|UNITED STATES


SECURITIES AND
EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM 10-QSB


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

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

|For the quarterly period ended
September 30, 2000
|-------------------------------------------------

|[   ] |  | 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)275 Main Street, El Segundo, California
     (Address of principal executive offices) | NO. 95-4693574
     (IRS Employer Identification No.)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, 2000 there
were 1,238,076 shares of First Coastal Bancshares Common Stock outstanding.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|First Coastal
BancsharesSeptember 30, 2000


INDEX


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

|                                                                          | PAGE
|------------------------------------------------------------------------- | ----
|Item 1 - Financial Statements                                             |     
|Condensed Consolidated Balance Sheets at September 30, 2000 and           |     
|December 31, 1999                                                         |     
|Condensed Consolidated Statements of Income for the Three                 |     
|Months and Nine Months Ended September 30, 2000 and 1999                  |     
|Condensed Consolidated Statements of Changes in Shareholders Equity from |     
|January 1, 1999 through September 30, 2000                                |     
|Condensed Consolidated Statements of Cash Flows for the Nine              |     
|Months Ended September 30, 2000 and 1999                                  |     
|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                                 |     

|Item 1.  
Financial Statements


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

|                                                          | September 30,2000 | December 31,1999
|--------------------------------------------------------- | ----------------- | ----------------
|Cash and Due From Bank                                    |                   | $     9,024     
|Short Term Investments                                    |                   | 300             
|                                                         
|CASH AND CASH EQUIVALENTS                                 |                   | 9,324           
|Investment Securities, net                                |                   | 38,376          
|Federal Reserve and Federal Home Loan Bank Stock, at Cost |                   | 1,653           
|Loans                                                     |                   | 76,018          
|Allowance for Loan Losses                                 |                   | (958            
|                                                         
|NET LOANS                                                 |                   | 75,060          
|Premises and Equipment, net                               |                   | 678             
|Other Real Estate Owned, net                              |                   |                
|Goodwill, net                                             |                   | 5,150           
|Accrued Interest and Other Assets                         |                   | 4,665           
|                                                         
|                                                          |                   | $ 134,906       
|                                                         
|Noninterest-Bearing Deposits                              |                   | $   33,700      
|Interest-Bearing Deposits                                 |                   | 71,073          
|                                                         
|TOTAL DEPOSITS                                            |                   | 104,773         
|Other Borrowings                                          |                   | 15,935          
|Company Obligated Mandatorily Redeemable                  |                  
|Preferred Securities of Subsidiary Trust Holding          |                  
|Solely Junior Subordinated Debentures                     |                   | 6,600           
|Accrued Interest and Other Liabilities                    |                   | 1,038           
|                                                         
|TOTAL LIABILITIES                                         |                   | 128,346         
|Preferred Stock                                           |                   | 1,993           
|Common Shares                                             |                   | 6,544           
|Accumulated Deficit                                       |                   | (970            
|Accumulated Other Comprehensive Income                    |                   | (1,007          
|                                                         
|TOTAL SHAREHOLDERS EQUITY                                |                   | 6,560           
|                                                         
|                                                          |                   | $ 134,906       
|                                                         

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

|Item 1.  
Financial Statements  Continued


First Coastal Bancshares and Subsidiaries
     Condensed 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            |                                         | $ 2,543                               
|Interest Expense           |                                         | 1,319                                 
|                          
|Net Interest Income        |                                         | 1,224                                 
|Provision for Loan Losses  |                                         | 145                                   
|                          
|Net Interest Income after  |                                        
|Provision for Loan Losses  |                                         | 1,079                                 
|Noninterest Income         |                                         | 428                                   
|Noninterest Expense        |                                         | 1,454                                 
|                          
|Income (Loss) Before Taxes |                                         | 53                                    
|Income Taxes               |                                         | 63                                    
|                          
|Net Loss                   |                                         | $   (10                               
|                          
|Per Share Data:            |                                        
|Net Loss - Basic           |                                         | $(0.05                                
|Net Loss - Diluted         |                                         | $(0.05                                

