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<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'><b>UNITED STATES </b></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'><b>SECURITIES AND EXCHANGE
COMMISSION</b></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'><b>Washington, D. C. 20549</b></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:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'><b>FORM 8-K</b></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:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'>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:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'>Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934</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:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'>Date of Report (Date of
earliest event reported): February 20, 2009</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:"Times New Roman";margin:0in;margin-bottom:.0001pt;
text-align:center'>&nbsp;</p>
<p style='margin-bottom:.0001pt;font-family:"Times New Roman";text-align:center; margin-left:0in; margin-right:0in; margin-top:0in'>
<b><font size="4">Palmetto Bancshares, Inc.</font></b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>(Exact name of registrant as specified in its
  charter)</p>
<div align="left">
	<table class=MsoNormalTable border=0 cellpadding=0 width=640
 style='width:100%;border-collapse:collapse'>
		<tr>
			<td width="31%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="41%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td width="31%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-17.05pt'>
			<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;&nbsp;&nbsp;</u></p>
			</td>
			<td width="41%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>
			<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0-26016&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;</u></p>
			</td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  74-2235055</u></p></td>
		</tr>
		<tr>
			<td width="31%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>State or other
  jurisdiction of incorporation </p></td>
			<td width="41%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:center'>Commission File Number</p>
			</td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>&nbsp;IRS Employer I.D. number</p>
			</td>
		</tr>
		<tr>
			<td width="31%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="41%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td width="31%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="41%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>&nbsp;</p>
			</td>
		</tr>
		<tr>
			<td colspan=2 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
			<u>301 Hillcrest Drive,
  Laurens, South Carolina</u></p></td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>
			<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29360</u></p></td>
		</tr>
		<tr>
			<td colspan=2 valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>Address of principal
  executive offices</p></td>
			<td width="28%" valign=top style='padding:0in; '>
			<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:right'>Zip Code</p>
			</td>
		</tr>
	</table></div>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-15.25pt' align="center">
<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (864) 984-4551&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>Registrant's telephone number </p>
<p align="center"><u>&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
N/A&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u>(Former Name or Former Address, if Changed Since
  Last Report</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>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. below):</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>[&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:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>[&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:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>[ ] 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:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";text-align:justify;text-indent:.25in'>[ ] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<b><hr color="#000080"><br clear=all
style='page-break-before:always'></b>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>
<b>ITEM
5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.</b></p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>&nbsp;</p>
<p style='font-size:12.0pt;font-family:"Times New Roman"; margin-left:0in; margin-right:0in'>On February 20, 2009,
Palmetto Bancshares, Inc. (the &quot;Company&quot;) announced that Samuel L.
Erwin and Lee S. Dixon have been named Senior Executive Vice Presidents of the
Company and its wholly owned subsidiary, The Palmetto Bank (the
&quot;Bank&quot;).&nbsp;&nbsp; </p>
<p style='font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in'>The
base annual salary for Erwin will be $225,000.&nbsp;The base annual salary for
Dixon will be $200,000.&nbsp;&nbsp; In addition to base salary, Messers Erwin and
Dixon will be eligible for nonequity incentive compensation as described in the
Company&#146;s Proxy Statement for its Annual Meeting of Shareholders held April 15, 2008.&nbsp; The
nonequity incentive compensation plan provides that Messers Erwin and Dixon, as
senior managers, designated each year by the Compensation Committee, will receive up to 50% of his base
salary in nonequity incentive compensation if 100% of the targets, as approved
by the Board, are met and exceeded by specified amounts. </p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in'>The
Company offers its senior management various benefits on the same terms as
other employees.&nbsp; During 2009, these benefits will include medical and dental
benefits, life insurance, long-term disability insurance, and a 401(k) plan.
