SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                Annual Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                     For fiscal year ended December 31, 2002

                        Commission File Number 000-26995

                           HCSB FINANCIAL CORPORATION*
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             (Exact name of Registrant as specified in its charter)


         South Carolina                                     57-1079444
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       (State or other                                   (I.R.S. Employer
       jurisdiction of                                  Identification No.)
 incorporation or organization)


5201 Broad Street, Loris, South Carolina                    29569
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(Address of principal executive offices)                  (Zip Code)

         Registrant's telephone number, including area code 843/756-6333
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        Securities registered pursuant to Section 12(b) of the Act: None

    Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes X No__

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The issuer's revenues (net interest income plus noninterest income) for its most
recent fiscal year were $14,011,000.

The aggregate market value (computed on the basis of the most recent trades of
which the issuer was aware) of shares of the Common Stock held by non-affiliates
of the registrant as of March 21, 2003 was $35,593,765. The market value
calculation assumes that all shares beneficially owned by members of the board
of directors of the issuer are shown owned by "affiliates", a status which each
of the directors individually disclaims.

The number of shares outstanding of the issuer's classes of common stock as of
March 21, 2003, was 1,547,555.

Transitional Small Business Disclosure Format. (Check one): Yes        No   X
                                                               ------     -----



                       DOCUMENTS INCORPORATED BY REFERENCE

                             Company's             Proxy Statement for the 2003
                                                   Annual Shareholders Meeting
                                                   - Part III 2002 Annual
                                                   Report - - Part II.

*The registrant is a successor issuer, within the meaning of Rule 15d-5 under
the Securities Exchange Act of 1934, to Horry County State Bank, Loris, South
Carolina.


<PAGE>




                                     PART I
Item 1.    Description of Business

         This Report contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
the Securities Exchange Act of 1934. These statements are based on many
assumptions and estimates and are not guarantees of future performance. Our
actual results may differ materially from those projected in any forward-looking
statements, as they will depend on many factors about which we are unsure,
including many factors which are beyond our control. The words "may," "would,"
"could," "will," "expect," "anticipate," "believe," "intend," "plan," and
"estimate," as well as similar expressions, are meant to identify such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to:

        o        significant increases in competitive pressure in the banking
                 and financial services industries;

        o        changes in the interest rate environment which could reduce
                 anticipated or actual margins;

        o        the cost of defending and the risk of loss in connection with
                 litigation involving customers of and activities in our trust
                 department;

        o        changes in political conditions or the legislative or
                 regulatory environment;

        o        general economic conditions, either nationally or regionally
                 and especially in primary service area, becoming less favorable
                 than expected resulting in, among other things, a deterioration
                 in credit quality;

        o        changes occurring in business conditions and inflation;

        o        changes in technology;

        o        the level of allowance for loan loss;

        o        the rate of delinquencies and amounts of charge-offs;

        o        the rates of loan growth;

        o        adverse changes in asset quality and resulting credit
                 risk-related losses and expenses;

        o        changes in monetary and tax policies;

        o        changes in the securities markets; and

        o        other risks and uncertainties detailed from time to time in our
                 filings with the Securities and Exchange Commission.

General Overview

         HCSB Financial Corporation was incorporated as a South Carolina
corporation on June 10, 1999 to serve as the holding company for Horry County
State Bank. The bank is a state-chartered commercial bank which commenced
operations on January 4, 1988. Over the last fifteen years we have grown from a
newborn bank with assets of $2.2 million, one office, and seven employees to a
bank with over $200 million in assets, eleven offices, and over one hundred
employees. We opened two new offices in 2002, giving us a presence in most
markets within Horry County. At the present year, at the present time, we are


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not actively considering any additional branch expansion, although we shall
remain open to any potential opportunity that we believe to be beneficial to our
company and shareholders. Our primary goal in 2003 will be to further develop
the business volume at each of our present offices and thereby bring our
profitability ratios back towards where they were prior to our branch expansions
over the last couple of years. We offer a full range of deposit services for
individuals and businesses. Deposit products include checking accounts, savings
accounts, certificates of deposit, money market accounts, and IRAs.

Operating and Growth Strategy

         Our goal is to be the leading community bank in our market area. We
intend to achieve this goal chiefly by providing personalized service to our
customers. Other strategies that we will use to support our goal are hiring,
developing, and retaining high caliber and motivated employees, focusing each of
our branches on the unique needs and cultures of the community in which it is
located, maintaining high asset quality, increasing asset size through internal
growth and branch expansion, and offering our customers a breadth of products
competitive with those offered by much larger institutions. These goals are
intended to build long-term shareholder value.

        o       Personalized  Service.  We view banking as a service industry
                in which  personal  relationships  can provide a  competitive
                advantage.  This  paradigm  is  captured  in our  marketing
                tagline  "It's the little  things that make a little bank . . .
                BIG!" We strive to be "BIG"  (important) to our customers by
                doing "little"  things like  identifying  our customers'  needs
                and promoting  products to satisfy them,  knowing our customers
                by name, and providing our products with superior  levels of
                quality  and  service.  We seek  customers  who  prefer to
                conduct business with a locally owned and managed bank that
                demonstrates an active interest in their  business and personal
                financial affairs.  We believe that by consistently providing
                high levels of service to customers who value that service,
                we develop and strengthen  relationships that provide
                a competitive advantage.

        o       Motivated  Employees.  We believe that the key to our success
                lies with our  employees,  because it is through our employees
                that we are able to provide our  customers  with the high level
                of service and attention that they expect and deserve.  To
                this end, we hire people who are familiar with their community
                and are committed to providing a superior  level of banking
                service  to our  customers.  By  selecting  only  knowledgeable
                and committed  employees,  we  believe  we can  provide an
                unsurpassed  level of customer  service and  satisfaction.  We
                strive to develop,  sustain the motivation of, and retain our
                employees through training,  personal  attention,  recognition,
                and competitive  compensation.  We encourage and equip each
                employee to focus on the individual needs of our customers
                and to deliver the specific  products and services that will
                best help these customers achieve their financial goals.

