Exhibit 99.01

PRESS RELEASE

For Immediate Release

Bank of the Carolinas Corporation Reports

Second Quarter Financial Results

MOCKSVILLE, NORTH CAROLINA, July 29, 2010- Bank of the Carolinas Corporation (Nasdaq: BCAR) reported today financial results for the three- and six-month periods ended June 30, 2010.

For the three-month period ended June 30, 2010, the Company reported a net loss of $188,000, as compared to a net loss of $1,479,000 in the second quarter of 2009. After payment of dividends on preferred stock, the net loss available to common shareholders for the three months ended June 30, 2010 was $415,000, or $0.11 per common share, compared to a net loss of $0.41 per common share for the second quarter of 2009.

For the six-month period ended June 30, 2010, the Company reported a net loss of $423,000, as compared to a net loss of $2,134,000 for the six-month period of 2009. The net loss available to common shareholders for the six months ended June 30, 2010 was $877,000, or $0.23 per common share, compared to a net loss of $0.57 per common share for the six month period of 2009.

The significant improvement in year-to-date 2010 results versus the previous year was driven by stronger core operating results which helped offset increased provisions for loan losses and continued high credit losses. For the three- and six-month periods in 2010, net interest income increased 42.7% and 37.4%, respectively, over the comparable periods in 2009. This increased the Company’s year-to-date net interest margin to 3.28% in 2010 as compared to 2.26% in the previous year.

As of June 30, 2010, the Company’s nonperforming assets totaled $20.8 million and amounted to 3.86% of total assets, compared to total nonperforming assets of $17.5 million, or 2.86% of total assets, as of December 31, 2009, and $20.0 million, or 3.27% of total assets at June 30, 2009.

The provision for loan losses totaled $1,086,000 for the quarter ended June 30, 2010, an increase of 50.9% from the provision of $720,000 for the second quarter of 2009. For the six-month period ended June 30, 2010, the loan loss provision totaled $2,002,000, an increase of 41.0% from the $1,420,000 recorded in the same period 2009. The allowance for loan losses was 1.95% of total loans as of June 30, 2010, and net charge-offs for the six-month period represented an annualized percentage of 1.59% of average loans outstanding.

Noninterest expenses totaled $4.1 million for the second quarter of 2010, a decrease of 20.1% from the comparable quarter of 2009. For the six month period ended June 30,

2010, noninterest expenses totaled $8.3 million, a decrease of 7.3% from the comparable period of 2009. The decrease in noninterest expenses for 2010 was primarily due to reductions in write-downs on carrying values on foreclosed real estate. Salaries and benefits increased period over period due to the Company bringing in-house the special asset functions that previously were outsourced. Noninterest income remained relatively flat for the second quarter compared to 2009.

Total assets at June 30, 2010 amounted to $539.9 million, a decrease of 11.6% when compared to the $610.4 million as of December 31, 2009 and a decrease of 11.7% when compared to $611.1 million as of June 30, 2009. The decrease in assets was a planned strategy by the Company to improve its net interest margin and capital ratios. Loans totaled $368.8 million at June 30, 2010, a decline of 9.0% from a year earlier, and deposits fell 14.7% over the prior year to $414.0 million.

The Company continues to be well capitalized with a Tier 1 leverage ratio of 8.31%, a Tier 1 capital to risk-weighted assets ratio of 10.44% and a total capital to risk-weighted assets ratio of 12.31% as of June 30, 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:

Eric E. Rhodes

Chief Financial Officer

Bank of the Carolinas

(336) 998-1799 x 220

DISCLOSURES ABOUT FORWARD LOOKING STATEMENTS

Statements in this press release relating to plans, strategies, economic performance and 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, may be forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include, but are not limited to, 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 SEC’s Internet website at www.sec.gov. Forward-looking statements may be identified by terms such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “ feels,” “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. Factors that could influence the accuracy of forward-looking statements include, but are not limited to (a) pressures on our earnings, capital and liquidity resulting from current and future conditions in the credit and capital markets, (b) continued or unexpected increases in nonperforming loans and credit losses in our loan portfolio, (c) continued adverse conditions in the economy and in the real estate market in our banking markets (particularly those conditions that affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of collateral that secures our loans), (d) the financial success or changing strategies of our customers, (e) actions of government regulators, or change in laws,

regulations or accounting standards, that adversely affect our business, (f) changes in the interest rate environment and the level of market interest rates that reduce our net interest margins and/or the values of loans we make and securities we hold, and changes in general economic conditions and real estate values in our banking market (particularly changes that affect our loan portfolio, the abilities of our borrowers to repay their loans, and the values of loan collateral), (g) changes in competitive pressures among depository and other financial institutions or in our ability to compete effectively against other financial institutions in our banking markets, and (h) other developments or changes in our business that we do not expect. Although we believe that the expectations reflected in the forward-looking statements included in this press release are reasonable, they represent our management’s judgments only as of the date they are made, and we cannot guarantee future results, levels of activity, performance or achievements. As a result, readers are cautioned not to place undue reliance on these forward-looking statements. 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 do not intend, to update these forward-looking statements.

Bank of the Carolinas Corporation

Consolidated Balance Sheets

(In Thousands Except Share Data)

(Unaudited)

	June 30,
	2010			2009
Assets:
Cash and due from banks, noninterest-bearing	$	3,467		$	8,282
Temporary investments		7,462			30,249
Investment securities		121,916			131,977
Loans		368,843			405,364
Less, allowance for loan losses		(7,180	)		(6,714	)
Total loans, net		361,663			398,650
Premises and equipment, net		13,496			14,491
Other real estate owned		9,181			7,149
Bank owned life insurance		10,189			9,825
Other assets		12,482			10,470
Total Assets	$	539,856		$	611,093
Liabilities:
Noninterest bearing demand deposits	$	37,581		$	19,256
Interest-checking deposits		34,765			29,077
Savings and money market deposits		141,834			297,271
Time deposits		199,807			139,467
Total deposits		413,987			485,071
Securities sold under repurchase agreements		45,755			46,111
Federal Home Loan Bank advances		25,000			23,000
Subordinated debt		7,855			7,855
Other liabilities		1,797			1,990
Total Liabilities		494,394			564,027
Shareholders’ Equity:
Preferred stock, no par value		13,179			13,179
Discount on preferred stock		(1,121	)		(1,366	)
Common stock, $5 par value per share		19,486			19,456
Additional paid-in capital		12,990			13,016
Retained earnings (loss)		(576	)		1,835
Accumulated other comprehensive income		1,504			946
Total Shareholders’ Equity		45,462			47,066
Total Liabilities and Shareholders’ Equity	$	539,856		$	611,093
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			3,891,841
Book value per common share	$	8.28		$	8.71

Bank of the Carolinas Corporation

Consolidated Statements of Income

(In Thousands Except Share Data)

(Unaudited)

