Greer Bancshares (GRBS) 8-K Regulation FD Disclosure

Exhibit 99.1

Message to Shareholders

Greer Bancshares Incorporated

August 12, 2011

Dear Shareholders and Friends:

For the quarter ended June 30, 2011, Greer Bancshares Incorporated reported a net loss of $(1,742,000) before TARP-related expenses of $161,000, resulting in a net loss attributable to common shareholders of $(1,903,000) or $(0.77) per diluted common share. For the six months ended June 30, 2011, the net loss was ($1,781,000) before TARP related expenses of $325,000, resulting in a net loss attributable to common shareholders of $(2,106,000) or $(0.85) per diluted common share. Obviously the losses are very disappointing and merit some explanation and clarification.

Once again, the major factor leading to the net loss in the second quarter was a significant charge-off of $1,981,000 resulting from a new appraisal on a non-performing, residential subdivision loan. In 2010, the appraisal on this Greer residential subdivision, performed by a reputable, local MAI appraiser, reported a market value of $4.9 million; however, in the second quarter of 2011, a new appraisal on this property by another local and reputable MAI appraiser, produced an appraised value of $1,825,000, a decrease of 62.75% in value from one year ago. Given the magnitude of this decrease in appraised value, we deemed it prudent to request a second appraisal, and unfortunately the second appraisal confirmed the value of the first 2011 appraisal. Therefore, in May we charged-off the difference between the loan balance on our books and the appraised value. It is difficult to understand how real estate values could decrease so significantly in one year, but the lack of lot and home sales, particularly in “high-end or upscale” subdivisions have significantly diminished lot and home values.

Primarily as a result of this large charge-off in May, the Bank added $1,995,000 to its loan loss provision in the second quarter, bringing the loan loss reserves to $7,033,000 or 2.90% of total loans at June 30, 2011, compared to $7,495,000 or 2.78% of total loans at December 31, 2010. Planned reductions in the size of the loan portfolio during the second quarter increased the loan loss reserves relative to total loans outstanding.

Non-performing assets have decreased to $22,217,000 as of June 30, 2011, from $27,743,000 at year-end 2010, confirming good results from our aggressive plan for reducing non-performing loans.

As of June 30, 2011:

• total assets were $420 million, a decrease of 8.1% from December 31, 2010;

• total loans outstanding were $243 million, down 10.0% from year end 2010; and

• total deposits were $302 million, down 5.5% from year end 2010.

Recent trends in the Bank’s past dues and non-performing loans indicate our loan portfolio has shown signs of stabilization. We are proactively working past due loans and non-performing loans, working with customers to bring their accounts current and thereby reduce collection and legal expenses from delinquent or non-performing loans.

Although the Bank did not meet the minimum leverage capital requirement of the Consent Order, the Bank continues to exceed statutory minimum regulatory capital requirements and management continues to explore strategies to further enhance the Bank’s capital position in the quarters ahead. We work closely with our regulators and advisors to ensure that our strategies and efforts on capital enhancement are appropriate and properly aligned.

We sincerely thank you for your past support, patience and understanding which we value highly. While no one can predict the future, we are hopeful the worst experiences are behind us. There may be periodic surprises and disappointments ahead, but we believe our efforts will begin to yield not only progress but also profits.

We welcome your comments for improving your Company and our communications with you.

/s/ Walter M. Burch	/s/ R. Dennis Hennett
Walter M. Burch	R. Dennis Hennett
Chairman of the Board	President & Chief Executive Officer

CONSOLIDATED

BALANCE SHEET

Unaudited

Dollars in thousands, except per share data

	06/30/11		12/31/10
Assets
Cash and due from banks	$	20,383	$	23,700
Interest bearing deposits in banks		640		512
Federal funds sold		2,940		3,754
Cash and cash equivalents		23,963		27,966
Investment securities:
Available for sale		131,609		132,813
Loans, net of allowance for loan losses		235,848		262,505
Loans held for sale		253		1,082
Premises and equipment, net		5,095		5,253
Accrued interest receivable		1,752		1,829
Restricted stock		4,888		5,309
Other real estate owned		7,787		9,038
Deferred tax asset		—		457
Other assets		8,799		10,515
Total Assets	$	419,994	$	456,767

	06/30/11			12/31/10
Liabilities
Deposits
Noninterest bearing	$	34,497		$	36,434
Interest bearing		267,805			283,482
Total deposits		302,302			319,916
Long term borrowings		94,841			113,841
Other liabilities		5,078			4,749
Total Liabilities		402,221			438,506
Stockholders’ Equity
Preferred stock		10,179			10,126
Common stock		12,433			12,433
Additional paid in capital		3,675			3,634
Retained earnings (loss)		(9,037	)		(7,203	)
Accumulated other comprehensive income (loss)		523			(729	)
Total Stockholders’ Equity		17,773			18,261
Total Liabilities and Stockholders’ Equity	$	419,994		$	456,767

