EXHIBIT 10 (c)

                  EMPLOYMENT AGREEMENT WITH PHILLIP G. STALVEY



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                              EMPLOYMENT AGREEMENT


         THIS AGREEMENT is made  effective as of the 21st day of October,  1997,
by and between COASTAL FEDERAL SAVINGS BANK (the "Savings Bank"),  Myrtle Beach,
South Carolina;  COASTAL  FINANCIAL  CORPORATION,  (the  "Company"),  a Delaware
corporation; and PHILLIP G. STALVEY (the "Executive").

         WHEREAS,  the Savings  Bank wishes to assure  itself of the services of
the Executive for the period provided in this Agreement; and

         WHEREAS, the Executive is willing to serve in the employ of the Savings
Bank on a full-time basis for said period.

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained,  and upon the other terms and conditions  hereinafter  provided,  the
parties hereby agree as follows:

1.       POSITION AND RESPONSIBILITIES.

         During the period of his employment hereunder,  the Executive agrees to
serve as Executive Vice President of the Savings Bank.

2.       TERMS AND DUTIES.

         (a) The term of this Agreement  shall be deemed to have commenced as of
the date first above written and shall continue for a period of thirty-six  (36)
full calendar months  thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary  date  thereafter,  the Board of Directors of the
Savings Bank (the  "Board") may extend the  Agreement  for an  additional  year.
Prior to the  extension  of the  Agreement  as provided  herein,  the Board will
conduct  a formal  performance  evaluation  of the  Executive  for  purposes  of
determining  whether to extend the Agreement,  and the results  thereof shall be
included in the minutes of the Board's meeting.

         (b) During the period of his employment  hereunder,  except for periods
of absence occasioned by illness,  reasonable  vacation periods,  and reasonable
leaves of absence,  the Executive  shall devote  substantially  all his business
time,  attention,  skill, and efforts to the faithful  performance of his duties
hereunder  including  activities  and  services  related  to  the  organization,
operation and management of the Savings Bank; provided,  however, that, with the
approval of the Board, as evidenced by a resolution of such Board,  from time to
time, the Executive may serve,  or continue to serve, on the boards of directors
of, and hold any other  offices or positions  in,  companies  or  organizations,
which, in such Board's judgment,  will not present any conflict of interest with
the Savings Bank, or materially affect the performance of the Executive's duties
pursuant to this Agreement.

3.       COMPENSATION AND REIMBURSEMENT.

         (a) The  compensation  specified under this Agreement shall  constitute
the salary and benefits  paid for the duties  described in Sections 1 and 2. The
Savings Bank shall pay the  Executive as  compensation  a salary of $125,000 per
year ("Base  Salary").  Such Base Salary shall be payable in accordance with the
customary  payroll  practices  of the  Savings  Bank.  During the period of this
Agreement,  the Executive's Base Salary shall be reviewed at least annually; the
first  such  review  will be made no later  than one year  from the date of this
Agreement.  Such review  shall be  conducted  by a Committee  designated  by the
Board,  and the Board may increase (but may not decrease) the  Executive's  Base
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Salary.  In addition  to the Base Salary  provided  in this  Section  3(a),  the
Savings Bank shall provide the  Executive at no cost to the  Executive  with all
such other benefits as are provided uniformly to permanent  full-time  employees
of the Savings Bank.

