Exhibit 99.01

PRESS RELEASE

For Immediate Release

Bank of the Carolinas Corporation Reports

First Quarter Financial Results

MOCKSVILLE, NORTH CAROLINA, May 17, 2010- Bank of the Carolinas Corporation (Nasdaq: BCAR) reported today financial results for the three month period ended March 31, 2010.

For the three month period ended March 31, 2010, the Company reported a net loss of $235,000, as compared to a net loss of $655,000 in the first quarter of 2009. The net loss available to common shareholders for the three months ended March 31, 2010 was $462,000, or $0.12 per common share, compared to a net loss of $0.17 per common share for the first quarter of 2009.

The economic downturn, which began in late 2007, continues to adversely affect the Company’s operating results manifested by increased loan loss provisions and costs associated with foreclosed real estate. These costs have been partially mitigated in the first quarter of 2010 by improved net interest margins driven by lower funding costs. Net interest income totaled $4.2 million in the first quarter of 2010, a 32.3% increase from the comparable 2009 quarter. The net interest margin in the first quarter of 2010 increased to 3.17%, compared to 2.38% in 2009.

As of March 31, 2010, the Company’s other real estate owned and nonaccrual loans totaled $20.8 million and amounted to 3.64% of total assets. These levels of nonperforming assets compares to nonperforming assets totaling $17.5 million, or 2.86% of total assets as of December 31, 2009 and $15.9 million, or 2.65% of total assets at March 31, 2009.

The provision for loan losses totaled $916,000 for the quarter ended March 31, 2010, an increase of 30.9% from the provision of $700,000 for the first quarter of 2009. The allowance for loan losses was 1.85% of total loans as of March 31, 2010, and net charge-offs for the current quarter represented an annualized percentage of 2.14% of average loans outstanding.

Noninterest expenses totaled $4.2 million for the first quarter of 2010, an increase of 9.7% from the comparable quarter of 2009. The most significant drivers in the cost increase for 2010 were significantly higher costs related to ownership and disposal of other real estate and increased salaries and benefits from bringing our special asset functions in-house. Offsetting a portion of the above described increases in 2010 noninterest expenses were reductions in professional services, data processing services, and advertising. Noninterest income, exclusive of securities gains, remains relatively flat for the first quarter compared to 2009.

Total assets at March 31, 2010 amounted to $570.7 million, a decrease of 6.5% when compared to the $610.4 million as of December 31, 2009 and a decrease of 5.0% when compared to $600.6 million as of March 31, 2009. The decrease in assets was a planned strategy by the Company to improve its net interest margin and capital ratios. Loans totaled $380.9 million at March 31,

2010, a decline of 6.3% from a year earlier, and deposits fell 8.3% over the prior year to $445.1 million.

The Company continues to be well-capitalized with a Tier 1 leverage ratio of 7.87%, a Tier 1 capital to risk-weighted assets ratio of 10.07% and a total capital to risk-weighted assets ratio of 11.92% as of March 31, 2010.

Bank of the Carolinas Corporation is the holding company for Bank of the Carolinas, a North Carolina chartered bank headquartered in Mocksville, NC with offices in Advance, Asheboro, Cleveland, Concord, Harrisburg, King, Landis, Lexington and Winston-Salem. The common stock of the Company is traded on the NASDAQ Global Market under the symbol “BCAR”.

For further information contact:

Robert E. Marziano

Chief Executive Officer

Bank of the Carolinas

(336) 751-5755

DISCLOSURES ABOUT FORWARD LOOKING STATEMENTS

This press release may contain statements relating to our financial condition, results of operations, plans, strategies, trends, projections of results of specific activities or investments, expectations or beliefs about future events or results, and other statements that are not descriptions of historical facts. Those statements, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “forecasts,” “potential” or “continue,” or similar terms or the negative of these terms, or other statements concerning opinions or judgments of our management about future events. Forward-looking information is inherently subject to risks and uncertainties, and our actual results could differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, risk factors discussed in our Annual Report on Form 10-K and in other documents we file with the Securities and Exchange Commission from time to time. Copies of those reports are available directly through the Commission’s website at www.sec.gov. Other factors that could influence the accuracy of forward-looking statements include, but are not limited to, (a) pressures on the earnings, capital and liquidity of financial institutions resulting from current and future adverse conditions in the credit and equity markets and the banking industry in general; (b) changes in competitive pressures among depository and other financial institutions or in our ability to compete successfully against the larger financial institutions in our banking markets; (c) the financial success or changing strategies of our customers; (d) actions of government regulators, or changes in laws, regulations or accounting standards, that adversely affect our business; (e) changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the volumes and values of loans we make and securities we hold; (f) changes in general economic or business conditions and real estate values in our banking markets (particularly changes that affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral); and (g) other developments or changes in our business that we do not expect. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statements in this paragraph. We have no obligation, and we do not intend, to update these forward-looking statements.