CONSOLIDATED

STATEMENTS OF LOSS

Unaudited

Dollars in thousands, except per share data

	For Three months Ended						For Six months Ended
	6/30/11			6/30/10			6/30/11			6/30/10
Interest income
Loans	$	3,324		$	4,114		$	6,830		$	8,116
Investment securities:
Taxable		822			766			1,541			1,693
Exempt from federal income tax		296			263			597			510
Federal funds sold		14			7			27			13
Other		3			—			4			7
Total interest income		4,459			5,150			8,999			10,339
Interest expense
Interest on deposit accounts		950			1,216			2,012			2,418
Interest on other borrowings		730			963			1,487			1,994
Total interest expense		1,680			2,179			3,499			4,412
Net interest income		2,779			2,971			5,500			5,927
Provision for loan losses		1,995			1,564			2,095			2,676
Net interest income after provision for loan losses		784			1,407			3,405			3,251
Noninterest income
Customer service fees		187			214			365			401
Gain on sale of investment securities		184			164			185			1,120
Other noninterest income		481			357			909			790
Total noninterest income		852			735			1,459			2,311
Noninterest expenses
Salaries and employee benefits		1,295			1,425			2,632			2,832
Occupancy and equipment		174			185			342			384
FDIC deposit insurance assessments		329			147			522			302
Other real estate owned and foreclosure		920			640			1,888			1,733
Other		660			558			1,261			1,219
Total noninterest expenses		3,378			2,955			6,645			6,470
Loss before income taxes		(1,742	)		(813	)		(1,781	)		(908	)
Provision for income taxes		—			12			—			12
Net Loss		(1,742	)		(825	)		(1,781	)		(920	)
Preferred stock dividends and net discount accretion		(161	)		(160	)		(325	)		(319	)
Net loss available to common shareholders	$	(1,903	)	$	(985	)	$	(2,106	)	$	(1,239	)
Weighted average shares outstanding		2,486			2,486			2,486			2,486
Basic net loss per share of common stock	$	(.77	)	$	(.40	)	$	(.85	)	$	(.50	)
Diluted net loss per share of common stock	$	(.77	)	$	(.40	)	$	(.85	)	$	(.50	)

***********

Forward-looking and cautionary statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements relate to among other things, future economic performance plans and objectives of management for future operations, and projections of revenues and other financial items that are based on the beliefs of management as well as assumptions made by and information currently available to management. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “may,” and “intend,” as well as other similar words and expressions, are intended to identify forward-looking statements. Actual results may differ materially from the results discussed in the forward-looking statements. The Company’s operating performance is subject to various risks and uncertainties including without limitation:

• significant increases in competitive pressure in the banking and financial services industries

• reduced earnings due to higher credit losses owing to economic factors, including declining home values, increasing interest rates increasing unemployment, or changes in payment behavior or other causes

• the concentration of our portfolio in real estate based loans and the weakness in the commercial real estate market

• increased funding costs due to market illiquidity, increased competition for funding or other regulatory requirements;

• market risk and inflation

• level composition and re-pricing characteristics of our securities portfolios

• availability of wholesale funding

• adequacy of capital and future capital needs

• our reliance on secondary sources of liquidity such as FHLB advances, federal funds lines of credit from correspondent banks and brokered time deposits, to meet our liquidity needs;

• changes in the interest rate environment which could reduce anticipated or actual margins;

• operating restrictions imposed by our Consent Order, such as limitations on the use of brokered deposits;

• our inability to meet the requirements set forth in our Consent Order within prescribed time frames;

• changes in political conditions or the legislative or regulatory environment, including recently enacted and proposed legislation;

• adequacy of the level of our allowance for loan losses;

• the rate of delinquencies and amounts of charge-offs;

• the rates of loan growth;

• adverse changes in asset quality and resulting credit risk-related losses and expenses;

• general economic conditions, either nationally or regionally and especially in our primary service area, becoming less favorable than expected resulting in, among other things, a deterioration in credit quality;

• changes occurring in business conditions and inflation;

• changes in technology;

• changes in monetary and tax policies;

• loss of consumer confidence and economic disruptions resulting from terrorist activities;

• changes in the securities markets;

• ability to generate future taxable income to realize deferred tax assets;

• ability to have sufficient liquidity at the parent holding company level to pay preferred stock dividends and interest expense on junior subordinated debt; and

• other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission.

For a description of factors which may cause actual results to differ materially from such forward-looking statements, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and other reports from time to time filed with or furnished to the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on any forward-looking statements as these statements speak only as of the date when made. The Company undertakes no obligation to update any forward-looking statements made in this report.

Greer Bancshares Incorporated and Greer State Bank

Directors

Mark S. Ashmore	Steven M. Bateman
Ashmore Bros, Inc/Century	Steven M. Bateman, CPA
Concrete	Owner
President
Walter M. Burch	Raj K. S. Dhillon
Retired	Motel Owner and
The Greer Citizen	Land Developer
Former Co-Publisher/
General Manager
Gary M. Griffin	R. Dennis Hennett
Mutual Home Stores	Greer State Bank
	President & CEO
Harold K. James	Paul D. Lister
James Agency, Inc	Lister, Jeter & Lloyd, CPA’s, LLC
Real Estate and Insurance
Vice President/Broker In Charge
Theron C. Smith, III	C. Don Wall
Eye Associates of Carolina, P.A.	Professional Pharmacy of Greer
President	President
Greer State Bank Executive Officers
R. Dennis Hennett	J. Richard Medlock, Jr.
President & CEO	Executive Vice President/
	Chief Financial Officer
Victor K. Grout
Executive Vice President/
Commercial Banking Manager/
Chief Credit Officer
Greer Bancshares Incorporated
R. Dennis Hennett	J. Richard Medlock, Jr.
President & CEO	Secretary/Treasurer
	Chief Financial Officer

GREER STATE BANK

OFFICE LOCATIONS

MAIN OFFICE &

GREER FINANCIAL SERVICES

1111 West Pointsett Street

Greer, South Carolina 29650

BRANCH OFFICES

601 North Main Street

Greer, South Carolina 29650

871 South Buncombe Road

Greer, South Carolina 29650

3317 Wade Hampton Boulevard

Taylors, SC 29687

864-877-2000

“TELEBANKER”- 864-879-2265

www.greerstatebank.com

Member FDIC