Tarp still casts shadow over recovering S.C. bank

Lingering questions about participation in the Troubled Asset Relief Program continue to dog a South Carolina bank in the midst of an otherwise impressive turnaround.

In an annual filing Friday, HCSB Financial Corp. in Loris disclosed that special inspector general for Tarp had served it with a second subpoena in November. The $376 million-asset company had previously disclosed that it had been served with a subpoena from SIGTARP in March 2016, as well.

HCSB, the holding company for Horry County State Bank, stated in last week’s filing it had “fully and timely responded to these subpoenas and are continuing to work with SIGTARP on its follow-up questions and requests.”

HSBC Chief Executive Jan Hollar and a spokesman for the special inspector general declined to comment further.

HCSB received $12.9 million Tarp investment in March 2009, but quickly became delinquent on its repayment obligation. In April 2016, the Treasury Department sold the preferred stock it had purchased back to the company at a steep discount. In all, the government lost $12.8 million on the transaction, according to the Treasury’s most recent Tarp update to Congress.

The Treasury estimated the unpaid interest in dividend payments owed by HCSB totaled $4.3 million.

Hollar was hired in March 2016, as part of a $45 million recapitalization effort led by Castle Creek Partners. She succeeded Jimmy Clarkson, who helped found the company in 1987 and served as president and CEO until the recapitalization.

In October, the company won its release from a five-year-old consent order with the Federal Deposit Insurance Corp. and South Carolina’s Board of Financial Institutions. It reported a $1.4 million fourth-quarter profit in January.