##### 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, 2010
 Commission File Number 000-52584
 
 BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
  Michigan
    
    20-1132959(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 33583 Woodward Avenue, Birmingham, MI 48009  (Address of principal executive offices, including zip code)
 (248) 723-7200
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a
smaller reporting company)
 o þ




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##### 



INDEX
 PART I -FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    15ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    24ITEM 4T. CONTROLS AND PROCEDURES
    
    
    25PART II. OTHER INFORMATION
    
    
    26ITEM 1. LEGAL PROCEEDINGS
    
    
    26ITEM 1A. RISK FACTORS
    
    
    26ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    26ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    26ITEM 4. [RESERVED]
    
    
    26ITEM 5. OTHER INFORMATION
    
    
    26ITEM 6. EXHIBITS
    
    
    27EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 (unaudited)September 30,
    
    
    December 31,2010
    
    
    2009AssetsCash and cash equivalentsCash
    
    $
    11,661,891
    
    
    $
    4,644,416Federal funds sold
    
    
    50,299
    
    
    
    3,113,785Total cash and cash equivalents
    
    
    11,712,190
    
    
    
    7,758,201Securities, available for sale (Note 3)
    
    
    3,963,672
    
    
    
    3,835,082Loans (Note 4)Total loans
    
    
    94,284,107
    
    
    
    79,655,896Less: allowance for loan losses
    
    
    (1,424,006
    )
    
    
    (1,173,865
    )Net loans
    
    
    92,860,101
    
    
    
    78,482,031Premises & equipment (Note 6)
    
    
    1,366,918
    
    
    
    1,488,689Interest receivable and other assets
    
    
    1,351,593
    
    
    
    1,072,770Total assets
    
    $
    111,254,474
    
    
    $
    92,636,773Liabilities and Shareholders EquityDeposits (Note 5)Non-interest bearing
    
    $
    12,708,760
    
    
    $
    8,494,903Interest bearing
    
    
    87,288,547
    
    
    
    72,970,583Total deposits
    
    
    99,997,307
    
    
    
    81,465,486Interest payable and other liabilities
    
    
    358,611
    
    
    
    443,354Total liabilities
    
    
    100,355,918
    
    
    
    81,908,840Shareholders equitySenior cumulative perpetual preferred stock series A
$1,000 liquidation value per share, 5%
Authorized, issued and outstanding  1,635 shares
    
    
    1,635,000
    
    
    
    1,635,000Discount on senior preferred stock series A
    
    
    (65,474
    )
    
    
    (79,427
    )Warrant cumulative perpetual preferred stock series B
$1,000 liquidation value per share, 9%
Authorized, issued and outstanding  82 shares
    
    
    82,000
    
    
    
    82,000Premium on warrant preferred stock series B
    
    
    7,117
    
    
    
    8,634Senior cumulative perpetual preferred stock series C
$1,000 liquidation value per share, 5%
Authorized, issued and outstanding  1,744 shares
    
    
    1,744,000
    
    
    
    1,744,000Common stock, no par value
Authorized  4,500,000 shares
Issued and outstanding  1,800,000 shares
    
    
    17,034,330
    
    
    
    17,034,330Additional paid in capital  share based payments
    
    
    493,154
    
    
    
    489,459Accumulated deficit
    
    
    (10,182,536
    )
    
    
    (10,299,436
    )Accumulated other comprehensive income
    
    
    150,965
    
    
    
    113,373Total shareholders equity
    
    
    10,898,556
    
    
    
    10,727,933Total liabilities and shareholders equity
    
    $
    111,254,474
    
    
    $
    92,636,773
  3




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest IncomeLoans, including fees
    
    $
    1,486,216
    
    
    $
    1,038,306
    
    
    $
    4,127,106
    
    
    $
    2,774,781Taxable securities
    
    
    35,215
    
    
    
    36,437
    
    
    
    101,270
    
    
    
    110,948Federal funds sold
    
    
    51
    
    
    
    1,019
    
    
    
    1,299
    
    
    
    2,934Correspondent bank
    
    
    9,967
    
    
    
    9,526
    
    
    
    21,283
    
    
    
