##### Table of Contents



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 March 31, 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
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INDEX
 PART I  FINANCIAL INFORMATION
    
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    7ITEM 3. CONTROLS AND PROCEDURES
    
    
    11PART II. OTHER INFORMATION
    
    
    16ITEM 1. LEGAL PROCEEDINGS
    
    
    16ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    16ITEM 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
    
    
    18Certification Pursuant to Rules 13a-15(e) and 15d-15(e)Certification Pursuant to Rules 13a-15(e) and 15d-15(e)Certification Pursuant to Rules 13a-14(b) and 15d-14(b)
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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 ASSETSCash
    
    $
    36,815Deferred offering costs (note 1)
    
    
    634,529Other Assets
    
    
    58,793Equipment
    
    
    227,745Total Assets
    
    $
    957,882LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Related party notes payable (note 2)
    
    $
    749,000Bank note payable (note 3)
    
    
    1,565,000Other liabilities (note 4)
    
    
    106,033Total Liabilities
    
    
    2,420,033Shareholders equity (deficit)Common Stock, no par valueAuthorized
 4,500,000 shares 
Issued and outstanding  100 shares at March 31, 2006
    
    
    1,000Accumulated deficit
    
    
    (1,463,151
    )Total shareholders equity (deficit)
    
    
    (1,462,151
    )Total liabilities and shareholders equity (deficit)
    
    $
    957,882
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Period fromThree
    
    
    Three
    
    
    February 26,Months
    
    
    Months
    
    
    2004Ended
    
    
    Ended
    
    
    (inception)March 31,
    
    
    March 31,
    
    
    to March 31,2006
    
    
    2005
    
    
    2006Total revenue
    
    $
    0
    
    
    $
    0
    
    
    $
    0Operating expensesManagement
consulting agreements,
salaries and benefits
    
    
    186,789
    
    
    
    148,875
    
    
    
    717,549Legal fees
    
    
    7,556
    
    
    
    37,056
    
    
    
    104,961Consulting
    
    
    0
    
    
    
    36,740
    
    
    
    230,740Accounting & auditing
    
    
    0
    
    
    
    600
    
    
    
    22,050Rent (note 6)
    
    
    55,001
    
    
    
    22,000
    
    
    
    188,584Building maintenance & utilities
    
    
    11,621
    
    
    
    10,474
    
    
    
    61,871Interest expense
    
    
    16,500
    
    
    
    0
    
    
    
    30,053Miscellaneous
    
    
    32,695
    
    
    
    4,890
    
    
    
    107,343Total operating expenses
    
    $
    310,162
    
    
    $
    260,635
    
    
    $
    1,463,151Income taxes (note 5)
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    ($310,162
    )
    
    
    ($260,635
    )
    
    
    ($1,463,151
    )Net loss per share
    
    
    (3,101.62
    )
    
    
    (2,606.35
    )
    
    
    (14,631.51
    )
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DeficitAccumulatedDuring theCommon
    
    
    DevelopmentStock
    
    
    Stage
    
    
    TotalBalance at February 26, 2004
    
    
    
    
    
    
    
    
    
    
    Issuance of 100 shares Common
Stock
    
    $
    1,000
    
    
    
    
    
    
    $
    1,000Net Loss
    
    
    
    
    
    ($
    157,531
    )
    
    
    (157,531
    )Balance at December 31, 2004
    
    
    1,000
    
    
    
    (157,531
    )
    
    
    (156,531
    )Net Loss
    
    
    
    
    
    
    (995,458
    )
    
    
    (995,458
    )Balance at December 31, 2005
    
    
    1,000
    
    
    
    (1,152,989
    )
    
    
    (1,151,989
    )Net Loss
    
    
    
    
    
    
    (310,162
    )
    
    
    (310,162
    )Balance at March 31, 2006
    
    $
    1,000
    
    
    ($
    1,463,151
    )
    
    ($
    1,462,151
    )
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Period fromThree
    
    
    Three
    
    
    FebruaryMonths
    
    
    Months
    
    
    26,2004Ended
    
    
    Ended
    
    
    (inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    ($
    310,162
    )
    
    ($
    260,635
    )
    
    ($
    1,463,151
    )Net increase in other assets
    
    
    (226,014
    )
    
    
    (17,292
    )
    
    
    (693,322
    )Net increase in other liabilities
    
    
    22,874
    
    
    
    31,204
    
    
    
    106,033Net cash used in operating activities
    
    
    (513,302
    )
    
    
    (246,723
    )
    
    
    (2,050,440
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchases of equipment
    
    
    (87,637
    )
    
    
    (10,140
    )
    
    
    (227,745
    )CASH FLOWS FROM FINANCING ACTIVITIESSale of Stock
    
    
    
    
    
    
    
    
    
    
    1,000Increase in notes payable from related parties
    
    
    
