|UNITED STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM 10-QSB

(Mark One)
|-----------------------------------------------------------------------------------------------------

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

|For the quarterly period ended June
30, 2001
|--------------------------------------------

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

|For the transition period from


Commission file number:
333-68207


FIRST COASTAL BANCSHARES
|---------------------------------------------------------------------------------------------

|CALIFORNIA(State of other jurisdiction of incorporation) | NO. 95-4693574(IRS Employer Identification No.)
|-------------------------------------------------------- | -----------------------------------------------

|275 Main Street, El Segundo, California(Address of principal executive offices) | 90245(Zip Code)
|------------------------------------------------------------------------------- | ---------------

|Registrants telephone
number, including area code: (888) 296-2250


Not applicable(Former
name or former address, 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(c) of the Securities Exchange Act of 1934 during the preceding 12
months (of 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. Yes
[X ] No [ ]


APPLICABLE
ONLY TO CORPORATE ISSUERS


On June 30, 2001 there were
1,247,711 shares of First Coastal Bancshares Common Stock outstanding.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|First
Coastal BancsharesJune 30, 2000


INDEX


PART I  FINANCIAL
INFORMATION
|------------------------------------------------------------------------------

|                                                                                     | PAGE
|------------------------------------------------------------------------------------ | ----
|Item
      1  Financial Statements                                                  |     
|Condensed
      Consolidated Balance Sheets at June 30, 2001 and                     |     
|December
      31, 2000                                                              |     
|Condensed
      Consolidated Statements of Income for the Three                      |     
|Months
      and Six Months Ended June 30, 2001 and 2000                             |     
|Condensed
      Consolidated Statements of Changes in Shareholders Equity from      |     
|January
      1, 2000 through June 30, 2001                                          |     
|Condensed
      Consolidated Statements of Cash Flows for the Six                    |     
|Months
      Ended June 30, 2001 and 2000                                            |     
|Notes
      to Consolidated Financial Statements                                     |     
|Item
      2  Managements Discussion and Analysis of Financial Condition
      and |     
|Results
      of Operations                                                          |     

|PART II  OTHER
INFORMATION
|---------------------------

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

|2
|-

|Item 1.
Financial Statements


First
Coastal Bancshares and SubsidiariesCondensed Consolidated Balance Sheets(Unaudited
 Dollar Amounts in Thousands)
|------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          | June 30,2001 |             | December 31,2000 |            
|--------------------------------------------------------- | ------------ | ----------- | ---------------- | -----------
|Cash and Due From Bank                                    |              | $     7,634 |                  | $     7,322
|Investment Securities, net                                |              | 24,239      |                  | 34,702     
|Federal Reserve and Federal Home Loan Bank Stock, at Cost |              | 974         |                  | 1,175      
|Loans                                                     |              | 93,745      |                  | 83,686     
|Allowance for Loan Losses                                 |              | (1,045      | )                | (964       
|                                                          |              |             |                  |            
|NET LOANS                                                 |              | 92,700      |                  | 82,722     
|                                                          |              |             |                  |            
|Premises and Equipment, net                               |              | 655         |                  | 676        
|Goodwill, net                                             |              | 4,846       |                  | 5,048      
|Accrued Interest and Other Assets                         |              | 3,865       |                  | 4,019      
|                                                          |              |             |                  |            
|                                                          |              | $ 134,913   |                  | $ 135,664  
|                                                          |              |             |                  |            
|Noninterest-Bearing Deposits                              |              | $   32,155  |                  | $   32,822 
|Interest-Bearing Deposits                                 |              | 77,253      |                  | 77,339     
|                                                          |              |             |                  |            
|TOTAL DEPOSITS                                            |              | 109,408     |                  | 110,161    
|                                                          |              |             |                  |            
|Other Borrowings                                          |              | 10,748      |                  | 10,848     
|Company Obligated Mandatorily Redeemable                  |             
|Preferred Securities of Subsidiary Trust Holding          |             
|Solely Junior Subordinated Debentures                     |              | 6,600       |                  | 6,600      
|Accrued Interest and Other Liabilities                    |              | 1,053       |                  | 1,071      
|                                                          |              |             |                  |            
|TOTAL LIABILITIES                                         |              | 127,809     |                  | 128,680    
|                                                          |              |             |                  |            
|Preferred Stock                                           |              | 1,993       |                  | 1,993      
|Common Shares                                             |              | 6,566       |                  | 6,551      
|Accumulated Deficit                                       |              | (1,289      | )                | (1,112     
|Accumulated Other Comprehensive Income                    |              | (166        | )                | (448       
|                                                          |              |             |                  |            
|TOTAL SHAREHOLDERS EQUITY                                |              | 7,104       |                  | 6,984      
|                                                          |              |             |                  |            
|                                                          |              | $ 134,913   |                  | $ 135,664  
|                                                          |              |             |                  |            