    17,122Total interest income
    
    
    1,531,449
    
    
    
    1,085,288
    
    
    
    4,250,958
    
    
    
    2,905,785Interest expenseDeposits
    
    
    336,660
    
    
    
    337,221
    
    
    
    1,012,639
    
    
    
    1,005,080Total interest expense
    
    
    336,660
    
    
    
    337,221
    
    
    
    1,012,639
    
    
    
    1,005,080Net interest income
    
    
    1,194,789
    
    
    
    748,067
    
    
    
    3,238,319
    
    
    
    1,900,705Provision for loan losses
    
    
    255,652
    
    
    
    32,000
    
    
    
    544,949
    
    
    
    180,776Net interest income after provision for loan losses
    
    
    939,137
    
    
    
    716,067
    
    
    
    2,693,370
    
    
    
    1,719,929Non-interest incomeLoan fees and charges
    
    
    2,952
    
    
    
    4,337
    
    
    
    16,514
    
    
    
    10,008Deposit fees and charges
    
    
    22,895
    
    
    
    20,053
    
    
    
    64,061
    
    
    
    54,779Other income
    
    
    1,578
    
    
    
    2,916
    
    
    
    24,312
    
    
    
    12,733Total non-interest income
    
    
    27,425
    
    
    
    27,306
    
    
    
    104,887
    
    
    
    77,520Non-interest expenseSalaries and benefits
    
    
    428,327
    
    
    
    398,630
    
    
    
    1,226,890
    
    
    
    1,176,724Occupancy & equipment expense
    
    
    143,398
    
    
    
    191,873
    
    
    
    433,941
    
    
    
    607,413Share based payments
    
    
    
    
    
    
    5,911
    
    
    
    3,695
    
    
    
    19,211Data processing expense
    
    
    56,870
    
    
    
    54,845
    
    
    
    162,000
    
    
    
    158,610Advertising and public relations
    
    
    21,895
    
    
    
    (650
    )
    
    
    67,229
    
    
    
    56,608Professional fees
    
    
    62,898
    
    
    
    72,663
    
    
    
    222,603
    
    
    
    269,977Printing and office supplies
    
    
    7,013
    
    
    
    5,400
    
    
    
    18,714
    
    
    
    21,422FDIC and state regulatory assessments
    
    
    48,876
    
    
    
    50,131
    
    
    
    121,861
    
    
    
    137,054Loan production and servicing expense
    
    
    24,524
    
    
    
    26,947
    
    
    
    67,159
    
    
    
    53,306Other expense
    
    
    74,821
    
    
    
    61,052
    
    
    
    212,334
    
    
    
    205,963Total non-interest expense
    
    
    868,622
    
    
    
    866,802
    
    
    
    2,536,426
    
    
    
    2,706,288Net income (loss) before taxes
    
    
    97,940
    
    
    
    (123,429
    )
    
    
    261,831
    
    
    
    (908,839
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    97,940
    
    
    $
    (123,429
    )
    
    $
    261,831
    
    
    $
    (908,839
    )Dividend on senior preferred stock
    
    
    (44,082
    )
    
    
    (22,283
    )
    
    
    (132,495
    )
    
    
    (27,482
    )Amortization of discount on preferred stock
    
    
    (4,191
    )
    
    
    (3,942
    )
    
    
    (12,436
    )
    
    
    (6,994
    )Effective dividend on preferred stock
    
    
    (48,273
    )
    
    
    (26,225
    )
    
    
    (144,931
    )
    
    
    (34,476
    )Net income (loss) applicable to common shareholders
    
    $
    49,667
    
    
    $
    (149,654
    )
    
    $
    116,900
    
    
    $
    (943,315
    )Basic income (loss) per share
    
    $
    0.03
    
    
    $
    (0.08
    )
    
    $
    0.06
    
    
    $
    (0.52
    )Diluted income (loss) per share
    
    $
    0.03
    
    
    $
    (0.08
    )
    
    $
    0.06
    
    
    $
    (0.52
    )
  4




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
January 1, 2010 to September 30, 2010
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherPreferred
    
    
    Common
    
    
    Paid in
    
    
    Accumulated
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    TotalBalance at January 1, 2010
    
