|UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 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, 2002

|    |  |                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------
||_| |  | 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 July 31, 2002 there were
2,162,361 shares of First Coastal Bancshares Common Stock outstanding.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|First Coastal
BancsharesJune 30, 2002


INDEX


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

|                                                                          | PAGE
|------------------------------------------------------------------------- | ----
|Item 1  Financial Statements                                             |     
|Condensed Consolidated Balance Sheets at June 30, 2002 and                |     
|December
      31, 2001                                                   |     
|Condensed Consolidated Statements of Income for the Three                 |     
|Months
      and Six Months Ended June 30, 2002 and 2001                  |     
|Condensed Consolidated Statements of Changes in Shareholders Equity from |     
|January
      1, 2001 through June 30, 2002                               |     
|Condensed Consolidated Statements of Cash Flows for the Six               |     
|Months
      Ended June 30, 2002 and 2001                                 |     
|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,
      2002 | December
      31,
      2001
|--------------------------------------------------------------- | ------------------- | -----------------------------
|Cash
      and Due From Bank                                    |                     | $     5,653                  
|Federal
      Funds Sold                                        |                     | 8,050                        
|                                                                |                     |                              
|Cash
      and Cash Equivalents                                 |                     | 13,703                       
|                                                                |                     |                              
|Time
      Deposits in Other Financial Institutions             |                     | 1,864                        
|Investment
      Securities, net                                |                     | 13,940                       
|Federal
      Reserve and Federal Home Loan Bank Stock, at Cost |                     | 768                          
|Loans                                                           |                     | 96,399                       
|Allowance
      for Loan Losses                                 |                     | (1,259                       
|                                                                |                     |                              
|NET
      LOANS                                                 |                     | 95,140                       
|                                                                |                     |                              
|Premises
      and Equipment, net                               |                     | 1,211                        
|Goodwill,
      net                                             |                     | 4,625                        
|Accrued
      Interest and Other Assets                         |                     | 2,945                        
|                                                                |                     |                              
|                                                                |                     | $ 134,196                    
|                                                                |                     |                              
|Noninterest-Bearing
      Deposits                              |                     | $   33,013                   
|Interest-Bearing
      Deposits                                 |                     | 83,825                       
|                                                                |                     |                              
|TOTAL
      DEPOSITS                                            |                     | 116,838                      
|                                                                |                     |                              
|Other
      Borrowings                                          |                     | 1                            
|Company
      Obligated Mandatorily Redeemable                  |                    
|Preferred
      Securities of Subsidiary Trust Holding          |                    
|Solely
      Junior Subordinated Debentures                     |                     | 6,600                        
|Accrued
      Interest and Other Liabilities                    |                     | 785                          
|                                                                |                     |                              
|TOTAL
      LIABILITIES                                         |                     | 124,224                      
|                                                                |                     |                              
|Preferred
      Stock                                           |                     | 1,993                        
|Common
      Shares                                             |                     | 9,584                        
|Accumulated
      Deficit                                       |                     | (1,447                       
|Accumulated
      Other Comprehensive Income                    |                     | (158                         
|                                                                |                     |                              
|TOTAL
      SHAREHOLDERS EQUITY                                |                     | 9,972                        
|                                                                |                     |                              
|                                                                |                     | $ 134,196                    
|                                                                |                     |                              
|                                                                |                     |                              

|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 Nine Months EndedJune 30,
|--------------------------------- | ---------------------------------- | -------- | ---------------------------------
|
|Interest
      Income             |                                    | $2,077   |                                  
|Interest
      Expense            |                                    | 752      |                                  
|                                  |                                    |          |                                  
|Net
      Interest Income         |                                    | 1,325    |                                  
|Provision
      for Loan Losses   |                                    |         |                                  
|                                  |                                    |          |                                  
|Net
      Interest Income after   |                                   
|Provision
      for Loan Losses   |                                    | 1,325    |                                  
|Noninterest
      Income          |                                    | 211      |                                  
|Noninterest
      Expense         |                                    | 1,419    |                                  
|                                  |                                    |          |                                  
|Income
      (Loss) before Taxes  |                                    | 117      |                                  
|Income
      Taxes                |                                    | 34       |                                  
|                                  |                                    |          |                                  
|Net
      Income (Loss)           |                                    | $     83 |                                  
|                                  |                                    |          |                                  
|Per
      Share Data:             |                                   
|Net
      Income (Loss) - Basic   |                                    | $  0.02  |                                  
|Net
      Income (Loss) - Diluted |                                    | $  0.02  |                                  

