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 * WILLETTS FREDERICK III   2. Issuer Name and Ticker or Trading Symbol COOPERATIVE BANKSHARES INC [COOP] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) __X__ Director __X__ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Pres., CEO & Chairman of Board (Last) (First) (Middle) 201 MARKET STREET 3. Date of Earliest Transaction (Month/Day/Year) 08/03/2006 (Street) WILMINGTON, NC 28401 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 08/03/2006   S   1,000 D $ 17.5 37,325 (1) I By Trust (medical) Common Stock               257,772 (2) D   Common Stock               53,808 (3) (4) I By 401(k) Common Stock               68,662 (5) (6) I By Mother Common Stock               49,462 (5) (7) I By Mother's IRA Common Stock               3,441 (8) (9) I By Spouse Common Stock               158,197 (10) I By Trust (Father) Common Stock               3,024 (8) (11) I by trust for 1st daughter Common Stock               3,024 (8) (12) I By trust for 2nd daughter Common Stock               3,024 (8) (13) I By Trust for 3rd daughter Common Stock               1,014 (8) (14) I by wife in trust for 3 daughters Common Stock               1,615 (15) I by Willetts Building Trust

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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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

Stock Option (Right to Buy)

$ 12 (16)

12/29/2004(17)

12/29/2014

Common Stock

15,750 (16)

15,750 (16)

D

Stock Option (Right to Buy)

$ 13.77 (18)

12/14/2005(17)

12/14/2015

Common Stock

10,500 (18)

10,500 (18)

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
WILLETTS FREDERICK III 201 MARKET STREET WILMINGTON, NC 28401	X	X	Pres., CEO & Chairman of Board

Signatures

/s/ Willetts, III, Frederick		08/07/2006
**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)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 12,775 additional shares of common stock.
(2)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 85,924 additional shares of common stock.
(3)	Reflects stock acquired through Cooperative Bankshares 401(k) plan exempt from reporting under Rule 16b-3(c).
(4)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 17,936 additional shares of common stock.
(5)	Reporting person may be deemed the beneficial owner of shares beneficially owned by his mother due to dispositive authority granted to him under a general Power of Attorney on behalf of and for the benefit of his mother. Reporting person disclaims having a beneficial ownership interest in such shares for purposes of Section 16 under the Securities and Exchange Act of 1934.
(6)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 22,887 additional shares of common stock.
(7)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 16,487 additional shares of common stock.
(8)	This form reflects increases in beneficial ownership resulting from exempt acquisitions pursuant to Rule 16a-11.
(9)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 1,143 additional shares of common stock.
(10)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 52,732 additional shares of common stock.
(11)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 1,005 additional shares of common stock.
(12)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 1,005 additional shares of common stock.
(13)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 1,005 additional shares of common stock.
(14)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 337 additional shares of common stock.
(15)	On June 30, 2006, the common stock of Cooperative Bankshares, Inc. split 3-for-2, resulting in the reporting person's acquition of 538 additional shares of common stock.
(16)	This option was previously reported as covering 10,500 shares at an exercise price of $18.00 per share, but was adjusted to reflect the 3-for-2 stock split on June 30, 2006.
(17)	Stock Options fully vested on date of grant.
(18)	This option was previously reported as covering 7,000 shares at an exercise price of $20.66 per share, but was adjusted to reflect the 3-for-2 stock split on June 30, 2006.

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