|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 March 31, 2002
|---------------------------------------------

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

|For the transition period from


Commission file number: 333-68207


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

|CALIFORNIA
(State or 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 May 10, 2002, there were
2,162,361 shares of First Coastal Bancshares Common Stock outstanding.


1
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|First Coastal Bancshares
March 31, 2002


INDEX


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

|       |   |                                                                                                                    |  | PAGE  
|------ | - | ------------------------------------------------------------------------------------------------------------------ |  | ------
|Item 1 | - | Financial Statements                                                                                               |  |       
|       |   | Condensed Consolidated Balance Sheets at March 31, 2002 and   December 31, 2001                                    |  | 3     
|       |   | Condensed Consolidated Statements of Operations for the Three   Months Ended March 31, 2002 and 2001               |  | 4     
|       |   | Condensed Consolidated Statements of Changes in Shareholders Equity from   January 1, 2001 through March 31, 2002 |  | 5     
|       |   | Condensed Consolidated Statements of Cash Flows for the Three   Months Ended March 31, 2002 and 2001               |  | 6     
|       |   | Notes to Consolidated Financial Statements                                                                         |  | 7     
|Item 2 | - | Managements Discussion and Analysis of Financial Condition and   Results of Operations                            |  | 8 - 11

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

|Item 1 | - | Legal Proceedings                                   |  | 12
|------ | - | --------------------------------------------------- |  | --
|Item 2 | - | Changes in Securities                               |  | 12
|Item 3 | - | Defaults upon Senior Securities                     |  | 12
|Item 4 | - | Submission of Matters to a Vote of Security Holders |  | 12
|Item 5 | - | Other Information                                   |  | 12
|Item 6 | - | Exhibits and Reports on Form 8-K                    |  | 12

|2
|-

|Item 1 - Financial Statements




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

|                                                          | March 31,2002 |  | December 31,2001 |        
|--------------------------------------------------------- | ------------- |  | ---------------- | -------
|Cash and Due From Bank                                    |               |  | $                | 7,249  
|                                                         
|Time Deposits in Other Financial Institutions             |               |  |                  | 1,864  
|                                                         
|Investment Securities, net                                |               |  |                  | 16,686 
|                                                         
|Federal Reserve and Federal Home Loan Bank Stock, at Cost |               |  |                  | 865    
|                                                         
|Loans                                                     |               |  |                  | 95,026 
|Allowance for Loan Losses                                 |               |  |                  | (1,261 
|                                                          |               |  |                  |        
|NET LOANS                                                 |               |  |                  | 93,765 
|                                                         
|Premises and Equipment, net                               |               |  |                  | 1,026  
|Goodwill, net                                             |               |  |                  | 4,625  
|Accrued Interest and Other Assets                         |               |  |                  | 3,167  
|                                                          |               |  |                  |        
|                                                         
|                                                          |               |  | $                | 129,247
|                                                          |               |  |                  |        
|                                                         
|Noninterest-Bearing Deposits                              |               |  | $                | 26,842 
|Interest-Bearing Deposits                                 |               |  |                  | 85,851 
|                                                          |               |  |                  |        
|TOTAL DEPOSITS                                            |               |  |                  | 112,693
|                                                         
|Other Borrowings                                          |               |  |                  | 2,039  
|Company Obligated Mandatorily Redeemable Preferred        |               | 
|Securities of Subsidiary Trust Holding Solely Junior      |               | 
|Subordinated Debentures                                   |               |  |                  | 6,600  
|Accrued Interest and Other Liabilities                    |               |  |                  | 1,108  
|                                                          |               |  |                  |        
|TOTAL LIABILITIES                                         |               |  |                  | 122,440
|                                                         
|Preferred Stock                                           |               |  |                  | 1,993  
|Common Stock                                              |               |  |                  | 6,584  
|Accumulated Deficit                                       |               |  |                  | (1,475 
|Accumulated Other Comprehensive Income                    |               |  |                  | (295   
|                                                          |               |  |                  |        
|TOTAL SHAREHOLDERS EQUITY                                |               |  |                  | 6,807  
|                                                          |               |  |                  |        
|                                                         
|                                                          |               |  | $                | 129,247
|                                                          |               |  |                  |        

|3
|-

|Item 1 - Financial Statements - Continued




First Coastal Bancshares and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited  Dollar Amounts in Thousands, Except EPS)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                            | For the Three Months EndedMarch 31, | 
|--------------------------- | ----------------------------------- | 
|
|Interest Income             |                                     | 
|Interest Expense            |                                     | 
|                            |                                     | 
|NET INTEREST INCOME         |                                     | 
|                           
|Provision for Loan Losses   |                                     | 
|                            |                                     | 
|NET INTEREST INCOME AFTER   |                                     | 
|PROVISION FOR LOAN LOSSES   |                                     | 
|                           
|Noninterest Income          |                                     | 
|Noninterest Expense         |                                     | 
|                            |                                     | 
|INCOME (LOSS) BEFORE TAXES  |                                     | 
|                           
|Income Tax                  |                                     | 
|                            |                                     | 
|NET INCOME (LOSS)           |                                     | 
|                            |                                     | 
|Per Share Data:             |                                     | 
|Net Income (Loss) - Basic   |                                     | 
|Net Income (Loss) - Diluted |                                     | 

