Edgar Filing: Cornerstone Financial Corp

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

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[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
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CORNERSTONE FINANCIAL CORPORATION
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(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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CORNERSTONE FINANCIAL CORPORATION
6000 MIDLANTIC DRIVE, SUITE 120S,
MT. LAUREL, NEW JERSEY 08054

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on August 15, 2012

To Our Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Cornerstone Financial Corporation (the "Company"), the
holding company for Cornerstone Bank (the "Bank") to be held on August 15, 2012
at 2:00 p.m. at the corporate headquarters of the Company, 6000 Midlantic Drive,
Suite 120S, Mt. Laurel, New Jersey 08054.

At the Annual Meeting, shareholders will be asked to consider and vote
upon the following:

1. The election of two (2) directors to the Company's Board of
Directors each to serve for the term described in the
accompanying proxy statement;

2. To ratify the appointment of KPMG as the Company's
independent registered public accountants for the fiscal year
ending December 31, 2012;

3. Such other business as shall properly come before the Annual
Meeting.

The Board of Directors of the Company believes that both the election
of the nominees for director and the ratification of the Company's independent
registered public accountants are in the best interests of the Company and its
shareholders. For the reasons set forth in the Proxy Statement, the Board
unanimously recommends that you vote "FOR" each nominee for director, and "FOR"
ratification of Company's independent registered public accountants.

YOUR COOPERATION IS APPRECIATED SINCE ONE-THIRD (1/3) OF OUR COMMON
STOCK MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM
FOR THE CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED.

Very truly yours,

/s/ George W. Matteo, Jr.
-------------------------
George W. Matteo, Jr.
Chairman of the Board of Directors

July 13, 2012
Mt. Laurel, New Jersey

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON AUGUST 15, 2012. OUR PROXY STATEMENT AND
ANNUAL REPORT TO SHAREHOLDERS ARE ALSO AVAILABLE ON LINE AT
HTTP://WWW.SNL.COM/IRWEBLINKX/GENPAGE.ASPX?IID=4220067&GKP=1073743350.

CORNERSTONE FINANCIAL CORPORATION

PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 15, 2012

___________________________________________________________

GENERAL PROXY STATEMENT INFORMATION

This Proxy Statement is being furnished to shareholders of Cornerstone
Financial Corporation (the "Company") in connection with the solicitation by the
Board of Directors of proxies to be used at the Annual Meeting of Shareholders
to be held on August 15, 2012 at 2:00 p.m., at the corporate headquarters of the
Company, 6000 Midlantic Drive, Suite 120S, Mt. Laurel, New Jersey 08054 (the
"Annual Meeting").

The approximate date on which this Proxy Statement and the accompanying
proxy card are being mailed to the Company's shareholders is on or about July
13, 2012.

RECORD DATE, OUTSTANDING SECURITIES AND VOTING RIGHTS
-----------------------------------------------------------

The Board of Directors has fixed the close of business on July 2, 2012
as the record date (the "Record Date") for the determination of the holders of
common stock entitled to receive notice of and to vote at the Annual Meeting.
At the close of business on the Record Date, there were 2,094,302 shares of
common stock outstanding. Each share of common stock is entitled to one vote on
all matters to be acted upon at the Annual Meeting.

Shareholders of the Company are requested to complete, date and sign
the accompanying form of proxy and return it promptly to the Company in the
enclosed envelope. If a proxy is properly executed and returned in time for
voting, it will be voted as indicated thereon. If no voting instructions are
given, proxies received by the Company will be voted "FOR" approval of the
Directors nominated for election and "FOR" each other proposal set forth in this
proxy statement. With regard to any other matter properly presented at the
Annual Meeting, the proxy will be voted in the discretion of the persons named
in the proxy.

REVOCABILITY OF PROXIES
-------------------------

Any shareholder who executes a proxy has the power to revoke it at any
time before it is voted by giving written notice of revocation to the Company,
by executing and delivering a substitute proxy to the Company or by attending
the Annual Meeting and voting in person. If a shareholder desires to revoke a
proxy by written notice, such notice should be mailed or delivered, so that it
is received on or prior to the meeting date, to Keith Winchester, Secretary,
Cornerstone Financial Corporation, 6000 Midlantic Drive, Suite 120S, Mt. Laurel,
New Jersey 08054.

SOLICITATION OF PROXIES
-------------------------

This proxy solicitation is being made by the Board of Directors of the
Company and the cost of the solicitation will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile by officers, Directors and employees of the Company
and/or the Bank, who will not be specially compensated for such solicitation
activities.

PROPOSAL 1
ELECTION OF DIRECTORS

The Certificate of Incorporation and By-Laws of the Company provide
that the number of Directors shall not be less than five (5) or more than
twenty-five (25) and permit the exact number to be determined from time to time
by the Board of Directors. Our Certificate of Incorporation provides for a
Board of Directors divided into three (3) classes. For 2012, there are two (2)
nominees for Director. There are no arrangements or understandings between any
director, or nominee for directorship, pursuant to which such director or
nominee was selected as a director or nominee.

