##### 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 September 30, 2008
 Commission File Number 000-52584
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-1132959(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 33583 Woodward Avenue, Birmingham, MI 48009  (Address of principal executive offices, including zip code)
 (248) 723-7200
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



INDEX
 PART I   FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    15ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    26ITEM 4T. CONTROLS AND PROCEDURES
    
    
    27PART II. OTHER INFORMATION
    
    
    28ITEM 1. LEGAL PROCEEDINGS
    
    
    28ITEM 1A. RISK FACTORS
    
    
    28ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    28ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    28ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    28ITEM 5. OTHER INFORMATION
    
    
    28ITEM 6. EXHIBITS
    
    
    29EX-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
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)AssetsCash and cash equivalentsCash
    
    $
    1,418,051
    
    
    $
    1,265,119Federal funds sold
    
    
    1,000,538
    
    
    
    3,874,007Total cash and cash equivalents
    
    
    2,418,589
    
    
    
    5,139,126Securities, available for sale (Note 3)
    
    
    4,318,260
    
    
    
    2,595,930Loans (Note 4)Total loans
    
    
    55,869,077
    
    
    
    37,106,976Less: allowance for loan losses
    
    
    (700,000
    )
    
    
    (560,000
    )Net loans
    
    
    55,169,077
    
    
    
    36,546,976Premises & equipment (Note 6)
    
    
    2,310,977
    
    
    
    2,519,701Interest receivable and other assets
    
    
    365,691
    
    
    
    458,157Total assets
    
    $
    64,582,594
    
    
    $
    47,259,890Liabilities and Shareholders EquityDeposits (Note 5)Non-interest bearing
    
    $
    6,058,301
    
    
    $
    5,385,200Interest bearing
    
    
    48,741,296
    
    
    
    30,877,148Total deposits
    
    
    54,799,597
    
    
    
    36,262,348Interest payable and other liabilities
    
    
    291,444
    
    
    
    237,903Total liabilities
    
    
    55,091,041
    
    
    
    36,500,251Shareholders equityCommon stock, no par valueAuthorized  4,500,000 sharesIssued and outstanding  1,800,000 shares
    
    
    17,034,330
    
    
    
    17,034,330Additional paid in capital  share based payments
    
    
    462,000
    
    
    
    462,000Accumulated deficit
    
    
    (8,057,036
    )
    
    
    (6,799,150
    )Accumulated other comprehensive income
    
    
    52,259
    
    
    
    62,459Total shareholders equity
    
    
    9,491,553
    
    
    
    10,759,639Total liabilities and shareholders equity
    
    $
    64,582,594
    
    
    $
    47,259,890
  3




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans, including fees
    
    $
    817,556
    
    
    $
    470,794
    
    
    $
    2,196,208
    
    
    $
    1,068,700Taxable securities
    
    
    42,176
    
    
    
    60,895
    
    
    
    97,811
    
    
    
    69,793Federal funds sold
    
    
    23,711
    
    
    
    179,689
    
    
    
    113,841
    
    
    
    553,001Total interest income
    
    
    883,443
    
    
    
    711,378
    
    
    
    2,407,860
    
    
    
    1,691,494Interest expenseDeposits
    
    
    351,789
    
    
    
    330,104
    
    
    
    1,005,217
    
    
    
    774,211Total interest expense
    
    
    351,789
    
    
    
    330,104
    
    
    
    1,005,217
    
    
    
    774,211Net interest income
    
    
    531,654
    
    
    
    381,274
    
    
    
    1,402,643
    
    
    
    917,283Provision for loan losses
    
    
    109,146
    
    
    
    155,000
    
    
    
    253,811
    
    
    
    275,000Net interest income after
provision for loan losses
    
    
    422,508
    
    
    
    226,274
    
    
    
    1,148,832
    
    
    
    642,283Non-interest incomeLoan fees and charges
    
    
    3,198
    
    
    
    8,729
    
    
    
    15,027
    
    
    
    54,842Deposit fees and charges
    
    
    15,492
    
    
    
    12,771
    
    
    
    53,307
    
    
    
    33,929Other income
    
    
    16,224
    
    
    
    6,634
    
    
    
    28,141
    
    
    
