|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

|   |  |                                                                                              
|-- |  | ---------------------------------------------------------------------------------------------
|[] |  | 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) 295-2250


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

|First
Coastal BancsharesSeptember 30, 2001


INDEX


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

|                                                                          | PAGE
|------------------------------------------------------------------------- | ----
|Item 1  Financial Statements                                             |     
|Condensed Consolidated Balance Sheets at September 30, 2001 and           |     
|December 31, 2000                                                         |     
|Condensed Consolidated Statements of Income for the Three                 |     
|Months and Nine Months Ended September 30, 2001 and 2000                  |     
|Condensed Consolidated Statements of Changes in Shareholders Equity from |     
|January 1, 2000 through September 30, 2001                                |     
|Condensed Consolidated Statements of Cash Flows for the Nine              |     
|Months Ended September 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)
|------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                          | September 30,2001 | December 31,2000
|--------------------------------------------------------- | ----------------- | ----------------
|Cash and Due From Bank                                    |                   | $     6,508     
|Federal Funds Sold                                        |                   | 10,850          
|                                                          |                   |                 
|CASH AND CASH EQUIVALENTS                                 |                   | 17,358          
|                                                          |                   |                 
|Investment Securities, net                                |                   | 12,938          
|                                                          |                   |                 
|Federal Reserve and Federal Home Loan Bank Stock, at Cost |                   | 982             
|                                                          |                   |                 
|Loans                                                     |                   | 94,876          
|Allowance for Loan Losses                                 |                   | (1,041          
|                                                          |                   |                 
|NET LOANS                                                 |                   | 93,835          
|                                                          |                   |                 
|Premises and Equipment, net                               |                   | 678             
|Goodwill, net                                             |                   | 4,745           
|Accrued Interest and Other Assets                         |                   | 3,568           
|                                                          |                   |                 
|                                                          |                   | $ 134,104       
|                                                          |                   |                 
|Noninterest-Bearing Deposits                              |                   | $   31,323      
|Interest-Bearing Deposits                                 |                   | 86,271          
|                                                          |                   |                 
|TOTAL DEPOSITS                                            |                   | 117,594         
|                                                          |                   |                 
|Other Borrowings                                          |                   | 2,148           
|Company Obligated Mandatorily Redeemable                  |                  
|Preferred Securities of Subsidiary Trust Holding          |                  
|Solely Junior Subordinated Debentures                     |                   | 6,600           
|Accrued Interest and Other Liabilities                    |                   | 680             
|                                                          |                   |                 
|TOTAL LIABILITIES                                         |                   | 127,022         
|                                                          |                   |                 
|Preferred Stock                                           |                   | 1,993           
|Common Shares                                             |                   | 6,566           
|Accumulated Deficit                                       |                   | (1,399          
|Accumulated Other Comprehensive Income                    |                   | (78             
|                                                          |                   |                 
|TOTAL SHAREHOLDERS EQUITY                                |                   | 7,082           
|                                                          |                   |                 
|                                                          |                   | $ 134,104       
|                                                          |                   |                 

|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 EndedSeptember 30, |         | For the Nine Months EndedSeptember 30,
|-------------------------- | --------------------------------------- | ------- | --------------------------------------
|
|Interest Income            |                                         | $ 2,378 |                                       
|Interest Expense           |                                         | 1,038   |                                       
|                           |                                         |         |                                       
|Net Interest Income        |                                         | 1,340   |                                       
|                           |                                         |         |                                       
|Provision for Loan Losses  |                                         |        |                                       
|                           |                                         |         |                                       
|Net Interest Income after  |                                        
|Provision for Loan Losses  |                                         | 1,340   |                                       
|                           |                                         |         |                                       
|Noninterest Income         |                                         | 205     |                                       
|Noninterest Expense        |                                         | 1,546   |                                       
|                           |                                         |         |                                       
|Income (Loss) Before Taxes |                                         | (1      | )                                     
|                           |                                         |         |                                       
|Income Taxes               |                                         | 55      |                                       
|                           |                                         |         |                                       
|Net Loss                   |                                         | $   (56 | )                                     
|                           |                                         |         |                                       
|Per Share Data:            |                                        
|Net Loss - Basic           |                                         | $(0.09  | )                                     
|Net Loss - Diluted         |                                         | $(0.09  | )                                     