         (b) The Savings Bank will provide the Executive  with employee  benefit
plans,  arrangements and perquisites  substantially equivalent to those in which
the Executive was  participating or otherwise  deriving benefit from immediately
prior to the beginning of the term of this Agreement,  and the Savings Bank will
not,  without the Executive's  prior written  consent,  make any changes in such
plans,  arrangements or perquisites which would adversely affect the Executive's
rights or benefits thereunder.  Without limiting the generality of the foregoing
provisions of this Subsection (b), the Executive will be entitled to participate
in or receive  benefits  under any employee  benefit  plans  including,  but not
limited to, retirement  plans,  supplemental  retirement  plans,  pension plans,
profit-sharing  plans,  health-and-accident  plan, medical coverage or any other
employee  benefit plan or arrangement  made available by the Savings Bank in the
future to its senior executives and key management employees, subject to, and on
a basis consistent  with, the terms,  conditions and overall  administration  of
such  plans and  arrangements.  The  Executive  will be  entitled  to  incentive
compensation and bonuses as provided in any plan, or pursuant to any arrangement
of the Savings Bank, in which the Executive is eligible to participate.  Nothing
paid to the Executive under any such plan or arrangement will be deemed to be in
lieu of other  compensation  to which  the  Executive  is  entitled  under  this
Agreement, except as provided under Section 5(e).

         (c) In addition to the Base Salary  provided  for by  paragraph  (a) of
this Section 3, the Savings Bank shall pay or reimburse  the  Executive  for all
reasonable  travel and other  obligations  under this  Agreement and may provide
such additional compensation in such form and such amounts as the Board may from
time to time determine.

4.       PAYMENTS TO THE EXECUTIVE UPON AN EVENT OF TERMINATION.

         (a) Upon the occurrence of an Event of Termination  (as herein defined)
during the Executive's term of employment  under this Agreement,  the provisions
of  this  Section  shall  apply.  As  used  in  this  Agreement,  an  "Event  of
Termination"  shall mean and include any one or more of the  following:  (i) the
termination  by  the  Savings  Bank  of  the  Executive's  full-time  employment
hereunder  for any reason other than a Change in Control,  as defined in Section
5(a) hereof; disability, as defined in Section 6(a) hereof; death as provided in
Section 7; retirement,  as defined in Section 7 hereof; or for Cause, as defined
in Section 8 hereof;  (ii) the Executive's  resignation  from the Savings Bank's
employ, upon (A) unless consented to by the Executive,  a material change in the
Executive's  function,  duties,  or  responsibilities,  which change would cause
Executive's  position  to become one of lesser  responsibility,  importance,  or
scope from the position and  attributes  thereof  described in Sections 1 and 2,
above,  (any such  material  change shall be deemed a continuing  breach of this
Agreement), (B) a relocation of the Executive's principal place of employment by
more than 35 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this  Agreement,  (C) the liquidation
or  dissolution  of the Savings Bank, or (D) any breach of this Agreement by the
Savings Bank.  Upon the  occurrence of any event  described in clauses (A), (B),
(C), or (D), above, the Executive shall have the right to elect to terminate his
employment  under this  Agreement by  resignation  upon not less than sixty (60)
days  prior  written  notice  given  within a  reasonable  period of time not to
exceed,  except in case of a continuing  breach,  four calendar months after the
event giving rise to said right to elect.
<PAGE>
         (b) Upon the  occurrence of an Event of  Termination,  the Savings Bank
shall  pay  the  Executive,  or,  in the  event  of his  subsequent  death,  his
beneficiary or  beneficiaries,  or his estate,  as the case may be, as severance
pay or  liquidated  damages,  or both,  a sum equal to the  payments  due to the
Executive  for the  remaining  term of the  Agreement,  including  Base  Salary,
bonuses,  and  any  other  cash  or  deferred  compensation  paid  or to be paid
(including the value of employer  contributions that would have been made on the
Executive's behalf over the remaining term of the agreement to any tax-qualified
retirement plan sponsored by the Savings Bank as of the Date of Termination), to
the  Executive  for the term of the  Agreement  provided,  however,  that if the
Savings Bank is not in compliance  with its minimum  capital  requirements or if
such  payments  would cause the Savings  Bank's  capital to be reduced below its
minimum capital requirements, such payments shall be deferred until such time as
the Savings Bank is in capital  compliance.  All payments  made pursuant to this
Section 4(b) shall be paid in substantially equal monthly  installments over the
remaining  term  of  this  Agreement  following  the  Executive's   termination;
provided,  however, that if the remaining term of the Agreement is less than one
(1) year (determined as of the Executive's  Date of Termination),  such payments
and benefits  shall be paid to the Executive in a lump sum within 30 days of the
Date of Termination.