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


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

|Item 1.
Financial Statements  Continued


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

|                                        | Preferred
      Stock | Amount | Comprehensive
      Income | Accumulated
      Deficit | Accumulated
      Other
      Comprehensive
      Income | Total
|--------------------------------------- | --------------------- | ------ | -------------------------- | ------------------------- | -------------------------------------------------------- | -----
|January
1, 2001                         |                       | $1,993 |                            |                           |                                                          |      
|Sale
      of Treasury Shares           |                       |        |                            |                           |                                                          |      
|Dividends
      - Preferred Stock       |                       |        |                            |                           |                                                          |      
|Comprehensive
Income                    |                      
|Net Loss                                |                       |        |                            |                           |                                                          |      
|Change
      in Unrecognized Gains      |                      
|of
      Securities Available for       |                      
|Sale,
      net of taxes of $236        |                       |        |                            |                           |                                                          |      
|Less
      Reclassification Adjustments |                      
|for
      Gains included in Net         |                      
|Loss,
      net of Taxes of $17         |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|Comprehensive
      Income              |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|December
31, 2001                       |                       | 1,993  |                            |                           |                                                          |      
|Dividends
      - Preferred Stock       |                       |        |                            |                           |                                                          |      
|Sale
      of Stock                     |                       |        |                            |                           |                                                          |      
|Comprehensive
Income                    |                      
|Net Income                              |                       |        |                            |                           |                                                          |      
|Change
      in Unrecognized Loss       |                      
|of
      Securities Available for       |                      
|Sale,
      net of Taxes of $16         |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|Comprehensive
      Income              |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      
|June
30, 2002                           |                       | $1,993 |                            |                           |                                                          |      
|                                        |                       |        |                            |                           |                                                          |      

|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 Ended
      June 30,
|------------------------------------------------------------ | ---------------------------------------------
|
|OPERATING
      ACTIVITIES                                   |                                              
|Net
      Income (Loss)                                      |                                              
|Adjustments
      to Reconcile Net Income (Loss) to          |                                              
|Net
      Cash Provided by Operating Activities:             |                                              
|Depreciation
      and Amortization                          |                                              
|Provision
      for Loan Losses                              |                                              
|Other
      Items - Net                                      |                                              
|                                                             |                                              
|NET
      CASH PROVIDED BY                                   |                                              
|OPERATING
      ACTIVITIES                                   |                                              
|INVESTING
      ACTIVITIES                                   |                                              
|Net
      Change in Time Deposits                            |                                              
|Purchases
      of Investment Securities                     |                                              
|Sale
      and Maturities of Investment Securities           |                                              
|Net
      Change in Federal Reserve and Home Loan Bank Stock |                                              
|Net
      Change in Loans                                    |                                              
|Purchase
      of Premises and Equipment                     |                                              
|                                                             |                                              
|NET
      CASH PROVIDED BY                                   |                                              
|INVESTING
      ACTIVITIES                                   |                                              
|FINANCING
      ACTIVITIES                                   |                                              
|Net
      (Decrease) Increase in Deposits                    |                                              
|Net
      Change in Other Borrowings                         |                                              
|Proceeds
      from Issuance of Common Stock                 |                                              
|Dividends                                                    |                                              
|                                                             |                                              
|NET
      CASH (USED) PROVIDED                               |                                              
|BY
      FINANCING ACTIVITIES                                |                                              
|                                                             |                                              
|INCREASE
      IN CASH                                       |                                              
|AND
      CASH EQUIVALENTS                                   |                                              
|Cash and Cash Equivalents at Beginning of Period             |                                              
|                                                             |                                              
|CASH
      AND CASH EQUIVALENTS                              |                                              
|AT
      END OF PERIOD                                       |                                              
|                                                             |                                              

|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,
2002.


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, 2002 and 2001, reflect all adjustments, consisting only of normal
recurring accruals and provisions, necessary for a fair presentation thereof.


