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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM
10-QSB
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 Commission File Number 333-128127
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
 
 Michigan
    
    20-1132959(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
   þ o
  o þ




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INDEX
 PART I  FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    12ITEM 3. CONTROLS AND PROCEDURES
    
    
    17PART II. OTHER INFORMATION
    
    
    17ITEM 1. LEGAL PROCEEDINGS
    
    
    17ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    17ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    18ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    18ITEM 5. OTHER INFORMATION
    
    
    18ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    
    19Section 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerCertifications Pursuant to Section 906
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PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 September 30,
    
    
    December 31,2006
    
    
    2005(unaudited)ASSETSCash and cash equivalentsCash
    
    $
    650,670
    
    
    $
    32,754Federal funds sold
    
    
    11,147,255
    
    
    
    Total cash and cash equivalents
    
    
    11,797,925
    
    
    
    32,754LoansTotal Loans
    
    
    1,951,426
    
    
    
    Less: allowance for loan losses
    
    
    (30,000
    )
    
    
    Net loans
    
    
    1,921,426
    
    
    
    Premises & equipment
    
    
    1,925,833
    
    
    
    140,108Deferred offering costs (note 1)
    
    
    0
    
    
    
    442,766Subscriptions
receivable (note 9)
    
    
    3,865,400
    
    
    
    Interest receivable and other assets
    
    
    79,784
    
    
    
    24,542Total Assets
    
    $
    19,590,368
    
    
    $
    640,170LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)DepositsNon-interest bearing
    
    $
    305,763
    
    
    
    Interest bearing
    
    
    4,871,999
    
    
    
    Total Deposits
    
    
    5,177,762
    
    
    
    Related party notes payable (note 2)
    
    
    
    
    
    $
    749,000Bank note payable (note 3)
    
    
    
    
    
    
    960,000Interest payable and other liabilities (note 4)
    
    
    19,689
    
    
    
    83,159Total Liabilities
    
    
    19,689
    
    
    
    1,792,159Shareholders equity (deficit)Common Stock, no par value
Authorized  4,500,000 shares
Issued and outstanding  1,800,000 shares at September 30, 2006,
100 shares at December 31, 2005
    
    
    17,075,159
    
    
    
    1,000Additional paid in capital  share based payments (note 5)
    
    
    420,000
    
    
    
    Accumulated deficit
    
    
    (3,102,242
    )
    
    
    (1,152,989
    )Total shareholders equity (deficit)
    
    
    14,392,917
    
    
    
    (1,151,989
    )Total liabilities and shareholders equity (deficit)
    
    $
    19,590,368
    
    
    $
    640,170
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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest IncomeLoans, including fees
    
    $
    14,969
    
    
    
    
    
    
    $
    14,969
    
    
    
    Securities
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    Federal funds sold
    
    
    97,421
    
    
    
    
    
    
    
    97,421
    
    
    
    Total interest income
    
    
    112,390
    
    
    
    
    
    
    
    112,390
    
    
    
    Interest expenseDeposits
    
    
    14,922
    
    
    
    0
    
    
    
    14,922
    
    
    
    0Borrowings
    
    
    24,594
    
    
    $
    8,040
    
    
    
    71,452
    
    
    $
    8,040Total interest expense
    
    
    39,516
    
    
    
    8,040
    
    
    
    86,374
    
    
    
    8,040Net Interest Income
    
    
    72,874
    
    
    
    (8,040
    )
    
    
    26,016
    
    
    
    (8,040
    )Provision for loan losses
    
    
    30,000
    
    
    
    
    
    
    
    30,000
    
    
    
    Net interest income after
provision for loan losses
    
    
    42,874
    
    
    
    (8,040
    )
    
    
    (3,984
    )
    
    
    (8,040
    )Non-interest incomeService charges and other fees
    
    
    699
    
    
    
    
    
    
    
    699
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    Total non-interest income
    
    
    699
    
    
    
    
    
    
    
    699
    
    
    
    Non-interest expenseSalaries and benefits
    
    
    532,629
    
    
    
    115,556
    
    
    
    937,250
    
    
    
    368,881Occupancy & equipment expense
    
    
    110,217
    
    
    
    45,535
    
    
    
    282,921
    
    
    
    114,778FAS 123R share based payments (note 5)
    
    
    420,000
    
    
    
    
    
    
    
    420,000
    
    
    
    Data processing expense
    
    
    8,882
    
    
    
    
    
    
    
    8,882
    
    
    
    Advertising and public relations
    
    
    25,089
    
    
    
    
    
    
    
    25,089
    
    
    
    Professional fees
    
    
    6,365
    
    
    
    26,508
    
    
    
    49,684
    
    
    
