GREENSBORO, N.C., Oct. 26, 2009 (GLOBE NEWSWIRE) -- Carolina Bank Holdings, Inc. (Nasdaq:CLBH) today reported deposit growth of $96.8 million, or 19.4%, for the first nine months of 2009 and 27.9% for the year ended September 30, 2009 to $594.9 million. The additional deposits have funded loan growth of $35.2 million and allowed for a reduction of $53.8 million in wholesale funding from the Federal Home Loan Bank and from Federal funds purchased during the first nine months of 2009. Robert T. Braswell, President and CEO, commented, "Our increased focus on deposit gathering is paying off in sharply higher core deposits which have increased shareholder value. We are especially pleased to report that all deposit growth in 2009 was in transactional accounts which generally produce a lower cost. Customers in our expanded footprint in the Triad of North Carolina are pleased to have same day credit for deposits, free ATM transactions, convenient locations, competitive pricing and exceptional service and are showing their enthusiasm by opening new accounts and increasing balances."

The Company reported net income for the third quarter of 2009 of $169,000 and net loss available to common stockholders of $108,000, or ($0.03) per diluted common share, compared to net income of $704,000, or $0.21 per diluted common share in the third quarter of 2008. The issuance of preferred stock contributed to the net loss available to common stockholders and lower diluted earnings per share in 2009. Net income before income taxes, the provision for loan losses, and repossessed asset losses was $2.5 million in the third quarter of 2009 compared to $1.5 million in the third quarter of 2008. The provision for loan losses and repossessed asset losses were $2.4 million in the third quarter of 2009 compared to $0.4 million in the second quarter of 2008.

Robert T. Braswell, President and CEO of Carolina Bank Holdings, commented, "Our core earnings before provision for loan losses, repossessed asset losses, and increased FDIC insurance has been aided by an improved net interest margin which increased 39 basis points from a year ago and from strong fee income from our mortgage division. These base earnings doubled from the third quarter of last year. We have been challenged by the current credit environment but are pleased with the performance of our mortgage division and our success in net interest margin improvement."

Net interest income for the third quarter of 2009 increased $1.3 million from the same quarter in 2008, or 32.5% to $5.1 million, reflecting a 17.0% increase in average earning assets and a 39 basis point increase in the net interest margin to 3.25%.

Non-interest income for the third quarter of 2009 was $1.6 million, an increase of $0.5 million from the third quarter of 2008. Mortgage banking income which consists of fees from the origination and sale of residential mortgage loans, increased to $2.0 million in the third quarter of 2009 from $0.6 million in the third quarter of 2008. Non-interest income in the third quarter of 2009 included repossessed asset losses of $695,000 and a loss on the sale of an investment in an asset management company of $136,000.

Non-interest expense was $4.8 million in the third quarter of 2009, an increase of 41.0% from the third quarter of 2008. A new corporate office and full service branch in downtown Greensboro, a growing office in Winston-Salem, higher FDIC premiums and the expanded wholesale mortgage division accounted for most of the new expense in 2009.

Mr. Braswell added, "We continue to concentrate on our bank's asset quality as our non-performing assets have risen in 2009 due to economic weakness and the related impact on some of our business customers. We are disappointed in the increase in non-performing assets over the past three quarters and are working to reduce them. On a positive note, we repurchased in September 2009, $5.6 million in loan participations at a discount from the FDIC which we had previously sold to Silverton Bank and expect to realize an increased yield on these loans as they payoff." Non-performing assets were $22.1 million, or 3.26% of assets at September 30, 2009, compared with $6.4 million, or 1.04% of assets at December 31, 2008. The bank had annualized net charge-offs of 0.95% and 0.09% of average loans in the first nine months of 2009 and 2008, respectively. The allowance for loan losses was 1.33% and 1.14% of loans held for investment at September 30, 2009 and 2008, respectively.

Net income for the nine months ended September 30, 2009 was $1,169,000 and net income available to common stockholders was $354,000, or $0.10 per diluted common share, compared to $2,014,000, or $0.59 per diluted share, for the same period in 2008.

Shareholders' equity was strengthened during 2009 from the issuance of $16.0 million of preferred stock to the United States Treasury under the UST Capital Purchase Program and from an increase in retained earnings. Dividends paid and accrued to the United States Treasury and accretion of the discount on the preferred stock totaled $815,000 in the first nine months of 2009.

About the Company

Carolina Bank, the banking subsidiary of Carolina Bank Holdings, Inc. began banking operations on November 25, 1996. The parent company is a North Carolina corporation organized in 2000. The bank is engaged in lending and deposit gathering activities in the Piedmont Triad of North Carolina, with operations in four counties: Guilford, Alamance, Forsyth and Randolph. The bank has eight full-service banking locations, four in Greensboro, one in Asheboro, one in High Point, one in Burlington, and one in Winston-Salem, North Carolina. The Company's stock is listed on the NASDAQ Global Market under the symbol CLBH. Further information is available on the Company's web site: www.carolinabank.com.

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 undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

 Carolina Bank Holdings, Inc.