SCHEDULE 14A
                                 (RULE 14A-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
           PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                EXCHANGE ACT OF 1934 (AMENDMENT NO. ____________)

FILED  BY  THE  REGISTRANT
FILED  BY  A  PARTY  OTHER  THAN  THE  REGISTRANT
CHECK  THE  APPROPRIATE  BOX:
     PRELIMINARY  PROXY  STATEMENT
     CONFIDENTIAL,  FOR  USE  OF  THE  COMMISSION  ONLY  (AS  PERMITTED  BY RULE
14A-6(E)(2))
     DEFINITIVE  PROXY  STATEMENT
     DEFINITIVE  ADDITIONAL  MATERIALS
     SOLICITING  MATERIAL  PURSUANT  TO  RULE  14A-11(C)  OR  RULE  14A-12

                              COASTAL BANCORP, INC.
                (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


    (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT))

PAYMENT  OF  FILING  FEE  (CHECK  THE  APPROPRIATE  BOX):
     NO  FEE  REQUIRED.
     FEE  COMPUTED  ON  TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.

     (1)     TITLE  OF  EACH  CLASS  OF SECURITIES TO WHICH TRANSACTION APPLIES:

___________________________________
     (2)     AGGREGATE  NUMBER  OF  SECURITIES  TO  WHICH  TRANSACTION  APPLIES:

___________________________________
     (3)     PER  UNIT  PRICE  OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT  TO  EXCHANGE
          ACT  RULE  0-11:  (SET  FORTH  THE  AMOUNT  ON WHICH THE FILING FEE IS
CALCULATED  AND  STATE  HOW  IT  WAS  DETERMINED):

___________________________________
     (4)     PROPOSED  MAXIMUM  AGGREGATE  VALUE  OF  TRANSACTION:

___________________________________
     (5)     TOTAL  FEE  PAID:

___________________________________
     FEE  PAID  PREVIOUSLY  WITH  PRELIMINARY  MATERIALS:
     CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(A)(2)  AND  IDENTIFY  THE  FILING  FOR  WHICH  THE  OFFSETTING FEE WAS PAID
PREVIOUSLY.  IDENTIFY  THE  PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE  FORM  OR  SCHEDULE  AND  THE  DATE  OF  ITS  FILING.

     (1)     AMOUNT  PREVIOUSLY  PAID:

___________________________________
     (2)     FORM,  SCHEDULE  OR  REGISTRATION  STATEMENT  NO.:

___________________________________
     (3)     FILING  PARTY:

___________________________________
     (4)     DATE  FILED:


___________________________________


<PAGE>







                                                        March 23, 1999


Dear  Stockholder:

     You  are cordially invited to attend the Annual Meeting of the stockholders
of  Coastal  Bancorp,  Inc.  (the  "Company").  The  meeting will be held at the
corporate  offices  of Coastal Bancorp, Inc., at 5718 Westheimer, Houston, Texas
in  the  Coastal  Banc  auditorium,  Suite 1101, on Thursday, April 22, 1999, at
11:00  a.m.,  Central  Time.

     The  attached  Notice  of  Annual  Meeting and Proxy Statement describe the
formal  business  to  be  transacted  at the meeting.  Stockholders will vote to
elect directors, act on the Company's 1999 Stock Compensation Program, act on an
adjournment  of  the  Annual  Meeting,  if  necessary,  and ratify the Company's
independent  auditors.  The  Company's  Board  of  Directors believes that these
proposals  are  in  the  best  interest  of the Company and its stockholders and
recommends  that  stockholders vote "for" them at the Annual Meeting.  Directors
and  officers  of  the  Company and representatives of the Company's independent
auditors  will  be present to respond to any questions that our stockholders may
have.

     It  is  very  important  that  you  be  represented  at  the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting  in person. Let me urge you to mark, sign and date your proxy card today
and  return it in the postage paid envelope provided, even if you plan to attend
the  Annual  Meeting.  This will not prevent you from voting in person, but will
ensure  that  your  vote  is  counted  if  you  are  unable  to  attend.

     Your  continued  support  of  and  interest  in  Coastal  Bancorp,  Inc. is
appreciated.

                                        Sincerely,




                                        /s/   Manuel  J.  Mehos
                                        Manuel  J.  Mehos
                                        Chairman  of  the  Board,  President
                                        and  Chief  Executive  Officer

<PAGE>
                              COASTAL BANCORP, INC.
                               COASTAL BANC PLAZA
                           5718 WESTHEIMER, SUITE 600
                              HOUSTON, TEXAS  77057

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD APRIL 22, 1999

     NOTICE  IS  HEREBY  GIVEN  that the Annual Meeting of Stockholders ("Annual
Meeting") of Coastal Bancorp, Inc. (the "Company") will be held at the corporate
offices of Coastal Bancorp, Inc., at 5718 Westheimer, Suite 1101, Houston, Texas
at  11:00  a.m., Central Time, on April 22, 1999 for the following purposes, all
of  which  are  more  completely  set forth in the accompanying Proxy Statement:

     (1)     To  elect  two  directors  of the Company to serve until the annual
meeting  of stockholders in the year 2002 and until their successors are elected
and  qualified;

     (2)     To  consider  and  act  upon  a  proposal  to  adopt the 1999 Stock
Compensation  Program  for  the  Company  and  its  subsidiaries;

     (3)     To  vote  on  a  proposal  to  approve an adjournment of the Annual
Meeting  to  another  date  and  time  for  the purpose of soliciting additional
proxies  if  there are not sufficient votes at the time of the Annual Meeting to
approve  the  proposal  relating  to  the  1999  Stock  Compensation  Program;

     (4)     To  ratify the appointment of KPMG LLP as the Company's independent
auditors  for  the  fiscal  year  ending  December  31,  1999;  and,

     (5)     To  transact  such  other  business as may properly come before the
Annual Meeting, or any adjournment or postponement thereof.  Except with respect
to  procedural matters incident to the conduct of the Annual Meeting, management
of  the  Company  is  not  aware of any matters other than those set forth above
which  may  properly  come  before  the  Annual  Meeting.

     The Board of Directors has fixed February 25, 1999 for the determination of
stockholders  entitled  to notice of, and to vote at, the Annual Meeting and any
adjournment  or  postponement  thereof.  Only those stockholders of record as of
the  close  of  business  on  that  date  will be entitled to vote at the Annual
Meeting  or  at  any  such  adjournment  or  postponement.

                                   BY  ORDER  OF  THE  BOARD  OF
                                   DIRECTORS





                                   /s/   Linda  B.  Frazier
                                   Linda  B.  Frazier
                                   Secretary


Houston,  Texas
March  23,  1999


     YOU  ARE  CORDIALLY  INVITED TO ATTEND THE ANNUAL MEETING.  IT IS IMPORTANT
THAT  YOUR  SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN.  EVEN IF YOU
PLAN  TO  BE  PRESENT,  YOU  ARE  URGED  TO  COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED  PROXY  PROMPTLY IN THE ENVELOPE PROVIDED.  IF YOU ATTEND THIS MEETING,
YOU  MAY  VOTE  IN PERSON OR BY PROXY.  ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING  OR  IN  PERSON  AT  ANY  TIME  PRIOR  TO  THE  EXERCISE  THEREOF.




                              COASTAL BANCORP, INC.


                                 PROXY STATEMENT


                         ANNUAL MEETING OF STOCKHOLDERS


     This  Proxy Statement is furnished to the holders of the common stock, $.01
par  value  per  share  (the  "Common  Stock")  of  Coastal  Bancorp,  Inc. (the
"Company") in connection with the solicitation of proxies on behalf of the Board
of Directors of the Company, to be used at the Annual Meeting of Stockholders to
be  held  at the corporate offices of Coastal Bancorp, Inc., at 5718 Westheimer,
Houston,  Texas  in  the  Coastal  Banc  auditorium,  Suite 1101, at 11:00 a.m.,
Central  Time,  on April 22, 1999 and at any adjournment or postponement thereof
for  the  purposes  set  forth  in the Notice of Annual Meeting of Stockholders.
This  Proxy Statement is expected to be mailed to stockholders on or about March
23,  1999.

     Each  proxy  solicited  hereby,  if  properly  signed  and  returned to the
Company,  will be voted in accordance with the instructions contained therein if
it is not revoked prior to its use.  IF NO CONTRARY INSTRUCTIONS ARE GIVEN, EACH
PROXY  RECEIVED  WILL BE VOTED:  (I) FOR THE ELECTION OF THE BOARD'S NOMINEES AS
DIRECTORS  OF  THE  COMPANY;  (II)  FOR  THE PROPOSAL TO CONSIDER AND ACT UPON A
PROPOSAL  TO  ADOPT  THE 1999 STOCK COMPENSATION PROGRAM FOR THE COMPANY AND ITS
SUBSIDIARIES;  (III)  FOR  THE  PROPOSAL TO APPROVE AN ADJOURNMENT OF THE ANNUAL
MEETING  TO  ANOTHER  DATE  AND  TIME  FOR  THE PURPOSE OF SOLICITING ADDITIONAL
PROXIES  IF  THERE ARE NOT SUFFICIENT VOTES AT THE TIME OF THE ANNUAL MEETING TO
APPROVE  THE  PROPOSAL RELATING TO THE 1999 STOCK COMPENSATION PROGRAM; (IV) FOR
THE  PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS  FOR  THE  FISCAL  YEAR  ENDING  DECEMBER  31,  1999;  AND (V) UPON THE
TRANSACTION  OF  SUCH  OTHER  BUSINESS  AS  MAY  PROPERLY COME BEFORE THE ANNUAL
MEETING,  IN  ACCORDANCE  WITH  THE  BEST  JUDGMENT  OF THE PERSONS APPOINTED AS
PROXIES.  ANY  HOLDER  OF  COMMON  STOCK WHO RETURNS A SIGNED PROXY BUT FAILS TO
PROVIDE  INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH SHARES ARE TO BE VOTED WILL
BE  DEEMED  TO  HAVE  VOTED  IN  FAVOR OF THE MATTERS SET FORTH IN THE PRECEDING
SENTENCE.

     Any  stockholder  giving  a  proxy  has  the power to revoke it at any time
before  it  is exercised by (i) filing with the Secretary of the Company written
notice  of  revocation thereof (Linda B. Frazier, Coastal Bancorp, Inc., Coastal
Banc Plaza, 5718 Westheimer, Suite 600, Houston, Texas 77057), (ii) submitting a
duly  executed  proxy  bearing a later date; or (iii) by appearing at the Annual
Meeting  and  giving  the  Secretary  notice  of his or her intention to vote in
person.  Proxies  solicited  hereby  may be exercised only at the Annual Meeting
and  any  adjournment or postponement thereof and will not be used for any other
meeting.

<PAGE>
                             BACKGROUND INFORMATION
                                       ON
                              COASTAL BANCORP, INC.
                                       AND
                                  SUBSIDIARIES

     Coastal  Bancorp, Inc. (the "Company") is engaged primarily in the business
of serving as the parent holding company for Coastal Banc ssb (the "Bank").  The
Company  was incorporated in March 1994 in connection with the reorganization of
Coastal  Banc  Savings  Association,  a  Texas-chartered thrift institution (the
"Association")  into  the  holding  company form of organization.  In connection
with  the  reorganization,  which  was  completed  in July 1994, the Association
concurrently  converted into a Texas-chartered savings bank and took its present
name.  In  November  1996,  in  order  to  minimize  state  taxes, the Company's
corporate  structure  was  again  reorganized  by  forming  Coastal Banc Holding
Company,  Inc.  ("HoCo")  as  a  Delaware  holding  company.  HoCo  became  a
wholly-owned  subsidiary  of  the  Company  and  the  Bank became a wholly-owned
subsidiary  of  HoCo.  Coastal Bancorp, Inc. is a registered unitary savings and
loan  holding  company  regulated  by  the  Office  of  Thrift  Supervision.


                        VOTING SECURITIES AND BENEFICIAL
                                OWNERSHIP THEREOF

     Only  holders  of  record  of  the  Company's  Common Stock at the close of
business on February 25, 1999 ("Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting.  On the Record Date, there were 6,880,964 shares
of  Common  Stock  outstanding  and  the  Company  had  no other class of equity
securities  outstanding.  Only  holders of Company Common Stock will be entitled
to vote at the Annual Meeting and each share of Common Stock will be entitled to
one vote on all matters properly presented.  Stockholders of the Company are not
permitted  to  cumulate  their  votes  for the election of directors.  All share
balances set forth herein have been adjusted to reflect the 3:2 stock split that
was  paid  on  June  15,  1998.

     The  presence  in  person  or  by  proxy  of  at  least  a  majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum  at  the  Annual Meeting. Directors will be elected by a plurality of the
votes  cast  at  the  Annual Meeting.  The affirmative vote of a majority of the
total  votes cast at the Annual Meeting is required for the approval of the 1999
Stock  Compensation Program, to adjourn the Annual Meeting, if necessary, and to
approve  the  proposal  to  ratify  the appointment of the Company's independent
auditors.

     Abstentions  will  be counted for purposes of determining the presence of a
quorum  at  the Annual Meeting.  Because of the required votes, abstentions will
have  the  same  effect as a vote against the proposal to approve the 1999 Stock
Compensation  Program,  against  the  proposal to adjourn the Annual Meeting, if
necessary,  and  against the proposal to ratify the appointment of the Company's
independent  auditors, but will not be counted as votes cast for the election of
directors  and,  thus,  will  have  no  effect on the voting for the election of
directors.  Under  the  applicable rules, all of the proposals for consideration
at  the Annual Meeting are considered "discretionary" items upon which brokerage
firms  may  vote  in their discretion on behalf of their clients if such clients
have  not  furnished  voting  instructions.  Thus,  there are no proposals to be
considered  at  the  Annual Meeting which are considered "non-discretionary" and
for  which  there  will  be  "broker  non-votes".

     At  February  25,  1999, directors, executive officers and their affiliates
beneficially  owned  1,360,943  shares  of  Common  Stock or 20.28% of the total
shares  of Common Stock outstanding on such date.  It is anticipated that all of
such  shares  will  be  voted  for the election of the nominees of the Company's
Board  of  Directors and in favor of all of the proposals of the Board described
herein.

     The following table sets forth the beneficial ownership of the Common Stock
as  of  February 25, 1999, with respect to (i) any person or entity who is known
to  the  Company  to  be the beneficial owner of 5% or more of the Common Stock;
(ii) each nominee for director; (iii) each director of the Company; (iv) each of
the  executive  officers named in the summary compensation table (see "Executive
Compensation  - Summary Compensation Table") and (v) all directors and executive
officers  of  the  Company and its subsidiary, Coastal Banc ssb, as a group. The
address  for all directors and executive officers of the Company and the Bank is
Coastal Banc Plaza, 5718 Westheimer, Suite 600, Houston, Texas 77057.  Except as
set  forth  below,  as  of  February 25, 1999, the Company was aware of no other
person  or entity unaffiliated with the Company that was the beneficial owner of
5%  or  more  of  the  Common  Stock.


<PAGE>
------
<TABLE>
<CAPTION>


                                            Amount of Shares of
                                                Common Stock
Name                                         Beneficially Owned
(and Address) of                             as of February 25,   Percent of
Beneficial Owner                                  1999(1)            Class
------------------------------------------  --------------------  -----------
<S>                                         <C>                   <C>

First Manhattan Co.. . . . . . . . . . . .        728,988(2)       10.60%
437 Madison Avenue
New York, New York 10022

Thomson Horstmann & Bryant, Inc. . . . . .        665,300(2)        9.67 
Park 80 West, Plaza II
Saddle Brook, New Jersey 07662

Dimensional Fund Advisors, Inc.. . . . . .        438,150(2)        6.37 
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401

Weiss Peck & Greer, L.L.C. . . . . . . . .        376,850(2)        5.48 
One New York Plaza, 30th Floor
New York, New York 10004

Friedman Billings Ramsey & Co., Inc. . . .        232,437(2)        3.38 
1001 19th Street North
Arlington, Virginia 22209-1710

Robert Edwin Allday, Director. . . . . . .              0(3)           * 
Coastal Bancorp, Inc. and Coastal Banc ssb

D. Fort Flowers, Jr., Director . . . . . .        274,020(4)        3.98 
Coastal Bancorp, Inc. and Coastal Banc ssb

Dennis S. Frank, Director. . . . . . . . .            2,700            * 
Coastal Bancorp, Inc. and Coastal Banc ssb

Robert E. Johnson, Jr., Director . . . . .           19,320            * 
Coastal Bancorp, Inc. and Coastal Banc ssb

Manuel J. Mehos, Chairman of the Board,. .        568,250(5)(6)     8.26 
President and Chief Executive Officer
Coastal Bancorp, Inc., Coastal Banc
Holding Company, Inc. and
Coastal Banc ssb
</TABLE>




<PAGE>
------
<TABLE>
<CAPTION>


                                               Amount of Shares of
                                                   Common Stock
Name                                            Beneficially Owned
(and Address) of                                as of February 25,   Percent of
Beneficial Owner                                     1999(1)            Class
---------------------------------------------  --------------------  -----------
<S>                                            <C>                   <C>


James C. Niver, Director. . . . . . . . . . .        553,428(6)        8.04%
Coastal Bancorp, Inc. and Coastal Banc ssb

John D. Bird, Executive Vice President, . . .         42,416(5)           * 
Chief Administrative Officer and
Assistant Secretary
Coastal Banc ssb

Gary R. Garrett, Executive Vice President . .         47,206(5)           * 
and Chief Lending Officer
Coastal Banc ssb

David R. Graham, Executive Vice President - .         21,764(5)           * 
Real Estate Lending
Coastal Banc ssb

Nancy S. Vadasz, Executive Vice President - .         26,844(5)           * 
Market and Product Strategies
Coastal Banc ssb

Catherine N. Wylie, Executive Vice President.         46,447(5)           * 
and Chief Financial Officer
Coastal Bancorp, Inc., Coastal Banc Holding
Company, Inc. and Coastal Banc ssb

All directors and executive officers of the .      1,360,943(5)       20.28 
Company and the Bank as a group
(11 persons)
</TABLE>


______________________
----------------------

*     Represents  less  than  1.0%  of  the  Common  Stock  outstanding.


(1)     Based  upon  information  furnished  by  the  respective individuals and
filings  pursuant  to  the  Securities  Exchange  Act  of  1934, as amended (the
"Exchange  Act").  The  information  is not necessarily indicative of beneficial
ownership  for any other purpose.  Under regulations promulgated pursuant to the
Exchange  Act,  shares  are deemed to be beneficially owned by a person if he or
she  directly  or  indirectly has or shares (i) voting power, which includes the
power  to  vote or to direct the voting of the shares, or (ii) investment power,
which  includes the power to dispose or to direct the disposition of the shares.
Unless  otherwise  indicated,  the  named  beneficial  owner has sole voting and
dispositive  power  with  respect  to  the  shares.

(2)     Based  on  a  Schedule  13G  filed  under  the  Exchange  Act.

(3)     Mr.  Allday  is  the beneficial owner of 2,000 shares of the Bank's 9.0%
Noncumulative  Preferred  Stock,  Series  A.

(4)     Of  such shares, 269,520 are owned by a trust over which Mr. Flowers has
shared  voting  and  dispositive  power  with  two  other  co-trustees.

(5)     Under  applicable  regulations,  a  person  is deemed to have beneficial
ownership  of any shares of Common Stock which may be acquired within 60 days of
the  Record  Date pursuant to the exercise of outstanding stock options.  Shares
of  Common Stock which are subject to stock options are deemed to be outstanding
for the purpose of computing the percentage of outstanding Common Stock owned by
such person or group but not deemed outstanding for the purpose of computing the
percentage  of Common Stock owned by any other person or group.  The amounts set
forth  in  the  table include 41,416, 46,706, 21,764, 124,750, 26,844 and 42,522
shares which may be received upon the exercise of stock options by Messrs. Bird,
Garrett,  Graham and Mehos and Mmes. Vadasz and Wylie, respectively, pursuant to
stock  options.  For all directors and executive officers as a group, the number
of  shares  includes 304,002 shares of Common Stock subject to outstanding stock
options.

(6)     Mr.  Niver  is  the co-trustee with his wife of a trust which holds such
shares  for  their  benefit.


               INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
              DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS


ELECTION  OF  DIRECTORS

     Coastal  Bancorp, Inc. is a Texas corporation, formed pursuant to the Texas
Business  Corporation  Act  which  requires that the business and affairs of the
Company  shall  be  managed by or under the direction of the Board of Directors.
The  Company's  Articles  of  Incorporation  provide that the Company's Board of
Directors  be  divided into three classes as nearly equal in number as possible,
with one class to be elected annually, and the Bylaws state that members of each
class  are  to be elected for a term of office to expire at the third succeeding
annual  meeting  of  stockholders and when their respective successors have been
elected  and qualified.  The number of directors is determined from time to time
by  resolution  of  the Board.  Mr. Stone, effective November 24, 1998, resigned
from  the  Board  of  Directors  for personal reasons.  On January 28, 1999, the
Board  of  Directors  nominated  and  approved  Mr. Paul W. Hobby to replace Mr.
Stone.

     Two directors are to be elected at this Annual Meeting to hold office until
the  Annual Meeting in 2002 or until their successors are elected and qualified.
The  information  set  forth  below relating to a director's tenure is as of the
date  he was first elected as director of either the Association or the Company,
where  applicable.  There  are  no  arrangements  or  understandings between the
Company  and  any  person  pursuant  to which such person has been selected as a
nominee,  and  no director is related to any other director or executive officer
of  the  Company  or  the  Bank  by  blood,  marriage  or  adoption.