         (c) Upon the  occurrence of an Event of  Termination,  the Savings Bank
will  cause to be  continued  life,  medical,  dental  and  disability  coverage
substantially  identical to the coverage  maintained by the Savings Bank for the
Executive  prior  to  his  termination.  Such  coverage  shall  cease  upon  the
expiration of the remaining term of this Agreement.

5.       CHANGE IN CONTROL.

         (a) No benefit  shall be paid under this  Section 5 unless  there shall
have  occurred a Change in Control of the Company or the Bank.  For  purposes of
this Agreement, a "Change in Control" of the Company or the Bank shall be deemed
to occur if and when (a) an offeror other than the Company  purchases  shares of
the common  stock of the  Company or the Bank  pursuant  to a tender or exchange
offer for such  shares,  (b) any person (as such term is used in Sections  13(d)
and  14(d)(2)  of  the  Securities  Exchange  Act of  1934)  is or  becomes  the
beneficial  owner,  directly or indirectly,  of securities of the Company or the
Bank representing 25% or more of the combined voting power of the Company's then
outstanding  securities,  (c) the  membership  of the board of  directors of the
Company or the Bank  changes as the result of a  contested  election,  such that
individuals who were directors at the beginning of any twenty-four  month period
(whether commencing before or after the effective date of this Agreement) do not
constitute  a  majority  of  the  Board  at  the  end  of  such  period,  or (d)
shareholders of the Company or the Bank approve a merger, consolidation, sale or
disposition of all or  substantially  all of the Company's or the Bank's assets,
or a plan of partial or complete liquidation.

         (b) If any of the events described in Section 5(a) hereof  constituting
a Change  in  Control  have  occurred  or the Board of the  Savings  Bank or the
Company has  determined  that a Change in Control has  occurred,  the  Executive
shall be entitled to the  benefits  provided in  paragraphs  (c), (d) and (e) of
this Section 5 upon his involuntary termination of employment at any time during
the period  beginning three (3) months prior to the  announcement by the Savings
Bank or the Company of an event  constituting  a Change of Control or  voluntary
termination  within  twelve  (12)  months  following a Change of Control for any
reason, unless such termination is because of his death,  retirement as provided
in Section 7, termination for Cause, or termination for Disability.
<PAGE>
         (c)  Upon  the  occurrence  of a  Change  in  Control  followed  by the
Executive's termination of employment, the Savings Bank shall pay the Executive,
or in the event of his subsequent  death, his beneficiary or  beneficiaries,  or
his estate, as the case may be, as severance pay or liquidated damages, or both,
a sum equal to 2.99 times the  Executive's  "base amount," within the meaning of
ss.280G(b)(3) of the Internal Revenue Code of 1986 ("Code"),  as amended. In the
event the  Executive  has been  employed by the Savings  Bank for less than five
calendar (5) years preceding the Change in Control,  the Executive's base amount
shall be determined by reference to the period during which he has been employed
by the Savings  Bank with any period of less than one full year  annualized.  In
the event that a Change in Control  occurs during his initial year of employment
hereunder,  the Executive's base amount shall be annualized.  Such payment shall
be made in a lump  sum paid  within  ten (10)  days of the  Executive's  Date of
Termination or, at the Executive's  election, in substantially equal installment
payments over a three (3) year period following Date of Termination.

         (d)  Upon  the  occurrence  of a  Change  in  Control  followed  by the
Executive's  termination  of  employment,  the  Savings  Bank  will  cause to be
continued life, medical,  dental and disability coverage substantially identical
to the coverage  maintained by the Savings Bank for the  Executive  prior to his
severance.  In  addition,  Executive  shall be  entitled to receive the value of
employer  contributions that would have been made on the Executive's behalf over
the  remaining  term  of the  agreement  to any  tax-qualified  retirement  plan
sponsored by the Savings Bank as of the Date of  Termination.  Such coverage and
payments shall cease upon the expiration of thirty-six (36) months.

