    
    
    27ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    27ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    27ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    27ITEM 5. OTHER INFORMATION
    
    
    27ITEM 6. EXHIBITS
    
    
    28EX-31.1EX-31.2EX-32
  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 31,2008
    
    
    2007(unaudited)AssetsCash and cash equivalentsCash
    
    $
    1,219,245
    
    
    $
    1,265,119Federal funds sold
    
    
    12,414,065
    
    
    
    3,874,007Total cash and cash equivalents
    
    
    13,633,310
    
    
    
    5,139,126Securities, available for sale (Note 3)
    
    
    1,766,686
    
    
    
    2,595,930Loans (Note 4)Total loans
    
    
    49,388,881
    
    
    
    37,106,976Less: allowance for loan losses
    
    
    (789,000
    )
    
    
    (560,000
    )Net loans
    
    
    48,599,881
    
    
    
    36,546,976Premises & equipment (Note 6)
    
    
    2,367,635
    
    
    
    2,519,701Interest receivable and other assets
    
    
    475,313
    
    
    
    458,157Total assets
    
    $
    66,842,825
    
    
    $
    47,259,890Liabilities and Shareholders EquityDeposits (Note 5)Non-interest bearing
    
    $
    6,547,469
    
    
    $
    5,385,200Interest bearing
    
    
    50,221,020
    
    
    
    30,877,148Total deposits
    
    
    56,768,489
    
    
    
    36,262,348Interest payable and other liabilities
    
    
    370,570
    
    
    
    237,903Total liabilities
    
    
    57,139,059
    
    
    
    36,500,251Shareholders equityCommon
stock, no par value Authorized  4,500,000 sharesIssued and outstanding  1,800,000 shares
    
    
    17,034,330
    
    
    
    17,034,330Additional paid in capital  share based payments
    
    
    483,000
    
    
    
    462,000Accumulated deficit
    
    
    (7,822,459
    )
    
    
    (6,799,150
    )Accumulated other comprehensive income
    
    
    8,895
    
    
    
    62,459Total shareholders equity
    
    
    9,703,766
    
    
    
    10,759,639Total liabilities and shareholders equity
    
    $
    66,842,825
    
    
    $
    47,259,890
  3




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans, including fees
    
    $
    728,511
    
    
    $
    344,503
    
    
    $
    1,378,652
    
    
    $
    597,906Taxable securities
    
    
    26,490
    
    
    
    8,898
    
    
    
    55,635
    
    
    
    8,898Federal funds sold
    
    
    41,830
    
    
    
    211,338
    
    
    
    90,130
    
    
    
    373,312Total interest income
    
    
    796,831
    
    
    
    564,739
    
    
    
    1,524,417
    
    
    
    980,116Interest expenseDeposits
    
    
    339,686
    
    
    
    274,464
    
    
    
    653,428
    
    
    
    444,107Total interest expense
    
    
    339,686
    
    
    
    274,464
    
    
    
    653,428
    
    
    
    444,107Net interest income
    
    
    457,145
    
    
    
    290,275
    
    
    
    870,989
    
    
    
    536,009Provision for loan losses
    
    
    94,665
    
    
    
    85,000
    
    
    
    144,665
    
    
    
    120,000Net interest income after
provision for loan losses
    
    
    362,480
    
    
    
    205,275
    
    
    
    726,324
    
    
    
    416,009Non-interest incomeLoan fees and charges
    
    
    1,102
    
    
    
    20,202
    
    
    
    11,829
    
    
    
    46,113Deposit fees and charges
    
    
    19,991
    
    
    
    10,418
    
    
    
    37,815
    
    
    
    21,158Other income (loss)
    
    
    2,483
    
    
    
    (2,146
    )
    
    
    11,917
    
    
    
    (947
    )Total non-interest income
    
    
    23,576
    
    
    
    28,474
    
    
    
    61,561
    
    
    
    66,324Non-interest expenseSalaries and benefits
    
    
    312,540
    
    
    
    461,070
    
    
    
    861,604
    
    
    
    895,762Occupancy & equipment expense
    
    
    199,284
    
    
    
    249,800
    
    
    
    418,244
    
    
    
    457,553FAS 123R share based payments
    
    
    10,500
    
    
    
    
    
    
    
    21,000
    
    
    
    Data processing expense
    
    
    43,368
    
    
    
    37,122
    
    
    
    87,095
    
    
    
    93,150Advertising and public relations
    
    
    36,395
    
    
    
    61,178
    
    
    
    59,611
    
    
    
    130,098Professional fees
    
    
    72,512
    
    
    
    64,510
    
    
    