    $
    3,390,207
    
    
    $
    17,034,330
    
    
    $
    489,459
    
    
    
    ($10,299,436
    )
    
    $
    113,373
    
    
    $
    10,727,933Amortization of senior preferred stock A
    
    
    13,953
    
    
    
    
    
    
    
    
    
    
    
    (13,953
    )
    
    
    
    
    
    
    Accretion of warrant preferred stock B
    
    
    (1,517
    )
    
    
    
    
    
    
    
    
    
    
    1,517
    
    
    
    
    
    
    
    Preferred dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132,495
    )
    
    
    
    
    
    
    (132,495
    )Share based payments expense
    
    
    
    
    
    
    
    
    
    
    3,695
    
    
    
    
    
    
    
    
    
    
    
    3,695Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261,831
    
    
    
    
    
    
    
    261,831Change in unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,592
    
    
    
    37,592Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    299,424Balance at September 30,2010
    
    $
    3,402,643
    
    
    $
    17,034,330
    
    
    $
    493,154
    
    
    $
    (10,182,536
    )
    
    $
    150,965
    
    
    $
    10,898,556
  5




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine Months Ended September 30,2010
    
    
    2009Cash flows from operating activitiesNet income (loss)
    
    $
    261,831
    
    
    $
    (909,578
    )Share based payments expense
    
    
    3,695
    
    
    
    19,950Provision for loan losses
    
    
    544,949
    
    
    
    180,776Accretion of securities
    
    
    (3,865
    )
    
    
    (3,531
    )Gain on sales or calls of securities
    
    
    
    
    
    
    (3,027
    )Depreciation expense
    
    
    134,157
    
    
    
    225,674Loss on disposal of equipment
    
    
    
    
    
    
    Net (increase) decrease in other assets
    
    
    (278,823
    )
    
    
    (48,359
    )Net decrease in other liabilities
    
    
    (84,743
    )
    
    
    (33,846
    )Net cash provided by (used in) operating activities
    
    
    577,201
    
    
    
    (571,941
    )Cash flows from investing activitiesOrigination of portfolio loans, net of principal repayments
    
    
    (14,923,019
    )
    
    
    (10,662,699
    )Purchase of securities
    
    
    (2,976,260
    )
    
    
    (2,954,862
    )Proceeds from sales, calls or maturities of securities
    
    
    2,889,128
    
    
    
    2,422,629Purchases of premises and equipment, net of proceeds
    
    
    (12,387
    )
    
    
    (16,746
    )Net cash used in investing activities
    
    
    (15,022,538
    )
    
    
    (11,211,678
    )Cash flows from financing activitiesIncrease in deposits
    
    
    18,531,821
    
    
    
    14,843,261Proceeds from sale of senior preferred stock
    
    
    
    
    
    
    1,635,000Dividend on senior preferred stock
    
    
    (132,495
    )
    
    
    (27,482
    )Net cash provided by financing activities
    
    
    18,399,326
    
    
    
    16,450,779Increase in cash and cash equivalents
    
    
    3,953,989
    
    
    
    4,667,160Cash and cash equivalents at the
beginning of the period
    
    
    7,758,201
    
    
    
    4,663,497Cash and cash equivalents at the
end of the period
    
    $
    11,712,190
    
    
    $
    9,330,657Supplemental cash flow information:Cash paid for interest:
    
    $
    980,895
    
    
    $
    1,070,918
  6




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##### Table of Contents



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




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting
 Valuation Hierarchy
  
    
    Level 1  inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets which the Corporation can participate.
    
