STATE OF SOUTH CAROLINA
                               SECRETARY OF STATE

                              ARTICLES OF AMENDMENT




      Pursuant to ss.Section 33-10-106 of the 1976 South Carolina Code, as
amended, the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:


1.    The name of the corporation is Palmetto Bancshares, Inc.


2.    On October 15, 1996   , the corporation adopted the following Amendment(s)
      of its Articles of Incorporation:
        



         RESOLVED, that the Articles of Incorporation of the Corporation be
amended to increase the authorized shares of common stock from 2,000,000 shares,
par value $5.00 per share, to 10,000,000 shares, par value $5.00 per share; and

              FURTHER RESOLVED, that ARTICLE FOUR of the Articles of
Incorporation is hereby amended in its entirety to read:

              The Corporation is authorized to issue one class of shares to be
              designated "common." The total number of shares which the
              Corporation is authorized to issue is 10,000,000 shares, and the
              par value of each such share is $5.00. The total authorized
              capital stock is $50,000,000.


3.   The manner,  if not set forth in the  amendment,  in which any exchange,
     reclassification,  or  cancellation  of issued  shares  provided for in the
     Amendment shall be effected, is as follows: (if not applicable, insert "not
     applicable" or "NA").



                                 NOT APPLICABLE




4.    Complete either a or b, whichever is applicable.

       a.  X  Amendment(s) adopted by shareholder action.
              At the date of adoption of the amendment, the number of
              outstanding shares of each voting group entitled to vote
              separately on the Amendment, and the vote of such shares was:

<TABLE>
<CAPTION>

              Number of      Number of         Number of Votes    Number of Undisputed*
Voting        Outstanding    Votes Entitled    Represented at     Shares Voted
Group         Shares          to be Cast       the Meeting        For            Against


<S>         <C>              <C>              <C>                <C>          <C>   

Common     1,001,943          1,001,943        894,055            885,585       8,470
Stock

</TABLE>
                                        

<PAGE>




*NOTE:        Pursuant to Section 33-10-106(6)(i), the corporation can
              alternatively state the total number of undisputed shares cast for
              the amendment by each voting group together with a statement that
              the number of votes cast for the amendment by each voting group
              was sufficient for approval by that voting group.



      b.      The Amendment(s) was duly adopted by the incorporators or board of
              directors without shareholder approval pursuant to ss.33-6-102(d),
              33-10-102 and 33-10-105 of the 1976 South Carolina Code as
              amended, and shareholder action was not required.


5.    Unless a delayed date is specified, the effective date of these Articles
      of Amendment shall be the date of acceptance for filing by the Secretary
      of State.





Date: October 15      , 1996                 Palmetto Bancshares, Inc.
     -----------------                      --------------------------
                                                (Name of Corporation)

                                            By:/s/L. Leon Patterson
                                                L. Leon Patterson
                                                Chairman and CEO