INFORMATION  WITH  RESPECT  TO  CONTINUING  DIRECTORS

     Information concerning those members of the Board whose terms do not expire
in  1999,  including  age,  tenure  and  principal position with the Company and
principal  occupation  during  the past five years, as well as the year his term
will  expire,  is  set  forth  below:

     MANUEL  J. MEHOS.  Age 44.  Director since 1986.  Mr. Mehos is the Chairman
of the Board, President and Chief Executive Officer of the Company, Coastal Banc
Holding  Company,  Inc., Coastal Banc Capital Corp., and the Bank and also Chief
Executive Officer of CoastalBanc Financial Corp., a Bank subsidiary.  He is also
a  director of each of the Bank's subsidiaries and is the President of CBS Asset
Corp.,  CBS  Builders,  Inc.  and  CoastalBanc Investment Corporation, which are
wholly-owned  subsidiaries  of  the  Bank,  all of which are located in Houston,
Texas.  CBS  Asset  Corp.,  CBS  Builders,  Inc.  and  CoastalBanc  Investment
Corporation  are  presently  inactive.  Mr.  Mehos  also currently serves on the
Finance  Commission of Texas.  His term as a director of the Company will expire
in  2000.

     JAMES  C.  NIVER.  Age  69.  Director since 1986.  Mr. Niver is retired and
from  1972  until  1995  was  employed  by Century Land Company, Houston, Texas,
retiring as its President.  His term as a director of the Company will expire in
2000.

     R.  EDWIN  ALLDAY.  Age  48.  Director since 1986.  Mr. Allday is a private
investor  and  in  September  1993  became  a  senior  consultant  with The Dini
Partners,  Inc.,  Houston,  Texas,  a  company  that  provides  counseling  in
philanthropy  and  non-profit company management.  Mr. Allday was an independent
consultant  for community relations for charitable organizations from March 1990
to  June  1993.  From  August  1988  to  March  1990,  Mr.  Allday was the Chief
Operating  Officer  of  the American Leadership Forum, a non-profit organization
which  teaches business leadership skills located in Houston, Texas.  From March
1982  to  August 1988, Mr. Allday was the General Manager of Anglia Companies, a
family-owned  investment  management  business in Houston, Texas.  His term as a
director  of  the  Company  will  expire  in  2001.

     D.  FORT  FLOWERS,  JR.  Age  37.  Director since 1992.  Mr. Flowers is the
President  of  Sentinel  Trust  Company,  a  Texas  Limited Banking Association,
Houston,  Texas,  providing  fiduciary  and  investment  management  services to
affluent  families,  their closely held corporations and foundations, a position
he has held since January 1997.  Mr. Flowers was Chairman of the Board of DIFCO,
Inc.,  a railroad car engineering and manufacturing company from before the time
he became a director until August, 1997 when that company was sold.  His term as
a  director  of  the  Company  will  expire  in  2001.

<PAGE>

     DENNIS  S. FRANK.  Age 42.  Director since 1988.  Mr. Frank is the Chairman
of  the  Board,  Chief Executive Officer and President of Silvergate Bancorp, La
Mesa,  California, a position he has held since December 1996.  Additionally, he
has  been  the  President and Chief Executive Officer of DSF Management Corp., a
private  investment company, located in Houston, Texas, since March 1994.  Prior
to that, Mr. Frank was the Manager of the Association's Capital Markets Division
from July 1988 to April 1993 and a consultant to the Association from April 1993
to  April  1994.  His  term  as  a  director of the Company will expire in 2001.


INFORMATION  WITH  RESPECT  TO  NOMINEES  FOR  DIRECTOR

     Unless  otherwise  directed,  each  proxy  executed  and  returned  by  a
stockholder  will  be  voted  "FOR"  the election of each of the nominees listed
below.  If  any person named as a nominee should be unable or unwilling to stand
for  election  at  the  time  of the Annual Meeting, the Board of Directors will
nominate,  and  the  persons  named  as  proxies  will vote, for any replacement
nominee  or  nominees  recommended by the Board of Directors.  At this time, the
Board  of  Directors knows of no reason why any of the nominees listed below may
not  be  able  to  serve  as  a  director  if  elected.

     Information  concerning  the  nominees for director, including age, tenure,
principal  position  with  the  Company and principal occupation during the past
five  years,  as  well  as  the  year  his term will expire, is set forth below:

     ROBERT  E.  JOHNSON,  JR.  Age  45.  Director since 1986.  Mr. Johnson is a
partner  in  the  law firm of Johnson & Johnson, Austin, Texas.  If elected, his
term  as  a  director  of  the  Company  will  expire  in  2002.

     PAUL  W.  HOBBY.  Age  38.  Director  since  January,  1999.  Mr.  Hobby is
Chairman  and  Chief  Executive  Officer of Hobby Media Services, Inc., Houston,
Texas,  a  Houston  based corporation which invests in traditional and new media
services.  Mr.  Hobby  also  serves  on the board of directors of various civic,
charitable and professional associations.  If elected, his term as a director of
the  Company  will  expire  in  2002.

                THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE
                NOMINEES BE ELECTED AS DIRECTORS OF THE COMPANY.


<PAGE>
STOCKHOLDER  NOMINATIONS

     The  Company's Articles of Incorporation govern nominations for election to
the  Board  of  Directors  and  require that all nominations for election to the
Board  of Directors other than those made by the Board, be made by a stockholder
who  has complied with the notice provisions in the Articles.  Written notice of
a  stockholder's  nomination  must  be  communicated  to  the  attention  of the
Company's  Secretary  and  either  delivered  to, or mailed and received at, the
principal  executive  offices  of the Company not less than 60 days prior to the
anniversary  date  of  the  mailing  of  the  proxy  materials by the Company in
connection  with the immediately preceding annual meeting of stockholders of the
Company,  and with respect to a special meeting of stockholders for the election
of  directors,  on  the close of business on the tenth day following the date on
which  notice of such meeting is first given to stockholders.  Such notice shall
include specified matters as set forth in the Articles of Incorporation.  If the
nomination  is  not  made  in  accordance with the requirements set forth in the
Articles  of  Incorporation, the defective nomination will be disregarded at the
Annual  Meeting.  The  Company did not receive any nominations from stockholders
for  the  Annual  Meeting.


BOARD  OF  DIRECTORS  MEETINGS  AND  COMMITTEES
  OF  COASTAL  BANCORP,  INC.  AND  COASTAL  BANC  SSB

     Regular meetings of the Board of Directors of the Company are held at least
quarterly  and  special meetings may be called at any time as necessary.  During
the  year  ended  December  31, 1998, the Board of Directors of the Company held
eleven  meetings.  No  incumbent director of the Company attended fewer than 75%
of the Board meetings held during the period in which he served as a director in
1998.

     The  Board of Directors is authorized by its Bylaws to elect members of the
Board  to  committees of the Board which may be necessary or appropriate for the
conduct  of  the  business  of the Company.  At December 31, 1998, there were no
committees  of  the  Board  of  the  Company.

     Regular meetings of the Board of Directors of the Bank are held monthly and
special  meetings may be called at any time as necessary.  During the year ended
December  31, 1998, the Board of Directors of the Bank held twelve meetings.  No
incumbent  director  of the Bank attended fewer than 75% of the aggregate of the
total  number  of  Board meetings held during the period in which he served as a
director  and  the  total  number of meetings held by committees of the Board of
Directors  of  the  Bank  on  which  he  served  in  1998.

     The  Board  of  Directors  of the Bank is authorized by its Bylaws to elect
members  of  the  Board  to  committees  of  the Board which may be necessary or
appropriate  for the conduct of the business of the Bank.  At December 31, 1998,
the  Bank  had  an Audit, Compensation, Asset/Liability, Directors' Loan Review,
Community  Reinvestment  Act  Committee  and  an  Investment  Banking Committee.

<PAGE>

     The  Audit  Committee  of the Bank's Board is responsible for reviewing the
reports  of  the  independent  auditors  and  examination  reports of regulatory
authorities,  monitoring  the  functions of the internal audit department, which
reports  directly  to  this  Committee, and generally overseeing compliance with
internal policies and procedures.  The Audit Committee members are Messrs. Niver
(Chairman),  Allday  and  Johnson.  This  Committee  met  six times during 1998.

     The  Compensation  Committee  reviews  the compensation of senior executive
officers and recommends to the Board adjustments in such compensation based on a
number  of  factors,  including  the  profitability  of the Bank.  Messrs. Niver
(Chairman),  Flowers  and Johnson comprise the Compensation Committee, which met
two  times  during  1998.  See  "Executive Compensation - Report of the Board of
Directors  on  Compensation  During  Fiscal  1998."

     The  Asset/Liability  Committee  met  four  times  in  1998  to  authorize
investment  categories,  overall  investment  limitations  and  brokers  to  be
utilized, to review trade recommendations and past trades of the Asset/Liability
Subcommittee  (composed  of  certain  officers)  and  compliance  of  the Bank's
investment activities with the Bank's Investment and Interest Rate Risk Policies
and  with  Board  recommendations.  The  Committee also makes interest rate risk
assessments and formulates asset/liability management policy for the forthcoming
quarterly period.  This Committee consists of Messrs. Frank (Chairman), Flowers,
Mehos  and  Hobby.

     The  Directors'  Loan  Review Committee met twelve times in 1998 to approve
and/or  review  certain  loans.  The  Committee can approve any class or type of
loan  which is authorized for investment by the Board.  Specified loan authority
limits  are  further  delegated to the management loan committee, the management
construction  loan  committee  or  an  individual  officer  of  the  Bank.  The
Directors'  Loan Review Committee consists of Messrs. Mehos (Chairman), Flowers,
Frank,  Niver,  and  Stone.

     The Community Reinvestment Act ("CRA") Committee was established to monitor
the  Bank's  efforts  in  serving  the  credit  needs  of  the  residents of the
communities  in  which  it  does business, including those credit-worthy persons
having  low and moderate incomes.  The CRA Committee has appointed a CRA Officer
who  is  responsible for developing and administering the Bank's CRA program and
for  training the Bank's staff to comply with CRA regulations, and Bank policies
and  procedures.  The  CRA Officer chairs a management CRA Committee which works
to  oversee that the Bank meets the procedural requirements of the CRA.  The CRA
Committee is composed of Messrs. Allday (Chairman), Frank, Mehos and Johnson and
met  two  times  in  1998.

     The  Investment  Banking  Committee  was  established in 1998 to review and
recommend  to  the Board possible acquisitions of investment banking firms.  The
committee  is  composed  of  Messrs.  Mehos,  Flowers  and  Stone,  prior to his
resignation met two times during 1998.  Mr. Hobby will be serving as a member of
this  committee  in  1999.


<PAGE>
BOARD  FEES

     Through October 22, 1998, each non-employee director of the Company and the
Bank was paid a fee of $1,550 for attendance at Board meetings and a fee of $300
for  each  committee  meeting  attended.  Directors who were members of the Loan
Review  Committee  or  who  attended any ad hoc Portfolio Control Center ("PCC")
meetings  were  paid  a  maximum  of $600 per month for all such meetings.  From
November,  1998, each non-employee director of the Company and the Bank was paid
a  fee  of  $2,000  for  attendance  at  Board meetings, $400 for each committee
meeting  attended  and $800 for all Loan Review Committee/PCC meetings attended.
When  the  Board  of the Company meets on the same day as the Board of the Bank,
only  one  attendance  fee  is  paid  for  that  date.  No  fees  are  paid  for
non-attendance; attendance by conference telephone is similarly not compensated.
Directors are also reimbursed for reasonable travel expenses.  Directors who are
also  employees  of  the  Company and the Bank receive no fees for attendance at
Board  or  committee  meetings.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE OF THE EXCHANGE ACT

     Section  16(a)  of  the  Exchange  Act  requires  the  Company's  officers,
directors  and  beneficial  owners  of  more  than  10%  of  any class of equity
securities  of  the Company to file reports to indicate ownership and changes in
ownership with the Securities and Exchange Commission and to furnish the Company
with  copies  of  such  reports.

     Based  upon a review of the copies of such forms, the Company believes that
during  the  year ended December 31, 1998, all Section 16(a) filing requirements
applicable  to  the  Company's  officers and directors of the Company and/or the
Bank were complied with.  However, the Company believes that First Manhattan Co.
did  not  file  the  required  reports.


<PAGE>
EXECUTIVE  OFFICERS  WHO  ARE  NOT  DIRECTORS

     The following table sets forth information concerning executive officers of
the  Company,  the  Bank or other subsidiaries who do not serve on the Company's
Board  of  Directors.  All  executive  officers  are  elected  by  the  Board of
Directors  of  the Company or the Bank or of the respective subsidiary and serve
until  their successors are elected and qualified.  No such executive officer is
related to any director or other executive officer of the Company or the Bank or
its  subsidiaries  by blood, marriage or adoption, and there are no arrangements
or understandings between a director and any other person pursuant to which such
person  was  elected  an  executive  officer.

<TABLE>
<CAPTION>

                                                             Position with the Company and/or
                                                              the Bank and other subsidiaries
       Name                   Age                        Principal Occupation During Last Five Years
   ---------                 ------                       -------------------------------------------

<S>                            <C>                        <C>
John D. Bird                   55                    Executive Vice President of the Bank since August 1993,
                                                     Chief Administrative Officer since June 1993, and
                                                     Assistant Secretary of the Bank since March 1986;
                                                     Chief Operations Officer of the Bank from March 1986
                                                     to June 1993; President and sole stockholder of Coastal
                                                     Banc Insurance Agency, Inc., an affiliate of the Bank,
                                                     since May 1987.

Gary R. Garrett               52                     Executive Vice President of the Bank since August 1993
                                                     and a director of each of the Bank's subsidiaries;
                                                     Chief Lending Officer of  the Company and the since
                                                     1995; Senior Vice President- Mortgage Lending of
                                                     the Bank from October 1991 to August 1993; Chief
                                                     Executive Officer and President of CBS Mortgage Corp.
                                                     since August 1993; Executive Vice President, CBS
                                                     Mortgage Corp. from January 1989 to August 1993.
                                                     Director and Executive Vice President of Coastal Banc
                                                     Capital Corp., an affiliate of the Bank, since August 1997.

David R. Graham              55                      Executive Vice President of the Bank since August 1993
                                                     and a director of each of the Bank's subsidiaries; Senior
                                                     Vice President-Real Estate Lending Division of the
                                                     Bank from May 1988 to August 1993.  Senior Vice
                                                     President of CBS Asset Corp. since April 1993.

Nancy S. Vadasz              45                      Executive Vice President of the Bank since June of 1994,
                                                     Senior Vice President since September 1991.  Ms.
                                                     Vadasz is responsible for Market and Product Strategies.

Catherine N. Wylie           44                      Executive Vice President of Coastal Banc Holding
                                                     Company, Inc.  since November, 1996, of the Company
                                                     since July 1994 and of the  Bank since August 1993 and a
                                                     director of Coastal Banc  Holding Company, Inc., and of 
                                                     each of the Bank's subsidiaries; Chief Financial Officer of
                                                     of the Company and the Bank since October 1993; Controller 
                                                     of the Bank from April 1989 to October 1993; also Executive
                                                     Vice President/Treasurer of each of the Bank's subsidiaries
                                                     since October 1990.  Director and Executive Vice President
                                                     of Coastal Banc Capital Corp., an affiliate of the Bank
                                                     since August 1997.
</TABLE>




<PAGE>

                             EXECUTIVE COMPENSATION

     REPORT  OF  THE  COMPENSATION  COMMITTEE  OF  THE  BOARD  OF  DIRECTORS  ON
COMPENSATION  DURING  FISCAL  1998.  Officers  of  the  Company  do  not receive
compensation  for  their  services.

     The  Compensation  Committee  of  the  Board  of Directors of the Bank (the
"Committee")  is  composed  entirely  of  independent  outside  directors.  See
"Information  With  Respect  to  Nominees  for  Director,  Directors Whose Terms
Continue  and Executive Officers - Board of Directors Meetings and Committees of
Coastal  Bancorp,  Inc. and Coastal Banc ssb."  The Committee is responsible for
reviewing  the  compensation  of executive officers of the Bank and recommending
executive  compensation proposals to the Bank's Board of Directors for approval.

     The  Board  of Directors of the Bank has a compensation philosophy pursuant
to  which  executive  compensation  is  designed  to be at least comparable with
average  executive  compensation  for  the  Bank's  peers,  which  are generally
considered  to  be  companies  of  approximately  the  same size and in the same
industry.  Companies  included  are  independent  financial companies, banks and
savings  and  loan  associations,  ranging  from $900 million to $4.0 billion in
asset size.  In May 1992, the Bank retained an executive compensation consultant
to  review  its  executive  compensation  policies.  The  consultant developed a
compensation program for the Bank's executive officers which is a combination of
base  salary  plus  incentive  compensation  linked to the Bank's profitability.

     The  Committee evaluates the base salaries of the Bank's executive officers
annually.  An executive officer's base salary is determined based upon longevity
with  the  Bank,  the  effectiveness of such individual in performing his or her
duties,  peer  averages  at  the  position  in  question  and the Bank's overall
performance.  No  particular  weight  is  assigned  to these variables. The base
salary  component  alone,  while  designed  to  be  competitive  with peer group
averages,  is  not designed to produce top levels of compensation for the Bank's
executive officers when compared to its peer group.  The incentive component, as
described  below,  which requires the Bank to achieve returns at a pre-specified
level  before  additional compensation is paid, is the element which is designed
to  make total compensation for each of the Bank's executive officers comparable
or  better than the comparable executive compensation for the executive officers
in  the  Bank's  peer  group.  Based  upon  the  foregoing, Mr. Mehos, the Chief
Executive  Officer,  earned  $269,900  in  base  salary  during  1998.

     The  amount  of  incentive  compensation  is  related  to  the  financial
performance  of  the  Bank.  No  cash incentive compensation will be paid to the
Bank's  executive  officers unless the Committee determines the Bank is safe and
sound  in the following areas:  capital adequacy, earnings composition, earnings
capability,  liquidity, risk management (classified assets), strategic planning,
and  compliance  with  laws  and  regulations.

<PAGE>

     During  1998, the Board of Directors determined that no incentive awards to
its  Executive  Management  would be paid unless a 7.5% return on average equity
("ROE")  was  achieved.  Any  earnings  from  extraordinary  items  or  unsound
practices  are excluded from such calculations at the Board's discretion.  Gains
on  sales of securities from the investment account, net of losses of sales from
the  investment  account, are deducted from the earnings pool.  During 1998, the
Committee  calculated  that  the  Company  achieved  a  14.96%  ROE.

     Accordingly,  during  1998,  a  bonus pool of $348,697 in the aggregate was
established  and incentive awards were paid to the three top executive officers,
Mehos,  Garrett  and  Wylie,  of  the  Bank.  See  "Summary Compensation Table."

                                        By  the  Committee:



                                        James  C.  Niver  (Chairman)
                                        D.  Fort  Flowers,  Jr.
                                        Robert  E.  Johnson,  Jr.


<PAGE>
     SUMMARY  COMPENSATION  TABLE.  To meet the goal of providing shareholders a
concise,  comprehensive  overview of compensation awarded, earned or paid in the
reporting  period,  the  Summary  Compensation Table is utilized by the Company.
The Summary Compensation Table includes individual compensation information with
respect  to  the  Chief  Executive  Officer  and  the  four  other  most  highly
compensated  executive  officers  of  the  Bank and its subsidiaries whose total
compensation  exceeded  $100,000  for services rendered in all capacities during
the  fiscal  years  ended  December  31,  1998,  1997  and  1996.

<TABLE>
<CAPTION>
                                                       ANNUAL                               ALL
     NAME  AND  PRINCIPAL                           COMPENSATION            AWARDS         OTHER
         POSITION(1)                YEAR       SALARY(2)       BONUS(3)    OPTIONS(4)  COMPENSATION(5)
     --------------------           ----      ---------       --------      --------    ----------
<S>                                 <C>           <C>           <C>           <C>           <C>

Manuel J. Mehos
Chairman of the Board,              1998       $269,900       $174,899       10,000       $ 2,000
 President and                      1997        264,000        127,900       22,000         2,000
 Chief Executive Officer            1996        241,000        131,228       30,000         1,425

John D. Bird                        1998        128,369         27,000        2,000         8,000
Executive Vice President and        1997        124,630         30,000        5,000         8,000
 Chief Administrative Officer       1996        121,000         40,000        5,000         7,425

Gary R. Garrett                     1998        179,900         87,149        3,000         5,669
Executive Vice President and        1997        164,800         64,000       11,000         5,000
 Chief Lending Officer              1996        160,000         70,000       10,000         4,425

David R. Graham                     1998        131,071         34,291        2,000         2,000
Executive Vice President            1997        124,630         32,895        8,000         2,000
 Real Estate Lending Division       1996        121,000         40,000        7,500         1,425

Catherine N. Wylie                  1998        179,900         87,149        3,000        26,120
Executive Vice President and        1997        164,800         64,000       11,000         5,000
 Chief Financial Officer            1996        160,000         70,000       10,000         4,425

</TABLE>




(1)     Principal  positions  are  for  fiscal  1998.
(2)     Does not include amounts attributable to miscellaneous benefits received
by  executive  officers  of  the  Bank, including use of Bank-owned vehicles and
reimbursement  of  educational  expenses.  In  the  opinion of management of the
Company,  the  costs to the Company of providing such benefits to any individual
executive  officer  during  the  year ended December 31, 1998 did not exceed the
lesser  of  $50,000  or 10% of the total of annual salary and bonus reported for
the  individual.
(3)     Includes  lump  sum  cash  bonuses earned for the fiscal year stated and
paid  in  some  casesin  the  subsequent  year.
(4)     Free  standing stock options; see "- Option Grants in Last Fiscal Year."
(5)     Includes,  for  the  named  individuals, employer matching contributions
accrued  pursuant  to  the  Company's  Profit  Sharing  (401(k))  Plan,  any car
allowances  and  educational  reimbursements.

