Carolina Bank (CLBH) 8-K Carolina Bank Holdings, Inc. Announces Record First Quarter

Exhibit 99.1

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Carolina Bank Holdings, Inc.

Robert T. Braswell, President and CEO

Telephone: 336-286-8761

Email: b.braswell@carolinabank.com

Carolina Bank Holdings, Inc. Announces Record First Quarter

Diluted EPS of $0.22, Up 15.8%

GREENSBORO, NC - April 18, 2006 - Carolina Bank Holdings, Inc. (Nasdaq:CLBH) today reported first quarter 2006 net income of $603,000, an increase of 13.3% over the $532,000 reported for the first quarter of 2005. Diluted earnings per share were $0.22 compared with $0.19 for the prior-year period, an increase of 15.8%. Per share results were restated to reflect the impact of the six-for-five stock split in the fourth quarter of 2005. Results reflect revenue growth generated by strong loan and deposit growth year-over-year.

Robert T. Braswell, President and CEO of Carolina Bank Holdings, commented, “We are pleased to report another consecutive quarter of earnings growth. Loans grew over 22% during the prior twelve months, and continue at this strong pace into 2006; on an annualized basis, loans increased 20% since the beginning of the year. Lower-cost transaction accounts grew over 40% during the same 12-month period, and continue at a robust pace - up 22% on an annualized basis since the beginning of the year. This growth is reflective of the strength of our markets, and the skill of our bankers. We are pleased with our reception in new communities, like Burlington where we have recently expanded to accept deposits. High Point is still on target for a late-2006 or early-2007 opening.

“A highlight of this past quarter was the growing level of fee income from non-deposit investment products. Our investment services partnership with UVEST Financial Services generated an increase of $96,000 above the first quarter of 2005, to $149,000; the majority of the increase came from a single account.”

Mr. Braswell continued, “It has taken longer than we anticipated to return our restructured loans to performing status. We reclassified these loans to non-accrual during the first quarter of 2006 but anticipate near-term resolution of a portion of this $2.5 million credit. The majority of our problem assets are collateralized by real estate. However, resolution of loans secured by real-estate requires a more protracted time frame to achieve an acceptable payout.”

Total revenue, consisting of net interest income and non-interest income, was $3.3 million for the first quarter of 2006 compared with $2.7 million for the first quarter of 2005, an increase of 21.0%. Net interest income increased 18.8% to $2.9 million, reflecting a 14.5% increase in average earning assets and a 5 basis point increase in the net interest margin to 3.26%. Mr. Braswell noted, “Our success at attracting high-quality lending opportunities along with the low-cost deposits to fund them has enabled us to maintain a relatively stable net interest margin over the last five quarters. The majority of margin variations relate to changes in the level of non-performing assets.” Non-interest income increased 38.3% to $426,000, primarily as a result of a 96.2% improvement in other income arising from an increase in investment services income.

Non-interest expense totaled $2.0 million for the first quarter of 2006, an increase of 21.8% over the $1.6 million reported for the first quarter of 2005. The increase primarily reflects corporate growth over the past twelve months, including the third quarter 2005 opening of a loan production office in Burlington. Salaries and employee benefits, up $203,000 or 23.4%, accounted for over half of the $357,000 increase; the increase reflects the addition of 7 FTE employees as well as higher benefit costs. The efficiency ratio for the first quarter of 2006 was 60.52% compared with 60.10% for the prior-year period.

Assets at March 31, 2006 totaled $379.7 million compared with $313.5 million twelve months ago, an increase of 21.1%. Loans held for investment grew $50.1 million, or 22.2%, during the past twelve months, reaching $275.9 million at period-end. Commercial real estate loans accounted for the majority of this growth; they increased $39.6 million, or 30.6% over the past twelve months, and now account for 61.3% of the loan portfolio.

Deposits increased $63.5 million, or 24.4% over the past year, reaching $323.4 million at March 31, 2006. Transaction accounts (DDA, NOW, MM and Savings) grew $50.2 million or 41.3% over the past twelve months, and now account for $171.7 million or 53.1% of total deposits. This compares with $121.5 million or 46.7% of deposits twelve months ago.

Asset quality remained stable from the previous quarter. Nonperforming assets were $5.5 million or 1.46% of assets at March 31, 2006 compared with $5.4 million or 1.48% of assets at December 31, 2005 and $3.8 million or 1.23% of assets at March 31, 2005. Net charge-offs for the first quarter of 2006 were virtually zero compared with an annualized 0.10% of average loans for the previous quarter, and 0.02% of average loans for the prior-year first quarter. The allowance for loan losses was 1.30% of total loans and leases at March 31, 2006.

Shareholders’ equity totaled $23.3 million at March 31, 2006, up $1.8 million from twelve months ago. Leverage remains at comfortable levels. Shares outstanding at March 31, 2006 were 2,720,496. Mr. Braswell concluded, “We are pleased to begin 2006 on a positive note. We look forward to the new opportunities our expanding geographic footprint will provide in the coming year.”

