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<title>Palmetto Form 8-K</title>


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<div style='page:Section1;'>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>&nbsp;</b></p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>&nbsp;</b></p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>UNITED STATES </b></p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>SECURITIES AND EXCHANGE
COMMISSION</b></p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>Washington, D. C. 20549</b></p>

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text-align:center'>&nbsp;</p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'><b>FORM 8-K</b></p>

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text-align:center'>&nbsp;</p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>CURRENT REPORT</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'>&nbsp;</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt;
text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934</p>

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text-align:center'>&nbsp;</p>

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text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>Date of Report (Date of
earliest event reported): November 20, 2008</p>

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text-align:center'>&nbsp;</p>

<div align="center">

<table class=MsoNormalTable border=0 cellpadding=0
 style='border-collapse:collapse' width="90%">
 <tr>
  <td colspan=3 valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'><b>Palmetto Bancshares, Inc.</b></p>
  <p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'>(Exact name of registrant as
  specified in charter)</p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";margin-top:0'><u>South
  Carolina&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'><u>&nbsp;&nbsp;&nbsp;&nbsp;
  0-26016&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:right; margin-top:0'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  74-2235055</u></p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";margin-top:0'>State or
  other jurisdiction of incorporation </p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'>Commission File Number</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:right; margin-top:0'>&nbsp;IRS Employer I.D. number</p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="30%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td width="41%" valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-size:10.0pt;font-family:"Times New Roman"; margin-top:0'>&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";margin-top:0'><u>301
  Hillcrest Drive, Laurens, South Carolina</u></p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:right; margin-top:0'><u>29360</u></p>
  </td>
 </tr>
 <tr>
  <td colspan=2 valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";margin-top:0'>Address
  of principal executive offices</p>
  </td>
  <td valign=top style='padding:0in; ' nowrap>
  <p style='margin-bottom:0;font-family:"Arial";text-align:right; margin-top:0'>Zip Code</p>
  </td>
 </tr>
 </table>

</div>

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text-align:center'>&nbsp;</p>
  <p style='margin-bottom:0;font-family:"Arial";margin-top:0' align="center"><u>(864) 984-4551</u></p>
  <p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Registrant's telephone
  number </p>
<p style='margin-bottom:0;font-family:"Arial";text-align:center; margin-top:0'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";text-align:justify;text-indent:.25in; margin-left:0in; margin-right:0in; margin-top:0in'>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 (<i>see</i> General
Instruction A.2.):</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";text-align:justify;text-indent:.25in; margin-left:0in; margin-right:0in; margin-top:0in'>[&nbsp; ] Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425)</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";text-align:justify;text-indent:.25in; margin-left:0in; margin-right:0in; margin-top:0in'>[&nbsp; ] Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";text-align:justify;text-indent:.25in; margin-left:0in; margin-right:0in; margin-top:0in'>[ ] Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";text-align:justify;text-indent:.25in; margin-left:0in; margin-right:0in; margin-top:0in'>[ ] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'><b>Item 8.01 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Events</b></p>

<pre style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Arial Unicode MS";'>&nbsp;</pre>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;
margin-bottom:.0001pt' align="justify">On November&nbsp;20, 2008, Palmetto
Bancshares, Inc., the parent company of The Palmetto Bank, issued a press
release announcing its intention not to participate in the U.S. Treasury's
Capital Purchase Program. A copy of the press release is furnished as Exhibit&nbsp;99 to this Current Report on Form 8-K and is incorporated
herein by reference in its entirety.</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:0in;
margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'><b>Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements and Exhibits</b></p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'><b>&nbsp;</b></p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt; margin-left:0in; margin-right:0in; margin-top:0in'>(d) Exhibits</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>

<p style='margin-top:5.0pt;margin-right:.25in;margin-bottom:5.0pt;margin-left:.25in;font-size:12.0pt;font-family:"Arial";margin-bottom:.0001pt;text-indent:13.5pt; margin-left:0in; margin-right:0in; margin-top:0in'>99&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Press release issued
November&nbsp;20, 2008</p>

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text-align:center'>&nbsp;</p>

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text-align:center'>&nbsp;</p>

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<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";line-height:1.0pt'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";'>&nbsp;</p>

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<p style='margin-bottom:.0001pt;font-family:"Arial";margin-right:-9.0pt;text-align:center; margin-left:0in; margin-top:0in'>SIGNATURES</p>

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<p style='margin-bottom:.0001pt;font-family:"Arial";margin-right:-9.0pt;text-align:justify; margin-left:0in; margin-top:0in'>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.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";margin-right:-9.0pt;text-align:justify; margin-left:0in; margin-top:0in'>PALMETTO BANCSHARES, INC.</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin-bottom:.0001pt;font-family:"Arial";margin-right:-9.0pt;text-align:justify; margin-left:0in; margin-top:0in'>By:</p>

<p style='margin:0in;margin-bottom:.0001pt;font-size:10.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'><u>/s/
L. Leon
Patterson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;L.
Leon Patterson</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;Chairman
and Chief Executive Officer</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;<u>/s/
Paul W.
Stringer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</u></p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;Paul
W. Stringer</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;President
and Chief Operating Officer</p>

<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Arial";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;Chief
Accounting Officer</p>

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<p style='margin-bottom:.0001pt;font-family:"Arial";margin-right:-9.0pt;text-align:justify; margin-left:0in; margin-top:0in'>Date:&nbsp;&nbsp; November 24, 2008</p>

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{"company-data": {"conformed-name": "PALMETTO BANCSHARES INC", "cik": "0000706874", "assigned-sic": "6022", "irs-number": "742235055", "state-of-incorporation": "SC", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-26016", "film-number": "081210478"}, "business-address": {"street1": "301 HILLCREST DR", "street2": "P O BOX 49", "city": "LAURENS", "state": "SC", "zip": "29360", "phone": "8649844551"}}
Palmetto Form 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): November 20, 2008
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.):
[  ] 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 8.01       Other Events
On November 20, 2008, Palmetto
Bancshares, Inc., the parent company of The Palmetto Bank, issued a press
release announcing its intention not to participate in the U.S. Treasury's
Capital Purchase Program. A copy of the press release is furnished as Exhibit 99 to this Current Report on Form 8-K and is incorporated
herein by reference in its entirety.
Item 9.01.      Financial Statements and Exhibits
(d) Exhibits
99               Press release issued
November 20, 2008
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
Chief
Accounting Officer
Date:   November 24, 2008