The Board of Directors of the Company has nominated for election to the
Board of Directors the persons named below, each of whom currently serves as a
member of the Board. If elected each nominee will serve until the 2015 Annual
Meeting of Stockholders. The Board of Directors has no reason to believe that
any of the nominees will be unavailable to serve if elected.

Set forth below are the names, ages, principal occupations, and
business experience, as well as the prior service on the Board, if any, for all
nominees and for those members of our Board whose terms continue beyond the 2012
Annual Meeting. Unless otherwise indicated, principal occupations shown for
each Director have extended for five or more years.

NOMINEES FOR ELECTION

GEORGE W. MATTEO, JR. DIRECTOR SINCE 1999 AGE 56
--------------------------------------------------------------------------------

Mr. Matteo has served as the President and Chief Executive Officer of the Bank
since March 2006 and of the Company since inception in 2008. He has served as
Chairman of the Board of Directors since the Bank's inception in 1999 and the
Company's inception in 2008. He has also served as an equity partner in the law
firm Wolf, Block, Schorr and Solis-Cohen LLP from 2005-2006; Mr. Matteo
maintained an of-counsel relationship with Wolf Block from March 2006 through
January 2007. His business and legal experience and background give Mr. Matteo
unique insight into all of the components of the Company's business, including
shareholder relations, capital management, loss mitigation, financial and
strategic planning, regulatory relations and management planning.

ROBERT A. KENNEDY, JR. DIRECTOR SINCE 1999 AGE 56
--------------------------------------------------------------------------------

President of the Kennedy Companies since 1986, a wholesale distributor of
underground utility products founded in 1973, Mr. Kennedy serves as a Trustee of
Our Lady of Lourdes Medical Center and the St. Joseph's Carpenter Society. The
Board benefits from his long term knowledge of the Company's market area and
customers.

DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 2012 ANNUAL MEETING

J. RICHARD CARNALL DIRECTOR SINCE 2004 TERM EXPIRES 2013 AGE 73
--------------------------------------------------------------------------------

J. Richard Carnall, currently retired, is the former Chairman and CEO of PFPC
Worldwide, Inc., a subsidiary of PNC Bank, from 1987 until 2002. From 1981 to
2002, Mr. Carnall was Executive Vice President of PNC Bank, National Association
and held directorships with various PNC Bank-related entities from 1993 to 2002.
Mr. Carnall has also served as a director of RBB Fund, Inc., a registered
investment company since 2002. As a career banker, he brings a wealth of
industry experience to his service on the Company's Board.

GAETANO P. GIORDANO DIRECTOR SINCE 1999 TERM EXPIRES 2013 AGE 57
--------------------------------------------------------------------------------

Mr. Giordano has been the President of Vincent Giordano Corporation,
Philadelphia, Pennsylvania, since 1983. Mr. Giordano also serves on the Board
of Trustees of LaSalle University, located in Philadelphia, Pennsylvania. Mr.
Giordano also serves as a director of a number of children's charitable
organizations. His diverse involvement in local community affairs brings an
important and unique outlook when considering issues affecting our marketplace,
customers and shareholders.

RONALD S. MURPHY DIRECTOR SINCE 1999 TERM EXPIRES 2013 AGE 60
--------------------------------------------------------------------------------

Since 1978, Ronald S. Murphy has served as the President of Murphy's Markets of
South Jersey, Inc., a chain of supermarkets operating in our market area. Mr.
Murphy's business experience provides him with insight and understanding of many
of the same issues our small business customers, and the Company, deal with
today, including financial and strategic planning, capital allocation and
management development.

SUSAN BARRETT DIRECTOR SINCE 2010 TERM EXPIRES 2014 AGE 51
--------------------------------------------------------------------------------

Susan Barrett is a former President and partner of Dearden, Maguire, Weaver &
Barrett LLC, investment and financial advisors, retiring in 2007. Ms. Barrett
has recently re-entered the financial industry as an independent advisor and
consultant for individuals, non-profits and small banks. Ms. Barrett is also an
active member of a variety of local organizations, acting as a financial advisor
for various non-profit entities in the area, and as a member of the Board of
Trustees of LaSalle University. Ms. Barrett's extensive knowledge of financial
affairs and small bank operations provides valuable insight to the Board.

J. MARK BAIADA DIRECTOR SINCE 1999 TERM EXPIRES 2014 AGE 64
--------------------------------------------------------------------------------

J. Mark Baiada is the President of Bayada Nurses, Inc., a home health care
company. Mr. Baiada also serves as the Overseer of the University of
Pennsylvania School of Nursing. Mr. Baiada's knowledge of economic conditions
in our local markets is of great assistance to the Company.

BRUCE PAPARONE DIRECTOR SINCE 2000 TERM EXPIRES 2014 AGE 50
--------------------------------------------------------------------------------

Bruce Paparone is the President of Paparone Corporation since 1995, a real
estate development company. Mr. Paparone has served as a trustee and director
of Kennedy Health System since 1989. Mr. Paparone's knowledge and understanding
of real estate provides valuable insight to our Board.

--------------------------------------------------------------------------------

No Director of the Company is also a director of a company having a class of
securities registered under Section 12 of the Securities Exchange Act of 1934,
as amended, or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Bank Act of
1940, except for J. Richard Carnall. Mr. Carnall serves as a director for RBB
Fund, Inc., a registered investment company.