|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)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                              | PreferredStock |         | CommonStock |         | ComprehensiveIncome |          | AccumulatedDeficit |         | AccumulatedOtherComprehensiveIncome |         | Total
|--------------------------------------------------------------------------------------------- | -------------- | ------- | ----------- | ------- | ------------------- | -------- | ------------------ | ------- | ----------------------------------- | ------- | -----
|January 1, 2000                                                                               |                | $ 1,993 |             | $ 6,527 |                     |          |                    | $(721   | )                                   | $(1,210 | )    
|                                                                                              |                |         |             |         |                     |          |                    |         |                                     |         |      
|Sale of Treasury Shares                                                                       |                |         |             | 24      |                     |          |                    |         |                                     |         |      
|Dividends - Preferred Stock                                                                   |                |         |             |         |                     |          |                    | (214    | )                                   |         |      
|Comprehensive Income                                                                          |               
|Net Loss                                                                                      |                |         |             |         |                     | $  (177  | )                  | (177    | )                                   |         |      
|Change in Unrecognized Loss                                                                   |               
|of Securities Available for                                                                   |               
|Sale, net of Taxes of $530                                                                    |                |         |             |         |                     | 762      |                    |         |                                     | 762     |      
|                                                                                              |                |         |             |         |                     |          |                    |        
|Comprehensive Loss                                                                            |                |         |             |         |                     | $    585 |                   
|                                                                                              |                |         |             |         |                     |          |                    |        
|                                                                                              |                |         |             |         |                     |          |                    |        
|                                                                                              |                |         |             |         |                     |          |                    |         |                                     |         |      
|December 31, 2000                                                                             |                | 1,993   |             | 6,551   |                     |          |                    | (1,112  | )                                   | (448    | )    
|                                                                                              |                |         |             |         |                     |          |                    |         |                                     |         |      
|Dividends - Preferred Stock                                                                   |                |         |             |         |                     |          |                    | (162    | )                                   |         |      
|Sale of Treasury Shares                                                                       |                |         |             | 15      |                     |          |                    |         |                                     |         |      
|Comprehensive Income                                                                          |               
|Net Loss                                                                                      |                |         |             |         |                     | $  (125  | )                  | (125    | )                                   |         |      
|Change in Unrecognized    Loss of Securities
    Available for
    Sale, net of Taxes of $257 |                |         |             |         |                     | 370      |                    |         |                                     | 370     |      
|                                                                                              |                |         |             |         |                     |          |                    |        
|Comprehensive Income                                                                          |                |         |             |         |                     | $    245 |                   
|                                                                                              |                |         |             |         |                     |          |                    |        
|                                                                                              |                |         |             |         |                     |          |                    |         |                                     |         |      
|September 30, 2001                                                                            |                | $ 1,993 |             | $ 6,566 |                     |          |                    | $(1,399 | )                                   | $(78    | )    
|                                                                                              |                |         |             |         |                     |          |                    |         |                                     |         |      

|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 Nine Months EndedSeptember 30,
|------------------------------------------------------ | --------------------------------------
|
|OPERATING ACTIVITIES                                   |                                       
|Net Loss                                               |                                       
|Adjustments to Reconcile Net Loss to                   |                                       
|Net Cash Provided (Used) by Operating Activities:      |                                       
|Depreciation and Amortization                          |                                       
|Provision for Loan Losses                              |                                       
|Other Items - Net                                      |                                       
|                                                       |                                       
|NET CASH PROVIDED (USED)                               |                                       
|BY OPERATING ACTIVITIES                                |                                       
|                                                       |                                       
|INVESTING ACTIVITIES                                   |                                       
|Purchases of Investment Securities                     |                                       
|Sale and Maturities of Investment Securities           |                                       
|Net Change in Federal Reserve and Home Loan Bank Stock |                                       
|Net Change in Loans                                    |                                       
|Proceeds from the Sale of Other Real Estate Owned      |                                       
|Purchase of Premises and Equipment                     |                                       
|                                                       |                                       
|NET CASH PROVIDED (USED)                               |                                       
|BY INVESTING ACTIVITIES                                |                                       
|                                                       |                                       
|FINANCING ACTIVITIES                                   |                                       
|Net Change in Deposits                                 |                                       
|Net Change in Other Borrowings                         |                                       
|Proceeds from Issuance of Common Stock                 |                                       
|Redemption of Preferred and 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, 2001.