	Three months ended June 30						Six months ended June 30
	2010			2009			2010			2009
Interest income
Interest and fees on loans	$	5,324		$	5,977		$	10,707		$	12,029
Interest on securities		851			1,435			1,785			2,898
Other interest income		16			21			33			43
Total interest income		6,191			7,433			12,525			14,970
Interest expense
Interest on deposits		1,209			3,644			2,658			7,186
Interest on borrowed funds		684			777			1,356			1,588
Total interest expense		1,893			4,421			4,014			8,774
Net interest income		4,298			3,012			8,511			6,196
Provision for loan losses		1,086			720			2,002			1,420
Net interest income after provision for loan losses		3,212			2,292			6,509			4,776
Noninterest income
Customer service fees		330			338			645			650
Increase in value of banked owned life insurance		90			91			179			180
Gains on investment securities		94			95			190			95
Other income (loss)		(2	)		18			1			23
Total noninterest income		512			542			1,015			948
Noninterest expense
Salaries and benefits		1,799			1,677			3,714			3,348
Occupancy and equipment		533			532			1,128			1,094
FDIC insurance assessments		263			380			562			715
Data processing expense		191			212			397			455
Valuation provisions and net operating costs associated with foreclosed real estate		343			1,326			712			1,462
Other		952			984			1,803			1,897
Total noninterest expenses		4,081			5,111			8,316			8,971
Loss before income taxes		(357	)		(2,277	)		(792	)		(3,247	)
Provision for income taxes		(169	)		(798	)		(369	)		(1,113	)
Net loss	$	(188	)	$	(1,479	)	$	(423	)	$	(2,134	)
Dividends and accretion on preferred stock		(227	)		(99	)		(454	)		(99	)
Net loss available to common shareholders	$	(415	)	$	(1,578	)	$	(877	)	$	(2,233	)
Loss per common share:
Basic	$	(0.11	)	$	(0.41	)	$	(0.23	)	$	(0.57	)
Diluted	$	(0.11	)	$	(0.41	)	$	(0.23	)	$	(0.57	)
Weighted Average Common Shares Outstanding:
Basic		3,897,174			3,891,423			3,897,174			3,891,299
Diluted		3,897,174			3,891,423			3,897,174			3,891,299

Bank of the Carolinas Corporation

Other Financial Data

(Dollars in thousands except per share amounts)

	As of or for the three months ended June 30								As of or for the six months ended June 30
	2010			2009			Change*		2010			2009			Change*
Average balance sheet data
Average loans	$	372,571		$	407,727		(8.62	)%	$	379,172		$	407,751		(7.01	)%
Average earning assets		508,996			562,910		(9.58	)		523,961			552,325		(5.14	)
Average total assets		555,762			604,180		(8.01	)		570,948			593,359		(3.78	)
Average common shareholders’ equity		32,376			59,882		(45.93	)		32,387			48,250		(32.88	)
Average total shareholders’ equity		45,555			59,882		(23.93	)		45,566			48,250		(5.56	)
Period-end balance sheet data:
Total loans									$	368,843		$	405,364		(9.01	)%
Allowance for loan losses										(7,180	)		(6,714	)	6.94
Total assets										539,856			611,093		(11.66	)
Total deposits										413,987			485,071		(14.65	)
Total common shareholders’ equity										32,283			33,887		(4.73	)
Total shareholders’ equity										45,462			47,066		(3.41	)
Asset quality indicators
Net loan charge-offs	$	957		$	975		n/m	%	$	2,989		$	1,014		194.85	%
Total nonperforming loans		11,642			12,860		(9.47	)		11,642			12,860		(9.47	)
Total nonperforming assets		20,822			20,009		4.06			20,822			20,009		4.06
Asset quality ratios
Net-chargeoffs (recoveries) to average loans **		1.03	%		0.96	%	7	BP		1.59	%		0.50	%	109	BP
Nonperforming loans to total loans		3.16			3.17		(2	)		3.16			3.17		(2	)
Nonperforming assets to total assets		3.86			3.27		58			3.86			3.27		58
Nonperforming assets to loan-related assets		5.51			4.85		66			5.51			4.85		66
Allowance for loan losses to total loans		1.95			1.66		29			1.95			1.66		29
Financial ratios
Return on average assets **		(0.14	)%		(0.98	)%	84	BP		(0.15	)%		(0.74	)%	59	BP
Return on average common shareholders’ equity **		(5.14	)		(10.57	)	543			(5.46	)		(9.33	)	387
Net interest margin **		3.39			2.15		124			3.28			2.26		102
Per share amounts available to common shareholders
Basic earnings (loss) per common share	$	(0.11	)	$	(0.41	)	73.17	%	$	(0.23	)	$	(0.57	)	59.65	%
Diluted earnings (loss) per common share		(0.11	)		(0.41	)	73.17			(0.23	)		(0.57	)	59.65
Book value per common share		8.28			8.71		(4.86	)		8.28			8.71		(4.86	)

* bps denotes basis points.

** ratio annualized.