    208,972Printing and office supplies
    
    
    16,890
    
    
    
    676
    
    
    
    37,709
    
    
    
    3,156Other expense
    
    
    10,066
    
    
    
    10,931
    
    
    
    184,433
    
    
    
    32,013Total non-interest expense
    
    
    1,130,138
    
    
    
    199,206
    
    
    
    1,945,968
    
    
    
    727,800Income taxes (note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    ($1,086,565
    )
    
    
    ($207,246
    )
    
    
    ($1,949,253
    )
    
    
    ($735,840
    )Basic earnings/(loss) per share
    
    
    (1.08
    )
    
    
    (2,072.46
    )
    
    
    (5.76
    )
    
    
    (7,358.40
    )Diluted earnings/(loss) per share
    
    
    (1.08
    )
    
    
    (2,072.46
    )
    
    
    (5.76
    )
    
    
    (7,358.40
    )
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AdditionalPaid inCommon Stock
    
    
    Accumulated Deficit
    
    
    Capital
    
    
    TotalBalance at December 31, 2005
    
    
    1,000
    
    
    
    (1,152,989
    )
    
    
    
    
    
    
    (1,151,989
    )Issuance of 1,799,900 shares
common stock (net of offering
costs of $924,841)
    
    
    17,074,159
    
    
    
    
    
    
    
    
    
    
    
    17,074,159Share based payments
    
    
    
    
    
    
    
    
    
    
    420,000
    
    
    
    420,000Net loss
    
    
    
    
    
    
    (1,949,253
    )
    
    
    
    
    
    
    (1,949,253
    )Balance at September 30, 2006
    
    $
    17,075,159
    
    
    
    ($3,102,242
    )
    
    $
    420,000
    
    
    $
    14,392,917
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Nine Months EndedSeptember 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    
    ($1,949,253
    )
    
    
    ($735,839
    )Share based payments expense
    
    
    420,000
    
    
    
    Provision for Loan Losses
    
    
    30,000
    
    
    
    Net (increase) decrease in other assets
    
    
    387,524
    
    
    
    (162,309
    )Net increase (decrease) in other liabilities
    
    
    (63,470
    )
    
    
    84,580Net cash used in operating activities
    
    
    (1,175,199
    )
    
    
    (813,568
    )CASH FLOWS FROM INVESTING ACTIVITIESIncrease in loans
    
    
    (1,951,426
    )
    
    
    Purchases of equipment
    
    
    (1,785,725
    )
    
    
    (66,234
    )Net cash used in investing activities
    
    
    (3,737,151
    )
    
    
    (66,234
    )CASH FLOWS FROM FINANCING ACTIVITIESIncrease in deposits
    
    
    5,177,762
    
    
    
    Sale of Stock
    
    
    13,208,759
    
    
    
    Increase (decrease) in notes payable from
related parties
    
    
    (749,000
    )
    
    
    370,000Increase (decrease) in bank note payable
    
    
    (960,000
    )
    
    
    310,000Net cash provided by financing activities
    
    
    16,677,521
    
    
    
    680,000INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    11,765,171
    
    
    
    (199,802
    )CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF THE PERIOD
    
    
    32,754
    
    
    
    222,469CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD
    
    $
    11,797,925
    
    
    $
    22,667
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Note 1  Summary of Significant accounting principles
 Organization
 Basis of Presentation
 Organization and Preopening Costs
 Deferred Offering Costs
 Property and Equipment
 Income Taxes 
 Earnings per Share
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Note 2  Related Party Notes Payable
  Note 3  Notes Payable
  Note 4  Other Liabilities
  Note 5  Share Based Payments
    Dividend yield or expected dividends
    
    
    0.00
    %Risk free interest rate
    
    
    4.50
    %Expected life
    
    5 yrs.Expected volatility
    
    
    12.18
    %
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Note 6  Income Taxes
 Income Taxes
  Deferred tax assets:Net operating loss carryforward
    
    $
    912,000Less valuation allowance
    
    
    (912,000
    )Total net deferred tax asset
    
    $
    
  Period fromFebruaryThree Months
    
    
    26, 2004Ended
    
    
    (inception)September 30,
    
    
    To September2006
    
    
    30, 2006Loss before income taxes
    
    $
    666,565
    
    
    $
    2,682,242Income tax benefit at federal statutory rate of 34 percent
    
    
    226,632
    
    
    
    911,962Other
    
    
    (368
    )
    
    
    38Change in valuation allowance
    
    
    227,000
    
    
    
    912,000Total income tax expense
    
    $
    
    
    
    $
    
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Note 7  Leases and Commitments
   October 1, 2006 through December 31,2006
    
