Carolina Bank Holdings Announces 25th Consecutive Quarterly Profit.

GREENSBORO, N.C. -- Carolina Bank Holdings, Inc. (NASDAQ:CLBH) announced that it had posted its twenty-fifth consecutive quarterly profit for the period ending June 30, 2004. The performance record was announced by Robert T. Braswell, President and CEO. "The company continues to achieve record growth and profitability. We opened November 25, 1996. After just 15 months of operations, the company broke even; we have been profitable every on of the 71 months since that time," he stated.

The driver of the company's success continues to be the performance of its wholly owned subsidiary, Carolina Bank, headquartered in Greensboro, NC. The bank continues to experience solid, profitable growth. Comparing the quarter ending June 30, 2004, with the same period one year ago, the bank's assets have increased 22 percent to $245 million, deposits increased 21 percent to $200.9 million and net loans increased 30 percent, to $191.7 million. Similarly, comparing the quarter ending June 30, 2004, with the same period one year ago, the bank's net income has increased 39 percent, to $347,963 and Diluted Earnings per Share increased 36 percent to $0.15, adjusted for the 20 percent stock dividend, paid in April 2004.

"Our bank's profitability is not at the mercy of the current weakness in the mortgage market, Braswell continued. "At our bank, mortgage fee income is a compliment to our banking operations, not a key to our success. Furthermore, fully 80 percent of our loans are tied to a floating rate index, principally the prime rate. Therefore, the recent increase in the prime rate should have a positive, not negative, impact on our performance because the income on loans will increase faster than the cost of our deposits."

The company has recently strengthened its team of bankers with three new employee additions. Mr. David Griswold, Vice President has joined the Asheboro Office as a Commercial Lender. Ms. Pam Sparks now serves as Vice President and Branch Manager of the Friendly Office. Mr. Ross Geller will serve as Vice President and Branch Manager of the Jefferson Village Office.

Earlier in the year, Carolina Bank introduced added value enhancements to its three primary personal checking accounts, including discounts on shopping, entertainment, hearing, vision, and pharmacy along with $10,000 accidental death insurance during the past month. The enhancements are available to bank customers at no charge. The bank offers SmartPay, an Internet Bill Payment service free to qualified Carolina Bank customers.

Carolina Bank has three branches in Greensboro and one in Asheboro, N.C. Further information is available on the bank's website, www.carolinabank.com

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.

CAROLINA BANK HOLDINGS, INC.
Selected Financial Information
----------------------------------------------------------------------
                              2004                   2003
                       ------------------ ----------------------------
(in thousands, except   Second    First    Fourth    Third   Second
 per share)             Quarter  Quarter   Quarter  Quarter  Quarter
----------------------------------------- ----------------------------

OPERATING INCOME SUMMARY
Interest income          $2,855   $2,741    $2,682   $2,404   $2,417
Interest expense            960      893       875      853      878
 Net interest income      1,895    1,848     1,807    1,551    1,539
Provision for loan
 losses                     133      180       225       95      135
Non-interest inc. bfr
 securities/REO inc.        351      295       319      432      326
Securities/REO gains
 (losses), net                -        -       (37)     (25)     (85)
Non-interest expenses     1,589    1,437     1,339    1,369    1,268
 Income before income
  taxes                     524      526       525      494      377
Income taxes                176      169       171      178      127
  Net income               $348     $357      $354     $316     $250

PER COMMON SHARE (a)
Basic                     $0.15    $0.16     $0.16    $0.14    $0.11
Diluted                    0.15     0.15      0.15     0.14     0.11
Book Value (on
 outstanding shares)       8.83     8.92      8.70     8.49     8.47

ASSET QUALITY
Allowance for loan
 losses                  $2,436   $2,316    $2,150   $2,023   $1,942
Loans on nonaccrual         327      322       228      900      376
Repossessed assets          714      126       126      216      114
Net loan charge offs
 (recoveries)                13       14        99       14       97
Allowance for loan
 losses to loans           1.25%    1.25%     1.25%    1.30%    1.30%
Nonaccrual lns +
 repossessions to
 assets                    0.42%    0.19%     0.16%    0.53%    0.24%

AVERAGE BALANCES
Loans                  $189,452 $179,288  $164,333 $152,488 $147,928
Earning assets          222,737  214,310   198,143  191,784  187,570
Total assets            242,497  226,685   211,955  203,986  196,909

AT PERIOD END
Loans before allowance $194,141 $185,994  $172,575 $155,937 $149,892
Total assets            245,002  239,302   226,911  212,126  201,375
Deposits                200,932  197,514   183,569  168,706  165,868
Stockholders' Equity     19,876   20,051    19,563   19,057   18,937

RATIOS ANNUALIZED
Net yield - avg
 interest earning assets   3.40%    3.45%     3.65%    3.23%    3.28%
Return on average assets   0.57%    0.63%     0.67%    0.62%    0.51%
Net charge-offs to
 average loans             0.03%    0.03%     0.24%    0.04%    0.26%
Efficiency ratio (excl
 security/REO trans.)      0.71     0.67      0.63     0.69     0.68

Note: All quarterly information is unaudited.

(a) All Per 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


CAROLINA BANK HOLDINGS, INC.
Selected Financial Information
----------------------------------------------------------------------
                                                   Years Ended
                                           ---------------------------

(in thousands, except per share)               2003     2002     2001
----------------------------------------------------------------------

OPERATING INCOME SUMMARY
Interest income                              $9,844   $9,085   $9,016
Interest expense                              3,584    4,152    5,397
 Net interest income                          6,260    4,933    3,619
Provision for loan losses                       692      685      391
Non-interest inc. bfr securities/REO inc.     1,454      911      557
Securities/REO gains (losses), net             (100)      20      129
Non-interest expenses                         5,198    4,266    3,386
 Income before income taxes                   1,724      913      528
Income taxes                                    574      312      126
 Net income                                  $1,150     $601     $402

PER COMMON SHARE (a)
Basic                                         $0.52    $0.47    $0.32
Diluted                                        0.51     0.46     0.32
Book Value (on outstanding shares)             8.70     8.28     7.74

ASSET QUALITY
Allowance for loan losses                    $2,150   $1,661   $1,369
Loans on nonaccrual                             228       37      443
Repossessed assets                              126      648        -
Net loan charge offs (recoveries)               204      393      209
Allowance for loan losses to loans             1.25%    1.25%    1.26%
Nonaccrual lns + repossessions to assets       0.16%    0.36%    0.29%

AVERAGE BALANCES
Loans                                      $151,155 $121,446  $95,602
Earning assets                              189,766  155,420  122,273
Total assets                                201,354  163,337  129,022

AT PERIOD END
Loans before allowance                     $172,575 $133,045 $108,882
Total assets                                226,911  189,871  151,515
Deposits                                    183,569  154,878  124,654
Stockholders' Equity                         19,563   18,344    9,590

RATIOS ANNUALIZED
Net yield - avg interest earning assets        3.30%    3.17%    2.96%
Return on average assets                       0.57%    0.37%    0.31%
Net charge-offs to average loans               0.13%    0.32%    0.22%
Efficiency ratio (excl security/REO trans.)    0.67     0.73     0.81

Note: All quarterly information is unaudited.

(a) All Per 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