<PAGE>
EXECUTIVE  SEVERANCE  AGREEMENTS

     On  June  25,  1998,  the  Company  and  the  Bank extended the term of the
executive  severance  agreements (the "Executive Severance Agreements") with Mr.
Garrett  and  Ms.  Wylie  (the "Employees" or "Employee") out one year to expire
June  25,  2001.  The  Executive Severance Agreements provide for the payment of
certain  severance  benefits  to  Mr.  Garrett  and  Ms. Wylie in the event of a
trigger  event  under  the  Executive  Severance Agreements, which means (i) the
occurrence  of  a change in control of the Company as defined below, or (ii) the
voluntary  termination  within  90  days  of  an  event  which occurs during the
"Protected  Period"  (i.e., the period six months before and three years after a
change  of control or after the expiration of the Executive Severance Agreement)
and  constitutes  "Good  Reason" (as defined below), or (iii) termination of the
Employee's  employment  for  any  reason  other  than  "Just  Cause"  during the
Protected  Period.  If a trigger event occurs, the Employees will be entitled to
(x)  payment by the Company or the Bank of one times the annual salary and bonus
for  incentive compensation (not including stock compensation plans) paid to the
Employee  during  his or her immediately preceding year of employment or (y) the
payment by the Company or the Bank of an amount equal to 2.99 times their annual
salary  plus  bonuses  paid  during  the immediately preceding year; and (z) the
Company  will  cause  any  and  all outstanding options to purchase stock of the
Company  held  by  each Employee to become immediately exercisable in full.  The
Executive  Severance Agreement also provides that the Company will reimburse the
Employee  for  all  costs  and  expenses,  including  reasonable attorney's fees
incurred  by  the  Employee to enforce rights or benefits under such agreements.
Other  than  the  foregoing,  the  Company  has  not entered into any employment
contracts  with  any  of  its  officers.

     Under  the  Executive  Severance  Agreements,  a "Change In Control" of the
Company  would be deemed to occur if (i) the Company is not the surviving entity
in  any merger, consolidation, or other reorganization, (ii) the sale, exchange,
lease,  transfer or other disposition to any person of all or a substantial part
of  the  assets,  liabilities, or business of the Company or the Bank, (iii) any
change in business of the Company or the Bank such that the Company does not own
the  voting  stock  of the Bank or the business of the Bank is not as an insured
depository  institution,  (iv)  any  person  or  entity  including  a "group" as
contemplated by Section 13(d)(3) of the Exchange Act acquires or gains ownership
or  control  (including,  without limitation, power to vote) of more than 25% of
the  outstanding shares of the Bank's or the Company's voting stock, or (v) as a
result  of  or in connection with a contested election of directors, the persons
who  were  directors  of  the  Bank or the Company before such election cease to
constitute  at  least  two-thirds  of  the  Board  of  Directors.

     Under  the  Executive  Severance Agreements (a)  "Good Reason" means any of
the following events, which has not been consented to in advance by the Employee
in  writing:  (i)  the  requirement  that  the Employee move his or her personal
residence, or perform his or her principal executive functions, more than thirty
(30)  miles  from  his  or  her  primary  office as of the date of the Change in
Control; (ii) a material (defined to be 10% or more) reduction in the Employee's
base  compensation  as  in effect on the date of the Change in Control or as the
same may be increased from time to time; (iii) a successor to the Company or the
Bank  fails  or refuses to assume the Company's and the Bank's obligations under
the  Executive  Severance  Agreement;  (iv)  the  Company, the Bank or successor
thereto  breaches any provision of the Executive Severance Agreement; or (v) the
Employee  is  terminated  for other than Just Cause after the Change in Control;
and (b) "Just Cause" means, in the good faith determination of the Company's and
the  Bank's  Boards  of  Directors,  the  Employee'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 the
Executive  Severance  Agreement.  The  Employee  shall  have the right to make a
presentation  to  the Board of Directors with counsel prior to rendering of such
determination  by  the  Board.  The  Employee  shall  have  no  right to receive
compensation  or other benefits for any period after termination for Just Cause.
No  act, or failure to act, on the Employee's part shall be considered "willful"
unless  he  has  acted,  or  failed  to  act, with the absence of good faith and
without  a  reasonable  belief that his action or failure to act was in the best
interest  of  the  Bank  and  the  Company.

     In  the  event that the Employee and the Company or the Bank agree that the
Employee  will  be  paid an amount under the Executive Severance Agreement which
triggers  the  requirement  to pay the excise tax required under Section 280G of
the  Internal  Revenue  Code  of  1986, as amended, the Company or the Bank will
reimburse  the  Employee  for  all  such  excise  taxes.

     The Executive Severance Agreement remains in effect for the modified period
commencing  on June 25, 1998 (the "Effective Date") and ending on the earlier of
(i)  June 25, 2001, or (ii) the date on which the Employee terminates his or her
employment  with  the  Company  or  the Bank.  Any payments made to the Employee
pursuant  to the Executive Severance Agreement, or otherwise, are subject to and
conditioned upon their compliance with the Federal Deposit Insurance Act and any
regulations promulgated by the Federal Deposit Insurance Corporation thereunder.

OPTION  GRANTS  IN  LAST  FISCAL  YEAR

     On  March  23,  1995,  the  Board  of  Directors  adopted  the  1995  Stock
Compensation Program (the "1995 Program").  Stockholders of the Company approved
the  1995  Program  at  the  April  27, 1995 annual meeting.  The Board reserved
255,261  shares  of Common Stock for issuance under the 1995 Program at the time
of  adoption.  There  were 47,500 options issued under the 1995 Program in 1998.
The  1995  Program  is  substantially  similar to the 1991 Program, as described
below.

     The  Board  of  Directors  adopted the 1991 Stock Compensation Program (the
"1991  Program") for the benefit of officers and other selected key employees of
the Company and the Bank who were deemed to be responsible for the future growth
of  the  Company.  Stockholders of the Company approved the program at a Special
Meeting  of  Stockholders  held  in  December  1991.  In  connection  with  the
reorganization  of  the Association in 1994, the 1991 Program was adopted by the
Company,  and  approved  by  stockholders  for  the  benefit of officers and key
employees  of  the  Company  and  the  Bank  and  its  subsidiaries.

     An aggregate of 241,001 shares of authorized but unissued shares of Company
Common  Stock  were  originally  reserved  for  future  issuance  under the 1991
Program.  All  shares  of  the  1991  Program  have  been  issued.

     Of  the  shares  reserved  for issuance under both the 1995 Program and the
1991  Program (the "Programs"), 2,842 shares are not currently subject to option
at  February  25,  1999.  The  Programs  will remain in effect for a term of ten
years  from the date of adoption unless sooner terminated in accordance with the
provisions  of  the  Programs.

     Four  kinds  of  rights,  evidenced  by  four  plans,  are contained in the
Programs  and  are  available  for  grant:  (i)  incentive  stock  options; (ii)
compensatory  stock  options;  (iii)  stock  appreciation  rights;  and  (iv)
performance  share  awards.  Shares  issuable under the Programs pursuant to the
exercise  of  stock options and/or the granting of stock appreciation rights and
performance  shares are subject to modification or adjustment to reflect changes
in  the  Company's  capitalization.

     The  Programs  are  administered by Messrs. Niver, Flowers and Johnson (the
"Program  Administrators").  The  Program  Administrators  are  given  absolute
discretion  under each Program to select the persons to whom options, rights and
awards  will  be  granted  and to determine the number of shares subject to each
option, right or award.  Only regular, full-time employees of the Company or the
Bank, or any subsidiary of the Company or the Bank are eligible for selection by
the  Program  Administrators  to  participate  in  the  Programs.  Non-employee
directors  are  not  eligible  to  receive  awards  under  the  Programs.

     The  option  prices per share for incentive stock options granted under the
Programs  may  not  be  less  than the fair market value of the Company's Common
Stock  on  the  date  of the grant; provided, however, that if any employee owns
more  than  10%  of  the  combined  voting  power of all classes of stock of the
Company,  the  purchase price for shares acquired pursuant to the exercise of an
option shall not be less than 110% of the fair market value of the Common Stock.
The per share exercise price for compensatory options granted under the Programs
may  be  equal  to or less than the fair market value on the date of grant.  The
purchase  price  for shares of Common Stock subject to incentive or compensatory
options  may  be  paid  in  cash,  by  check,  or  if  permitted  by the Program
Administrators  at the time the option is granted, by shares of Common Stock, or
by  a  combination  thereof.

     In  the  event  of  a  change  in  control  of the Company, as defined, all
incentive  and  compensatory  stock  options  previously  granted  may  become
immediately  exercisable  notwithstanding  any  existing  installment limitation
which  may  be  established  by  the  Program  Administrators, provided that the
exercisability  of  an  option  may  not  be  accelerated prior to the six month
anniversary  of  the  date  the  option  is  granted.


<PAGE>
AGGREGATE  OPTIONS  GRANTED  IN  LAST  FISCAL  YEAR

     The  following table sets forth individual grants of options that were made
during  the  last  fiscal  year  to  the executive officers named in the Summary
Compensation  Table.  This  table is intended to allow stockholders to ascertain
the number and size of option grants made during the fiscal year, the expiration
date  of  the  grants and the potential realizable present value of such options
under  specified  assumptions.

<TABLE>
<CAPTION>
                                       PERCENT OF
                        OPTIONS       TOTAL OPTIONS
                        GRANTED         GRANTED TO          EXERCISE         GRANT DATE
                        (NO. OF         EMPLOYEES             PRICE          EXPIRATION      PRESENT
   NAME                 SHARES)(1)    IN FISCAL YEAR        PER SHARE           DATE         VALUE(2)
   ----                 ----------      --------------     ---------            ----         --------
<S>                      <C>               <C>               <C>               <C>           <C>
Manuel J. Mehos          10,000            21.05%            $25.13            6/25/08        $113,880
John D. Bird              2,000             4.21              25.13            6/25/08         22,776
Gary R. Garrett           3,000             6.32              25.13            6/25/08         34,164
David R. Graham           2,000             4.21              25.13            6/25/08         22,776
Catherine N. Wylie        3,000             6.32              25.13            6/25/08         34,164
</TABLE>

______________

(1)     Total  options granted in 1998 were 47,500 shares.  The options vest 25%
during  the  first  year and an additional 25% for each of the next three years.

(2)     The  potential  realizable  value of the grant of options is the present
value  of  the grant at the date of grant using a variation of the Black-Scholes
option  pricing  model.  Assumptions  used to calculate the present value of the
options  granted  on  June 25, 1998, respectively, were as follows:  an expected
volatility rate of 25.49%, a risk free rate of return of 5.47%, a dividend yield
of  $.32  per  share  per  year  and  the  expiration  date  of  June  25, 2008,
respectively.


<PAGE>
AGGREGATE  OPTIONS  EXERCISED  IN  LAST  YEAR  AND FISCAL YEAR-END OPTION VALUES

     The  following  table  sets  forth,  with respect to the executive officers
named  in  the  Summary  Compensation  Table,  information  with  respect to the
aggregate  amount  of  options  exercised during the last fiscal year, any value
realized  thereon,  the  number  of unexercised options at the end of the fiscal
year  (exercisable  and  unexercisable)  and  the  value  with  respect thereto.

<TABLE>
<CAPTION>
                                                                            Value of Unexercised
                     Shares                 Number of Unexercised         in-the-Money Options at
                   Acquired on    Value    Options at Fiscal Year-End       Fiscal Year-End(1)
Name                Exercise    Realized   Exercisable  Unexercisable    Exercisable   Unexercisable
----                --------   --------   -----------   -------------    -----------    -----------
<S>                    <C>         <C>      <C>           <C>            <C>            <C>
Manuel J. Mehos        --          --       124,750       35,250         $767,940       $92,130
John D. Bird           --          --        41,416        7,125          327,515        20,306
Gary R. Garrett        --          --        46,706       16,530          512,346        46,799
David R. Graham        --          --        21,764       10,807          162,208        31,872
Catherine N. Wylie     --          --        42,522       19,924          499,748        69,545
</TABLE>


______________

(1)     Based  upon  a closing market price for the Company's Common Stock as of
December  31,  1998  of  $17.50.


COMPARATIVE  STOCK  PERFORMANCE  GRAPH

     The stock performance graph below compares the cumulative total stockholder
return of the Company's Common Stock from December 31, 1993 to December 31, 1998
with  the  cumulative  total  return  of  the National Association of Securities
Dealers  Automated  Quotations  ("NASDAQ")  Market  Index  and  certain  thrift
institutions  traded  on  the NASDAQ, as compiled by SNL Securities, L.P. in its
OTC  Thrift  Index,  assuming an investment of $100 on December 31, 1993 and the
reinvestment  of  all  dividends.  The  Company  did  not  pay  dividends on the
Company's  Common  Stock  during  1993.  In  1994,  the  Company  paid its first
dividend  of  $.08  per share on June 15, 1994.  Quarterly dividends of the same
amount  were paid on September 15, 1994, December 15, 1994, March 15, 1995, June
15,  1995,  September  15,  1995, and December 15, 1995.  The Board of Directors
voted  at the January 25, 1996 regularly scheduled Board Meeting to increase the
dividend  for  the fourth quarter of 1995 from $.08 per share to $.10 per share.
Quarterly  dividends  of  $.10  per  share were paid on March 15, 1996, June 15,
1996,  September  15,  1996 and December 15, 1996.  During 1997 the Company paid
quarterly  dividends  in  the  amount  of  $.10  per share on March 15, 1997 and
quarterly  dividends  of $.12 per share on June 15, 1997, September 15, 1997 and
December  15,  1997.  In  1998 the Company split the stock 3:2 at which time the
$.12  per  share  dividend,  adjusted  for the split was $.08 per share.  During
1998,  the  Company paid quarterly dividends in the amount of $.08 per share, as
adjusted  for  the  stock split, on March 15, 1998, June 15, 1998, September 15,
1998  and  December  15,  1998.

<PAGE>
           COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURN PERFORMANCE



<TABLE>
<CAPTION>
                                                       PERIOD  ENDING
                                                       --------------
INDEX                      12/31/93     12/31/94     12/31/95     12/31/96     12/31/97    12/31/98
<S>                        <C>          <C>          <C>          <C>          <C>          <C>
Coastal Bancorp, Inc       100.00       110.00       136.68       182.51       282.89       216.13
NASDAQ - Total US Index    100.00        97.75       138.26       170.01       208.58       293.21
SNL OTC Thrift Index       100.00       100.85       153.34       199.50       324.02       283.31
</TABLE>


______________

Notes:
     A.     Each  Index  is  weighted for all companies that fit the criteria of
that particular Index.  The Index is calculated to exclude companies as they are
acquired,  and  add them to the Index calculation as they become publicly traded
companies.  All  companies  in  the  particular  Index that were in existence at
December  31,  1998  are  included  in  the  calculations.
     B.     Each  Index  value  measures  dividend  re-investment  by  assuming
dividends  are  received  in  cash  on the ex-date and re-invested back into the
company  stock  paying  the  dividend  on  the same day.  The stock price on the
ex-date  is  used  to calculate how many shares can be bought with the dividend.



<PAGE>
CERTAIN  TRANSACTIONS

     As  a  result  of  the  enactment  of  the  Financial  Institutions Reform,
Recovery,  and  Enforcement  Act  of  1989 ("FIRREA") on August 9, 1989, Section
22(h)  of  the  Federal  Reserve Act became applicable to a savings institution,
such  as  the  Bank.  This  law generally provides that any credit extended by a
savings  institution  to  its  executive  officers, directors and, to the extent
otherwise  permitted,  principal  stockholder(s), or any related interest of the
foregoing, must (i) be on substantially the same terms, including interest rates
and  collateral,  as those prevailing at the time for comparable transactions by
the  savings  association  with  non-affiliated  parties;  (ii)  be  pursuant to
underwriting  standards  that  are  no  less  stringent than those applicable to
comparable transactions with non-affiliated parties; (iii) not involve more than
the normal risk of repayment or present other unfavorable features; and (iv) not
exceed,  in  the aggregate, the institution's unimpaired capital and surplus, as
defined.  The  Company  had  no  loans  to  principal shareholders, directors or
executive  officers  outstanding  at the year ended December 31, 1998.  In 1998,
the  Company  voted  to  make  loans available to employees starting in the last
quarter  of  1998  under  the  same  terms  as those offered to the public.  The
Directors  and  Executive Officers of the Company and the Bank are excluded from
this  program.

     In  1987,  the  Bank entered into an Administrative Services Agreement with
Coastal  Banc  Insurance  Agency,  Inc.  ("CBIA"),  a Texas business corporation
licensed under Texas law to act as a life insurance agent.  CBIA is wholly-owned
by  an  executive  officer  of the Bank who receives no salary or dividends from
CBIA.  CBIA  has granted to the Bank the legal ownership of all of its books and
records  and the stockholder of CBIA has granted to the Bank the right to assign
all  of its stock in CBIA to any other properly licensed life insurance agent in
the  Bank's  sole  discretion.  The  Bank  has agreed to provide to CBIA certain
services,  including  but  not  limited  to  employee  training,  office  space,
furniture,  fixtures,  equipment,  clerical  services, data processing and other
services  as  well as marketing leads and information to assist CBIA in the sale
of  annuities  underwritten  by  an  independent  annuity  company to the Bank's
deposit and loan customers.  In consideration for such services, CBIA has agreed
to  pay  the  Bank  a  flat fee which is subject to renegotiation on a quarterly
basis.  The  fee  payable  to the Bank was last negotiated on December 28, 1998,
and  was  $260,000  for  the year ended December 31, 1998.  Such fee represented
substantially  all  of  CBIA's  net  income  for  the  year  then  ended.

     PROPOSAL  TO  ADOPT  THE
     1999  STOCK  COMPENSATION  PROGRAM

     The  Board  of  Directors of the Company has approved the adoption of a new
stock  compensation  program  for  officers and employees of the Company and its
subsidiaries.  The  Coastal  Bancorp,  Inc. 1999 Stock Compensation Program (the
"1999  Program")  is  substantially similar to the Company's 1991 and 1995 Stock
Compensation Programs.  The Board of Directors believes that the 1999 Program is
necessary primarily because there are no shares remaining under the 1991 Program
and  only  2,842  shares currently remaining and reserved for issuance under the
1995  Program.  The Board of Directors believes that it is in the best interests
of  the  Company  and  its  stockholders  to  ensure stock ownership for certain
individuals  who  are  key  to  the  success  of  the  Company  and  who will be
responsible  for  its  future growth.  Like the 1991 and 1995 Programs, the 1999
Program  is  designed  to help the Company attract and retain superior personnel
for,  and  in  positions  of, substantial responsibility with the Company and to
provide  them  with  a  stock-based  incentive.  The  Board  believes that stock
options,  stock  appreciation  rights  and performance share grants should be an
integral  part  of  certain  individuals'  compensation  package and desires the
ability to continue to provide such awards on terms and conditions substantially
similar  to  the terms and conditions set forth under the 1991 and 1995 Programs
which  have  been  in  effect  for the past eight years.  The Board has reserved
340,000 shares of Common Stock (or 4.94% of the 6,880,964 shares of Common Stock
issued  and  outstanding  as  of  the  Record  Date) for issuance under the 1999
Program.

     Accordingly,  the  stockholders  of  the Company are being requested at the
Annual  Meeting  to  consider and approve the adoption of the 1999 Program.  The
1999  Program  must  be  approved  by  the affirmative vote of a majority of the
shares  of Common Stock entitled to vote and cast on this matter and represented
in  person or by proxy at the Annual Meeting.  The following is a summary of the
1999  Program  which  does  not  purport  to  be  complete.

GENERAL

     Four  kinds  of  rights, evidenced by four plans, are contained in the 1999
Program  and  will  be available for grant:  incentive stock options ("Plan I"),
compensatory  stock  options ("Plan II"), stock appreciation rights ("Plan III")
and  performance  share  awards  ("Plan IV").  An aggregate of 340,000 shares of
authorized  but unissued Common Stock has been reserved for issuance pursuant to
the  1999  Program,  subject to modification or adjustment to reflect changes in
the  Company's capitalization, as discussed below.  See "- Adjustments to Number
and  Purchase  Price  of  Shares."  No  options,  stock  appreciation  rights or
performance  shares  have  been  granted  under  the 1999 Program as of the date
hereof  and  the  Board  of Directors does not anticipate making any such grants
until  after  the  1999  Program  has  been  approved by the stockholders of the
Company.  Therefore,  the  amount  of  options,  stock  appreciation  rights  or
performance  share  awards  are  not  currently  determinable  and  may  not  be
determined with respect to the last completed fiscal year as if the 1999 Program
had  been  in  effect.  Upon approval of the 1999 Program by stockholders of the
Company,  the Company will register the securities of the 1999 Program under the
Securities  Act  of  1933  and  any  applicable  state  securities  laws.

