<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the quarterly period ended September 30, 1997
                               ------------------------------------------------

                                       or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from                        to
                              -----------------------   -----------------------

Commission File Number: 0-28938
                       --------------------------------------------------------

                                 Coast Bancorp
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           California                                           77-0401327
-------------------------------------------------------------------------------
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

740 Front Street, Santa Cruz, California                                95060
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

                               (408) 458-4500
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                               Not Applicable
-------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last 
                                     report)

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.
                                                             /X/ Yes   / / No

     No. of shares of Common Stock outstanding on September 30, 1997: 2,203,659
                                                                      ---------

<PAGE>

                                 COAST BANCORP
                                       
                                   FORM 10-Q
                                       
                      FOR THE QUARTER ENDED SEPTEMBER 30, 1997
                               TABLE OF CONTENTS
                                       
                                    PART I

                                                                           Page

Item 1.   Financial Statements                                               1
Item 2.   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                                5
                                       
                                    PART II

Item 1.   Legal Proceedings                                                 15
Item 2.   Changes in Securities                                             15
Item 3.   Defaults Upon Senior Securities                                   15
Item 4.   Submission of Matters to a Vote of Security Holders               15
Item 5.   Other Information                                                 15
Item 6.   Exhibits and Reports on Form 8-K                                  15

<PAGE>

PART I
Item 1.  Financial Statements
COAST BANCORP
CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,         DECEMBER 31,
                                                                     1997                  1996
                                                                ---------------        -----------
ASSETS                                                           (unaudited)
<S>                                                             <C>                   <C>
Cash and due from banks                                         $ 18,802,000          $ 22,492,000
Federal funds sold                                                23,000,000            15,500,000
                                                                ------------          ------------
Total cash and equivalents                                        41,802,000            37,992,000
Securities:                                                                                       
  Available-for-sale, at fair value                               75,321,000            65,486,000
                                                                                                  
  Held-to-maturity, at amortized cost                                                             
    (fair value - 1997 $5,906,000, 1996 $6,021,000)                5,746,000             5,914,000
                                                                                                  
Loans:                                                                                            
  Commercial                                                      36,961,000            35,633,000
  Real estate - construction                                      18,742,000            15,112,000
  Real estate - term                                              70,282,000            65,208,000
  Installment and other                                            6,081,000             7,768,000
                                                                ------------          ------------
Total loans                                                      132,066,000           123,721,000
  Unearned income                                                 (1,976,000)           (1,742,000)
  Allowance for credit losses                                     (3,563,000)           (3,158,000)
                                                                ------------          ------------
Net loans                                                        126,527,000           118,821,000
Bank premises and equipment, net                                   1,865,000             2,131,000
Other real estate owned                                              112,000               551,000
Accrued interest receivable and other assets                       5,953,000             6,020,000
                                                                ------------          ------------
TOTAL ASSETS                                                    $257,326,000          $236,915,000
                                                                ------------          ------------
                                                                ------------          ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
  Noninterest-bearing demand                                    $ 56,673,000          $ 56,699,000
  Interest-bearing demand                                         79,239,000            69,305,000
  Savings                                                         27,928,000            32,296,000
  Time                                                            34,337,000            27,167,000
                                                                ------------          ------------
Total deposits                                                   198,177,000           185,467,000
Securities sold under agreements to repurchase                    28,850,000            24,608,000
Accrued expenses and other liabilities                             4,058,000             3,647,000
                                                              ---------------        --------------
Total liabilities                                                231,085,000           213,722,000
STOCKHOLDERS' EQUITY:
Preferred stock - no par value;
  10,000,000 shares authorized; no shares issued                           -                     -
Common stock - no par value; 20,000,000 shares authorized;
  shares outstanding: 2,203,659 in 1997 and 2,209,659 in 1996     11,011,000            11,041,000
Retained earnings                                                 14,866,000            12,022,000
Net unrealized gain on securities available-for-sale                 364,000               130,000
                                                                ------------          ------------
Total stockholders' equity                                        26,241,000            23,193,000
                                                                ------------          ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $257,326,000          $236,915,000
                                                                ------------          ------------
                                                                ------------          ------------
</TABLE>

         See notes to unaudited consolidated financial statements


                                      -1-
<PAGE>

COAST BANCORP
CONSOLIDATED INCOME STATEMENTS
(unaudited)


