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 19, 2007

Palmetto Bancshares, Inc. (Exact name of registrant as specified in charter)
South Carolina	0-26016		74-2235055
State or other jurisdiction of incorporation	Commission File Number	IRS Employer I.D. number
301 Hillcrest Drive, Laurens, South Carolina			29360
Address of principal executive offices			Zip Code
(864) 984-4551
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 19, 2007, Palmetto Bancshares, Inc. issued a press release that disclosed the results of operations and financial condition of the Company for the three and twelve months ended December 31, 2006.

For more information regarding this matter, see the press release attached hereto as Exhibit 99.

Item 9.01.      Financial Statements and Exhibits

(d) Exhibits

99   Press Release issued January 19, 2007.

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
Palmetto Bancshares, Inc.

/s/ Paul W. Stringer                                 
 Paul W. Stringer
 President and Chief Operating Officer
 (Chief Accounting Officer)

Date: February 5, 2007

EX-99.1

 

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, 2006, of $15.2 million, up 11% over the previous year. Net income per diluted share reached $2.37, up 10% over the previous year's record earnings of $2.15 per diluted share. Total assets were $1.2 billion at year-end 2006, up 7% or $78.1 million over year-end 2005. For the year ended December 31, 2006, Palmetto Bancshares, Inc. produced a 16.03% return on shareholders' equity and a 1.37% return on assets.

Net income for the quarter ended December 31, 2006, was $4.1 million, a 16% increase over net income for the same three months of 2005. Net income per diluted share for the fourth quarter was $.63, a 15% increase over $.55 per share reported for the fourth quarter of 2005.

The year 2006 marked the twenty-fourth consecutive year in which Palmetto Bancshares, Inc. has increased the payment of dividends to shareholders. Cash dividends paid in 2006 were 11% higher when compared with 2005. Shareholders' equity ended the year at $100.4 million, a 13% increase over year-end 2005.

Total loans at December 31, 2006, increased 9% over the prior year to $947.6 million, while total deposits reached $1.0 billion, a 10% increase over the prior year. The Palmetto Bank reported total assets under management (including mortgage servicing and trust and investment group assets) of $1.9 billion as compared with $1.8 billion reported at the close of the year 2005.

Celebrating more than 100 years of service in the Upstate, The Palmetto Bank manages $1.9 billion in assets including Commercial Banking, Trust and Investment Group and Mortgage Servicing.  The Palmetto Bank is the fifth largest independent state-chartered commercial bank in South Carolina with 32 locations throughout the Upstate counties of Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, Oconee, Pickens and Spartanburg.