Exhibit 99.1

Bank Notes

OFFICER APPOINTMENTS

Tricia (Trish) P. Springfield has been appointed to Executive Vice President, Retail Banking Executive with overall responsibility for all retail banking activities. In this senior management role, Mrs. Springfield’s responsibilities will include all loan and deposit products and services provided to retail customers primarily through the Bank’s 29 branches. Mrs. Springfield will also have overall lending responsibility for residential mortgage, credit card, and indirect automobile, as well as small business lending and merchant services to commercial customers.

Blake E. Davis has been promoted to Branch Manager and Loan Officer, North Harper office. He is a graduate of Newberry College, the South Carolina Bankers School, the SCBA Commercial Lending School, and Leadership Laurens County Class XVI. Davis has been employed with The Palmetto Bank since May 2001.

Jeanie Roberts has been promoted to Branch Information Support (BIS) Manager, BIS department. Roberts has been employed with The Palmetto Bank for twelve years.

PROMOTIONS ANNOUNCED

Jeri C. Manley has been promoted to Assistant Vice President, Branch Manager and Loan Officer, Main office. She is a graduate of the South Carolina Bankers School. Manley has been employed with The Palmetto Bank for twenty years.

Elizabeth L. Robertson has been promoted to Mortgage Originator, Laurens/Greenwood. A Laurens native, Robertson is a graduate of the University of South Carolina, The Palmetto Bank’s management training program, and the South Carolina Bankers School. She has been employed with The Palmetto Bank for eleven years.

Gary C. Coleman has been promoted to Loss Mitigation and Recovery Specialist. A Laurens native, Coleman received his Bachelor of Science degree in Financial Management from Clemson University. He has been employed with The Palmetto Bank since September 2008.

THE PALMETTO BANK TO EXPAND ITS WEALTH MANAGEMENT BUSINESS

George A. (Andy) Douglas has been appointed to Executive Vice President, Wealth Management Group. Douglas will expand the Bank’s existing trust and investments division into a comprehensive wealth management business.

Currently, the Bank provides trust, investment, insurance and brokerage services through a combination of in-house employees and an agreement with Raymond James Financial Services, Inc. As part of its mission to serving as a trusted financial advisor to its clients, the Bank plans to expand its current offerings to include private banking and other services to provide more complete financial advice to its clients.

THE PALMETTO BANK LAUNCHES FACEBOOK PAGE

The Palmetto Bank is excited to continue its history of innovation by launching a Facebook page. Facebook users who visit the The Palmetto Bank’s Facebook page will discover a variety of features including products and services, industry information, upcoming community events, photos and updates about The Palmetto Bank. Check us out on Facebook today.

To Our Shareholders:

For the quarter ended September 30, 2010, the Company reported a net loss of $13.8 million, compared to a second quarter 2010 net loss of $8.5 million. Similar to the previous quarter, the net loss in the third quarter was driven primarily by the elevated level of provision for loan losses and write downs on foreclosed assets to address the credit quality of the loan portfolio and related declines in commercial real estate values.

During the third quarter 2010, substantially all of the Company’s credit losses were concentrated in commercial real estate assets, with $12.3 million of credit losses related to ten individual commercial real estate assets. Commercial real estate activity continues to be depressed which has negatively impacted appraised values. As a result, we recorded write downs on our problem assets based on updated appraisals that continue to come in at reduced values. On a positive note, similar to the second quarter, our problem assets declined in the third quarter resulting in the second consecutive quarterly decrease in our nonperforming assets. While the overall economic environment is still uncertain, we are hopeful that this declining trend in our problem assets will continue.

The third quarter 2010 net loss also included a one time, noncash charge to write off $3.7 million of goodwill related to prior branch acquisitions. The goodwill was an intangible asset recorded based on accounting rules at the time we acquired bank branches from other banks in 1988 through 1999, and was not a tangible asset. Accordingly, the charge had no effect on the liquidity, regulatory capital, or daily operations of the Company.

The day to day operations of the Bank are profitable. Absent the elevated provision for loan losses, write downs on our foreclosed assets, and write off of goodwill, the Bank would have shown a profit for the quarter. While it is disappointing that we incurred another quarterly loss, it is a natural part of the process of working our way through the current credit cycle.

On October 7, 2010, we consummated the $103 million private placement of our common stock with institutional investors, and contributed substantially all of the net proceeds as a capital contribution to The Palmetto Bank. The capital contribution to the Bank resulted in the Bank’s capital adequacy ratios exceeding the minimum capital levels required to be categorized as “well capitalized”. Raising additional capital was an important step to weather the ongoing impact of the extended recession of the past few years. Completing the private placement in this very challenging economic environment is a testament to the value of The Palmetto Bank franchise.

We recognize the significant impact of the private placement on our current shareholders. As disappointing as it is to the value of your investment in the Company, we believe it was the appropriate course of action to position to Company to manage through these very difficult times and position the Company to recover the loss in market value in the post-recession environment. The creation of long-term shareholder value remains a critically important element of our corporate mission, and we continue to take value generating actions to reposition the Company for the future. Under the stock purchase agreement with the investors, the Company also is permitted to conduct a $10 million offering that will allow our shareholders of record as of October 6, 2010 to purchase common stock of the Company at the same price per share as purchased by the institutional investors in the private placement.¹ We expect to provide details related to this offering in the near future.

As you know from our previous letters, we have been working very hard to deal with the impact of the extended recession of the past two years, and we believe that we have made substantial progress. While the recession officially ended in 2009, it is not yet clear if a sustained economic recovery has begun. An improving economy is critical to help our borrowers recover and therefore result in an improvement in our financial results. The Board of Directors, your management team and all of the employees of the Company come to work every day focused on the issues that resulted in our poor financial performance in 2009 and 2010 and prepared to continue to adapt to the rapidly changing financial services industry.