|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 | Amount | ComprehensiveIncome | AccumulatedDeficit | AccumulatedOtherComprehensiveIncome | Total
|--------------------------------- | -------------- | ------ | ------------------- | ------------------ | ----------------------------------- | -----
|                                  |                |        |                     |                    |                                     |      
|January 1, 2001                   |                |        | $                   | 1,993              |                                     | $    
|Sale of Treasury Shares           |                |        |                     |                    |                                     |      
|Dividends - Preferred Stock       |                |        |                     |                    |                                     |      
|Comprehensive Income              |                |       
|Net Loss                          |                |        |                     |                    |                                     |      
|Change in Unrecognized Gains      |                |       
|of Securities Available for       |                |       
|Sale, net of taxes of $236        |                |        |                     |                    |                                     |      
|Less Reclassification Adjustments |                |       
|for Gains included in Net         |                |       
|Loss, net of Taxes of $17         |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|Comprehensive Income              |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|December 31, 2001                 |                |        |                     | 1,993              |                                     |      
|                                 
|Dividends - Preferred Stock       |                |        |                     |                    |                                     |      
|Comprehensive Income              |                |       
|Net Income                        |                |        |                     |                    |                                     |      
|Change in Unrecognized Loss       |                |       
|of Securities Available for       |                |       
|Sale, net of Taxes of $111        |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|Comprehensive Income              |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|                                  |                |        |                     |                    |                                     |      
|March 31, 2002                    |                |        | $                   | 1,993              |                                     | $    
|                                  |                |        |                     |                    |                                     |      

|5
|-

|Item 1 - Financial Statements - Continued




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

|                                                                | For the Three Months EndedMarch 31, | 
|--------------------------------------------------------------- | ----------------------------------- | 
|
|OPERATING ACTIVITIES                                            |                                     | 
|Net Income (Loss)                                               |                                     | 
|Adjustments to Reconcile Net Income (Loss) to                   |                                     | 
|Net Cash Provided by Operating Activities:                      |                                     | 
|Depreciation and Amortization                                   |                                     | 
|Provision for Loan Losses                                       |                                     | 
|Other Items - Net                                               |                                     | 
|                                                                |                                     | 
|NET CASH PROVIDED BY                                            |                                     | 
|OPERATING ACTIVITIES                                            |                                     | 
|INVESTING ACTIVITIES                                            |                                     | 
|Net Change in Time Deposits in Other Financial Institutions     |                                     | 
|Purchases of Investment Securities                              |                                     | 
|Sale and Maturities of Investment Securities                    |                                     | 
|(Increase) Decrease in Federal Reserve and Home Loan Bank Stock |                                     | 
|Net Change in Loans                                             |                                     | 
|Purchase of Premises and Equipment                              |                                     | 
|                                                                |                                     | 
|NET CASH PROVIDED (USED)                                        |                                     | 
|BY INVESTING ACTIVITIES                                         |                                     | 
|FINANCING ACTIVITIES                                            |                                     | 
|Net Change in Deposits                                          |                                     | 
|Net Change in Other Borrowings                                  |                                     | 
|Dividends                                                       |                                     | 
|                                                                |                                     | 
|NET CASH PROVIDED (USED)                                        |                                     | 
|BY FINANCING ACTIVITIES                                         |                                     | 
|                                                                |                                     | 
|INCREASE (DECREASE) IN CASH                                     |                                     | 
|AND CASH EQUIVALENTS                                            |                                     | 
|                                                               
|Cash and Cash Equivalents at Beginning of Period                |                                     | 
|                                                                |                                     | 
|CASH AND CASH EQUIVALENTS                                       |                                     | 
|AT END OF PERIOD                                                |                                     | 
|                                                                |                                     | 

|6
|-

|Item 1 - Financial Statements - Continued




First Coastal Bancshares and Subsidiaries
Notes to Consolidated Financial Statements


Note 1 - Basis of Presentation and Management Representation


The accompanying financial
information has been prepared in accordance with the Securities and Exchange
Commission rules and regulations for quarterly reporting and therefore does not
necessarily include all information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles. This information should be read in conjunction with the
Companys Form 10-KSB filed on March 30, 2002.