         (e) Upon the occurrence of a Change in Control,  the Executive shall be
entitled to receive benefits due him under, or contributed by the Company or the
Savings  Bank on his  behalf,  pursuant  to any  retirement,  incentive,  profit
sharing,  bonus,   performance,   disability  or  other  employee  benefit  plan
maintained by the Savings Bank or the Company on the  Executive's  behalf to the
extent that such benefits are not otherwise  paid to the Executive upon a Change
in Control.

         (f) Notwithstanding the preceding  paragraphs of this Section 5, in the
event that the  aggregate  payments  or  benefits  to be made or afforded to the
Executive  under this  Section  would be deemed to include an "excess  parachute
payment"  under ss.280G of the Code,  such payments or benefits shall be payable
or provided in equal monthly  installments  over the minimum period necessary to
reduce the present  value of such payments or benefits to an amount which is one
dollar  ($1.00)  less than  three  times the  Executive's  "base  amount"  under
ss.280G(b)(3) of the Code.

6.       TERMINATION FOR DISABILITY.

         (a) If the  Executive  shall become  disabled as defined in the Savings
Bank's then current  disability plan (or, if no such plan is then in effect,  if
the Executive is permanently and totally  disabled within the meaning of Section
22(e)(3) of the Code as determined by a physician  designated by the Board), the
Savings Bank may terminate Executive's employment for "Disability."

         (b) Upon the Executive's termination of employment for Disability,  the
Savings Bank will pay Executive, as disability pay, a bi-weekly payment equal to
three-quarters  (3/4)  of  Executive's  bi-weekly  rate  of Base  Salary  on the
effective date of such termination.  These disability payments shall commence on
the effective date of Executive's termination and will end on the earlier of (i)
the date the Executive  returns to the full-time  employment of the Savings Bank
in the same capacity as he was employed prior to his  termination for Disability
<PAGE>
and pursuant to an  employment  agreement  between the Executive and the Savings
Bank;  (ii)  Executive's  full-time  employment by another  employer;  (iii) the
Executive  attaining the age of 65; or (iv) the  Executive's  death;  or (v) the
expiration of the term of this Agreement. The disability pay shall be reduced by
the amount,  if any,  paid to the  Executive  under any plan of the Savings Bank
providing disability benefits to the Executive.

         (c) The Savings Bank will cause to be continued life,  medical,  dental
and disability  coverage  substantially  identical to the coverage maintained by
the Savings Bank for the Executive prior to his termination for Disability. This
coverage and payments shall cease upon the earlier of (i) the date the Executive
returns to the full-time employment of the Savings Bank, in the same capacity as
he was  employed  prior to his  termination  for  Disability  and pursuant to an
employment   agreement   between  the  Executive  and  the  Savings  Bank;  (ii)
Executive's  full-time  employment by another  employer;  (iii) the  Executive's
attaining the age of 65; or (iv) the Executive's death; or (v) the expiration of
the term of this Agreement.

         (d)  Notwithstanding  the foregoing,  there will be no reduction in the
compensation  otherwise  payable to the Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.

7.       TERMINATION UPON RETIREMENT; DEATH OF THE EXECUTIVE.

         Termination by the Savings Bank of the Executive  based on "Retirement"
shall mean retirement at age 65 or in accordance with any retirement arrangement
established  with the Executive's  consent with respect to him. Upon termination
of Executive upon  Retirement,  the Executive  shall be entitled to all benefits
under any retirement  plan of the Savings Bank or the Company and other plans to
which the Executive is a party.  Upon the death of the Executive during the term
of this  Agreement,  the Savings  Bank shall pay to the  Executive's  estate the
compensation due to the Executive  through the last day of the calendar month in
which his death occurred.