<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED SEPTEMBER 30,    NINE MONTHS ENDED SEPTEMBER 30,
                                                          ----------------------------         -------------------------- 
                                                                  1997           1996                1997           1996  
                                                          ------------    -----------          -----------     ---------- 
<S>                                                       <C>             <C>                  <C>             <C>>       
Interest Income:                                                                                                          
  Loans, including fees                                   $ 3,693,000     $ 3,166,000          $10,496,000     $ 9,474,000
  Federal funds sold                                          304,000         281,000              980,000         576,000
  Securities:
    Taxable                                                 1,201,000       1,019,000            3,397,000       3,112,000
    Nontaxable                                                 82,000          84,000              248,000         253,000
                                                          -----------     -----------          -----------     -----------
Total interest income                                       5,280,000       4,550,000           15,121,000      13,415,000
Interest expense:
    Deposits                                                1,060,000         870,000            3,043,000       2,525,000
    Other borrowings                                          371,000         360,000            1,041,000       1,015,000
                                                          -----------     -----------          -----------     -----------
Total interest expense                                      1,431,000       1,230,000            4,084,000       3,540,000
                                                          -----------     -----------          -----------     -----------
Net interest income                                         3,849,000       3,320,000           11,037,000       9,875,000
Provision for credit losses                                    75,000         225,000              375,000         675,000
                                                          -----------     -----------          -----------     -----------
Net interest income after provision for credit losses       3,774,000       3,095,000           10,662,000       9,200,000
Noninterest income:                                                                                                       
    Customer service fees                                     463,000         457,000            1,407,000       1,313,000
    Gain on sale of loans                                     285,000         405,000              998,000       1,174,000
    Loan servicing fees                                       270,000         251,000              792,000         706,000
    Gains (losses) on sales of securities                     (10,000)              -              (10,000)         66,000
    Other                                                     178,000         144,000              491,000         405,000
                                                          -----------     -----------          -----------     -----------
Total noninterest income                                    1,186,000       1,257,000            3,678,000       3,664,000
Noninterest expenses:                                                                                                     
    Salaries and benefits                                   1,381,000       1,292,000            4,168,000       3,910,000
    Equipment                                                 319,000         291,000              867,000         857,000
    Occupancy                                                 252,000         237,000              726,000         687,000
    Insurance                                                  60,000          38,000              148,000          91,000
    Stationery and postage                                     84,000          94,000              267,000         297,000
    Legal fees                                                 23,000          30,000               68,000          45,000
    Other                                                     637,000         672,000            1,880,000       1,857,000
                                                          -----------     -----------          -----------     -----------
Total noninterest expenses                                  2,756,000       2,654,000            8,124,000       7,744,000
                                                          -----------     -----------          -----------     -----------
Income before income taxes                                  2,204,000       1,698,000            6,216,000       5,120,000
Provision for income taxes                                    879,000         679,000            2,508,000       2,033,000
                                                          -----------     -----------          -----------     -----------
Net income                                                $ 1,325,000     $ 1,019,000          $ 3,708,000     $ 3,087,000
                                                          -----------     -----------          -----------     -----------
                                                          -----------     -----------          -----------     -----------
NET INCOME PER COMMON AND EQUIVALENT SHARE                $       .59     $       .46          $      1.65     $      1.38
                                                          -----------     -----------          -----------     -----------
                                                          -----------     -----------          -----------     -----------
</TABLE>

           See notes to unaudited consolidated financial statements


                                      -2-
<PAGE>

COAST BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

<TABLE>
<CAPTION>
                                                                 NINE MONTHS ENDED SEPTEMBER 30, 
                                                                 ------------------------------- 
                                                                          1997              1996 
                                                                 -------------     ------------- 
<S>                                                              <C>               <C>           
CASH FLOWS FROM OPERATIONS:                                                                      
Net income                                                       $   3,708,000     $   3,087,000 
                                                                                                 
Adjustments to reconcile net income to net cash provided by                                      
    operations:                                                                                  
    Provision for credit losses                                        375,000           675,000 
    Depreciation and amortization                                      112,000            16,000 
    Losses (gains) on securities transactions                          (10,000)          (66,000)
    Deferred income taxes                                             (306,000)         (514,000)
    Proceeds from loan sales                                        34,710,000        34,942,000 
    Origination of loans held for sale                             (39,369,000)      (34,911,000)
    Accrued interest receivable and other assets                       616,000          (479,000)
    Accrued expenses and other liabilities                             411,000           (36,000)
    Increase in unearned income                                        998,000           850,000 
    Other - net                                                         30,000                -- 
                                                                 -------------     ------------- 
Net cash provided by operations                                      1,275,000         3,564,000 
                                                                 -------------     ------------- 

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities                               12,027,000        14,468,000 
Purchases of securities available-for-sale                          (27,064,000)      (16,348,000)
Proceeds from sales of securities available-for-sale                  5,552,000         4,846,000 
Net increase in loans                                                (3,656,000)      (12,496,000)
Purchases of bank premises and equipment                               (382,000)         (245,000)
                                                                 -------------     -------------  
Net cash used in investing activities                               (13,523,000)       (9,775,000)
                                                                 -------------     -------------  
                                                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:                                                             
Net proceeds from securities sold under                                                           
 agreements to repurchase                                            4,242,000          4,525,000 
Net increase in deposits                                            12,710,000         17,041,000 
Payment of cash dividends                                             (764,000)          (668,000)
Repurchase of common stock                                            (130,000)          (690,000)
                                                                 -------------      ------------- 
Net cash provided by financing activities                           16,058,000         20,208,000 
                                                                 -------------      ------------- 
                                                                                                  
Net increase in cash and cash equivalents                            3,810,000         13,997,000 
                                                                 -------------      ------------- 
                                                                                                  
Cash and equivalents, beginning of period                           37,992,000         25,956,000 
                                                                 -------------      ------------- 
                                                                                                  
Cash and equivalents, end of period                              $  41,802,000      $  39,953,000 
                                                                 -------------      ------------- 
                                                                 -------------      ------------- 
                                                                                                  
OTHER CASH FLOW INFORMATION - CASH PAID DURING THE PERIOD FOR:                                    
Interest                                                         $   3,945,000      $   4,403,000 
Income taxes                                                         1,586,000          2,710,000 
                                                                                                  
NON-CASH INVESTING AND FINANCING TRANSACTIONS:                                                    
Additions to other real estate owned                              $           -     $      98,000 
</TABLE>

             See notes to unaudited consolidated financial statements


                                      -3-
<PAGE>

COAST BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997 and 1996
-------------------------------------------------------------------------------

1.  BASIS OF PRESENTATION - These financial statements reflect, in
    management's opinion, all adjustments, consisting of adjustments of a 
    normal recurring nature, which are necessary for a fair presentation of 
    Coast Bancorp's financial position and results of operations and cash 
    flows for the periods presented.  The results of interim periods are not 
    necessarily indicative of results of operations expected for athe full 
    year.  These financial statements should be read in conjuction with the 
    audited financial statements for 1996 included in the Company's Form 
    10-K.