The Company encourages all Directors to attend the Company's annual meeting.
However, Directors Baiada and Giordano were unable to attend the 2011 annual
meeting, each due to unavoidable scheduling conflicts.

REQUIRED VOTE
-------------

DIRECTORS WILL BE ELECTED BY A PLURALITY OF THE VOTES CAST AT THE ANNUAL MEETING
WHETHER IN PERSON OR BY PROXY.

RECOMMENDATION
--------------

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE NOMINEES
SET FORTH ABOVE.

INFORMATION ABOUT THE BOARD OF DIRECTORS
AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT
--------------------------------

The following table sets forth information as of June 30, 2012
regarding the number of shares of common stock beneficially owned by all
Directors, executive officers described in the compensation table, and by all
Directors and executive officers as a group. Beneficial ownership includes
shares, if any, held in the name of the spouse, minor children or other
relatives of the nominee living in such person's home, as well as shares, if
any, held in the name of another person under an arrangement whereby the
Director or executive officer can vest title in himself at once or within sixty
(60) days. Beneficially owned shares also include shares over which the named
person has sole or shared voting or investment power, shares owned by
corporations controlled by the named person, and shares owned by a partnership
in which the named person is a partner.

Shares of Common
Stock Beneficially Percent of
Name Owned(1) Class(1)
---- ------------------ -----------

NOMINEES FOR DIRECTOR
George W. Matteo, Jr. 79,966 (2) 3.76%
J. Mark Baiada 274,123 (3)(4) 12.60%
Susan Barrett 13,270 *
J. Richard Carnall 53,519 (3)(5) 2.54%
Gaetano P. Giordano 166,960 (3)(6) 7.90%
Robert A. Kennedy, Jr. 64,076 (3)(7) 3.03%
Ronald S. Murphy 100,619 (3)(8) 4.76%
Bruce Paparone 97,600 (3)(9) 4.62%

EXECUTIVE OFFICERS WHO
ARE NOT DIRECTORS

Gene D'Orazio 17,412 (10) *
Keith Winchester 15,103 (10) *

Directors and executive
officers as a group
(10 persons) 882,648 (11)(12) 37.88%
__________________________
* Less than one percent

(1) Beneficial ownership is based on 2,094,302 shares of common stock
outstanding as of June 30, 2012.
(2) Includes 22,575 shares issuable upon exercise of options
(3) Includes 4,320 shares issuable upon exercise of options
(4) Includes 77,143 shares issuable upon exercise of warrants
(5) Includes 11,556 shares issuable upon exercise of warrants
(6) Includes 15,428 shares issuable upon exercise of warrants
(7) Includes 15,120 shares issuable upon exercise of warrants
(8) Includes 15,417 shares issuable upon exercise of warrants
(9) Includes 15,336 shares issuable upon exercise of warrants
(10) Includes 13,884 shares issuable upon exercise of options
(11) Consists of 86,087 shares issuable upon exercise of options
(12) Consists of 150,000 shares issuable upon exercise of warrants

To the Company's knowledge, there are no shareholders other than those set forth
above who beneficially own 5% or more of the common stock of the Company.

BOARD OF DIRECTORS AND COMMITTEES
---------------------------------

Meetings of the Board of Directors are held monthly and as needed. The Board of
Directors held twelve (12) meetings in the year ended December 31, 2011. The
Company's policy is that all Directors make every effort to attend each meeting.
For the year ended December 31, 2011, each of the Company's Directors attended
at least 75% of the aggregate of the total number of meetings of Board of
Directors and the total number of meetings of committees on which the respective
Directors served.

A majority of the Board consists of individuals who are "independent" under the
Nasdaq listing standards. Mr. Matteo, who serves as the Chairman, President
and CEO is not independent. Shareholders wishing to communicate directly with
the independent members of the Board of Directors may send correspondence to
Cornerstone Financial Corporation, attn: Chair of Audit Committee, 6000
Midlantic Drive, Suite 120S, Mount Laurel, New Jersey 08054.

DIVERSITY
---------

The entire Board of Directors of the Company is engaged in determining the
appropriate skills and characteristics required of board members in the context
of the current make-up of the Board. When we have an opening on the Board, we
will always look at a diverse pool of candidates. The assessment of the Board's
characteristics includes diversity, skills, such as an understanding of
financial statements and financial reporting systems, and an understanding of
our market area. We view and define diversity in its broadest sense, which
includes gender, ethnicity, education, experience and leadership qualities.

BOARD LEADERSHIP
----------------

The Board of Directors has appointed Mr. Matteo as both the Company's chief
executive officer and chairman of the board. The Board believes that the
combination of these two roles provides more consistent communication and
coordination throughout the organization, which results in a more effective and
efficient implementation of corporate strategy, and is important in unifying the
Company's strategy behind a single vision.

RISK OVERSIGHT
--------------

Risk is an inherent part of the business of banking. Risks faced by the Company
include credit risk relating to its loans and interest rate risk related to its
entire balance sheet. The Board of Directors oversees these risks through the
adoption of policies and by delegating oversight to certain Board committees,
including the audit committee. The Board exercises oversight by establishing a
corporate environment that promotes timely and effective disclosure, fiscal
accountability and compliance with all applicable laws and regulations.