8.       TERMINATION FOR CAUSE.

           For purposes of this Agreement, "Termination for Cause" shall include
termination  because  of  the  Executive's  personal  dishonesty,  incompetence,
willful  misconduct,   breach  of  fiduciary  duty  involving  personal  profit,
intentional  failure to perform  stated  duties,  willful  violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist  order,  or material breach of any provision of this Agreement.
For purposes of this Section,  no act, or the failure to act, on the Executive's
part shall be "willful"  unless done,  or omitted to be done,  not in good faith
and  without  reasonable  belief  that the  action or  omission  was in the best
interest of the Savings Bank or its affiliates.  Notwithstanding  the foregoing,
the Executive  shall not be deemed to have been  terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the  affirmative  vote of not less than  three-fourths  of the members of the
Board at a  meeting  of the  Board  called  and held  for  that  purpose  (after
reasonable  notice to the Executive and an  opportunity  for him,  together with
counsel,  to be heard before the Board),  finding that in the good faith opinion
of the Board,  the Executive was guilty of conduct  justifying  termination  for
Cause and specifying the reasons thereof. The Executive shall not have the right
to receive  compensation or other benefits for any period after  termination for
Cause. Any stock options granted to the Executive under any stock option plan or
any unvested  awards  granted  under any other stock benefit plan of the Savings
<PAGE>
Bank, the Company, or any subsidiary or affiliate thereof, shall become null and
void effective upon the  Executive's  receipt of Notice of Termination for Cause
pursuant to Section 9 hereof,  and shall not be  exercisable by the Executive at
any time subsequent to such Termination for Cause.

9.       REQUIRED PROVISIONS.

         (a) The Savings Bank may  terminate the  Executive's  employment at any
time, but any termination by the Savings Bank, other than Termination for Cause,
shall not prejudice the  Executive's  right to  compensation  or other  benefits
under this Agreement. Executive shall not have the right to receive compensation
or other  benefits  for any  period  after  Termination  for Cause as defined in
Section 8 herein.

         (b) If the Executive is suspended  and/or  temporarily  prohibited from
participating  in the conduct of the Savings  Bank's  affairs by a notice served
under Section  8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act ("FDIA")
(12 U.S.C.  1818(e)(3)  and (g)(1)),  the Savings Bank's  obligations  under the
Agreement  shall  be  suspended  as of the date of  service,  unless  stayed  by
appropriate proceedings. If the charges in the notice are dismissed, the Savings
Bank  may,  in  its  discretion,  (i)  pay  the  Executive  all or  part  of the
compensation  withheld  while its contract  obligations  were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.

           (c) If the Executive is removed and/or  permanently  prohibited  from
participating  in the conduct of the Savings  Bank's  affairs by an order issued
under  Section  8(e)(4) or (g)(1) of the FDIA (12 U.S.C.  1818(e)(4) or (g)(1)),
all  obligations of the Savings Bank under the Agreement  shall  terminate as of
the effective date of the order,  but vested rights of the  contracting  parties
shall not be affected.

           (d) If the Savings Bank is in default (as defined in Section  3(x)(1)
of the FDIA),  all  obligations  under this Agreement  shall terminate as of the
date of default,  but this  paragraph  shall not affect any vested rights of the
parties.

           (e) All obligations under this Agreement shall be terminated  (except
to the extent determined that continuation of the Agreement is necessary for the
continued  operation of the Savings Bank):  (i) by the Director of the Office of
Thrift  Supervision  (the  "Director")  or his or her  designee  at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an  agreement  to provide  assistance  to or on behalf of the Savings  Bank
under  the  authority  contained  in  Section  13(c)  of the FDIA or (ii) by the
Director,  or his or her  designee  at the time the  Director  or such  designee
approves a supervisory  merger to resolve  problems  related to operation of the
Savings Bank or when the Savings Bank is  determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.

