OneUnited Bank, a troubled Boston-based online bank that took and has yet to re-pay TARP money, has received a $500,000 Bank Enterprise Award from the U.S. Department of the Treasury.
The award comes from the Treasury’s Community Development Financial Institutions Fund. This is the sixth time OneUnited has received the award, the bank said in a statement. The fund, and the award, helps establish jobs in severely distressed communities.
When considering banks for enterprise award funds, Treasury does so in cooperation with regulators, said Scott Berman, a spokesman for the Community Development Financial Institutions Fund.
"We cooperate with regulators to make sure there are no immediate concerns," Berman said in an email to Banker & Tradesman.
OneUnited took $12 million in Troubled Asset Relief Program (TARP) money and hasn’t paid back any of it, "but that doesn’t prohibit them from receiving" award funding "if the bank is in a strong enough financial position to make loans and help low income people get into homes," Berman said.
Berman also explained that the enterprise awards are made "after the fact." That is, they are awarded now based on the bank’s performance in 2010-11.
"They have to report to us going forward how they use the award," Berman said.
In 2008, the Federal Deposit Insurance Corp. and the state Division of Banks ordered OneUnited to cease and desist "unsafe and unsound banking practices and violations of law."
According to the order OneUnited, an online bank that markets itself to African Americans, waived its right to a hearing regarding its alleged malfeasance and was made to comply with a laundry list of orders and oversight initiated by the FDIC and the division.
OneUnited operated with insufficient capital, failed to provide adequate supervision of officers, paid its executives "excessive" salaries, fees and benefits, operated "without effective underwriting standards," had no loan documentation program, made speculative investments, failed to monitor its earnings and operated with deficient earnings and insufficient liquidity, the order said.
The order set out strict financial, underwriting and monitoring requirements for the bank. It also allowed the FDIC and the division to analyze and assess the bank’s management and staff performance and required the bank to write a new management plan in response to all the recommendations.
Spokesman David Barr said the FDIC hadn’t taken enforcement action against the bank before the 2008 order and hasn’t taken any against it since.
OneUnited operates in Boston, Los Angeles and Miami.
Teri Williams, its president and CEO, travels to schools in those cities promoting financial literacy with the book "I Got Bank!" which she authored.
Bob Cooper, OneUnited general counsel, said the award is "confirmation of the high level of community development activities we’re engaged in."
He said Treasury "looks at census track data, literally block-by-block" when considering banks for the enterprise award.
"This is confirmation that we’re back on track," Cooper told Banker & Tradesman.