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


Operating results for
interim periods are not necessarily indicative of operating results for an
entire fiscal year. In the opinion of management, the unaudited financial
information for the three-month period ended March 31, 2002 and 2001, 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 - Sale of Branch


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


Note 3 - Earnings Per Share


Effective December 31,
1997, the Company adopted Statement of Financial Accounting Standards 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
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Note 4 - Good will and Other Intangible Assets


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


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

|                               | Quarter Ended |  | Year Ended |   
|------------------------------ | ------------- |  | ---------- | --
|
|                               |               |  |            |   
|Net Income                     |               |  | $          | 54
|Addback: Goodwill Amortization |               |  |            |  
|                               |               |  |            |   
|Adjusted Net Income            |               |  | $          | 54
|                               |               |  |            |   
|Basic Earnings per Share:      |               | 
|Net Income                     |               |  | $          |  
|Goodwill Amortization          |               |  |            |  
|                               |               |  |            |   
|Adjusted Net Income            |               |  | $          |  
|                               |               |  |            |   
|Diluted Earnings per Share:    |               | 
|Net Income                     |               |  | $          |  
|Goodwill Amortization          |               |  |            |  
|                               |               |  |            |   
|Adjusted Net Income            |               |  | $          |  
|                               |               |  |            |   

|The Company has 6 months
from the date of adoption to complete the initial test for impairment of
Goodwill and will perform that test by June 30, 2002.


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

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


Income Summary


For the three months ended
March 31, 2002, the Company reported net income of $54,000,or $0.00
basic income per share compared to a net loss of $56,000, or $0.09 basic loss
per share for the same three-month period in 2001. The primary difference
between 2002 and 2001 earnings was the discontinuance of the amortization of
goodwill as discussed in Note 4 to the financial statements.


The annualized return on
average assets was 0.17% for 2002 compared to (0.17)% for 2001. Annualized
return on average shareholders equity for 2002 and 2001 was 3.14% and
(3.16)%, 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 $1,294,000 for the quarter ended March 31,
2002, compared to $1,319,000 for the quarter ended March 31, 2001.


The total amount of net
interest income decreased slightly for the quarter ended March 31, 2002 compared
to the same period in 2001. This decrease was primarily due to the
re-positioning of the balance sheet from the sale of the Burbank branch and the
declining prime rate. Although the prime rate has declined by 325 basis points
since March 31, 2001, the Company was able to limit its decline in net interest
margin to only 9 basis pointscomparing the first quarter of 2002 to the
same quarter in 2001. Net interest margin for the first quarter of 2002 actually
exceeded the 2001 year-to-date net interest margin by 18 basis points.


The following table sets
forth the components of net interest income, average earning assets and net
interest margin:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       | Three Months EndedMarch 31, |  | Year EndedDecember 31, |        
|---------------------- | --------------------------- |  | ---------------------- | -------
|
|                       |                             |  |                        |        
|Interest Income        |                             |  | $                      | 2,076  
|Interest Expense       |                             |  |                        | 782    
|                       |                             |  |                        |        
|Net Interest Income    |                             |  | $                      | 1,294  
|                       |                             |  |                        |        
|Average Earning Assets |                             |  | $                      | 115,400
|Net Interest Margin    |                             |  |                        | 4.49   

|9
|-

|Provision for Loan Losses


The Company made no
contribution to the allowance for loan losses in the first quarter of 2002 or
2001. Management believes that the allowance, which stands at 1.3% of total
loans at March 31, 2002, is adequate to cover future losses.


Changes in the allowance
for loan losses for the quarter ended March 31, 2002 and 2001 are as follows
(dollar amounts in thousands):
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | Quarter EndedMarch 31, | 
|------------------------------- | ---------------------- | 
|
|Allowance, Beginning of Quarter |                        | 
|Provision for Loan Losses       |                        | 
|Recoveries on Loans Charged Off |                        | 
|                                |                        | 
|                                |                        | 
|Less: Loans Charged Off         |                        | 
|                                |                        | 
|Allowance, End of Quarter       |                        | 
|                                |                        | 

|Non-Interest Income


Non-Interest Income
represents deposit account service charges and other types of non-loan related
fee income. Non-interest income for the quarter ended March 31, 2002 totaled
$187,000 compared to $176,000 for the same period ended 2001.


Non-Interest Expense


Non-Interest Expenses
represent salaries, occupancy expenses, professional expenses, outside services
and other miscellaneous expenses necessary to conduct business. Non-interest
expense for the quarter ended March 31, 2002 totaled $1,414,000 compared to
$1,538,000 for the same period during 2001. The decrease is primarily from the
discontinuance of the amortization of goodwill, which was $114,000 in 2001. The
reduction in salaries and occupancy expense associated with the sale of the
Burbank branch was offset by additional costs that resulted from the relocation
of the Marina branch, as well as occupancy and marketing costs for the new
Manhattan Beach branch.


