<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 June 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 June 30, 1997: 2,203,659
                                                                 ---------

<PAGE>

                                 COAST BANCORP
                                       
                                   FORM 10-Q
                                       
                      FOR THE QUARTER ENDED JUNE 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>
                                                                    JUNE 30,          DECEMBER 31,
                                                                       1997                  1996
                                                                ---------------        -----------
ASSETS                                                           (unaudited)
<S>                                                             <C>                   <C>
Cash and due from banks                                         $ 20,601,000          $ 22,492,000
Federal funds sold                                                14,000,000            15,500,000
                                                                ------------          ------------
Total cash and equivalents                                        34,601,000            37,992,000
Securities:
  Available-for-sale, at fair value                               67,721,000            65,486,000

  Held-to-maturity, at amortized cost
    (fair value - 1997 $6,006,000, 1996 $6,021,000)                5,909,000             5,914,000

Loans:
  Commercial                                                      37,535,000            35,633,000
  Real estate - construction                                      15,280,000            15,112,000
  Real estate - term                                              70,062,000            65,208,000
  Installment and other                                            6,417,000             7,768,000
                                                                ------------          ------------
Total loans                                                      129,294,000           123,721,000
  Unearned income                                                 (1,795,000)           (1,742,000)
  Allowance for credit losses                                     (3,482,000)           (3,158,000)
                                                                ------------          ------------
Net loans                                                        124,017,000           118,821,000
Bank premises and equipment - net                                  2,008,000             2,131,000
Other real estate owned                                              492,000               551,000
Accrued interest receivable and other assets                       7,678,000             6,020,000
                                                                ------------          ------------
TOTAL ASSETS                                                    $242,426,000          $236,915,000
                                                                ------------          ------------
                                                                ------------          ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
  Noninterest-bearing demand                                    $ 58,501,000          $ 56,699,000
  Interest-bearing demand                                         71,622,000            69,305,000
  Savings                                                         28,920,000            32,296,000
  Time                                                            30,665,000            27,167,000
                                                                ------------          ------------
Total deposits                                                   189,708,000           185,467,000
Securities sold under agreements to repurchase                    23,850,000            24,608,000
Accrued expenses and other liabilities                             3,897,000             3,647,000
                                                              ---------------        --------------
Total liabilities                                                217,455,000           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                                                 13,795,000            12,022,000
Net unrealized gain (loss) on available-for-sale securities          165,000               130,000
                                                                ------------          ------------
Total stockholders' equity                                        24,971,000            23,193,000
                                                                ------------          ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $242,426,000          $236,915,000
                                                                ------------          ------------
                                                                ------------          ------------
</TABLE>

             See notes to unaudited consolidated financial statements


                                      -1-
<PAGE>

COAST BANCORP
CONSOLIDATED INCOME STATEMENTS
(unaudited)

