SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 11-K

                                  ANNUAL REPORT

                        Pursuant to Section 15(d) of the
                         Securities Exchange Act of 1934


                   For the fiscal year ended December 31, 1997


                         COMMISSION FILE NUMBER: 0-19398



A.       Full title of the Plan and the address of the Plan:


                               First Coastal Bank
                          Employee Stock Purchase Plan
                         c/o Human Resources Department
                               First Coastal Bank
                             Pavilion Center Office
                               2101 Parks Avenue,
                         Virginia Beach, Virginia 23451




B.       Name of  issuer of the  securities  held  pursuant  to the Plan and the
         address of its principal executive office:


                  Virginia Beach Federal Financial Corporation
                          2101 Parks Avenue, Suite 400
                         Virginia Beach, Virginia 23451




<PAGE>



                              REQUIRED INFORMATION
                              --------------------
                                                                   PAGE
                                                             ---------------





(a)      Financial Statements



         Independent Auditors' Report........................             1

         Statement of Financial Condition....................             2

         Statement of Income and Changes in Plan Equity......             3

         Notes to Financial Statements.......................         4 - 7



(b)      Consent of Independent Auditors ....................             8






<PAGE>


SIGNATURES


Pursuant to the  requirements of the Securities  Exchange Act of 1934, the Board
of Directors has duly caused this annual report to be signed by the  undersigned
thereunto duly authorized.



                                              FIRST COASTAL BANK
                                           EMPLOYEE STOCK PURCHASE PLAN





      March 25, 1998                       /s/  John A. B. Davies, Jr.
----------------------------    ------------------------------------------------
           Date                              John A. B. Davies, Jr.
                                        President/Chief Executive Officer



      March 25, 1998                         /s/  Dennis R. Stewart
----------------------------    ------------------------------------------------
           Date                                 Dennis R. Stewart
                                Executive Vice President/Chief Financial Officer


                                        9


<PAGE>

                          Independent Auditors' Report
                          ----------------------------








To the Participants and Plan Administrator of the
First Coastal Bank Employee Stock Purchase Plan


We have  audited the  accompanying  statement  of  financial  condition of First
Coastal Bank Employee  Stock Purchase Plan as of December 31, 1997 and 1996, and
the related statement of income and changes in plan equity for each of the years
in the three-year period ended December 31, 1997. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of the First Coastal Bank Employee
Stock  Purchase  Plan as of December  31, 1997 and 1996,  and the results of its
operations  and changes in plan  equity for each of the years in the  three-year
period ended December 31, 1997 in conformity with generally accepted  accounting
principles.


                                                   \s\  KPMG PEAT MARWICK LLP
                                                   --------------------------

Richmond, Virginia
March 9, 1998

                                        1

<PAGE>



                 First Coastal Bank Employee Stock Purchase Plan
                        Statement of Financial Condition

                           December 31, 1997 and 1996

<TABLE>
<CAPTION>




                                                                    1997       1996
                                                                 --------------------
Assets:

<S>                                                              <C>        <C>     
Investments, at fair value -

     Virginia Beach Federal Financial Corporation Common Stock

         20,741 shares in 1997 - Cost $195,695;
         18,563 shares in 1996 - Cost $160,303 (Note 4) ......   $381,116   $175,188

Contributions receivable .....................................      2,811      2,968
                                                                 -------------------

         Total Assets ........................................   $383,927   $178,156
                                                                 ===================


Plan equity ..................................................   $383,927   $178,156
                                                                 ===================
</TABLE>




                 See accompanying Notes to Financial Statements


                                        2

<PAGE>



                 First Coastal Bank Employee Stock Purchase Plan
                 Statement of Income and Changes in Plan Equity

                  Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>

                                                     1997        1996         1995
                                                  ------------------------------------


<S>                                               <C>          <C>          <C>      
Contributions to the plan:

     Employee .................................   $  70,558    $  80,115    $ 144,569

     Employer .................................       3,715        4,217        7,267

Dividend income ...............................       3,780        2,761        3,818
                                                  -----------------------------------

         Total ................................      78,053       87,093      155,654

Unrealized appreciation of investments (Note 4)     170,536       23,115       18,087

Withdrawals - distributions to participants ...     (42,818)    (127,526)     (90,028)
                                                  -----------------------------------