PURPOSE

     As noted above, the purpose of the 1999 Program is to advance the interests
of  the  Company  and its stockholders by enabling the Company, the Bank and any
other  subsidiaries  or  affiliates  thereof (which are collectively referred to
herein,  unless the context otherwise requires, as the "Company") to attract and
retain  superior  personnel  for  positions of substantial responsibility and to
provide  key employees with an additional incentive to contribute to the success
of  the  Company.  The  successful  conduct of the Company's business is largely
dependent  upon  the  judgment, initiative and efforts of the Company's officers
and  other  key  employees,  and  the  Program  provides  such  persons  with an
opportunity  to  receive  greater  rewards  for  their efforts and the incentive
advantages  inherent  in  ownership  of  the  Company's  Common  Stock.


<PAGE>
ADMINISTRATION

     The 1999 Program is to be administered by not less than three disinterested
outside  directors of the Company as determined by the Board of Directors of the
Company  ("Program  Administrators").  The  Program Administrators serve as such
until  they  resign  or  are  replaced by the Board of Directors of the Company.
Each  Program  Administrator must be a "disinterested person" as defined by Rule
16b-3(d)(3)  of  the Securities Exchange Act.  A "disinterested person" means an
administrator  of  a  plan  who  is  not  at the time he exercises discretion in
administering  the  plan eligible, and has not at any time within one year prior
thereto,  been eligible for selection as a person to whom stock may be allocated
or to whom stock options or stock appreciation rights may be granted pursuant to
the  plan  or  any  other  plan  of  the Company or its affiliates.  The Program
Administrators have absolute discretion to determine the employees to whom stock
options,  stock  appreciation rights or performance shares will be granted under
the  1999  Program  and  to determine the number of shares subject to each stock
option,  stock  appreciation  right  or  performance  share.  Subject  to  the
provisions  of  the  1999 Program, the Program Administrators also have absolute
discretion to determine the terms on which such options, appreciation rights and
performance shares are to be granted, to interpret the 1999 Program, and to make
all  other  determinations  necessary or advisable for the administration of the
1999  Program.  No  Program  Administrator  shall  be  liable  for any action or
determination  made  in  good  faith  with respect to the 1999 Program or to any
option, stock appreciation right or performance share granted thereunder and the
Company will indemnify the Program Administrators against proceedings brought by
reason  of  actions or omissions by any Program Administrator in his capacity as
such  under  or  with respect to the 1999 Program.  As of the date of this Proxy
Statement, the Board of Directors has appointedJames C. Niver (Chairman), Robert
Edwin Allday and D. Fort Flowers, Jr., to serve as the Program Administrators of
the  1999  Program.

ELIGIBILITY

     All  regular full-time employees, including officers, of the Company or any
subsidiary  thereof,  approximately  655 individuals, are eligible to be granted
stock  options, stock appreciation rights and performance share awards under the
1999  Program.  Stock  options,  stock appreciation rights and performance share
awards  may  be  granted  to  those  employees  who, in the determination of the
Program  Administrators, are largely responsible through their judgment, ability
and  special efforts for the successful conduct of the operation of the Company.
Directors  of  the  Company, unless they are also employees, are not eligible to
participate  in  the  1999 Program.  Each employee who receives an option may be
requested  to  agree in writing, as a condition of the receipt of such option to
remain  in the employ of the Company, or the applicable subsidiary, for a period
not in excess of three years.  However, nothing in the 1999 Program confers upon
any  employee any right to continued employment by the Company or any subsidiary
thereof  or limits in any way the right of the Company to terminate or alter the
terms  of  such employment.  In addition, the Program Administrators may revoke,
rescind  and  terminate any option, or portion thereof which has not yet vested,
or  any stock appreciation right to the extent not yet exercised, which has been
previously  granted under the 1999 Program to an employee who is discharged from
the  employ  of  the  Company or any subsidiary thereof for certain acts such as
conviction of a felony for misappropriating Company assets or which results in a
threat  to the Company's reputation or for willful failure to perform his or her
duties  and  responsibilities.  An  employee  who  receives options will have no
voting, dividend or other rights as a stockholder of the Company with respect to
the  shares of Common Stock under option until such option is properly exercised
(which  includes  full  payment  for  such  shares).

STOCK  OPTIONS  (PLANS  I  AND  II)

     Options granted under Plan I of the 1999 Program are intended to qualify as
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended ("Code").  Options granted under Plan II of the 1999 Program
are  nonstatutory  or compensatory stock options ("non-qualified options").  The
tax  treatment differs with respect to the two types of options.  See "- Federal
Income  Tax  Consequences."

     An  incentive  stock option is defined in the Code as an option to purchase
Common Stock of the Company and granted to an employee in connection with his or
her  employment  which  satisfies  certain conditions. An incentive stock option
must  be  granted  pursuant  to a plan specifying the aggregate number of shares
which  may  be  issued under the Plan  and the employees, or class of employees,
eligible  to  receive  such  options.  The  incentive  stock option plan must be
approved by the stockholders of the granting corporation within 12 months of the
date  of  its adoption.  (The 1999 Program was adopted by the Board of Directors
at a meeting of the Board on January 28, 1999.)  The per share exercise price of
an  incentive  stock  option  may  not be less than the fair market value of the
Common  Stock  at  the  date  of  the grant, and incentive stock options must be
granted within 10 years from the date of adoption of the Plan.  By its terms, an
incentive  stock  option must not be exercisable after 10 years from the date it
is  granted.  However,  if  an  employee  of  the  Company  owns,  directly  or
indirectly,  more  than 10% of the total combined voting power of all classes of
stock  issued  to  stockholders  of the Company or any subsidiary at the time an
incentive stock option is granted to him or her, the exercise price of incentive
stock  options granted to him or her may be no less than 110% of the fair market
value of a share of Common Stock at the time of the grant and the option may not
be  exercisable  beyond  five  years  from the date of grant.  Finally, the Code
currently  requires that the aggregate fair market value (determined at the time
the  options  are  granted)  of the Common Stock with respect to which incentive
stock options are first exercisable by any optionee during any calendar year may
not  exceed  $100,000.  The  terms of Plan I of the 1999 Program comply with the
above-stated  requirements  of  the  Code.

     Incentive  stock options under Plan I and non-qualified stock options under
Plan  II  become  vested and are exercisable during the period specified in each
option  agreement  as  determined  by  the  Program  Administrators; however, no
expiration  date  may be later than the tenth anniversary (the fifth anniversary
for  a  greater  than  10%  stockholder  of the Company) of the date on which an
incentive  stock  option  was granted and, with respect to a non-qualified stock
option,  no  later  than ten years and one month.  Options may be exercisable in
installments  pursuant  to  a  schedule designated by the Program Administrators
and,  to  the  extent not exercised, will accumulate unless otherwise specified.
If  (i)  a  "change in control" or "threatened change in control" of the Company
occurs,  as  determined in accordance with the 1999 Program, or (ii) the Company
or  its  stockholders enter into an agreement to dispose of all or substantially
all  of  the assets or stock of the Company (or of the Bank) by means of a sale,
merger  or  other  reorganization  or  liquidation where the stockholders of the
Company  will  not own at least 50% of the voting stock of any surviving entity,
all  options  previously  granted  may  become  immediately  exercisable
notwithstanding  any  existing  installment  limitation.  The  term "control" is
defined in the 1999 Program to mean the acquisition of 10% or more of the voting
securities  of the Company by any person or group of persons; provided, that for
purposes  of  the  1999  Program,  no  change in control or threatened change in
control will be deemed to have occurred if prior to the acquisition of, or offer
to  acquire,  10%  or more of the Company's voting securities, the full Board of
Directors  of the Company adopts by not less than a two-thirds vote a resolution
specifically  approving  such  acquisition  or offer for the specific purpose of
preventing the acceleration of the vesting of such options.  These provisions of
the 1999 Program may have certain antitakeover effects, including, among others:
(i)  increasing  the  cost  to  a  potential acquiror by increasing the possible
number  of  shares  of  Common  Stock outstanding; (ii) increasing the number of
shares  of Common Stock in the hands of management of the Company who might vote
such  shares  in  a  manner  contrary  to  that  desired by other non-management
stockholders;  and  (iii)  increasing the total number of shares of Common Stock
which  are  issued  and  outstanding which could dilute the stock ownership of a
potential  acquiror.  Such  provisions  could  result  in  causing the potential
acquiror  to  negotiate  with  the  Board of Directors, and perhaps with certain
option  holders, regarding such options in conjunction with any offer to acquire
control  of  the  Company.  As  a  consequence,  these provisions might have the
effect  of  discouraging  an attempt by another person or entity from seeking to
acquire  control  of  the  Company.  The  Board of Directors is not aware of any
effort by any person to gain control of the Company.  Notwithstanding the above,
the Board believes that this aspect of the 1999 Program is far outweighed by the
benefits  of  the  1999  Program,  as  described  herein.

     If  employment  is terminated due to disability (as defined by the Code) or
retirement,  the  Program  Administrators  may allow the options to be exercised
within  one  year  after  the  date  of  such  termination  due to disability or
retirement  to  the extent exercisable on the date of termination of employment.
If  employment  is  terminated by reason of death or if the optionee dies within
three  months after leaving the employ of the Company or any subsidiary thereof,
the  person  or  persons  to whom the optionee's rights under the option pass by
will  or  by  the  laws  of  descent and distribution will also have one year to
exercise  the  options  to  the extent exercisable on the date of termination of
employment.  However, in order for the option to be treated under the Code as an
incentive  stock  option, the option must be exercised within three months after
the  date  of  termination  of  employment.  If  the  employment  of an optionee
terminates  for  any  other  reason,  his  or  her options will expire upon such
termination,  except  that in the discretion of the Program Administrators, such
options  may  be  exercised  for a period of between three months and five years
following  termination  to  the extent exercisable on the date of termination of
employment.  In  no  event,  however,  will  the  exercise period for any option
extend  beyond  the  original  expiration  date  of  the  option.

     The  option  exercise  price  per share for incentive stock options granted
under  the 1999 Program may not be less than the fair market value of the Common
Stock  (as defined by the 1999 Program) on the date of the grant (or 110% of the
fair  market value in the case of an incentive stock option granted to a greater
than  10% stockholder of the Company's Common Stock).  The option exercise price
per  share  for compensatory stock options can be equal to or less than the fair
market  value  of  the shares at the time of grant, as determined by the Program
Administrators  at  the  time  of grant, but in no event will such price be less
than  the  par  value  of  the Common Stock.  Neither incentive nor compensatory
stock  options  granted  under  the  1999 Program are transferable or assignable
other  than  by  will  or  by  the  laws  of descent and distribution and may be
exercised  during  the  lifetime  of  an  optionee  only  by  the  optionee.

     Payment for shares purchased under the 1999 Program through the exercise of
stock  options  may  be made either in cash or check or, by exchanging shares of
Common  Stock of the Company (including shares acquired pursuant to the exercise
of  an  option)  or  by withholding some of the shares of Common Stock which are
being  purchased  thereby,  or  in  other  property, if permitted by the Program
Administrators,  having  a fair market value equal to the option exercise price,
or  a  combination thereof.  If the fair market value of a share of Common Stock
at the time of exercise is greater than the exercise price per share, permitting
the optionee to use previously acquired shares or to withhold some of the shares
being  acquired,  would  enable  the  optionee  to acquire a number of shares of
Common  Stock  upon  exercise  of the option which is greater than the number of
shares  delivered  as payment for the exercise price.  In addition, if permitted
by  the  Program Administrators, an optionee could partially exercise his or her
option  and  then  deliver the shares acquired upon such exercise as payment for
the exercise price of the remaining options.  Again, if the fair market value of
a  share  of  Common  Stock at the time of exercise is greater than the exercise
price per share, this feature would enable the optionee to either (1) reduce the
amount of cash required to receive a fixed number of shares upon exercise of the
option or (2) receive a greater number of shares upon exercise of the option for
the  same  amount  of cash that otherwise would have been used.  Because options
may  be exercised in part from time to time, the ability to deliver Common Stock
as  payment of the exercise price would enable the optionee to turn a relatively
small  number  of  shares  into  a  larger number of shares.  In the case of any
incentive  stock  options  exercisable within the first six months following the
date  of  grant,  the  shares of Common Stock received upon the exercise of such
option  may  not be sold or disposed of by the optionee for the first six months
following  the  date  of  grant.

STOCK  APPRECIATION  RIGHTS  (PLAN  III)

     Under  Plan  III  of  the  1999 Program, the Program Administrators may, in
their  sole  discretion,  grant  rights  to  optionees  to surrender exercisable
options  granted  under Plan I or Plan II, or any portion thereof, in return for
the  payment  by  the  Company  to  the  optionee of cash or, subject to certain
conditions,  Common Stock of the Company in an amount equal to the excess of the
fair  market  value  of  the shares of Common Stock subject to the option at the
time  over  the  exercise  price of the option with respect to such shares, or a
combination  of  cash  and  Common  Stock.  An  optionee may exercise such stock
appreciation  rights  only during the period beginning on the third business day
following  the  release  of certain quarterly or annual financial information of
the  Company  and  ending  on  the  twelfth  business  day  following such date.

     Upon  the exercise of a stock appreciation right, the stock option to which
it relates terminates with respect to the number of shares as to which the right
is  so  exercised.  Conversely, upon the exercise of a stock option, any related
stock  appreciation  right  terminates as to any number of shares subject to the
right that exceeds the total number of shares for which the stock option remains
unexercised.  With respect to incentive stock options, stock appreciation rights
must  be  granted  concurrently  with  the incentive stock options to which they
relate.  With  respect to non-qualified stock options, stock appreciation rights
may  be  granted concurrently or at any time thereafter prior to the exercise or
expiration  of  such  options.  The holder of a stock appreciation right may not
transfer  or  assign  the right other than by will or by the laws of descent and
distribution.  In  the event of an employee's termination of employment with the
Company,  a stock appreciation right may be exercised only within the period, if
any,  in  which  the  option  to  which  it  relates  may  be  exercised.

     Whenever  an  incentive  stock  option  and  a stock appreciation right are
granted  together  and  the  exercise  of  one affects the right to exercise the
other,  the stock appreciation right will expire no later than the expiration of
the  underlying  incentive  stock option and the stock appreciation right may be
for  no  more  than  the difference between the exercise price of the underlying
incentive  option  and  the  market  price  of  the  Common Stock subject to the
underlying  incentive  option  at  the  time  the  stock  appreciation  right is
exercised.  In  addition, the stock appreciation right is transferable only when
the  underlying  incentive  stock  option  is  transferable  and  under the same
conditions,  the  stock  appreciation  right  may  be  exercised  only  when the
underlying  incentive  stock  option  is eligible to be exercised, and the stock
appreciation  right  may  be  exercised only when the market price of the Common
Stock  subject  to the incentive option exceeds the exercise price of the Common
Stock  subject  to  the  option.

     In  addition,  Plan III of the 1999 Program contains a provision giving the
Program  Administrators  discretion to grant "limited stock appreciation rights"
in  tandem  with  incentive  stock options in the event there is an "Offer."  An
"Offer"  is  defined  to mean a tender offer or exchange offer for shares of the
Company's  capital  stock,  provided  that  the person making the Offer acquires
shares of the Company's capital stock pursuant to such Offer.  The limited stock
appreciation  right would be exercisable between the first and the thirtieth day
following  the  expiration  date  of  the  Offer.  In  general,  with respect to
determining  the  value of the limited stock appreciation right, the fair market
value  of  the shares to which the right relates is determined to be the highest
price  per  share  paid  in  any  Offer that is in effect at any time during the
period  beginning  on  the  sixtieth  day prior to the date on which the limited
stock  appreciation  right  is  exercised and ending on such exercise date.  The
limited  stock  appreciation  rights  may  have anti-takeover effects similar to
those  of the options, described above under "- Stock Options (Plans I and II)."

     The  Program Administrators are also authorized to grant stock appreciation
rights  which  are  not  linked  to  options ("Naked Rights").  Employees may be
awarded Naked Rights for a period of between six months and five years which are
payable  in  cash  or  in  shares  of  Common Stock as determined by the Program
Administrators.  For  purposes  of  determining  the  amount of the Naked Rights
award,  the Program Administrators, based on factors they deem appropriate, will
determine  the  difference between the market value of such right at the date of
grant  and  the  market  value  at  the end of the designated period.  The Naked
Rights  are  to be used solely as a device to determine the amount to be paid to
participants under Plan III and will not constitute or be treated as property or
a  trust  fund of any kind.  As set forth in Plans I and II, if there is a sale,
merger  or  other  reorganization  of  the  Company  (or  of the Bank) where the
stockholders of the Company will not own at least 50% of the voting stock of any
surviving  entity  or if there is a "change in control" or "threatened change in
control"  of  the Company, all Naked Rights will become immediately exercisable.
Such  an  event may have certain antitakeover effects similar to those discussed
above  regarding  stock  options,  under  "-  Stock  Options  (Plans I and II)."
Holders of Naked Rights may be requested to agree to remain in the employ of the
Company,  or  an applicable subsidiary, for a period of up to three years.  If a
Naked  Rights  holder  ceases  to  be  employed for any reason other than death,
disability  or  retirement,  his  or her Naked Rights will immediately terminate
unless  the  Program  Administrators,  at  the time of the granting of the Naked
Rights,  permit  it  to  be exercised within three months after the date of such
termination.  A  holder who becomes disabled or retires may exercise such rights
at  any  time within one year from the date of termination.  If such holder dies
during his term of employment or within three months thereafter, the Naked Right
will  expire  one  year  after  the  date  of  death,  unless it expires sooner.


<PAGE>
PERFORMANCE  SHARES  (PLAN  IV)

     Employees of the Company also may receive performance share awards pursuant
to  Plan  IV  of the 1999 Program.  The granting of performance shares gives the
recipient  thereof  the  right to receive a specified number of shares of Common
Stock  of  the  Company contingent upon the achievement of specified performance
objectives  within  a  specified  award  period.  Any performance shares granted
under the 1999 Program constitute an unfunded promise to make future payments to
the  employee  upon the completion of the specified objectives.  The grant of an
opportunity to receive performance shares does not entitle the affected employee
to  any  rights to specified funds or assets of the Company.  In lieu of some or
all  of the shares earned by achievement of the specified performance objectives
within  the  specified period, the Program Administrators may distribute cash in
an  amount  equal  to  the fair market value thereof.  The duration of the award
period  is  determined by the Program Administrators but cannot be less than one
year  nor  more  than  five  years.  If  the  participating  individual  dies or
terminates  his  or her position with the Company prior to the close of an award
period, any performance share granted to him or her for the period is forfeited.
A  participating  employee may not transfer or assign a performance share award.

ADJUSTMENTS  TO  NUMBER  AND  PURCHASE  PRICE  OF  SHARES

     In  the  event  of a merger, reorganization, stock dividend, stock split or
any  other  transaction  affecting  the  number or kind of outstanding shares of
Common  Stock  of  the  Company,  the  number  and  kind  of shares allocated to
unexercised stock options, stock appreciation rights and performance shares will
also  be  appropriately and proportionately adjusted, as will the maximum number
and  kind  of shares which may be granted under the 1999 Program.  Corresponding
adjustments  will  be made in the exercise price per share for shares covered by
outstanding  stock options, stock appreciation rights and performance shares, or
portions thereof.  If, upon a merger, consolidation, reorganization or the like,
the  shares  of the Company's Common Stock are exchanged for other securities of
the  Company  or  another  corporation,  each  recipient  of  an  option,  stock
appreciation  right or performance share will be entitled to purchase or acquire
such  number  of shares of the securities as were exchangeable for the number of
shares  of  Common  Stock  of  the  Company  which the optionees would have been
entitled  to  purchase, with appropriate adjustments to be made to the per share
exercise  price  of  the  outstanding  options  or  stock  appreciation  rights.

FEDERAL  INCOME  TAX  CONSEQUENCES

     INCENTIVE  STOCK OPTIONS.  The grant of an incentive stock option under the
1999  Program  will  not result in taxable income to the recipient either at the
date of grant or at the date of its timely exercise.  However, the excess of the
fair  market  value  of  the Common Stock received upon exercise of an incentive
stock  option over the option exercise price is an item of tax preference income
potentially  subject  to  the  alternative minimum tax.  Upon disposition of the
Common  Stock  acquired  upon  exercise  of an incentive stock option, long-term
capital  gain or loss is recognized in an amount equal to the difference between
the  sale  price  and the option exercise price, provided that the option holder
has  not disposed of the stock within two years from the date of grant or within
one  year  from  the  date  of  exercise.  If  the option holder disposes of the
acquired Common Stock without complying with both holding period requirements (a
"Disqualifying  Disposition"),  the option holder will recognize ordinary income
at  the  time  of  such  Disqualifying  Disposition  in  an  amount equal to the
difference  between  (i) the lesser of the fair market value of the Common Stock
on  the  date the incentive stock option is exercised (the value at a later date
may  govern  in  the  case  of an optionee whose sale of stock at a profit could
subject  him  or  her  to  suit  under Section 16(b) of the Exchange Act) or the
amount  realized  on such Disqualifying Disposition, and (ii) the exercise price
paid for the Common Stock.  Any remaining gain or loss will generally be treated
as  a  short-term capital gain or loss, depending upon how long the Common Stock
is  held.  In  the  event  of  a  Disqualifying Disposition, the incentive stock
option  tax  preference described above does not apply.  Where the Disqualifying
Disposition  occurs  subsequent to the year in which the option is exercised, it
may  be  necessary for the option holder to amend his or her return to eliminate
the  tax  preference  item  previously  reported.  Unlike  the  case  when  a
non-qualified  stock option is exercised, the Company and its subsidiary are not
entitled  to  a  tax  deduction  upon  either the exercise of an incentive stock
option or the disposition of Common Stock acquired pursuant to such an exercise,
except  to  the  extent  that  the option holder recognizes ordinary income in a
Disqualifying  Disposition.