    $
    67,2142007
    
    
    269,0222008
    
    
    274,0372009
    
    
    279,8072010
    
    
    285,6952011 and after
    
    
    1,478,986Total
    
    $
    2,654,791
  Note 8  Stock Options and Stock Warrants
  Note 9  Subsequent event
  Note 10  Minimum regulatory capital requirements
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For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedRatio
    
    
    
    
    
    Ratio
    
    
    
    
    
    RatioAmount
    
    (Percent)
    
    Amount
    
    (Percent)
    
    Amount
    
    (Percent)As of September 30, 2006:Total risk-based capital
(to risk weighted assets)Bank of Birmingham
    
    
    10,498
    
    
    
    164.39
    
    
    
    511
    
    
    
    8.00
    
    
    
    639
    
    
    
    10.00Consolidated
    
    
    10,557
    
    
    
    163.78
    
    
    
    516
    
    
    
    8.00
    
    
    
    645
    
    
    
    10.00Tier I Capital
(to risk weighted assets)Bank of Birmingham
    
    
    10,468
    
    
    
    163.92
    
    
    
    255
    
    
    
    4.00
    
    
    
    383
    
    
    
    6.00Consolidated
    
    
    10,527
    
    
    
    163.31
    
    
    
    258
    
    
    
    4.00
    
    
    
    387
    
    
    
    6.00Tier I Capital
(to average assets)Bank of Birmingham
    
    
    10,468
    
    
    
    105.93
    
    
    
    395
    
    
    
    4.00
    
    
    
    494
    
    
    
    5.00Consolidated
    
    
    10,527
    
    
    
    105.88
    
    
    
    398
    
    
    
    4.00
    
    
    
    497
    
    
    
    5.00
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
   
    
    the Company and Bank must receive regulatory approvals before the Bank may open for
business;
    
    the Bank must satisfy certain conditions following regulatory approval before it may open
for business;
    
    any delay in beginning banking operations will result in additional losses;
    
    the Company has no operating history upon which to base an estimate of its future
financial performance;
    
    the Company expects to incur losses during its initial years of operations;
    
    failure of the Company or the Bank to implement its business strategies may adversely
affect its financial performance;
    
    departures of key personnel or directors may impair the Banks operations;
    
    the Bank will face intense competition from a variety of competitors;
    
    the Banks legal lending limits may impair its ability to attract borrowers;
    
    an economic downturn, especially one affecting the Banks primary service areas, may have
an adverse effect on the Companys financial performance;
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
    
    adverse economic conditions in the automobile manufacturing and related service
industries may impact the Companys banking business;
    
    monetary policy and other economic factors could adversely affect the Banks profitability;
    
    the common stock of the Company is not an insured deposit;
    
    your share ownership may be diluted in the future;
    
    the Bank could be negatively affected by changes in interest rates;
    
    the determination of the offering price in the initial public offering was arbitrary, and
shareholders may be unable to resell their shares at or above the offering price;
    
    the Company does not intend to pay dividends in the foreseeable future;
    
    the Company and Bank are subject to extensive regulatory oversight, which could restrain
growth and profitability;
    
    the Company may not be able to raise additional capital on terms favorable to it;
    
    subscribers will incur immediate and substantial dilution in the book value per share of
any shares that they purchase in the offering;
    
    the liquidity of the Companys common stock will be affected by its limited trading
market;
    
    the Companys articles of incorporation and bylaws, and the employment agreements of the
Companys executive officers, contain provisions that could make a takeover more difficult;
    
    management of the Bank may be unable to adequately measure and limit credit risk
associated with the loan portfolio, which would affect the Companys profitability; and,
    
    the Companys directors and executive officers could have the ability to influence
shareholder actions in a manner that may be adverse to a shareholders personal investment
objectives.
  OVERVIEW
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PLAN OF OPERATION
    14




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FINANCIAL RESULTS
    FUNDING OF OPERATIONS AND LIQUIDITY
   CAPITAL EXPENDITURES
  15




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LIQUIDITY AND INTEREST RATE SENSITIVITY
  th
     CAPITAL ADEQUACY
 16
    Table of Contents      
 ITEM 3. CONTROLS AND PROCEDURES
     
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  17




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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
  18




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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
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
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SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date: November 14, 2006
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate:  November 14, 2006
    By:
    /s/ Richard J. MillerRichard J. MillerChief Financial Officer 20




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EXHIBIT INDEX
 Exhibit Number
    
    Description of Exhibit31.1
    
    Certification pursuant to Rules 13a-15(e) and 15d-15(e) of
the Securities Exchange Act31.2
    
    Certification pursuant to Rules 13a-15(e) and 15d-15(e) 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
 21