Exhibit 99.1

PRESS RELEASE

For Immediate Release

Bank of the Carolinas Corporation Reports Fourth Quarter Earnings

MOCKSVILLE, NORTH CAROLINA, January 25, 2007—Bank of the Carolinas Corporation (Nasdaq Capital Market: BCAR), today reported financial results for the three and twelve months ended December 31, 2006.

For the three month period ended December 31, 2006, the Company reported net income of $681,000, as compared to $694,000 in the fourth quarter of 2005. Diluted earnings per share were $.17 for the fourth quarter compared to $.18 per diluted share for the same period in 2005.

For the year ended December 31, 2006, the Company reported net income of $3,474,000 or $.88 per diluted share compared to $2,333,000 or $.59 per diluted share for the same period in 2005. The 2006 year to date amount includes a one time gain on the sale of our Carthage, NC branch that was consummated in the third quarter of 2006. Excluding the after-tax effect of the one time gain, 2006 net income was virtually unchanged from the 2005 amount and diluted earnings per share would have been unchanged year over year.

For the year ended 2006, net interest income increased $2,512,000 or 20.7% due primarily to growth in earning assets. However, the Bank’s net interest margin declined slightly to 3.78% during the period. Non-interest income for 2006 grew $278,000 or 20.7% exclusive of the one time gain. Offsetting these increases, non-interest expense rose $2,680,000 or 30.3% year over year. Primary factors that contributed to this increase were expenses related to personnel, data processing, marketing, other real estate write-downs and the formation of a holding company.

Total assets at December 31, 2006 amounted to $454.6 million, an increase of 16.5% when compared to the prior year end amount of $390.2 million. Net loans increased 18.3% over the prior year to $350.8 million while deposits grew to $382.7 million, a 17.2% increase over the prior year. The allowance for loan losses was 1.05% of total loans as of December 31, 2006 and net year to date charge-offs were 0.23% of average loans outstanding.

Bank of the Carolinas Corporation is the holding company for Bank of the Carolinas, a state chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Cleveland, Harrisburg, King, Landis, and Lexington. Common stock of the company is traded on the NASDAQ Capital Market under the symbol BCAR.

This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Bank of the Carolinas undertakes no obligation to revise these statements following the date of this press release.

For further information contact:

Eric E. Rhodes

Chief Financial Officer

Bank of the Carolinas

(336) 751-5755

Bank of the Carolinas Corporation

Consolidated Balance Sheets

(In Thousands)

	December 31,
	2006			2005*
	Unaudited
Assets
Cash and Due from Banks	$	5,626		$	5,035
Interest-Bearing Deposits in Banks		7,777			120
Federal Funds Sold		6,449			17,000
Securities Available for Sale		55,677			47,379
Loans		354,555			299,927
Less, Allowance for Loan Losses		(3,732	)		(3,315	)
Total Loans, Net		350,823			296,612
Properties and Equipment		11,142			9,960
Other Assets		17,084			14,081
Total Assets	$	454,578		$	390,187
Liabilities
Non-interest Bearing Demand Deposits	$	26,317		$	26,131
Interest Bearing Demand Deposits		67,214			59,521
Savings Deposits		10,021			11,101
Time Deposits		279,169			229,887
Total Deposits		382,721			326,640
Borrowings		31,000			27,400
Other Liabilities		3,143			1,496
Total Liabilities		416,864			355,536
Shareholders’ Equity
Common Stock, Par Value $5 Per Share: Authorized 15,000,000 Shares; Issued 3,826,792 Shares in 2006 and 3,825,192 Shares in 2005		19,134			19,126
Additional Paid-In Capital		11,444			11,419
Retained Earnings		7,293			4,583
Accumulated Other Comprehensive Loss		(157	)		(477	)
Total Shareholders’ Equity		37,714			34,651
Total Liabilities and Shareholders’ Equity	$	454,578		$	390,187

* Derived from audited financial statements

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands, Except Share and Per Share Data)

	Three Months Ended December 31				Twelve Months Ended December 31
	2006		2005		2006		2005*
	Unaudited				Unaudited
Interest Income
Interest and Fees on Loans	$	7,265	$	5,574	$	26,672	$	18,892
Interest on Securities		586		434		2,184		1,498
Fed Funds Sold		105		55		398		150
Deposits in Other Banks		8		3		22		16
Total Interest Income		7,964		6,066		29,276		20,556
Interest Expense
Deposits		4,067		2,393		13,343		7,434
Borrowed Funds		292		284		1,270		971
Total Interest Expense		4,359		2,677		14,613		8,405
Net Interest Income		3,605		3,389		14,663		12,151
Provision for Loan Losses		182		272		1,157		1,120
Net Interest Income After Provision for Loan Losses		3,423		3,117		13,506		11,031
Other Income
Customer Service Fees		234		239		947		847
Mortgage Loan Broker Fees		42		60		177		196
Increase in CSV of Life Insurance		64		51		215		203
Gain on sale of branch		—		—		1,755		—
Other Income		104		28		280		95
Total Other Income		444		378		3,374		1,341
Noninterest Expense
Salaries and Benefits		1,540		1,331		6,130		4,844
Occupancy and Equipment		383		313		1,412		1,222
Other Noninterest Expense		928		797		3,970		2,766
Total Noninterest Expense		2,851		2,441		11,512		8,832
Income Before Income Taxes		1,016		1,054		5,368		3,540
Income Taxes		335		360		1,894		1,207
Net Income	$	681	$	694	$	3,474	$	2,333
Earnings Per Share (1)
Basic	$	0.18	$	0.18	$	0.91	$	0.61
Diluted	$	0.17	$	0.18	$	0.88	$	0.59
Weighted Average Shares Outstanding (1)
Basic		3,825,644		3,810,202		3,825,343		3,799,565
Diluted		3,958,578		3,961,740		3,963,358		3,950,842

⁽¹⁾ Share and per share data reflect a 6-for-5 stock split effected October 28, 2005.

* Derived from audited financial statements

Bank of the Carolinas Corporation

Performance Ratios

	Twelve Months Ended December 31
	2006		2005		Change*
Financial Ratios
Return On Average Assets	0.84	%	0.69	%	15	BP
Return On Average Shareholders’ Equity	9.57	%	6.86	%	271
Net Interest Margin	3.78	%	3.84	%	(6	)
Asset Quality Ratios
Net-chargeoffs to Average Loans	0.23	%	0.11	%	12	BP
Nonperforming Loans To Total Loans	1.31	%	0.67	%	64
Nonperforming Assets To Total Assets	1.25	%	1.08	%	17
Allowance For Loan Losses To Total Loans	1.05	%	1.11	%	(6	)

* BP denotes basis points.