Note 2  Sale of Branch


Effective October 26, 2001, the Bank
sold its Burbank branch to another financial institution for a net gain of $1.2 million.
In connection with the sale, the Bank transferred deposits of $19.6 million and loans of
$3.5 million to the acquirer as well as loaned the acquirer $800,000 in the form of a
subordinated note which is included in commercial loans.


Note 3  Earnings Per Share


Effective December 31, 1997, the
Company adopted Statement of Financial Accounting Standards (SFAS) 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.


Note 4  Goodwill and Other
Intangible Assets



In June 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 142, Accounting for Goodwill and
Other Intangible Assets, (SFAS 142). Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be subject to
annual impairment tests in accordance with the new statements.




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

|The Company adopted SFAS 142 on
January 1, 2002. Upon adoption, the Company no longer amortized goodwill. The following
table represents the effect of the adoption of SFAS 142 for the quarter and six-months
ended June 30, 2002, and the year ending December 31, 2001.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | Quarter
      Ended
      June 30, |      | Six Months
      Ended
      June 30, |   | Year Ended
      December 31,
|------------------------------------ | ---------------------------------- | ---- | ------------------------------------- | - | -----------------------------
|
|Net
      Income                     | $                                  | 83   |                                       | $ | (13                          
|Addback:
      Goodwill Amortization |                                    |     |                                       |   | 110                          
|                                     |                                    |      |                                       |   |                              
|Adjusted
      Net Income            | $                                  | 83   |                                       | $ | 97                           
|                                     |                                    |      |                                       |   |                              
|Basic
      Earnings per Share:     
|Net
      Income                     | $                                  | 0.02 |                                       | $ | (0.05                        
|Goodwill
      Amortization          |                                    |     |                                       |   | 0.09                         
|                                     |                                    |      |                                       |   |                              
|Adjusted
      Net Income            | $                                  | 0.02 |                                       | $ | 0.04                         
|                                     |                                    |      |                                       |   |                              
|Diluted
      Earnings per Share:   
|Net
      Income                     | $                                  | 0.02 |                                       | $ | (0.05                        
|Goodwill
      Amortization          |                                    |     |                                       |   | 0.09                         
|                                     |                                    |      |                                       |   |                              
|Adjusted
      Net Income            | $                                  | 0.02 |                                       | $ | 0.04                         
|                                     |                                    |      |                                       |   |                              

|The Company performed its initial
impairment test of goodwill as of January 1, 2002 and has determined that no goodwill
impairment existed as of the initial adoption of SFAS 142. Goodwill was tested for
impairment using the combined banking operations as the reporting unit. The fair value of
the reporting unit was estimated using multiples of earnings and tangible book value,
which are commonly used for valuation purposes and publicly reported in the community
banking industry.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8
|-

|Forward-Looking Statements


This Form 10-QSB contains various
forward-looking statements and includes assumptions concerning the Companys
beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions,
operations, future results, and prospects, including statements that include the words
may, could, should, would, believe, expect, will, shall, anticipate, estimate, intend,
plan or similar expressions. These forward-looking statements are based upon current
expectations and are subject to risk and uncertainties. In connection with the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company
provides the following cautionary statement identifying important factors (some of which
are beyond the Company s control), which could cause the actual results, or events
to differ materially from those set forth in or implied by the forward-looking statements
and related assumptions.


Such factors include the following:
(i) risk and cost resulting from the opening of a new office or offices and adding
employees; (ii) the effect of changing regional and national economic conditions,
especially as they affect the income and cash flow of business and consumer borrowers,
their ability to repay loans, and their need for borrowed funds; (iii) the effects of
trade, monetary and fiscal policies and laws, including interest rate policies of the
Board of Governors of the Federal Reserve System; (iv) significant changes in interest
rates and prepayment speeds; (v) inflation, stock and bond market, and monetary
fluctuations; (vi) credit risks of commercial, SBA, real estate, consumer, and other
lending activities, including risks related to changes in the values of real estate and
other security for loans; (vii) changes in federal and state banking and financial
services laws and regulations; (viii) the presence in the Companys market area of
competitors with greater financial resources than the Company; (ix) the timely
development of competitive new products and services by the Company and the acceptance of
those products and services by customers and regulators (when required); (x) the secure
and effective implementation of new technology (including Internet services) for both the
delivery of services and internal operations; (xi) the willingness of customers to
substitute competitorsproducts and services for those of the Company and vice
versa; (xii) changes in consumer and business spending and savings habits; (xiii)
unanticipated regulatory or judicial proceedings; and (xiv) other external developments
which could materially impact the Company s operational and financial performance.


