Cornerstone Bancorp, Inc. Reports 7% Increase in Net Earnings for Q2 2002.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--July 26, 2002

Merrill J. Forgotson, President and Chief Executive Officer of Cornerstone Bancorp, Inc.(AMEX: CBN), (the "Bancorp"), today reported consolidated net earnings for the Bancorp and its subsidiary, Cornerstone Bank (the "Bank"), for the second quarter of 2002.

Net income for the six-month period ended June 30, 2002 was $894,489, a 7% increase over net income of $836,537 for the same period of 2001, representing $0.73 earnings per diluted share compared to $0.69 earnings per diluted share in the year ago period.

Total assets increased to $196,730,211 on June 30, 2002 compared to $181,516,996 on December 31, 2001, an increase of 8.4%. On the liability side of the balance sheet, total deposits increased to $170,831,367 on June 30, 2002 from $154,472,991 on December 31, 2001, an increase of 10.6%.

On June 24, 2002, the Board of Directors declared a cash dividend. The quarterly cash dividend was payable on July 19, 2002 to stockholders of record as of the close of business on July 5, 2002. The cash dividend followed a 10% stock dividend that was distributed on June 14, 2002 to stockholders of record as of the close of business on May 31, 2001.

Mr. Forgotson commented on the results of the second quarter saying, "The Bancorp's strategic plan for the year has produced the desired results. New lines of business and recently opened offices have begun to contribute to profitability. Our fee income from various sources has enhanced the core earnings of the Bank. Expenses are at an acceptable run rate and loan demand and production has been more than satisfactory considering the state of the economy and recent national and world events."

He commented further on the Bank's strategy, "Cornerstone's philosophy has always been to take care of its customers in its own community. That is why we gather our deposits and make our loans where we have branches, with a vast majority of our loans in the communities we serve. Staying close to home has benefited us in the solid reputation we have built for ourselves, our "cornerstone" so to speak. Our traditional menu of products and services has always focused on the needs of the individual consumer and small businesses."

In Connecticut, Cornerstone Bancorp, through its subsidiary Cornerstone Bank operates from four full service locations in Stamford, a full service location in Greenwich, a full service location and a business development office in Norwalk, a full service location in Westport and four limited service mobile branches. The Bancorp's common stock is traded on the American Stock Exchange under the symbol CBN.

Six Months Ended June 30,         2002          2001
                               ----------    ----------
Total Interest Income          $5,709,424    $5,917,951
Net Interest Income             4,138,741     4,014,173
Provision for Loan Losses         112,027       108,696
Income Before Taxes             1,490,815     1,371,373
Income Tax Expense                596,326       534,836
Net Income                        894,489       836,537
Basic Earnings Per Share             0.75          0.71
Diluted Earnings Per Share           0.73          0.69

Earnings per share data for both periods reflects the shares issued in
the 10% stock dividend distributed in June 2002.

The statements contained in this report that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Examples of such forward-looking statements include, without limitation, statements regarding expectations for earnings, credit quality, and other financial and business matters. When used in this report, the words "anticipate," "plan," "believe," "estimate," "expect" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. All forward-looking statements involve risks and uncertainties. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements as a result of certain factors, including but not limited to, competitive pressures on loan and deposit product pricing; other actions of competitors; changes in economic conditions; technological changes; the extent and timing of actions of the Federal Reserve Board, including changes in monetary policies and interest rates; customer deposit disintermediation; changes in customers' acceptance of the Bank's products and services; and the extent and timing of legislative and regulatory actions and reforms.

The forward-looking statements contained in this report speak only as of the date on which such statements are made. By making any forward-looking statements, the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.