        o       Community  Focus. We approach  banking with a community focus,
                particularly at the branch level. We operate each branch as
                an independent  business unit and encourage our branch
                managers to promote those products that best meet the need of
                their customer base. This strategy  enables our branches to
                serve diverse  populations and economies  effectively.  We
                support our branches by  supporting  the economic development
                of our communities and by encouraging our employees to be active
                in community affairs.  We have located our existing offices,
                and plan to locate proposed offices,  in communities in which
                we believe we can develop strong relationships.  We favor
                growth areas and areas in which there are opportunities to
                differentiate ourselves by providing customers with superior
                service.

        o       High Asset Quality. We place a great deal of emphasis on
                maintaining high asset quality and believe that the outstanding
                asset quality experienced to date is principally due to the
                closeness of our lenders, senior officers, and directors to our
                customers and their significant knowledge of the communities in
                which they reside.

        o       Internal Growth, Branch Expansion. We have grown significantly
                over the last five years. We will continue to focus on acquiring
                market share, particularly from large Southeastern regional


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           bank holding companies, by emphasizing our local management and
           decision-making and personal services.

        o       Broad Range of Products and Services. We strive to provide our
           customers with the breadth of products and services comparable to a
           regional bank, while maintaining the quick response and personal
           service of a locally owned and managed bank. In addition to offering
           a full range of deposit services and commercial and personal loans,
           we offer products such as mortgage loan originations, accounts
           receivable financing, and investment products and brokerage services
           through a third party arrangement.

Location and Service Area

         Our primary market includes Horry and Marion Counties in South Carolina
and Columbus and Brunswick Counties in North Carolina. We offer a full range of
deposit services, including checking accounts, savings accounts, certificates of
deposit, money market accounts, and IRA's. Most of the banks in Horry County in
South Carolina and Brunswick and Columbus counties in North Carolina are now
local branches of large regional banks. Although size gives the larger banks
certain advantages in competing for business from large corporations, including
higher lending limits and the ability to offer services in other areas of South
Carolina and Horry County in South Carolina and Brunswick and Columbus counties
in North Carolina, we believe that there is a void in the community banking
market in Brunswick and Columbus counties in North Carolina that we successfully
fill. We also believe that the Horry County market will continue to grow,
particularly along the Atlantic coast. We intend to continue to expand our
branch network to take advantage of opportunities caused by this growth. We
generally do not attempt to compete for the banking relationships of large
corporations, but concentrate our efforts on small- to medium-sized businesses
and on individuals.

Banking Services

         We offer a full range of deposit services that are typically available
in most banks and savings and loan associations, including checking accounts,
NOW accounts, savings accounts, and other time deposits of various types,
ranging from daily money market accounts to longer-term certificates of deposit.
The transaction accounts and time certificates are tailored to our principal
market area at rates competitive to those offered in our market area. In
addition, we offer certain retirement account services, such as Individual
Retirement Accounts. All deposit accounts are insured by the FDIC up to the
maximum amount allowed by law (generally, $100,000 per depositor, subject to
aggregation rules). We solicit these accounts from individuals, businesses,
associations and organizations, and governmental authorities.

Lending Activities

         General. We emphasize a range of lending services, including real
estate, commercial, agricultural and consumer loans, to individuals and small to
medium-sized businesses and professional concerns that are located in or conduct
a substantial portion of their business in our market area. The characteristics
of our loan portfolio and our underwriting procedures, collateral types, risks,
approval process and lending limits are discussed below.

          Real Estate Loans. The primary component of our loan portfolio is real
estate mortgage loans, which make up approximately 40.1% of our loan portfolio.
These loans are secured generally by first or second mortgages on residential or
commercial property. These loans consist of commercial real estate loans,
construction and development loans, and residential real estate loans (but
exclude home equity loans, which are classified as consumer loans).

         Commercial Loans. Approximately 29.7% of our loan portfolio consists
of commercial loans. Commercial loans consist of secured and unsecured loans,
lines of credit, and working capital loans. We

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make these loans to various types of businesses. Included in this category are
loans to purchase equipment, finance accounts receivable or inventory, and
loans made for working capital purposes.

         Consumer Loans. Consumer loans make up approximately 15.4% of our loan
portfolio. These are loans made to individuals for personal and household
purposes, such as secured and unsecured installment and term loans, home equity
loans and lines of credit, and revolving lines of credit such as overdraft
protection. Automobiles and small recreational vehicles are pledged as security
for their purchase.

         Agricultural Loans. Approximately 3.4% of our loan portfolio consists
of agricultural loans. These are loans made to individuals and businesses for
agricultural purposes, including loans to finance crop production and livestock
operating expenses, to purchase farm equipment, and to store crops. These loans
are secured generally by liens on growing crops and farm equipment. Also
included in this category are loans to agri-businesses, which are substantially
similar to commercial loans, as discussed above.

         Construction and Development Loans. The remaining 10.5% of our loan
portfolio is composed of consumer and commercial real estate construction and
commercial development loans. These loans are secured by the real estate for
which construction is planned and, in many cases, by supplementary collateral.

         Underwriting Procedures, Collateral, and Risk. We use our established
credit policies and procedures when underwriting each type of loan. Although
there are minor variances in the characteristics and criteria for each loan
type, which may require additional underwriting procedures, we generally
evaluate borrowers using the following defined criteria:

     o   Character - we evaluate whether the borrower has sound character and
         integrity by examining the borrower's history. o Capital - we evaluate
         the borrower's overall financial strength, as well as the equity
         investment in the asset being financed.
     o   Collateral - we evaluate whether the collateral is adequate from the
         standpoint of quality, marketability, value and income potential.
     o   Capacity - we evaluate the borrower's ability to service the debt.
     o   Conditions - we underwrite the credit in light of the effects of
         external factors, such as economic conditions and industry trends.

