Mail Stop 4561

      May 3, 2006

T. Allen Liles
Chief Financial Officer
Carolina Bank Holdings, Inc.
528 College Road
Greensboro, North Carolina 27410


      Re:	Carolina Bank Holdings, Inc.
		Form 10-KSB for the Fiscal Year Ended December 31, 2005
		Definitive Proxy Statement on Schedule 14A filed March
17,
2006
		File No. 000-31877

Dear Mr. Liles:

   We have limited our review of your filing to the issue we have
addressed in our comment.  Please be as detailed as necessary in
your
explanation.  In our comment, we ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may raise additional
comments.

   Please understand that the purpose of our review process is to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comment or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.


Definitive Proxy Statement

Management`s Discussion and Analysis, page 16

Allowance for Loan Losses, page 27

1. We note that your disclosure on page 17 that several of your
commercial customers and real estate developers experienced
financial
difficulties in 2005 resulting in higher non-accrual loans and
increased loan charge-offs.  While your allowance for loan losses
has
increased, the allowance decreased relative to your portfolio and
does not appear to clearly correlate with the decrease in credit
quality.  Please tell us and in future filings disclose how
increased
loan charge-offs and higher nonperforming loans impacted your
determination of your allowance for loan losses as of December 31,
2005.  Separately quantify and describe how you determine the
amount
of each component (such as specific, general, unallocated) of your
allowance for the periods presented.

   Please respond to these comments within 10 business days or
tell
us when you will provide us with a response.  Please understand
that
we may have additional comments after reviewing your response to
our
comments.

   We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

     	In connection with responding to our comment, please
provide, in writing, a statement from the company acknowledging
that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comment on your filing.  Please contact Nancy
Maloney
Staff Accountant at (202) 551-3427 or me at (202) 551-3449 if you
have questions.

   							Sincerely,



Joyce Sweeney
Accounting Branch Chief



T. Allen Liles
Carolina Bank Holdings, Inc.
May 3, 2006
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