September 21, 2005
Mail Stop 4561
James R. Clarkson
President and Chief Executive Officer
HCSB Financial Services Corporation
5201 Broad Street
Loris, South Carolina 29569
Re: HCSB Financial Services Corporation
Form 10-KSB for the period ended December 31, 2004
File No. 0-26995
Dear Mr. Clarkson:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. In some of our comments, we may ask
you
to provide us with information so we may better understand your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the period ended December 31, 2004
Financial Statements
Note 7 - Derivative Instruments and Hedging Activities, page 40
1. We note your disclosure on page 32 that you use the shortcut
method of assessing hedge effectiveness for fair value hedges. We
also note your disclosure on page 41 that your Federal Home Loan
Bank
advances are convertible advances that initially bear interest at
a
fixed-rate that can be converted to a floating-rate after a
certain
period. Please tell us the following regarding these hedges:
* the specific terms of the convertible advances and swaps used to
hedge these advances;
* how those terms match the terms of the advances; and
* how you determined that this particular hedging relationship
qualifies for shortcut treatment under paragraph 68 of SFAS 133.
2. Please provide us with a similar analysis for any other hedging
relationships for which you apply the shortcut method of assessing
hedge effectiveness.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a response letter that keys your responses to our
comments and provides any requested information. Detailed letters
greatly facilitate our review. Please file your response letter
on
EDGAR. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Sharon Johnson, Staff Accountant, at (202)
551-
3474 or me at (202) 551-3449 if you have questions.
Sincerely,
Joyce Sweeney
Branch Chief
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James R. Clarkson
HCSB Financial Services Corporation
September 21, 2005
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