|The accompanying notes are
an integral part of the consolidated financial statements.


3
|-----------------------------------------------------------------------------------------

|Item 1.
Financial Statements  Continued


First
Coastal Bancshares and SubsidiariesCondensed Consolidated Statements of Income(Unaudited  Dollar Amounts in Thousands, Except Per Share Data)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           | For the Three Months EndedJune 30, |         | For the Six Months EndedJune 30, |        
|-------------------------- | ---------------------------------- | ------- | -------------------------------- | -------
|
|Interest Income            |                                    | $ 2,372 |                                  | $ 2,539
|Interest Expense           |                                    | 1,098   |                                  | 1,221  
|                           |                                    |         |                                  |        
|Net Interest Income        |                                    | 1,274   |                                  | 1,318  
|                           |                                    |         |                                  |        
|Provision for Loan Losses  |                                    |        |                                  | 45     
|                           |                                    |         |                                  |        
|Net Interest Income after  |                                   
|Provision for Loan Losses  |                                    | 1,274   |                                  | 1,273  
|                           |                                    |         |                                  |        
|Noninterest Income         |                                    | 177     |                                  | 176    
|Noninterest Expense        |                                    | 1,434   |                                  | 1,426  
|                           |                                    |         |                                  |        
|Income (Loss) before Taxes |                                    | 17      |                                  | 23     
|                           |                                    |         |                                  |        
|Income Taxes               |                                    | 30      |                                  | 51     
|                           |                                    |         |                                  |        
|Net Loss                   |                                    | $   (13 | )                                | $   (28
|                           |                                    |         |                                  |        
|Per Share Data:            |                                   
|Net Loss  Basic           |                                    | $(0.05  | )                                | $(0.07 
|Net Loss  Diluted         |                                    | $(0.05  | )                                | $(0.07 

|The accompanying notes are
an integral part of the consolidated financial statements.


4
|-----------------------------------------------------------------------------------------

|Item 1.
Financial Statements  Continued


First
Coastal Bancshares and SubsidiariesCondensed Consolidated Statements of Changes in Shareholders Equity
(Unaudited  Dollar Amounts in Thousands)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  | Preferred
      Stock | Common
      Stock | Comprehensive
      Income | Accumulated
      Deficit | Accumulated
      Other
      Comprehensive
      Income | Total 
|--------------------------------- | --------------------- | ------------------ | -------------------------- | ------------------------- | -------------------------------------------------------- | ------
|January
      1, 2000             |                       | $1,993             |                            | $6,527                    |                                                          |       
|Sale
      of Treasury Shares     |                       |                    |                            | 24                        |                                                          |       
|Dividends
      - Preferred Stock |                       |                    |                            |                           |                                                          |       
|Comprehensive
      Income        |                      
|Net Loss                          |                       |                    |                            |                           |                                                          | $ (177
|Change
      in Unrecognized Loss |                      
|of
      Securities Available for |                      
|Sale,
      net of Taxes of $530  |                       |                    |                            |                           |                                                          | 762   
|                                  |                       |                    |                            |                           |                                                          |       
|Comprehensive
      Income        |                       |                    |                            |                           |                                                          | $ 585 
|                                  |                       |                    |                            |                           |                                                          |       
|                                  |                       |                    |                            |                           |                                                          |       
|December
      31, 2000           |                       | 1,993              |                            | 6,551                     |                                                          |       
|Dividends
       Preferred Stock |                       |                    |                            |                           |                                                          |       
|Sale
      of Treasury Shares     |                       |                    |                            | 15                        |                                                          |       
|Comprehensive
      Income        |                      
|Net Loss                          |                       |                    |                            |                           |                                                          | $ (69 
|Change
      in Unrecognized Loss |                      
|of
      Securities Available for |                      
|Sale,
      net of Taxes of $196  |                       |                    |                            |                           |                                                          | 282   
|                                  |                       |                    |                            |                           |                                                          |       
|Comprehensive
      Income        |                       |                    |                            |                           |                                                          | $ 213 
|                                  |                       |                    |                            |                           |                                                          |       
|                                  |                       |                    |                            |                           |                                                          |       
|June
      30, 2001               |                       | $1,993             |                            | $6,566                    |                                                          |       
|                                  |                       |                    |                            |                           |                                                          |       