     If  a  holder of an incentive stock option pays the exercise price, in full
or in part, with shares of previously acquired Common Stock, the exchange should
not  affect the incentive stock option tax treatment of the exercise.  Upon such
an  exchange,  and  except  as  otherwise  provided  herein,  no gain or loss is
recognized  upon  the disposition of the previously owned shares, and the shares
of Common Stock received by the option holder, equal in number to the previously
owned  shares exchanged therefor, will have the same basis and holding period as
the  previously owned shares.  Holders will not, however, be able to utilize the
holding  period  for purposes of satisfying the incentive stock option statutory
holding  period  requirements.  Shares  of  Common  Stock received by the option
holder, in excess of the number of previously owned shares, will have a basis of
zero  and  a  holding  period  which  commences  as  of  the date the shares are
transferred  upon  exercise  of the incentive stock option.  However, if such an
exercise  is  effected using shares of Common Stock acquired upon exercise of an
incentive  stock  option,  the exchange of these previously owned shares will be
considered a disposition of such shares for the purpose of determining whether a
Disqualifying  Disposition  has  occurred.

     NON-QUALIFIED  STOCK OPTIONS.  Under present federal regulations, the grant
of  a  non-qualified  stock  option  under  the  1999 Program does not result in
taxable  income  to the recipient at the time of grant, assuming that the option
does  not  have  a  readily  ascertainable  fair  market value at the time it is
granted.  However,  the  optionee  must recognize ordinary income at the time of
exercise  of  the  non-qualified  stock  option  in the amount by which the fair
market  value  of  the  Common Stock received upon exercise of the non-qualified
stock option at the time of exercise exceeds the exercise price.  However, if an
optionee  is  subject  to  the  restrictions on resale of the Common Stock under
Section  16  of  the Exchange Act, such person must generally recognize ordinary
income  at  a date six months after exercise of the option in an amount equal to
the  difference  between  the option exercise price and the fair market value of
the  Common  Stock  at  such  later  date.  Nevertheless, the optionee may elect
within 30 days after the date of exercise to recognize ordinary income as of the
date  of  exercise.  The amount of ordinary income recognized by the optionee is
deductible  by  the  Company  or  a  subsidiary  in  the year that the income is
recognized  and  will  be  subject  to  withholding.

     If  a holder of a non-qualified stock option pays the option exercise price
solely  in  cash,  his  or  her basis in such shares is equal to the fair market
value  of  the  Common Stock on the date ordinary income is recognized and, upon
subsequent disposition, any further gain or loss is taxable either as short-term
or  long-term capital gain or loss, depending upon how long the shares are held.
The  holding  period for such shares commences as of the date ordinary income is
recognized.

     If  a holder of a non-qualified stock option pays the option exercise price
by  delivering  already  owned  Common  Stock in lieu of cash, the optionee will
recognize  ordinary  income  to  the  extent the fair market value of the shares
received  exceeds  the  option  exercise  price.  If a holder of a non-qualified
stock  option  pays  the  exercise  price,  in  full  or in part, with shares of
previously  acquired  Common  Stock,  no  gain  or  loss  is recognized upon the
disposition of such previously owned shares.  Shares of Common Stock received by
the  option  holder  equal  in  number  to the previously owned shares exchanged
therefor  will  have  the same basis and holding period as such previously owned
shares.  Shares  of  Common Stock received by the option holder in excess of the
number  of previously acquired shares will have a basis equal to the fair market
value  of  such  additional  shares as of the date ordinary income is recognized
which,  except  with respect to recipients subject to Section 16 of the Exchange
Act,  is  the  date  the  option  is  exercised.  The  holding  period  for such
additional  shares  commences  as  of  the  date  ordinary income is recognized.

     STOCK APPRECIATION RIGHTS.  A recipient of a stock appreciation right under
the  1999  Program  is not taxed upon the grant of the stock appreciation right.
Upon  the  exercise of a stock appreciation right, the holder generally is taxed
at  ordinary income tax rates on the amount of cash received and the fair market
value  of  any shares of Common Stock received.  If a recipient receiving shares
of  Common  Stock  is  subject to the restrictions on resale of the Common Stock
under  Section 16 of the Exchange Act, such person generally recognizes ordinary
income  at  the time that the six-month restriction lapses in an amount equal to
the  fair  market value of the Common Stock on the date of lapse.  Nevertheless,
such  recipient  may  elect  within 30 days of the date of exercise to recognize
ordinary  income  as  of  the  date  of exercise.  The amount of ordinary income
recognized by the recipient is deductible by the Company in the year that income
is  recognized and will be subject to withholding.  The recipient's basis in any
shares  acquired  is  equal  to  the  amount  of ordinary income recognized with
respect  to  such  shares, and, upon subsequent disposition, any further gain or
loss  is  taxable  either  as  short-term  or  long-term  capital  gain or loss,
depending  on  how long the shares are held.  The holding period for such shares
commences  as  of  the  date  ordinary  income  is  recognized.

     PERFORMANCE  SHARE  AWARDS.  Generally, stock grants which are subject to a
substantial  risk of forfeiture and which are not freely transferable within the
meaning of Section 83 of the Code will give rise to taxable ordinary income (and
a  deduction  to  the  Company) when the restrictions lapse or the stock becomes
freely transferable, unless the recipient elects under Section 83(b) of the Code
to  recognize  income  as  of  the  date  of  transfer,  as  discussed  below.

     PERSONS  SUBJECT TO SECTION 16 OF THE EXCHANGE ACT.  Under the Code, shares
acquired  pursuant  to the 1999 Program by an officer or director of the Company
or  by  a person who within six months thereafter becomes an officer or director
are considered subject to a substantial risk of forfeiture so long as their sale
at  a  profit  could  subject  such  person  to  suit under Section 16(b) of the
Exchange  Act.  Thus,  if  a  participant acquires shares upon the exercise of a
non-qualified  stock option or a related stock appreciation right or pursuant to
a performance share grant, he or she must recognize ordinary income as described
above  but  at  such time as the sale of such shares at a profit would no longer
subject such person to suit under Section 16(b) of the Exchange Act and based on
the  fair  market value of the shares at that time.  Similarly, if a participant
acquires  shares  upon the exercise of an incentive stock option but disposes of
the  shares  in  a  Disqualifying Disposition, he or she must recognize ordinary
income  as described above at the time of such disposition but based on the fair
market  value  of the shares at the first time that their sale at a profit would
no longer have subjected such person to suit under Section 16(b) of the Exchange
Act.

     A  participant  who receives, upon exercise of a non-qualified stock option
or  a related stock appreciation right or pursuant to a performance share award,
shares  subject  to  a substantial risk of forfeiture may elect, notwithstanding
such substantial risk of forfeiture, to include in income at the time the shares
are  transferred  to  him or her the excess, if any, of the fair market value at
the  time  the  shares are received over the amount paid for them (if any).  The
election is made by filing a written statement with the Internal Revenue Service
and  must  be made within 30 days after receipt of the shares.  Such an election
is  irrevocable  without consent of the Secretary of the Treasury.  In the event
that  such  an  election  is  made,  and  the  shares involved are forfeited, no
deduction  will  be  allowed  to  the participant in respect of such forfeiture.

ACCOUNTING  TREATMENT

     Generally  accepted  accounting principles require, in most cases, that the
estimated cost of stock appreciation rights be charged to the Company's earnings
based on the change in the market price of the Common Stock at the beginning (or
grant date if granted during the period) and end of each accounting period if it
is  higher  than  the  exercise  price.  In the event of a decline in the market
price  of  the  Company's  Common  Stock subsequent to a charge against earnings
related to the estimated costs of stock appreciation rights, a reversal of prior
charges is made in the amount of such decline (but not to exceed aggregate prior
charges).  Performance  share  awards  are  treated  in the same manner as stock
appreciation  rights  when  it  becomes  likely that the shares will be awarded.

     Neither  the  grant  nor  the  exercise  of  an incentive stock option or a
non-qualified  stock option under the 1999 Program currently requires any charge
against  earnings  under  generally  accepted accounting principles.  In certain
circumstances,  shares  issuable pursuant to outstanding stock options under the
1999  Program  might  be  considered  outstanding  for  purposes  of calculating
earnings  per  share  of  the  Company.

     In  June  1993, the Financial Accounting Standards Board ("FASB") issued an
exposure  draft proposing that companies be required to recognize an expense for
all  stock-based  compensation  awards,  including  stock  options.  However, in
December  1994,  the  FASB  agreed  to  work  toward improving disclosures about
employee  stock  options  and  related  arrangements  in  the notes to financial
statements  rather than requiring the previously proposed expense charge for all
options.  The FASB expects to encourage, rather than require, companies to adopt
a  new  method  that  accounts  for  stock  compensation  awards  based on their
estimated  fair  market  value at the date they are granted.  Companies would be
permitted,  however,  to  continue  accounting  under  the present requirements,
which,  as  stated  above,  do  not  require an expense charge for most options.

ERISA  AND  OTHER  QUALIFICATION

     The  1999  Program  will  not  be subject to the participation, vesting and
funding  requirements of the Employee Retirement Income Security Act of 1974, as
amended  ("ERISA"),  and  is  not  qualified  under  Section 401(a) of the Code.

AMENDMENT  OR  TERMINATION  OF  THE  1999  PROGRAM

     The  1999  Program  will terminate 10 years from the date it was adopted by
the  Board of Directors of the Company, which was January 28, 1999, and no stock
options,  stock appreciation rights or performance shares shall be granted under
the  1999 Program after that date.  The Board of Directors may amend, suspend or
terminate  the  1999  Program or any portion thereof at any time, except that it
may not amend the 1999 Program without stockholder approval where the absence of
such  approval  would  cause  the 1999 Program to fail to comply with Rule 16b-3
under  the  Exchange  Act,  Section  422  of  the  Code, the requirements of any
securities exchange or national quotation system or any other requirement of law
or  regulation.  The  Program Administrators may at any time amend or revise the
terms  of  the  1999  Program,  provided that no amendment or revision shall (i)
increase  the  maximum  aggregate  number of shares covered by the 1999 Program,
except  to  the  extent  described  under  "- Adjustments to Number and Purchase
Price  of  Shares," above; (ii)  change the minimum exercise price of any option
granted  under  the terms of Plan I and II, except to the extent described under
"-  Adjustments  to  Number and Purchase Price of Shares," above; (iii) increase
the  stated maximum term for any option, stock appreciation right or performance
share;  or  (iv) expand the class of persons eligible to participate in the 1999
Program.  In  addition,  no  amendment,  suspension  or  termination of the 1999
Program  shall,  without  the  consent  of  the  person who has received a stock
option,  stock  appreciation  right or performance share, alter or impair any of
that  person's  rights or obligations under any stock option, stock appreciation
right  or  performance  share  granted  under  the  1999  Program  prior to such
amendment,  suspension  or  termination.

RESTRICTIONS  ON  RESALES

     Upon  the  registration  of the shares underlying the 1999 Program, persons
who  are not deemed to be "affiliates" of the Company at the time of resale will
be  free to resell any shares of Common Stock of the Company issued to them upon
the  grant  of  stock  awards  or  the  exercise  of  stock  options  and  stock
appreciation rights granted under the 1999 Program either publicly or privately,
without  regard  to the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Securities Act") or compliance with the
restrictions  and  conditions  contained  in the exemptive rules thereunder.  An
"affiliate"  of  a  person is someone who directly or indirectly, through one or
more  intermediaries,  controls,  is  controlled  by, or is under common control
with, that person.  Normally, a director, principal officer or major stockholder
of  a  corporation  may  be  deemed to be an "affiliate" of that corporation.  A
person who may be deemed an "affiliate" of the Company at the time of a proposed
resale  will  be  permitted  to make public resales of the Company's shares only
pursuant  to  a  "reoffer" prospectus or in accordance with the restrictions and
conditions  contained  in  Rule  144  under  the  Securities  Act  or some other
exemption  from  registration.  In  general,  the amount of the Company's shares
which  any  such  affiliate  may  publicly  resell  pursuant  to Rule 144 in any
three-month  period  may  not  exceed  one  percent of the Company's shares then
outstanding,  such  sales  may be made only through brokers without solicitation
and only at a time when the Company is current in filing the reports required of
it  under  the  Exchange  Act,  and certain notice filings must be made with the
Securities  and  Exchange  Commission.


<PAGE>
BOARD  RECOMMENDATION

     The  Board  of  Directors  has  unanimously  approved  and adopted the 1999
Program  and  recommends  that  stockholders  of the Company vote "FOR" the 1999
Program.

                        THE BOARD OF DIRECTORS RECOMMENDS
                          A VOTE "FOR" THE 1999 PROGRAM


                   PROPOSAL TO APPROVE THE ADJOURNMENT OF THE
                          ANNUAL MEETING, IF NECESSARY

     Each  proxy  solicited hereby by the Company requests authority to vote for
an adjournment of the Annual Meeting if an adjournment of such meeting is deemed
to  be necessary.  The Company may seek an adjournment of the Annual Meeting for
not  more  than  120  days  in order to enable it to solicit additional votes in
favor of the 1999 Stock Compensation Program in the event that such proposal has
not  received  the  requisite  vote  of  Stockholders  at  the  Annual  Meeting.

     If  the  Company  desires to adjourn the Annual Meeting with respect to the
foregoing  proposal,  it  will  request  a  motion  that  the  Annual Meeting be
adjourned  for up to 120 days with respect to such proposal, and no vote will be
taken  on  such  proposal  at  the  originally  scheduled  meeting.  Each  proxy
solicited hereby, if properly signed and returned to the Company and not revoked
prior to its use, will be voted on any such motion for adjournment in accordance
with the instructions contained therein.  If no contrary instructions are given,
each  proxy  received  will  be  voted  in favor of any motion by the Company to
adjourn  the  Annual  Meeting.  Unless  revoked  prior  to  its  use,  any proxy
solicited  for  the Annual Meeting will continue to be valid for any adjournment
of such meeting, and will be voted in accordance with the instructions contained
therein,  and  if  no  contrary  instructions  are  given,  for  the  1999 Stock
Compensation  Program.

     Any  adjournment  will permit the Company to solicit additional proxies and
will permit a greater expression of the Stockholders' views with respect to such
proposal.  Such  an adjournment would be disadvantageous to Stockholders who are
against the 1999 Stock Compensation Program because an adjournment will give the
Company additional time to solicit favorable votes and thus increase the chances
of  approving  such  proposal.

     If a quorum is not present at the Annual Meeting, no proposal will be acted
upon  and  the Company will adjourn the Annual Meeting to an alternative date in
order  to solicit additional proxies on each of the proposals being submitted to
Stockholders.

     An  adjournment  for up to 120 days may require the setting of a new record
date  and,  if  so required, notice of the adjourned meeting will be provided to
Stockholders  as  in the case of an original meeting.  The Company does not have
any  reason  to  believe  that  an  adjournment  of  the  Annual Meeting will be
necessary  at  this  time.

     BECAUSE  THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS STOCKHOLDERS VOTE
"FOR"  THE  1999  STOCK  COMPENSATION  PROGRAM, AS DISCUSSED ABOVE, THE BOARD OF
DIRECTORS  OF  THE  COMPANY  ALSO  RECOMMENDS  THAT  STOCKHOLDERS VOTE "FOR" THE
POSSIBLE  ADJOURNMENT  OF  THE  ANNUAL  MEETING  ON  SUCH  PROPOSAL.

           PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS

     The Board of Directors of the Company has appointed KPMG LLP as independent
auditors  for the Company for the year ending December 31, 1999, and has further
directed  that  the  selection  of auditors be submitted for ratification by the
stockholders  at  the  Annual Meeting.  The Company has been advised by KPMG LLP
that  neither  the  firm nor any of its associates has any relationship with the
Company  or  its  subsidiaries  other  than  the  usual relationship that exists
between  independent  public accountants and clients.  KPMG LLP will have one or
more  representatives at the Annual Meeting who will have an opportunity to make
a  statement,  if  he  or  she  so  desires, and will be available to respond to
appropriate  questions.

     THE  BOARD  OF  DIRECTORS  RECOMMENDS  A  VOTE  "FOR"  RATIFICATION  OF THE
APPOINTMENT  OF  KPMG  LLP  AS  INDEPENDENT  AUDITORS  FOR  FISCAL  1999.


                              STOCKHOLDER PROPOSALS

     Any  proposal  which  a  stockholder  wishes  to have presented at the next
Annual  Meeting  of  Stockholders  of  the  Company  and  included  in the proxy
materials  used  by the Company in connection with such meeting must be received
at  the corporate headquarters office of the Company at Coastal Banc Plaza, 5718
Westheimer,  Suite  600,  Houston, Texas 77057, no later than November 24, 1999.
If  such  proposal  is  in compliance with all of the requirements of Rule 14a-8
promulgated  under  the Exchange Act, it will be included in the Proxy Statement
and  set  forth  on  the  form  of  proxy  issued for the next Annual Meeting of
Stockholders.  It  is  urged  that any such proposals be sent by certified mail,
return  receipt  requested.

     Stockholder  proposals  which  are  not  submitted  for  inclusion  in  the
Company's  proxy  materials pursuant to Rule 14a-8 under the Exchange Act may be
brought  before  an  annual  meeting  pursuant  to  the  Company's  Articles  of
Incorporation,  which  provide that business must be properly brought before the
meeting  by or at the direction of the Board of Directors, or otherwise properly
brought  before  the  meeting  by  a  stockholder.  For  business to be properly
brought  before  an  annual  meeting by a stockholder, the stockholder must have
given  timely  notice thereof in writing to the Secretary of the Company.  To be
timely,  a stockholder's notice must be delivered to, or mailed and received at,
the  principal  executive  offices of the Company not less than 60 days prior to
the  anniversary  date  of  the  mailing  of  proxy  materials by the Company in
connection  with the immediately preceding annual meeting of stockholders of the
Company.  A  stockholder's  notice  shall  set  forth  as  to  each  matter  the
stockholder  proposes  to  bring  before  an  annual  meeting  such  information
specified  in  the  Company's Articles of Incorporation.  If the proposal is not
made  in  accordance  with  the  terms  of  the  Articles of Incorporation, such
proposal will not be acted upon at the Annual Meeting.  No stockholder proposals
were  received  by  the  Company  in  connection  with  the 1999 Annual Meeting.


<PAGE>
                               PROXY SOLICITATION

     The  Company  has retained Corporate Investor Communications, Inc. ("CIC"),
111  Commerce  Road,  Carlstadt,  New  Jersey  07072,  a  professional  proxy
solicitation  firm,  to  assist  in  the solicitation of proxies and for related
services.  The  Company will pay CIC a fee of $5,000 and has agreed to reimburse
it  for  its  reasonable  out-of-pocket  expenses.

                                  OTHER MATTERS

     Management  is  not  aware  of  any business to come before the 1999 Annual
Meeting  other  than  those  matters described above in this Proxy Statement and
possibly,  procedural  matters incident to the conduct of the meeting.  However,
if  any  other  matters  should properly come before the meeting, it is intended
that  the  proxies  solicited  hereby  will be voted with respect to those other
matters  in  accordance  with  the  judgment  of the persons voting the proxies.

     The  cost of the solicitation of proxies will be borne by the Company.  The
Company  will  reimburse  brokerage  firms  and  other  custodians, nominees and
fiduciaries  for reasonable expenses incurred by them in sending proxy materials
to  the  beneficial  owners  of  the  Company's  Common  Stock.  In  addition to
solicitations  by  mail, directors, officers and employees of the Company or its
subsidiary  may  solicit  proxies  personally or by telephone without additional
compensation.
                     ANNUAL REPORT AND FINANCIAL STATEMENTS

     A  copy of the Company's Annual Report for the year ended December 31, 1998
("Annual  Report") accompanies this Proxy Statement.  The Annual Report is not a
part  of  the  proxy  solicitation  materials.

     UPON  RECEIPT  OF  A  WRITTEN  REQUEST,  THE  COMPANY  WILL  FURNISH TO ANY
STOCKHOLDER,  WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR  THE  YEAR  ENDED DECEMBER 31, 1998, AND ANY EXHIBITS THERETO REQUIRED TO BE
FILED  WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE EXCHANGE ACT.  SUCH
WRITTEN  REQUEST  SHOULD  BE  DIRECTED  TO  CATHERINE  N. WYLIE, CHIEF FINANCIAL
OFFICER,  COASTAL BANCORP, INC., COASTAL BANC PLAZA, 5718 WESTHEIMER, SUITE 600,
HOUSTON,  TEXAS  77057.  THE  FORM  10-K IS NOT A PART OF THE PROXY SOLICITATION
MATERIALS.

                              By  Order  of  the  Board  of  Directors




                              /s/  Linda  B.  Frazier
                              Linda  B.  Frazier
                              Secretary

March  23,  1999

                                    EXHIBIT A

                         1999 Stock Compensation Program

<PAGE>


     COASTAL  BANCORP,  INC.

     1999  STOCK  COMPENSATION  PROGRAM

     1.     PURPOSE.  This Coastal Bancorp, Inc. 1999 Stock Compensation Program
            -------
("Program") is intended to secure for Coastal Bancorp, Inc. (the "Company"), any
Subsidiaries thereof and its stockholders the benefits arising from ownership of
the  Company's Common Stock, par value $.01 per share ("Common Stock"), by those
selected  Officers  and  other  key  Employees of the Company and any Subsidiary
thereof  who will be responsible for its future growth.  The Program is designed
to  help  attract  and  retain  superior  personnel for positions of substantial
responsibility  with the Company and to provide key Employees with an additional
incentive  to  contribute  to  the  success of the Company.  All Incentive Stock
Options  issued  under  the  Incentive  Plan  are  intended  to  comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and all
provisions  under the Incentive Plan shall be read, interpreted and applied with
that  purpose  in  mind.  Capitalized  terms  are  defined  in Article 15 of the
General  Provisions  of  the  Stock  Compensation  Program.