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

|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, 1999                   |                | $ 2,658     |                     | $ 3,673            |                                     |           
|Redemption of Preferred Stock     |                | (586        | )                   |                    |                                     |           
|Conversion of Preferred to        |               
|Common Stock                      |                | (79         | )                   | 79                 |                                     |           
|Sale of Treasury Shares           |                |             |                     | 115                |                                     |           
|Net Proceeds from Stock Offering  |                |             |                     | 1,901              |                                     |           
|Dividends - Preferred Stock       |                |             |                     |                    |                                     |           
|Common Stock Repurchased          |                |             |                     | (116               | )                                   |           
|Exercise of Warrants              |                |             |                     | 875                |                                     |           
|Common Shares Reissued            |               
|Comprehensive Income              |               
|Net Loss                          |                |             |                     |                    |                                     | $    (391 
|Change in Unrecognized Loss       |               
|of Securities Available for       |               
|Sale, net of Taxes of $812        |                |             |                     |                    |                                     | (1,166    
|Less Reclassification Adjustments |               
|for Gains included in Net Loss    |               
|net of taxes of $9                |                |             |                     |                    |                                     | (13       
|                                 
|Comprehensive Loss                |                |             |                     |                    |                                     | $ (1,570  
|                                 
|                                 
|December 31, 1999                 |                | 1,993       |                     | 6,527              |                                     |           
|Redemption of Common Stock        |                |             |                     | (1                 | )                                   |           
|Dividends - Preferred Stock       |                |             |                     |                    |                                     |           
|Common Shares Issued              |                |             |                     | 18                 |                                     |           
|Comprehensive Income              |               
|Net Loss                          |                |             |                     |                    |                                     | $      (87
|Change in Unrecognized Loss       |               
|of Securities Available for       |               
|Sale, net of Taxes of $141        |                |             |                     |                    |                                     | 203       
|                                 
|Comprehensive Income              |                |             |                     |                    |                                     | $      116
|                                 
|                                 
|September 30, 2000                |                | $ 1,993     |                     | $ 6,544            |                                     |           
|                                 

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

|Item 1.  
Financial Statements  Continued


First Coastal Bancshares and Subsidiaries
     Condensed 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 (Used) Provided by Operating Activities:       |                                       
|Depreciation and Amortization                           |                                       
|Provision for Loan Losses                               |                                       
|Other Items - Net                                       |                                       
|                                                       
|NET CASH (USED) PROVIDED 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 Cash and Cash Equivalents from AIB Acquisition      |                                       
|Net Change in Loans                                     |                                       
|Proceeds from the Sale of Other Real Estate Owned       |                                       
|Purchase of Premises and Equipment                      |                                       
|                                                       
|NET CASH USED BY INVESTING ACTIVITIES                   |                                       
|                                                       
|FINANCING ACTIVITIES                                    |                                       
|Net Change in Deposits                                  |                                       
|Net Change in Other Borrowings                          |                                       
|Trust Preferred Securities, net of Costs                |                                       
|Proceeds from Supplemental Stock Offering, net of Costs |                                       
|Proceeds from Issuance of Common Stock                  |                                       
|Proceeds from Exercise of Warrants and Options          |                                       
|Redemption of Preferred and Common Stock                |                                       
|Dividends                                               |                                       
|                                                       
|NET CASH 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.
|-------------------------------------------------------------------------------------

|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, 2000 and Form SB-2 filed on
February 12, 1999.


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


Operating results for
interim periods are not necessarily indicative of operating results for an
entire fiscal year. In the opinion of management, the unaudited financial
information for the nine-month period ended September 30, 2000 and 1999, 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 
Acquisition of American Independent Bank, N.A. (AIB)


On March 8, 1999, the Bank
acquired 100% of the outstanding common stock of American Independent Bank, N.A.
(AIB) for approximately $6.5 million in cash. AIB had total assets of
approximately $38 million on March 8, 1999. The acquisition was accounted for
using the purchase method of accounting in accordance with Accounting Principles
Board Opinion No, 16. Business Combinations. Under this method of
accounting, the purchase price was allocated to the assets, deposits and
liabilities assumed based on their fair values as of the acquisition date, which
were not materially different from their book values. The financial statements
include the operations of AIB from the date of the acquisition. Goodwill arising
from the transaction totaled approximately $4.0 million and is being amortized
over fifteen years on a straight-line basis.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 2 
Acquisition of American Independent Bank, N.A.  Continued


The following table sets
forth selected pro forma unaudited combined financial results of the Company and
AIB. The pro forma operating data reflects the effect of the acquisition of AIB
as if it was consummated at the beginning of each period presented. The pro
forma results are not indicative of the results that would have occurred had the
acquisition been in effect for the full periods presented, nor are they
indicative of the results of future operations.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       | Three Months EndedSeptember 30, | Nine Months EndedSeptember 30,
|-------------------------------------- | ------------------------------- | ------------------------------
|
|
|Interest and Noninterest Income:       |                                 |                               
|The Company                            |                                 | $ 2,971                       
|AIB - Pre-Merger                       |                                 |                              
|                                      
|Total                                  |                                 | $ 2,971                       
|                                      
|Net Loss:                              |                                
|The Company                            |                                 | $   (10                       
|AIB - Pre-Merger                       |                                 |                              
|Interest Costs - Pro Forma, net of Tax |                                 |                              
|Goodwill Amortization- Pro Forma       |                                 |                              
|                                      
|Total                                  |                                 | $   (10                       
|                                      
|Per Share Data:                        |                                
|Basic                                  |                                 | $(0.05                        
|Diluted                                |                                 | $(0.05                        