|The accompanying notes are
an integral part of the consolidated financial statements.


5
|-----------------------------------------------------------------------------------------

|Item 1.
Financial Statements  Continued


First
Coastal Bancshares and SubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited  Dollar Amounts in Thousands)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                    | For the Six Months EndedJune 30, |          
|------------------------------------------------------------------- | -------------------------------- | ---------
|
|OPERATING ACTIVITIES                                                |                                  |          
|Net Loss                                                            |                                  | $     (69
|Adjustments to Reconcile Net Loss to                                |                                 
|Net Cash Provided (Used) by Operating Activities:                   |                                 
|Depreciation and Amortization                                       |                                  | 344      
|Provision for Loan Losses                                           |                                  |         
|Other Items - Net                                                   |                                  | (150     
|                                                                    |                                  |          
|NET CASH PROVIDED (USED) BY                                         |                                 
|OPERATING ACTIVITIES                                                |                                  | 125      
|                                                                    |                                  |          
|INVESTING ACTIVITIES                                                |                                 
|Purchases of Investment Securities                                  |                                  | (4,055   
|Sale and Maturities of Investment Securities                        |                                  | 15,101   
|Net Decrease (Increase) in Federal Reserve and Home Loan Bank Stock |                                  | 201      
|Net Change in Loans                                                 |                                  | (9,978   
|Proceeds from the Sale of Other Real Estate Owned                   |                                  |         
|Purchase of Premises and Equipment                                  |                                  | (121     
|                                                                    |                                  |          
|NET CASH PROVIDED (USED) BY                                         |                                 
|INVESTING ACTIVITIES                                                |                                  | 1,148    
|                                                                    |                                  |          
|FINANCING ACTIVITIES                                                |                                 
|Net (Decrease) Increase in Deposits                                 |                                  | (753     
|Net Change in Other Borrowings                                      |                                  | (100     
|Proceeds from Issuance of Common Stock                              |                                  |         
|Redemption of Preferred and Common Stock                            |                                  |         
|Dividends                                                           |                                  | (108     
|                                                                    |                                  |          
|NET CASH (USED) PROVIDED BY                                         |                                 
|FINANCING ACTIVITIES                                                |                                  | (961     
|                                                                    |                                  |          
|INCREASE  IN CASH                                                   |                                 
|AND CASH EQUIVALENTS                                                |                                  | 312      
|Cash and Cash Equivalents at Beginning of Period                    |                                  | 7,322    
|                                                                    |                                  |          
|CASH AND CASH EQUIVALENTS                                           |                                 
|AT END OF PERIOD                                                    |                                  | $   7,634
|                                                                    |                                  |          

|The accompanying notes are
an integral part of the consolidated financial statements.


6
|-----------------------------------------------------------------------------------------

|Item 1.
Financial Statements  Continued


First
Coastal Bancshares and SubsidiariesNotes to Consolidated Financial Statements


Note 1  Basis
of Presentation and Management Representation


The accompanying financial
information has been prepared in accordance with the Securities and Exchange
Commission rules and regulations for quarterly reporting and therefore does not
necessarily include all information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles. This information should be read in conjunction with the
Companys Form 10-KSB filed on March 30, 2001 and Form SB-2 filed on
February 12, 1999.