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                                          ----------------------------   --------------------------
                                                                  1997           1996           1997           1996
                                                          ------------    -----------    -----------     ----------
<S>                                                       <C>             <C>            <C>             <C>
Interest Income:
  Loans, including fees                                   $ 3,481,000    $ 3,236,000    $ 6,802,000    $ 6,308,000
  Federal funds sold                                          372,000        153,000        676,000        295,000
  Securities:
    Taxable                                                 1,111,000      1,008,000      2,196,000      2,093,000
    Nontaxable                                                 83,000         85,000        166,000        169,000
                                                          -----------    -----------    -----------    -----------
Total interest income                                       5,047,000      4,482,000      9,840,000      8,865,000
Interest expense:
    Deposits                                                1,036,000        826,000      1,983,000      1,655,000
    Other borrowings                                          340,000        344,000        670,000        655,000
                                                          -----------    -----------    -----------    -----------
Total interest expense                                      1,376,000      1,170,000      2,653,000      2,310,000
                                                          -----------    -----------    -----------    -----------
Net interest income                                         3,671,000      3,312,000      7,187,000      6,555,000
Provision for credit losses                                    75,000        225,000        300,000        450,000
                                                          -----------    -----------    -----------    -----------
Net interest income after provision for credit losses       3,596,000      3,087,000      6,887,000      6,105,000
Noninterest income:
    Customer service fees                                     472,000        403,000        944,000        856,000
    Gain on sale of loans                                     263,000        362,000        714,000        769,000
    Loan servicing fees                                       265,000        235,000        522,000        455,000
    Gains (losses) on securities sales                              -         66,000              -         66,000
    Other                                                     146,000        143,000        313,000        261,000
                                                          -----------    -----------    -----------    -----------
Total noninterest income                                    1,146,000      1,209,000      2,493,000      2,407,000
Noninterest expenses:
    Salaries and benefits                                   1,363,000      1,281,000      2,787,000      2,618,000
    Equipment                                                 285,000        279,000        548,000        566,000
    Occupancy                                                 235,000        224,000        473,000        450,000
    Insurance                                                  38,000         24,000         87,000         53,000
    Stationery and postage                                     79,000        101,000        184,000        203,000
    Legal fees                                                 23,000         (5,000)        45,000         15,000
    Other                                                     679,000        655,000      1,244,000      1,185,000
                                                          -----------    -----------    -----------    -----------
Total noninterest expenses                                  2,702,000      2,559,000      5,368,000      5,090,000
                                                          -----------    -----------    -----------    -----------
Income before income taxes                                  2,040,000      1,737,000      4,012,000      3,422,000
Provision for income taxes                                    823,000        688,000      1,629,000      1,354,000
                                                          -----------    -----------    -----------    -----------
Net income                                                $ 1,217,000    $ 1,049,000    $ 2,383,000    $ 2,068,000
                                                          -----------    -----------    -----------    -----------
                                                          -----------    -----------    -----------    -----------
NET INCOME PER COMMON AND EQUIVALENT SHARE                $       .55    $       .47    $      1.07    $       .92
                                                          -----------    -----------    -----------    -----------
                                                          -----------    -----------    -----------    -----------
</TABLE>

             See notes to unaudited consolidated financial statements


                                      -2-
<PAGE>

COAST BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

<TABLE>
<CAPTION>
                                                                       SIX MONTHS ENDED JUNE 30,
                                                                 -------------------------------
                                                                          1997              1996
                                                                 -------------     -------------
<S>                                                              <C>               <C>
CASH FLOWS FROM OPERATIONS:
Net income                                                       $   2,383,000     $   2,068,000

Adjustments to reconcile net income to net cash provided by 
    (used in) operations:
    Provision for credit losses                                        300,000           450,000
    Depreciation and amortization                                      100,000             9,000
    Deferred income taxes                                             (156,000)         (382,000)
    Proceeds from loan sales                                        25,967,000        20,093,000
    Origination of loans held for sale                             (25,910,000)      (27,108,000)
    Accrued interest receivable and other assets                    (1,259,000)         (783,000)
    Accrued expenses and other liabilities                             250,000          (159,000)
    Increase in unearned income                                        531,000           504,000
    Other - net                                                       (208,000)          (10,000)
                                                                 -------------     -------------
Net cash provided by (used in) operations                            1,998,000        (5,318,000)
                                                                 -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities                               7,782,000        11,940,000
Purchases of securities available-for-sale                         (10,119,000)      (11,207,000)
Proceeds from sales of securities available-for-sale                         -         4,628,000
Net decrease (increase) in loans                                    (5,606,000)       (4,975,000)
Purchases of bank premises and equipment                              (289,000)         (216,000)
                                                                 -------------     -------------
Net cash (used in) provided by investing activities                 (8,232,000)          170,000
                                                                 -------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net (purchases of) proceeds from securities sold under 
 agreements to repurchase                                             (758,000)        4,497,000
Net increase in deposits                                             4,241,000         1,498,000
Payment of cash dividends                                             (510,000)         (447,000)
Repurchase of common stock                                            (130,000)         (690,000)
                                                                 -------------     -------------
Net cash provided by financing activities                            2,843,000         4,858,000
                                                                 -------------     -------------