2.  NET INCOME PER COMMON AND EQUIVALENT SHARE - Net income per common and
    equivalent share is computed using the weighted average shares 
    outstanding plus the dilutive effect of stock options.  The number of 
    shares used to compute net income per share for the nine month periods 
    ended September 30, 1997 and 1996 was 2,253,016 and 2,232,336, 
    respectively, and for the three month periods ended September 30, 1997 
    and 1996 was 2,252,841 and 2,223,068, respectively.

3.  NEW ACCOUNTING PRONOUNCEMENTS - In February 1997, the Financial Accounting
    Standards Board issued Statement of Financial Accounting Standards No. 
    128, "Earnings per Share" (SFAS 128). The Company is required to adopt 
    SFAS 128 in the fourth quarter of 1997 and will restate at that time 
    earnings per share (EPS) data for prior periods to conform with SFAS 
    128. Earlier application is not permitted.
    
    SFAS 128 replaces current EPS reporting requirements and requires a dual 
    presentation of basic and diluted EPS. Basic EPS excludes dilution and 
    is computed by dividing net income by the weighted average of common 
    shares outstanding for the period. Diluted EPS reflects the potential 
    dilution that could occur if securities or other contracts to issue 
    common stock were exercised or converted into common stock.

    If SFAS 128 had been in effect during the current and prior year periods,
    basic EPS and diluted EPS under SFAS 128 would not have been significantly
    different than EPS currently reported for the three months ended
    September 30, 1997 and 1996.  For the nine months ended September 30, 1997
    and 1996, basic EPS would have been $1.68 and $1.40, respectively, while
    diluted EPS under SFAS 128 would not have been significantly different than
    EPS currently reported.

    In June 1997, the Financial Accounting Standards Board issued SFAS No. 
    130 "Reporting Comprehensive Income," which requires that an enterprise 
    rport, by major components and as a single total, the change in its net 
    assets during the period from nonowner sources; and SFAS No. 131 
    "Disclosures about Segments of an Enterprise and Related Information," 
    which establishes annual and interim reporting standards for an 
    enterprise's business segments and related disclosures about its 
    products, geographic areas, and major customers.  Adoption of these 
    statements will not impact the Company's financial position, results of 
    operations or cash flows.  Both statements are effective for fiscal 
    years beginning after December 15, 1997, with earlier application 
    permitted.


                                      -4-
<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

OVERVIEW

Net income for the three months ended September 30, 1997 was $1,325,000 
compared to $1,019,000 during the same period in 1996, representing an 
increase of 30%.  Net income for the nine months ended September 30, 1997 was 
$3,708,000 compared to $3,087,000 for the prior year period, a 20% increase.  
The increase in net income during 1997 was primarily due to an increase in 
net interest income and a decrease in the provision for credit losses 
partially offset by an increase in noninterest expenses and a related 
increase in income tax expense.

EARNINGS SUMMARY
NET INTEREST INCOME
Net interest income refers to the difference between interest and fees earned 
on loans and investments and the interest paid on deposits and other borrowed 
funds.  It is the largest component of the net earnings of a financial 
institution.  The primary factors to consider in analyzing net interest 
income are the composition and volume of earning assets and interest-bearing 
liabilities, the amount of noninterest bearing liabilities and nonaccrual 
loans, and changes in market interest rates.


                                      -5-


Table I sets forth average balance sheet information, interest income and 
expense, average yields and rates, and net interest income and net interest 
margin for the three months and nine months ended September 30, 1997 and 1996.

Table I  Components of Net Interest Income

<PAGE>

<TABLE>
<CAPTION>

Three months ended September 30,                                 1997                              1996
                                              --------------------------------   --------------------------------
                                                Average                Average      Average              Average 
(Dollars in thousands)                          Balance    Interest    Rate(4)      Balance   Interest   Rate(4) 
                                              ----------   --------    -------    ----------  --------   ------- 
<S>                                           <C>          <C>         <C>        <C>         <C>        <C>     
Assets:                                                                                                          
                                                                                                                 
Loans (2) (3)                                 $ 131,333    $ 3,694     11.3%      $ 119,092   $ 3,166      10.6%  
                                                                                                                 
Investment securities:                                                                                           
   Taxable                                       71,003      1,201      6.8%         57,764     1,019       7.0%   
   Nontaxable (1)                                 5,905        124      8.4%          5,993       127       8.4%   
                                                                                                                 
Federal funds sold                               22,135        304      5.5%         21,464       281       5.2%   
                                              ---------    -------                ---------   -------            
Total earning assets                            230,376      5,323      9.2%        204,313     4,593       8.9%   
                                                                                                                 
