PALMETTO BANCSHARES INC - 10-Q Quarterly Report

U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(X)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended March 31, 2005

( )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from __________ to __________

Commission file number 0-26016

PALMETTO BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

South Carolina
(State or other jurisdiction of incorporation or organization)

74-2235055
(IRS Employer Identification No.)

301 Hillcrest Drive, Laurens, South Carolina
(Address of principal executive offices)

29360
(Zip Code)

(864) 984-4551
(Registrant's telephone number)

www.palmettobank.com
(Registrant's web site)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No __

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
-----------------------------
Common stock, $5.00 par value

Outstanding at May 4, 2005
-------------------------------
6,313,535

PALMETTO BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(dollars in thousands, except common share data)

				March 31,		December 31,
				2005	2004	2004
				(unaudited)
ASSETS
Cash and cash equivalents
	Cash and due from banks			$ 36,554	26,406	32,055
	Federal funds sold			1,344	10,090	1,390
		Total cash and cash equivalents		37,898	36,496	33,445

Federal Home Loan Bank (FHLB) stock, at cost				4,331	2,122	3,866
Investment securities available for sale, at fair market value				138,385	106,373	143,733
Mortgage loans held for sale				5,335	6,353	5,854

Loans				802,948	706,999	773,254
	Less allowance for loan losses			(7,838)	(7,692)	(7,619)
		Loans, net		795,110	699,307	765,635

Premises and equipment, net				22,384	21,927	22,141
Accrued interest receivable				4,452	3,784	4,285
Other assets				14,709	15,598	14,143
			Total assets	$ 1,022,604	891,960	993,102

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
	Noninterest-bearing			$ 124,251	122,247	124,489
	Interest-bearing			706,922	656,554	702,958
		Total deposits		831,173	778,801	827,447

Retail repurchase agreements				20,981	18,126	16,397
Commercial paper (Master notes)				18,993	16,339	17,051
Federal funds purchased				13,320	-	-
Federal Home Loan Bank ("FHLB") borrowings				52,000

PALMETTO BANCSHARES, INC. AND SUBSIDIARY
Table of Contents

			Page No.

PART I. FINANCIAL INFORMATION			3
	Item 1.	Financial Statements	3
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
	Item 4.	Controls and Proecedures	36

PART II. OTHER INFORMATION			37
	Item 1.	Legal Proceedings	37
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 3.	Defaults Upon Senior Securities	37
	Item 4.	Submission of Matters to a Vote of Security Holders	37
	Item 5.	Other Information	37
	Item 6.	Exhibits	37

SIGNATURES			38