CODE OF BUSINESS CONDUCT AND ETHICS
-----------------------------------

The Board of Directors has adopted a Code of Business Conduct and Ethics
governing the Company's CEO and senior financial officers, as required by the
Sarbanes-Oxley Act and SEC regulations, as well as the Board of Directors and
other senior members of management. Our Code of Business Conduct governs such
matters as conflicts of interest, use of corporate opportunity, confidentiality,
compliance with law and the like. Our Code of Business Ethics is available on
our website at http://www.cornerstonebanknj.com.

COMMITTEES
----------

The Board of Directors has an Audit Committee and a Compensation Committee

AUDIT COMMITTEE. The Audit Committee is responsible for the selection and
recommendation of the independent accounting firm for the annual audit and to
establish, and oversee adherence to, a system of internal controls. It reviews
and accepts the reports of the Company's independent auditors and federal
examiners. In 2011, the Audit Committee consisted of Directors Paparone
(Chair), Carnall, Barrett, Giordano, and Kennedy. The Audit Committee met five
(5) times during 2011. The audit committee does not currently have any member
qualifying as an "audit committee financial expert" as that term is defined in
SEC Regulation S-K Item 407(d)(5). The board believes that all members of the
audit committee are financially literate and experienced in business matters.
Like many small companies, it is not easy for the company to attract and retain
competent and diligent board members, and competition for individuals qualifying
as "audit committee financial experts" is significant. The board believes that
the current audit committee is able to fulfill its role under SEC regulations
despite not having a designated "audit committee financial expert". The Audit
Committee has adopted a written charter, which is available at
http://www.cornerstonebanknj.com.

COMPENSATION COMMITTEE. In 2011, the Compensation Committee consisted of
Directors Barrett (Chair), Carnall, Giordano, Murphy, Kennedy and Baiada. Each
member of the Compensation Committee is independent, as such term is defined in
the Nasdaq listing standards. The purpose of the Compensation Committee is to
review senior management's performance and determine compensation, and review
and set guidelines for compensation of all employees. The Compensation Committee
does not delegate its authority regarding compensation. Mr. Matteo, our CEO,
provides input to the Committee regarding the compensation of our executive
officers. Currently, no consultants are engaged or used by the Compensation
Committee for purposes of determining or recommending compensation. In 2011,
the Compensation Committee met four (4) times. The Compensation Committee does
not have a written charter.

NOMINATION OF DIRECTORS. The Board of Directors does not have a standing
nominating committee and the entire Board of Directors performs the function of
a nominating committee to select persons to be nominated to serve as directors
of the Company, and to fill vacancies as necessary. In connection with
nominations, the full Board of Directors met four (4) times during 2011 to
discuss nominations.

Because of the moderate size of the Board of Directors and the high proportion
of directors who are independent, the Board of Directors believes that it is
appropriate for the full Board of Directors to continue to perform the function
of a nominating committee and that a standing nominating committee is not
necessary. As there is no nominating committee, the Board of Directors does not
have a charter addressing the director nomination process.

If a need for new directors should arise in the future, the Board of Directors
would likely ask incumbent directors to identify potential candidates. To date,
the Company has not engaged a third party to identify or assist in identifying
or evaluating potential nominees. Pursuant to our Bylaws, the Board of
Directors is required to provide written nominations for director to our
Secretary at least thirty days prior to the date of the meeting at which
directors are to be elected. The Board of Directors would consider
recommendations for director nominations by shareholders that are received a
reasonable time prior to such thirty day period and that include the name, age,
address, principal occupation, prior business experience and background of the
recommended individual and a written consent executed by the recommended
individual stating that he or she desires to be considered as a nominee and, if
elected, that he or she will serve as a director.

The Board of Directors will generally consider nominees for director recommended
by shareholders in the same manner, and based on the same criteria, that the
Board considers nominees for director recommended by members of the Board of
Directors, by outside consultants or by other individuals or groups. However,
the knowledge of one or more directors concerning a nominee may be a factor and
members of the Board of Directors may have certain insights into the dynamics
and chemistry of the Board of Directors that they may consider when evaluating
any recommended candidate for director.

AUDIT COMMITTEE REPORT
----------------------

The Audit Committee meets periodically to consider the adequacy of the Company's
financial controls and the objectivity of its financial reporting. The Audit
Committee meets with the Company's independent auditors and the Company's
internal auditor, both of whom have unrestricted access to the Audit Committee.

In connection with this year's financial statements, the Audit Committee has
reviewed and discussed the Company's audited financial statements with the
Company's officers and KPMG, our independent auditors. We have discussed with
KPMG the matters required to be discussed by Statement on Auditing Standards No.
61, ("Communication with Audit Committees"). We also have received the written
disclosures and letters from KPMG required by Independence Standards Board
Standard No. 1 ("Independence Discussions with Audit Committees"), and have
discussed with representatives of KPMG their independence.

Based on these reviews and discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company's Annual Report on form 10-K for the fiscal year 2011 for filing with
the U.S. Securities and Exchange Commission.