Employees also receive personal time off
and discounted loan rates under programs generally available to all full-time
employees. &nbsp;In addition to the foregoing benefits and
perquisites offered to Company and Bank employees and officers, the Company
offers various benefits and perquisites to its senior management, including, club
memberships, a company-provided
automobile, and physical examinations. </p>
<p style='font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in'>Erwin&#146;s
employment will commence on March 1, 2009. An exact date of employment
commencement has not yet been set for Dixon, but it is expected that he will
begin in late Spring 2009.&nbsp; </p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin-left:0in; margin-right:0in'>Erwin has 12 years of banking experience.&nbsp; Erwin began his banking
career at First Union National Bank (now Wachovia) in January 1997.&nbsp; At the
time of his departure in July 1990, he served as Vice President and City
Executive in Orangeburg, South Carolina. He worked with First National Bank
(now South Carolina Bank and Trust) from January 1997 until January 2000 where
he held the position of Senior Vice President and Region Executive in
Orangeburg, South Carolina.&nbsp; From January 2000 until June 2002, he held the
position of Senior Vice President and Market President in Columbia, South
Carolina with First Union National Bank (now Wachovia).&nbsp; From June 2002 until
December 2004, he served as Senior Vice President and Commercial Relationship
Manager for Carolina National Bank, a start-up bank in Columbia, South
Carolina.&nbsp; Most recently, Erwin served as Chief Executive Officer of Community
Bancshares, Inc. in Orangeburg, South Carolina.&nbsp; Erwin is a 1990 graduate of
Clemson University with a bachelors of science degree in Financial Management.
Erwin was recognized in 2004 as one of <i>The State</i> newspaper&#146;s &#147;Top 20
under 40&#148; and was the S.C. Bankers Association&#146;s (SCBA) 2005 Outstanding Young
Banker. Erwin is Board Chair for Edisto United Way, a Board member and past
Chair of SCBA&#146;s Young Bankers Division, a member of the Rotary Club of
Orangeburg, a Board member of Orangeburg Calhoun Technical College Foundation,
the Regional Medical Center Foundation, and the Business Development Corporation,
a vestry member of Episcopal Church of the Redeemer, and is a committee member
of the Boy Scouts of America, Indian Waters Council.</p>
<p style='margin-right:0in;margin-left:0in;font-size:12.0pt;font-family:"Times New Roman";margin:0in;margin-bottom:.0001pt'>Dixon worked with PricewaterhouseCoopers LLP from 1989 until 2006.&nbsp; He
was admitted as a partner with the firm in 1999.&nbsp; Currently, Dixon serves as
Chief Operating Officer of First Presbyterian Church of Winston-Salem.&nbsp; Dixon
is a 1988 graduate of the University of South Carolina with majors in
Accounting and Finance.&nbsp; Additionally, he graduated in 1997 from Stonier Graduate
School of Banking.&nbsp; Dixon is a certified public accountant in North Carolina,
Florida, Georgia, and West Virginia.&nbsp; </p><hr color="#000080">
<br clear=all
style='page-break-before:always'>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<b>SIGNATURES</b></p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>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 hereunto duly authorized.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>PALMETTO BANCSHARES, INC.</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>By:</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;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:"Times New Roman";margin-top:0in;margin-right:-9.0pt;margin-bottom:0in;margin-left:
0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;<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:"Times New Roman";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:"Times New Roman";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:"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:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>Date:&nbsp;&nbsp; February 26, 2009</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";margin-right:-9.0pt;text-align:justify'>&nbsp;</p>
<p style='margin:0in;margin-bottom:.0001pt;font-size:12.0pt;font-family:"Times New Roman";'>
<strong><font style="font-size: 10.0pt">&nbsp;&nbsp;</font></strong></p>

</body>

</html>
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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": "09638035"}, "business-address": {"street1": "301 HILLCREST DR", "street2": "P O BOX 49", "city": "LAURENS", "state": "SC", "zip": "29360", "phone": "8649844551"}}
Prepared by E-Services - www.edgar2.com
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): February 20, 2009
Palmetto Bancshares, Inc.