    
    
    
    325,000
    
    
    
    749,000Increase in bank note payable
    
    
    605,000
    
    
    
    
    
    
    
    1,565,000Net cash provided by financing activities
    
    
    605,000
    
    
    
    325,000
    
    
    
    2,315,000INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    4,061
    
    
    
    68,137
    
    
    
    36,815CASH AND CASH EQUIVALENTSAT THE BEGINNING OF THE PERIOD
    
    
    32,754
    
    
    
    222,470
    
    
    
    CASH AND CASH EQUIVALENTSAT THE END OF THE PERIOD
    
    $
    36,815
    
    
    $
    290,607
    
    
    $
    36,815
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Note 1  Summary of Significant accounting principles
 Organization Birmingham Bloomfield Bancshares, Inc. (the Company) was incorporated February 26,
2004 as Birmingham Bloomfield Bancorp, Inc., for the purpose of becoming a bank holding company
under the Bank Holding Company Act of 1956, as amended. The Company subsequently changed its name
to Birmingham Bloomfield Bancshares, Inc. Upon receipt of all required regulatory approvals, the
Company will purchase the common stock of Bank of Birmingham (the Bank), a Michigan state bank in
organization. The Company intends to raise a minimum of $13,000,000 in equity capital prior to
offering costs, through the sale of shares of the Companys common stock. Proceeds of the
offering will be used to capitalize the Bank, lease facilities and provide working capital.Basis of Presentation The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates and assumptions.Organization and Preopening Costs Organization and preopening costs represent incorporation
costs, legal and accounting costs, consultant and professional fees and other costs relating to
the organization. Management anticipates that the organization and pre-opening costs will
approximate $1,550,000 through the commencement of operations, and these costs are being charged
to expense as incurred.Deferred Offering Costs Direct costs related to the offering of common stock will be
capitalized and will be netted against the offering proceeds when the sale of stock is completed.
Management estimates these costs will approximate $650,000 at the minimum offering and $950,000
at the maximum offering.Property and Equipment The company has approximately $228,000 of property and equipment on its
balance sheet as of March 31, 2006. The majority of this represents construction in process on
the Companys main office at 33583 Woodward, Birmingham, MI. The property will be placed in
service upon completion and depreciation will begin to be recognized at that time.Income Taxes Deferred income tax assets and liabilities are determined using the liability (or
balance sheet) method. Under this method the net deferred tax asset or liability is determined
based on the tax effects of the various temporary differences between the book and the tax basis
of the various balance sheet assets and liabilities and gives the current recognition to changes
in tax rates and laws. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.Earnings per Share- Basic earnings per share represents income available to shareholders divided
by the weighted-average number of shares outstanding during the period.
 Note 2  Related Party Notes Payable
 Notes Payable in the amount of $749,000 are outstanding from the Companys organizers. The notes
are non-interest bearing and have no stated maturity. In lieu of repayment in cash of the cash
advances make by the organizers, the Company intends to issue stock to each organizer having an
aggregate subscription price equal to the amount advanced by the organizer.
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Note 3  Notes Payable
 On July 21, 2005, the Company signed a $1,600,000 line of credit agreement with Fifth Third Bank.
The line of credit was increased by $720,000 on April 20, 2006. The line of credit is payable on
demand with interest at the prime rate ( equal to 7.75% as of March 31, 2006 ) minus one percent
and is secured by the limited personal guarantees of the Companys organizers. The balance on the
line at March 31, 2006 was $1,565,000. The line expires August 1, 2006.
 Note 4  Other Liabilities
 The Company has entered into management consulting agreements with two of the organizers and two
other persons, all of whom are to become employees of the Bank upon regulatory approval. These
agreements call for additional payments to be accrued and paid to the parties at the rate ranging
from $1,354 to $2,083 per month each beginning on their starting date with one third to be paid
upon regulatory approvals and two thirds being paid upon the Bank commencing business. The total
amount accrued as of March31, 2006 is $106,000.
 Note 5  Income Taxes
 Income Taxes The Company has net operating loss carryforwards of approximately $1,463,000
generated from inception through March 31, 2006 that are available to reduce future taxable
income through the year ending December 31, 2025. The deferred tax asset generated by that loss
carryforward has been offset with a valuation allowance since the Company does not have a history
of earnings.
 The components of the net deferred tax assets, included in other assets, are as follows:
 Deferred tax assets:Net operating loss carryforward
    
    $
    498,000Less valuation allowance
    
    
    (498,000
    )Total net deferred tax asset
    
    $
    
 The reasons for the differences between the income tax expense at the federal statutory income
tax rate and the recorded income tax expense are summarized as follows:
 Period fromFebruaryThree Months
    