     2.     ELEMENTS  OF  THE  PROGRAM.  In order to maintain flexibility in the
            --------------------------
award of stock benefits, the Program is comprised of four parts.  The first part
is  the  Incentive Stock Option Plan ("Incentive Plan").  The second part is the
Compensatory  Stock  Option  Plan  ("Compensatory Plan").  The third part is the
Stock  Appreciation  Rights  Plan  ("S.A.R.  Plan").  The  fourth  part  is  the
Performance  Share  Plan  ("Performance  Plan").  Copies  of the Incentive Plan,
Compensatory  Plan, S.A.R. Plan and Performance Plan are attached hereto as Part
I, Part II, Part III and Part IV, respectively, and are collectively referred to
herein  as  the  "Plans"  or  the  "Program."  The  grant  of  an  Option, Stock
Appreciation  Right  or  Performance  Share  under one of the Plans shall not be
construed  to  prohibit  the  grant  of  an  Option, Stock Appreciation Right or
Performance  Share  under  any  of  the  other  Plans.

     3.     APPLICABILITY  OF  GENERAL PROVISIONS.  Unless any Plan specifically
            -------------------------------------
indicates  to the contrary, all Plans shall be subject to the General Provisions
of  the  Stock  Compensation  Program  set  forth  below.

     4.     ADMINISTRATION  OF  THE  PLANS.  The  Plans  shall  be administered,
            ------------------------------
construed, governed and amended in accordance with the General Provisions of the
Stock  Compensation  Program  and  their  respective  terms.

GENERAL  PROVISIONS  OF  THE  STOCK  COMPENSATION  PROGRAM

     ARTICLE  1.  ADMINISTRATION.  The  Program  shall  be  administered  by  a
                  --------------
committee appointed by the Board of Directors of the Company and composed of not
less than three directors of the Company, none of whom is an Officer or Employee
of the Company or any Subsidiary thereof.  The Board of Directors may, from time
to  time,  remove  members from, or add members to this Committee, provided that
the  Committee  shall continue to consist of three or more members of the Board,
none of whom is an Officer or Employee of the Company or any Subsidiary thereof,
and  each  of  whom shall be a "disinterested person" within the meaning of Rule
16b-3  under  the  Exchange  Act.  The  Committee, when acting to administer the
Program,  is  referred to herein as the "Program Administrators."  Any action of
the  Program  Administrators  shall  be  taken  by  majority vote or the written
consent  of  a  majority  of the Program Administrators.  Subject to the express
provisions  and limitations of the Program, this Committee may adopt such rules,
regulations  and  procedures  as  it  deems  appropriate  for the conduct of its
affairs.  It  may  appoint  one  of  its members to be chairman, and any person,
whether  or  not a member of this Committee, to be its secretary or agent.  This
Committee  shall  report  its actions and decisions to the Board of Directors at
appropriate  times,  but  in  no event less than one time per calendar year.  No
Program  Administrator or member of the Board of Directors of the Company, shall
be liable for any action or determination made in good faith with respect to the
Program or to any Option, Stock Appreciation Right, or Performance Share granted
thereunder.  If a Program Administrator is a party or is threatened to be made a
party  to  any  threatened,  pending  or  completed  action, suit or proceeding,
whether  civil, criminal, administrative or investigative, by reason of anything
done  or  not  done  by him or her in such capacity under or with respect to the
Program,  the  Company shall, subject to the requirements of applicable laws and
regulations,  indemnify  such  member  against  all  liabilities  and  expenses
(including  attorneys'  fees),  judgments,  fines and amounts paid in settlement
actually  and  reasonably incurred by him or her in connection with such action,
suit  or  proceeding  if he or she acted in good faith and in a manner he or she
reasonably  believed  to  be in the best interests of the Company and any of its
Subsidiaries  and,  with  respect  to  any criminal action or proceeding, had no
reasonable  cause  to  believe  his  conduct  was  unlawful.

     ARTICLE  2.  AUTHORITY  OF  PROGRAM  ADMINISTRATORS.  Subject  to the other
                  --------------------------------------
provisions  of  this  Program,  and  with  a  view to effecting its purpose, the
Program  Administrators  shall have sole authority in their absolute discretion:
(a)  to construe and interpret the Program; (b) to define the terms used herein;
(c)  to  prescribe, amend and rescind rules, regulations and procedures relating
to the Program, including, without limitation, rules, regulations and procedures
which  (i)  deal  with  satisfaction of an Employee's tax withholding obligation
pursuant  to  Article  11  hereof,  (ii)  include arrangements to facilitate the
Employee's ability to borrow funds for payment of the exercise or purchase price
of  an  Award,  if  applicable,  from  securities brokers and dealers, and (iii)
include  arrangements  which  provide  for  the  payment  of some or all of such
exercise  or  purchase  price  by  delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock
which are being acquired; (d) to determine the Employees to whom Awards shall be
granted  under  the  Program; (e) to determine the time or times at which Awards
shall  be  granted  under  the  Program;  (f)  to determine the number of shares
subject  to  any  Option  or  Stock Appreciation Right under the Program and the
number  of  shares to be awarded as Performance Shares under the Program as well
as  the  option  exercise  price,  and the duration of each Award, and any other
terms  and  conditions  of Awards; (g) to terminate the Program; and (h) to make
any  other  determinations  necessary or advisable for the administration of the
Program and to do everything necessary or appropriate to administer the Program.
All  decisions,  determinations  and  interpretations  made  by  the  Program
Administrators shall be final, binding and conclusive on all participants in the
Program  and  on  their  legal  representatives,  heirs  and  beneficiaries.

     ARTICLE 3.  MAXIMUM NUMBER OF SHARES SUBJECT TO THE PROGRAM.  The aggregate
                 -----------------------------------------------
number  of  shares of Common Stock available to be issued pursuant to the Plans,
subject to adjustment as provided in Article 6 hereof, shall be equal to 340,000
shares  of the Company's Common Stock.  If any of the Options granted under this
Program  are surrendered before exercise (including surrender in connection with
the  exercise of a Stock Appreciation Right), expire or terminate for any reason
before they have been exercised in full, the unpurchased shares subject to those
surrendered,  expired  or  terminated  Options  shall again be available for the
purposes of the Program as if no Awards had been previously granted with respect
to  such shares.  If the performance objectives associated with the grant of any
Performance Share(s) are not achieved within the specified performance period or
if  the Performance Share grant terminates for any reason before the performance
objective  date  arrives,  the  shares  of  Common  Stock  associated  with such
Performance  Shares  shall  again  be available for the purposes of the Program.
The  shares  of  Common  Stock  issued  under  the Program may be authorized but
unissued  shares, treasury shares or shares purchased by the Company on the open
market  or  from  private  sources  for  use  under  the  Program.

     ARTICLE  4.  ELIGIBILITY  AND  PARTICIPATION.  Only  regular  full-time
                  -------------------------------
Employees  of  the Company or any Subsidiary thereof, including Officers whether
or  not  directors  of  the Company, or of any Subsidiary, shall be eligible for
selection  by  the  Program  Administrators  to  participate  in  the  Program.
Directors  of  the  Company shall not be eligible to participate in the Program.

     ARTICLE  5.  EFFECTIVE  DATE AND TERM OF PROGRAM.  The Program shall become
                  -----------------------------------
effective  upon  its  adoption  by  the  Board  of  Directors of the Company and
subsequent  approval  of the Program by the affirmative vote of the holders of a
majority  of the shares entitled to vote thereon at a meeting of stockholders of
the  Company  and  represented  in person or by proxy at such meeting at which a
quorum is present, which vote shall be taken within 12 months of adoption of the
Program  by the Company's Board of Directors; provided, however, that Awards may
be  granted  under  this  Program prior to obtaining stockholder approval of the
Program,  except  that any such Awards shall be contingent upon such stockholder
approval  being  obtained  and may not be exercised prior to such approval.  The
Program  shall  continue  in  effect  for  a  term  of  ten  years unless sooner
terminated  under Article 2 or Article 7 of the General Provisions.  Termination
of  the  Program  shall not affect any Awards previously granted and such Awards
shall remain valid and in effect until they have been fully exercised or earned,
are  surrendered  or  by  their  terms  expire  or  are  forfeited.

     ARTICLE 6.  ADJUSTMENTS.  If the shares of Common Stock of the Company as a
                 -----------
whole are increased, decreased, changed into or exchanged for a different number
or  kind  of  shares  or  securities through merger, consolidation, combination,
exchange  of  shares,  other reorganization, recapitalization, reclassification,
stock  dividend,  stock  split  or  reverse  stock  split,  an  appropriate  and
proportionate  adjustment shall be made in the maximum number and kind of shares
as  to  which  Awards  may  be  granted  under  this  Program.  A  corresponding
proportionate  adjustment  of  the  exercise  price  of  any  Option  or  Stock
Appreciation  Right and of the number or kind of shares allocated to unexercised
Options,  Stock  Appreciation  Rights,  Performance  Shares or portions thereof,
which  shall have been granted prior to any such change, shall likewise be made.
In making any adjustment pursuant to this Article 6, any fractional shares shall
be  rounded in the discretion of the Program Administrators.  If, upon a merger,
consolidation,  reorganization, liquidation, recapitalization or the like of the
Company,  the  shares of the Company's Common Stock shall be exchanged for other
securities  of the Company or of another corporation, each recipient of an Award
shall  be  entitled,  subject  to  the  conditions herein stated, to purchase or
acquire  such  number of shares of Common Stock or amount of other securities of
the  Company  or  such  other corporation as were exchangeable for the number of
shares  of  Common  Stock  of  the  Company which such Optionees would have been
entitled  to  purchase  or  acquire  except  for  such  action,  and appropriate
adjustments shall be made to the per share exercise price of outstanding Options
and  Stock  Appreciation  Rights.

     ARTICLE  7.  TERMINATION  AND  AMENDMENT  OF  PROGRAM.  The  Program  shall
                  ----------------------------------------
terminate  no  later than ten years from the date such Program is adopted by the
Board  of  Directors  or  the date such Program is approved by the stockholders,
whichever  is  earlier.  No Awards shall be granted under the Program after that
date.  The Board of Directors may amend, suspend or terminate the Program or any
portion  thereof  at  any time, except that it may not amend the Program without
stockholder  approval where the absence of such approval would cause the Program
to  fail  to  comply  with Rule 16b-3 under the Exchange Act, Section 422 of the
Code,  the  requirements of any securities exchange or national quotation system
on  which  the  shares  of  Common Stock are then listed or traded, or any other
requirement  of  applicable  law  or  regulation.  Subject  to  the  limitation
contained in Article 8 of the General Provisions, the Program Administrators may
at  any  time  amend  or revise the terms of the Program, including the form and
substance  of  the  Option,  Stock  Appreciation  Right,  and  Performance Share
agreements  to  be  used hereunder; provided that no amendment or revision shall
(a)  increase  the  maximum  aggregate  number  of  shares  that  may  be  sold,
appreciated  or  distributed  pursuant  to Options, Stock Appreciation Rights or
Performance Shares granted under this Program, except as permitted under Article
6  of  the  General Provisions; (b) change the minimum purchase price for shares
under  Section  4  of Plans I and II, except as permitted under Article 6 of the
General  Provisions;  (c)  increase the maximum term established under the Plans
for any Option, Stock Appreciation Right or Performance Share; or (d) permit the
granting  of  an Option, Stock Appreciation Right or Performance Share to anyone
other  than  as  provided  in  Article  4  of  the  General  Provisions.

     ARTICLE  8.  PRIOR  RIGHTS  AND  OBLIGATIONS.  No  amendment, suspension or
                  -------------------------------
termination  of  the  Program  shall, without the consent of an Employee who has
received  an Award, alter or impair any of that Employee's rights or obligations
under any Award granted under the Program prior to such amendment, suspension or
termination.

     ARTICLE 9.  PRIVILEGES OF STOCK OWNERSHIP.  Notwithstanding the exercise of
                 -----------------------------
any  Options  or Stock Appreciation Rights granted pursuant to the terms of this
Program  or  the  achievement  of  any  performance  objective  specified in any
Performance  Share  granted  pursuant  to the terms of this Program, no Employee
shall  have  any  of the rights or privileges of a stockholder of the Company in
respect  of  any shares of stock issuable upon the exercise of his or her Option
or  achievement  of  his or her performance goal until certificates representing
the  shares  have  been issued and delivered.  No shares shall be required to be
issued  and  delivered  upon  exercise  of  any  Option  or  achievement  of any
performance goal as specified in a Performance Share unless and until all of the
requirements  of law and of all regulatory agencies having jurisdiction over the
issuance and delivery of the securities shall have been fully complied with.  No
adjustment  shall be made for dividends or any other distributions for which the
record  date  is  prior  to  the date on which such stock certificate is issued.

     ARTICLE  10.  RESERVATION  OF  SHARES OF COMMON STOCK.  The Company, during
                   ---------------------------------------
the  term  of  this  Program,  will at all times reserve and keep available such
number  of  shares  of  its  Common  Stock as shall be sufficient to satisfy the
requirements  of  the Program.  All Awards granted hereunder shall be subject to
all  applicable  federal  and  state  laws,  rules  and  regulations and to such
approval  by  any  governmental  or  regulatory  agency as may be required.  The
Company  will  from  time to time, as is necessary to accomplish the purposes of
this  Program,  seek  to obtain all necessary and appropriate approvals from any
governmental  authority  or  regulatory agency having jurisdiction any requisite
authority  in  order  to  issue  and sell shares of Common Stock hereunder.  The
inability  of  the  Company  to  obtain  from  any  regulatory  agency  having
jurisdiction  the  authority deemed by the Company's counsel to be necessary for
the  lawful issuance and sale of any shares of its stock hereunder shall relieve
the Company of any liability in respect of the non-issuance or sale of the stock
as  to  which  the  requisite  authority  shall  not  have  been  obtained.

     ARTICLE  11.  TAX WITHHOLDING.  The exercise of any Award granted under the
                   ---------------
Program  is  subject  to  the  condition  that  if at any time the Company shall
determine,  in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as  a  condition of, or in any connection with, such exercise or the delivery or
purchase  of  shares  pursuant  thereto, then in such event, the exercise of the
Option,  Stock  Appreciation  Right  or Performance Share shall not be effective
unless  such  withholding  tax  or other withholding liabilities shall have been
satisfied  in a manner acceptable to the Company.  The Company may withhold from
any  cash  payment  made  under  this  Program  sufficient  amounts to cover any
applicable  withholding  and  employment  taxes,  and if the amount of such cash
payment  is  insufficient,  the  Company  may require the Optionee to pay to the
Company  the  amount  required  to  be withheld as a condition to delivering the
shares  acquired pursuant to an Award.  The Company also may withhold or collect
amounts  with  respect  to a disqualifying disposition of shares of Common Stock
acquired  pursuant  to  exercise  of  an  Incentive Stock Option, as provided in
Section  16  of the Incentive Stock Option Plan.  The Program Administrators are
authorized  to  adopt  rules,  regulations,  or procedures which provide for the
satisfaction of an Employee's tax withholding obligation by, among other things,
the retention of shares of Common Stock to which the Employee would otherwise be
entitled  pursuant  to  an  Award  and/or  by  the  Employee's  delivery  of
previously-owned  shares  of  Common  Stock  or  other  property.

     ARTICLE  12.  EMPLOYMENT.  Nothing  in  the Program or in any Option, Stock
                   ----------
Appreciation  Right,  or Performance Share award, shall confer upon any eligible
Employee  any  right  to  continued  employment by the Company or any Subsidiary
thereof, or limit in any way the right of the Company or any Subsidiary thereof,
at  any  time  to  terminate  or  alter  the  terms  of  that  employment.

     ARTICLE  13.  REVOCATION FOR MISCONDUCT.  The Program Administrators may by
                   -------------------------
resolution  immediately  revoke,  rescind  and  terminate any Option, or portion
thereof,  to  the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Program to an
Employee  who  is  discharged  from  the employ of the Company or any Subsidiary
thereof  for cause, which, for purposes hereof, shall mean termination for:  (i)
conviction  of  a  felony involving the misappropriation of the Company's or any
Subsidiaries  assets or a conviction of a felony which results in a substantial,
demonstrable  threat  to  the  Company's or any Subsidiaries reputation, or (ii)
gross  and  willful  failure  to perform a substantial portion of the Employee's
duties  and  responsibilities  as  an  Employee.

     ARTICLE 14.  RESTRICTIONS ON TRANSFER.  The Company may place a legend upon
                  ------------------------
any  certificate  representing  shares  acquired  pursuant  to  an Award granted
hereunder  noting  that  the  transfer  of  such  shares  may  be  restricted by
applicable  laws  and  regulations.

     ARTICLE  15.  DEFINITIONS.
                   -----------

          (a)  "Award"  means an Option, Stock Appreciation Right or Performance
Share  granted  pursuant  to  the  terms  of  this  Program.

          (b)  "Board"  means  the  Board  of  Directors  of  the  Company.

          (c)  "Code"  means  the  Internal  Revenue  Code  of 1986, as amended.

          (d)  "Committee"  means  a  Committee  of  three  or  more  directors
appointed  by  the Board pursuant to Article 1 of the General Provisions hereof,
none  of  whom shall be an Officer or Employee of the Company or any Subsidiary,
and  each  of  whom shall be a "disinterested person" within the meaning of Rule
16b-3  under  the  Exchange  Act.

          (e)  "Common  Stock"  means shares of the common stock, $.01 par value
per  share,  of  the  Company.

          (f)  "Disability"  means any disability which makes a person unable to
engage  in  any  substantial  gainful  activity  by  reason  of  any  medically
determinable physical or mental impairment as defined in Section 22(e)(3) of the
Code.

          (g)  "Employee"  means  any  person  who  is employed full time by the
Company  or  any  Subsidiary, or is an Officer of the Company or any Subsidiary,
but  not including directors who are not also Officers of, or otherwise employed
by,  the  Company  or  any  Subsidiary.

          (h)  "Exchange  Act"  means  the  Securities  Exchange Act of 1934, as
amended.

          (i)  "Fair  Market  Value" shall be equal to the fair market value per
share  of  the  Company's  Common  Stock  on  the date an Award is granted.  For
purposes  hereof,  the Fair Market Value of a share of Common Stock shall be the
closing  sale  price  of a share of Common Stock on the date in question (or, if
such  day  is  not  a  trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of  the  markets,  if  more than one) or national quotation system in which such
shares  are  then  traded,  or  if no such closing prices are reported, the mean
between  the  high  bid and low asked prices that day on the principal market or
national  quotation  system then in use, or if no such quotations are available,
the  price furnished by a professional securities dealer making a market in such
shares  selected  by  the  Committee.

          (j)  "Incentive  Stock  Option"  means  any  Option granted under this
Program  which  the Board intends (at the time it is granted) to be an Incentive
Stock  Option  within  the  meaning  of  Section  422  of  the  Code.

          (k)  "Non-Qualified  Option"  means any Option granted under this Plan
which  is  not  an  Incentive  Stock  Option.

          (l)  "Officer"  means an Employee whose position in the Company or any
Subsidiary  thereof  is that of a corporate officer, as determined by the Board.

          (m)  "Option"  means  a  right  granted under this Program to purchase
Common  Stock.

          (n)  "Optionee"  means  an  Employee  or  former  Employee  to whom an
Option,  Stock  Appreciation  Right,  or  Performance  Share, as appropriate, is
granted  under  the  Program.

          (o)  "Performance Shares" means a specified number of shares of Common
Stock  granted  to  an  Employee,  as  provided in the discretion of the Program
Administrators  in  accordance  with  Performance  Share  Plan.

          (p)  "Retirement"  means a termination of employment which constitutes
a  "retirement"  pursuant  to  the  personnel  policies  of  the  Company or any
Subsidiary  thereof  or  under  any  applicable  qualified  pension benefit plan
maintained  by  the  Company  or  any  Subsidiary  thereof.

          (q)  "Stock  Appreciation  Right" means a right to surrender an Option
in  consideration  for  a payment by the Company in cash and/or Common Stock, as
provided  in the discretion of the Program Administrators in accordance with the
Stock  Appreciation  Rights  Plan.

          (r)  "Subsidiary"  or  "Subsidiaries"  means those subsidiaries of the
Company,  including  Coastal  Banc ssb, which meet the definition of "Subsidiary
corporations"  set  forth in Section 424(f) of the Code, at the time of granting
of  the  Award  in  question.

          (s)  "Termination  Date" means the date the employee is effectively no
longer  an  employee.  This  does  not  cover  time  paid  for  severance.

          (t)  Other  terms  are  defined as set forth in the General Provisions
and  the  respective  Plans.

     ARTICLE 16.  STOCK OPTION AGREEMENT.  The proper Officers, on behalf of the
                  ----------------------
Company,  and  each  Optionee shall execute a Stock Option Agreement which shall
set  forth  the total number of shares of Common Stock to which it pertains, the
exercise  price,  whether  it  is  a  Non-Qualified Option or an Incentive Stock
Option,  and  such  other  terms, conditions, restrictions and privileges as the
Program  Administrators  in each instance shall deem appropriate.  Each Optionee
shall  receive  a  copy  of  his  or  her  executed  Stock  Option  Agreement.