At the August 2010 shareholders meeting, two of our directors did not stand for re-election to the Board of Directors. In addition, in October several other directors retired from the Board. We would like to recognize and thank all of these directors for their dedicated service to the Company. These directors are Fred Davis, David George, John Gramling, Sam Phillips, Albert Smith, Ann Smith and Keith Snead. We also would like to welcome John Sullivan, Bob Goldstein, and Jim Lynch to the Board of Directors and look forward to their contributions in the coming years.

These are trying times in general and for the banking industry in particular. Please do not hesitate to contact either one of us, or any other employee of the Company, with questions or concerns about your Company.

Sincerely,
Leon Patterson	Sam Erwin
Chairman of the Board of Directors	Chief Executive Officer

¹ The foregoing information does not constitute an offer to sell or the solicitation of an offer to buy shares of the Company’s common stock.

Consolidated Balance Sheets

(in thousands, except per share data)

	September 30, 2010			June 30, 2010			December 31, 2009
	(unaudited)			(unaudited)
Assets
Cash and cash equivalents
Cash and due from banks	$	266,453		$	236,029		$	188,084
Total cash and cash equivalents		266,453			236,029			188,084
Federal Home Loan Bank (“FHLB”) stock, at cost		6,785			7,010			7,010
Investment securities available for sale, at fair value		129,571			112,316			119,986
Mortgage loans held for sale		3,716			1,898			3,884
Commercial loans held for sale, net		88,564			—			—
Loans, gross		827,564			967,244			1,040,312
Less: allowance for loan losses		(29,339	)		(28,383	)		(24,079	)
Loans, net		798,225			938,861			1,016,233
Premises and equipment, net		28,481			29,344			29,605
Goodwill, net		—			3,691			3,691
Accrued interest receivable		4,178			4,222			4,322
Real estate acquired in settlement of loans		22,508			26,521			27,826
Income tax refund receivable		7,589			4,721			20,869
Other		24,786			23,308			14,440
Total assets	$	1,380,856		$	1,387,921		$	1,435,950
Liabilities and shareholders’ equity
Liabilities
Deposits
Noninterest-bearing	$	150,707		$	143,223		$	142,609
Interest-bearing		1,049,147			1,048,152			1,072,305
Total deposits		1,199,854			1,191,375			1,214,914
Retail repurchase agreements		20,819			24,674			15,545
Commercial paper (Master notes)		—			—			19,061
FHLB borrowings		96,000			96,000			101,000
Convertible debt		380			380			—
Accrued interest payable		1,517			1,508			2,020
Other		12,912			11,341			8,395
Total liabilities		1,331,482			1,325,278			1,360,935
Shareholders’ equity
Preferred stock - par value $0.01 per share		—			—			—
Common stock - par value $0.01 per share at September 30, 2010 and $5.00 per share at June 30, 2010 and December 31, 2009		65			32,309			32,282
Capital surplus		35,085			2,758			2,599
Retained earnings		19,490			33,269			47,094
Accumulated other comprehensive loss, net of tax		(5,266	)		(5,693	)		(6,960	)
Total shareholders’ equity		49,374			62,643			75,015
Total liabilities and shareholders’ equity	$	1,380,856		$	1,387,921		$	1,435,950

Consolidated Statements of Loss

(in thousands) (unaudited)

	For the three month period ended September 30, 2010			For the three month period ended June 30, 2010			For the nine month period ended September 30, 2010
Interest income
Interest earned on cash and cash equivalents	$	143		$	88		$	298
Dividends paid on FHLB stock		7			5			16
Interest earned on investment securities available for sale		781			786			2,770
Interest and fees earned on loans		12,925			13,571			40,101
Total interest income		13,856			14,450			43,185
Interest expense
Interest paid on deposits		3,451			3,274			10,288
Interest paid on retail repurchase agreements		16			13			43
Interest paid on commercial paper		—			11			21
Interest paid on FHLB borrowings		412			408			1,313
Other		9			10			19
Total interest expense		3,888			3,716			11,684
Net interest income		9,968			10,734			31,501
Provision for loan losses		13,100			12,750			36,600
Net interest loss after provision for loan losses		(3,132	)		(2,016	)		(5,099	)
Noninterest income
Service charges on deposit accounts, net		1,787			2,027			5,764
Fees for trust and investment management and brokerage services		585			735			1,971
Mortgage-banking		1,193			377			2,190
Automatic teller machine		321			321			945
Merchant services		10			101			905
Investment securities gains		1			—			9
Other		499			500			1,613
Total noninterest income		4,396			4,061			13,397
Noninterest expense
Salaries and other personnel		6,236			6,302			18,675
Occupancy		1,226			1,148			3,545
Furniture and equipment		1,068			927			2,962
Loss on disposition of premises, furniture, and equipment		29			3			37
FDIC deposit insurance assessment		1,776			981			3,472
Mortgage-servicing rights portfolio amortization and impairment		209			197			597
Marketing		383			450			1,128
Real estate acquired in settlement of loans writedowns and expenses		5,490			2,550			9,052
Goodwill impairment		3,691			—			3,691
Other		2,515			2,813			8,158
Total noninterest expense		22,623			15,371			51,317
Net loss before benefit for income taxes		(21,359	)		(13,326	)		(43,019	)
Benefit for income taxes		(7,580	)		(4,793	)		(15,415	)
Net loss	$	(13,779	)	$	(8,533	)	$	(27,604	)

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Additional information can be found in our filed reports at the SEC’s Internet site (http://www.sec.gov).