    
    26, 2004Ended
    
    
    (inception)March 31,
    
    
    To March2006
    
    
    31, 2006Loss before income taxes
    
    $
    310,162
    
    
    $
    1,463,151Income tax benefit at federal statutory rate of 34 percent
    
    
    104,055
    
    
    
    497,471Other
    
    
    945
    
    
    
    529Change in valuation allowance
    
    
    105,000
    
    
    
    498,000Total income tax expense
    
    $
    
    
    
    $
    
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Note 6  Leases and Commitments
 The Company has entered into a lease agreement for its main office. Payments began in February
2005 and the lease expires in October 2015. The Company also entered into a lease agreement for
its branch office in Bloomfield Township which calls for lease payments to begin in March 2006
and expires February 2016. The main office lease has two ten year renewal options. The Bloomfield
branch office lease has one five year renewal option. Rent expense under this agreement was
$52,000 for the main office and $3,000 for the branch office for the three months ended March 31,
2006.
 The following is a schedule of future minimum rental payments under operating leases on a
calendar year basis:
 April 1, 2006 through December 31,2006
    
    $
    200,3512007
    
    
    269,0222008
    
    
    274,0372009
    
    
    279,8072010
    
    
    285,6952011 and after
    
    
    1,478,986Total
    
    $
    2,787,898
 As of March 31, 2006 the Company has outstanding commitments under construction contracts
totaling $1.39 million for the renovation of its main office facility of which the company will
be receiving an allowance of $249,000 from the building owner. The Company has paid
approximately $60,000 as of March 31, 2006.
 Note 7  Stock Options and Stock Warrants
 The Company plans to issue 105,000 stock options to the future executive officers of the Bank.
The Company is also planning to issue 184,000 stock warrants to the organizers of the Bank. These
proposed options and warrants have a ten year duration and would be issued with a strike price of
$10.00. In conjunction with its upcoming stock offering, the Company is planning to issue to each
initial shareholder one warrant for every five shares of common stock purchased in the offering.
These warrants would have a three year duration and would have a strike price of $12.50. As of
the date of this report, the stock incentive plan has not been adopted by the board of directors
of the Company.
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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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
    
    developing building plans and specification; and
    
    identifying and hiring Bank staff; and
    
    preparing the business plan; and
    
    developing Bank systems, policies and procedures and infrastructure.
 PLAN OF OPERATION
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FINANCIAL RESULTS
    FUNDING OF OPERATIONS AND LIQUIDITY
   13




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CAPITAL EXPENDITURES
  Liquidity and interest rate sensitivity
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Capital adequacy
    
 ITEM 3. CONTROLS AND PROCEDURES
    15




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
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Birmingham Bloomfield Bancshares, Inc.
 Minimum offering
    
    
    Maximum offeringGross proceeds
from offering
    
    $
    12,251,000
    
    
    
    100.0
    %
    
    $
    17,251,000
    
    
    
    100.0
    %Organizer Loans to be
converted to stock
    
    
    749,000
    
    
    
    6.1
    %
    
    
    749,000
    
    
    
    4.3
    %Stock Offering Expenses
    
    
    (650,000
    )
    
    
    (5.3
    )
    
    
    (950,000
    )
    
    
    (5.5
    )%Pre-opening expenses
recognized by holding
company
    
    
    (550,000
    )
    
    
    (4.5
    )
    
    
    (550,000
    )
    
    
    (3.2
    )%Investment in Bank stock
    
    
    (11,700,000
    )
    
    
    (95.5
    )%
    
    
    (15,100,000
    )
    
    
    (87.5
    )%$
    100,000
    
    
    
    0.8
    %
    
    $
    1,400,000
    
    
    
    8.1
    %
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Bank of Birmingham
  Minimum offering
    
    
    Maximum offeringGross Proceeds
from offering
    
    $
    12,050,000
    
    
    
    100.0
    %
    
    $
    15,550,000
    
    
    
    100.0
    %Pre-opening expenses
    
    $
    (1,000,000
    )
    
    
    8.3
    %
    
    $
    (1,000,000
    )
    
    
    6.4
    %Furniture, fixtures
and equipment
    
    $
    (1,050,000
    )
    
    
    8.7
    %
    
    $
    (1,050,000
    )
    
    
    6.8
    %Loans to customers,
investment and
other general
purposes
    
    $
    (10,000,000
    )
    
    
    83.0
    %
    
    $
    (13,500,000
    )
    
    
    86.8
    %Remaining proceeds
    
    $
    0
    
    
    
    0.0
    %
    
    $
    0
    
    
    
    0.0
    %
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 ITEM 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
 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: May 5, 2006
    
    By:
    
    /s/ Robert E. FarrRobert E. FarrChief Executive OfficerDate: May 5, 2006
    
    By:
    
    /s/ Richard J. MillerRichard J. MillerChief Financial Officer
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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
 20