After a few mojitos, I think I can summarize SBBT's operating/survival strategy. Meet "The Cyronics Bank." I am totally serious here.

A brief introduction to cyronics can be found at http://en.wikipedia.org/wiki/Cryonics

"Cryonics is the low-temperature preservation of humans and animals that can no longer be sustained by contemporary medicine until resuscitation may be possible in the future. Currently, human cryopreservation is not reversible, which means that it is not currently possible to bring people out of cryopreservation alive. The rationale for cryonics is that people who are considered dead by the current legal or medical definitions will not necessarily be dead by future standards - the most stringent standard being the information-theoretic definition of death - and that such people could be brought out of cryopreservation in the future."

How does this apply to SBBT? Here goes:
* The bank did not meet the regulatory memorandum of understanding regarding capital for a second quarter in a row and now is in violation of two of the target criteria.
* There seems to be little hope of an equity infusion of the magnitude needed ($250 - $500+ million) when another bank can buy the entire bank for ~$55 million.
* The prospects of another ~$40 million loss in Q4 seem likely.
* Statutory penetration into the lower, less desirable "adequately capitalized" zone is also likely.
* Management has (strangely) not sold the tax business but seems does not have the capital to support $6+ Billion in loans that were made in the most recent season.
* The bank has totally astronomical liquidity, with $859 million at the Federal Reserve earning 0.25%. See Call Report Schedule RC-A, line 4.
* New debt that is costing well in excess of the 0.25% earned at the Fed continues to grow significantly. FHLB advances (Schedule RC-M line 5.a.1 summation) went up $187 million during the quarter. Brokered deposits (Schedule RC-E line 1.b) jumped $379 million.
* This leads to a negative interest spread akin to "Borrow High, Lend (@ 0.25%) Low."
* In short, they currently can't make (much) money using their business model.
* (big assumption follows) However, "There must be a method to their madness."

Another poster succinctly called the bank a "Zombie bank." From the bank's management view, I think they view themselves as "The Cryonics Bank."

First, they have built up huge amounts of liquidity, which they can use to (a) insulate themselves from depositor runs, (b) point to regulators that they can keep the doors open so the FDIC can go ahead and close illiquid banks instead. The have not totally blown through all their capital, so the regulators don't have a compelling reason to close them immediately. Depositors should not be worried about their funds due to FDIC insurance.

Second, they are touting their ability to tread water, doing just enough to lose an "acceptable" amount of money. They are trying to "deep freeze" themselves to they can be awakened when the economy revives and credit markets thaw. In other words, just try to stem the bleeding through cryonics. So while everyone thinks the bank is (eventually) dead/Zombie by current standards, the bank I believe is trying to be "revivable" in the future by attempting a long cryonics state. They are hoping to greatly reverse some of the loan loss reserve in the future, thus adding back to its capital. In the future, post cryonics, they are the undead.

"The Cryonics Bank" is the only explanation (again, assuming the huge assumption there actually is a method to their madness).

I think the mojitos wore off.