Susan Barrett
J. Richard Carnall
Gaetano P. Giordano
Robert A. Kennedy, Jr.
Bruce Paparone, Chairman

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the
compensation of our CEO and our two next most highly compensated executive
officers making over $100,000.

---------------------------------------------------------------------------------------------------------------------------------
NON-QUALIFIED
DEFERRED
OPTION COMPENSATION ALL OTHER
SALARY BONUS AWARDS EARNINGS COMPENSATION TOTAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) ($) ($)
---------------------------------------------------------------------------------------------------------------------------------

George W. Matteo, Jr. 2011 395,581 - 43,200 86,250 (5) 25,867 (2)(4) 550,898
Chairman of the Board, 2010 329,033 80,000 43,200 78,750 (5) 28,047 (2)(4) 559,030
President and CEO
---------------------------------------------------------------------------------------------------------------------------------
Gene D'Orazio 2011 224,060 - 16,095 27,375 (5) 12,650 (3)(4) 280,180
Executive Vice President and 2010 170,259 53,500 16,095 9,810 (5) 12,117 (3)(4) 261,780
Chief Operating Officer
---------------------------------------------------------------------------------------------------------------------------------
Keith Winchester 2011 211,737 - 16,095 25,500 (5) 9,500 (3) 262,832
Executive Vice President and 2010 166,102 53,500 16,095 21,825 (5) 9,423 (3) 266,945
Chief Financial Officer
---------------------------------------------------------------------------------------------------------------------------------

(1) Pursuant to the requirements of the Securities and Exchange
Commission, the amounts set forth represent the aggregate grant date
fair value of the stock and option awards, computed in accordance with
FASB ASC Topic 718, rather than the expense recognized pursuant to SFAS
123 (R).
(2) Includes payments for an auto allowance and country club dues.
(3) Includes payments for an auto allowance.
(4) Includes the Bank's contributions under the Cornerstone Bank 401(k)
Plan.
(5) Includes payments under the Cornerstone Bank Nonqualified Deferred
Compensation Plan (Deferred Compensation Plan") adopted January 1,
2006. Under the Deferred Compensation Plan, the Board designates those
employees eligible to participate and receive contributions credited to
an unfounded Plan Deferral Account equal to a percentage of such
employees base salary.

MATTEO EMPLOYMENT AGREEMENT.

On January 10, 2008, we entered into an employment agreement with
George W. Matteo, Jr., our Chairman, President and Chief Executive Officer.
Under the Agreement, Mr. Matteo receives an annual base salary as determined
from time to time by the Board, but no less than $262,500. Mr. Matteo is
eligible to participate in any bonus plan implemented by us for executive
employees, on terms no less favorable than those applicable to any comparable
executive of the Company, or in a bonus plan specific to Mr. Matteo but which
will be at least as favorable to Mr. Matteo as any plan applicable to any
comparable executive employees. Under the Agreement, we also provide Mr. Matteo
with certain fringe benefits, which in the aggregate will be not less favorable
than those received by our comparable executive employees, include an automobile
allowance and reimbursement for membership dues and other business-related
expenses in accordance with our policy.

The current term of the Agreement ends on March 31, 2013. The
Agreement will automatically renew for successive one (1) year terms unless (i)
either we or Mr. Matteo gives written notice of termination at least sixty (60)
days prior to the anniversary date of the then-current term, or (ii) the
Agreement is terminated earlier in accordance with the termination provisions in
the Agreement.

We may terminate Mr. Matteo's employment "without Cause" (as such term
is defined in the Agreement) upon giving thirty (30) days prior written notice
to Mr. Matteo. Additionally, Mr. Matteo may resign for "Good Reason" (as such
term is described below and more fully defined in the Agreement) upon giving
written notice to us within forty-five (45) days after the event constituting
Good Reason, provided that we have not cured such action constituting Good
Reason within thirty (30) days after the event. For purposes of the Agreement,
"Good Reason" includes, among other things, a reduction in title, authority,
status or base salary, our failure to provide comparable benefits upon a Change
in Control, or breach by us of a material provision of the Agreement. If Mr.
Matteo resigns without Good Reason, he will be bound by a one year covenant not
to compete with us, and a one year non-solicitation covenant with regard to our
customers and employees.

If Mr. Matteo is terminated by us without Cause or resigns for Good
Reason, he will be entitled to receive for a period of the greater of eighteen
(18) months from the date of termination of employment or the remaining term of
the Agreement, (i) the sum of (a) his base salary as of the termination of his
employment (or prior to any reduction thereof preceding termination of
employment), plus (b) a dollar amount equal to the average of the bonuses he
received for each of the three preceding calendar years, and (ii) all life,
disability and medical insurance and other normal benefits in effect during the
two preceding calendar years, or if we are unable to provide such benefits, a
dollar amount that will equal the after tax cost of obtaining such benefits.

D'ORAZIO EMPLOYMENT AGREEMENT.

On July 16, 2009, we entered into an employment agreement with Eugene
D. D'Orazio, our Executive Vice President and Chief Operating Officer. Under
the Agreement, Mr. D'Orazio receives an annual base salary as determined from
time to time by the Board. Mr. D'Orazio is eligible to receive bonuses during
the term of the Agreement, at the discretion of the Board. Under the Agreement,
we also provide Mr. D'Orazio with certain fringe benefits as may be provided by
the Bank to its employees from time-to-time. The current term of the Agreement
ends on February 28, 2013.