Net decrease in cash and cash equivalents                           (3,391,000)         (290,000)
                                                                 -------------     -------------

Cash and equivalents, beginning of period                           37,992,000        25,956,000
                                                                 -------------     -------------

Cash and equivalents, end of period                              $  34,601,000     $  25,666,000
                                                                 -------------     -------------
                                                                 -------------     -------------

OTHER CASH FLOW INFORMATION - CASH PAID DURING THE PERIOD FOR: 
Interest                                                         $   2,580,000     $   3,314,000
Income taxes                                                         1,050,000         1,712,000

NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Additions to other real estate owned                                         -     $      66,000
</TABLE>

             See notes to unaudited consolidated financial statements


                                      -3-
<PAGE>

COAST  BANCORP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 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.

    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 six month periods ended
    June 30, 1997 and 1996 was 2,233,487 and 2,232,336, respectively, and for
    the three month periods ended June 30, 1997 and 1996 was 2,232,874 and 
    2,218,608, respectively.

3.  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 June 30, 1997 and 1996.  For the six months ended 
    June 30, 1997 and 1996, basic EPS would have been $1.08 and $.93,
    respectively, while diluted EPS under SFAS 128 would not have been 
    significantly different than EPS currently reported.


                                      -4-
<PAGE>

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

OVERVIEW

Net income for the three months ended June 30, 1997 was $1,166217,000 
compared to $1,0149,000 during the same period in 1996, representing an 
increase of 164%.  Net income for the six months ended June 30, 1997 was 
$2,383,000 copmpared to $2,068,000 for the prior year period, a 15%  
increase.  The increase in net income during 1997 was primarily due to 
increases in net interest income and noninterest income 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-
<PAGE>

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 six months ended June 30, 1997 and 1996.

Table 1  Components of Net Interest Income

<TABLE>
<CAPTION>

Three months ended June 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)                                      $ 123,240    $ 3,481      11.3%     $ 115,548   $ 3,237      11.2%

Investment securities:
   Taxable                                            65,843      1,111       6.8%        61,869     1,008       6.5%
   Nontaxable (1)                                      5,911        126       8.5%         6,096       129       8.5%

Federal funds sold                                    26,858        372       5.5%        11,562       153       5.3%
                                                   ---------    -------                ---------   -------
Total earning assets                                 221,852      5,090       9.2%       195,075     4,527       9.3%

Cash and due from banks                               16,532                              13,426
Allowance for credit losses                           (3,435)                             (2,811)
Unearned income                                       (1,801)                             (1,633)
Bank premises and equipment, net                       2,098                               2,223
Other assets                                           7,260                               7,608
                                                   ---------                           ---------
Total assets                                       $ 242,506                           $ 213,888
                                                   ---------                           ---------
                                                   ---------                           ---------

Interest-bearing liabilities:
Deposits:
  Demand                                           $  74,736        373       2.0%     $  68,766       330       1.9%
  Savings                                             33,030        284       3.4%        27,451       200       2.9%
  Time                                                29,489        379       5.1%        23,340       297       5.1%
                                                   ---------    -------                ---------   -------
Total deposits                                       137,255      1,036       3.0%       119,557       827       2.8%
Borrowed funds                                        24,080        340       5.7%        24,616       344       5.6%
                                                   ---------    -------                ---------   -------
Total interest-bearing liabilities                   161,335      1,376       3.4%       144,173     1,171       3.3%

Demand deposits                                       53,653                              45,998
Other liabilities                                      3,347                               2,357
Stockholders' equity                                  24,471                              21,360
                                                   ---------                           ---------

Total liabilities and stockholders' equity         $ 242,506                           $ 213,888
                                                   ---------                           ---------
                                                   ---------                           ---------

Net interest income and margin                                 $  3,714       6.7%                 $ 3,356       6.9%
                                                               --------      -----                 --------     -----
                                                               --------      -----                 --------     -----
</TABLE>

(1)  Tax exempt income includes $43,000 and $44,000 in 1997 and 1996,
respectively, to adjust to a fully taxable equivalent basis using the federal
statutory rate of 34%.