The consolidated financial
statements include First Coastal Bancshares and its wholly owned subsidiaries,
First Coastal Bank, N.A. (the Bank) and First Coastal Capital Trust.


Operating results for
interim periods are not necessarily indicative of operating results for an
entire fiscal year. In the opinion of management, the unaudited financial
information for the six-month period ended June 30, 2001 and 2000, reflect all
adjustments, consisting only of normal recurring accruals and provisions,
necessary for a fair presentation thereof.


Some matters discussed in
this Form 10-QSB may be forward-looking statements within the
meaning of the Private Litigation Reform Act of 1995 and therefore may involve
risks, uncertainties and other factors which may cause our actual results to be
materially different from the results expressed or implied by our
forward-looking statements. These statements generally appear with words such as
anticipate, believe, estimate,
may, intend, and expect.


Note 2 
Proposed Sale of Branch


The Bank has entered into
an agreement to sell its Burbank branch location to Bank of Granada Hills. The
purchase price for the branch, which has approximately $18.5 million in
deposits, is expected to be approximately $1.2 million. Completion of the
transaction is anticipated by year-end 2001, and is subject to approval of the
California Department of Financial Institutions, FDIC and Bank of Granada
Hills shareholders.


Note 3 
Earnings Per Share


Effective December 31, 1997,
the Company adopted Statement of Financial Accounting Standards No. 128,
Earnings per Share. Accordingly, basic earnings per share are
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during each period. The computation
of diluted earnings per share also considers the number of shares issuable upon
the assumed exercise of outstanding common stock options and the number of
shares issuable upon the assumed conversion of the convertible preferred stock.
These items were anti-dilutive for the periods reported and therefore dilutive
earnings per shares are reported as the same as basic earnings per share.



7
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 2 - Managements
Discussion and Analysis of Financial Condition and Results of Operations



Income Summary


For the three months ended
June 30, 2001, the Company reported a net loss of $13,000, or $0.05 basic loss
per share compared to a net loss of $28,000, or $0.07 basic loss per share for
the same three-month period in 2000. For the six months ended June 30, 2001, the
Company reported a net loss of $69,000, or $0.15 basic loss per share compared
to a net loss of $77,000, or $0.15 basic loss per share for the same six-month
period in 2000.


The annualized return on
average assets was (0.11)% for the first half of 2001 compared to (0.12)% for
2000. Annualized return on average shareholders equity for the first half
of 2001 and 2000 was (1.96)% and (2.37)%, respectively.


Net Interest
Income


Net interest income is the
amount by which the interest and amortization of fees generated from loans and
other earning assets exceed the cost of funding those assets, usually deposit
account interest expense. Net interest income depends on the difference (the
interest rate spread) between gross interest and fees earned on the
loans and investment portfolios and the interest rates paid on deposits and
borrowings. Net interest income was $1,274,000 for the quarter ended June 30,
2001, compared to $1,318,000 for the quarter ended June 30, 2000. Net interest
income was $2,593,000 for the six months ended June 30, 2001, compared to
$2,603,000 for the six months ended June 30, 2000.


The total amount of net
interest income decreased for the quarter and six months ended June 30, 2001
compared to the same periods in 2000. This decrease was primarily due to the 275
basis points decrease in the prime rate during the first half of 2001.


The following table sets
forth the components of net interest income, average earning assets and net
interest margin (dollar amounts in thousands):
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Three
      Months Ended
      June 30, |            | Six Months
      Ended
      June 30, |            | Year
      Ended
      December 31, |           
|----------------------------- | --------------------------------------- | ---------- | ------------------------------------- | ---------- | ----------------------------------- | ----------
|
|Interest
      Income         |                                         | $    2,372 |                                       | $    2,539 |                                     | $    4,913
|Interest
      Expense        |                                         | 1,098      |                                       | 1,221      |                                     | 2,320     
|                              |                                         |            |                                       |            |                                     |           
|Net
      Interest Income     |                                         | $    1,274 |                                       | $    1,318 |                                     | $    2,593
|                              |                                         |            |                                       |            |                                     |           
|                              |                                         |            |                                       |            |                                     |           
|Average
      Earning Assets  |                                         | $116,645   |                                       | $116,880   |                                     | $115,266  
|Net
      Interest Margin (1) |                                         | 4.37       | %                                     | 4.51       | %                                   | 4.50      