Cash and due from banks                          17,568                              14,121                       
Allowance for credit losses                      (3,521)                             (3,035)                      
Unearned income                                  (1,853)                             (1,676)                      
Bank premises and equipment, net                  2,004                                2,144                       
Other assets                                      6,871                               6,285                       
                                              ---------                           ---------                      
Total assets                                  $ 251,445                           $ 222,152                      
                                              ---------                           ---------                      
                                              ---------                           ---------                      
                                                                                                                 
Interest-bearing liabilities:                                                                                    
Deposits:                                                                                                        
  Demand                                      $  77,782        408      2.1%      $  69,007       346       2.0%
  Savings                                        27,726        219      3.2%         29,009       223       3.1%
  Time                                           32,379        433      5.4%         23,984       301       5.0%
                                              ---------    -------                ---------   -------           
Total deposits                                  137,887      1,060      3.1%        122,000       870       2.8%
Borrowed funds                                   25,753        371      5.8%         24,518       360       5.8%
                                              ---------    -------                ---------   -------           
Total interest-bearing liabilities              163,640      1,431      3.5%        146,518     1,230       3.3%
                                                                                                                
Demand deposits                                  58,250                              51,353                     
Other liabilities                                 3,743                               2,353                     
Stockholders' equity                             25,812                              21,928                     

<PAGE>

                                              ---------                           ---------                     
                                                                                                                
Total liabilities and stockholders' equity    $ 251,445                           $ 222,152                     
                                              ---------                           ---------                     
                                              ---------                           ---------                     
                                                                                                                
Net interest income and margin                             $  3,892      6.8%                 $ 3,363       6.6%
                                                           --------     -----                 -------      -----
                                                           --------     -----                 -------      -----
</TABLE>

<PAGE>

(1)  Tax exempt income includes $42,000 and $43,000 in 1997 and 1996, 
respectively, to adjust to a fully taxable equivalent basis using the federal 
statutory rate of 34%.

(2)  Loan fees totaling $294,000 and $166,000 are included in loan interest 
income for the three months ended September 30, 1997 and 1996, respectively.

(3)  Average nonaccrual loans totaling $280,000 and $481,000 are included in 
average loans for the three months ended September 30, 1997 and 1996, 
respectively.

(4) Annualized

<PAGE>

<TABLE>
<CAPTION>

Nine months ended September 30,                                        1997                              1996
                                                   --------------------------------    ---------------------------------
                                                     Average                Average      Average               Average  
(Dollars in thousands)                               Balance    Interest    Rate(4)      Balance   Interest    Rate(4)  
                                                   ----------   --------    -------    ----------  --------    -------  
<S>                                                <C>          <C>         <C>        <C>         <C>         <C>      
Assets:                                                                                                                 
                                                                                                                        
Loans (2) (3)                                      $ 125,665    $10,496      11.1%     $ 114,572   $ 9,474      11.0%   
                                                                                                                        
Investment securities:                                                                                                  
   Taxable                                            67,043      3,397       6.8%        61,179     3,112       6.8%   
   Nontaxable (1)                                      5,912        376       8.5%         6,062       383       8.4%   
                                                                                                                        
Federal funds sold                                    24,281        980       5.4%        14,601       576       5.3%   
                                                   ---------    -------                ---------   -------              
Total earning assets                                 222,901     15,249       9.1%       196,414    13,545       9.2%   
                                                                                                                        
Cash and due from banks                               16,260                              13,431                        
Allowance for credit losses                           (3,404)                             (2,806)                       
Unearned income                                       (1,799)                             (1,642)                       
Bank premises and equipment, net                       2,089                               2,231                        
Other assets                                           6,992                               6,198                        
                                                   ---------                           ---------                        
Total assets                                       $ 243,039                           $ 213,826                        
                                                   ---------                           ---------                        
                                                   ---------                           ---------                        
                                                                                                                        
Interest-bearing liabilities:                                                                                           
Deposits:                                                                                                               
  Demand                                           $  75,737      1,145       2.0%     $  71,632     1,034       1.9%   
  Savings                                             30,856        747       3.2%        26,586       590       3.0%   
  Time                                                29,692      1,151       5.2%        23,335       901       5.2%   
                                                   ---------    -------                ---------   -------              
Total deposits                                       136,285      3,043       3.0%       121,553     2,525       2.8%   
Borrowed funds                                        24,748      1,041       5.6%        23,197     1,015       5.8%   
                                                   ---------    -------                ---------   -------              
Total interest-bearing liabilities                   161,033      4,084       3.4%       144,750     3,540       3.3%   
                                                                                                                        
Demand deposits                                       53,899                              45,851                        
Other liabilities                                      3,573                               1,798                        
Stockholders' equity                                  24,534                              21,427                        
                                                   ---------                           ---------                        
Total liabilities and stockholders' equity         $ 243,039                           $ 213,826                        
                                                   ---------                           ---------                        
                                                   ---------                           ---------                        
                                                                                                                        
Net interest income and margin                                 $ 11,165       6.7%                 $10,005       6.8%   
                                                               --------      -----                 -------      -----  
                                                               --------      -----                 -------      -----  
</TABLE>

<PAGE>

(1)  Tax exempt income includes $128,000 and $130,000 in 1997 and 1996, 
respectively, to adjust to a fully taxable equivalent basis using the federal 
statutory rate of 34%.