|These pro forma disclosures
include adjustment to interest expense from the funds borrowed to fund a portion
of the purchase as well as adjustments to per share data to reflect the issuance
of common stock to fund the balance of the purchase. No adjustments have been
reflected in these amounts for the anticipated cost savings to be derived from
this merger.


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

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



Income Summary


For the three months ended
September 30, 2000, the Company reported a net loss of $10,000, or $0.05 basic
loss per share compared to a net loss of $69,000, or $0.10 basic loss per share
for the same three-month period in 1999. For the nine months ended September 30,
2000, the Company reported a net loss of $87,000, or $0.20 basic loss per share
compared to a net loss of $207,000, or $0.35 basic loss per share for the same
nine-month period in 1999.


After adding back the
amortization of intangible assets, tangible net income was $104,000 and $44,000
for the three months ended September 30, 2000 and 1999, respectively, and $257,000
and $71,000 for the nine months ended September 30, 2000 and 1999, respectively.


The annualized return on
average assets was (0.09)% for the first nine months of 2000 compared to (0.25)%
for 1999. Annualized return on average shareholders equity for the first
nine months of 2000 and 1999 was (1.76)% and (3.79)%, 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 $1,224,000 for the quarter ended September
30, 2000, compared to $1,228,000 for the quarter ended September 30, 1999. Net
interest income was $3,827,000 for the nine months ended September 30, 2000,
compared to $3,258,000 for the nine months ended September 30, 1999.


The total amount of net
interest income increased for the nine months ended September 30, 2000 compared
to the same period in 1999 due to the significant increase in interest-earning
assets. This increase was due to the combined effect of the acquisition of AIB
as well as overall growth in investments funded by short-term 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         |                                 | $    2,543                     |                       
|Interest Expense        |                                 | 1,319                          |                       
|                       
|Net Interest Income     |                                 | $    1,224                     |                       
|                       
|Average Earning Assets  |                                 | $118,752                       |                       
|Net Interest Margin (1) |                                 | 4.12                           | %                     

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

|Net Interest
Income  Continued


The net interest margin
decreased in the first nine months of 2000 compared to the same period in 1999
partially due to the 100 basis point increase in the prime rate during the first
half of 2000. In order to be competitive and attract new deposits the Company
increased rates on their money market and certificate of deposit accounts.


Further contributing to the
decrease in net interest margin was the purchase of $40 million in CAP
derivatives. The CAPs were purchased for $255,500 and are being amortized
over two to three years, or $7,368 per month.


The Company issued $6.6
million in preferred securities on March 3, 1999. Interest expense incurred on
these securities, net of tax effect, was $116,000 in each of the first three
quarters of 2000. Had these distributions not been charged to earnings, the
Company would have recognized net income of $106,000 and $47,000 in the third
quarter of 2000 and 1999 respectively.


Provision for
Loan Losses


During the first and second
quarter of 2000, the Company contributed $45,000 each quarter to the allowance
for loan losses. During the third quarter the Company contributed $145,000.
Total contributions to the allowance for loan losses in the first nine months of
2000 and 1999 were $235,000 and $50,000 respectively. Management believes that
the allowance, which stands at 1.3% of gross loans at September 30, 2000,
is adequate to cover future losses.


Changes in the allowance
for loan losses for the quarter and nine months ended September 30, 2000 and
1999 are as follows (dollar amounts in thousands):
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | Three Months EndedSeptember 30, | Nine Months EndedSeptember 30,
|------------------------------- | ------------------------------- | ------------------------------
|
|Allowance, Beginning of Period  |                                 | $    854                      
|Provision for Loan Losses       |                                 | 145                           
|Recoveries on Loans Charged Off |                                 | 8                             
|Allowance from AIB Acquisition  |                                 |                              
|                               
|                                |                                 | 1,007                         
|Less: Loans Charged Off         |                                 | (49                           
|                               
|Allowance, End of Period        |                                 | $    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, 2000 totaled
$428,000 compared to $315,000 for the same period ended 1999. The increase for
the three months ended September 30, 2000 is primarily the result of an
insurance settlement of $275,000. Non-interest income for the nine months ended
September 30, 2000 totaled $814,000 compared to $767,000 for the same period
ended 1999.