         It is our practice to obtain collateral for most loans to help mitigate
the risk associated with lending. We generally limit our loan-to-value ratio to
80%. For example, we obtain a security interest in real estate for loans secured
by real estate, including construction and development loans, and other
commercial loans. For commercial loans, we typically obtain security interests
in equipment and other company assets. For agricultural loans, we typically
obtain a security interest in growing crops, farm equipment, or real estate. For
consumer loans used to purchase vehicles, we obtain appropriate title
documentation. For secured loans that are not associated with real estate, or
for which the mortgaged real estate does not provide an acceptable loan-to-value
ratio, we typically obtain other available collateral such as stocks or savings
accounts.

          Every loan carries a credit risk, simply defined as the potential that
the borrower will not be willing or able to repay the debt. While this risk is
common to all loan types, each type of loan may carry risks that distinguish it
from other loan types. The following paragraphs discuss certain risks that are
associated with each of our loan types.

         Each real estate loans is sensitive to fluctuations in the value of the
real estate that secures that loan. Certain types of real estate loans have
specific risk characteristics that vary according to the type of collateral that
secures the loan, the terms of the loan, and the repayment sources for the loan.
Commercial real estate loans have risk that the primary source of repayment will
be insufficient to service the debt. Construction and development real estate
loans generally carry a higher degree of risk than long term financing of
existing properties. These projects are usually dependent on the completion of
the project on

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schedule and within cost estimates and on the timely sale of the
property. Inferior or improper construction techniques, changes in economic
conditions during the construction and marketing period, and rising interest
rates which may slow the sale of the property are all risks unique to this type
of loan. Residential mortgage loans, in contrast to commercial real estate
loans, generally have longer terms and may have fixed or adjustable interest
rates.

         Commercial loans primarily have risk that the primary source of
repayment will be insufficient to service the debt. Often this occurs as the
result of changes in economic conditions in the location or industry in which
the borrower operates which impact cash flow or collateral value. Consumer
loans, other than home equity loan products, are generally considered to have
more risk than loans to individuals secured by first or second mortgages on real
estate due to dependence on the borrower's employment status as the sole source
of repayment. Agricultural loans carry the risk of crop failure, which adversely
impacts both the borrower's ability to repay the loan and the value of the
collateral.

         By following defined underwriting criteria as noted above, we can help
to reduce these risks. Additionally we help to reduce the risk that the
underlying collateral may not be sufficient to pay the outstanding balance by
using appraisals or taking other steps to determine that the value of the
collateral is adequate, and lending amounts based upon lower loan-to-value
ratios. We also control risks by reducing concentration of our loan portfolio in
any one type of loan.

         Loan Approval and Review. Our loan approval policies provide for
various levels of officer lending authority. When the amount of aggregate loans
to a single borrower exceeds that individual officer's lending authority, the
loan request is considered by an officer with a higher lending limit. Any loan
in excess of this lending limit is approved by the directors' loan committee. We
do not make any loans to any of our directors or executive officers unless the
loan is approved by a three-fourth's vote of the board of directors of the bank
and is made on terms not more favorable to such person than would be available
to a person not affiliated with us. Aggregate credit in excess of 10% of the
bank's aggregate capital, surplus, retained earnings, and reserve for loan
losses must be approved by a three-fourth's vote of our bank's board of
directors.

         Lending Limits. Our lending activities are subject to a variety of
lending limits imposed by federal law. While differing limits apply to certain
loan types or borrowers, in general we are subject to a loan-to-one-borrower
limit. These limits increase or decrease as our capital increases or decreases.
Unless we sell participations in loans to other financial institutions, we are
not able to meet all of the lending needs of loan customers requiring aggregate
extensions of credit above these limits.

Other Banking and Related Services

         Other bank services which are in place or planned include cash
management services, safe deposit boxes, travelers checks, direct deposit of
payroll and social security checks, and automatic drafts for various accounts.
We are associated with a shared network of automated teller machines that may be
used by our customers throughout South Carolina and other regions. One of our
non-executive officers is a registered representative of UVEST and effects
transactions in securities and other non-deposit investment products. We also
offer MasterCard and VISA credit card services through a correspondent bank as
an agent for the bank. We continue to seek and evaluate opportunities to offer
additional financial services to our customers.

Competition

         The banking business is highly competitive. We compete with other
commercial banks, savings and loan associations, credit unions, and money market
mutual funds operating in our service area and elsewhere. As of June 2002, there
were fourteen commercial banks and four savings banks operating in Horry County.
We believe that our community bank focus, with our emphasis on service to small

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businesses, individuals, and professional concerns, gives us an advantage in
this market. Nevertheless, a number of these competitors are well established in
our service area. Most of them have substantially greater resources and lending
limits than the bank and offer certain services, such as extensive and
established branch networks and trust services, that we do not provide. As a
result of these competitive factors, we may have to pay higher rates of interest
to attract deposits.

Employees

As of March 21, 2003, the bank had 104 full-time and 2 part- time employees. The
company does not have any employees other than its officers. Neither the company
nor the bank is a party to a collective bargaining agreement, and they consider
their relations with employees to be good.


                           SUPERVISION AND REGULATION

         Both our company and our bank are subject to extensive state and
federal banking laws and regulations which impose specific requirements or
restrictions on and provide for general regulatory oversight of virtually all
aspects of operations. These laws and regulations are generally intended to
protect depositors, not shareholders. The following summary is qualified by
reference to the statutory and regulatory provisions discussed below.
Significant changes to the regulatory structure of the financial services
industry were enacted in 1999 and additional changes have been proposed. From
time to time other changes are proposed to laws and the policies of various
regulatory authorities affecting the Banking industry, and these changes could
have a material effect on our operations, business, and prospects. We cannot
predict the effect that fiscal or monetary policies, economic control, or new
federal or state legislation may have on our business and earnings in the
future.

