Cornerstone Bancorp, Inc. Reports 1999 Fourth Quarter and Full Year Earnings.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--Jan. 25, 2000

Norman H. Reader, President and CEO of Cornerstone Bancorp, Inc. reports that after-tax net earnings for the three month period ended December 31, 1999 was $452,000, a 10.5% increase over fourth quarter earnings in 1998 of $409,000.

Earnings for the fiscal year ended December 31, 1999 were on target with the Bancorp's strategic plan. The year was capped off with two major shareholder announcements: first, a 50% increase in the common stock dividend from $.06 to $.09 per share and second, a stock repurchase plan.

Mr. Reader said, &uot;The dividend increase is a result of the strong earnings of the Bancorp and its subsidiary, Cornerstone Bank. It sends a very powerful message that we value our base of shareholders.&uot; He further commented, &uot;The plan to repurchase 100,000 shares of common stock demonstrates our continued confidence in the company's earnings and allows us to exercise good capital management for our shareholders. Cornerstone is well capitalized according to  regulatory standards and will remain so after the proposed buyback.&uot; On December 15, 1999, the Board of Directors declared a quarterly cash dividend of $.09 per share. The dividend was paid on January 15, 2000 to stockholders of record as of December 31, 1999.

Income before taxes was $2,452,000 for the year ended December 31, 1999 compared to $3,179,000 in 1998. Pre-tax results in 1998 included non-recurring income of $509,000 from the recovery of interest on non-accrual loans. Income after taxes was $1,460,000 for the fiscal year ended December 31, 1999 or $1.26 earnings per diluted share compared to $1,874,000 in 1998 or $1.60 earnings per diluted share. Income after taxes for 1998 included $309,000 from the recovery of interest on non-accrual loans.

On a fiscal year end basis, the asset side of the balance sheet was highlighted by a 15.4% increase in net loans from $67,651,000 on December 31, 1998 to $78,038,000 on December 31, 1999. On the liability side, time deposits declined from $52,492,000 on December 31, 1998 to $44,860,000 on December 31, 1999.

It was the Bancorp's intention to restructure its long term deposits and growth was limited in time certificates of deposit in order to contain interest expense and not inventory deposits beyond projected growth in loans. Total assets on a year to year basis were stable at $139,407,000 at December 31, 1999 compared to $139,733,000 a year ago.

The Bank's diligent two year preparation for Y2K events afforded it an orderly transition into the new millennium with no interruption in customer service.

As we begin the new decade, we focus our growth on an experienced and prudent strategy. We have always believed that we should concentrate on activities where we have the most expertise. This is the most effective way we see to both solidify the value of the Bancorp in the long term and to pursue in the short term the most profitable activities that make sense for us. Consistent with this focused approach is the discipline to deliver results accordingly.

In Connecticut, Cornerstone Bank operates from four full service locations in Stamford, two full service locations in Greenwich and Norwalk and three limited service mobile branches. The Bancorp's common stock is traded on the American Stock Exchange under the symbol CBN.

Year ended December 31,          1999                  1998

Total Interest Income         $ 9,903,000         $ 10,503,000 (1)
Net Interest Income             6,400,000            6,831,000 (1)
Provision (Credit)
  for Loan Losses                 (80,000)             272,000
Income Before Taxes              2,452,000           3,179,000
Provision for Income Taxes         992,000           1,305,000
Net Income                       1,460,000           1,874,000 (1)
Basic Earnings Per Share              1.30                1.68
Diluted Earnings Per Share            1.26                1.60


Three months ended December 31,     1999                 1998

Total Interest Income          $ 2,534,000        $   2,479,000
Net Interest Income              1,690,000            1,513,000
Provision (Credit)
  for Loan Losses                  (57,000)              26,000
Income Before Taxes                759,000              686,000
Provision for Income Taxes         307,000              277,000
Net Income                         452,000              409,000
Basic Earnings Per Share              0.40                 0.37
Diluted Earnings Per Share            0.39                 0.35

(1) Total Interest Income and Net Interest Income for the full year 1998 include non-recurring income of $509,000 resulting from the recovery of interest on non-accrual loans in the second quarter of the year. On an after tax basis, Net Income includes $309,000 for this recovery ($509,000 less related income taxes of approximately $200,000).

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995: Except for historical information, the matters discussed in this news release that may be considered forward-looking statements may be subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected, including uncertainities in the market, pricing competition, procurement, efficiencies and other risks detailed from time to time in the Bancorp's financial statements. The Bancorp assumes no obligation to update the information in this release.