(2)  Loan fees totaling $808,000 and $712,000 are included in loan interest 
income for the nine months ended September 30, 1997 and 1996, respectively.

(3)  Average nonaccrual loans totaling $220,000 and $575,000 are included in 
average loans for the nine months ended September 30, 1997 and 1996, 
respectively.

(4) Annualized


                                      -6-
<PAGE>

    For the three months ended September 30, 1997, net interest income, on a 
    fully taxable-equivalent basis, was $3,892,000 or 6.8% of average 
    earning assets, an increase of 16% over $3,363,000 or 6.6% of average 
    earning assets in the comparable period in 1996.  For the nine months 
    ended September 30, 1997, net interest income, on a fully 
    taxable-equivalent basis, was $11,165,000 or 6.7% of average earnings 
    assets, an increase of 12% over $10,005,000 or 6.8% in the comparable 
    period in 1996.  The increase in 1997 reflects higher levels of earning 
    assets.
    
    Interest income, on a fully taxable-equivalent basis, was $5,323,000 and 
    $4,591,000 for the three months and $15,249,000 and $13,545,000 for the 
    nine months ended September 30, 1997 and 1996, respectively.  The 
    increase in 1997 resulted from the growth in average earning assets.  
    Loan yields averaged 11.3% and 10.6% for the three months ended 
    September 30, 1997 and 1996, respectively, and 11.1% and 11.0% for the 
    first nine months of 1997 and 1996, respectively, and generally reflect 
    the stability of interest rates since the first quarter of 1996 and the 
    25 basis point increase in the prime rate in March 1997.  Approximately 
    90% of the Bank's loans have variable interest rates indexed to the 
    prime rate.  The Bank's average prime rate was 8.50% for each of the 
    three month periods ended September 30, 1997 and 1996, respectively, and 
    8.42% and 8.28% for the nine months ended September 30, 1997 and 1996, 
    respectively.  Average earning assets were $230,376,000 and $222,901,000 
    for the three and nine months of 1997 compared to $204,192,000 and 
    $196,414,000 in the same periods in 1996.  The growth in average earning 
    assets resulted from increased levels of deposits which were invested 
    primarily in federal funds sold and loans.
    
    The increase in interest income during 1997 on a fully 
    taxable-equivalent basis, was partially offset by an increase in 
    interest expense.  The average rate paid on interest bearing deposits 
    was 3.1% and 2.8% in  for the three month periods ended September 30, 
    1997 and 1996, respectively, and 3.0% and 2.8% for the nine month 
    periods ended September 30, 1997 and 1996, respectively.

                                      -7-
<PAGE>

NONINTEREST INCOME

Table 2 summarizes the sources of noninterest income for
the periods indicated:

Table 2 - Noninterest Income
(Dollars in thousands)

                                            Three months ended September 30,
                                          -------------------------------
                                                   1997            1996
                                              ----------       ----------
    Customer service fees                        $  463          $  457
    Gain on sale of loans                           285             405
    Loan servicing fees                             270             251
    Losses on securities transactions               (10)              -
    Other                                           178             144
                                               ----------      ----------
Total noninterest income                         $1,186          $1,257
                                               ----------      ----------
                                               ----------      ----------

                                              Nine months ended September 30,
                                          -------------------------------
                                                   1997            1996
                                              ----------       ----------
    Customer service fees                        $1,407          $1,313
    Gain on sale of loans                           998           1,174
    Loan servicing fees                             792             706
    Gains (losses) on securities
      transactions                                  (10)             66
    Other                                           491             405
                                               ----------      ----------
Total noninterest income                         $3,678          $3,664
                                               ----------      ----------
                                               ----------      ----------

The increase in customer service fees in 1997 relates primarily to higher 
levels of returned item fees.  Gains on sale of loans decreased as a result 
of a lower volume of SBA loans sold during 1997.  The Company sells SBA loans
and FHLMC conforming mortgage loans with SBA loan sales providing the primary 
source of gains on sale.  Loan servicing fees and other noninterest income 
increased consistent with the growth of deposits and loans serviced for 
others.

                                      -8-
<PAGE>

NONINTEREST EXPENSES

The major components of noninterest expenses stated in dollars and as a 
percentage of average earning assets are set forth in Table 3 for the periods 
indicated.

Table 3 - Noninterest Expenses
(Dollars in thousands)

                                   Three months ended September 30,
                                 -------------------------------------
                                       1997               1996
                                 -----------------  ------------------
Salaries and benefits             $1,381      2.40%   $1,292      2.53%
Equipment                            319      0.55%      291      0.57%
Occupancy                            252      0.44%      237      0.46%
Insurance                             60      0.10%       38      0.07%
Stationery and postage                84      0.15%       94      0.18%
Legal fees                            23      0.04%       30      0.06%
Other                                637      1.11%      672      1.32%
                                  -----------------  -----------------
Total noninterest expenses        $2,756      4.79%   $2,654      5.19%
                                  -----------------  -----------------
                                  -----------------  -----------------

                                     Nine months ended September 30,
                                 -------------------------------------
                                       1997               1996
                                 -----------------  ------------------
Salaries and benefits             $4,168      2.49%   $3,910      2.66%
Equipment                            867      0.52%      857      0.58%
Occupancy                            726      0.43%      687      0.47%
Insurance                            148      0.09%       91      0.06%
Stationery and postage               267      0.16%      297      0.20%
Legal fees                            68      0.04%       45      0.03%
Other                              1,880      1.13%    1,857      1.26%
                                  -----------------  -----------------
Total noninterest expenses        $8,124      4.86%   $7,744      5.26%
                                  -----------------  -----------------
                                  -----------------  -----------------

The increases in 1997 were primarily related to higher staff costs and 
increases in other noninterest expenses.  The increase in noninterest 
expenses reflects the growth in total loans, deposits and assets.  The 
decrease in noninterest expense as a percentage of average earning assets is 
the result of the rate of growth in average earning assets in 1997 exceeding 
the rate of increase in noninterest expenses.