    Level 2  inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3  inputs to the valuation methodology are unobservable and significant to the
fair value measurement, and include inputs that are available in situations where there is
little, if any, market activity for the related asset or liability.
   Assets
 Securities available for sale
    Quoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance atAssets
    
    
    Inputs
    
    
    Inputs
    
    
    September(unaudited)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    30,2010Securities available for sale
    
    $
    
    
    
    $
    3,964
    
    
    $
    
    
    
    $
    3,964
 8




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Fair Value Accounting -continued
  Note 3  Securities
  Gross
    
    
    Gross
    
    
    Estimated(unaudited)
    
    Amortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairSeptember 30, 2010
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueU.S. Government agency securities
    
    $
    1,870
    
    
    $
    20
    
    
    $
    
    
    
    $
    1,890State and local government securities
    
    
    650
    
    
    
    13
    
    
    
    
    
    
    
    663Mortgage backed securities
    
    
    881
    
    
    
    107
    
    
    
    
    
    
    
    988Corporate bonds
    
    
    250
    
    
    
    11
    
    
    
    
    
    
    
    261Subtotal Available for Sale
    
    $
    3,651
    
    
    $
    151
    
    
    $
    
    
    
    $
    3,802FHLB Stock
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    162Total
    
    $
    3,813
    
    
    $
    151
    
    
    $
    
    
    
    $
    3,964
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    fairDecember 31, 2009
    
    cost
    
    
    gains
    
    
    losses
    
    
    valueU.S. Government agency securities
    
    $
    2,342
    
    
    $
    18
    
    
    $
    
    
    
    $
    2,360State and local government securities
    
    
    200
    
    
    
    4
    
    
    
    
    
    
    
    204Mortgage backed securities
    
    
    1,018
    
    
    
    91
    
    
    
    
    
    
    
    1,109Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subtotal Available for Sale
    
    $
    3,560
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,673FHLB Stock
    
    
    162
    
    
    
    
    
    
    
    
    
    
    
    162Total
    
    $
    3,722
    
    
    $
    113
    
    
    $
    
    
    
    $
    3,835
 9




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Securities continued
   (unaudited)
    
    Amortized Cost
    
    
    Estimated fair valueDue in one year or less
    
    $
    1,200
    
    
    $
    1,208Due in one year through five years
    
    
    851
    
    
    
    880Due in five years through ten years
    
    
    718
    
    
    
    726Due after ten years
    
    
    
    
    
    
    Subtotal
    
    $
    2,769
    
    
    $
    2,814Mortgage backed securities
    
    
    882
    
    
    
    988FHLB Stock
    
    
    162
    
    
    
    162Total
    
    $
    3,813
    
    
    $
    3,964
 Note 4  Loans
  (unaudited)September 30,
    
    
    December 31,2010
    
    
    2009Mortgage loans on real estateResidential 1-4
    
    $
    3,302
    
    
    $
    1,353Multifamily
    
    
    12,436
    
    
    
    12,647Commercial
    
    
    43,949
    
    
    
    35,917Construction
    
    
    2,676
    
    
    
    518Second mortgage
    
    
    145
    
    
    
    171Equity lines of credit
    
    
    11,644
    
    
    
    11,445Total real estate loans
    
    
    74,152
    
    
    
    62,051Commercial loans
    
    
    19,310
    
    
    
    17,186Consumer installment loans
    
    
    959
    
    
    
    512Total portfolio loans
    
    
    94,421
    
    
    
    79,749Less: ALLL
    
    
    1,424
    
    
    
    1,174Deferred fees
    
    
    137
    
    
    
    93Net portfolio loans
    
    $
    92,860
    
    
    $
    78,482
 10




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Loans continued
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(unaudited)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of period
    
    $
    1,168
    
    
    $
    840
    
    
    $
    1,174
    
    
    $
    710Charge-offs
    
    
    
    
    
    
    
    
    
    
    (341
    )
    
    
    (18
    )Recoveries
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    Provision for loan losses
    
    
    256
    
    
    
    32
    
    
    
    545
    
    
    
    180Balance at end of period
    
    $
    1,424
    
    
    $
    872
    
    
    $
    1,424
    
    
    $
    872
  Note 5  Deposits
  (unaudited)As of September 30, 2010
    
    
    As of December 31, 2009Balance
    
    
    Percentage
    
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    12,709
    
    
    
    12.7
    %
    
    $
    8,495
    
    
    
    10.4
    %NOW accounts
    
    
    7,029
    
    
    
    7.0
    %
    
    
    7,894
    
    
    
    9.7
    %Money market
    
    
    10,160
    
    
    
    10.2
    %
    
    
    7,815
    
    
    