|(1) |  | Interim periods are presented on an annualized basis.
|--- |  | -----------------------------------------------------

|8
|-

|Provision for
Loan Losses


During the first and second
quarter of 2001, the Company did not contribute to the allowance for loan
losses. Total contributions to the allowance for loan losses in the first six
months of 2000 were $90,000. Management believes that the allowance, which
stands at 1.1% of gross loans at June 30, 2001, is adequate to cover future
losses.


Changes in the allowance
for loan losses for the quarter and six months ended June 30, 2001 and 2000 are
as follows (dollar amounts in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | Three Months EndedJune 30, |         | Six Months EndedJune 30, |         
|------------------------------- | -------------------------- | ------- | ------------------------ | --------
|
|Allowance, Beginning of Period  |                            | $ 1,048 |                          | $    994
|Provision for Loan Losses       |                            |        |                          | 45      
|Recoveries on Loans Charged Off |                            | 9       |                          | 24      
|                                |                            |         |                          |         
|                                |                            | 1,057   |                          | 1,063   
|Less: Loans Charged Off         |                            | (12     | )                        | (209    
|                                |                            |         |                          |         
|Allowance, End of Period        |                            | $ 1,045 |                          | $    854
|                                |                            |         |                          |         

|Noninterest
Income


Non Interest Income
represents deposit account service charges and other types of non-loan related
fee income. Non-interest income for the quarter ended June 30, 2001 totaled
$177,000 compared to $176,000 for the same period ended 2000. Non-interest
income for the six months ended June 30, 2001 totaled $353,000 compared to
$386,000 for the same period ended 2000. The decrease for the six months ended
June 30, 2001 compared to the same period in 2000 is primarily the result of a
non-recurring recovery of operational accruals realized in the first quarter of
2000.


Noninterest
Expense


Noninterest Expenses represent
salaries, occupancy expenses, professional expenses, outside services and other
miscellaneous expenses necessary to conduct business. Noninterest expense for
the quarter ended June 30, 2001 totaled $1,434,000 compared to $1,426,000 for
the same period during 2000. Noninterest expense for the six months ended June
30, 2001 totaled $2,971,000 compared to $2,889,000 for the same period during
2000.




9
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Income Taxes


The Companys income
tax provision for the first half of 2001 and 2000 was $44,000 and $87,000
resulting in an effective rate of 41.0% on income before taxes and
goodwill amortization.


Balance Sheet
Analysis


Total assets at June 30,
2001 totaled $134.9 million, down from the $135.7 million reported at December
31, 2000. The sale of approximately $10.0 million of investment securities
funded the increase of approximately $10.0 million in loans as the Bank
continues to restructure the balance sheet into higher yielding assets.


Asset Quality


The following table sets forth the
components of non-performing assets and related ratios: (dollar amounts in thousands)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                | June 30, |        | December
      31, |       
|----------------------------------------------- | -------- | ------ | ------------------ | ------
|
|Loans
      90 Days Past Due and Still Accruing |          | $  97  |                    | $  77 
|Loans
      on Nonaccrual                       |          | 327    |                    | 279   
|                                                |          |        |                    |       
|Nonperforming
      Loans                       |          | 424    |                    | 356   
|Other
      Real Estate Owned                   |          |       |                    |      
|                                                |          |        |                    |       
|Nonperforming
      Assets                      |          | $424   |                    | $356  
|                                                |          |        |                    |       
|Nonperforming
      Loans as a Percent          |         
|of
      Total Loans                            |          | 0.45   | %                  | 0.48  
|Allowance
      for Loan Losses as a Percent    |         
|of
      Nonperforming Loans                    |          | 246.46 | %                  | 239.89
|Nonperforming
      Assets as a Percent         |         
|of
      Total Assets                           |          | 0.31   | %                  | 0.26  

|The primary ratios of loan
quality have not changed significantly in the first half of 2001. Non-performing
loans as a percent of total loans increased slightly to 0.45% at June 30, 2001,
compared to 0.38% at December 31, 2000. The allowance for loan losses as a
percent of non-performing loans decreasedto 246.46 % at June 30, 2001,
down from 303.14% at December 31, 2000.