(2)  Loan fees totaling $270,000 and $276,000 are included in loan interest
income for the three months ended June 30, 1997 and 1996,
respectively.

(3)  Average nonaccrual loans totaling $103,000 and $366,000 are included in
average loans for the three months ended June 30, 1997 and 1996,
respectively.

(4) Annualized

<TABLE>
<CAPTION>

Six months ended June 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)                                      $ 122,784    $ 6,802      11.1%     $ 112,287   $ 6,308      11.2%

Investment securities:
   Taxable                                            65,030      2,196       6.8%        63,249     2,093       6.6%
   Nontaxable (1)                                      5,915        251       8.5%         6,097       256       8.4%

Federal funds sold                                    25,372        676       5.3%        11,132       295       5.3%
                                                   ---------    -------                ---------   -------
Total earning assets                                 219,101      9,925       9.1%       192,765     8,952       9.3%

Cash and due from banks                               15,596                              12,944
Allowance for credit losses                           (3,344)                             (2,690)
Unearned income                                       (1,772)                             (1,625)
Bank premises and equipment, net                       2,133                               2,275
Other assets                                           7,054                               6,154
                                                   ---------                           ---------
Total assets                                       $ 238,768                           $ 209,873
                                                   ---------                           ---------
                                                   ---------                           ---------

Interest-bearing liabilities:
Deposits:
  Demand                                           $  74,698        737       2.0%     $  72,959       688       1.9%
  Savings                                             32,447        528       3.3%        25,361       367       2.9%
  Time                                                28,326        718       5.1%        23,007       600       5.2%
                                                   ---------    -------                ---------   -------
Total deposits                                       135,471      1,983       2.9%       121,327     1,655       2.7%
Borrowed funds                                        24,238        670       5.5%        22,529       655       5.8%
                                                   ---------    -------                ---------   -------
Total interest-bearing liabilities                   159,709      2,653       3.3%       143,856     2,310       3.2%

Demand deposits                                       51,687                              43,070
Other liabilities                                      3,486                               1,773
Stockholders' equity                                  23,886                              21,174
                                                   ---------                           ---------
Total liabilities and stockholders' equity         $ 238,768                           $ 209,873
                                                   ---------                           ---------
                                                   ---------                           ---------

Net interest income and margin                                 $  7,272       6.6%                 $ 6,642      6.9%
                                                               --------      -----                 --------     -----
                                                               --------      -----                 --------     -----
</TABLE>

(1)  Tax exempt income includes $85,000 and $87,000 in 1997 and 1996,
respectively, to adjust to a fully taxable equivalent basis using the federal
statutory rate of 34%.

(2)  Loan fees totaling $513,000 and $546,000 are included in loan interest
income for the six months ended June 30, 1997 and 1996,
respectively.

(3)  Average nonaccrual loans totaling $122,000 and $568,000 are included in
average loans for the six months ended June 30, 1997 and 1996,
respectively.