    9.6
    %Savings
    
    
    18,279
    
    
    
    18.3
    %
    
    
    11,785
    
    
    
    14.5
    %Time deposits under $100,000
    
    
    12,264
    
    
    
    12.3
    %
    
    
    13,240
    
    
    
    16.3
    %Time deposits over $100,000
    
    
    39,556
    
    
    
    39.5
    %
    
    
    32,236
    
    
    
    39.5
    %Total deposits
    
    $
    99,997
    
    
    
    100.0
    %
    
    $
    81,465
    
    
    
    100.0
    %
  (unaudited)
    
    <$100,000
    
    
    >$100,000
    
    
    TotalWithin 12 months
    
    $
    3,793
    
    
    $
    12,835
    
    
    $
    16,628> 12 months
    
    
    8,471
    
    
    
    26,721
    
    
    
    35,192Total
    
    $
    12,264
    
    
    $
    39,556
    
    
    $
    51,820
 11




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6  Leases and Commitments
   2010
    
    $
    592011
    
    
    2302012
    
    
    2342013
    
    
    2392014
    
    
    244Thereafter
    
    
    2,976Total
    
    $
    3,982
 Note 7  Fair Value of Financial Instruments
   Cash and Cash Equivalents
 Securities
 12




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Fair Value of Financial Instruments  continued
 Loans Receivable
 Deposit Liabilities
 Accrued Interest
 Other Financial Instruments
  (unaudited)September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    11,712
    
    
    $
    11,712
    
    
    $
    7,758
    
    
    $
    7,758Securities available for sale
    
    
    3,964
    
    
    
    3,964
    
    
    
    3,835
    
    
    
    3,835Loans
    
    
    92,860
    
    
    
    93,305
    
    
    
    78,482
    
    
    
    78,952Accrued interest receivable
    
    
    419
    
    
    
    419
    
    
    
    335
    
    
    
    335Financial liabilities:Deposits
    
    
    99,997
    
    
    
    100,411
    
    
    
    81,465
    
    
    
    81,807Accrued interest payable
    
    
    108
    
    
    
    108
    
    
    
    77
    
    
    
    77
 13




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8  Minimum Regulatory Capital Requirements
   For Capital
    
    To beActual
    
    Adequacy Purposes
    
    Well-Capitalized(unaudited)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of September 30, 2010Total risk-based capital
(to risk weighted assets) 
Bank of Birmingham
    
    $
    10,008
    
    
    
    10.8
    %
    
    $
    7,394
    
    
    
    8.0
    %
    
    $
    9,243
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,849
    
    
    
    9.6
    %
    
    $
    3,697
    
    
    
    4.0
    %
    
    $
    5,546
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    8,849
    
    
    
    8.2
    %
    
    $
    4,321
    
    
    
    4.0
    %
    
    $
    5,402
    
    
    
    5.0
    %As of December 31, 2009Total risk-based capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    9,467
    
    
    
    12.0
    %
    
    $
    6,318
    
    
    
    8.0
    %
    
    $
    7,897
    
    
    
    10.0
    %Tier I capital
(to risk weighted assets)
Bank of Birmingham
    
    $
    8,468
    
    
    
    10.7
    %
    
    $
    3,159
    
    
    
    4.0
    %
    
    $
    4,738
    
    
    
    6.0
    %Tier I capital
(to average assets)
Bank of Birmingham
    
    $
    8,468
    
    
    
    9.4
    %
    
    $
    3,590
    
    
    
    4.0
    %
    
    $
    4,488
    
    
    
    5.0
    %
 14




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  Premises and Equipment
  Deposits
  (unaudited)As of September 30, 2010Deposits (000s omitted)
    
    Balance
    
    
    PercentageNoninterest bearing demand
    
    $
    12,709
    
    
    
    12.7
    %NOW accounts
    
    
    7,029
    
    
    
    7.0
    %Money market
    
    
    10,160
    
    
    
    10.2
    %Savings
    
    
    18,279
    
    
    
    18.3
    %Time deposits under $100,000
    
    
    12,264
    
    
    
    12.3
    %Time deposits over $100,000
    
    
    39,556
    
    
    