INCOME TAXES

The Company's effective tax rate was 39.9% and 40.9% for the three and 
nine months ended September 30, 1997 compared to 40.0% and 39.7% for the 
comparable periods in 1996.  Changes in the effective tax rate for the 
Company are primarily due to fluctuations in the proportion of tax 
exempt income generated from investment securities to pre-tax income.

BALANCE SHEET ANALYSIS

Total assets increased to $257.3 million at September 30, 1997, a 9% 
increase from the end of 1996.  Based on average balances, third quarter 
1997 average total assets of $251.4 million represent an increase of 13% 
over the third quarter 1996 while nine month 1997 average total assets 
of $243.0 million represent an increase of 14% over nine months 1996.


                                      -9-

<PAGE>

EARNING ASSETS
LOANS

Total gross loans at September 30, 1997 were $132.1 million, a 7% increase 
from $123.7 million at December 31, 1996.  Average loans in the three and 
nine months of 1997 were $131,333,000 and $125,665,000 representing increases 
of 10% over each of the comparable periods in 1996.  The 1997 increases 
primarily reflected growth in average real estate loans which in the opinion 
of the Company is due to improved local economic conditions.

Risk Elements

Lending money involves an inherent risk of nonpayment.  Through the 
administration of loan policies and monitoring of the portfolio, management 
seeks to reduce such risks.  The allowance for credit losses is an estimate 
to provide a financial buffer for losses, both identified and unidentified, 
in the loan portfolio.

Nonaccrual Loans, Loans Past Due and OREO

The accrual of interest is discontinued and any accrued and unpaid interest 
is reversed when the payment of principal or interest is 90 days past due 
unless the amount is well secured and in the process of collection.  Income 
on such loans is then recognized only to the extent that cash is received and 
where the future collection of principal is probable.  At September 30, 1997 
nonaccrual loans totaled $513,000 or .39% of total loans compared to $159,000 
or .13% of total loans at December 31, 1996.

Table 4 presents the composition of nonperforming assets at September 30, 1997.

Table 4  Nonperforming Assets
(dollars in thousands)



                                                             September 30,
                                                                1997
                                                              -------
                                                           
Nonperforming assets:
Accruing loans past due 90 days or more                        $    -
Nonaccrual loans                                                  513
                                                               ------
Total nonperforming loans                                         513
OREO                                                              112
                                                               ------
Total nonperforming assets                                     $  625
                                                               ------
                                                               ------
Nonperforming loans as a percent of total loans                 0.39%
OREO as a percent of total assets                               0.04%
Nonperforming assets as a percent of total assets               0.24%

Allowance for loan losses                                      $3,563
  As a percent of total loans                                   2.70%
  As a percent of nonaccrual loans                              6945%
  As a percent of nonperforming loans                           6945%


                                     -10-

<PAGE>

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

Management has established an evaluation process designed to determine the 
adequacy of the allowance for credit losses.  This process attempts to assess 
the risk of loss inherent in the portfolio by segregating the allowance for 
credit losses into three components: "historical losses;" "specific;"  and 
"margin for imprecision."  The "historical losses" and "specific" components 
include management's judgment of the effect of current and forecasted 
economic conditions on the ability of the Company's borrowers' to repay; an 
evaluation of the allowance for credit losses in relation to the size of the 
overall loan portfolio; an evaluation of the composition of, and growth 
trends within, the loan portfolio; consideration of the relationship of the 
allowance for credit losses to nonperforming loans; net charge-off trends; 
and other factors.  While this evaluation process utilizes historical and 
other objective information, the classification of loans and the 
establishment of the allowance for credit losses, relies, to a great extent, 
on the judgment and experience of management.  The Company evaluates the 
adequacy of its allowance for credit losses quarterly.

It is the policy of management to maintain the allowance for possible credit 
losses at a level adequate for known and future risks inherent in the loan 
portfolio.  Based on information currently available to analyze loan loss 
potential, including economic factors, overall credit quality, historical 
delinquency and a history of actual charge-offs, management believes that the 
loan loss provision and allowance are adequate; however, no assurance of the 
ultimate level of credit losses can be given with any certainty.  Loans are 
charged against the allowance when management believes that the 
collectibility of the principal is unlikely.  An analysis of activity in the 
allowance for credit losses is presented in Table 5.