(4) Annualized


                                      -6-

<PAGE>

For the three months ended June 30, 1997, net interest income, on a fully 
taxable-equivalent basis, was $3,714,000 or 6.7% of average earning assets, 
an increase of 11% over $3,356,000 or 6.9% of average earning assets in the 
comparable period in 1996.  For the six months ended June 30, 1997, net 
interest income, on a fully taxable-equivalent basis, was $7,272,000 or 6.6% 
of average earnings assets, an increase of 9% over $6,6452,000 or 6.9% 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 $5,090,000 and 
$4,527,000 for the three months and $9,925,000 and $8,952,000 for the six 
months ended June 30, 1997 and 1996, respectively.  The increase in 1997 
resulted from the growth in average earning assets.  Loan yields averaged 
11.3% and 11.2% for the three months ended June 30, 1997 and 1996, 
respectively, and 11.1% and 11.2% for the first six 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 XX91% of the Bank's loans have variable interest 
rates indexed to the prime rate.  The Bank's average prime rate was 8.50% and 
8.35% for the three months ended June 30, 1997 and 1996, respectively, and 
8.38% and 8.30% for the six months ended June 30, 1997 and 1996, 
respectively.  Average earning assets were $221,852,000 and $219,101,000 for 
the three and six months of 1997 compared to $195,075,000 and $192,48765,000 
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 3.4% and 3.3% in  for the three 
month periods ended June 30, 1997 and 1996, respectively, and 3.3% and 3.2% 
for the six month periods ended June 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 June  30,
                                          -------------------------------
                                                   1997            1996
                                              ----------       ----------
    Customer service fees                        $  472          $  403
    Gain on sale of loans                           263             362
    Loan servicing fees                             265             235
    Gains on securities transactions                 -              66
    Other                                           146             143
                                               ----------      ----------
Total noninterest income                         $1,146          $1,209
                                               ----------      ----------

                                              Six months ended June  30,
                                          -------------------------------
                                                   1997            1996
                                              ----------       ----------
    Customer service fees                        $  944          $  856
    Gain on sale of loans                           714             769
    Loan servicing fees                             522             455
    Gains on securities transactions                 -               66
    Other                                           313             261
                                               ----------      ----------
Total noninterest income                         $2,493          $2,407
                                               ----------      ----------

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 despite an increase in the 
total amount of 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 June 30,
                                 -------------------------------------
                                       1997               1996
                                 -----------------  ------------------
Salaries and benefits             $1,363      2.46%   $1,281      2.63%
Equipment                            285      0.52%      279      0.57%
Occupancy                            235      0.42%      224      0.46%
Insurance                             38      0.07%       24      0.05%
Stationery and postage                79      0.14%      101      0.21%
Legal fees                            23      0.04%       (5)    (0.01)%
Other                                679      1.22%      655      1.34%
                                  -----------------  -----------------
Total noninterest expense         $2,702      4.87%   $2,559      5.25%
                                  -----------------  -----------------
                                  -----------------  -----------------

                                     Six months ended June 30,
                                 -------------------------------------
                                       1997               1996
                                 -----------------  ------------------
Salaries and benefits             $2,787      2.54%   $2,618      2.72%
Equipment                            548      0.50%      566      0.59%
Occupancy                            473      0.43%      450      0.47%
Insurance                             87      0.08%       53      0.05%
Stationery and postage               184      0.17%      203      0.21%
Legal fees                            45      0.04%       15      0.02%
Other                              1,244      1.14%    1,185      1.23%
                                  -----------------  -----------------
Total noninterest expense         $5,368      4.90%   $5,090      5.28%
                                  -----------------  -----------------
                                  -----------------  -----------------

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 40.3% and 40.6% for the three and six 
months ended June 30, 1997 compared to 39.6% for both 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 $242.4 million at June 30, 1997, a 2% increase from 
the end of 1996.  Based on average balances, second quarter 1997 average 
total assets of $242.5 million represent an increase of 13% over the second 
quarter 1996 while six month 1997 average total assets of $238.87 million 
represent an increase of 143% over six months 1996.


                                      -9-
<PAGE>

EARNING ASSETS
LOANS

Total gross loans at June 30, 1997 were $129.3 million, a 215% increase from 
$10623.87 million at December 31, 1996.  Average loans in the three and six 
months of 1997 were $123,240,000 and $122,784,000 representing increases of 
7% and 9% over 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 June 30, 1997 
nonaccrual loans totaled $54,000 or .04% 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 June  30,
1997.

