A look under the covers of the credit metrics shows yet another quarter of WORSENING performance. The data is buried deep in the Call Report filed yesterday and a comparison of quarter-over-quarter shows CONTINUING deterioration. How could these guys calmly discuss a rosy picture on the conference call? I can only guess that credit continuing to get worse at a slower rate is "good news" to this team. (Although it would be hard to top last quarter's fiasco.)

The "Troubled Asset Ratio" climbed to 50.6 from 44.1 (Q1 was 30.7). Higher numbers are bad.

Looking at the components of the troubled assets is even more troubling. ;-)

Item 1. (numerator) 90 days past due loans BUT STILL ACCRUING INTEREST (i.e., counted as performing) grew from less than $2 million to over $16 million. Did they change their accounting policy on the sly?

Item 2. (numerator) Non-accrual loans went up from $297 million to over $303 million, an increase of over $5 million. Not good but geez whiz, mom, what's $5 million amongst friends?

Item 3. (numerator) OREO (not the cookie). Grew over $13 million to $38 million.

ALL three troubled asset measures got worse. $33 million of more loans in trouble is good news to SBBT???

Item 4. (denominator) Total Tier 1 capital. Tier 1 fell nearly $40 million. I guess that would be considered a rosy assessment by mismanagement when compared to last quarter's $203 million drop in Tier 1 capital. I'm sure the regulators are absolutely giddy and are patting the SBBT management team on the back. ;-)

Item 5. (denominator) Total Loan Loss Reserve. Despite an increase in troubled assets of over $33 million, the Loan Loss Reserve only increased $11 million? I guess that's a "financial management" technique?

Troubled assets to Tier 1 capital stands at 82%. Last quarter, that ratio was 67%. "Look on the bright side, we still have more capital than bad loans!"

Looking to a future source of non-accruals, 30-89 day delinquencies increased from $110 million to $114 million. No improvement there so one should not expect a great improvement to another $40+ million loss next quarter.

Pretty much every credit metric is worse quarter-over-quarter. I'm going for mojitos at lunch. Maybe I'll see mismanagement celebrating? (They would probably try pick me up, too, with some lame line.)