We may terminate Mr. D'Orazio's employment "without Cause" (as such
term is defined in the Agreement) upon giving thirty (30) days prior written
notice to Mr. D'Orazio. Additionally, Mr. D'Orazio may resign for "Good Reason"
(as such term is described below and more fully defined in the Agreement) upon
giving written notice to us, provided that we have not cured such action
constituting Good Reason within thirty (30) days after the event. For purposes
of the Agreement, "Good Reason" includes, among other things, a reduction in
title, authority, status or base salary (except for a reduction not to exceed
10% applied equally to all executive vice presidents), our failure to provide
comparable benefits upon a Change in Control, or breach by us of a material
provision of the Agreement. Following termination, Mr. D'Orazio will be bound by
a one year non-solicitation covenant with regard to our customers and employees,
and a covenant not-to-compete, which will be for a period of one (1) year if
termination is following a change-in-control, or otherwise for sixty (60) days.

If Mr. D'Orazio is terminated by us without Cause or resigns for Good
Reason, and provided that he executed a Release, as such term is defined in the
Agreement, he will be entitled to receive for the remaining term of the
Agreement, but in no event greater than twelve (12) months nor less than (3)
months, his base salary as of the termination of his employment (or prior to any
reduction thereof preceding termination of employment), and (ii) medical

insurance during the same time period, or if the Company is unable to provide
such benefits, a dollar amount that will equal the after tax cost of obtaining
such benefits. In addition if a change of control occurs and a change of control
payment is provided to Mr. D'Orazio pursuant to the terms of the employment
agreement and if the Internal Revenue Service finds that such payment
constitutes an "excess parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, the Company will decrease such
payment by the minimum amount necessary to result in no portion of the payments
and benefits being non-deductible pursuant to section 280G of the Code.

WINCHESTER EMPLOYMENT AGREEMENT.

On February 15, 1999, The Cornerstone Formation Group, LLC, the
predecessor entity to the Bank and the Company, entered into an employment
agreement with Keith Winchester to serve initially as a consultant prior to the
opening of the Bank. Since the opening of the Bank, and pursuant to the terms
of the Agreement, Mr. Winchester has served as an Executive Vice President and
Chief Financial Officer. Under the Agreement, Mr. Winchester's annual base
salary is determined from time to time by the Board. Mr. Winchester is
eligible to participate in a bonus plan implemented by us. Under the Agreement,
we also provide Mr. Winchester with certain fringe benefits, including an
automobile allowance. The term of the Agreement shall continue until such time
as Mr. Winchester's employment is terminated by written notice at least 30, but
no more than 60, days prior to such termination, and otherwise in accordance
with the Agreement.

We may terminate Mr. Winchester's employment "without Cause" (as such
term is defined in the Agreement) upon giving no less than thirty (30) and no
more than sixty (60) days prior written notice to Mr. Winchester. Additionally,
Mr. Winchester may resign for "Good Reason" (as such term is described below and
more fully defined in the Agreement) upon giving written notice to us after the
event constituting Good Reason. For purposes of the Agreement, "Good Reason"
includes, among other things, a reduction in title, position, duties, or base
salary, or breach by us of a material provision of the Agreement.

If Mr. Winchester is terminated by us without Cause or resigns for Good
Reason, or following a Change in Control, he will be entitled to receive for a
period of one year from the date of termination of employment his base salary as
of the termination of his employment (or prior to any reduction thereof
preceding termination of employment) and uninterrupted health insurance coverage
substantially comparable to that which was in effect at the time of termination.
In addition, if a termination or change of control occurs and the payment is
provided to Mr. Winchester pursuant to the terms of the employment agreement and
if the Internal Revenue Service finds that such payment constitutes an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, the Company will reduce such payment to an amount one
($1) dollar less than the amount that is fully deductible for Federal tax
purposes by the Company.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth information regarding outstanding stock
option awards for each of our Named Executive Officers as of March 31, 2012.

-----------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
--------------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF NUMBER OF VALUE OF
SECURITIES SHARES OR SHARES OR
UNDERLYING NUMBER OF SECURITIES UNITS OF UNITS OF
UNEXERCISED UNDERLYING OPTION STOCK THAT STOCK THAT
OPTIONS UNEXERCISED OPTIONS EXERCISE OPTION HAVE NOT HAVE NOT
(#) (#) PRICE EXPIRATION VESTED VESTED
NAME EXERCISABLE UNEXERCISABLE ($) DATE (#) ($)
--------------------------------------------------------------------------------------------------------------------------------

George W. Matteo, Jr. 32,400 16,200(2) $4.63 July 16, 2019 16,200 24,300(3)
------------------------------------------------------------------------------------------------------------------------------------
Gene D. D'Orazio 564(1) - $8.70(1) October 2, 2017 - -
13,320(2) 6,660(2) $4.17(2) January 21, 2020 6,660 9,990(3)
--------------------------------------------------------------------------------------------------------------------------------
Keith Winchester 564(1) - $8.70(1) October 2, 2017 - -
13,320(2) 6,660(2) $4.17(2) January 21, 2020 6,660 9,990(3)
--------------------------------------------------------------------------------------------------------------------------------

(1) Has been restated to reflect the 7.5% common stock dividend paid on
May 15, 2008 and the 8% common stock dividend paid on May 15, 2011.

