Portrait of David CarpenterPortrait of Kelly GillespieGREENVILLE, S.C. – The Palmetto Bank (the “Bank”), a wholly-owned subsidiary of Palmetto Bancshares, Inc. (NASDAQ: PLMT), recently began offering significantly expanded corporate banking services through the addition of David M. Carpenter as Senior Vice President, Corporate Banking, and Kelly F. Gillespie, Corporate Banking Specialist to the team.

“The Palmetto Bank has been serving commercial clients in the Upstate for 106 years. With David and Kelly leading our new Corporate Banking team, we are now providing specialized banking services to larger and more sophisticated companies,” said Coleman A. Kirven, Commercial Banking Executive. “Our Corporate Banking team is focused on asset-based lines of credit, equipment financing, and the convenience and efficiency of a variety of cash management and Treasury solutions,” continued Kirven. “As proven, experienced corporate bankers, David and Kelly are providing innovative banking solutions to assist businesses as they navigate through this challenging economic environment.”

Kirven also stated, “We have a long legacy of providing banking services to operating companies in the Upstate. With the ongoing disruption in the banking industry, The Palmettto Bank is now filling a void in the corporate banking market that we believe is under-served by other banks. In this very challenging economic environment, we are keenly focused on providing critically important banking services designed to help our clients succeed. With David and Kelly’s expertise and experience, we are expanding both the banking services we provide and the types of companies we serve.”

Headquartered in Greenville, South Carolina, The Palmetto Bank is a 105-year old independent state-chartered commercial bank and is the fourth-largest banking institution headquartered in South Carolina. The Palmetto Bank has assets of $1.2 billion and serves the Upstate through 25 banking locations in Abbeville, Anderson, Cherokee, Greenville, Greenwood, Laurens, Oconee, Pickens and Spartanburg counties. The Bank specializes in providing personalized community banking services to individuals and small-to mid-size businesses including Retail Banking (including Mortgage and Credit Cards), Commercial Banking (including Business Banking, Treasury Management and Merchant Services), and Wealth Management (including Trust, Brokerage, Financial Planning, and Insurance). Additional information may be found at the company’s website at www.palmettobank.com or Facebook.

This News Release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles (“GAAP”). This News Release discusses both GAAP net loss and pre-tax loss excluding credit-related items and certain gains and losses, which is a non-GAAP measure. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP. Investors should consider the Company’s recording of provision for loan losses, loan workout expenses, foreclosed real estate writedowns and expenses and losses on commercial loans held for sale in the fourth quarter of 2010 and the first, second and third quarters of 2011 when assessing the performance of the Company. In addition, investors should consider the gain on sale of the Company’s credit card portfolio in the fourth quarter of 2010 when assessing the performance of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.