Net increase (decease) in plan equity .........     205,771      (17,318)      83,713

Plan equity - beginning of year ...............     178,156      195,474      111,761
                                                  -----------------------------------

Plan equity - end of year .....................   $ 383,927    $ 178,156    $ 195,474
                                                  ===================================

Net asset value per unit ......................   $   18.51    $    9.60    $    7.90
                                                  ===================================

Number of units outstanding at end of year ....      20,741       18,563       24,741
                                                  ===================================
</TABLE>





                 See accompanying Notes to Financial Statements


                                        3

<PAGE>



                 First Coastal Bank Employee Stock Purchase Plan
                          Notes to Financial Statements





Note 1 - Plan Description


The First Coastal Bank  Employee  Stock  Purchase  Plan (the Plan;  formerly the
Virginia   Beach  Federal   Savings  Bank  Employee  Stock  Purchase  Plan)  was
established  April 1,  1994  for the  purpose  of  offering  employees  a way to
commence  or  increase  their  ownership  of Virginia  Beach  Federal  Financial
Corporation (the Corporation) common stock.

The Plan is not qualified under Section 401(a) of the Internal  Revenue Code and
is exempt from the provisions of the Employee  Retirement Income Security Act of
1974, as amended  (ERISA).  First  Coastal  Bank's (the Bank) Board of Directors
(Board of Directors) has appointed American Stock Transfer & Trust Company (Plan
Administrator) to administer the Plan and make purchases of common stock of (the
Corporation)  as agent  for the  participants.  The Board of  Directors  has the
authority  to make  changes  in the Plan and to  appoint  or to remove  the Plan
Administrator, at any time.

All employees are eligible to participate in the Plan on a voluntary basis up to
a maximum of $900 per pay period.  Once an employee is enrolled as a participant
in the Plan,  payroll  deductions  are made and such funds are used to  purchase
common  stock  of the  Corporation  in the  open-market,  or  directly  from the
Corporation under the terms of the Plan. The Plan grants participants options to
purchase  common  stock of the  Corporation  at 95% of the current  market price
during a thirty day investment  period.  The Bank  contributes the remaining 5%.
The participant  pays no brokerage  commissions or service charges for purchases
made under the Plan. Certain charges, such as brokerage commissions and transfer
taxes,  may be incurred upon a  participant's  withdrawal  from the Plan or upon
termination of the Plan.  The Plan  Administrator  may deduct  expenses from the
Plan to the  extent  such  expenses  have not been  paid  directly  by the Bank;
provided  that not less than 15 days written  notice of such intent to make such
deductions is furnished to the Bank.

The Plan Administrator holds and acts as custodian of shares purchased under the
Plan. The Plan  Administrator  may establish such procedures and make such other
provisions  for  the  administration  and  operation  of the  Plan  as it  deems
appropriate to give effect to the Plan's purpose.

Cash  dividends  paid on shares  credited  to a  participant's  account  will be
retained in the  participant's  account and  invested in common stock as soon as
practicable following the dividend payment date.


A  participant  may withdraw from the Plan at any time to be effective as of the
first day of any calendar quarter. Upon termination of employment with the Bank,
participation  under the Plan shall immediately cease and no unexercised options
to purchase common stock under the Plan

                                        4

<PAGE>


Notes to Financial Statements (Continued)


shall be deemed exercisable. Termination of employment shall include termination
as a result of death or disability of the participant.

Upon written  request to the Plan  Administrator,  a participant may request the
distribution  of shares  held under the Plan in stock  certificates  of not less
than 100 share increments on a quarterly basis. Alternatively, a participant may
request that such  distribution  be made in the form of cash, in which case such
distribution  of cash will be made in accordance  with  established  procedures,
with the proceeds from the sale of such shares,  less any brokerage  commissions
and any taxes, if applicable,  remitted to the participant. Such distribution of
Plan shares shall not be deemed a "Withdrawal" under the Plan.

Each  participant  has the  authority  to direct the Plan  Administrator  in the
manner of voting the number of whole  shares  (units) and  fractional  shares of
common  stock held in his or her  account.  The  aggregate  number of  remaining
shares  representing  shares for which no participant  voting  instructions  are
received in a timely manner shall not be voted by the Plan Administrator.