    5,687Total non-interest income
    
    
    34,914
    
    
    
    28,134
    
    
    
    96,475
    
    
    
    94,458Non-interest expenseSalaries and benefits
    
    
    301,753
    
    
    
    450,171
    
    
    
    1,163,357
    
    
    
    1,345,933Occupancy & equipment expense
    
    
    198,158
    
    
    
    205,659
    
    
    
    616,402
    
    
    
    663,212FAS 123R share based payments
    
    
    (21,000
    )
    
    
    28,000

    
    
    
    
    
    
    
    28,000Data processing expense
    
    
    47,973
    
    
    
    40,822
    
    
    
    135,068
    
    
    
    133,972Advertising and public relations
    
    
    10,110
    
    
    
    34,293
    
    
    
    69,721
    
    
    
    164,391Professional fees
    
    
    65,955
    
    
    
    57,680
    
    
    
    225,737
    
    
    
    183,091Printing and office supplies
    
    
    5,384
    
    
    
    9,543
    
    
    
    19,510
    
    
    
    32,747Other expense
    
    
    83,666
    
    
    
    90,349
    
    
    
    273,398
    
    
    
    244,267Total non-interest expense
    
    
    691,999
    
    
    
    916,517
    
    
    
    2,503,193
    
    
    
    2,795,613Net loss before taxes
    
    
    (234,577
    )
    
    
    (662,109
    )
    
    
    (1,257,886
    )
    
    
    (2,058,872
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (234,577
    )
    
    $
    (662,109
    )
    
    $
    (1,257,886
    )
    
    $
    (2,058,872
    )Basic loss per share
    
    $
    (0.13
    )
    
    $
    (0.37
    )
    
    $
    (0.70
    )
    
    $
    (1.14
    )Diluted loss per share
    
    $
    (0.13
    )
    
    $
    (0.37
    )
    
    $
    (0.70
    )
    
    $
    (1.14
    )
  4




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
January 1, 2008 to September 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
    
    
    $
    10,759,639Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (1,257,886
    )
    
    
    
    
    
    
    (1,257,886
    )Change in unrealized gain
(loss) on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,200
    )
    
    
    (10,200
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,268,086
    )Balance at September 30, 2008
    
    $
    17,034,330
    
    
    $
    462,000
    
    
    $
    (8,057,036
    )
    
    $
    52,259
    
    
    $
    9,491,553
  5




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months Ended September 30,2008
    
    
    2007Cash flows from operating activitiesNet loss
    
    $
    (1,257,886
    )
    
    $
    (2,058,872
    )Share based payments expense
    
    
    
    
    
    
    28,000Provision for loan losses
    
    
    253,811
    
    
    
    275,000Accretion of securities
    
    
    (20,821
    )
    
    
    (12,067
    )Gain on calls of securities
    
    
    (19,270
    )
    
    
    Depreciation expense
    
    
    234,000
    
    
    
    284,700Loss on disposal of equipment
    
    
    
    
    
    
    36,216Net decrease (increase) in other assets
    
    
    92,466
    
    
    
    (191,739
    )Net increase in other liabilities
    
    
    53,541
    
    
    
    408,717Net cash used in operating activities
    
    
    (664,159
    )
    
    
    (1,230,045
    )Cash flows from investing activitiesIncrease in loans
    
    
    (18,875,912
    )
    
    
    (18,168,408
    )Purchase of securities
    
    
    (2,978,241
    )
    
    
    (6,042,501
    )Proceeds from sales, calls or maturities of
securities
    
    
    1,285,802
    
    
    
    165,347Purchases of premises and equipment
    
    
    (25,276
    )
    
    
    (743,862
    )Proceeds from reimbursement of leasehold
improvements
    
    
    
    
    
    
    144,500Net cash used in investing activities
    
    
    (20,593,627
    )
    
    
    (24,644,924
    )Cash flows from financing activitiesIncrease in deposits
    
    
    18,537,249
    
    
    
    27,487,428Net cash provided by financing activities
    
    
    18,537,249
    
    
    
    27,487,428(Decrease) increase in cash and cash equivalents
    
    
    (2,720,537
    )
    
    
    1,612,459Cash and cash equivalents at the
beginning of the period
    
    
    5,139,126
    
    
    