(2) Has been restated to reflect the 7.5% common stock dividend paid on
May 15, 2011.

(3) Based on the last sale price of the Bank's common stock known on June
4, 2012 ($1.50 per share price)

The Company maintains two (2) equity compensation plans, the
Cornerstone Financial Corporation 2009 Equity Compensation Plan, and the
Cornerstone Financial Corporation 2010 Equity Compensation Plan. Under these
plans, the Company is authorized to issue options and restricted stock to
purchase up to 271,425 shares of the Company's common stock.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
--------------------------------------------------------

If Mr. Matteo is terminated without Cause after a "Change in Control"
or resigns with Good Reason after a Change in Control, Mr. Matteo will be
entitled to receive for a period of two years from the date of termination of
employment, (i) the sum of (a) the highest base salary received by Mr. Matteo as
of either the date of termination of his employment (or prior to any reduction
thereof resulting in Good Reason for resignation) or any of the three
immediately preceding calendar years, plus (b) a dollar amount equal to the
highest bonus he received in any of the three preceding calendar years, and (ii)
all life, disability and medical insurance and other normal benefits in effect
during the two preceding calendar years, or if we are unable to provide such
benefits, a dollar amount that will equal the after tax cost of obtaining such
benefits. In addition if a change of control occurs and a change of control
payment is provided to Mr. Matteo pursuant to the terms of the employment
agreement and if the Internal Revenue Service finds that such payment
constitutes an "excess parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, the Company will increase such
change of control payment to place Mr. Matteo in his original after tax
position.

Should a "Change in Control" (as defined in the Agreement) occur prior
to the time when all of Mr. Matteo's non-qualified stock options have vested,
such unvested options shall immediately vest upon such Change in Control.

DIRECTORS' COMPENSATION
------------------------

DIRECTOR COMPENSATION

FEES
EARNED NON-EQUITY NONQUALIFIED
OR PAID STOCK OPTION INCENTIVE PLAN DEFERRED
IN CASH AWARDS AWARDS COMPENSATION COMPENSATION ALL OTHER
NAME ($)(1) ($) ($) ($) EARNINGS ($) COMPENSATION ($) TOTAL ($)
---- ------- ------ ------ -------------- ------------ ---------------- ---------

J. Mark Baiada - - - - 6,500 - 6,500
Susan Barrett 7,033 - - - - - 7,033
J. Richard Carnall 10,300 - - - - - 10,300
Gaetano P. Giordano - - - - 9,150 - 9,150
Robert A. Kennedy, Jr. - - - - 9,650 - 9,650
Ronald S. Murphy - - - - 7,550 - 7,550
Bruce Paparone - - - - 8,650 - 8,650

Our directors are not compensated for service on the Company's Board of
Directors. We do compensate our directors for service on the Bank's Board of
Directors. For each regular meeting attended in person, the Vice Chairman
receives $1,250 and each other non-management director receives $1,000. The per
meeting attendance fees are paid on a quarterly basis, unless the Director
elects to participate in the Directors' Fee Deferral and Death Benefit Plan
described below. We pay also pay board directors for their service on various
board committees. Directors are reimbursed for their reasonable out-of-pocket
expenses incurred in connection with attendance at meetings of the Board of
Directors and committees of the Board of Directors.

In addition, we adopted, effective January 1, 2006, a Directors' Fee
Deferral and Death Benefit Plan ("Director Plan"), which allows each
non-employee director to elect to defer receipt of payment of some or all of his
or her director fees into an unfunded Plan Deferral Account. All directors
other then Mr. Carnell and Ms. Barrett elected to defer their director fees in
2011. Pursuant to the prior election of each director participating in the
Director Plan, at the end of each calendar year each director's Plan Deferral
Account balance will be adjusted to reflect an earnings adjustment calculated as
if the amount in the Plan Deferral Account were invested in either (1) an
interest bearing account earning interest at the prime rate determined by the
Board from time to time, or (2) our common stock. Under the Director Plan, the
designated beneficiary of each non-employee director will also be entitled to a
death benefit of $75,000 in the event of his or her death while still serving as
a director. Payment of this death benefit will be funded solely by one or more
life insurance contracts obtained by us on the life of each participant.
Accordingly, if a life insurance policy is not obtained then there will be no
death benefit, or if a life insurance policy is obtained in an amount less than
$75,000, then the amount of the death benefit payable shall be limited to the
amount of proceeds paid under any such life insurance policy. The death benefit
under the Director Plan is not a vested benefit and may be terminated at any
time by amendment to the Director Plan.

TRANSACTIONS WITH MANAGEMENT
----------------------------

We expect to engage in banking transactions in the ordinary course of
business with our shareholders, Directors and employees and their affiliates,
including members of their families or corporations, partnerships or other
organizations in which such shareholders, Directors and employees have a
controlling interest, on substantially the same terms, including interest rates
and collateral on loans, as those prevailing at the same time for comparable
transactions with others.

