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): July 15, 2005


                            PALMETTO BANCSHARES, INC.
               (Exact name of registrant as specified in charter)


South Carolina                     0-26016                    74-2235055
- -----------------------------  -----------------        -----------------------
State or other                   Commission                   IRS Employer
jurisdiction of incorporation    File Number                  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. 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 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.


On July  15,  2005,  Palmetto  Bancshares,  Inc.  issued a press  release  which
discloses the results of operations  and financial  condition of the Company for
the second quarter ended June 30, 2005.

For more  information  regarding  this matter,  see the press  release  attached
hereto as Exhibit 99.


ITEM 9.01.        FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits

    99   Press Release issued July 15, 2005



                                   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
Palmetto Bancshares, Inc.


By:  /s/ Paul W. Stringer
- ----------------------------------------
Paul W. Stringer
President and Chief Operating Officer
(Chief Accounting Officer)

Date:  July 18, 2005

EX-99

THE PALMETTO BANK
NEWS RELEASE


FOR IMMEDIATE RELEASE                         For More Information Contact:
July 15, 2005                                 CYNTHIA JAMISON, (864) 984-8395
                                              cjamison@palmettobank.com



                        PALMETTO BANCSHARES, INC. REPORTS
                         27% QUARTERLY EARNINGS INCREASE


UPSTATE,  SC - Leon Patterson,  chairman and chief executive officer of Palmetto
Bancshares,  Inc., parent company for The Palmetto Bank, reported net income for
the second quarter of 2005 was $3.5 million, a 27% increase over the same period
in 2004. Net income per diluted share was $.55, a 28% increase over the $.43 per
share reported in the second quarter of 2004.

For the six months ended June 30, 2005, Palmetto  Bancshares,  Inc. reported net
income at $7.0  million  compared to $5.8  million  reported  the same period of
2004, an increase of 19%.  Diluted earnings per share were $1.08, as compared to
$.91 per share in the same period of 2004.

Total assets at June 30 grew 12% to $1.1 billion,  an increase of $111.7 million
over the same period in 2004.  At June 30, 2005,  loans  increased 15% to $831.7
million,  while  deposits  rose to $896.6  million,  a 9% increase over the same
period in 2004. "We are pleased with the Bank's  consistently strong performance
during this past quarter and the past six months," said Leon Patterson, chairman
and chief executive  officer.  "We are in preparation for the opening of our new
Easley  office - our first  location in Pickens  County.  We look forward to the
added growth the location will bring to our company."

Serving the Upstate  for more than 99 years,  The  Palmetto  Bank  manages  $1.7
billion in assets including  Commercial Banking,  Trust,  Brokerage and Mortgage
Servicing.  The Palmetto  Bank is the fifth  largest  independent  state-charted
commercial  bank in South  Carolina  with 31  locations  throughout  the Upstate
counties of  Abbeville,  Anderson,  Cherokee,  Greenville,  Greenwood,  Laurens,
Oconee, Spartanburg, and Pickens.

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