Ownership Submission
FORM 5
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
Form 3 Holdings Reported
Form 4 Transactions Reported
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL 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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1. Name and Address of Reporting Person *
READER PAUL H
 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)
Senior Vice President
(Last)
(First)
(Middle)

181 CARTER ST		 3. Statement for Issuer's Fiscal Year Ended (Month/Day/Year)
12/31/2004
(Street)


NEW CANAAN, CT 06840		 4. If Amendment, Date Original Filed(Month/Day/Year)
 6. Individual or Joint/Group Reporting
(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 at end of Issuer's Fiscal Year
(Instr. 3 and 4)		 6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)		 7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Amount (A) or (D) Price
Common Stock             8,634.039 (1) D  
Common Stock             1,210 I Joint with wife
Common Stock             880.059 (2) I Custodian for minor
Common Stock 04/07/2004 04/07/2004 W 10,250 A $ 0 10,330.99 (3) I By trust for which he is trustee

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2270 (9-02)

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 at End of Issuer's Fiscal Year
(Instr. 4)		 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)		 11. Nature of Indirect Beneficial Ownership
(Instr. 4)
(A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Employee stock option - right to buy $ 8.678           06/21/1995 06/21/2005 Common Stock
3,025
  3,025
D
 
Employee stock option - right to buy $ 8.678           07/19/1995 07/19/2005 Common Stock
7,865
  10,890
D
 
Employee stock option - right to buy $ 8.988           02/21/1996 02/21/2006 Common Stock
1,513
  12,403
D
 
Employee stock option - right to buy $ 12.397           05/21/1997 05/21/2007 Common Stock
1,513
  13,916
D
 
Employee stock option - right to buy $ 16.012           12/31/1997 12/31/2007 Common Stock
14,520
  28,436
D
 
Employee stock option - right to buy $ 8.678           06/21/1995 06/21/2005 Common Stock
6,050
  34,486
D
 
Employee stock option - right to buy $ 8.678           07/19/1995 07/19/2005 Common Stock
23,595
  58,081
D
 
Employee stock option - right to buy $ 14.545           01/02/2002 01/02/2012 Common Stock
1,100
  59,181
D
 
Employee stock option - right to buy $ 20.3           01/02/2004 01/02/2014 Common Stock
2,000
  61,181
D
 

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
READER PAUL H
181 CARTER ST
NEW CANAAN, CT 06840		   X     Senior Vice President  

Signatures

Leigh A. Hardisty as Power of Attorney 02/11/2005
**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) The reporting person received 141.899 shares of common stock as a result of participation in the Bancorp's plan for the reinvestment of dividends.
(2) The reporting person received 15.138 shares of common stock as a result of participation in the Bancorp's plan for the reinvestment of dividends.
(3) The reporting person received 80.99 shares of common stock as a result of participation in the Bancorp's plan for the reinvestment of dividends.

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