    159,782
    
    
    
    125,411Printing and office supplies
    
    
    7,590
    
    
    
    11,320
    
    
    
    14,126
    
    
    
    23,204Other expense
    
    
    102,465
    
    
    
    94,167
    
    
    
    189,732
    
    
    
    153,918Total non-interest expense
    
    
    784,654
    
    
    
    979,167
    
    
    
    1,811,194
    
    
    
    1,879,096Net loss before taxes
    
    
    (398,598
    )
    
    
    (745,418
    )
    
    
    (1,023,309
    )
    
    
    (1,396,763
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (398,598
    )
    
    $
    (745,418
    )
    
    $
    (1,023,309
    )
    
    $
    (1,396,763
    )Basic loss per share
    
    $
    (0.22
    )
    
    $
    (0.41
    )
    
    $
    (0.57
    )
    
    $
    (0.78
    )Diluted loss per share
    
    $
    (0.22
    )
    
    $
    (0.41
    )
    
    $
    (0.57
    )
    
    $
    (0.78
    )
  4




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
January 1, 2008 to June 30, 2008
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid in
    
    
    Accumulated
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at January 1, 2008
    
    $
    17,034,330
    
    
    $
    462,000
    
    
    $
    (6,799,150
    )
    
    $
    62,459
    
    
    $
    10,759,639Share based payments
    
    
    
    
    
    
    21,000
    
    
    
    
    
    
    
    
    
    
    
    21,000Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (1,023,309
    )
    
    
    
    
    
    
    (1,023,309
    )Unrealized loss on
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,564
    )
    
    
    (53,564
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,076,873
    )Balance at June 30, 2008
    
    $
    17,034,330
    
    
    $
    483,000
    
    
    $
    (7,822,459
    )
    
    $
    8,895
    
    
    $
    9,703,766
  5




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Six Months Ended June 30,2008
    
    
    2007Cash flows from operating activitiesNet loss
    
    $
    (1,023,309
    )
    
    $
    (1,396,763
    )Share based payments expense
    
    
    21,000
    
    
    
    Provision for loan losses
    
    
    144,665
    
    
    
    120,000Accretion of securities
    
    
    (7,305
    )
    
    
    (1,189
    )Gain on calls of securities
    
    
    (6,474
    )
    
    
    Depreciation expense
    
    
    156,000
    
    
    
    187,200Loss on disposal of equipment
    
    
    
    
    
    
    35,479Net increase in other assets
    
    
    (17,156
    )
    
    
    (86,004
    )Net increase in other liabilities
    
    
    132,667
    
    
    
    578,502Net cash used in operating activities
    
    
    (599,912
    )
    
    
    (562,775
    )Cash flows from investing activitiesIncrease in loans
    
    
    (12,197,570
    )
    
    
    (8,096,909
    )Purchase of securities
    
    
    
    
    
    
    (2,408,397
    )Proceeds from sales, calls or maturities
of securities
    
    
    789,459
    
    
    
    12,923Purchases of premises and equipment
    
    
    (3,934
    )
    
    
    (736,626
    )Proceeds from reimbursement of leasehold
improvements
    
    
    
    
    
    
    144,500Net cash used in investing activities
    
    
    (11,412,045
    )
    
    
    (11,084,509
    )Cash flows from financing activities
Increase in deposits
    
    
    20,506,141
    
    
    
    20,251,552Net cash provided by financing activities
    
    
    20,506,141
    
    
    
    20,251,552Increase in cash and cash equivalents
    
    
    8,494,184
    
    
    
    8,604,268Cash and cash equivalents at the beginning of the period
    
    
    5,139,126
    
    
    
    8,551,001Cash and cash equivalents at the end of the period
    
    $
    13,633,310
    
    
    $
    17,155,269Supplemental cash flow information:Cash paid for interest:
    
    $
    542,564
    
    
    $
    422,267
  6




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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
 Establishing Standards on Measuring Fair Value
  The Fair Value Option for Financial Assets and Financial Liabilities
  Non-controlling Interest in Consolidated Financial Statements  an amendment to ARB No. 51
 Non-controlling Interest in Consolidated Financial
Statements  an amendment to ARB No. 51.
 7




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies  continued
  Staff Accounting Bulletin 109
 Accounting for Servicing of Financial Assets The Fair Value
Option of Financial Assets and Financial Liabilities
 Staff Accounting Bulletin 110
 Share-Based Payment
 Disclosures about Derivative Instruments and Hedging Activities  an amendment of SFAS 133
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of SFAS 133.
 8




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




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting  continued
   Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable Inputs
    
