**U. S. SECURITIES AND EXCHANGECOMMISSION**WASHINGTON, D.C. 20549

**FORM 10-K/A**

**AMENDMENT NO. 1**

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended December 31, 2004

Commission file number 0-26016

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

** **

| **SouthCarolina  **                                                                                                       | **74-2235055**                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
|               (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)    |
| ** **                                                                                                                                         |                                 |
| **301 Hillcrest Drive, Laurens,South Carolina**                                                                                                    | **29360**                            |
| (Address of principal executive offices)                                                                                                           | (Zip Code)                           |
| ** **                                                                                                                                         |                                 |
| **(864) 984-4551**                                                                                                                                 | **palmettobank.com**                 |
| (Registrant's telephone number)                                                                                                                    | (Registrant's subsidiary's web site) |

** **

Securitiesregistered pursuant to Section 12(b) of the Act: None

Securitiesregistered pursuant to Section 12(g) of the Act:

**Common Stock, par value $5.00 per share(Title of class**)

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes  x  No o

Indicateby check mark if disclosure of delinquent filers pursuant to item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof the registrants knowledge, in the definitive proxy or information statementsincorporated by reference in Part III of this form 10-K or any amendmentto this Form 10-K. o

 

Indicateby check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Act). Yes x   No  o

The aggregate market value of the voting stock held bynon-affiliates of the registrant (computed by reference to the price at whichthe stock was most recently sold) was $168,239,821 as of the last business dayof the registrant's most recently completed second fiscal quarter. 

6,313,185 shares of the registrant's common stock wereoutstanding as of March 3, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

None

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**EXPLANATORY NOTE**

 

 

InNovember 2004, the Securities and Exchange Commission (the "SEC") issued anexemptive order providing companies with market capitalization under $700million with an extension of up to 45 days for the filing of (i) Management'sreport on internal controls over financial reporting and (ii) the requiredattestation on those controls from the registrant's independent registeredpublic accounting firm as required by Item 9A of Form 10-K. PalmettoBancshares, Inc. (the "Company") elected to utilize this extension period.

ThisAmendment No. 1 to the Company's Annual Report on Form 10-K is being filed toprovide the information required by Item 9A of Form 10-K, and to makeconforming changes to the certifications required by Rules 13a-14(a) or15d-14(a) of the Exchange Act of 1934 (the "Act"). This Form 10-K/A does notreflect events occurring after the filing of the Annual Report on Form 10-Kfiled on March 16, 2005, nor does it modify or update the disclosures presentedtherein, except with regard to the specific modifications described in thisExplanatory Note. 

 

 

 

 

 

 

 

 

 

 

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** ITEM 9A. CONTROLS AND PROCEDURES**

*** ***

**Evaluation of Disclosure Controls and Procedures**As of December 31, 2004, the end of the period covered bythis report, the Company carried out an evaluation, under the supervision andwith the participation of the Company's management, including the ChiefExecutive Officer and the President and Chief Operating Officer (ChiefAccounting Officer), of the effectiveness of the design and operation of theCompany's disclosure controls and procedures, as defined in the Securities andExchange Act Rule 13(a)-15(e) or 15(d)-15(e). Based on that evaluation,the Chief Executive Officer and the President and Chief Operating Officer(Chief Accounting Officer) concluded that as of December 31, 2004, theCompany's disclosure controls and procedures were effective in providingreasonable assurance that information required to be disclosed by the Companyin the reports it files or submits under the Securities Exchange Act of 1934 is(i) accumulated and communicated to the Company's Management (including theChief Executive Officer and the President and Chief Operating Officer (ChiefAccounting Officer)) in a timely manner, and is (ii) recorded, processed,summarized, and reported within the time periods specified in the SEC's rulesand forms.

**Management's Report on Internal Control over FinancialReporting**

            MANAGEMENT'S REPORTON INTERNAL CONTROL OVER FINANCIAL REPORTING

Toprovide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles, Management is responsible forestablishing and maintaining effective internal control management. Inestablishing such internal controls, Management weighs the costs of suchsystems against the benefits it believes such systems will provide. Allinternal control systems, no matter how well designed, have inherentlimitations.  Therefore, even those systems determined to be effective canprovide only reasonable assurance with respect to financial statementpreparation and presentation.  Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures maydeteriorate.

Managementof the Company is responsible for establishing and maintaining adequateinternal control over financial reporting and for assessing the effectivenessof internal control over financial reporting, as such term is defined inExchange Act Rules 13a-15(f) and 15d-15(f). Management has assessed theeffectiveness of the Company's internal control over financial reporting basedon the criteria established in "Internal Control - Integrated Framework,"issued by the Committee of Sponsoring Organizations ("COSO") of the TreadwayCommission. Based on that assessment and criteria, Management has determinedthat the Company has maintained effective internal control over financialreporting as of December 31, 2004. 

ElliottDavis, LLC, the independent registered public accounting firm that audited theconsolidated financial statements of the Company included in its Annual Reporton Form 10-K for the year ended December 31, 2004, has issued an attestationreport on Management's assessment of the effectiveness of the Company'sinternal control over financial reporting as of December 31, 2004. Theirreport, which expresses an unqualified opinion on Management's assessment andon the effectiveness of the Company's internal control over financial reportingas of December 31, 2004, is included in this amended Annual Report on Form10-K. Elliott Davis, LLC's audit on Management's assessment of the effectiveness of theCompany's internal control over financial reporting was performed in accordancewith standards of the Public Company Accounting Oversight Board (UnitedStates).  