           (f) Any payments made to the Executive pursuant to this Agreement, or
otherwise,  are  subject  to and  conditioned  upon  compliance  with 12  U.S.C.
ss.1828(k) and any regulations promulgated thereunder.
<PAGE>
10.      NOTICE.

         (a) Any purported  termination  by the Savings Bank or by the Executive
shall be  communicated  by Notice of Termination to the other party hereto.  For
purposes  of this  Agreement,  a "Notice  of  Termination"  shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's  employment  under
the provision so indicated.

         (b) "Date of Termination" shall mean (A) if the Executive's  employment
is terminated for Disability,  thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a  full-time  basis  during  such  thirty  (30) day  period),  and (B) if his
employment is terminated for any other reason,  the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

         (c) If,  within  thirty  (30) days after any Notice of  Termination  is
given,  the party receiving such Notice of Termination  notifies the other party
that a dispute exists concerning the termination,  except upon the occurrence of
a Change in Control and voluntary termination by the Executive in which case the
Date of  Termination  shall be the date  specified  in the  Notice,  the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal there from having  expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute, the Savings Bank will continue
to pay the Executive his full compensation in effect when the notice giving rise
to the dispute  was given  (including,  but not  limited  to,  Base  Salary) and
continue him as a participant in all  compensation,  benefit and insurance plans
in which he was  participating  when the notice of dispute was given,  until the
dispute is finally  resolved in  accordance  with this  Agreement.  Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset  against  or reduce  any other  amounts  due under  this
Agreement.

11.      SOURCE OF PAYMENTS.

         All payments provided in this Agreement shall be timely paid in cash or
check  from the  general  funds  of the  Savings  Bank.  The  Company,  however,
guarantees  all  payments  and the  provision  of all amounts and  benefits  due
hereunder to the Executive and, if such payments are not timely paid or provided
by the Savings Bank,  such amounts and benefits shall be paid or provided by the
Company.

12.      EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

         This Agreement  contains the entire  understanding  between the parties
hereto and supersedes any prior employment agreement between the Savings Bank or
any  predecessor  of the  Savings  Bank  and the  Executive,  except  that  this
Agreement  shall not affect or operate  to reduce  any  benefit or  compensation
inuring to the  Executive  of a kind  elsewhere  provided.  No provision of this
Agreement  shall  be  interpreted  to mean  that the  Executive  is  subject  to
receiving fewer benefits than those  available to him without  reference to this
Agreement.
<PAGE>
13.      NO ATTACHMENT.

         (a) Except as required by law, no right to receive  payments under this
Agreement  shall be  subject to  anticipation,  commutation,  alienation,  sale,
assignment,  encumbrance,  charge,  pledge, or  hypothecation,  or to execution,
attachment,  levy, or similar process or assignment by operation of law, and any
attempt,  voluntary  or  involuntary,  to affect any such action  shall be null,
void, and of no effect.

         (b) This Agreement  shall be binding upon, and inure to the benefit of,
the Executive, the Savings Bank, the Company and their respective successors and
assigns.

14.      MODIFICATION AND WAIVER.

         (a)  This  Agreement  may  not be  modified  or  amended  except  by an
instrument in writing signed by the parties hereto.

         (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement,  except by written  instrument of the party charged with such
waiver or estoppel.  No such written waiver shall be deemed a continuing  waiver
unless specifically  stated therein,  and each such waiver shall operate only as
to the specific  term or condition  waived and shall not  constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.

15.      SEVERABILITY.

         If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this  Agreement or any part of such  provision not held so invalid,  and each
such other  provision and part thereof shall to the full extent  consistent with
law continue in full force and effect.

16.      HEADINGS FOR REFERENCE ONLY.

         The headings of sections and paragraphs  herein are included solely for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.