    
    Balance at JuneLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    30, 2008Securities available for sale
    
    $
    1,767
    
    
    $
    
    
    
    $
    
    
    
    $
    1,767
  Quoted Prices in
    
    
    
    
    
    
    
    
    
    
    Total Losses forActive Markets for
    
    
    Significant Other
    
    
    Significant
    
    
    the Three and SixBalance at June
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable Inputs
    
    
    Months Ended June30, 2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    30, 2008Impaired loan
accounted
for under FAS 114
    
    $
    173
    
    
    $
    
    
    
    $
    
    
    
    $
    173
    
    
    $
    173
 Impaired Loans
  Note 3  Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairJune 30, 2008 (unaudited)
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueSecurities available for sale:Mortgage backed securities
    
    $
    1,758
    
    
    $
    9
    
    
    $
    
    
    
    $
    1,767Total securities available for sale
    
    $
    1,758
    
    
    $
    9
    
    
    $
    
    
    
    $
    1,767
 10




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairDecember 31, 2007
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueSecurities available for sale:U.S. Government agency securities
    
    $
    678
    
    
    $
    7
    
    
    $
    
    
    
    $
    685Mortgage backed securities
    
    
    1,855
    
    
    
    56
    
    
    
    
    
    
    
    1,911Total securities available for sale
    
    $
    2,533
    
    
    $
    63
    
    
    $
    
    
    
    $
    2,596
   EstimatedAmortized
    
    
    faircost
    
    
    valueMortgage backed securities,
due after 10 years
    
    $
    1,758
    
    
    $
    1,767
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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Loans
  June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    2,006
    
    
    $
    1,816Multifamily
    
    
    5,405
    
    
    
    1,864Commercial
    
    
    18,788
    
    
    
    13,601Construction
    
    
    3,215
    
    
    
    2,348Second mortgage
    
    
    751
    
    
    
    758Equity lines of credit
    
    
    11,495
    
    
    
    8,696Total mortgage loans on real estate
    
    
    41,660
    
    
    
    29,083Commercial loans
    
    
    7,550
    
    
    
    7,898Consumer installment loans
    
    
    247
    
    
    
    177Total loans
    
    
    49,457
    
    
    
    37,158Less:Allowance for loan losses
    
    
    789
    
    
    
    560Net deferred loan fees
    
    
    68
    
    
    
    51Net loans
    
    $
    48,600
    
    
    $
    36,547
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,(unaudited)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    610
    
    
    $
    230
    
    
    $
    560
    
    
    $
    195Charge-offs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Recoveries
    
    
    84
    
    
    
    
    
    
    
    84
    
    
    
    Provision for loan losses
    
    
    95
    
    
    
    85
    
    
    
    145
    
    
    
    120Balance at end of period
    
    $
    789
    
    
    $
    315
    
    
    $
    789
    
    
    $
    315
  12




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 5  Deposits
  June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)Non-interest bearing deposits
    
    $
    6,547
    
    
    $
    5,385NOW accounts
    
    
    7,872
    
    
    
    9,727Savings and money market accounts
    
    
    13,004
    
    
    
    11,620Certificates of deposit <$100,000
    
    
    13,112
    
    
    
    2,008Certificates of deposit >$100,000
    
    
    16,233
    
    
    
    7,522Total
    
    $
    56,768
    
    
    $
    36,262
  <$100,000
    
    
    >$100,000
    
    
    TotalWithin 12 months
    
    $
    12,878
    
    
    $
    16,233
    
    
    $
    29,111> 12 months
    
    
    234
    
    
    
    
    
    
    
    234Total
    
    $
    13,112
    
    
    $
    16,233
    
    
    $
    29,345
 Note 6  Leases and Commitments
   2008
    
    $
    1372009
    
    
    2802010
    
    
    2862011
    
    
    2912012
    
    
    298Thereafter
    
    
    3,670Total
    
    $
    4,962
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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Minimum Regulatory Capital Requirements
   For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of June 30, 2008Total
risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,771
    
    
    
    19.1
    %
    
    $
    4,094
    
    
    
    8.0
    %
    
    $
    5,117
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,120
    
    
    
    17.8
    %
    
    $
    2,047
    
    
    
    4.0
    %
    
    $
    3,070
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    9,120
    
    
    
    15.0
    %
    
    $
    2,438
    
    
    
    4.0
    %
    
    $
    3,048
    
    
    
    5.0
    %As of December 31, 2007Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,553
    
    
    
    26.8
    %
    
    $
    3,152
    
    
    
    8.0
    %
    
    $
    3,940
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    10,050
    
    
    