    8,551,001Cash and cash equivalents at the end of the period
    
    $
    2,418,589
    
    
    $
    10,163,460Supplemental cash flow information:Cash paid for interest:
    
    $
    882,655
    
    
    $
    733,550
  6




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Summary of Significant Accounting Policies
 Basis of Statement Presentation
    Principles of Consolidation
  Recent Accounting Developments
 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
  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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##### Table of Contents



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 in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance atAssets
    
    
    Inputs
    
    
    Inputs
    
    
    SeptemberLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    30, 2008Securities available for sale
    
    $
    4,318
    
    
    $
    
    
    
    $
    
    
    
    $
    4,318
 Note 3  Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairSeptember 30, 2008 (unaudited)
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueSecurities available for sale:U.S. Government agency securities
    
    $
    2,989
    
    
    $
    8
    
    
    $
    
    
    
    $
    2,997Mortgage backed securities
    
    
    1,277
    
    
    
    44
    
    
    
    
    
    
    
    1,321Total securities available for sale
    
    $
    4,266
    
    
    $
    52
    
    
    $
    
    
    
    $
    4,318
 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
  10




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Securities  continued
  EstimatedAmortized
    
    
    faircost
    
    
    valueDue in one year or less
    
    $
    1,991
    
    
    $
    1,991Due in one year through five years
    
    
    998
    
    
    
    1,006Due in five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Subtotal
    
    
    2,989
    
    
    
    2,997Mortgage backed securities,
due after 10 years
    
    
    1,277
    
    
    
    1,321Total
    
    $
    4,266
    
    
    $
    4,318
 Note 4  Loans
  September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)Mortgage loans on real estate:Residential 1 to 4 family
    
    $
    2,754
    
    
    $
    1,816Multifamily
    
    
    7,591
    
    
    
    1,864Commercial
    
    
    21,616
    
    
    
    13,601Construction
    
    
    3,939
    
    
    
    2,348Second mortgage
    
    
    745
    
    
    
    758Equity lines of credit
    
    
    10,607
    
    
    
    8,696Total mortgage loans on real
estate
    
    
    47,252
    
    
    
    29,083Commercial loans
    
    
    8,499
    
    
    
    7,898Consumer installment loans
    
    
    210
    
    
    
    177Total loans
    
    
    55,961
    
    
    
    37,158Less:Allowance for loan losses
    
    
    700
    
    
    
    560Net deferred loan fees
    
    
    92
    
    
    
    51Net loans
    
    $
    55,169
    
    
    $
    36,547
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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Loans  continued
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(unaudited)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    789
    
    
    $
    315
    
    
    $
    560
    
    
    $
    195Charge-offs
    
    
    (198
    )
    
    
    
    
    
    
    (198
    )
    
    
    Recoveries
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    Provision for loan losses
    
    
    109
    
    
    
    155
    
    
    
    254
    
    
    
    275Balance at end of period
    
    $
    700
    
    
    $
    470
    
    
    $
    700
    
    
    $
    470
  Note 5  Deposits
  September
    
    
    December 31,30, 2008
    
    
    2007(unaudited)Non-interest bearing deposits
    
    $
    6,058
    
    
    $
    5,385NOW accounts
    
    
    6,710
    
    
    
    9,727Savings and money market accounts
    
    
    13,319
    
    
    
    11,620Certificates of deposit <$100,000
    
    
    15,241
    
    
    
    2,008Certificates of deposit >$100,000
    
    
    13,471
    
    
    
    7,522Total
    
    $
    54,799
    
    
    $
    36,262
  <$100,000
    
    
    >$100,000
    
    
    TotalWithin 12 months
    
    $
    14,530
    
    
    $
    13,242
    
    
    $
    27,772> 12 months
    
    
    711
    
    
    
    229
    
    
    
    940Total
    
    $
    15,241
    
    
    $
    13,471
    
    
    $
    28,712
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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6  Leases and Commitments
   2008
    
    $
    692009
    
    
    2802010
    
    
    2862011
    
    
    2912012
    
    
    298Thereafter
    
    
    3,670Total
    
    $
    4,894
 Note 7  Minimum Regulatory Capital Requirements
  13




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BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Minimum Regulatory Capital Requirements  continued
  For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of September 30, 2008Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,557
    