Dated: April 19, 2005

 

 

 

 

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**Report of Independent Registered Public Accounting Firm on Internal ControlOver Financial Reporting**

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of DirectorsPalmetto Bancshares, Inc.Laurens, South Carolina

We have audited management'sassessment, included in the accompanying Management's Report on InternalControl Over Financial Reporting, that Palmetto Bancshares, Inc.**("theCompany") maintained effective internal control over financial reporting as ofDecember 31, 2004, based on criteria established in*InternalControl-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).*  Palmetto Bancshares,Inc.'s management is responsible for maintaining effective internal controlover financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting.  Our responsibility is to express anopinion on management's assessment and an opinion on the effectiveness of thecompany's internal control over financial reporting based on our audit.

We conducted our audit in accordance withthe standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. Our audit included obtainingan understanding of internal control over financial reporting, evaluatingmanagement's assessment, testing and evaluating the design and operatingeffectiveness of internal control, and performing such other procedures as weconsidered necessary in the circumstances.  We believe that our audit providesa reasonable basis for our opinion.

A company's internal control overfinancial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generallyaccepted accounting principles.  A company's internal control over financialreporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or dispositionof the company's assets that could have a material effect on the financialstatements.

Because of its inherent limitations,internal control over financial reporting may not prevent or detectmisstatements.  Also, projections of any evaluation of effectiveness to futureperiods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.

In our opinion, management's assessmentthat Palmetto Bancshares, Inc. maintained effective internal control overfinancial reporting as of December 31, 2004, is fairly stated, in all materialrespects, based on criteria established in*Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO).*  Also in our opinion, Palmetto Bancshares, Inc*.*maintained, in all material respects, effective internal control over financialreporting as of December 31, 2004, based on criteria established in*InternalControl-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).*

 

 

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We have also audited, in accordance with the standards ofthe Public Company Accounting Oversight Board (United States), the consolidatedfinancial statements of Palmetto Bancshares, Inc. and our report dated January21, 2005 expressed an unqualified opinion.

/s/Elliott Davis LLC

Greenville, South CarolinaApril 19, 2005 

**Changes in Internal Control OverFinancial Reporting**During the fourth quarter of 2004, the Company did notmake any changes in its internal controls over financial reporting thatmaterially affected or were reasonably likely to materially affect thosecontrols.

 

 

 

 

 

 

 

 

 

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** ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

** **

(a)    (1)   Financial Statements       None.

(2)  Financial Statement Schedules       None.

(3)  Listing of Exhibits

|   | Exhibit No.  | Description                                                                                                                                                                                                                                                                                                   |
|--------|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.1.1             | Articlesof Incorporation filed on May 13, 1982 in the office of the Secretary of Stateof South Carolina: Incorporated by reference to Exhibit 3 to the Company'sRegistration Statement on Form S-4, Commission File No. 33-19367, filed withthe Securities and Exchange Commission on December 30, 1987.      |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.1.2             | Articles of Amendment filedon May 5, 1988 in the office of the Secretary of State of South Carolina:Incorporated by reference to Exhibit 4.1.2 to the Company's RegistrationStatement on Form S-8, Commission File No. 33-51212 filed with the Securitiesand Exchange Commission on August 20, 1992.          |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.1.3             | Articlesof Amendment filed on January 26, 1989 in the office of the Secretary of Stateof South Carolina: Incorporated by reference to Exhibit 4.1.3 to the Company'sRegistration Statement on Form S-8, Commission File No. 33-51212 filed with theSecurities and Exchange Commission on August 20, 1992.     |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.1.4             | Articles of Amendment filedon April 23, 1990 in the office of the Secretary of State of South Carolina:Incorporated by reference to Exhibit 4.1.4 to the Company's RegistrationStatement on Form S-8, Commission File No. 33‐51212 filed with theSecurities and Exchange Commission on August 20, 1992. |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.1.5             | Articles of Amendment filed onOctober 16, 1996 in the office of the Secretary of State of South Carolina: Incorporated by reference to Exhibit 3.1.5 to the Company's Quarterly Report onForm 10-Q for the fiscal quarter ended September 30, 1996.                                                      |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.1.6             | Articles of Amendment filed on May17, 1999 in the office of the Secretary of State of South Carolina: incorporated by reference to Exhibit 3.1.6 of the Company's quarterly report onForm 10-Q for the fiscal quarter ended June 30, 1999.                                                               |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.2.1             | By-Laws adopted April 10, 1990.Incorporated by reference to Exhibit 3.2.1 to the Company's 1996 Annual Reporton Form 10-K, filed with the Securities and Exchange Commission on March 30,1997.                                                                                                                |
|   |              |                                                                                                                                                                                                                                                                                                          |
|   | 3.2.2             | Amendment to By-Laws dated April12, 1994. Incorporated by reference to Exhibit 3.2.2 to the Company's 1996Annual Report on Form 10-K, filed with the Securities and Exchange Commissionon March 30, 1997.                                                                                                     |

 

 

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* Management contract or compensatory plan orarrangement

^ Previously filed on March 16, 2005 as an exhibit to the Company's filing of itsAnnual Report on Form 10-K for the year ended December 31, 2004.

# Filedherein as an exhibit to the Company's filing of its Amended Annual Report onForm 10-K for the year ended December 31, 2004.

 

 

 

 

 

 

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.

PALMETTO BANCSHARES, INC.

/s/L. Leon PattersonL.Leon PattersonChairmanand Chief Executive Officer

/s/Paul W. StringerPaulW. StringerPresidentand Chief Operating OfficerChiefAccounting Officer

Dated:April 29, 2005

 

 

 

 

 

 

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