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, 2000 totaled $1,454,000 compared to $1,592,000
for the same period during 1999. During the third quarter of 1999, the Company
recognized an operating loss of approximately $90,000 plus related legal and
professional fees of approximately $75,000. Noninterest expense for the nine
months ended September 30, 2000 totaled $4,343,000 compared to $4,153,000 for
the same period during 1999. This overall increase, net of the operating loss
discussed above, was primarily the result of increased operating costs related
to the branches acquired during March 1999, in the AIB acquisition.


Income Taxes


The Companys income
tax provision for the first nine months of 2000 and 1999 was $150,000 and
$29,000 resulting in an effective rate of 41.0% on income before taxes
and goodwill amortization.


Balance Sheet
Analysis


Total assets at September
30, 2000 totaled $134.9 million, up 3.5% from $130.2 million
at December 31, 1999. This increase was centered in loans as well as
overall growth in deposits that have increased 17% since December 31,
1999.


Asset Quality


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

|                                          | September 30, | December 31,
|----------------------------------------- | ------------- | ------------
|
|Restructured Loans                        |               | $          
|Loans 90 Days Past Due and Still Accruing |               | 11          
|Loans on Nonaccrual                       |               | 362         
|                                         
|Nonperforming Loans                       |               | 373         
|Other Real Estate Owned                   |               |            
|                                         
|Nonperforming Assets                      |               | $373        
|                                         
|Nonperforming Loans as a Percent          |              
|of Total Loans                            |               | 0.49        
|Allowance for Loan Losses as a Percent    |              
|of Nonperforming Loans                    |               | 256.84      
|Nonperforming Assets as a Percent         |              
|of Total Assets                           |               | 0.28        

|Asset Quality
 Continued


The primary ratios of loan
quality have improved significantly in the first nine months of 2000.
Non-performing loans as a percent of total loans decreased to 0.49% at
September 30, 2000, compared to 1.31% at December 31, 1999. Contributing to the
decrease was the sale of $1.8 million in classified loans. The allowance for
loan losses as a percent of non-performing loans increased to 256.84 % at
September 30, 2000, up from 90.63% at December 31, 1999. A portion of this
increase is due to the $235,000 provision made to the Allowance for Loan Loss.


Other
Borrowings


Other borrowings at
September 30, 2000 consist of $15.0 million in short-term borrowings from the
Federal Home Loan Bank and $935,000 in long-term borrowings from a correspondent
bank. The Company uses these sources to fund asset growth and offset
fluctuations in demand for deposits.


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, 2000 totaled $6.560 million compared to $6.589 million
at December 31, 1999. This decrease was primarily attributable to the dividends
of preferred stock of $162,000 and the net year to date loss of $89,000 offset
by an unrealized gain of $203,000 for investment securities.


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 30,2000 | December 31,1999
|---------------------------------------- | -------------------------------------------- | ----------------- | ----------------
|Tier 1 Capital (to Average Assets)       |                                              | 5.00              | %               
|Tier 1 Capital (to Risk Weighted Assets) |                                              | 6.00              | %               
|Total Capital (to Risk Weighted Assets)  |                                              | 10.00             | %               

|The Companys ratios
at September 30, 2000 were 3.27% for Tier 1 capital to average assets,
4.94% for Tier 1 capital to risk-weighted assets and 11.89% for Total capital to
risk-weighted assets.


Liquidity


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

|Year 2000
Compliance


During the periods leading
up to January 1, 2000, the Company addressed the potential problems associated
with the possibility the computers that control or operate the Companys
information technology system and infrastructure may not have been programmed to
read four-digit date codes and upon the arrival of the year 2000, may have
recognized the two-digit code 00 as the year 1900, causing systems
to fail to function or generate erroneous data.


The Company expended
approximately $123,000 through the periods ended December 31, 1999 in connection
with its Year 2000 compliance program. The Company experienced no significant
problems related to its information technology systems upon arrival of the Year
2000, nor was there any interruption in service to its customers.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | None
| | ----

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

| | None
| | ----

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

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

| | None
| | ----

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

| | A) |  | Exhibits
  Exhibit 27  Financial Data Schedule (For SEC use only)
| | -- |  | ------------------------------------------------------------------

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

| | None
| | ----

|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, 2000 |  | /s/ Don M. Griffith

Don M. GriffithChairman andChief Executive Officer                       
|Date:      November 14, 2000 |  | /s/ Deborah A. Marsten

Deborah A. MarstenVice Chairman, Chief FinancialOfficer, and Secretary