Income Summary


For the three months ended June 30,
2002, the Company reported net income of $83,000, or $0.02 basic income per share
compared to a net loss of $(13,000), or $(0.05) basic loss per share for the same
three-month period in 2001. For the six months ended June 30, 2002, the Company reported
net income of $137,000, or $0.02 basic income per share compared to a net loss of
$(69,000), or $(0.15) basic loss per share for the same six-month period in 2001. As
discussed in Note 4, the primary reason for the improvement in earnings was the
discontinuance of goodwill amortization in 2002.


The annualized return on average
assets was 0.10% for the first half of 2002 compared to (0.11)% for 2001. Annualized
return on average shareholdersequity for the first half of 2002 and 2001 was 1.63%
and (1.96)%, respectively.








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

|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 $1,325,000 for the quarter ended
June 30, 2002, compared to $1,274,000 for the quarter ended June 30, 2001. Net interest
income was $2,619,000 for the six months ended June 30, 2002, compared to $2,593,000 for
the six months ended June 30, 2001.


The total amount of net interest
income increased slightly for the quarter and six months ended June 30, 2002 compared to
the same period in 2001. This increase was primarily due to the re-positioning of the
balance sheet from the sale of the Burbank branch. Although the prime rate has declined
by 200 basis points since June 30, 2001, the Company was able to limit its decline in net
interest margin to only 4 basis pointscomparing the first half of 2002 to the same
period in 2001. Net interest margin for the second quarter of 2002 actually exceeded the
2001 year-to-date net interest margin by 12 basis points.


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   |                             |  | $                          | 2,077   |                        
|Interest Expense        |                             |  |                            | 752     |                        
|                        |                             |  |                            |         |                        
|Net Interest Income     |                             |  | $                          | 1,325   |                        
|                        |                             |  |                            |         |                        
|Average Earning Assets  |                             |  | $                          | 119,616 |                        
|Net Interest Margin (1) |                             |  |                            | 4.43    | %                      

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


Provision for Loan Losses


During the first and second quarter
of 2002 and 2001, the Company did not contribute to the allowance for loan losses.
Management believes that the allowance, which stands at 1.3% of gross loans at June 30,
2002, is adequate to cover future losses.



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

|Changes in the allowance for loan
losses for the quarter and six months ended June 30, 2002 and 2001 are as follows (dollar
amounts in thousands):
|--------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | Three Months Ended June 30, |  | Six Months Ended June 30,
|------------------------------------ | --------------------------- |  | -------------------------
|
|Allowance,
      Beginning of Period |                             |  | $                        
|Provision for Loan Losses            |                             |  |                          
|Recoveries on Loans Charged Off      |                             |  |                          
|                                     |                             |  |                          
|                                     |                             |  |                          
|Less:  Loans Charged Off             |                             |  |                          
|                                     |                             |  |                          
|Allowance, End of Period             |                             |  | $                        
|                                     |                             |  |                          

|Noninterest Income


Noninterest income represents
deposit account service charges and other types of non-loan related fee income.
Noninterest income for the quarter ended June 30, 2002 totaled $211,000 compared to
$177,000 for the same period ended 2001. Noninterest income for the six months ended June
30, 2002 totaled $398,000 compared to $353,000 for the same period ended 2001. The
increase in 2002 relates to the growth in demand deposit accounts, the primarily source
of service charges and fees.


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, 2002 totaled $1,419,000 compared to $1,434,000 for the same period during
2001. Noninterest expense for the six months ended June 30, 2002 totaled $2,833,000
compared to $2,971,000 for the same period during 2001. The decrease is primarily from
the discontinuance of the amortization of goodwill, which was $110,000 in the second
quarter of 2001 and $224,000 for the first six months of 2001. The reduction in salaries
and occupancy expense associated with the sale of the Burbank branch was offset by
additional costs that resulted from the relocation of the Marina branch, as well as
occupancy and marketing costs for the new Manhattan Beach branch.