USA Patriot Act of 2001

         In October 2001, the USA Patriot Act of 2001 was enacted in response to
the terrorist attacks in New York, Pennsylvania and Washington D.C. which
occurred on September 11, 2001. The Patriot Act is intended to strengthen U.S.
law enforcement's and the intelligence communities' abilities to work cohesively
to combat terrorism on a variety of fronts. The potential impact of the Patriot
Act on financial institutions of all kinds is significant and wide ranging. The
Patriot Act contains sweeping anti-money laundering and financial transparency
laws and imposes various regulations, including standards for verifying client
identification at account opening, and rules to promote cooperation among
financial institutions, regulators and law enforcement entities in identifying
parties that may be involved in terrorism or money laundering.

Gramm-Leach-Bliley Act

          In November 1999, the Gramm-Leach-Bliley Act, previously known as the
Financial Services Modernization Act of 1999, was signed into law. Among other
things, the Act repeals the restrictions on banks affiliating with securities
firms contained in sections 20 and 32 of the Glass-Steagall Act. The Act also
permits bank holding companies to engage in a statutorily provided list of
financial activities, including insurance and securities underwriting and agency
activities, merchant banking, and insurance company portfolio investment
activities. The Act also authorizes activities that are "complementary" to
financial activities. The Act is intended, in part, to grant to community banks
certain powers as a matter of right that larger institutions have accumulated on
an ad hoc basis. Nevertheless, the Act may have the result of increasing the
amount of competition that we face from larger institutions and other types of
companies. In fact, it is not possible to predict the full effect that the Act
will have on us.

         The Gramm-Leach-Bliley Act also contains provisions regarding consumer
privacy. These provisions require financial institutions to disclose their
policy for collecting and protecting confidential information. Customers
generally may prevent financial institutions from sharing personal financial
information with nonaffiliated third parties except for third parties that
market an institution's own products

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and services. Additionally, financial institutions generally may not disclose
consumer account numbers to any nonaffiliated third party for use in
telemarketing, direct mail marketing, or other marketing to the consumer.



HCSB Financial Corporation

         Because it owns the outstanding capital stock of our bank, our holding
company is a bank holding company under the federal Bank Holding Company Act of
1956 and the South Carolina Banking and Branching Efficiency Act.

         The Bank Holding Company Act. Under the Bank Holding Company Act, the
company is subject to periodic examination by the Federal Reserve and required
to file periodic reports of its operations and any additional information that
the Federal Reserve may require. Our activities at the bank and holding company
level are limited to:

o      banking and managing or controlling banks;
o      furnishing services to or performing services for its subsidiaries; and
o      engaging in other activities that the Federal Reserve determines to be so
       closely related to banking and managing or controlling banks as to be a
       proper incident thereto.

         Investments, Control, and Activities. With certain limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:

o      acquiring substantially all the assets of any bank;
o      acquiring direct or indirect ownership or control of any voting shares of
       any bank if after the acquisition it would own or control more than 5% of
       the voting shares of such bank (unless it already owns or controls the
       majority of such shares); or
o      merging or consolidating with another bank holding company.

         In addition, and subject to certain exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with regulations
thereunder, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of a bank holding company. Control is rebuttably presumed to exist if
a person acquires 10% or more, but less than 25%, of any class of voting
securities and either the company has registered securities under Section 12 of
the Securities Exchange Act of 1934 or no other person owns a greater percentage
of that class of voting securities immediately after the transaction. The
company's common stock is registered under the Securities Exchange Act of 1934.
The regulations provide a procedure for challenge of the rebuttable control
presumption.

         Under the Bank Holding Company Act, a bank holding company is generally
prohibited from engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in nonbanking activities
unless the Federal Reserve Board, by order or regulation, has found those
activities to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. Some of the activities that the Federal
Reserve Board has determined by regulation to be proper incidents to the
business of a bank holding company include:

o       making or servicing loans and certain types of leases;
o       engaging in certain
        insurance and discount brokerage activities;
o       performing certain data processing services;
o       acting in certain circumstances as a fiduciary or
        investment or financial adviser;
o       owning savings associations; and


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o       making investments in certain corporations or projects designed
        primarily to promote community welfare.

         The Federal Reserve Board imposes certain capital requirements on the
company under the Bank Holding Company Act, including a minimum leverage ratio
and a minimum ratio of "qualifying" capital to risk-weighted assets. These
requirements are described below under "Capital Regulations." Subject to its
capital requirements and certain other restrictions, the company is able to
borrow money to make a capital contribution to the bank, and these loans may be
repaid from dividends paid from the bank to the company. Our ability to pay
dividends is subject to regulatory restrictions as described below in "Horry
County State Bank - Dividends." The company is also able to raise capital for
contribution to the bank by issuing securities without having to receive
regulatory approval, subject to compliance with federal and state securities
laws.

         Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, the company is expected to act as a source of financial strength
to the bank and to commit resources to support the bank in circumstances in
which the company might not otherwise do so. Under the Bank Holding Company Act,
the Federal Reserve Board may require a bank holding company to terminate any
activity or relinquish control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, upon the Federal Reserve Board's determination that such
activity or control constitutes a serious risk to the financial soundness or
stability of any subsidiary depository institution of the bank's holding
company. Further, federal bank regulatory authorities have additional discretion
to require a bank holding company to divest itself of any bank or nonbank
subsidiary if the agency determines that divestiture may aid the depository
institution's financial condition.

         South Carolina State Regulation. As a bank holding company registered
under the South Carolina Banking and Branching Efficiency Act, we are subject to
limitations on sale or merger and to regulation by the South Carolina Board of
Financial Institutions. We must receive the Board's approval prior to engaging
in the acquisition of banking or nonbanking institutions or assets, and we must
file periodic reports with respect to our financial condition and operations,
management, and intercompany relationships between the company and its
subsidiaries.

Horry County State Bank

          The bank operates as a South Carolina state chartered bank and is
subject to examination by the South Carolina Board of Financial Institutions.
Deposits in the bank are insured by the FDIC up to a maximum amount, which is
generally $100,000 per depositor subject to aggregation rules.