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 nine-month period ended September 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 
Subsequent Events


On October 26, 2001, the
Bank sold its Burbank branch to First State Bank of California, formerly Bank of
Granada Hills. At the time of sale, the branch had $19.6 million in deposits.
The gain on sale was approximately $1.2 million.


In October 2001, the Bank
accrued $500,000 towards litigation expenses.  The expenses are for legal actions
of which the Bank may be party to in its course of business.


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
September 30, 2001, the Company reported a net loss of $56,000, or $0.09 basic
loss per share compared to a net loss of $10,000, or $0.05 basic loss per share
for the same three-month period in 2000. For the nine months ended September 30,
2001, the Company reported a net loss of $125,000, or $0.23 basic loss per share
compared to a net loss of $87,000, or $0.20 basic loss per share for the same
nine-month period in 2000.


The annualized return on
average assets was (0.13)% for the first nine months of 2001 compared to (0.09)%
for 2000. Annualized return on average shareholders equity for the first
nine months of 2001 and 2000 was (2.39)% and (1.76)%, 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 $1,340,000 for the quarter ended September
30, 2001, compared to $1,224,000 for the quarter ended September 30, 2000. Net
interest income was $3,933,000 for the nine months ended September 30, 2001,
compared to $3,827,000 for the nine months ended September 30, 2000.


The total amount of net
interest income increased for the nine months ended September 30, 2001 compared
to the same periods in 2000 due to the decrease in interest expense associated
with the decrease in other borrowings.


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

|                        | Three Months EndedSeptember 30, |            | Nine Months EndedSeptember 30, |            | Year EndedDecember 31,
|----------------------- | ------------------------------- | ---------- | ------------------------------ | ---------- | ----------------------
|
|Interest Income         |                                 | $    2,378 |                                | $    2,543 |                       
|Interest Expense        |                                 | 1,038      |                                | 1,319      |                       
|                        |                                 |            |                                |            |                       
|Net Interest Income     |                                 | $    1,340 |                                | $    1,224 |                       
|                        |                                 |            |                                |            |                       
|Average Earning Assets  |                                 | $120,455   |                                | $118,752   |                       
|Net Interest Margin (1) |                                 | 4.45       | %                              | 4.12       | %                     

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



8
|--------------------------------------------------------------

|Net Interest
Income  Continued


Provision for
Loan Losses


The Company has not
contributed to the allowance for loan losses in the first three quarters of
2001. Total contributions to the allowance for loan losses in the first nine
months of 2000 were $235,000. Management believes that the allowance, which
stands at 1.1% of gross loans at September 30, 2001, is adequate to cover
future losses.


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

|                                | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30, |         
|------------------------------- | ------------------------------- | ------- | ------------------------------ | --------
|
|Allowance, Beginning of Period  |                                 | $ 1,045 |                                | $    854
|Provision for Loan Losses       |                                 |        |                                | 145     
|Recoveries on Loans Charged Off |                                 | 21      |                                | 8       
|                                |                                 |         |                                |         
|                                |                                 | 1,066   |                                | 1,007   
|Less: Loans Charged Off         |                                 | (25     | )                              | (49     
|                                |                                 |         |                                |         
|Allowance, End of Period        |                                 | $ 1,041 |                                | $    958
|                                |                                 |         |                                |         

|Noninterest
Income


Noninterest Income
represents deposit account service charges and other types of non-loan related
fee income. Noninterest income for the quarter ended September 30, 2001 totaled
$205,000 compared to $428,000 for the same period ended 2000. The decrease for
the three months ended September 30, 2001 is primarily the result of an
insurance settlement of $275,000 included in the third quarter of 2000.
Non-interest income for the nine months ended September 30, 2001 totaled
$558,000 compared to $814,000 for the same period ended 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 September 30, 2001 totaled $1,546,000 compared to $1,454,000
for the same period during 2000. Noninterest expense for the nine months ended
September 30, 2001 totaled $4,518,000 compared to $4,343,000 for the same period
during 2000.