TABLE 5 Allowance for Credit Losses
(Dollars in thousands)


                                    For the nine months ended
                                        September 30, 1997
                                          -------------

Total loans outstanding                      $ 132,066
Average total loans                            125,665

Balance, January 1                           $   3,158
Charge-offs by loan category:
  Commercial                                        68
  Installment and other                             38
  Real estate construction                           -
  Real estate-other                                  -
                                             ---------
     Total charge-offs                             106

Recoveries by loan category:
  Commercial                                        95
  Installment and other                             35
  Real estate construction                           6
  Real estate-other                                  -
                                             ---------
    Total recoveries                               136
Net recoveries                                      30
Provision charged to expense                       375
                                             ---------
Balance, September 30                           $3,563
                                             ---------
                                             ---------

Ratios:
  Net recoveries to average loans                    0.02%
  Reserve to total loans                             2.70%


                                     -11-
<PAGE>

OTHER INTEREST-EARNING ASSETS
For the three and nine months ended September 30, 1997, the average balance 
of investment securities and federal funds sold totaled $99,043,000 and 
$97,236,000, up from $85,101,000 and $81,842,000 for the same periods in 
1996.  The 1997 increase resulted from deploying additional liquidity in 
federal funds sold and investment securities.  The source of the additional 
liquidity was the excess of the increase in average deposits over the 
increase in average loans.  Management also uses borrowed funds to increase 
earning assets and enhance the Company's interest rate risk profile.

FUNDING

Deposits represent the Bank's principal source of funds for investment. 
Deposits are primarily core deposits in that they are demand, savings, and 
time deposits under $100,000 generated from local businesses and individuals. 
These sources represent relatively stable, long term deposit relationships 
which minimize fluctuations in overall deposit balances.  The Bank has never 
used brokered deposits.

Deposits increased $12,710,000 from year-end or 7% to $198,177,000 as of 
September 30, 1997.  Average total deposits in the three and nine months of 
1997 of $196,137,000 and $195,184,000 increased from $173,394,000 and 
$167,404,000 in the same periods in 1996.

Another source of funding for the Company is borrowed funds.  Typically, 
these funds result from the use of agreements to sell investment securities 
with a repurchase at a designated future date, also known as repurchase 
agreements. Repurchase agreements are conducted with major banks and 
investment brokerage firms.  The maturity of these arrangements for the Bank 
is typically 30 to 90 days.

LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity management refers to the Bank's ability to provide funds on an 
ongoing basis to meet fluctuations in deposit levels as well as the credit 
needs and requirements of its clients.  Both assets and liabilities 
contribute to the Bank's liquidity position.  Federal funds lines, 
short-term investments and securities, and loan repayments contribute to 
liquidity, along with deposit increases, while loan funding and deposit 
withdrawals decrease liquidity.  The Bank assesses the likelihood of 
projected funding requirements by reviewing historical funding patterns, 
current and forecasted economic conditions and individual client funding 
needs.  The Bank maintains informal lines of credit with its correspondent 
banks for short-term liquidity needs. These informal lines of credit are not 
committed facilities by the correspondent banks and no fees are paid by the 
Bank to maintain them.

The Bank manages its liquidity by maintaining a majority of its investment 
portfolio in liquid investments in addition to its federal funds sold. 
Liquidity is measured by various ratios, including the liquidity ratio of net 
liquid assets compared to total assets.  As of September 30, 1997, this ratio 
was 20.6%.  Other key liquidity ratios are the ratios of loans to deposits 
and federal funds sold to deposits, which were 66.6% and 11.6%, respectively, 
as of September 30, 1997.


                                     -12-
<PAGE>

INTEREST RATE SENSITIVITY

Interest rate sensitivity is a measure of the exposure of the Company's 
future earnings due to changes in interest rates.  If assets and liabilities 
do not reprice simultaneously and in equal volumes, the potential for such 
exposure exists.  It is management's objective to achieve a near-matched to 
modestly asset-sensitive cumulative position at one year, such that the net 
interest margin of the Company increases as market interest rates rise and 
decreases when short-term interest rates decline.

One quantitative measure of the "mismatch" between asset and liability 
repricing is the interest rate sensitivity "gap" analysis.   All 
interest-earning assets and funding sources are classified as to their 
expected repricing or maturity date, whichever is sooner.  Within each time 
period, the difference between asset and liability balances, or "gap," is 
calculated.  Positive cumulative gaps in early time periods suggest that 
earnings will increase if interest rates rise.  Negative gaps suggest that 
earnings will decline when interest rates rise.  Table 6 presents the gap 
analysis for the Company at September 30, 1997. Mortgage backed securities 
are reported in the period of their expected repricing based upon estimated 
prepayments developed from recent experience.

Table 6  Interest Rate Sensitivity
(Dollars in thousands)

<PAGE>

<TABLE>
<CAPTION>
                                                           Next day       Over three       Over one
                                                          and within      months and      and within       Over
As of September 30, 1997                    Immediately  three months   within one year   five years     five years      Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>            <C>               <C>            <C>           <C>
Rate sensitive assets:
Federal funds sold                           $  23,000       $      -       $      -       $      -       $      -     $  23,000
Investment securities:
     Treasury and agency obligations                 -              -          1,200          3,900          1,997         7,097
     Mortgage-backed securities                      -          2,491          6,903         26,545         30,958        66,897
     Municipal securities                            -            112          1,112          2,117          2,405         5,746
     Other                                           -              -              -              -          1,327         1,327

---------------------------------------------------------------------------------------------------------------------------------
Total investment securities                          -          2,603          9,215         32,562         36,687        81,067
Loans excluding nonaccrual loans               117,892          1,673            858          4,831          6,299       131,553