    
    
    17.5
    %
    
    $
    4,359
    
    
    
    8.0
    %
    
    $
    5,449
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,866
    
    
    
    16.3
    %
    
    $
    2,180
    
    
    
    4.0
    %
    
    $
    3,269
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    8,866
    
    
    
    13.7
    %
    
    $
    2,599
    
    
    
    4.0
    %
    
    $
    3,249
    
    
    
    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
    %
 14




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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
  Credit Quality
  17




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




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Deposits
  As of September 30,2008(000s omitted)
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    6,058
    
    
    
    11.1
    %NOW accounts
    
    
    6,710
    
    
    
    12.2Money market
    
    
    12,190
    
    
    
    22.2Savings
    
    
    1,129
    
    
    
    2.1Time deposits under $100,000
    
    
    15,241
    
    
    
    27.8Time deposits over $100,000
    
    
    13,471
    
    
    
    24.6Total deposits
    
    $
    54,799
    
    
    
    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 September 30,2008
    
    
    2007Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Earned/
    
    
    Yield/
    
    
    Balance
    
    
    Earned/
    
    
    Yield/(000s)
    
    
    Paid
    
    
    Rate
    
    
    (000s)
    
    
    Paid
    
    
    RateInterest-earning assetsLoans
    
    $
    53,000
    
    
    $
    817,556
    
    
    
    6.17
    %
    
    $
    25,079
    
    
    $
    470,794
    
    
    
    7.51
    %Securities
    
    
    3,893
    
    
    
    42,176
    
    
    
    4.33
    %
    
    
    4,321
    
    
    
    60,895
    
    
    
    5.64
    %Federal funds sold
    
    
    4,791
    
    
    
    23,711
    
    
    
    1.98
    %
    
    
    13,983
    
    
    
    179,689
    
    
    
    5.14
    %Total interest-earning assets
    
    
    61,684
    
    
    
    883,443
    
    
    
    5.73
    %
    
    
    43,383
    
    
    
    711,378
    
    
    
    6.56
    %Cash and due from banks
    
    
    1,329
    
    
    
    
    
    
    
    
    
    
    
    1,888All other assets
    
    
    1,958
    
    
    
    
    
    
    
    
    
    
    
    2,517Total assets
    
    $
    64,971
    
    
    
    
    
    
    
    
    
    
    $
    47,788Interest-bearing liabilitiesNOW accounts
    
    $
    7,615
    
    
    
    32,950
    
    
    
    1.73
    %
    
    $
    8,354
    
    
    
    83,889
    
    
    
    4.02
    %Money market
    
    
    11,848
    
    
    
    60,999
    
    
    
    2.06
    %
    
    
    12,561
    
    
    
    132,420
    
    
    
    4.22
    %Savings
    
    
    781
    
    
    
    3,546
    
    
    
    1.82
    %
    
    
    288
    
    
    
    1,212
    
    
    
    1.68
    %Time deposits
    
    
    28,372
    
    
    
    254,294
    
    
    
    3.59
    %
    
    
    8,656
    
    
    
    112,583
    
    
    
    5.20
    %Total interest-bearing liabilities
    
    
    48,616
    
    
    
    351,789
    
    
    
    2.89
    %
    
    
    29,859
    
    
    
    330,104
    
    
    
    4.42
    %Demand deposits
    
    
    6,486
    
    
    
    
    
    
    
    
    
    
    
    5,306All other liabilities
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    250Total liabilities
    
    
    55,393
    
    
    
    
    
    
    
    
    
    
    
    35,415Shareholders equity
    
    
    9,578
    
    
    
    
    
    
    
    
    
    
    
    12,373Total liabilities and shareholders
equity
    
    $
    64,971
    
    
    
    
    
    
    
    
    
    
    $
    47,788Net interest income
    
    
    
    
    
    $
    531,654
    
    
    
    
    
    
    
    
    
    
    $
    381,274Interest rate spread(1)
    
    
    
    
    
    
    
    
    
    
    2.84
    %
    
    
    
    
    
    
    
    
    
    
    2.14
    %Net interest margin(2)
    
    
    