         The South Carolina Board of Financial Institutions and the FDIC
regulate or monitor virtually all areas of the bank's operations, including:


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o        security devices and procedures;
o        adequacy of capitalization and loss reserves;
o        loans;
o        investments;
o        borrowings;
o        deposits;
o        mergers;
o        issuances of securities;
o        payment of dividends;
o        interest rates payable on deposits;
o        interest rates or fees chargeable on loans;
o        establishment of branches;
o        corporate reorganizations;
o        maintenance of books and records; and
o        adequacy of staff training to carry on safe lending and deposit
         gathering practices.

         The South Carolina Board of Financial Institutions requires the bank to
maintain specified capital ratios and imposes limitations on the bank's
aggregate investment in real estate, bank premises, and furniture and fixtures.
The FDIC requires the bank to prepare quarterly reports on the bank's financial
condition and to conduct an annual audit of its financial affairs in compliance
with its minimum standards and procedures.

         Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and their state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:

o        internal controls;
o        information systems and audit systems;
o        loan documentation;
o        credit underwriting;
o        interest rate risk exposure; and
o        asset quality.

         Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to offset losses from insurance payouts when banks and
thrifts fail. In 1993, the FDIC adopted a rule which establishes a risk-based
deposit insurance premium system for all insured depository institutions. Under
this system, until mid-1995 depository institutions paid to Bank Insurance Fund
or Savings Association Insurance Fund from $0.23 to $0.31 per $100 of insured
deposits depending on its capital levels and risk profile, as determined by its
primary federal regulator on a semiannual basis. Once the Bank Insurance Fund
reached its legally mandated reserve ratio in mid-1995, the FDIC lowered
premiums for well-capitalized banks, eventually eliminating premiums for
well-capitalized banks, with a minimum semiannual assessment of $1,000. However,
in 1996 Congress enacted the Deposit Insurance Funds Act of 1996, which
eliminated even this minimum assessment. It also separated the Financial
Corporation assessment to service the interest on its bond obligations. The
amount assessed on individual institutions by the Financial Corporation
assessment is in addition to the amount paid for deposit insurance

                                       10
<PAGE>


according to the risk-related assessment rate schedule. Increases in deposit
insurance premiums or changes in risk classification will increase the bank's
cost of funds, and we may not be able to pass these costs on to our customers.

         Transactions with Affiliates and Insiders. The bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which places limits on the
amount of loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the securities or obligations of affiliates. The aggregate of
all covered transactions is limited in amount, as to any one affiliate, to 10%
of the bank's capital and surplus and, as to all affiliates combined, to 20% of
the bank's capital and surplus. Furthermore, within the foregoing limitations as
to amount, each covered transaction must meet specified collateral requirements.
Compliance is also required with certain provisions designed to avoid the taking
of low quality assets.

         The bank is also subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.

         The Federal Reserve Board has recently issued Regulation W, which
codifies prior regulations under Sections 23A and 23B of the Federal Reserve Act
and interpretative guidance with respect to affiliate transactions. Regulation W
incorporates the exemption from the affiliate transaction rules but expands the
exemption to cover the purchase of any type of loan or extension of credit from
an affiliate. In addition, under Regulation W:

o        a bank and its subsidiaries may not purchase a low-quality asset from
         an affiliate;
o        covered transactions and other specified transactions between a
         bank or its subsidiaries and an affiliate must be on terms and
         conditions that are consistent with safe and sound banking
         practices; and
o        with some exceptions, each loan or extension of credit by a bank
         to an affiliate must be secured by collateral with a market value
         ranging from 100% to 130%, depending on the type of collateral, of
         the amount of the loan or extension of credit.

         Regulation W generally excludes all non-bank and non-savings
association subsidiaries of banks from treatment as affiliates, except to the
extent that the Federal Reserve Board decides to treat these subsidiaries as
affiliates. Concurrently with the adoption of Regulation W, the Federal Reserve
Board has proposed a regulation which would further limit the amount of loans
that could be purchased by a bank from an affiliate to not more than 100% of the
bank's capital and surplus. Comments on the proposed rule were due by January
13, 2003.

         Dividends. The bank is subject to regulatory restrictions on the
payment of dividends, including a prohibition of payment of dividends from its
capital. All dividends must be paid out of the undivided profits then on hand,
after deducting expenses, including losses and bad debts. The bank is authorized
to pay cash dividends up to 100% of net income in any calendar year without
obtaining the prior approval of the South Carolina Board of Financial
Institutions provided that the bank received a composite rating of one or two at
the last federal or state regulatory examination. The bank must obtain approval
from the South Carolina Board of Financial Institutions prior to the payment of
any other cash dividends. In addition, under the FDIC Improvement Act, the bank
may not pay a dividend if, after paying the dividend, the bank would be
undercapitalized. See "Capital Regulations" below.

         Branching. Under current South Carolina law, we may open bank branch
offices throughout South Carolina with the prior approval of the South Carolina
Board of Financial Institutions. In addition,

                                       11
<PAGE>


with prior regulatory approval, the bank may acquire existing banking operations
in South Carolina. Furthermore, federal legislation generally permits interstate
branching by authorizing out-of-state acquisitions by bank holding companies,
interstate branching by banks if allowed by state law, interstate merging by
banks, and de novo branching by banks if allowed by state law. However,
North Carolina does not permit de novo branching by South Carolina banks.

         Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, a financial institution's primary federal regulator
(this is the FDIC for our bank) shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose additional requirements
and limitations on the bank.