Table 4  Nonperforming Assets
(dollars in thousands)

<TABLE>
<CAPTION>
                                                             June 30,
                                                                1997
                                                              -------
<S>                                                           <C>
Nonperforming assets:
Loans past due 90 days or more                                 $    7
Nonaccrual loans                                                   47
                                                               ------
Total nonperforming loans                                          54
OREO                                                              492
                                                               ------
Total nonperforming assets                                     $  546
                                                               ------
                                                               ------
Nonperforming loans as a percent of total loans                 0.04%
OREO as a percent of total assets                               0.20%
Nonperforming assets as a percent of total assets               0.23%

Allowance for loan losses                                      $3,482
  As a percent of total loans                                   2.69%
  As a percent of nonaccrual loans                              7409%
  As a percent of nonperforming loans                           6448%
</TABLE>


                                     -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)

<TABLE>
<CAPTION>
                              For the six months ended
                                         June 30, 1997
                                         -------------
<S>                                      <C>
Total loans outstanding                      $ 129,294
Average total loans                            122,784


Balance, January 1                           $   3,158
Charge-offs by loan category:
  Commercial                                        36
  Installment and other                             14
  Real estate construction                           -
  Real estate-other                                  -
                                             ---------
     Total charge-offs                              50

Recoveries by loan category:
  Commercial                                        42
  Installment and other                             26
  Real estate construction                           6
  Real estate-other                                  -
                                             ---------
    Total recoveries                                74
Net charge-offs (recoveries)                       (24)
Provision charged to expense                       300
                                             ---------
Balance, June 30                             $   3,482
                                             ---------
                                             ---------
</TABLE>

Ratios:
  Net charge-offs (recoveries) to average loans     (0.02)%
  Reserve to total loans                             2.69%


                                     -11-
<PAGE>

OTHER INTEREST-EARNING ASSETS
For the three and six months ended June 30, 1997, the average balance of 
investment securities and federal funds sold totaled $98,612,000 and 
$96,317,000, up from $79,527,000 and $ 80,478,000 for the same periods in 
1996.  The 1997 increase resulted from deploying additional liquidity in 
federal funds sold and investment securities.  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 $4,241,000 from year-end or 2% to $189,708,000 as of June 
30, 1997.  Average total deposits in the three and six months of 1997 of 
$190,908,000 and $187,158,000 increased from $1645,357555,000 and 
$164,397,000 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 June 30, 1997, this ratio was 
16.8%.  Other key liquidity ratios are the ratios of loans to deposits and 
federal funds sold to deposits, which were 68.2% and 7.4%, respectively, as 
of June 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 
analysies for the Company at June 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)

<TABLE>
<CAPTION>
                                                             Next day        Over three    Over one
                                                           and within        months and  and within        Over
As of June 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                           $  14,000       $      -       $      -       $      -       $      -     $  14,000
Investment securities:
     Treasury and agency obligations                 -          1,500              -          1,415              -         2,915
     Mortgage-backed securities                      -          2,582          7,082         25,644         28,191        63,499
     Municipal securities                            -            216            530          2,197          2,966         5,909
     Other                                           -              -              -              -          1,307         1,307

---------------------------------------------------------------------------------------------------------------------------------
Total investment securities                          -          4,298          7,612         29,256         32,464        73,630
Loans excluding nonaccrual loans               117,860          1,428          2,102          4,683          3,174       129,247

---------------------------------------------------------------------------------------------------------------------------------
Total rate sensitive assets                  $ 131,860      $   5,726       $  9,714       $ 33,939       $ 35,638     $ 216,877
                                       
---------------------------------------------------------------------------------------------------------------------------------
Rate sensitive liabilities:
Deposits:
     Money market, NOW, and savings          $ 100,542      $       -       $      -       $      -              -     $ 100,542
     Time certificates                               -         17,311         11,466          1,888              -        30,665
                                       
---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits                100,542         17,311         11,466          1,888              -       131,207
Borrowings                                           -         23,850              -              -              -        23,850
                                       