(Exact name of registrant as specified in its
  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
N/A
(Former Name or Former Address, if Changed Since
  Last Report
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
5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On February 20, 2009,
Palmetto Bancshares, Inc. (the "Company") announced that Samuel L.
Erwin and Lee S. Dixon have been named Senior Executive Vice Presidents of the
Company and its wholly owned subsidiary, The Palmetto Bank (the
"Bank").
The
base annual salary for Erwin will be $225,000. The base annual salary for
Dixon will be $200,000.   In addition to base salary, Messers Erwin and
Dixon will be eligible for nonequity incentive compensation as described in the
Company's Proxy Statement for its Annual Meeting of Shareholders held April 15, 2008.  The
nonequity incentive compensation plan provides that Messers Erwin and Dixon, as
senior managers, designated each year by the Compensation Committee, will receive up to 50% of his base
salary in nonequity incentive compensation if 100% of the targets, as approved
by the Board, are met and exceeded by specified amounts.
The
Company offers its senior management various benefits on the same terms as
other employees.  During 2009, these benefits will include medical and dental
benefits, life insurance, long-term disability insurance, and a 401(k) plan.
Employees also receive personal time off
and discounted loan rates under programs generally available to all full-time
employees.  In addition to the foregoing benefits and
perquisites offered to Company and Bank employees and officers, the Company
offers various benefits and perquisites to its senior management, including, club
memberships, a company-provided
automobile, and physical examinations.
Erwin's
employment will commence on March 1, 2009. An exact date of employment
commencement has not yet been set for Dixon, but it is expected that he will
begin in late Spring 2009.
Erwin has 12 years of banking experience.  Erwin began his banking
career at First Union National Bank (now Wachovia) in January 1997.  At the
time of his departure in July 1990, he served as Vice President and City
Executive in Orangeburg, South Carolina. He worked with First National Bank
(now South Carolina Bank and Trust) from January 1997 until January 2000 where
he held the position of Senior Vice President and Region Executive in
Orangeburg, South Carolina.  From January 2000 until June 2002, he held the
position of Senior Vice President and Market President in Columbia, South
Carolina with First Union National Bank (now Wachovia).  From June 2002 until
December 2004, he served as Senior Vice President and Commercial Relationship
Manager for Carolina National Bank, a start-up bank in Columbia, South
Carolina.  Most recently, Erwin served as Chief Executive Officer of Community
Bancshares, Inc. in Orangeburg, South Carolina.  Erwin is a 1990 graduate of
Clemson University with a bachelors of science degree in Financial Management.
Erwin was recognized in 2004 as one of
The State
newspaper's "Top 20
under 40" and was the S.C. Bankers Association's (SCBA) 2005 Outstanding Young
Banker. Erwin is Board Chair for Edisto United Way, a Board member and past
Chair of SCBA's Young Bankers Division, a member of the Rotary Club of
Orangeburg, a Board member of Orangeburg Calhoun Technical College Foundation,
the Regional Medical Center Foundation, and the Business Development Corporation,
a vestry member of Episcopal Church of the Redeemer, and is a committee member
of the Boy Scouts of America, Indian Waters Council.
Dixon worked with PricewaterhouseCoopers LLP from 1989 until 2006.  He
was admitted as a partner with the firm in 1999.  Currently, Dixon serves as
Chief Operating Officer of First Presbyterian Church of Winston-Salem.  Dixon
is a 1988 graduate of the University of South Carolina with majors in
Accounting and Finance.  Additionally, he graduated in 1997 from Stonier Graduate
School of Banking.  Dixon is a certified public accountant in North Carolina,
Florida, Georgia, and West Virginia.
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 hereunto duly authorized.
PALMETTO BANCSHARES, INC.
By:
/s/
L. Leon
Patterson
L.
Leon Patterson
Chairman
and Chief Executive Officer
Date:   February 26, 2009