8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 7, 2005

Palmetto Bancshares, Inc.
(Exact name of registrant as specified in charter)

South Carolina	0-26016	74-2235055
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State or other	Commission File Number	IRS Employer
jurisdiction of incorporation or		Identification Number
organization

301 Hillcrest Drive, Laurens, South Carolina, 29360
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                    Address of principal executive offices, including zip code

(864) 984-4551
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Registrant's telephone number

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     [   ]   Written communications pursuant to Rule 425 under the Securities Act 
              (17 CFR 230.425)

     [   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act
              (17 CFR 240.14a-12)

     [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
             Exchange Act (17 CFR 240.14d-2(b))

     [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
             Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.        Results of Operations and Financial Condition.

On January 7, 2005, Palmetto Bancshares, Inc. issued a press release which discloses the results of operations and financial condition of the Company for the year ended December 31, 2004.

For more information regarding this matter, see the shareholder earnings overview attached hereto as Exhibit 99.

Item 9.01.        Financial Statements and Exhibits

(c) Exhibits

    99   Press Release issued January 7, 2005.

SIGNATURES

Pursuant to the requirements 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.

PALMETTO BANCSHARES, INC.

By:

/s/ L. Leon Patterson
- ------------------------------------
L. Leon Patterson
Chairman and Chief Executive Officer
 

/s/ Paul W. Stringer
- ------------------------------------
Paul W. Stringer
President and Chief Operating Officer
 

Date:   January 10, 2005

EX-99

FOR IMMEDIATE RELEASE	For More Information
January 7, 2005	Contact:
	Ida Smith (864) 984-8395
	ismith@palmettobank.com

Palmetto Bancshares, Inc. Reports Record Year

UPSTATE, SC - L. Leon Patterson, chairman and chief executive officer of Palmetto Bancshares, Inc., parent company of The Palmetto Bank, reported net income for the year ended December 31, 2004, of $12.1 million, up 11.19% over the previous year. Net income per diluted share reached $1.90, up 11.76% over the previous year's record earnings of $1.70 per diluted share. Total assets were $995.8 million at year-end 2004, up 10.88% or $97.7 million over year-end 2003. For the year ended December 31, 2004, Palmetto Bancshares, Inc. produced a 15.82% return on shareholders' equity and a 1.30% return on assets.

Net income for the quarter ended December 31, 2004, was $3.1 million, a 29% increase over net income for the same three months of 2003. Net income per diluted share for the fourth quarter was $.49, a 29% increase over $.38 per share reported for the fourth quarter of 2003.

The year 2004 marked the twenty-second consecutive year in which Palmetto Bancshares, Inc. has increased the payment of dividends to shareholders. Cash dividends paid in 2004 were 13.73% higher when compared with 2003. Shareholders' equity ended the year at $80.8 million, a 12.19% increase over year-end 2003.

Total loans at December 31, 2004, increased 11.36% over the prior year to $779.1 million, while total deposits reached $860.9 million, a 7.42% increase over the same periods. The Palmetto Bank reported total assets under management (including mortgage servicing and trust and investment subsidiary assets) of $1.7 billion as compared with $1.5 billion reported at the close of the year 2003.

Serving the Upstate for 98 years, The Palmetto Bank is an independent, state-chartered commercial bank with 30 locations throughout the Upstate counties of Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, Oconee, and Spartanburg.

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