Other
Borrowings


Other borrowings at June
30, 2001 consist of $8.0 million in short-term borrowings from the Federal Home
Loan Bank, $848,000 in long-term borrowings from a correspondent bank and
$600,000 in federal funds purchased.


Additionally, on June 27,
2001 a director lent the Bank $1.3 million in the form of a subordinated note
due and payable at maturity on July 1, 2008. The note bears interest at Prime
plus 200 basis points, payable on a quarterly basis. The purpose of the note is
to provide Tier 2 Capital for the Bank as the Bank continues to grow. See
Capital below for further discussion of the Banks capital ratios.



10
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Trust
Preferred Securities


During the first quarter of
1999 the Company completed an offering of $6.6 million in 11 7/8% Cumulative
Preferred Securities through a wholly owned subsidiary, First Coastal Capital
Trust. Under generally accepted accounting policies, the securities are reported
as liabilities of the Company and the interest payments and amortization of the
related costs of the offering ($1.0 million) are reported as interest expense.
The Trust Preferred Securities mature on December 31, 2028.


Capital


Total shareholders
equity at June 30, 2001 totaled $7.1 million compared to $7.0 million at
December 31, 2000. This increase was primarily attributable to the decrease in
net unrealized loss on available-for-sale investments of $282,000.


The Bank maintains capital
ratios above the Federal regulatory guidelines for a well-capitalized bank. The ratios are as follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               | Regulatory
      Minimum Ratio
      for
      Well-Capitalized |       | June 30,
      2001 |  | December
      31,
      2000 |  
|---------------------------------------------- | ----------------------------------------------------------------- | ----- | ------------------- |  | ----------------------------- | -
|Tier
      1 Capital (to Average Assets)       |                                                                   | 5.00  | %                   |  | 6.26                          | %
|Tier
      1 Capital (to Risk Weighted Assets) |                                                                   | 6.00  | %                   |  | 8.26                          | %
|Total
      Capital (to Risk Weighted Assets)  |                                                                   | 10.00 | %                   |  | 10.73                         | %

|The Companys ratios
at June 30, 2001 were4.17% for Tier 1 capital to risk-weighted assets
and 10.63% for Total capital to risk-weighted assets.


Liquidity


Management is not aware of
any future capital expenditures or other significant demands on commitments that
would severely impair liquidity.




11
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II 
OTHER INFORMATION
|---------------------------

| | Item 1  Legal Proceedings
| | --------------------------

| | Due
to the nature of the banking business, the Company is at times party to various legal
actions; all such actions are of a routine nature and arise in the normal course of
business.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 2  Changes in Securities
| | ------------------------------

| | None
| | ----

| | Item 3  Defaults upon Senior Securities
| | ----------------------------------------

| | None
| | ----

| | Item 4  Submission of Matters to a Vote of Security Holders
| | ------------------------------------------------------------

| | On
May 18, 2001, the Company held its annual shareholders meeting. At that meeting Carole
LaCaze, Paul Deters, Clifford Einstein, Charles Fullerton, Don Griffith, Deborah Marsten,
Thomas Spears and Joseph Wender were elected directors of the Company.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 5  Other Items
| | --------------------

| | None
| | ----

| | Item 6  Exhibits and Reports on Form 8-K
| | -----------------------------------------

| |  | A) |  | ExhibitsNone
| |  | -- |  | ------------

|Reports on Form 8-K
|-------------------

| | None
| | ----

|12
|--

|Signatures


Pursuant to the requirement
of the Securities and Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: August 13, 2001 | First Coastal Bancshares/s/ Don M. Griffith
Don M. GriffithChairman andChief Executive Officer
|--------------------- | ------------------------------------------------------------------------------------------------------------
|                     
|Date: August 13, 2001 | /s/ Deborah A. Marsten
Deborah A. MarstenVice Chairman, Chief FinancialOfficer, and Secretary 

|13
|--