Income Taxes


The Companys income
tax provision for the first quarter of 2002 and 2001 was $13,000, resulting in
an effective rate of 41.0% on income before taxes and goodwill amortization.


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

|Balance Sheet Analysis


Total assets at March 31,
2002 were $129.2 million, up 3.7% from the $124.6 million reported at December
31, 2001. This increase was primarily in deposits, which increased by $5.5
million.


Asset Quality


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

|                                                  | March 31, |  | December 31, |       
|------------------------------------------------- | --------- |  | ------------ | ------
|
|                                                  |           |  |              |       
|Restructured Loans                                |           |  |              |       
|Loans 90 day past due and still accruing          |           |  |              | 7     
|Loans on nonaccrual                               |           |  |              | 151   
|                                                  |           |  |              |       
|Nonperforming Loans                               |           |  |              | 158   
|Classified Investments                            |           |  |              |      
|                                                  |           |  |              |       
|Nonperforming Assets                              |           |  | $            | 158   
|                                                  |           |  |              |       
|Nonperforming loans as a percent of total loans   |           |  |              | 0.17  
|Allowance for loan losses as a percent            |           | 
|of nonperforming loans                            |           |  |              | 798.10
|Nonperforming assets as a percent of total assets |           |  |              | 0.12  

|The primary ratios of loan
quality have continued to improve in the first quarter of 2002. Non-performing
loans as a percent of total loans decrease to 0.17% at March 31, 2002, compared
to 0.25% at December 31, 2001. The allowance for loan losses as a percent of
nonperforming loans increased to 798.10% at March 31, 2002, up from 516.53% at
December 31, 2001.


Classified investments as
of December 31, 2001 were comprised of one investment security, which we
classified as less than investment grade. This security was sold in
early 2002 for a loss of approximately $2,000.


Other Borrowings


The Company owes $739 to a
correspondent bank, through the issuance of a promissory note that matures on
July 15, 2003. This loan requires monthly payments of interest between prime
plus 1.25% and prime plus 2.0%, depending on the deposit balance maintained by
the Bank at the correspondent bank, and principal payments of $130 and $609 in
2002 and 2003, respectively. This loan is secured by the common stock of the
Bank, which is wholly owned by the Company.


The Bank owes $1,300 to an
officer and director of the Company, through the issuance of a subordinated
capital note that matures on July 1, 2008. This loan requires monthly payments
of interest equal to prime plus 2.0%. This note is subordinated to the
depositors and creditors of the Bank.


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

|Trust Preferred Securities


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


Capital


Total shareholders
equity at March 31, 2002 totaled $6.8 million, compared to $6.9 millionat December 31, 2001. This decrease was primarily attributable to the
increase in net unrealized loss on available-for-sale investments of
$295,000.


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

|                                         | Ratio | March 31,2002 | December 31,2001
|---------------------------------------- | ----- | ------------- | ----------------
|Tier 1 Capital (to Average Assets)       |       |               |                 
|Tier 1 Capital (to Risk Weighted Assets) |       |               |                 
|Total Captial (to Risk Weighted Assets)  |       |               |                 

|The Company is subject to
similar requirements administered by its primary regulator, the Federal Reserve
Board. For capital adequacy purposes, the Company must maintain total capital to
risk-weighted assets and Tier 1 capital to risk-weighted assets of 8.0% and
4.0%, respectively. Its total capital to risk-weighted assets and Tier 1
capital to risk-weighted assets was 10.1% and 3.2%, respectively, at March 31,
2002 and 10.7% and 3.7%, respectively, at December 31, 2001.


As a result of a private
placement announced by the Company in April 2002, total shareholders' equity has
increased by $3 million since the close of the first quarter.


Liquidity


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


12
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II - OTHER INFORMATION




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

| | The
Bank is, from time to time, subject to various pending and threatened legal actions,
which arise out of the normal course of its business.
| | ----------------------------------------------------------------------------------------------------------------------------------------------

| | During
2001, the Bank established a $400,000 reserve for losses on litigation based on managements
analysis and opinion of legal counsel. These matters have not been settled and the Bank
is aggressively defending itself.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | None
| | ----

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

| | None
| | ----

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

| | None
| | ----

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

| | None
| | ----

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

| |  |  |  | A) |  | Exhibits
| |  |  |  | -- |  | --------

| | None
| | ----

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

| | None
| | ----

|13
|--

|Signatures


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

|Date: May 15, 2002 |  | First Coastal Bancshares
/s/ Don M. Griffith

Don M. Griffith
Chief Executive Officer,
Chairman and Director
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------

|Date: May 15, 2002 |  | /s/ Deborah A. Marsten

Deborah A. Marsten
Chief Financial Officer,
Secretary and Director
|------------------ |  | --------------------------------------------------------------------------------------------------------

|14
|--