<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0203</schemaVersion>

    <documentType>3</documentType>

    <periodOfReport>2009-07-01</periodOfReport>

    <noSecuritiesOwned>1</noSecuritiesOwned>

    <issuer>
        <issuerCik>0000706874</issuerCik>
        <issuerName>PALMETTO BANCSHARES INC</issuerName>
        <issuerTradingSymbol>n/a</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001313319</rptOwnerCik>
            <rptOwnerName>ERWIN SAMUEL L</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>PO BOX 2086</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>ORANGEBURG</rptOwnerCity>
            <rptOwnerState>SC</rptOwnerState>
            <rptOwnerZipCode>29116</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>Pres.(Ho Co) Pres&amp;CEO (Bank)</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <remarks>On July 1, 2009, Mr. Erwin was named President and CEO of The Palmetto Bank and President of Palmetto Bancshares, Inc.  Since that time, Mr. Erwin was elected to the Board of both organizations (October 2009), and Mr. Erwin also assumed the role of CEO of Palmetto Bancshares, Inc. (January 2010).</remarks>

    <ownerSignature>
        <signatureName>Lauren S Greer, with POA, SVP The Palmetto Bank, a wholly owned subsidiary of Palmetto Bancshares, Inc.</signatureName>
        <signatureDate>2010-04-20</signatureDate>
    </ownerSignature>
</ownershipDocument>