Income Taxes


The Companys income tax
provision for the first half of 2002 and 2001 was $47,000 and $44,000 resulting in an
effective rate of 25.5% and 22.1%, respectively on income before taxes and goodwill
amortization.


Balance Sheet Analysis


Total assets at June 30, 2002
totaled $134.2 million, up $9.6 million from the $124.6 million reported at December 31,
2001. This increase in assets was funded primarily by demand deposits, which grew $8.4
million as the Company continued to focus on increasing its relationship based banking
services. The Company also raised $3 million of capital in a private placement and
retired $2.7 million in other borrowings in 2002.





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

|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 | $        | 174    |                   
|Loans
      on Nonaccrual                       |          | 132    |                   
|                                                |          |        |                   
|Nonperforming
      Loans                       |          | 306    |                   
|Classified
      Investments                    |          |       |                   
|                                                |          |        |                   
|Nonperforming
      Assets                      | $        | 306    |                   
|                                                |          |        |                   
|Nonperforming
      Loans as a Percent         
|of
      Total Loans                            |          | 0.32   | %                 
|Allowance
      for Loan Losses as a Percent   
|of
      Nonperforming Loans                    |          | 411.44 | %                 
|Nonperforming
      Assets as a Percent        
|of
      Total Assets                           |          | 0.23   | %                 

|Non-performing loans as a percent of
total loans increased to 0.32% at June 30, 2002, compared to 0.25% at December 31, 2001.
The allowance for loan losses as a percent of non-performing loans decreasedto
411.44% at June 30, 2002, down from 516.53% at December 31, 2001. Total asset quality has
improved with the elimination in 2002 of the classified investments outstanding at
December 31, 2002.


Other Borrowings


During 2002, the Company retired the
majority of its other borrowings, primarily through the proceeds received from the $3
million private placement of common stock.


Trust Preferred Securities


During the first quarter of 1999 the
Company completed an offering of $6.6 million in 11?% 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, 2002 totaled $10.0 million compared to $7.0 million at December 31, 2001. This
increase was primarily attributable to the private placement of 909,091 shares of common
stock for $3 million.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12
|--

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

|                                         | RegulatoryMinimum Ratiofor"Well-Capitalized" | June 30,2002 | December 31,2001
|---------------------------------------- | -------------------------------------------- | ------------ | ----------------
|Tier
      1 Capital (to Average Assets) |                                              |              |                 
|Tier 1 Capital (to Risk Weighted Assets) |                                              |              |                 
|Total Capital (to Risk Weighted Assets)  |                                              |              |                 

|The Company is subject to similar
requirements administered by its primary regulator, the Federal Reserve Board. For
capital adequacy purposes, the Company must maintain total capital to risk-weighted
assets and Tier 1 capital to risk-weighted assets of 8.0% and 4.0%, respectively. Its
total capital to risk-weighted assets and Tier 1 capital to risk-weighted assets was
13.17% and 8.56%, respectively, at June 30, 2002 and 10.7% and 3.7%, respectively, at
December 31, 2001.


Liquidity


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

|13
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|PART II  OTHER INFORMATION
|---------------------------

| | Item 1  Legal Proceedings
| | --------------------------

| | The
Bank is, from time to time, subject to various pending and threatened legal actions,
which arise out of the normal course of its 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
June 21, 2002, the Company held its annual shareholders meeting. At that meeting Carole
LaCaze, Paul Deters, Charles Fullerton, Don Griffith, Peter Hocson, 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)
Exhibits
| | -----------

| | 99.1
- Certification of CEO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
| | ---------------------------------------------------------------------------------

| | 99.2
- Certification of CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
| | ---------------------------------------------------------------------------------

| | B)
Reports on Form 8-K
| | ----------------------

| | None
| | ----

|14
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|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.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      | First Coastal Bancshares                                                                    
|--------------------- | --------------------------------------------------------------------------------------------
|Date: August 12, 2002 | /s/ Don M. GriffithDon M. GriffithChairman andChief Executive Officer                       
|                      |                                                                                             
|Date: August 12, 2002 | /s/ Deborah A. MarstenDeborah A. MarstenVice Chairman, Chief FinancialOfficer, and Secretary

|15
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