FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * FORGOTSON MERRILL J   2. Issuer Name and Ticker or Trading Symbol CORNERSTONE BANCORP INC [cbn] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) __X__ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) President and CEO (Last) (First) (Middle) 7 BAYBERRY LANE 3. Date of Earliest Transaction (Month/Day/Year) 08/04/2005 (Street) WESTPORT, CT 06880 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common stock 08/04/2005 08/04/2005 M   15,000 A $ 13.636 22,700 D   Common Stock               1,260 (1) I By wife as custodian for child Common Stock               11,060 (2) I By wife Common stock               60 I By child Common stock               10,398 (3) I By trust of which wife is trustee

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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Employee stock option - right to buy

$ 13.636

08/04/2005

08/04/2005

M

15,000

05/29/2001

05/29/2011

Common stock

15,000

$ 13.636

7,000

D

Employee Stock option - right to buy

$ 14.545

01/02/2002

01/02/2012

Common stock

2,200

9,200

D

Employee stock option - right to buy

$ 20.3

01/02/2004

01/02/2014

Common stock

2,000

11,200

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
FORGOTSON MERRILL J 7 BAYBERRY LANE WESTPORT, CT 06880	X		President and CEO

Signatures

Leigh A. Hardisty as power of attorney		08/08/2005
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	During 2005 the reporting persons received 8.221 shares of common stock as a result of participation in the Bancorp's plan for the reinvestment of dividends. In May 2005, 0.21 shares of common stock were converted to cash as a result of the termination of the Bancorp's plan for the reinvestment of dividends.
(2)	During 2005 the reporting person received 43.23 shares of common stock as a result of participation in the Bancorp's plan for the reinvestment of dividends. In May 2005, 0.74 shares of common stock were converted to cash as a result of the termination of the Bancorp's plan for the reinvestment of dividends.
(3)	During 2005 the reporting person received 67.84 shares of common stock as a result of participation in the Bcorp's plan for the reinvestment of dividends. In May 2005, 0.83 shares of common stock were converted to cash as a result of termination of the Bancorp's plan for the reinvestment of dividends.

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