    
    
    
    
    
    
    
    3.45
    %
    
    
    
    
    
    
    
    
    
    
    3.52
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    1.27
    
    
    
    
    
    
    
    
    
    
    
    1.45
 
 (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
 Nine Months Ended September 30,2008
    
    
    2007Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestBalance
    
    
    Earned/
    
    
    Yield/
    
    
    Balance
    
    
    Earned/
    
    
    Yield/(000s)
    
    
    Paid
    
    
    Rate
    
    
    (000s)
    
    
    Paid
    
    
    RateInterest-earning assetsLoans
    
    $
    46,756
    
    
    $
    2,196,208
    
    
    
    6.26
    %
    
    $
    19,296
    
    
    $
    1,068,700
    
    
    
    7.38
    %Securities
    
    
    2,616
    
    
    
    97,811
    
    
    
    4.99
    %
    
    
    1,693
    
    
    
    69,793
    
    
    
    5.50
    %Federal funds sold
    
    
    6,386
    
    
    
    113,841
    
    
    
    2.38
    %
    
    
    14,105
    
    
    
    553,001
    
    
    
    5.23
    %Total interest-earning assets
    
    
    55,758
    
    
    
    2,407,860
    
    
    
    5.76
    %
    
    
    35,094
    
    
    
    1,691,494
    
    
    
    6.43
    %Cash and due from banks
    
    
    1,277
    
    
    
    
    
    
    
    
    
    
    
    1,403All other assets
    
    
    2,050
    
    
    
    
    
    
    
    
    
    
    
    2,605Total assets
    
    $
    59,085
    
    
    
    
    
    
    
    
    
    
    $
    39,102Interest-bearing liabilitiesNOW accounts
    
    $
    8,109
    
    
    
    124,318
    
    
    
    2.04
    %
    
    $
    5,764
    
    
    
    175,314
    
    
    
    4.06
    %Money market
    
    
    11,797
    
    
    
    202,547
    
    
    
    2.29
    %
    
    
    8,925
    
    
    
    312,649
    
    
    
    4.67
    %Savings
    
    
    501
    
    
    
    6,377
    
    
    
    1.70
    %
    
    
    210
    
    
    
    2,374
    
    
    
    1.51
    %Time deposits
    
    
    22,409
    
    
    
    671,975
    
    
    
    4.00
    %
    
    
    7,311
    
    
    
    283,874
    
    
    
    5.18
    %Total interest-bearing liabilities
    
    
    42,816
    
    
    
    1,005,217
    
    
    
    3.13
    %
    
    
    22,210
    
    
    
    774,211
    
    
    
    4.65
    %Demand deposits
    
    
    5,927
    
    
    
    
    
    
    
    
    
    
    
    3,731All other liabilities
    
    
    273
    
    
    
    
    
    
    
    
    
    
    
    163Total liabilities
    
    
    49,016
    
    
    
    
    
    
    
    
    
    
    
    26,104Shareholders equity
    
    
    10,069
    
    
    
    
    
    
    
    
    
    
    
    12,998Total liabilities and shareholders
equity
    
    $
    59,085
    
    
    
    
    
    
    
    
    
    
    $
    39,102Net interest income
    
    
    
    
    
    $
    1,402,643
    
    
    
    
    
    
    
    
    
    
    $
    917,283Interest rate spread(1)
    
    
    
    
    
    
    
    
    
    
    2.63
    %
    
    
    
    
    
    
    
    
    
    
    1.78
    %Net interest margin(2)
    
    
    
    
    
    
    
    
    
    
    3.35
    %
    
    
    
    
    
    
    
    
    
    
    3.49
    %Ratio of interest-earning assets
to interest-bearing liabilities
    
    
    1.30
    
    
    
    
    
    
    
    
    
    
    
    1.58
 
 (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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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
  Other Developments
 Participation in the Treasury Capital Purchase Program
  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 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     26




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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
     27




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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.
  
 ITEM 5. OTHER INFORMATION.
  28




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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 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.
 29




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##### Table of Contents



SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date:      November 13, 2008
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate:      November 13, 2008
    By:
    /s/ Robert E. FarrRobert E. FarrActing Chief Financial Officer 30




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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
 31