Cornerstone Bank Pays Shareholder Dividend.

STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 4, 1998--Norman H. Reader, chief executive officer, announced that Cornerstone Bank's (AMEX:CBN) board of directors declared, at its regularly scheduled meeting, a quarterly cash dividend of $.06 per share, payable on Jan. 15, 1999, to stockholders of record as of the close of business on Dec. 31, 1998.

This dividend follows the announcement on Oct. 23, 1998 that approval was given for an Agreement and Plan of Reorganization between Cornerstone Bank ("the bank") and Cornerstone Bancorp. Inc. ("the bancorp"), a newly formed Connecticut corporation. The reorganization will be accomplished through a share exchange, whereby each issued and outstanding share of common stock of the bank will be exchanged for one share of common stock of the bancorp. As a result of the reorganization, the bank will become a wholly owned subsidiary of the bancorp. It is expected that the reorganization will occur at the close of business on Dec. 31, 1998.

On July 17, 1998 the bank also announced a 10% common stock dividend payable on Aug. 31, 1998. The stock dividend is in addition to the cash dividends that the bank has been paying every quarter since the first quarter of 1995. In 1998, the bank has paid quarterly dividends of $0.06 per share payable Jan. 15, April 15, July 15, and Oct. 15, 1998 and a special dividend of $.10 per share payable on Feb. 16, 1998.

In Connecticut, Cornerstone Bank operates from four full service locations in Stamford, one full service location in Greenwich and a limited service mobile branch. The bank's common stock is traded on the American Stock Exchange under the symbol CBN.

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 uncertainties in the market, pricing, competition, procurement, efficiencies and other risks detailed from time to time in the bank's financial statements and other factors discussed in the bank's securities filings with the Federal Deposit Insurance Corporation. The bank assumes no obligation to update the information in this news release. Cornerstone Bank is a full service commercial bank with four offices located in Stamford and one office in Greenwich, Conn.