Carolina Bank (CLBH) 8-K Carolina Bank Announces Quarterly Earnings Increase

Exhibit 99.1

For Immediate Release

Carolina Bank Announces Quarterly Earnings Increase

(GREENSBORO, NC) Carolina Bank Holdings, Inc. (NASDAQ Small Cap Symbol “CLBH”) announced that for the quarter ended September 30, 2004 it posted net income of $451,212, an increase over the same period last year of 43 percent.

Robert T. Braswell, President and CEO said of the results, “I’m happy to report what amounts to our company’s twenty-sixth consecutive quarterly profit. Earnings have improved as a result of our growth in loans, fee income, and our continued adherence to a disciplined expense management system. We are pleased to report that the core bank continues to perform well and supports the company’s growth.”

The company reports the following comparison between the quarter ended September 30, 2004 and the quarter ended September 30, 2003: earnings per share increased 43 percent to $0.20 per share; net income increased 43 percent to $451,212; total assets increased 26 percent to $267.2 million; total deposits increased 30 percent to $219.3 million and net loans grew 34 percent to $206 million.

For the nine months ended September 30, 2004, the company reported net income of $1.156 million, which is 45 percent greater than the same period last year.

Commenting on the company’s performance, Braswell said, “While the economy continues to send mixed signals, our company continues to demonstrate positive results. Our loan demand continues to be very strong. Compared to our national and North Carolina peers, our credit quality remains very acceptable. The company’s stock price has been improving of late and is becoming more fairly valued on a price to book comparison to our peers.”

The company operates Carolina Bank as a wholly owned subsidiary. The bank has three branches in Greensboro and one in Asheboro, N.C. Further information is available on the bank’s website,www.carolinabank.com

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This press release contains forward-looking statements regarding future events. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include risks of managing our growth, substantial changes in financial markets, regulatory changes, changes in interest rates, loss of deposits and loan demand to other financial institutions, and changes in real estate values and the real estate market. Additional information concerning factors that could cause actual results to be materially different from those in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission.

Please see the attached table, “Selected Financial Information.”

It is an integral part of this communication.

For additional information please contact:

Carolina Bank

Mr. Robert T. Braswell, President and CEO

P. O. Box 10209, Greensboro, North Carolina 27404 Telephone: 336-286-8740 – Email:

b.braswell@carolinabank.com

CAROLINA BANK HOLDINGS, INC.

Selected Financial Information

	2004									2003						Years Ended
(in thousands, except per share)	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2003			2002			2001
OPERATING INCOME SUMMARY
Interest income	$	3,338		$	2,855		$	2,741		$	2,682		$	2,404		$	9,844		$	9,085		$	9,016
Interest expense		1,130			960			893			875			853			3,584			4,152			5,397
Net interest income		2,208			1,895			1,848			1,807			1,551			6,260			4,933			3,619
Provision for loan losses		236			133			180			225			95			692			685			391
Non-interest inc. bfr securities/REO inc.		286			351			295			319			432			1,454			911			557
Securities/REO gains (losses), net		—			—			—			(37	)		(25	)		(100	)		20			129
Non-interest expenses		1,561			1,589			1,437			1,339			1,369			5,198			4,266			3,386
Income before income taxes		697			524			526			525			494			1,724			913			528
Income taxes		246			176			169			171			178			574			312			126
Net income	$	451		$	348		$	357		$	354		$	316		$	1,150		$	601		$	402
PER COMMON SHARE *
Basic	$	0.20		$	0.15		$	0.16		$	0.16		$	0.14		$	0.52		$	0.47		$	0.32
Diluted		0.20			0.15			0.15			0.15			0.14			0.51			0.46			0.32
Book Value (on outstanding shares)		9.23			8.83			8.92			8.70			8.49			8.70			8.28			7.74
ASSET QUALITY
Allowance for loan losses	$	2,628		$	2,436		$	2,316		$	2,150		$	2,023		$	2,150		$	1,661		$	1,369
Loans on nonaccrual		772			327			322			228			900			228			37			443
Repossesed assets		891			714			126			126			216			126			648			—
Net loan chargeoffs (recoveries)		44			13			14			99			14			204			393			209
Allowance for loan losses to loans		1.26	%		1.25	%		1.25	%		1.25	%		1.30	%		1.25	%		1.25	%		1.26	%
Nonaccrual loans+repossessions to assets		0.62	%		0.42	%		0.19	%		0.16	%		0.53	%		0.16	%		0.36	%		0.29	%
AVERAGE BALANCES
Loans	$	203,085		$	189,452		$	179,288		$	164,333		$	152,488		$	151,155		$	121,446		$	95,602
Earning assets		246,103			222,737			214,310			198,143			191,784			189,766			155,420			122,273
Total assets		259,840			242,497			226,685			211,955			203,986			201,354			163,337			129,022
AT PERIOD END
Loans before allowance	$	208,653		$	194,141		$	185,994		$	172,575		$	155,937		$	172,575		$	133,045		$	108,882
Total assets		267,237			245,002			239,302			226,911			212,126			226,911			189,871			151,515
Deposits		219,337			200,932			197,514			183,569			168,706			183,569			154,878			124,654
Stockholders’ Equity		20,779			19,876			20,051			19,563			19,057			19,563			18,344			9,590
RATIOS ANNUALIZED
Net yield - avg interest earning assets		3.59	%		3.40	%		3.45	%		3.65	%		3.23	%		3.30	%		3.17	%		2.96	%
Return on average assets		0.69	%		0.57	%		0.63	%		0.67	%		0.62	%		0.57	%		0.37	%		0.31	%
Net charge-offs to average loans		0.09	%		0.03	%		0.03	%		0.24	%		0.04	%		0.13	%		0.32	%		0.22	%
Efficiency ratio (excl security/REO trans.)		0.63			0.71			0.67			0.63			0.69			0.67			0.73			0.81

Note: All quarterly information is unaudited.

* AllPer Common Share Information has been presented or restated to reflect the effect of the six-for-five stock split with a record date of April 20, 2004