17.      GOVERNING LAW.

         This  Agreement  shall be  governed  by the laws of the  State of South
Carolina,  unless otherwise  specified herein;  provided,  however,  that in the
event of a  conflict  between  the terms of this  Agreement  and any  applicable
federal or state law or  regulation,  the  provisions  of such law or regulation
shall prevail.

18.      ARBITRATION.

         Any dispute or  controversy  arising under or in  connection  with this
Agreement shall be settled exclusively by arbitration,  conducted before a panel
of three  arbitrators  sitting in a location selected by the employee within one
hundred (100) miles from the location of the Savings  Bank,  in accordance  with
the rules of the American Arbitration Savings Bank then in effect.  Judgment may
be entered on the arbitrator's award in any court having jurisdiction; provided,
<PAGE>
however,  that the Executive  shall be entitled to seek specific  performance of
his right to be paid until the Date of  Termination  during the  pendency of any
dispute or controversy arising under or in connection with this Agreement.

19.      PAYMENT OF LEGAL FEES; INTEREST

         All reasonable legal fees paid or incurred by the Executive pursuant to
any dispute or question of  interpretation  relating to this Agreement  shall be
paid or  reimbursed  by the  Savings  Bank,  if  successful  pursuant to a legal
judgment,  arbitration  or  settlement.  With respect to any payment  under this
Agreement that is the subject of a dispute between the Executive and the Savings
Bank  and/or the  Company,  if the  Executive  is the  prevailing  party in such
dispute,  the  Executive  shall be  entitled to interest at a rate not less than
nine (9) percent per annum on the  payment  for the period  during  which it was
withheld by the Savings Bank and/or the Company.

20.      INDEMNIFICATION.

         The Savings  Bank shall  provide the  Executive  (including  his heirs,
executors and  administrators)  with coverage  under a standard  directors'  and
officers' liability  insurance policy at its expense, or in lieu thereof,  shall
indemnify the Executive  (and his heirs,  executors and  administrators)  to the
fullest  extent  permitted  under  law  against  all  expenses  and  liabilities
reasonably  incurred  by him in  connection  with or arising  out of any action,
suite or  proceeding  in which he may be involved by reason of his having been a
director or officer of the Savings  Bank  (whether or not he  continues  to be a
directors or officer at the time of  incurring  such  expenses or  liabilities),
such expenses and liabilities to include, but not be limited to, judgment, court
costs and attorneys' fees and the cost of reasonable settlements.

21.      SUCCESSOR TO THE SAVINGS BANK OR THE COMPANY.

         The  Savings  Bank and the  Company  shall  require  any  successor  or
assignee,  whether direct or indirect,  by purchase,  merger,  consolidation  or
otherwise,  to all or  substantially  all the  business or assets of the Savings
Bank or the  Company,  expressly  and  unconditionally  to  assume  and agree to
perform the Savings Bank's or the Company's obligations under this Agreement, in
the same  manner and to the same  extent  that the  Savings  Bank or the Company
would be  required  to perform if no such  succession  or  assignment  had taken
place.
<PAGE>
         IN WITNESS  WHEREOF,  the Savings Bank and the Company have caused this
Agreement  to be  executed  and  their  seal to be  affixed  hereunto  by a duly
authorized officer, and the Executive has signed this Agreement, on the 21st day
of October, 1997.


ATTEST:                                     COASTAL FEDERAL SAVINGS BANK




/s/  Susan J. Cooke                         BY: /s/  Michael C. Gerald
-------------------                             ----------------------
Susan J. Cooke                                  Michael C. Gerald
[SEAL]


ATTEST:                                     COASTAL FINANCIAL CORPORATION



/s/  Susan J. Cooke                         BY: /s/  Michael C. Gerald
-------------------                             ----------------------
Susan J. Cooke                                  Michael C. Gerald
[SEAL]



WITNESS:



/s/  Susan J. Cooke                             /s/ Phillip G. Stalvey
-------------------                             ----------------------
Susan J. Cooke                                  Phillip G. Stalvey

                                                     EXECUTIVE