SEC Form 3

FORM 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0104 Estimated average burden hours per response: 0.5

1. Name and Address of Reporting Person* CapGen Capital Group V LP (Last) (First) (Middle) 280 PARK AVENUE, 40TH FLOOR WEST SUITE 401 (Street) NEW YORK NY 10017 (City) (State) (Zip)	2. Date of Event Requiring Statement (Month/Day/Year) 10/07/2010	3. Issuer Name and Ticker or Trading Symbol PALMETTO BANCSHARES INC [ PLMT ]
		4. Relationship of Reporting Person(s) to Issuer (Check all applicable) X Director X 10% Owner Officer (give title below) Other (specify below)	5. If Amendment, Date of Original Filed (Month/Day/Year)
			6. Individual or Joint/Group Filing (Check Applicable Line) Form filed by One Reporting Person X Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1. Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)
Common Stock, par value $0.01 per share	21,153,846(1)(2)(3)(4)	I	Held by CapGen Capital Group V LP

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
	Date Exercisable	Expiration Date	Title	Amount or Number of Shares

1. Name and Address of Reporting Person* CapGen Capital Group V LP (Last) (First) (Middle) 280 PARK AVENUE, 40TH FLOOR WEST SUITE 401 (Street) NEW YORK NY 10017 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner Officer (give title below) Other (specify below)

1. Name and Address of Reporting Person* GOLDSTEIN ROBERT (Last) (First) (Middle) C/O CAPGEN CAPITAL GROUP V LP 280 PARK AVENUE 40TH FLOOR WEST SUITE 40 (Street) NEW YORK NY 10017 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner Officer (give title below) Other (specify below)

1. Name and Address of Reporting Person* Sullivan John R (Last) (First) (Middle) C/O CAPGEN CAPITAL GROUP V LP 280 PARK AVENUE 40TH FLOOR WEST SUITE 40 (Street) NEW YORK NY 10017 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner Officer (give title below) Other (specify below)

1. Name and Address of Reporting Person* CapGen Capital Group V LLC (Last) (First) (Middle) 280 PARK AVENUE, 40TH FLOOR WEST SUITE 401 (Street) NEW YORK NY 10017 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner Officer (give title below) Other (specify below)

1. Name and Address of Reporting Person* Ludwig Eugene (Last) (First) (Middle) 280 PARK AVENUE 40TH FLOOR WEST SUITE 401 (Street) NEW YORK NY 10017 (City) (State) (Zip) Relationship of Reporting Person(s) to Issuer X Director X 10% Owner Officer (give title below) Other (specify below)

Explanation of Responses:

1. CapGen Capital Group V LP ("CapGen LP") acquired the shares of common stock, par value $0.01 per share (the "Common Stock"), of Palmetto Bancshares, Inc. (the "Issuer") on October 7, 2010. CapGen Capital Group V LLC ("CapGen LLC") is the sole general partner of CapGen LP. Mr. Eugene A. Ludwig is the managing member of CapGen LLC.

2. CapGen LP directly owns the shares of Common Stock on this row.

3. As the sole general partner of CapGen LP, CapGen LLC may be deemed to be the indirect beneficial owner of the shares of Common Stock on this row under Rule 16a-1(a)(2) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Pursuant to Rule 16a-1(a)(4) promulgated under the Exchange Act, CapGen LLC disclaims that it is the beneficial owner of such shares, except to the extent of its pecuniary interest.

4. As the managing member of CapGen LLC, Mr. Ludwig may be deemed to be the indirect beneficial owner of the shares of Common Stock under Rule 16a-1(a)(2) promulgated under the Exchange Act. As a principal member and member of the investment committee of CapGen LLC, the general partner of CapGen LP, Mr. Goldstein may be deemed to be the indirect beneficial owner of such shares under Rule 16a-1(a)(2) promulgated under the Exchange Act. Pursuant to Rule 16a-1(a)(4) promulgated under the Exchange Act, each of Mr. Ludwig and Mr. Goldstein disclaims that he is the beneficial owner of such shares, except to the extent of his pecuniary interest.

Remarks:

On October 12, 2010, the Issuer appointed Messrs. Robert Goldstein and John Sullivan to the board of directors. CapGen LP, CapGen LLC and Mr. Ludwig disclaim their status as directors by deputization by virtue of Messrs. Goldstein's and Sullivan's positions as members of the board of directors of the Issuer.

	/s/ Robert B. Goldstein	10/18/2010
	/s/ John Sullivan	10/18/2010
	/s/ Eugene A. Ludwig, the managing member of CapGen Capital Group V LLC, the general partner of CapGen Capital Group V LP	10/18/2010
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 5 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.