    25.5
    %
    
    $
    1,576
    
    
    
    4.0
    %
    
    $
    2,364
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    10,050
    
    
    
    20.3
    %
    
    $
    1,984
    
    
    
    4.0
    %
    
    $
    2,480
    
    
    
    5.0
    %
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Disclosure Regarding Forward Looking Statements
   15




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 OVERVIEW
      PLAN OF OPERATION
  16




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    FINANCIAL OVERVIEW
  FINANCIAL CONDITION
 Cash and Cash Equivalents
  Investments
  Loans
  17




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  Credit Quality
      Premises and Equipment
  18




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BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Deposits
  As of June 30,2008(000s omitted)
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    6,547
    
    
    
    11.5
    %NOW accounts
    
    
    7,872
    
    
    
    13.9Money market
    
    
    12,356
    
    
    
    21.8Savings
    
    
    648
    
    
    
    1.1Time deposits under $100,000
    
    
    13,112
    
    
    
    23.1Time deposits over $100,000
    
    
    16,233
    
    
    
    28.6Total deposits
    
    $
    56,768
    
    
    
    100.0
    %
 RESULTS OF OPERATIONS
 Net Interest Income
   19




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
  Three Months Ended June 30,2008
    
    
    2007Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Earned/
    
    
    Yield/
    
    
    Balance
    
    
    Earned/
    
    
    Yield/(000s)
    
    
    Paid
    
    
    Rate
    
    
    (000s)
    
    
    Paid
    
    
    RateInterest-earning assetsLoans
    
    $
    47,393
    
    
    $
    728,511
    
    
    
    6.15
    %
    
    $
    18,580
    
    
    $
    344,503
    
    
    
    7.42
    %Securities
    
    
    1,856
    
    
    
    26,490
    
    
    
    5.71
    %
    
    
    710
    
    
    
    8,898
    
    
    
    5.01
    %Federal funds sold
    
    
    8,447
    
    
    
    41,830
    
    
    
    1.98
    %
    
    
    15,691
    
    
    
    211,338
    
    
    
    5.39
    %Total interest-earning assets
    
    
    57,696
    
    
    
    796,831
    
    
    
    5.52
    %
    
    
    34,981
    
    
    
    564,739
    
    
    
    6.46
    %Cash and due from banks
    
    
    1,243
    
    
    
    
    
    
    
    
    
    
    
    1,054All other assets
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    2,762Total assets
    
    $
    60,958
    
    
    
    
    
    
    
    
    
    
    $
    38,797Interest-bearing liabilitiesNOW accounts
    
    $
    7,809
    
    
    
    31,733
    
    
    
    1.63
    %
    
    $
    6,420
    
    
    
    68,711
    
    
    
    4.28
    %Money market
    
    
    11,905
    
    
    
    55,563
    
    
    
    1.87
    %
    
    
    8,421
    
    
    
    104,848
    
    
    
    4.98
    %Savings
    
    
    386
    
    
    
    1,513
    
    
    
    1.57
    %
    
    
    159
    
    
    
    492
    
    
    
    1.24
    %Time deposits
    
    
    24,858
    
    
    
    250,877
    
    
    
    4.04
    %
    
    
    7,756
    
    
    
    100,413
    
    
    
    5.18
    %Total interest-bearing liabilities
    
    
    44,958
    
    
    
    339,686
    
    
    
    3.02
    %
    
    
    22,756
    
    
    
    274,464
    
    
    
    4.82
    %Demand deposits
    
    
    5,606
    
    
    
    
    
    
    
    
    
    
    
    2,341All other liabilities
    
    
    325
    
    
    
    
    
    
    
    
    
    
    
    164Total liabilities
    
    
    50,889
    
    
    
    
    
    
    
    
    
    
    
    25,261Shareholders equity
    
    
    10,069
    
    
    
    
    
    
    
    
    
    
    
    13,536Total liabilities and shareholders
equity
    
    $
    60,958
    
    
    
    
    
    
    
    
    
    
    $
    38,797Net interest income
    
    
    
    
    
    $
    457,145
    
    
    
    
    
    
    
    
    
    
    $
    290,275Interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    2.50
    %
    
    
    
    
    
    
    
    
    
    
    1.64
    %Net interest margin (2)
    
    
    
    
    
    
    
    
    
    
    3.17
    %
    
    
    
    
    
    
    
    
    
    
    3.32
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    1.28
    
    
    
    
    
    
    
    
    
    
    
    1.54
 
 (1)
    
    Interest rate spread is the difference between rates of interest-earning assets and rates
of interest paid on interest-bearing liabilities(2)
    