         Other Regulations. Interest and other charges collected or contracted
for by the bank are subject to state usury laws and federal laws concerning
interest rates. The bank's loan operations are also subject to federal laws
applicable to credit transactions, such as:

o    the federal Truth-In-Lending Act, governing disclosures of credit terms to
     consumer borrowers;
o    the Home Mortgage Disclosure Act of 1975, requiring financial institutions
     to provide information to enable the public and public officials to
     determine whether a financial institution is fulfilling its obligation to
     help meet the housing needs of the community it serves;
o    the Equal Credit Opportunity Act, prohibiting discrimination on the basis
     of race, creed or other prohibited factors in extending credit;
o    the Fair Credit Reporting Act of 1978, governing the use and provision of
     information to credit reporting agencies; o the Fair Debt Collection Act,
     governing the manner in which consumer debts may be collected by collection
     agencies; and o the rules and regulations of the various federal agencies
     charged with the responsibility of implementing such federal
     laws.

The deposit operations of the bank also are subject to:

o    the Right to Financial Privacy Act, which imposes a duty to maintain
     confidentiality of consumer financial records and prescribes procedures for
     complying with administrative subpoenas of financial records; and
o    the Electronic Funds Transfer Act and Regulation E issued by the Federal
     Reserve Board to implement that act, which governs automatic deposits to
     and withdrawals from deposit accounts and customers' rights and liabilities
     arising from the use of automated teller machines and other electronic
     banking services.

         Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice indicating that either the company or the bank is subject to
higher capital requirements. The current guidelines require all bank holding
companies and federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1
capital includes common shareholders' equity, qualifying perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries,
but excludes goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred stock
not included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments, subordinated

                                       12
<PAGE>


debt and intermediate term-preferred stock, and general reserves for loan and
lease losses up to 1.25% of risk-weighted assets.

         Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

         The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.

          The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
the bank must not be under any order or directive from the appropriate
regulatory agency to meet and maintain a specific capital level. Currently, we
qualify as "well capitalized."

         Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines (after notice and an opportunity for hearing) that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:

o       submit a capital restoration plan;
o       raise additional capital;
o       restrict their growth, deposit interest rates, and other activities;
o       improve their management;
o       eliminate management fees; or
o       divest themselves of all or a part of their operations.

Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.

         These capital guidelines can affect us in several ways. If we grow at a
rapid pace, our capital may be depleted too quickly, and a capital infusion from
the holding company may be necessary which could impact our ability to pay
dividends. Our capital levels currently are adequate; however, rapid growth,
poor loan portfolio performance, poor earnings performance, or a combination of
these factors could change our capital position in a relatively short period of
time.

         Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving

                                       13
<PAGE>


the minimum capital requirements. In addition, such a bank would generally not
receive regulatory approval of any application that requires the consideration
of capital adequacy, such as a branch or merger application, unless the bank
could demonstrate a reasonable plan to meet the capital requirement within a
reasonable period of time.

         Securities Regulation. One non-executive officer of the bank is
licensed with the National Association of Securities Dealers, Inc. (NASD), and
with the State of North Carolina as a registered representative of UVEST, an
NASD-member firm. This officer is subject to the rules and policies of the NASD.
The networking and brokerage affiliate arrangements between UVEST and the bank
are governed by a written agreement. Representatives of UVEST, the North
Carolina Securities Division, the NASD, and the Securities and Exchange
Commission may inspect the bank's records regarding securities transactions.

         Enforcement Powers. The Financial Institution Report Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such violations. Criminal penalties for some financial
institution crimes have been increased to 20 years. In addition, regulators are
provided with greater flexibility to commence enforcement actions against
institutions and institution-affiliated parties. Possible enforcement actions
include the termination of deposit insurance. Furthermore, banking agencies'
power to issue cease-and-desist orders were expanded. Such orders may, among
other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnification or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.

         Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had, and are likely to continue to have, an important impact on the
operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to curb inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.

ITEM 2.           DESCRIPTION OF PROPERTIES

         The organizers of Horry County State Bank purchased a lot at 5009 Broad
Street, Loris, South Carolina in 1987, and the bank initially opened for
business in January 1988 in a modular facility on this site. The bank
subsequently built a permanent building on this same site, moved its entire
operation into this facility in April 1999 and sold the modular building. The
permanent building was enlarged several years later to accommodate the bank's
growth and need to expand its support operations area. Today this building
houses the bank's main branch bank in Loris, the bank's Residential Mortgage
Loan Department and the bank's Investment Services Department. The bank owns
this property in fee simple title.

         In 1994 the bank purchased a lot in fee simple at 5264 Hwy. 9, Green
Sea, South Carolina and opened a full-service branch bank on this site in March
1995 in a modular building. The bank subsequently constructed a 2,300 square
foot building on this site and relocated its branch operations into this
permanent facility in February 1998. The bank still owns the modular building,
which is presently unoccupied.


                                       14
<PAGE>


         In January 1997, the bank purchased a commercial lot and former banking
office at 4011 Meeting Street, Loris, South Carolina, and renovated this
building to accommodate a second branch facility in Loris as well as the bank's
central credit operations department. The bank opened this facility in May 1997.
It presently serves solely as a branch banking facility. The bank owns this
property in fee simple.

         The bank purchased a lot and building at East 5th Street, Tabor City,
North Carolina in July, 1997, in anticipation of filing an Application to
Establish a Branch Banking Facility at this location based on the fact that the
Reigle-Neal Act would authorize interstate branching into North Carolina
effective June 1, 1997. Late in May 1997, however the North Carolina legislature
rescinded its earlier position on interstate branching and extended its
moratorium on such branching into North Carolina until June 1, 1999. Since that
time, this moratorium has been extended permanently. The bank still owns this
property in fee simple.

         Having been thwarted by the North Carolina banking statute change, the
bank entered into a long-term lease agreement to lease a lot at 3201 Hwy. 701
North, Loris, South Carolina which borders the South Carolina-North Carolina
boundary. The lease included an initial 5-year term with four renewal options of
five years each. The bank opened a full-service branch operation in a modular
facility on this site in October 1997. The bank expects to build a permanent
facility on this site in the future.

