1091491--3/18/2010--HCSB_FINANCIAL

related topics

{condition, economic, financial}

{loan, real, estate}

{stock, price, share}

{personnel, key, retain}

{capital, credit, financial}

{acquisition, growth, future}

{loss, insurance, financial}

{investment, property, distribution}

{system, service, information}

{regulation, change, law}

Negative developments in the financial industry and the domestic and international credit markets have adversely affected our operations and results. There can be no assurance that recently enacted legislation will help stabilize the U.S. financial system. Because of our participation in the Treasury Department s CPP, we are subject to several restrictions including restrictions on compensation paid to our executives. Legislation or regulatory changes could cause us to seek to repurchase the preferred stock and warrants that we sold to Treasury pursuant to the CPP. The Series T Preferred Stock impacts net income available to our common shareholders and earnings per common share, and the warrant we issued to Treasury may be dilutive to holders of our common stock. Continuation of the economic downturn could reduce our customer base, our level of deposits, and demand for financial products such as loans. A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt our business. Our small- to medium-sized business target markets may have fewer financial resources to weather a continued downturn in the economy. Our FDIC Deposit Insurance premiums have risen significantly in the recent past and may continue to increase in the future as a result of increased assessment rates imposed by the FDIC Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed. We depend heavily on out of market deposits as a source of funding. We are exposed to the possibility of technology failure. Our recent operating results may not be indicative of our future operating results. Our decisions regarding credit risk and reserves for loan losses may materially and adversely affect our business. A percentage of the loans in our portfolio currently include exceptions to our loan policies and supervisory guidelines. Lack of seasoning of our loan portfolio may increase the risk of credit defaults in the future. Changes in prevailing interest rates may reduce our profitability. We are dependent on key individuals and the loss of one or more of these key individuals could curtail our growth and adversely affect our prospects. James R. Clarkson, our president and chief executive officer, has extensive and long-standing ties within our primary market area and he has contributed significantly to our growth. If we lose the services of Mr. Clarkson, he would be difficult to replace, and our business and development could be materially Our success also depends, in part, on our continued ability to attract and retain experienced loan originators, as well as other management personnel. The loss of the services of several of such key personnel could adversely affect our growth strategy and prospects to the extent we are unable to replace such personnel. We are subject to extensive regulation that could limit or restrict our activities. We face strong competition for customers, which could prevent us from obtaining customers and may cause us to pay higher interest rates to attract customers. We will face risks with respect to future expansion and acquisitions or mergers. The success of our growth strategy depends on our ability to identify and retain individuals with experience and relationships in the markets in which we presently operate as well as those into which we intend to expand.

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1091491--3/18/2010--HCSB_FINANCIAL_CORP