Bank of the Carolinas Corporation

Consolidated Balance Sheets

(In Thousands Except Share Data)

	March 31, 2010			December 31, 2009*
	(unaudited)
Assets:
Cash and due from banks, noninterest-bearing	$	20,318		$	3,524
Temporary investments		33,904			33,835
Investment securities		95,674			140,004
Loans		380,890			391,265
Less, allowance for loan losses		(7,050	)		(8,167	)
Total loans, net		373,840			383,098
Premises and equipment, net		13,767			14,010
Other real estate owned		9,023			8,233
Bank owned life insurance		10,099			10,010
Other assets		14,093			17,673
Total Assets	$	570,718		$	610,387
Liabilities:
Noninterest bearing demand deposits	$	37,448		$	36,418
Interest-checking deposits		34,697			34,614
Savings and money market deposits		180,554			235,541
Time deposits		192,424			187,344
Total deposits		445,123			493,917
Securities sold under repurchase agreements		45,914			46,682
Federal home loan bank advances		25,000			15,000
Subordinated debt		7,855			7,855
Other liabilities		1,921			1,941
Total Liabilities		525,813			565,395
Shareholders’ Equity:
Preferred stock, no par value		13,179			13,179
Discount on preferred stock		(1,183	)		(1,245	)
Common stock, $5 par value per share		19,486			19,486
Additional paid-In capital		12,985			12,978
Retained earnings (loss)		(162	)		300
Accumulated other comprehensive income		600			294
Total Shareholders’ Equity		44,905			44,992
Total Liabilities and Shareholders’ Equity	$	570,718		$	610,387
Preferred shares authorized		3,000,000			3,000,000
Preferred shares issued and outstanding		13,179			13,179
Common shares authorized		15,000,000			15,000,000
Common shares issued and outstanding		3,897,174			3,897,174
Book value per common share	$	8.14		$	8.16

* Derived from audited information

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands Except Share Data)

(Unaudited)

	Three Months Ended March 31,
	2010			2009
Interest income
Interest and fees on loans	$	5,383		$	6,052
Interest on securities		934			1,463
Other interest income		17			22
Total interest income		6,334			7,537
Interest expense
Interest on deposits		1,449			3,542
Interest on borrowed funds		672			811
Total interest expense		2,121			4,353
Net Interest income		4,213			3,184
Provision for loan losses		916			700
Net interest income after provision for loan losses		3,297			2,484
Noninterest income
Customer service fees		315			312
Increase in value of bank owned life insurance		89			89
Gains on investment securities		96			—
Other income (loss)		3			5
Total non-interest income		503			406
Noninterest expense
Salaries and benefits		1,915			1,671
Occupancy and equipment		595			562
FDIC insurance assessments		299			335
Data processing services		206			243
Valuation provisions and net operating costs associated with foreclosed real estate		369			136
Other		851			913
Total non-interest expense		4,235			3,860
Income (loss) before income taxes		(435	)		(970	)
Provision for Income taxes		(200	)		(315	)
Net income (loss)		(235	)		(655	)
Dividends and accretion on preferred stock		(227	)		—
Net income (loss) available to common shareholders		(462	)		(655	)
Earnings (loss) per common share:
Basic	$	(0.12	)	$	(0.17	)
Diluted	$	(0.12	)	$	(0.17	)
Weighted Average Common Shares Outstanding:
Basic		3,897,174			3,891,174
Diluted		3,897,174			3,891,174

Bank of the Carolinas Corporation

Other Financial Data

(In Thousands Except Share Data)

(Unaudited)

	As of or for the three months ended March 31,
	2010			2009			Change*
Average balance sheet data
Average loans	$	385,847		$	408,543		(5.56	)%
Average earning assets		539,093			541,622		(0.47	)
Average total assets		586,301			582,971		0.57
Average common shareholders’ equity		32,398			37,989		(14.72	)
Average total shareholders’ equity		45,577			37,989		19.97
Period-end balance sheet data:
Total loans	$	380,890		$	406,449		(6.29	)%
Allowance for loan losses		(7,050	)		(6,969	)	1.16
Total assets		570,718			600,644		(4.98	)
Total deposits		445,123			485,273		(8.27	)
Common shareholders’ equity		31,726			36,135		(12.20	)
Total shareholders’ equity		44,905			36,135		24.27
Asset quality indicators
Net loan charge-offs	$	2,033		$	39		n/m	%
Total nonperforming loans		11,732			9,913		18.35
Total nonperforming assets		20,754			15,916		30.40
Asset quality ratios
Net-chargeoffs (recoveries) to average loans **		2.14	%		0.04	%	210	BP
Nonperforming loans to total loans		3.08			2.44		64
Nonperforming assets to total assets		3.64			2.65		99
Nonperforming assets to loan-related assets		5.32			3.86		146
Allowance for loan losses to total loans		1.85			1.71		14
Financial ratios
Return on average assets **		(0.16	)%		(0.46	)%	29	BP
Return on average common shareholders’ equity **		(5.78	)		(7.35	)	157
Net interest margin **		3.17			2.38		79
Per share amounts available to common shareholders
Basic earnings (loss) per common share	$	(0.12	)	$	(0.17	)	29.57	%
Diluted earnings (loss) per common share		(0.12	)		(0.17	)	29.57
Book value per common share		8.14			8.18		(0.43	)

* BP denotes basis points.

** ratio annualized.