         In March 1996, the bank purchased in fee simple a 2.82 acre tract on
Hwy. 9, Little River, South Carolina and subsequently purchased a modular
banking facility for location on this site. The bank opened this branch bank in
October 1997, at 3189 Hwy. 9, Little River, South Carolina. In November 1999,
the bank completed and moved this branch banking operation into a new 3,300
square foot permanent building on this same property, although the physical
address changed to 3187 Hwy. 9, Little River, South Carolina. In March 2000, the
bank sold the modular building and subsequently sold a 1.18 acre portion of this
tract.

         In November 1997, the bank entered into an agreement to lease a
commercial lot and former bank building at 1627-A Church Street, Conway, South
Carolina. The bank opened a full-service branch operation at this location in
February 1998, and subsequently purchased this property in April 1998. The bank
now owns this property in fee simple. The bank completed a renovation of the
building and an addition thereto during the first quarter of 2002.

         In January 1998, the bank purchased a commercial lot and building at
5201 Broad Street, Loris, South Carolina, which is adjacent to the bank's main
branch office in Loris. After remodeling and adding on to this building, the
bank in March 2000, relocated Executive Offices, Audit Department, Central
Deposit Operations, Central Credit Operations and Computer Operations into this
10,000 square foot facility.

         In August 1999, the bank purchased a 0.84 acre commercial lot at 3201
Hwy. 701 North, Conway, South Carolina. In conjunction with this purchase the
bank also acquired three lifetime easements on adjoining properties totaling
0.19 acre. The bank opened a 3,300 square foot full service branch operation on
this site in August 2000.

         In November 2000, the bank purchased a lot and former full service
banking facility at 4600 Hwy. 17 By-pass South, Myrtle Beach, South Carolina.
After remodeling this facility, the bank opened for business in February 2001.

         In March 2002, the bank purchased a lot at 4400 Hwy 17 South, North
Myrtle Beach, South Carolina. The bank constructed a 3,300 square foot banking
facility on this property which opened for business in February 2003.


                                       15
<PAGE>


         In March 2002, the bank entered into an agreement to lease a building
at 2713 Hwy 17 South, North Myrtle Beach, South Carolina. The lease is for one
year with two three month renewal options. The bank opened this office in June
2002 and operated there during the construction of the permanent building at
4400 Hwy 17 South, North Myrtle Beach, South Carolina. The bank moved into this
permanent facility in February 2003 and terminated the lease of the temporary
facility.

         In March 2002, the bank entered into an agreement to lease an office
building at 1601 North Oak Street, Suite 103, Myrtle Beach, South Carolina. The
lease is for one year with twelve one month renewal options. The bank purchased
a lot at 1701 North Oak Street in Myrtle Beach, SC in October 2002 on which to
build a permanent branch facility and received approval of its application to
establish the proposed branch in July 2002. The bank opened for business in the
temporary location in August 2003. The bank expects to begin construction of its
permanent facility during the second quarter of 2003.

ITEM 3.  LEGAL PROCEEDINGS

         In the ordinary course of operations, we are a party to various legal
proceedings. Our management does not believe that there is any pending or
threatened proceeding against us which, if determined adversely, would have a
material effect on our business, results of operations, or financial position
during the year ended December 31, 2002.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted during the fourth quarter of the fiscal year
ended December 31, 2002 to a vote of security holders, through the solicitation
of proxies or otherwise.

                                     PART II

ITEM 5.  MARKET FOR COMMON SHARE AND DIVIDENDS

            Pursuant to Rule 463, we are obligated to report on the use of
proceeds from our public offering. The information provided below is given as of
December 31, 2002.

(1)      Our registration statement on Form SB-2 (File No. 333-69492) was
         declared effective by the Commission on January 5, 2002.

(2)      The offering commenced on March 31, 2002.

(3)      The offering closed on August 31, 2002 upon the sale of aggregate of
         370,541 shares common stock.  We deregistered the remaining 129,459
         shares on December 10, 2002.

(4)     (i)      The offering was made primarily by our executive officers
                 and directors as well as by Mark S. Buckner as a registered
                 representative of UVEST Investment Services, Inc. Mr. Buckner
                 is also our vice president and senior investment consultant.
                 Neither our executive officers or directors nor Mr. Buckner
                 received any commissions for any sales they made. UVEST served
                 as the selling agent and North Carolina-sponsoring dealer for
                 the offering.

        (ii)     Common stock was the only class of securities registered in the
                 offering.

        (iii)    500,000 shares of common stock were registered, of which
                 370,541 shares were sold. The aggregate offering price of the
                 amount registered was $11,000,000 and the aggregate offering
                 price of the amount sold was $8,151,902.


                                       16
<PAGE>


        (iv)     We incurred $324,000 in expenses in connection with the
                 issuance and distribution of the common stock in the offering.
                 All of these expenses were paid directly or indirectly to
                 persons or entities other than directors, officers, persons
                 owning 10% or more of the company's securities, or affiliates
                 of the company.

        (v)      The net proceeds to the company after deducting the total
                 expenses described above were $7,721,000.

        (vi)     We used approximately $2,913,000 to out fit two new branches.
                 The remaining $4,808,000 was used to support loan growth and
                 for general working capital purposes.

        (vii)    The use of proceeds described above does not represent a
                 material change from the use of proceeds disclosed in the
                 prospectus for the offering.

         In addition, in response to this Item, certain information contained on
page 6 of the company's Annual Report to Shareholders for the year ended
December 31, 2002 is incorporated herein by reference.

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS

         In response to this Item, the information contained on pages 7 through
23 of the company's Annual Report to Shareholders for the year ended December
31, 2002 is incorporated herein by reference.

ITEM 7.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         In response to this Item, the information contained on pages 24 through
44 of the company's Annual Report to Shareholders for the year ended December
31, 2002 is incorporated herein by reference.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE

         Tourville, Simpson and Caskey, LLP (TSC), which served as the principal
     independent accountant for the company since December 1987, resigned from
     such position effective January 2, 2003 as it has ceased its auditing
     services for all of its clients. TSC's report on the financial statements
     of the company for each of the years ended December 31, 2000 and December
     31, 2001 did not contain an adverse opinion or a disclaimer of opinion and
     was not qualified or modified as to uncertainty, audit scope or accounting
     principles.

