November 04, 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 and Hedging Instruments, page 40

1. We have reviewed your response to prior comment one of our
letter
dated September 21, 2005.  We note that your convertible advances
convert to a variable-rate on specified dates at the option of the
FHLB.  Please tell us whether the FHLB can require you to prepay
the
fixed-rate advance in cash unless you can negotiate a new advance,
once its conversion option has been exercised.





2. We have reviewed your response to prior comment two of our
letter
dated September 21, 2005.  We understand that you believe your
hedged
FHLB advances are not prepayable by either party.  However, as
stated
in the in the Early Termination Option section of the term sheet,
you
have the right to prepay the advance on the conversion date with
prior notification to the FHLB.  The condition in paragraph 68d of
SFAS 133 stipulates that the hedged item cannot be prepayable
unless
it is prepayable due to an embedded call or put option and the
hedging interest rate swap contains an embedded mirror image call
or
put option.  Because your hedged FHLB advances can be settled by
you
prior to maturity and contain conversion rights that are mirrored,
rather than call and put rights that are mirrored, it appears that
your convertible advances are prepayable and would not meet the
criteria in paragraph 68d of SFAS 133.  Please explain how you
reached your accounting decision in view of these considerations
and
provide us with a copy of your loan agreement.

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please file
your
response letter on EDGAR.  Please understand that we may have
additional comments after reviewing your responses to our
comments.

	You may contact Sharon Johnson, Staff Accountant, at (202)
551-
3474 or me at (202) 551-3490 if you have questions.


      Sincerely,



      Donald Walker
								Senior Assistant Chief
Accountant
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James R. Clarkson
HCSB Financial Services Corporation
November 4, 2005
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