    39.5
    %Total deposits
    
    $
    99,997
    
    
    
    100.0
    %
 18




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
Net Interest Income
   Three Months Ended
    
    
    Three Months EndedSeptember 30, 2010
    
    
    September 30, 2009Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Income/
    
    
    Yield/
    
    
    Balance
    
    
    Income/
    
    
    Yield/(000s)
    
    
    Expense
    
    
    Rate
    
    
    (000s)
    
    
    Expense
    
    
    RateInterest-earning assets:Loans receivable
    
    $
    92,522
    
    
    $
    1,486,216
    
    
    
    6.43
    %
    
    $
    67,801
    
    
    $
    1,038,306
    
    
    
    6.13
    %Securities available for sale
    
    
    4,410
    
    
    
    35,215
    
    
    
    3.19
    %
    
    
    3,773
    
    
    
    36,437
    
    
    
    3.86
    %Federal funds sold
    
    
    127
    
    
    
    51
    
    
    
    0.16
    %
    
    
    2,316
    
    
    
    1,019
    
    
    
    0.18
    %Interest-bearing balances with
other financial institutions
    
    
    11,261
    
    
    
    9,967
    
    
    
    0.35
    %
    
    
    8,092
    
    
    
    9,526
    
    
    
    0.47
    %Total interest-earning assets
    
    
    108,320
    
    
    
    1,531,449
    
    
    
    5.66
    %
    
    
    81,982
    
    
    
    1,085,288
    
    
    
    5.30
    %Noninterest-earning assets:Cash and due from banks
    
    
    569
    
    
    
    
    
    
    
    
    
    
    
    1,266All other assets
    
    
    1,202
    
    
    
    
    
    
    
    
    
    
    
    1,574Total Assets
    
    $
    110,091
    
    
    
    
    
    
    
    
    
    
    $
    84,822Interest-bearing liabilities:NOW accounts
    
    $
    7,442
    
    
    $
    7,963
    
    
    
    0.43
    %
    
    $
    8,040
    
    
    $
    13,474
    
    
    
    0.67
    %Money market
    
    
    9,558
    
    
    
    15,401
    
    
    
    0.64
    %
    
    
    10,261
    
    
    
    26,402
    
    
    
    1.03
    %Savings
    
    
    16,575
    
    
    
    39,673
    
    
    
    0.96
    %
    
    
    10,038
    
    
    
    39,102
    
    
    
    1.56
    %Time deposits
    
    
    51,940
    
    
    
    273,623
    
    
    
    2.11
    %
    
    
    37,495
    
    
    
    258,243
    
    
    
    2.75
    %Total interest-bearing liabilities:
    
    $
    85,515
    
    
    
    336,660
    
    
    
    1.57
    %
    
    $
    65,834
    
    
    
    337,221
    
    
    
    2.05
    %Non-interest bearing demand deposits
    
    
    13,467
    
    
    
    
    
    
    
    
    
    
    
    8,335All other liabilities
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    644Total liabilities
    
    
    99,231
    
    
    
    
    
    
    
    
    
    
    
    74,813Shareholders Equity
    
    
    10,860
    
    
    
    
    
    
    
    
    
    
    
    10,009Total liabilities and shareholders equity
    
    $
    110,091
    
    
    
    
    
    
    
    
    
    
    $
    84,822Net Interest Income
    
    
    
    
    
    $
    1,194,789
    
    
    
    
    
    
    
    
    
    
    $
    748,067Net spread
    
    
    
    
    
    
    
    
    
    
    4.08
    %
    
    
    
    
    
    
    
    
    
    
    3.25
    %Net Interest Margin(1)
    
    
    
    
    
    
    
    
    
    
    4.41
    %
    
    
    
    
    
    
    
    
    
    
    3.65
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    126.67
    %
    
    
    
    
    
    
    
    
    
    
    124.53
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets. 19




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
   Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2009Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageBalance
    
    
    Income/
    
    
    Yield/
    
    
    Balance
    
    
    Income/
    
    
    Yield/(000s)
    
    
    Expense
    
    
    Rate
    
    
    (000s)
    