Income Taxes


The Companys income
tax provision for the first nine months of 2001 and 2000 was $98,000 and
$150,000 resulting in an effective rate of 41.0% on income before taxes
and goodwill amortization.



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

|Balance Sheet
Analysis


Total assets at September
30, 2001 totaled $134.1 million, down from the $135.7 million reported at
December 31, 2000. The sale of approximately $24.0 million of investment
securities funded the increase of approximately $10.0 million in loans and
reduced borrowings by approximately $9.0 million 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)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          | September 30, |            | December 31,
|----------------------------------------- | ------------- | ---------- | ------------
|
|Loans 90 Days Past Due and Still Accruing |               | $       36 |             
|Loans on Nonaccrual                       |               | 238        |             
|                                          |               |            |             
|Nonperforming Loans                       |               | 274        |             
|Other Real Estate Owned                   |               |           |             
|                                          |               |            |             
|Nonperforming Assets                      |               | $      274 |             
|                                          |               |            |             
|Nonperforming Loans as a Percent          |              
|of Total Loans                            |               | 0.29%      |             
|Allowance for Loan Losses as a Percent    |              
|of Nonperforming Loans                    |               | 379.93%    |             
|Nonperforming Assets as a Percent         |              
|of Total Assets                           |               | 0.20%      |             

|The primary ratios of loan
quality have continued to improve in the first nine months of 2001.
Non-performing loans as a percent of total loans decreased to 0.29% at September
30, 2001, compared to 0.38% at December 31, 2000. The allowance for loan losses
as a percent of non-performing loans increased to 379.93% at September 30, 2001,
up from 303.14% at December 31, 2000. A portion of this increase is due to net
recoveries of approximately $77,000 during the first nine months of 2001.


Other
Borrowings


Other borrowings at
September 30, 2001 consist of $848,0000 in long-term borrowings from a
correspondent bank and a $1.3 million subordinated note. The Company uses these
sources to fund asset growth and offset fluctuations in demand for deposits.


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. The interest payments are reported as interest
expense and the amortization of the related costs of the offering ($1.0 million)
are reported as other non-interest expense. The Trust Preferred Securities
mature on December 31, 2028.


Capital


Total shareholders
equity at September 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 $370,000.


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

|                                         | RegulatoryMinimum RatioforWell-Capitalized |       | September 30,2001 |  | December 31,2000 |  
|---------------------------------------- | -------------------------------------------- | ----- | ----------------- |  | ---------------- | -
|Tier 1 Capital (to Average Assets)       |                                              | 5.00  | %                 |  | 6.18             | %
|Tier 1 Capital (to Risk Weighted Assets) |                                              | 6.00  | %                 |  | 7.92             | %
|Total Capital (to Risk Weighted Assets)  |                                              | 10.00 | %                 |  | 10.28            | %

|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. See Note 2 of the Consolidated Financial Statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Item 2  Changes in Securities
| | ------------------------------

| | None
| | ----

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

| | None
| | ----

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

| | Item 5  Other Items
| | --------------------

| | None
| | ----

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

| | A)       Exhibits           None
| | --------------------------------

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.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | First Coastal Bancshares                                                                    
|----------------------- | --------------------------------------------------------------------------------------------
|Date: November 14, 2001 | /s/ Don M. GriffithDon M. GriffithChairman andChief Executive Officer                       
|                        |                                                                                             
|Date: November 14, 2001 | /s/ Deborah A. MarstenDeborah A. MarstenVice Chairman, Chief FinancialOfficer, and Secretary

|13
|--