         There were no disagreements between the company and TSC on any matter
     of accounting principles or practices, financial statement disclosure or
     auditing scope or procedure, which disagreements, if not resolved to the
     satisfaction of TSC, would have caused it to make reference to the subject
     matter of the disagreements in connection with its report.

     The disclosures required by Item 304 (a) (1) (iv) (B) of Regulation S-B are
     not applicable.

         Elliott Davis, LLC, certified public accountants, was engaged by the
     company on January 2, 2003, to audit the financial statements for the year
     ending December 31, 2002. The company did not consult Elliott Davis
     regarding any of the matters set forth in Item 304 (a) (2) (i) or (ii) of
     Regulation S-B.

                                    PART III

         Information called for by Part III on this Report on Form 10-KSB have
been omitted as we have filed a definitive Proxy Statement pursuant to
Regulation 14A promulgated under the Securities and Exchange Act of 1934 which
includes this information.


                                       17
<PAGE>


ITEM 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         In response to this Item 9, the information contained on pages 4
through 6 of our Proxy Statement for the Annual Meeting of Shareholders to be
held on April 24, 2003 is incorporated herein by reference.

ITEM 10.   EXECUTIVE COMPENSATION

         In response to this Item 10, the information contained on page 6 of our
Proxy Statement for the Annual Meeting of Shareholders to be held on April 24,
2003 is incorporated herein by reference.

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

         In response to this Item 11, the information contained on page 7 of our
Proxy Statement for the Annual Meeting of Shareholders to be held on April 24,
2003 is incorporated herein by reference.

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In response to this Item 12, the information contained on page 9 of our
Proxy Statement for the Annual Meeting of Shareholders to be held on April 24,
2003 is incorporated herein by reference.

ITEM 13.   Exhibits, List And Reports On Form 8-K

(a) The following documents are filed as a part of this report:

3.1      Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
         the Company's Form 10-K for the fiscal year ended December 31, 1999).

3.2      Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Form
         10-K for the fiscal year ended December 31, 1999).

13       The Company's 2002 Annual Report

21       Subsidiaries of Registrant

24       Power of Attorney (contained on signature pages herewith)

(b) Reports on Form 8-K

The following reports on Form 8-K were filed during the fourth quarter ended
December 31, 2002.

We filed a Form 8-K on November 14, 2002 to disclose that the Chief Executive
Officer, James R. Clarkson, and the Chief Financial Officer, Michael W.
Hambrick, each furnished to the SEC the certification required pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

Item 14.  Controls and Procedures

            Within 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
SEC reports. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.


                                       18
<PAGE>


         In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.



                                       19
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                  HCSB FINANCIAL CORPORATION

                                      /s/ James R. Clarkson
Date:  March 25, 2003             By: -----------------------------
                                      James R. Clarkson, President
                                      & Chief Executive Officer

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James R. Clarkson, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:

By:    /s/ Johnny C. Allen                    Date:  March 25, 2003
      --------------------------
      Johnny C. Allen, Director

By:   /s/ Clay D. Brittain                    Date:  March 25, 2003
      ---------------------------
      Clay D. Brittain, Director


By:   /s/ Russell R. Burgess, Jr.             Date:  March 25, 2003
      -----------------------------
      Russell R. Burgess, Jr., Director


By:   /s/ D. Singleton Bailey                 Date:  March 25, 2003
      ----------------------------
      D. Singleton Bailey, Director


By:  /s/ Franklin C. Blanton                  Date:  March 25, 2003
      ----------------------------
      Franklin C. Blanton, Director


By:  /s/ William H. Caines                    Date:  March 25, 2003
      ----------------------------
      William H. Caines, Director


By:  /s/ James R. Clarkson                    Date:  March 25, 2003
      ----------------------------
      James R. Clarkson, Director,
      President & CEO


By:  /s/ J. Lavelle Coleman                   Date:  March 25, 2003
      ----------------------------
      J. Lavelle Coleman, Director




                                       20
<PAGE>




By:  /s/ Larry G. Floyd                       Date:  March 25, 2003
     ---------------------------
     Larry G. Floyd, Director


By:  /s/ Boyd R. Ford, Jr.                    Date:  March 25, 2003
     ---------------------------
     Boyd R. Ford, Jr., Director


By:  /s/ Tommie W. Grainger                  Date:  March 25, 2003
     ---------------------------
     Tommie W. Grainger, Director


By:  /s/ Randy B. Hardee                     Date:  March 25, 2003
     ---------------------------
     Randy B. Hardee, Director


By:  /s/ Michael W. Hambrick                 Date:  March 25, 2003
     ---------------------------
     Michael W. Hambrick, Vice
     President and
     Chief Financial Officer
    (Principal Accounting Officer)

By: /s/ Gwyn G. McCutchen                    Date:  March 25, 2003
    ---------------------------
    Gwyn G. McCutchen, Director

By: /s/ T. Freddie Moore                     Date:  March 25, 2003
    ----------------------------
    T. Freddie Moore, Director

By:  /s/ Carroll D. Padgett, Jr.             Date:  March 25, 2003
    ----------------------------
    Carroll D. Padgett, Jr., Director

By:  /s/ Bill G. Page                        Date:  March 25, 2003
    ----------------------------
    Bill G. Page, Director



                                       21
<PAGE>



                                  EXHIBIT INDEX


3.1      Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
         the Company's Form 10-K for the fiscal year ended December 31, 1999).

3.2      Bylaws (incorporated by reference to Exhibit 3.2 to the Company's
         Form 10-K for the fiscal year ended December 31, 1999).

13       The Company's 2002 Annual Report

21       Subsidiaries of Registrant

24       Power of Attorney (contained on signature pages herewith)




                                       22
<PAGE>