     ARTICLE  17.  GOVERNING  LAW.  To the extent not superseded by federal law,
                   --------------
the provisions of the Program shall be governed by and interpreted in accordance
with  the  laws  of  the  State  of  Texas.

<PAGE>
                                COASTAL BANCORP, INC.
                         1999 STOCK COMPENSATION PROGRAM

PLAN  I  -  INCENTIVE  STOCK  OPTION  PLAN

     SECTION  1.  PURPOSE.  The  purpose of this Coastal Bancorp, Inc. Incentive
                  -------
Stock  Option  Plan  ("Incentive  Plan")  is  to  promote the growth and general
prosperity of the Company by permitting the Company to grant Options to purchase
shares  of its Common Stock.  The Incentive Plan is designed to help attract and
retain  superior  personnel for positions of responsibility with the Company, or
of  any Subsidiary, and to provide key Employees with an additional incentive to
contribute  to  the  success  of  the Company.  The Company intends that Options
granted  pursuant  to the provisions of the Incentive Plan will qualify and will
be  identified as "incentive stock options" within the meaning of Section 422 of
the Code.  This Incentive Plan is Part I of the Coastal Bancorp, Inc. 1999 Stock
Compensation  Program.  Unless  any  provision herein indicates to the contrary,
this  Incentive  Plan shall be subject to the General Provisions of the Program.

     SECTION  2.  OPTION  TERMS  AND  CONDITIONS.  The  terms  and conditions of
                  ------------------------------
Options  granted  under  the  Incentive  Plan may differ from one another as the
Program  Administrators  shall,  in their sole discretion, determine, as long as
all  Options  granted  under  the Incentive Plan satisfy the requirements of the
Incentive  Plan.

     SECTION  3.  DURATION  OF  OPTIONS.  Each  Option and all rights thereunder
                  ---------------------
granted  pursuant to the terms of the Incentive Plan shall be exercisable at any
time  on  or after it vests and becomes exercisable and shall expire on the date
determined  by  the  Program  Administrators,  but  in no event shall any Option
granted  under  the  Incentive Plan expire later than ten years from the date on
which  the Option is granted, except that any Employee who owns more than 10% of
the  combined  voting  power  of  all classes of stock of the Company, or of any
Subsidiary thereof, must exercise any Options within five years from the date of
grant.  In  addition,  each  Option  shall  be  subject  to early termination as
provided  in  the  Incentive  Plan.

     SECTION  4.  PURCHASE  PRICE.  The  purchase  price  for  shares  acquired
                  ---------------
pursuant  to  the  exercise,  in whole or in part, of any Incentive Stock Option
shall  not be less than one hundred percent (100%) of the Fair Market Value of a
share  of  Common  Stock at the time of the grant of the Option; except that for
any  Employee who owns more than 10% of the combined voting power of all classes
of  stock  of the Company, or of any Subsidiary, the purchase price shall not be
less than one hundred and ten percent (110%) of the Fair Market Value of a share
of  Common  Stock.  All shares sold under the Incentive Plan shall be fully paid
and  non-assessable.

     SECTION  5.  MAXIMUM AMOUNT OF OPTIONS IN ANY CALENDAR YEAR.  The aggregate
                  ----------------------------------------------
Fair  Market  Value  (determined  as  of  the time the Option is granted) of the
Common  Stock  with respect to which Incentive Stock Options, as defined in Code
Section  422(b),  are  exercisable for the first time by any Employee during any
calendar  year  (under  the terms of this Plan and all such plans of the Company
and  any Subsidiary thereof) shall not exceed $100,000.  Any Option in excess of
the  foregoing limitations shall be pursuant to the Company's Compensatory Stock
Option  Plan  (Plan  II) and shall be clearly and specifically designated as not
being  an  Incentive  Stock  Option.

     SECTION  6.  EXERCISE  OF  INCENTIVE  STOCK  OPTIONS.  Each Incentive Stock
                  ---------------------------------------
Option  shall  become  vested and exercisable in one or more installments during
its  term,  and  the  right  to  exercise may be cumulative as determined by the
Program  Administrators;  provided,  however,  that in the case of any Incentive
Stock  Options  exercisable  within  the first six months following the date the
Incentive  Stock Option is granted, the shares of Common Stock received upon the
exercise  of  such Option may not be sold or disposed of by the Optionee for the
first six months following the date of grant, provided further, however, that in
the  case  of  any  Incentive  Stock  Option  granted prior to the date that the
Program  is  approved  by the requisite vote of the stockholders of the Company,
the  shares of Common Stock received upon the exercise of such Option may not be
sold  or disposed of by the Optionee for the first six months following the date
stockholder approval is received.  In determining the number of shares of Common
Stock  with  respect  to  which  Incentive  Stock  Options  are  vested  and/or
exercisable, fractional shares will be rounded up to the nearest whole number if
the  fraction  is  0.5 or higher, and down if it is less.  The purchase price of
any  shares purchased shall be paid in full in cash or by certified or cashier's
check  payable  to  the  order  of  the  Company  or  by  shares of Common Stock
(including  shares  acquired  pursuant  to  the  exercise of an Option) or other
property,  or  by withholding some of the shares of Common Stock which are being
purchased  upon  exercise  of  an  Option,  if  permitted  by  the  Program
Administrators,  or by a combination of cash, check or shares of Common Stock or
other property equal in Fair Market Value to the purchase price of the shares to
be  acquired  pursuant  to  the  Option,  at the time of exercise of the Option.

     SECTION  7.  ACCELERATION  OF  RIGHT  OF  EXERCISE  OF  INSTALLMENTS.
                  -------------------------------------------------------
Notwithstanding  the  first sentence of Section 6 of this Incentive Plan, in the
event  the Company or its stockholders enter into an agreement to dispose of all
or  substantially  all of the assets or stock of the Company (or of Coastal Banc
ssb)  by  means  of  a  sale,  merger  or  other  reorganization, liquidation or
otherwise,  any Option granted pursuant to the terms of the Incentive Plan shall
become immediately exercisable with respect to the full number of shares subject
to  that  Option during the period commencing as of the date of the agreement to
dispose  of  all  or substantially all of the assets or stock of the Company and
ending when the disposition of assets or stock contemplated by that agreement is
terminated  or  the  Option  is  otherwise  terminated  in  accordance  with its
provisions  or  the  provisions  of this Incentive Plan, whichever occurs first;
provided,  however,  that  no Option shall be immediately exercisable under this
Section  7 on account of any agreement to dispose of all or substantially all of
the  assets or stock of the Company (or of Coastal Banc ssb) by means of a sale,
merger  or other reorganization, liquidation or otherwise where the stockholders
of  the  Company immediately before the consummation of the transaction will own
at least 50% of the total combined voting power of all classes of stock entitled
to  vote  of  the  surviving  entity,  whether the Company or some other entity,
immediately  after  the  consummation  of  the  transaction.  In  the  event the
transaction  contemplated  by the agreement referred to in this Section 7 is not
consummated, but rather is terminated, cancelled or expires, the Options granted
pursuant  to the Incentive Plan shall thereafter be treated as if that agreement
had  never  been  entered  into.

     Notwithstanding  the first sentence of Section 6 of this Incentive Plan, in
the  event of a change in control of the Company or threatened change in control
of  the Company as determined by a vote of not less than a majority of the Whole
Board of Directors and a majority of the Continuing Directors of the Company, as
such terms are defined in the Company's Articles of Incorporation, all Incentive
Stock  Options  granted  prior to such change in control or threatened change of
control  shall  become immediately exercisable.  The term "control" for purposes
of  this  Section  shall refer to the acquisition (subsequent to the approval of
the  Program  by  the  stockholders of the Company) of 10% or more of the voting
securities  of  the Company by any person or by persons acting as a group within
the  meaning  of  Section 13(d) of the Exchange Act; provided, however, that for
purposes  of  this  Incentive Plan, no change in control or threatened change in
control  shall  be  deemed  to  have occurred if prior to the acquisition of, or
offer to acquire, 10% or more of the voting securities of the Company, the Whole
Board  of  Directors  of  the  Company  shall  have  adopted  by not less than a
two-thirds  vote  a  resolution specifically approving such acquisition or offer
for  the  specific purpose of preventing the acceleration of the vesting of such
Options.  The term "person" for purposes of this Section refers to an individual
or  a  corporation,  partnership,  trust,  association,  joint  venture,  pool,
syndicate, sole proprietorship, unincorporated organization or any other form of
entity  not  specifically  listed  herein.

     SECTION  8.  WRITTEN  NOTICE  REQUIRED.  Any Option granted pursuant to the
                  -------------------------
terms  of  the  Incentive  Plan  shall  be exercised when written notice of that
exercise  has  been  given  to the Company at its principal office by the person
entitled  to exercise the Option and full payment for the shares with respect to
which  the  Option  is  exercised  has  been  received  by  the  Company.

     SECTION  9.  COMPLIANCE WITH SECURITIES LAWS.  Shares of Common Stock shall
                  -------------------------------
not be issued with respect to any Option granted under the Incentive Plan unless
the  exercise  of  that  Option  and  the  issuance and delivery of those shares
pursuant to that exercise shall comply with all relevant provisions of state and
federal  law  including,  without  limitation,  the  Securities  Act of 1933, as
amended,  the rules and regulations promulgated thereunder, and the requirements
of  any  stock  exchange  or national quotation system upon which the shares may
then  be listed, and shall be further subject to the approval of counsel for the
Company  with  respect  to such compliance.  The Program Administrators may also
require  an Optionee to whom an Option has been granted under the Incentive Plan
to  furnish evidence satisfactory to the Company, including a written and signed
representation  letter  and  consent  to  be  bound  by any transfer restriction
imposed  by  law,  legend,  condition  or  otherwise,  that the shares are being
purchased  only  for  investment  and  without  any present intention to sell or
distribute  the  shares  in  violation  of  any  state  or  federal law, rule or
regulation.  Further,  each Optionee shall consent to the imposition of a legend
on  the  shares  of  Common Stock subject to his or her Option restricting their
transferability  as  required  by  law  or  by  this  Section  9.

     SECTION  10.  EMPLOYMENT  OF  OPTIONEE.  Each Optionee, if requested by the
                   ------------------------
Program  Administrators  when  the Option is granted, must agree in writing as a
condition  of  receiving  his  or  her Option, that he or she will remain in the
employ  of  the  Company,  or  any  parent  or  Subsidiary  of the Company (or a
corporation  or a parent or Subsidiary of such corporation issuing or assuming a
stock  option  in a transaction to which Section 424(a) of the Code applies), as
the  case may be, following the date of the granting of that Option for a period
specified  by  the Program Administrators, which period shall in no event exceed
three  years.  Nothing  in  the  Plan  or  in any Option granted hereunder shall
confer  upon  any  Optionee any right to continued employment by the Company, or
any  Subsidiary  thereof,  or  limit  in any way the right of the Company or any
Subsidiary  thereof,  at  any  time  to  terminate  or  alter  the terms of that
employment.

     SECTION  11.  OPTION RIGHTS UPON TERMINATION OF EMPLOYMENT.  If an Optionee
                   --------------------------------------------
ceases  to  be  employed  by  the  Company,  or  any  Subsidiary  thereof  (or a
corporation  or a parent or Subsidiary of such corporation issuing or assuming a
stock  option in a transaction to which Section 424(a) of the Code applies), for
any  reason  other than death, Disability or Retirement, his or her Option shall
immediately  terminate.  Should  an employee be re-hired within the mandatory 30
day  exercise  window,  they  will  be  allowed to not exercise their previously
granted  options  at  their  discretion.

     SECTION  12.  OPTION  RIGHTS UPON DISABILITY OR RETIREMENT.  If an Optionee
                   --------------------------------------------
becomes  disabled  within  the  meaning  of  Section  22(e)(3) of the Code while
employed  by the Company or any Subsidiary thereof (or a corporation or a parent
or  Subsidiary  of  such  corporation  issuing  or  assuming a stock option in a
transaction  to  which  Section  424(a)  of  the  Code  applies) or ceases to be
employed  thereby  due  to  his  Retirement, the Option may be exercised, to the
extent  exercisable on the date of termination of employment, at any time within
one  year  after  the  date  of  termination  of employment due to Disability or
Retirement,  unless  either the Option or this Incentive Plan otherwise provides
for  earlier  termination.

     SECTION  13.  OPTION  RIGHTS  UPON  DEATH OF OPTIONEE.  Except as otherwise
                   ---------------------------------------
limited  by the Program Administrators at the time of the grant of an Option, if
an  Optionee  dies while employed by the Company or any Subsidiary thereof (or a
corporation  or  a  Subsidiary  of  such corporation issuing or assuming a stock
option  in a transaction to which Section 424(a) of the Code applies), or within
three  months  after  ceasing to be an Employee thereof, his or her Option shall
expire  one  year  after the date of death unless by its term it expires sooner.
During  this  one  year  or  shorter period, the Option may be exercised, to the
extent  that  it  remains  unexercised  on  the  date of death, by the person or
persons  to whom the Optionee's rights under the Option shall pass by will or by
the  laws  of descent and distribution, but only to the extent that the Optionee
is  entitled to exercise the Option at the date of death.  However, in order for
the  Option to continue to be treated as an Incentive Stock Option under Section
422  of  the Code, the Option must be exercised no later than three months after
the  date  of  termination  of  employment.

     SECTION  14.  OPTIONS  NOT  TRANSFERABLE.  Options  granted pursuant to the
                   --------------------------
terms of this Incentive Plan may not be sold, pledged, hypothecated, assigned or
transferred  in  any  manner  otherwise  than  by will or the laws of descent or
distribution  and  may  be  exercised during the lifetime of an Optionee only by
that  Optionee.

     SECTION  15.  ADJUSTMENTS  TO NUMBER AND PURCHASE PRICE OF OPTIONED SHARES.
                   ------------------------------------------------------------
All  Options  granted  pursuant  to  the  terms  of this Incentive Plan shall be
adjusted in the manner prescribed by Article 6 of the General Provisions of this
Program.

     SECTION 16.  NOTICE OF DISPOSITION; WITHHOLDING; ESCROW.  An Optionee shall
                  ------------------------------------------
immediately  notify  the Company in writing of any sale, transfer, assignment or
other disposition (or action constituting a disqualifying disposition within the
meaning  of  Section  421  of  the  Code) of any shares of Common Stock acquired
through  exercise of an Incentive Stock Option, within two years after the grant
of  such Incentive Stock Option or within one year after the acquisition of such
shares,  setting  forth the date and manner of disposition, the number of shares
disposed  of  and  the price at which such shares were disposed of.  The Company
shall  be  entitled  to withhold from any compensation or other payments then or
thereafter  due  to the Optionee such amounts as may be necessary to satisfy any
withholding  requirements of Federal or state law or regulation and, further, to
collect  from the Optionee any additional amounts which may be required for such
purpose.  The Program Administrators may, in their discretion, require shares of
Common  Stock acquired by an Optionee upon exercise of an Incentive Stock Option
to  be held in an escrow arrangement for the purpose of enabling compliance with
the  provisions  of  this  Section  16.

<PAGE>
                                COASTAL BANCORP, INC.
                         1999 STOCK COMPENSATION PROGRAM


PLAN  II  -  COMPENSATORY  STOCK  OPTION  PLAN

     SECTION  1.  PURPOSE.  The  purpose  of  this  Coastal  Bancorp,  Inc.
                  -------
Compensatory Stock Option Plan ("Compensatory Plan") is to permit the Company to
grant  Options  to  purchase shares of its Common Stock to selected Officers and
full-time,  key  Employees  of  the  Company,  or  any  Subsidiary thereof.  The
Compensatory  Plan is designed to help attract and retain superior personnel for
positions  of  substantial  responsibility with the Company and its Subsidiaries
and  to  provide key Employees with an additional incentive to contribute to the
success  of  the Company.  Any Option granted pursuant to this Compensatory Plan
shall  be  clearly  and  specifically designated as not being an Incentive Stock
Option,  as  defined  in  Section 422(b) of the Code.  This Compensatory Plan is
Part  II of the Company's 1999 Stock Compensation Program.  Unless any provision
herein indicates to the contrary, this Compensatory Plan shall be subject to the
General  Provisions  of  the  Program.

     SECTION  2.  OPTION  TERMS  AND  CONDITIONS.  The  terms  and conditions of
                  ------------------------------
Options  granted under this Compensatory Plan may differ from one another as the
Program  Administrators  shall,  in  their  discretion, determine as long as all
Options  granted  under  the  Compensatory  Plan satisfy the requirements of the
Compensatory  Plan.

     SECTION  3.  DURATION  OF  OPTIONS.  Each  Option and all rights thereunder
                  ---------------------
granted pursuant to the terms of this Compensatory Plan shall expire on the date
determined  by  the  Program  Administrators,  but  in no event shall any Option
granted  under  the  Compensatory Plan expire later than ten years and one month
from the date on which the Option is granted.  In addition, each Option shall be
subject  to  early  termination  as  provided  in  the  Compensatory  Plan.

     SECTION  4.  PURCHASE  PRICE.  The  purchase  price  for  shares  acquired
                  ---------------
pursuant to the exercise, in whole or in part, of any Non-Qualified Option shall
be  established  by  the  Program Administrators at the time of grant, but in no
event  shall  be  less than the par value of the Common Stock at the time of the
grant  of  the  Option.

     SECTION 5.     EXERCISE OF OPTIONS.  Each Non-Qualified Option shall become
                    -------------------
vested and exercisable in one or more installments during its term and the right
to  exercise  may  be  cumulative  as  determined by the Program Administrators,
provided,  however,  that  in  the  case of any Non-Qualified Option exercisable
within  the  first  six  months  following  the date such Option is granted, the
shares of Common Stock received upon the exercise of such Option may not be sold
or  disposed  of  by the Optionee for the first six months following the date of
grant,  provided  further, however, that in the case of any Option granted prior
to  the  date  that  this  Program  is  approved  by  the  requisite vote of the
stockholders  of  the  Company,  the  shares  of  Common Stock received upon the
exercise  of  such Option may not be sold or disposed of by the Optionee for the
first  six  months  following  the  date  stockholder  approval is received.  In
determining  the  number of shares of Common Stock with respect to which Options
are  vested  and/or  exercisable,  fractional  shares  will be rounded up to the
nearest  whole  number if the fraction is 0.5 or higher, and down if it is less.
The  purchase  price of any shares purchased shall be paid in full in cash or by
certified or cashier's check payable to the order of the Company or by shares of
Common  Stock  (including shares acquired pursuant to the exercise of an Option)
or other property or by withholding some of the shares of Common Stock which are
being  purchased  upon  exercise  of  an  Option,  if  permitted  by the Program
Administrators,  or by a combination of cash, check or shares of Common Stock or
other property equal in Fair Market Value to the purchase price of the shares to
be  acquired  pursuant  to  the  Option,  at the time of exercise of the Option.

     SECTION  6.  ACCELERATION  OF  RIGHT  OF  EXERCISE  OF  INSTALLMENTS.
                  -------------------------------------------------------
Notwithstanding  the  first  sentence of Section 5 of this Compensatory Plan, if
the  Company  or  its  stockholders enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company (or of Coastal Banc ssb)
by  means  of a sale, merger or other reorganization, liquidation, or otherwise,
any  Option granted pursuant to the terms of this Compensatory Plan shall become
immediately  exercisable  with  respect  to the full number of shares subject to
that  Option  during  the  period  commencing as of the date of the agreement to
dispose of all or substantially all of the assets or stock of the Company (or of
Coastal Banc ssb) and ending when that agreement is terminated, or the Option is
otherwise terminated in accordance with its provisions or the provisions of this
Compensatory  Plan,  whichever  occurs  first; provided, however, that no Option
shall  be  immediately  exercisable  under  this  Section  6  on  account of any
agreement  to  dispose of all or substantially all of the assets or stock of the
Company  by  means  of  a  sale,  merger or other reorganization, liquidation or
otherwise  where  the  stockholders  of  the  Company  immediately  before  the
consummation  of  the  transaction  will  own at least 50% of the total combined
voting  power  of all classes of stock entitled to vote of the surviving entity,
whether  the Company or some other entity, immediately after the consummation of
the  transaction.  In  the  event  the transaction contemplated by the agreement
referred  to  in  this  Section  6  is not consummated but rather is terminated,
cancelled  or  expires,  the  Options granted pursuant to this Compensatory Plan
shall  thereafter  be  treated as if that agreement had never been entered into.

     Notwithstanding  the first sentence of Section 5 of this Compensatory Plan,
in  the  event  of  a  change in control of the Company, or threatened change in
control  of  the  Company as determined by a vote of not less than a majority of
the  Whole  Board of Directors and a majority of the Continuing Directors of the
Company,  as  such terms are defined in the Company's Articles of Incorporation,
all  Non-Qualified Options granted prior to such change in control or threatened
change  in control shall become immediately exercisable.  The term "control" for
purposes  of  this  Section  shall  refer  to the acquisition (subsequent to the
approval  of  the  Program by the stockholders of the Company) of 10% or more of
the  voting  securities  of  the Company by any person or by persons acting as a
group  within  the  meaning  of  Section  13(d)  of  the Exchange Act; provided,
however,  that  for  purposes of this Compensatory Plan, no change in control or
threatened  change  in  control shall be deemed to have occurred if prior to the
acquisition of, or offer to acquire, 10% or more of the voting securities of the
Company,  the  Whole Board of Directors of the Company shall have adopted by not
less than a two-thirds vote a resolution specifically approving such acquisition
or  offer for the specific purpose of preventing the acceleration of the vesting
of  such  Options.  The  term "person" for purposes of this Section refers to an
individual  or  a  corporation,  partnership, trust, association, joint venture,
pool,  syndicate,  sole proprietorship, unincorporated organization or any other
form  of  entity  not  specifically  listed  herein.