---------------------------------------------------------------------------------------------------------------------------------
  Total rate sensitive liabilities           $ 100,542      $  41,161       $ 11,466       $  1,888              -     $ 155,057
                                       
---------------------------------------------------------------------------------------------------------------------------------
Gap                                          $  31,318      $ (35,435)      $ (1,752)      $ 32,051       $ 35,638     $  61,820
Cumulative gap                               $  31,318      $  (4,117)      $ (5,869)      $ 26,182       $ 61,820
</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 June 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 June 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 June 30, 
19967, and December 31, 1996.  Capital ratios for the Company are set forth 
in Table 7:

Table 7 Capital Ratios

<TABLE>
<CAPTION>
                                      June 30,          December 31,
                                         1997                 1996
                                  ------------          ------------
<S>                               <C>                   <C>
Total risk-based capital ratio          17.2%                16.4%
Tier 1 risk-based capital ratio         16.0%                15.2%
Tier 1 leverage ratio                   10.2%                 9.8%
</TABLE>


Capital ratios for the Bank at June 30, 1997 and December 31, 1996 were 15.5% 
and 15.0% total risk-based capital, 14.3% and 13.8% Tier 1 risk-based capital 
ratio and 9.1% 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

          The Company's annual meeting was held May 20, 1997.  The purpose of 
the meeting was elect the company's board of directors and ratify the 
appointment of Deloitte & Touche LLP as the Company's auditors for the year 
ending December 31, 1997.  The following directors were elected based upon 
the votes cast as indicated:

<TABLE>
<CAPTION>
Director                  Votes "for"    Votes "against"   Votes "withheld"
<S>                       <C>            <C>               <C>
Richard Alderson           1,234,949           0                4,980
Douglas D. Austin          1,238,735           0                1,194
John C. Burroughs          1,238,735           0                1,194
Bud W. Cummings            1,238,735           0                1,194
Ronald M. Israel, M.D.     1,238,735           0                1,194
Malcolm D. Moore           1,238,735           0                1,194
Harvey J. Nickelson        1,238,735           0                1,194
Gus J.F. Norton            1,238,735           0                1,194
James C. Thompson          1,238,735           0                1,194
</TABLE>

The appointment of Deloitte & Touche LLP as the Company's auditors for the 
year ending December 31, 1997 was ratified with 1,237,680 votes for 
ratification, no votes against, and 2,249 votes withheld.

Item 5.   Other Information

          On April 23, 1997, the Coast Bancorp Board of Directors declared a 
dividend of eleven and one-half cents ($0.115) per share, payable May 
28,1997, to shareholders of record on May 8, 1997.

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

10.19  Amended and Restated Deferred Compensation Agreement with Richard 
       Alderson dated May 21, 1997

10.20  Amended and Restated Deferred Compensations Agreement Douglas D. 
       Austin dated May 21, 1997

10.21  Amended and Restated Deferred Compensation Agreement with John Burroughs
       dated May 21, 1997

10.22  Amended and Restated Deferred Compensations Agreement with Bud W. 
       Cummings dated May 21, 1997

10.23  Amended and Restated Deferred Compensations Agreement with Ronald M. 
       Israel dated May 21, 1997

10.24  Amended and Restated Deferred Compensations Agreement with Malcolm D. 
       Moore dated May 21, 1997

10.25  Amended and Restated Deferred Compensations Agreement with Gus J.F. 
       Norton dated May 21, 1997

10.26  Amended and Restated Deferred Compensations Agreement with James C. 
       Thompson dated May 21, 1997

27     Financial Data Schedule


                                     -15-
<PAGE>

b.  Reports on Form 8-K

          On April 28, 1997 the Company filed a Form 8-K relating to a press 
release dated April 22, 1997 announcing first quarter earnings and an April 
23, 1997 press release announcing the declaration of an eleven and one-half 
cent ($0.115) cash dividend, payable May 28,1997, to shareholders of record 
on May 8, 1997.

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:  August 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-