---------------------------------------------------------------------------------------------------------------------------------
Total rate sensitive assets                  $ 140,892      $   4,276       $ 10,073       $ 37,393       $ 42,986     $ 235,620
                                       
---------------------------------------------------------------------------------------------------------------------------------
Rate sensitive liabilities:
Deposits:
     Money market, NOW, and savings          $ 107,167      $       -       $      -       $      -              -     $ 107,167
     Time certificates                               -         15,867         16,471          1,999              -        34,337
                                       
---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits                107,167         15,867         16,471          1,999              -       141,504
Borrowings                                           -         28,850              -              -              -        28,850
                                       
---------------------------------------------------------------------------------------------------------------------------------
  Total rate sensitive liabilities           $ 107,167      $  44,717       $ 16,471       $  1,999              -     $ 170,354
                                       
---------------------------------------------------------------------------------------------------------------------------------
Gap                                          $  33,725      $ (40,441)      $ (6,398)      $ 35,394       $ 42,986     $  65,266
Cumulative gap                               $  33,725      $  (6,716)      $(13,114)      $ 22,280       $ 65,266
</TABLE>


                                     -13-
<PAGE>

The Company's positive cumulative total gap results from the exclusion from 
the above table of noninterest-bearing demand deposits, which represent a 
significant portion of the Company's funding sources.  The Company maintains 
a minor negative cumulative gap in the next day and within three months and 
the over three months and within one year time periods and a positive 
cumulative gap in all other time periods.  The Company's experience indicates 
money market deposit rates tend to lag changes in the prime rate which 
immediately impact the prime-based loan portfolio.  Even in the Company's 
negative gap time periods, rising rates result in an increase in net interest 
income.  Should interest rates stabilize or decline in future periods, it is 
reasonable to assume that the Company's net interest margin, as well as net 
interest income, may decline correspondingly.

CAPITAL RESOURCES Management seeks to maintain adequate capital to support 
anticipated asset growth and credit risks, and to ensure that the Company and 
the Bank are in compliance with all regulatory capital guidelines.  The 
primary source of new capital for the Company has been the retention of 
earnings.  The Company does not have any material commitments for capital 
expenditures as of September 30, 1997.

The Company pays a quarterly cash dividend on its common stock as part of 
efforts to enhance shareholder value.  The Company's goal is to maintain a 
strong capital position that will permit payment of a consistent cash 
dividend which may grow commensurately with earnings growth.

During 1997, the Board of Directors approved a stock repurchase program 
authorizing open market purchases of up to 3% of the shares outstanding, or 
approximately 66,300 shares, in order to enhance long term shareholder value. 
As of September 30, 1997, 6,000 shares had been purchased under the program.

The Company and the Bank are subject to capital adequacy guidelines issued by 
the federal bank regulatory authorities. Under these guidelines, the minimum 
total risk-based capital requirement is 10.0% of risk-weighted assets and 
certain off-balance sheet items for a "well capitalized" depository 
institution. At least 6.0% of the 10.0% total risk-based capital ratio must 
consist of Tier 1 capital, defined as tangible common equity, and the 
remainder may consist of subordinated debt, cumulative preferred stock and a 
limited amount of the allowance for loan losses.

The federal regulatory authorities have established minimum capital leverage 
ratio guidelines for state member banks.  The ratio is determined using Tier 
1 capital divided by quarterly average total assets.  The guidelines require 
a minimum of 5.0% for a "well capitalized" depository institution.

The Company's risk-based capital ratios were in excess of regulatory 
guidelines for a "well capitalized" depository institution as of September 
30, 1997, and December 31, 1996.  Capital ratios for the Company are set 
forth in Table 7:

Table 7 Capital Ratios

                                   September 30,          December 31,
                                         1997                 1996
                                  ------------          ------------

Total risk-based capital ratio          17.6%                16.4%
Tier 1 risk-based capital ratio         16.4%                15.2%
Tier 1 leverage ratio                   10.3%                 9.8%


         Capital ratios for the Bank at September 30, 1997 and December 31, 
1996 were 15.9% and 15.0% total risk-based capital, 14.7% and 13.8% Tier 1 
risk-based capital ratio and 9.2% and 8.7% Tier 1 leverage ratio.

                                     -14-
<PAGE>

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings
          Not applicable.

Item 2.   Changes in Securities
          Not applicable

Item 3.   Defaults Upon Senior Securities
          Not applicable

Item 4.   Submission of Matters to a Vote of Security Holders
          Not applicable

Item 5.   Other Information

          On July 16, 1997, the Coast Bancorp Board of Directors declared
a dividend of eleven and one-half cents ($0.115) per share, payable
August 28, 1997, to shareholders of record on August 8, 1997.

Item 6.   Exhibits and Reports on Form 8-K
a.        Exhibits
Exhibit Number 

27     Financial Data Schedule


                                     -15-
<PAGE>

b.  Reports on Form 8-K
          Not applicable

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                       COAST BANCORP
                                       ---------------------------------------
                                       (REGISTRANT)

Date:  November 11, 1997

                                       /s/ HARVEY J. NICKELSON
                                       ---------------------------------------
                                       Harvey J. Nickelson
                                       President and Chief Executive Officer

                                       /s/ BRUCE H. KENDALL
                                       ---------------------------------------
                                       Bruce H. Kendall
                                       Senior Vice President
                                       and Chief Financial Officer
                                       (Principal Financial and Accounting 
                                       Officer)


                                     -16-