About the Company

Carolina Bank Holdings, Inc., the holding company for Carolina Bank, operates five full- service branches in North Carolina: three in Greensboro, one in Asheboro, in addition to a newly established office in Burlington. Further information is available on the Company’s web site:www.carolinabank.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding future events. These statements are only 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.

Carolina Bank Holdings, Inc.

Consolidated Financial Highlights

First Quarter 2006

(unaudited)

($ in thousands except for share data)

	Quarterly
	1st Qtr 2006			4th Qtr 2005		3rd Qtr 2005		2nd Qtr 2005		1st Qtr 2005
EARNINGS
Net interest income	$	2,864		2,836		2,576		2,405		2,411
Provision for loan loss	$	370		331		245		450		280
NonInterest income	$	426		327		279		316		308
NonInterest expense	$	1,991		1,963		1,695		1,654		1,634
Net income	$	603		555		548		402		532
Basic earnings per share	$	0.22		0.20		0.20		0.15		0.20
Diluted earnings per share	$	0.22		0.20		0.20		0.14		0.19
Average shares outstanding		2,720,496		2,720,491		2,720,336		2,719,750		2,706,887
Average diluted shares outstanding		2,804,564		2,794,686		2,796,181		2,797,046		2,795,635
PERFORMANCE RATIOS
Return on average assets(a)		0.61	%	0.64	%	0.68	%	0.51	%	0.67	%
Return on average common equity(a)		10.46	%	9.85	%	9.85	%	7.42	%	10.04	%
Net interest margin (fully-tax equivalent)(a)		3.26	%	3.41	%	3.32	%	3.15	%	3.21	%
Efficiency ratio		60.52	%	62.06	%	59.37	%	60.79	%	60.10	%
No. full-time equivalent employees - period end		59		59		57		53		52
CAPITAL
Equity to ending assets		6.14	%	6.24	%	6.78	%	6.76	%	6.85	%
Tier 1 leverage capital ratio		na		8.98	%	9.39	%	9.32	%	9.22	%
Tier 1 risk-based capital ratio		na		10.36	%	11.17	%	10.97	%	11.18	%
Total risk-based capital ratio		na		12.17	%	13.14	%	13.11	%	13.40	%
Book value per share	$	8.57		8.38		8.25		8.06		7.89
ASSET QUALITY
Net charge-offs	$	(2	)	65		497		330		12
Net charge-offs to average loans(a)		0.00	%	0.10	%	0.83	%	0.56	%	0.02	%
Allowance for loan losses	$	3,582		3,210		2,944		3,196		3076
Allowance for loan losses to total loans		1.30	%	1.22	%	1.23	%	1.38	%	1.36	%
Nonperforming loans	$	5,430		2,834		3,252		4,410		3,039
Restructured loans	$	0		2,474		2,574		48		118
Other real estate owned	$	111		111		37		652		691
Nonperforming loans to total loans		1.97	%	2.02	%	2.43	%	1.92	%	1.40	%
Nonperforming assets to total assets		1.46	%	1.48	%	1.77	%	1.57	%	1.23	%
END OF PERIOD BALANCES
Total assets	$	379,692		365,170		331,359		324,524		313,498
Total earning assets	$	357,423		344,522		309,913		300,386		295,706
Total loans	$	275,866		262,609		239,294		232,180		225,793
Total deposits	$	323,399		306,334		276,893		270,229		259,922
Stockholders’ equity	$	23,313		22,787		22,453		21,949		21,471
AVERAGE BALANCES
Total assets	$	366,335		346,434		323,461		317,878		315,691
Total earning assets	$	351,541		332,575		310,297		305,297		300,808
Total loans	$	274,728		256,904		239,340		235,144		228,085
Total interest-bearing deposits	$	281,328		262,342		243,509		240,503		212,021
Stockholders’ equity	$	23,070		22,532		22,265		21,676		21,199