    
    Expense
    
    
    RateInterest-earning assets:Loans receivable
    
    $
    87,680
    
    
    $
    4,127,106
    
    
    
    6.28
    %
    
    $
    62,782
    
    
    $
    2,774,781
    
    
    
    5.89
    %Securities available for sale
    
    
    3,944
    
    
    
    101,270
    
    
    
    3.42
    %
    
    
    3,554
    
    
    
    110,948
    
    
    
    4.16
    %Federal funds sold
    
    
    1,566
    
    
    
    1,299
    
    
    
    0.11
    %
    
    
    2,544
    
    
    
    2,934
    
    
    
    0.15
    %Interest-bearing balances with
other financial institutions
    
    
    9,794
    
    
    
    21,283
    
    
    
    0.29
    %
    
    
    4,927
    
    
    
    17,122
    
    
    
    0.46
    %Total interest-earning assets
    
    
    102,984
    
    
    
    4,250,958
    
    
    
    5.50
    %
    
    
    73,807
    
    
    
    2,905,785
    
    
    
    5.25
    %Noninterest-earning assets:Cash and due from banks
    
    
    710
    
    
    
    
    
    
    
    
    
    
    
    1,586All other assets
    
    
    1,209
    
    
    
    
    
    
    
    
    
    
    
    1,693Total Assets
    
    $
    104,903
    
    
    
    
    
    
    
    
    
    
    $
    77,086Interest-bearing liabilities:NOW accounts
    
    $
    7,807
    
    
    $
    28,929
    
    
    
    0.49
    %
    
    $
    7,837
    
    
    $
    52,314
    
    
    
    0.89
    %Money market
    
    
    9,117
    
    
    
    44,580
    
    
    
    0.65
    %
    
    
    10,128
    
    
    
    91,091
    
    
    
    1.20
    %Savings
    
    
    14,990
    
    
    
    123,479
    
    
    
    1.10
    %
    
    
    7,674
    
    
    
    95,054
    
    
    
    1.65
    %Time deposits
    
    
    50,551
    
    
    
    815,651
    
    
    
    2.15
    %
    
    
    34,468
    
    
    
    766,621
    
    
    
    2.97
    %Total interest-bearing liabilities:
    
    $
    82,465
    
    
    
    1,012,639
    
    
    
    1.64
    %
    
    $
    60,107
    
    
    
    1,005,080
    
    
    
    2.23
    %Non-interest bearing demand deposits
    
    
    11,301
    
    
    
    
    
    
    
    
    
    
    
    6,691All other liabilities
    
    
    352
    
    
    
    
    
    
    
    
    
    
    
    368Total liabilities
    
    
    94,118
    
    
    
    
    
    
    
    
    
    
    
    67,166Shareholders Equity
    
    
    10,785
    
    
    
    
    
    
    
    
    
    
    
    9,920Total liabilities and shareholders equity
    
    $
    104,903
    
    
    
    
    
    
    
    
    
    
    $
    77,086Net Interest Income
    
    
    
    
    
    $
    3,238,319
    
    
    
    
    
    
    
    
    
    
    $
    1,900,705Net spread
    
    
    
    
    
    
    
    
    
    
    3.87
    %
    
    
    
    
    
    
    
    
    
    
    3.02
    %Net Interest Margin (1)
    
    
    
    
    
    
    
    
    
    
    4.19
    %
    
    
    
    
    
    
    
    
    
    
    3.43
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    124.88
    %
    
    
    
    
    
    
    
    
    
    
    122.79
    %
 
 (1)
    
    Net interest earnings divided by average interest-earning assets. 20




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



BIRMINGHAM BLOOMFIELD BANCSHARES, INC.
Managements Discussion and Analysis of Financial Condition and Results of Operations
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     24




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##### Table of Contents



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




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. [RESERVED].
 
 ITEM 5. OTHER INFORMATION.
  26




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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.
 27




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##### Table of Contents



SIGNATURES
  BIRMINGHAM BLOOMFIELD BANCSHARES, INC.Date: November 15, 2010
    By:
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate: November 15, 2010
    By:
    /s/ Thomas H. DorrThomas H. DorrChief Financial Officer 28




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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
 29