Note 2 - Summary of Significant Accounting Policies

The financial statements are prepared on the accrual basis of accounting whereby
Plan  contributions and withdrawals are recognized as incurred;  dividend income
is recognized  when earned;  and  unrealized  appreciation  or  depreciation  of
investments is recognized as it occurs.

The common  shares of the  Corporation  are valued at fair value  based upon the
last traded market price at year end.

Contributions  receivable  represent amounts withheld from participants prior to
year-end,  and which  were  scheduled  for  payment  to the Plan for  investment
subsequent to the Plan's year end.


Note 3 - Tax Status

The Plan was  established  to  qualify as an  Employee  Stock  Purchase  Plan as
defined in Section 423 of the Internal Revenue Code.

The  following  is a  brief  summary  of  the  tax  consequences  of  the  Plan.
Participants  should  consult their tax advisors as to the tax  consequences  of
their individual transactions.

(1)   The grant of an  option  to  purchase  stock  under the Plan will not,  by
      itself,  result in the recognition of taxable income to the participant or
      entitle the Bank to a deduction at the time of such grant.

(2)   The  exercise of an option  generally  will not, by itself,  result in the
      recognition of taxable income to the  participant or entitle the Bank to a
      deduction  at the time of such  exercise.  Provided  that the  participant
      holds  such  shares  received  under the Plan for at least one year  after
      acquisition of the shares or two years after the grant of the

                                        5

<PAGE>


Notes to Financial Statements (Continued)


      option,  whichever is later, the participant will recognize taxable income
      upon sale of such common stock as follows:

      a)    with respect to the 5% purchase discount, the difference between the
            amount paid by the  participant  for such  common  stock (the option
            exercise price) and the Plan purchase price of the common stock will
            be taxable as ordinary income upon the sale of the common stock;

      b)    the  participant  will  recognize  capital gain upon the sale of the
            common stock  received upon the exercise of options to purchase such
            stock  under the Plan,  to the  extent  that the sale  price of such
            common stock exceeds the Plan purchase price of such common stock;

      c)    if the sale price of such  common  stock is below the Plan  purchase
            price of such  common  stock,  the  participant  shall  recognize  a
            long-term capital loss upon the sale of such common stock.

(3)   The sale of the  common  stock  acquired  within  two years of the date of
      grant of such option or one year of such acquisition,  whichever is later,
      will result in the  recognition of ordinary  income by the  participant on
      the date of sale in an amount equal to the difference between the exercise
      price  of  such  option  (i.e.,  95%  of the  market  price  of the  stock
      purchased) and the sale proceeds of such common stock.

(4)   Receipt of cash  dividends  on stock  held  under the Plan will  result in
      taxable income to the  participant in the year received  without regard to
      the  reinvestment of such dividends for the purchase of additional  common
      stock under the Plan.


                                        6

<PAGE>




Note 4 - Unrealized Appreciation of Investments

The following table summarizes the unrealized appreciation (depreciation) of the
Plan's  investments in common stock for the years ended December 31, 1997,  1996
and 1995.


                                          1997        1996         1995
                                        ----------------------------------



Fair value ..........................   $ 381,116   $ 175,188    $ 191,742

Less:  prior year accumulated 
       unrealized appreciation 
       depreciation).................      14,885      (8,230)     (26,317)

Less: cost...........................     195,695      160,303      199,972
                                        -----------------------------------

Current year unrealized appreciation    $ 170,536   $  23,115    $  18,087
                                        ===================================



                                        7
<PAGE>



                         CONSENT OF INDEPENDENT AUDITORS





The Board of Directors
Virginia Beach Federal Financial Corporation


We consent to incorporation by reference in Registration  Statement No. 33-76678
on Form S-8 of Virginia Beach Federal Financial  Corporation of our report dated
March 9, 1998, relating to the statement of financial condition of First Coastal
Bank  Employee  Stock  Purchase  Plan as of December 31, 1997 and 1996,  and the
related  statement of income and changes in plan equity for each of the years in
the three-year  period ended December 31, 1997,  which report is included in the
December 31, 1997 annual  report on Form 11-K of the First Coastal Bank Employee
Stock Purchase Plan.




\s\ KPMG Peat Marwick LLP

Richmond, Virginia
March 25, 1998


                                        8