	Calendar Year
	2005			2004
EARNINGS
Net interest income	$	10,228		8,315
Provision for loan loss	$	1,306		769
NonInterest income	$	1,230		1,263
NonInterest expense	$	6,946		6,336
Net income	$	2,037		1,633
Basic earnings per share	$	0.75		0.60
Diluted earnings per share	$	0.73		0.59
Average shares outstanding		2,716,866		2,699,926
Average diluted shares outstanding		2,795,887		2,767,587
PERFORMANCE RATIOS
Return on average assets(a)		0.60	%	0.64	%
Return on average common equity(a)		9.29	%	7.99	%
Net interest margin (fully-tax equivalent)(a)		3.15	%	3.43	%
Efficiency ratio		60.62	%	66.15	%
No. full-time equivalent employees - period end		59		51
CAPITAL
Equity to ending assets		6.24	%	6.78	%
Tier 1 leverage capital ratio		8.98	%	9.64	%
Tier 1 risk-based capital ratio		10.36	%	11.30	%
Total risk-based capital ratio		12.17	%	13.61	%
Book value per share	$	8.38		7.81
ASSET QUALITY
Net charge-offs	$	904		111
Net charge-offs to average loans(a)		0.36	%	0.06	%
Allowance for loan losses	$	3,210		2,808
Allowance for loan losses to total loans		1.22	%	1.26	%
Nonperforming loans	$	2,834		882
Restructured loans	$	2,474		48
Other real estate owned	$	111		857
Nonperforming loans to total loans		2.02	%	0.42	%
Nonperforming assets to total assets		1.48	%	0.57	%
END OF PERIOD BALANCES
Total assets	$	365,170		311,537
Total earning assets	$	344,522		295,774
Total loans	$	262,609		223,470
Total deposits	$	306,334		258,155
Stockholders’ equity	$	22,787		21,120
AVERAGE BALANCES
Total assets	$	338,527		255,374
Total earning assets	$	324,928		242,095
Total loans	$	251,529		197,384
Total interest-bearing deposits	$	256,921		212,343
Stockholders’ equity	$	22,386		20,430

(a) annualized for quarterly data

na = not available

Carolina Bank Holdings, Inc. and Subsidiary

Consolidated Statements of Operations

For the three months ended March 31, 2006 and 2005

(unaudited)

	For the Three Months Ended March 31,
	2006		2005
	(in thousands, except per share data)
Interest income:
Loans	$	5,212	$	3,587
Securities - taxable		675		461
Interest from federal funds sold		88		127
Other interest income		16		1
Total interest income		5,991		4,176
Interest expense:
Deposits		2,703		1,502
FHLB advances and other		255		149
Junior subordinated debentures		169		114
Total interest expense		3,127		1,765
Net interest income		2,864		2,411
Provision for loan losses		370		280
Net interest income after provision for loan losses		2,494		2,131
Noninterest income:
Service charges		159		146
Mortgage banking income		63		58
Other		204		104
Total noninterest income		426		308
Noninterest expense:
Salaries and benefits		1,072		869
Occupancy and equipment		265		218
Professional fees		202		186
Outside data processing		151		130
Advertising and promotion		72		62
Stationery, printing and supplies		86		67
Other		143		102
Total noninterest expense		1,991		1,634
Income before income taxes		929		805
Income taxes expense		326		273
Net income	$	603	$	532
Basic earnings per common share	$	0.22	$	0.20
Diluted earnings per common share	$	0.22	$	0.19
Average common shares outstanding		2,720,496		2,706,887
Average common shares and dilutive potential common shares outstanding		2,804,564		2,795,635

Carolina Bank Holdings, Inc. and Subsidiary

Consolidated Balance Sheets

First Quarter 2006

	(unaudited) March 31,						December 31,
	2006			2005			2005
	(in thousands)
ASSETS
Cash and due from banks	$	2,624		$	2,462		$	4,470
Short-term investments and interest-earning deposits		297			235			12,770
Federal funds sold		18,538			20,136			3,519
Total cash and cash equivalents		21,459			22,833			20,759
Securities available for sale, at fair value		64,229			48,173			64,461
Securities held-to-maturity, at amortized cost		3,923			4,408			3,997
Loans		275,866			225,793			262,609
Allowance for loan losses		(3,582	)		(3,076	)		(3,210	)
Net loans		272,284			222,717			259,399
Premises and equipment, net		8,354			6,541			7,728
Other assets		9,443			8,826			8,826
Total assets	$	379,692		$	313,498		$	365,170
LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES
Deposits:
Noninterest-bearing	$	27,813		$	23,756		$	27,168
Interest-bearing		295,586			236,166			279,166
Total deposits		323,399			259,922			306,334
Short-term borrowings		2,548			2,324			2,844
Federal Home Loan Bank advances		18,283			18,352			21,300
Junior subordinated debentures		10,310			10,310			10,310
Other liabilities		1,839			1,119			1,595
Total liabilities		356,379			292,027			342,383
STOCKHOLDERS’ EQUITY
Common stock and paid-in-capital, no par value, 20,000,000 shares authorized; issued and outstanding - 2,720,496 shares at March 31, 2006 and 2,266,458 shares at March 31, 2005		2,720			2,266			2,720
Additional paid-in capital		15,580			16,022			15,580
Retained earnings		5,643			3,536			5,040
Stock in directors rabbi trust		(365	)		(256	)		333
Directors deferred fees obligation		365			256			(333	)
Accumulated other comprehensive loss		(630	)		(353	)		(553	)
Total stockholders’ equity		23,313			21,471			22,787
Total liabilities and stockholders’ equity	$	379,692		$	313,498		$	365,170