    Net interest margin is the net interest income 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
 Six Months Ended June 30,2008
    
    
    2007Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Earned/
    
    
    Yield/
    
    
    Balance
    
    
    Earned/
    
    
    Yield/(000s)
    
    
    Paid
    
    
    Rate
    
    
    (000s)
    
    
    Paid
    
    
    RateInterest-earning assetsLoans
    
    $
    43,599
    
    
    $
    1,378,652
    
    
    
    6.32
    %
    
    $
    16,357
    
    
    $
    597,906
    
    
    
    7.31
    %Securities
    
    
    1,971
    
    
    
    55,635
    
    
    
    5.65
    %
    
    
    357
    
    
    
    8,898
    
    
    
    4.98
    %Federal funds sold
    
    
    7,192
    
    
    
    90,130
    
    
    
    2.51
    %
    
    
    14,167
    
    
    
    373,312
    
    
    
    5.27
    %Total interest-earning assets
    
    
    52,762
    
    
    
    1,524,417
    
    
    
    5.78
    %
    
    
    30,881
    
    
    
    980,116
    
    
    
    6.35
    %Cash and due from banks
    
    
    1,251
    
    
    
    
    
    
    
    
    
    
    
    1,156All other assets
    
    
    2,096
    
    
    
    
    
    
    
    
    
    
    
    2,649Total assets
    
    $
    56,109
    
    
    
    
    
    
    
    
    
    
    $
    34,686Interest-bearing liabilitiesNOW accounts
    
    $
    8,360
    
    
    
    91,368
    
    
    
    2.19
    %
    
    $
    4,450
    
    
    
    91,425
    
    
    
    4.11
    %Money market
    
    
    11,772
    
    
    
    141,548
    
    
    
    2.40
    %
    
    
    7,076
    
    
    
    180,229
    
    
    
    5.09
    %Savings
    
    
    359
    
    
    
    2,831
    
    
    
    1.58
    %
    
    
    170
    
    
    
    1,162
    
    
    
    1.37
    %Time deposits
    
    
    19,394
    
    
    
    417,681
    
    
    
    4.31
    %
    
    
    6,627
    
    
    
    171,291
    
    
    
    5.17
    %Total interest-bearing liabilities
    
    
    39,885
    
    
    
    653,428
    
    
    
    3.28
    %
    
    
    18,323
    
    
    
    444,107
    
    
    
    4.85
    %Demand deposits
    
    
    5,644
    
    
    
    
    
    
    
    
    
    
    
    2,924All other liabilities
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    119Total liabilities
    
    
    45,794
    
    
    
    
    
    
    
    
    
    
    
    21,366Shareholders equity
    
    
    10,315
    
    
    
    
    
    
    
    
    
    
    
    13,320Total liabilities and shareholders
equity
    
    $
    56,109
    
    
    
    
    
    
    
    
    
    
    $
    34,686Net interest income
    
    
    
    
    
    $
    870,989
    
    
    
    
    
    
    
    
    
    
    $
    536,009Interest rate spread (1)
    
    
    
    
    
    
    
    
    
    
    2.50
    %
    
    
    
    
    
    
    
    
    
    
    1.50
    %Net interest margin (2)
    
    
    
    
    
    
    
    
    
    
    3.30
    %
    
    
    
    
    
    
    
    
    
    
    3.47
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    1.32
    
    
    
    
    
    
    
    
    
    
    
    1.69
 
 (1)
    
    Interest rate spread is the difference between rates of interest-earning assets and rates
of interest paid on interest-bearing liabilities(2)
    
    Net interest margin is the net interest income divided by average interest-earning assets.  21




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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
   22




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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
  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
     24




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Off-Balance Sheet Arrangements
  
 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     25




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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
     26




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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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   Class III directors with a term expiring in 2011:
    
    FOR
    
    WITHHELDJohn M. Erb
    
    
    1,105,651
    
    
    
    38,350Charles T. Pryde
    
    
    1,104,601
    
    
    
    39,400Donald Ruff
    
    
    1,105,651
    
    
    
    38,350Walter G. Schwartz
    
    
    1,104,851
    
    
    
    39,150
  
 ITEM 5. OTHER INFORMATION.
  27




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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 Acting Chief Financial Officer.32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 28




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##### Table of Contents



SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date:      August 13, 2008
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate:      August 13, 2008
    By:
    /s/ Robert E. FarrRobert E. FarrActing Chief Financial Officer 29




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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
    
    Certification pursuant to Rules 13a-14(b) or Rule 15d-14(b)
of the Securities Exchange Act and 18 U.S.C. §1350
 30