Exhibit 99.1

Bank Notes

OFFICER PROMOTIONS

Leslie Matthews is a Credit Analyst in Greenville and has been promoted to Banking Officer. Ms. Matthews entered the Bank’s Management Development Program in June 2011 upon her graduation from Clemson University. She is active in PULSE and Clemson Young Alumni.

OFFICER APPOINTMENTS

Judy Barnaskey joined the Bank as Assistant Vice President, Branch Manager of the Bank’s Seneca branch. Ms. Barnaskey brings to the Bank twenty-seven years of financial services experience, the most recent of which was as branch manager for a regional bank with offices in the Upstate. She is a native of Central, South Carolina and is a graduate of Leadership Class of Clemson. She is also active in United Way and March of Dimes.

David J. Whitfield joined the Bank as Vice President, Credit Administrator and brings to the Bank over nineteen years of financial services experience, the most recent of which was as a commercial loan officer for a regional bank with offices in the Upstate. He is a resident of Anderson, South Carolina and is a graduate of Clemson University, The Graduate School of Banking – University of Colorado and Advanced Commercial Lending School.

BANK MILESTONES AND ACCOMPLISHMENTS

During the fourth quarter 2012 we reported quarterly net income of $2.7 million, our second consecutive quarter of profitability after returning to profitability in the third quarter. We also continued our technology-based client service enhancements through the launch of three deposit-accepting ATMs. In 2013, we plan to continue our client service enhancements by adding more deposit accepting ATMs as well as launching new personal financial management online tools, person-to-person payment solutions and a more functional and interactive website.

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).

March 4, 2013

To Our Shareholders:

For the fourth quarter, we are pleased to report our second consecutive quarter of profitability, and overall significantly improved financial results for the year ended December 31, 2012. For the fourth quarter 2012 we reported net income of $2.7 million following net income of $3.2 million for the third quarter 2012. For the year ended December 31, 2012 our net loss improved to $1.9 million compared to a net loss of $23.4 million in 2011. Our improving financial results continue to reflect the underlying earnings strength of our franchise. Over the past year we significantly reduced problem assets, improved our operating efficiency, exited the Consent Order with the banking regulators, and enhanced the delivery of products and services to our clients.

Credit Quality: We continue to aggressively resolve our fewer remaining problem assets, which in the fourth quarter resulted in a further reduction in nonperforming assets, which are now 81% below the peak at March 31, 2010. The significant reduction in problem assets during 2012 is expected to result in lower and more predictable credit losses going forward. However, our credit-related expenses may vary from quarter to quarter as we continue to resolve our remaining problem assets, adjust asset values based on the receipt of updated appraisals, and address any new problem assets that may surface.

Value Creation Strategy: In 2012, we made good progress on our value creation strategy to increase the value of The Palmetto Bank franchise. During 2012 and continuing into 2013, we implemented several technology, product and service enhancements to meet the rapidly changing expectations of our consumer and business clients. These enhancements are designed to give our clients the ability to bank where, when, and how they want. Our value creation initiatives will continue in 2013 as we further refine our product and service offerings, expand the delivery channels for these products and services, leverage our new Small Business Administration and Corporate Banking platforms introduced in 2012, and increase our focus on improving the strategic efficiency of our operations. While clearly not where we desire it to be, during 2012 and into 2013 our common stock price increased from $5.11 per share on January 1, 2012 to $10.95 per share as of February 28, 2013 (an increase of 114%).

Summary: We are proud of our 106-year legacy and rich heritage of serving clients and communities of the Upstate of South Carolina. We finished 2012 with positive earnings momentum and expect to remain profitable during 2013. Although we still have a lot of hard work ahead of us to reclaim our historical status as a high-performing bank, we are excited about our prospects for the future and look forward to continuing to serve our clients and communities of the Upstate.

Additional Information: Additional details about our financial results for the fourth quarter 2012 and for the year ended December 31, 2012 are included in our news release dated January 23, 2013 and our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2013, both of 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 these documents for a comprehensive discussion of our strategic plan and the actions we are taking to increase shareholder value. In addition, we currently expect to hold our annual meeting of shareholders on May 16, and in early April we plan to file our annual proxy statement related to the meeting. We look forward to meeting with you and providing an update on our plans for the future.

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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

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Consolidated Statements of Income (Loss)

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