Exhibit 99.1

306 East North Street, Greenville, SC 29601

www.palmettobank.com

Return Service Requested

Bank Notes

OFFICER PROMOTIONS

Sharon Powers is the Branch Manager/Loan Officer of the Bank’s Anderson Main branch and has been promoted to Assistant Vice President. Ms. Powers is a resident of Anderson, South Carolina and graduate of South Carolina Association Bankers School. She is also a member of Anderson County Business Education Partnership, Anderson Area Chamber of Commerce and Sertoma. Ms. Powers joined the Bank in 2004 and has over twenty-five years of banking experience.

OFFICER APPOINTMENTS

David M. Carpenter has joined the Bank as Senior Vice President, Corporate Banking and brings over twenty years of commercial lending experience to the Bank. He is a graduate of University of North Carolina, Chapel Hill and an honors graduate of the General Electric Financial Management Program.

BANK MILESTONES AND ACCOMPLISHMENTS

In addition to returning to profitability, during the third quarter 2012 we achieved a number of milestones and significant accomplishments, including:

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Additional information can be found in our filed reports at the Securities and Exchange Commission’s Internet site (http://www.sec.gov).

November 5, 2012

To Our Shareholders:

We are pleased to report that we returned to quarterly profitability in the third quarter. The $3.2 million of net income reported for the third quarter reflects the underlying earnings strength of our franchise and the results of our persistent and aggressive efforts to address the credit quality issues that have been negatively impacting our financial results since early 2009. Overall, we believe that our credit quality issues are largely behind us, and we are now applying an increased focus and emphasis on executing our strategies to increase shareholder value.

Credit Quality: As a result of our continued proactive problem asset resolution efforts, in the third quarter nonperforming assets decreased further and are now 78% below the peak at March 31, 2010. We still have an elevated level of problem assets as compared to historical periods, and over the next few quarters our credit-related expenses may vary from period to period based on the timing of receipt of updated appraisals and our ongoing problem asset resolution efforts. However, our credit-related expenses have declined to a much lower and more stable and predictable level, which is expected to contribute further to sustained profitability in the future.

Value Creation Strategy: A primary strategic initiative going forward is our value creation strategy that is designed to increase the value of The Palmetto Bank franchise by enhancing the client experience through improved delivery of our banking services and expanded products and services. Changing consumer and business expectations make it critically important that we make it easy for our clients to bank on their terms; they want the ability to manage their money where, when, and how they want. For our consumer clients, we implemented several technology enhancements this year, including mobile banking, upgraded online banking and automatic telephone voice response service, and enhanced deposit and trust statements with the ability to opt-in to e-statements. For businesses, we implemented enhanced remote deposit capture and wire transfer services, as well as a dedicated e-Treasury call center for client service. In addition to these technological enhancements, we also introduced expanded products and services such as our Small Business Administration lending, Corporate Banking and e-Treasury services. We have a long legacy of providing innovative banking services to consumers and operating companies in the Upstate. In this very challenging economic environment, we are keenly focused on providing critically important banking services that help our clients succeed.

Summary: We are proud of our 106 year history and rich heritage of serving clients and communities of the Upstate of South Carolina. Our unique position as one of the longest standing community banks in the state imparts on us a responsibility and commitment to continue building on our legacy to provide innovative products, services and technological enhancements. All of these initiatives are part of our value creation strategy designed to increase the value of The Palmetto Bank franchise by enhancing the client experience. We still have a lot of hard work ahead of us to increase shareholder value, and returning to quarterly profitability in the third quarter is a significant step in that direction.

Additional Information: Additional details about our financial results for the third quarter 2012 are included in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 2, 2012 which may be obtained from the SEC website at www.sec.gov or from our Investor Relations website at www.palmettobank.com. We encourage you to read the Form 10-Q for a comprehensive discussion of our strategic plan and the actions we are taking to increase shareholder value.

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Thank you for the continued support, and please do not hesitate to contact either one of us with questions or concerns about your Company.

Sincerely,

Mike Glenn,		Sam Erwin,
Chairman of the Board of Directors		Chief Executive Officer

Consolidated Balance Sheets

(in thousands)

Consolidated Statements of Income (Loss)

(in thousands)(unaudited)