PROPOSAL 2 -
RATIFICATION OF INDEPENDENT AUDITORS

The Audit Committee has appointed the firm of KPMG to act as our
independent registered public accounting firm and to audit our consolidated
financial statements for the fiscal year ending December 31, 2012. This
appointment will continue at the pleasure of the Audit Committee and is
presented to the stockholders for ratification as a matter of good governance.
In the event that this appointment is not ratified by our stockholders, the
Audit Committee will consider that fact when it selects independent auditors for
the following fiscal year.

KPMG has served as our independent registered public accounting firm
since our inception and one or more representatives of KPMG will be present at
the Annual Meeting. These representatives will be provided an opportunity to
make a statement at the Annual Meeting if they desire to do so and will be
available to respond to appropriate questions from stockholders.

REQUIRED VOTE
-------------

THE PROPOSAL TO RATIFY THE SELECTION OF KPMG AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2012 FISCAL YEAR REQUIRES AN
AFFIRMATIVE VOTE OF THE MAJORITY OF THE SHARES REPRESENTED IN PERSON OR BY PROXY
AT THE ANNUAL MEETING AND ENTITLED TO VOTE ON THE PROPOSAL.

RECOMMENDATION
--------------

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF KPMG AS THE COMPANY'S INDEPENDENT AUDITORS

INDEPENDENT AUDITORS

The Company's independent auditors for the fiscal year ended December 31, 2011
were KPMG.

PRINCIPAL ACCOUNTING FIRM FEES

Aggregate fees billed to the company for the fiscal years ended
December 31, 2011 and 2010 by the Company's principal accounting firm are shown
in the following table.

FISCAL YEAR ENDED DECEMBER 31
-------------------------------
2011 2010
------------ -------------
Audit Fees $ 102,000 $ 101,919
Audit-Related Fees $ 149,500 $ 130,452
------------ -------------
Tax Fees 31,500 22,465
------------ -------------

Total Audit and Audit-Related Fees $ 283,050 $ 254,836
All Other Fees $ - $ -
------------ -------------

Total Fees $ 283,050 $ 254,836
============ =============

COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
regulation of the Securities and Exchange Commission to furnish the Company with
copies of all Section 16(a) forms they file.

The Company believes that all persons associated with the Company and
subject to Section 16(a) have made all required filings for the fiscal year
ended December 31, 2011.

PROPOSALS FOR 2012 ANNUAL MEETING

Any proposal that a shareholder wishes to have presented at the next
annual meeting of shareholders, to be held in 2013, must be received no later
than March 13, 2013. Proposals must be sent to the Company, at the address set
forth on the cover page of this Proxy Statement, to the attention of Keith
Winchester, Executive Vice President. It is urged that any such proposals be
sent by certified mail, return receipt requested.

OTHER MATTERS

The Board of Directors is not aware of any matters to be presented for
action at the meeting other than as set forth herein. However, if any other
matters properly come before the Meeting, or any adjournment thereof, the person
or persons voting the proxies will vote them in accordance with their best
judgment.

CORNERSTONE FINANCIAL CORPORATION

REVOCABLE PROXY FOR

ANNUAL MEETING OF SHAREHOLDERS
AUGUST 15, 2012

SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints the Board of Directors of Cornerstone
Financial Corporation (the "Company"), and each of them to vote all of the
shares of the Company standing in the undersigned's name at the Annual Meeting
of Shareholders of the Company, to be held at the corporate headquarters of the
Company, 6000 Midlantic Drive, Suite 120S, Mt. Laurel, New Jersey 08054, and at
any adjournment thereof. The undersigned hereby revokes any and all proxies
heretofore given with respect to such meeting.

THIS PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED "FOR" MANAGEMENT'S NOMINEES TO THE BOARD OF
DIRECTORS AND "FOR" EACH OTHER PROPOSAL SET FORTH IN THE ACCOMPANYING PROXY
STATEMENT.

The Board of Directors recommends approval of the following proposals.

1. Election of the following two (2) nominees to each
serve on the Board of Directors for the terms set
forth in the accompanying proxy statement: George W.
Matteo, Jr., and Robert A. Kennedy, Jr.

[] FOR ALL NOMINEES

TO WITHHOLD AUTHORITY FOR ANY OF THE ABOVE NAMED
NOMINEES, PRINT THE NOMINEE'S NAME(S) ON THE LINE
BELOW:

_____________________________________________________

[] WITHHOLD AUTHORITY FOR ALL NOMINEES

2. Ratification of the appointment of KPMG as the
independent auditors of the Company for the fiscal
year ending December 31, 2012.

[] FOR RATIFICATION
[] AGAINST RATIFICATION
[] ABSTAIN

3. Such other business as shall properly come before
the Annual Meeting.

Dated: __________________________ ,2012.

__________________________
Signature

(Please sign exactly as your name appears. When signing as an executor,
administrator, guardian, trustee or attorney, please give your title as such.
If signer is a corporation, please sign the full corporate name and then an
authorized officer should sign his name and print his name and title below his
signature. If the shares are held in joint name, all joint owners should sign.)

PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.