Boston-based OneUnited Bank ($610.6 million), the subject of a controversy over the involvement of Rep. Barney Frank, D-Mass., in its application for Troubled Asset Relief Program funds, did not make the scheduled dividend payment on preferred shares issued under TARP, according to a report released July 17 by the U.S. Treasury Department.

The Treasury revealed the identities of the 18 banks and thrifts that have not made the latest dividend payments on TARP preferred shares. Participants in the program are required to pay a dividend rate of 5% per year for the first five years, usually in four payments per year. The most recent dividend payment for most institutions was due May 15, with the next one to follow Aug. 15. Under the terms of the Capital Purchase Program, failure to pay dividends for six dividend periods triggers the Treasury's right to elect two directors to the institution's board.

For institutions without a holding company, like OneUnited, the TARP dividends are noncumulative, meaning that if the institutions miss dividend payments, they do not have to pay them at a later date. The dividends do not accrue, so if OneUnited resumes dividends Aug. 15, it will only need to pay the amount for the current dividend period. TARP participants with holding companies, on the other hand, are required to repay all missed TARP dividends because their dividends are cumulative.

Click here to access the above list as an Excel spreadsheet.

OneUnited received $12.1 million in TARP funding in December 2008. And one month later, The Wall Street Journal reported that Frank had a hand in the approval of OneUnited's TARP application in a Jan. 23 news story. Frank requested that federal regulators consider the bank for the program even though it was questionable whether the institution would qualify. The FDIC issued a cease and desist order against OneUnited on Oct. 27, 2008, and at year-end the bank had negative Tier 1 common capital of $14.7 million.

The TARP bill, which was co-authored by Frank, included a provision that gave special consideration to banks with less than $1 billion in assets serving low- and moderate-income areas. OneUnited is the largest African-American-owned commercial bank in the country, according to call report data collected by SNL Financial. OneUnited did not return calls for comment.

The Treasury's report also showed that 11 institutions established since 2000 have not made TARP dividend payments, most likely due to state laws that prohibit the payment of dividends if the banks do not earn a certain amount of net profit. De novo institutions can, for example, may take as many as five years or more after opening to become profitable, according to SNL Financial data.

Los Angeles-based Pacific Commerce Bank, established in 2002, appeared on the Treasury's list for nonpayment of the latest dividend, but CEO Brian Kelley told SNL Financial that the company has since paid it. The company had to "jump few a through hoops," Kelley said, due to the fact its accumulated earnings were not high enough to pay the dividend without state approval. Pacific Commerce recorded net losses in 2005, 2006 and 2008, though it reported a profit in the first quarter of 2009.

Similarly, Fresno, Calif.-based Fresno First Bank, established in December 2005, and Riverside, Calif.-based Premier Service Bank, established in 2001, have missed TARP dividend payments. Fresno First said in its 2008 annual report that the California Financial Code provides that a bank may not make a cash distribution to its shareholders if it has not earned a certain amount of net profit. Fresno First has not earned a profit since opening. Premier Service Bank CFO Jessica Lee said her company was also prohibited under California code from paying dividends because the company has not earned enough retained earnings.

United American Bank CFO Gerry Brown and Community Bank of the Bay CEO Brian Garrett also confirmed to SNL Financial that the California financial code prohibited their companies from paying TARP dividends. Both companies are taking steps to begin paying the dividend in August.

Kelley said the California Commissioner for the Department of Financial Institutions has the authority to approve dividend payments at his or her discretion.

That is not the case in Connecticut, however.

Hartford, Conn.-based Connecticut Bank and Trust Co., established in 2004, said in a Form 10-Q filed May 14 that the state's Department of Banking has no authority to approve dividend payments by a company that has reported a certain level of net losses. Connecticut Bank and Trust has reported annual net losses since it commenced operations and, therefore, could not pay its TARP dividends. The company said there is a bill pending in the Connecticut legislature to allow the state to approve dividend payments regardless of a bank's earnings. The board has agreed to seek shareholder approval to pay the dividends if the legislation passes.

Other companies have stopped paying TARP dividends in an effort to save cash by deferring payment on outstanding trust preferred securities. In these cases, the terms of the trust preferred securities prohibit banks from paying capital distributions during a payment deferral period.

Overland Park, Kan.-based Blue Valley Ban Corp., which received $21.75 million in TARP funding, said in a Form 10-Q filed May 13 that it is prohibited from paying dividends on the preferred stock issued to the Treasury as long as the deferral period on its outstanding trust preferred securities continues. The company has lost $19 million in the four quarters ending March 31.

Stuart, Fla.-based Seacoast Banking Corp. of Florida, meanwhile, has also deferred payment on trust-preferred securities and, as a result, stopped TARP dividend payments.

Madison, Wis.-based Anchor BanCorp Wisconsin Inc., the second-largest institution to miss the May 15 payment, entered into a cease and desist order with the OTS on June 26. Anchor BanCorp spokesperson Liz Boelter told SNL, "We deferred our quarterly payment due to challenges presented by the current market in executing our comprehensive capital plan."

Two TARP participants have been told by regulators to stop paying dividends because of low capital levels: San Clemente, Calif.-based Pacific Coast National Bancorp and Santa Barbara, Calif.-based Pacific Capital Bancorp unit Pacific Capital Bank NA. The OCC and the Federal Reserve have imposed dividend restrictions on Pacific Coast National, according to a Form 8-K; the institution was deemed undercapitalized as of March 31. Pacific Capital Bank, meanwhile, entered into a memorandum of understanding with the OCC on April 16 and must boost capital levels. The bank said in a Form 10-Q filed May 11 that it also expected to enter into an MOU with the Federal Reserve that would bar it from paying dividends without the Fed's prior approval.