     SECTION  7.  WRITTEN  NOTICE REQUIRED.  Any Option pursuant to the terms of
                  ------------------------
this  Compensatory  Plan shall be exercised when written notice of that exercise
has  been given to the Company at its principal office by the person entitled to
exercise  the  Option  and full payment for the shares with respect to which the
Option  is  exercised  has  been  received  by  the  Company.

     SECTION  8.  COMPLIANCE  WITH  SECURITIES LAWS.  Shares shall not be issued
                  ---------------------------------
with  respect  to  any  Option  granted  under  the Compensatory Plan unless the
exercise  of  that  Option  and the issuance and delivery of the shares pursuant
thereto  shall  comply  with  all  relevant provisions of state and federal law,
including, without limitation, the Securities Act of 1933, as amended, the rules
and  regulations  promulgated  thereunder,  and  the  requirements  of any stock
exchange  or national quotation system upon which the shares may then be listed,
and  shall  be  further  subject to the approval of counsel for the Company with
respect  to  such  compliance.  The  Program  Administrators may also require an
Optionee to whom  an Option has been granted to furnish evidence satisfactory to
the Company, including a written and signed representation letter and consent to
be  bound  by  any  transfer  restrictions  imposed by law, legend, condition or
otherwise,  that the shares are being purchased only for investment purposes and
without  any  present intention to sell or distribute the shares in violation of
any  state  or  federal  law,  rule or regulation.  Further, each Optionee shall
consent  to  the imposition of a legend on the shares of Common Stock subject to
his  or  her  Option  restricting their transferability as required by law or by
this  Section  8.

     SECTION  9.  EMPLOYMENT  OF  OPTIONEE.  Each  Optionee, if requested by the
                  ------------------------
Program  Administrators, must agree in writing as a condition of the granting of
his  or  her  Option,  to  remain in the employ of the Company or any Subsidiary
thereof  (or a corporation or a parent or Subsidiary of such corporation issuing
or  assuming a stock option in a transaction to which Section 424(a) of the Code
applies),  following  the  date  of  the  granting  of  that Option for a period
specified  by  the Program Administrators, which period shall in no event exceed
three  years.  Nothing  in  this  Compensatory  Plan  or  in  any Option granted
hereunder  shall  confer  upon any Optionee any right to continued employment by
the  Company  or  any  Subsidiary  thereof, or limit in any way the right of the
Company  or  any  Subsidiary at any time to terminate or alter the terms of that
employment.

     SECTION 10.  OPTION RIGHTS UPON TERMINATION OF EMPLOYMENT.  If any Optionee
                  --------------------------------------------
under  this  Compensatory  Plan  ceases  to  be  employed by the Company, or any
Subsidiary  (or  a  corporation  or  a  parent or Subsidiary of such corporation
issuing  or  assuming a stock option in a transaction to which Section 424(a) of
the  Code  applies),  for any reason other than Disability, death or Retirement,
his  or  her  Option  shall  immediately  terminate, provided, however, that the
Program  Administrators  may,  in  their  discretion,  allow  the  Option  to be
exercised,  to  the extent exercisable on the date of termination of employment,
at  any  time  within  a period of between three months and five years after the
date of termination of employment, unless either the Option or this Compensatory
Plan otherwise provides for earlier termination.  Should an employee be re-hired
within  the  mandatory  30  day  exercise  window,  they  will be allowed to not
exercise  their  previously  granted  options  at  their  discretion.

     SECTION  11.  OPTION  RIGHTS UPON DISABILITY OR RETIREMENT.  If an Optionee
                   --------------------------------------------
becomes  disabled  within  the  meaning  of  Section  22(e)(3) of the Code while
employed by the Company, or any Subsidiary thereof (or a corporation or a parent
or  Subsidiary  of  such  corporation  issuing  or  assuming a stock option in a
transaction  to  which  Section  424(a)  of  the  Code  applies) or ceases to be
employed  thereby  due  to  his Retirement, the Program Administrators, in their
discretion,  may  allow the Option to be exercised, to the extent exercisable on
the  date  of  termination  of employment, at any time within one year after the
date of termination of employment due to Disability or Retirement, unless either
the Option or this Compensatory Plan otherwise provides for earlier termination.

     SECTION  12.  OPTION  RIGHTS  UPON  DEATH OF OPTIONEE.  Except as otherwise
                   ---------------------------------------
limited  by the Program Administrators at the time of the grant of an Option, if
an Optionee dies while employed by the Company, or any Subsidiary thereof, (or a
corporation  or a parent or Subsidiary of such corporation issuing or assuming a
stock  option in a transaction to which Section 424(a) of the Code applies), his
or  her Option shall expire one year after the date of death unless by its terms
it  expires  sooner.  During  this one year or shorter period, the Option may be
exercised,  to  the  extent that it remains unexercised on the date of death, by
the  person or persons to whom the Optionee's rights under the Option shall pass
by  will or by the laws of descent and distribution, but only to the extent that
the  Optionee  is  entitled  to  exercise  the  Option  at  the  date  of death.

     SECTION  13.  OPTIONS  NOT  TRANSFERABLE.  Options  granted pursuant to the
                   --------------------------
terms of this Compensatory Plan may not be sold, pledged, hypothecated, assigned
or  transferred  in  any manner otherwise than by will or the laws of descent or
distribution  and  may  be  exercised during the lifetime of an Optionee only by
that  Optionee.

     SECTION  14.  ADJUSTMENTS  TO NUMBER AND PURCHASE PRICE OF OPTIONED SHARES.
                   ------------------------------------------------------------
All  Options  granted  pursuant  to the terms of this Compensatory Plan shall be
adjusted  in  a  manner prescribed by Article 6 of the General Provisions of the
Program.

<PAGE>
                                COASTAL BANCORP, INC.
                         1999 STOCK COMPENSATION PROGRAM

PLAN  III  -  STOCK  APPRECIATION  RIGHTS  PLAN

     SECTION  1.  PURPOSE.  The  purpose  of  this  Coastal  Bancorp, Inc. Stock
                  -------
Appreciation Rights Plan ("S.A.R. Plan") is to permit the Company to grant Stock
Appreciation  Rights  for its Common Stock to its full-time, key Employees.  The
S.A.R.  Plan  is  designed  to  help  attract  and retain superior personnel for
positions  of  substantial  responsibility  with  the Company and any Subsidiary
thereof  and to provide key Employees with an additional incentive to contribute
to  the  success  of  the  Company.  This S.A.R. Plan is Part III of the Coastal
Bancorp,  Inc.  1999  Stock  Compensation  Program.

     SECTION  2.  TERMS  AND  CONDITIONS.  The  Program  Administrators may, but
                  ----------------------
shall  not be obligated to, authorize, on such terms and conditions as they deem
appropriate  in each case, the Company to grant rights to Optionees to surrender
an exercisable Option granted under Plan I or Plan II or any portion thereof, in
consideration for the payment by the Company of an amount equal to the excess of
the  Fair  Market Value of the shares of Common Stock subject to such Option, or
any  portion  thereof,  surrendered,  over the exercise price of the Option with
respect  to  such  shares.  Such  payment,  at  the  discretion  of  the Program
Administrators,  may  be  made in shares of Common Stock valued at the then Fair
Market  Value  thereof,  or  in  cash  or partly in cash and partly in shares of
Common  Stock;  provided  that  with  respect  to  rights granted in tandem with
Incentive  Stock Options, the Program Administrators shall establish the form(s)
of  payment  allowed  the  Optionee  at  the  date  of  grant.  The  Program
Administrators shall not be authorized to make payment to any Optionee in shares
of  the  Company's Common Stock unless Section 83 of the Code would apply to the
Common  Stock  transferred to the Optionee.  The Program Administrators may, but
shall  not  be  obligated  to, also authorize naked Stock Appreciation Rights in
accordance  with  Section  9 hereof.  Notwithstanding the foregoing, the Company
may  not  permit  the  exercise  and  cancellation of a Stock Appreciation Right
issued  pursuant  to  this S.A.R. Plan until the Company has been subject to the
reporting  requirements  of  Section  13 of the Exchange Act, for a period of at
least  one  year  prior  to  the  exercise  and  cancellation  of any such Stock
Appreciation  Right.

     SECTION  3.  TIME LIMITATIONS.  Any election by an Optionee to exercise the
                  ----------------
Stock  Appreciation Rights provided in this S.A.R. Plan shall be made during the
period beginning on the third business day following the release for publication
of  quarterly  or  annual  financial  information  required  to  be prepared and
disseminated by the Company pursuant to the requirements of the Exchange Act and
ending on the twelfth business day following such date.  The required release of
information  shall be deemed to have been satisfied when the specified financial
data  appears  on  or  in a wire service, financial news service or newspaper of
general  circulation  or  is  otherwise  first  made  publicly  available.

     SECTION 4.  EXERCISE OF STOCK APPRECIATION RIGHTS:  EFFECT ON STOCK OPTIONS
                 ---------------------------------------------------------------
AND  VICE VERSA.  Upon the exercise of a Stock Appreciation Right, the number of
---------------
shares  of  Common  Stock  available  under the Option to which it relates shall
decrease  by  a  number  equal  to  the  number  of  shares  for which the Stock
Appreciation  Right  was exercised.  Upon the exercise of an Option, any related
Stock  Appreciation  Right shall terminate as to any number of shares subject to
the  right  that exceeds the total number of shares for which the Option remains
unexercised.


<PAGE>
     SECTION  5.  TIME  OF GRANT.  With respect to Options granted under Plan I,
                  --------------
Stock  Appreciation Rights must be granted concurrently with the Incentive Stock
Options  to  which  they  relate; with respect to Options granted under Plan II,
Stock  Appreciation Rights may be granted concurrently or at any time thereafter
prior  to  the  exercise  or  expiration  of  such  Non-Qualified  Options.

     SECTION 6.  NON-TRANSFERABLE.  The holder of a Stock Appreciation Right may
                 ----------------
not  transfer  or  assign the right otherwise than by will or in accordance with
the  laws  of  descent  and  distribution.  Furthermore,  in  the  event  of the
termination  of  his  or  her  service  with  the  Company  as an Officer and/or
Employee,  the  right may be exercised only within the period, if any, which the
Option  to  which  it  relates  may  be  exercised.

     SECTION  7.  TANDEM  INCENTIVE  STOCK  OPTION  -  STOCK APPRECIATION RIGHT.
                  -------------------------------------------------------------
Whenever  an  Incentive  Stock  Option authorized pursuant to Plan I and a Stock
Appreciation Right authorized hereunder are granted together and the exercise of
one  affects  the  right to exercise the other, the following requirements shall
apply:

     (a)     The  Stock  Appreciation  Right  will  expire  no  later  than  the
expiration  of  the  underlying  Incentive  Stock  Option;

     (b)     The Stock Appreciation Right may be for no more than the difference
between  the exercise price of the underlying Option and the market price of the
stock  subject to the underlying Option at the time the Stock Appreciation Right
is  exercised;

     (c)     The  Stock  Appreciation  Right  is  transferable  only  when  the
underlying Incentive Stock Option is transferable and under the same conditions;

     (d)     The  Stock  Appreciation  Right  may  be  exercised  only  when the
underlying  Incentive  Stock  Option  is  eligible  to  be  exercised;  and

     (e)     The  Stock Appreciation Right may be exercised only when the market
price of the stock subject to the Option exceeds the exercise price of the stock
subject  to  the  Option.

     SECTION  8.  TANDEM  STOCK  OPTION - LIMITED STOCK APPRECIATION RIGHT.  The
                  --------------------------------------------------------
Program  Administrators  may  provide  that  any tandem Stock Appreciation Right
granted  pursuant  to this Section 8 shall be a limited Stock Appreciation Right
("Limited  Stock  Appreciation  Right"),  in  which  event:

     (a)     The  Limited  Stock  Appreciation Right shall be exercisable during
the  period  beginning on the first day following the expiration of an Offer (as
defined  below)  and  ending  on  the  thirtieth  day  following  such  date;

     (b)     Neither  the  Option tandem to the Limited Stock Appreciation Right
nor any other Stock Appreciation Right tandem to such Option may be exercised at
any  time  that  the Limited Stock Appreciation Right may be exercised, provided
that  this  requirement shall not apply in the case of an Incentive Stock Option
tandem  to  a  Limited  Stock  Appreciation  Right if and to the extent that the
Program  Administrators  determine  that such requirement is not consistent with
applicable  statutory  provisions  regarding  Incentive  Stock  Options  and the
regulations  issued  thereunder;

     (c)     Upon  exercise  of  the  Limited Stock Appreciation Right, the Fair
Market Value of the shares to which the right relates shall be determined as the
highest  price  per share paid in any Offer that is in effect at any time during
the  period beginning on the sixtieth day prior to the date on which the Limited
Stock  Appreciation  Right  is  exercised  and  ending  on  such  exercise date;
provided,  however, with respect to a Limited Stock Appreciation Right tandem to
an  Incentive  Stock  Option,  the  Program  Administrators shall determine Fair
Market  Value of such shares in a different manner if and to the extent that the
Program  Administrators  deem  necessary or desirable to conform with applicable
statutory  provisions  regarding  Incentive  Stock  Options  and the regulations
issued  thereunder.

     The  term  "Offer" shall mean any tender offer or exchange offer for shares
of the Company, provided that the person making the offer acquires shares of the
Company's  capital  stock  pursuant  to  such  offer.

     SECTION 9.  NAKED STOCK APPRECIATION RIGHT.  The Program Administrators may
                 ------------------------------
provide  that  any  Stock  Appreciation Right granted pursuant to this Section 9
shall  be  a  naked  Stock  Appreciation  Right ("Naked Right"), in which event:

     (a)     Participants  shall  be  awarded Naked Rights for a period of up to
five  years  or  such shorter period which shall not be less than six months, as
may  be  determined  by  the Program Administrators.  Such designated period may
vary  as  among  participants  and as among awards to a participant.  Subject to
compliance  with  Section  3  hereof,  at the end of such designated period with
respect  to a participant, such participant shall receive an amount equal to the
appreciation  in  market  value  of  his  or  her  Naked Rights as determined in
subparagraph  (b)  of this Section 9 (the "Right Award").  The Right Award shall
be  payable  in  cash  or in shares of Common Stock, as may be determined by the
Program  Administrators.  A  participant  may  receive  as  many awards of Naked
Rights  at  various  times as may be determined to be appropriate by the Program
Administrators.

     (b)     For  purposes  of  determining  the  amount  of  a Right Award, the
Program  Administrators shall determine the market value of Naked Rights held by
such participant at the end of the designated period for which such Naked Rights
have  been  held ("Valuation Period") and subtract therefrom the market value of
the same Naked Rights on the date awarded to such participant.  The market value
of  one  Naked  Right  on  a  valuation  date shall be determined by the Program
Administrators  on the basis of such factors as they deem appropriate; and shall
be  determined without regard to any restriction other than a restriction which,
by  its  terms, will never lapse.  The Fair Market Value of shares of the Common
Stock  shall  be  the  Fair  Market  Value  as set forth in Article 15(i) of the
General  Provisions and shall be used to determine the market value of one Naked
Right.  The  market  value  of Naked Rights held by a participant on a valuation
date  shall be determined by multiplying the number of Naked Rights held by such
participant  by the market value of one Naked Right on such valuation date.  The
measurement  of  appreciation  shall  be  made  separately  with respect to each
separate  award  of  Naked  Rights.

     (c)     The  Naked  Rights  shall  be  used  solely  as  a  device  for the
measurement  and  determination  of  the  amount  to  be  paid  to  participants
hereunder.  The  Naked  Rights shall not constitute or be treated as property or
as  a trust fund of any kind.  All amounts at any time attributable to the Naked
Rights  shall  be  and  remain  the  sole  property  of  the  Company  and  the
participants'  rights  hereunder  are  limited  to the right to receive cash and
shares  of  Common  Stock  as  herein  provided.

     (d)     Notwithstanding  the  first  sentence  of  subparagraph (a) of this
Section  9, in the event the Company or its stockholders enter into an agreement
to  dispose of all or substantially all of the assets or stock of the Company or
of  Coastal  Banc  ssb  by  means  of  a  sale,  merger or other reorganization,
liquidation  or  otherwise, any Naked Right granted pursuant to subparagraph (a)
of  this  Section  9  shall  become  immediately  exercisable  during the period
commencing  as  of  the date of the agreement to dispose of all or substantially
all of the assets or stock of the Company or of Coastal Banc ssb and ending when
the  disposition of assets or stock contemplated by that agreement is terminated
or  the Naked Right is otherwise terminated in accordance with its provisions or
the  provisions  of this S.A.R. Plan, whichever occurs first; provided, however,
that no Naked Right shall be immediately exercisable under this subparagraph (d)
on account of any agreement to dispose of all or substantially all of the assets
or  stock  of  the  Company  by means of a sale, merger or other reorganization,
liquidation  or  otherwise  where  the  stockholders  of the Company immediately
before  the  consummation  of the transaction will own at least 50% of the total
combined  voting power of all classes of stock entitled to vote of the surviving
entity,  whether  the  Company  or  some  other  entity,  immediately  after the
consummation  of  the transaction.  In the event the transaction contemplated by
the  agreement  referred  to  in  this  subparagraph (d) is not consummated, but
rather is terminated, cancelled or expires, the Naked Rights granted pursuant to
subparagraph  (a)  of  this  Section  9  shall  thereafter be treated as if that
agreement  had  never  been  entered  into.

     Notwithstanding  the  first sentence of subparagraph (a) of this Section 9,
in  the  event  of  a  change  in control of the Company or threatened change in
control  of  the  Company as determined by a vote of not less than a majority of
the  Whole  Board of Directors and a majority of the Continuing Directors of the
Company,  as  such terms are defined in the Company's Articles of Incorporation,
all Naked Rights granted prior to such change in control or threatened change of
control  shall  become immediately exercisable.  The term "control" for purposes
of  this  Section  shall refer to the acquisition (subsequent to the approval of
the  Program  by  the  stockholders of the Company) of 10% or more of the voting
securities  of  the Company by any person or by persons acting as a group within
the  meaning  of Section 13(d) of the Exchange Act; provided, however, no change
in  control  or threatened change in control shall be deemed to have occurred if
prior  to  the  acquisition  of,  or offer to acquire, 10% or more of the voting
securities  of  the  Company,  the Whole Board of Directors of the Company shall
have  adopted  by  not  less  than  a  two-thirds vote a resolution specifically
approving  such  acquisition or offer for the specific purpose of preventing the
acceleration  of  the  vesting  of  such  Naked  Rights.  The  term "person" for
purposes  of  this  paragraph  refers  to  an  individual  or  a  corporation,
partnership,  trust,  association,  joint  venture,  pool,  syndicate,  sole
proprietorship,  unincorporated  organization  or  any  other form of entity not
specifically  listed  herein.

     (e)     Any  Naked  Rights  granted  pursuant  to  subparagraph (a) of this
Section 9 shall be exercised when written notice of that exercise has been given
to  the  Company  at its principal office by the person entitled to exercise the
Naked  Right.

     (f)     Shares  of  Common  Stock  shall  not be issued with respect to any
Naked Right granted under subparagraph (a) of this Section 9 unless the exercise
of  that  Naked  Right and the issuance and delivery of those shares pursuant to
that exercise shall comply with all relevant provisions of state and federal law
including,  if applicable, the Securities Act of 1933, as amended, the rules and
regulations  promulgated  thereunder, and the requirements of any stock exchange
or national quotation system upon which the shares may then be listed, and shall
be  further  subject  to the approval of counsel for the Company with respect to
such  compliance.  The  Program  Administrators  may also require an Employee to
whom  a  right has been granted under subparagraph (a) of this Section 9 ("Right
Holder")  to  furnish  evidence satisfactory to the Company, including a written
and  signed  representation  letter  and  consent  to  be  bound by any transfer
restriction  imposed by law, legend, condition or otherwise, that the shares are
being acquired without any present intention to sell or distribute the shares in
violation  of any state or federal law, rule or regulation.  Further, each Right
Holder shall consent to the imposition of a legend on any shares of Common Stock
so  acquired  restricting  their  transferability  as required by law or by this
subparagraph  (f).

     (g)     Each  Right Holder, if requested by the Program Administrators when
a  Naked Right is granted, must agree in writing as a condition of receiving his
or  her Naked Right, that he or she will remain in the employ of the Company, or
any  Subsidiary  of  the  Company (or a corporation or a parent or Subsidiary of
such  corporation  issuing  or  assuming  a  Naked  Right),  as the case may be,
following the date of the granting of that Naked Right for a period specified by
the  Program  Administrators, which period shall in no event exceed three years.
Nothing  in  this Section 9 or in any Naked Right granted hereunder shall confer
upon  any  Right Holder any right to continued employment by the Company, or any
Subsidiary  thereof,  or  limit  in  any  way  the  right  of the Company or any
Subsidiary  thereof  at  any  time  to  terminate  or  alter  the  terms of that
employment.

     (h)     If  a  Right  Holder  ceases  to be employed by the Company, or any
Subsidiary  thereof  (or  a  corporation  or  a  parent  or  Subsidiary  of such
corporation issuing or assuming a Naked Right), for any reason other than death,
Disability  or  Retirement,  his or her Naked Right shall immediately terminate;
provided,  however,  that  the  Program  Administrators may, at the time a Naked
Right is granted, in their discretion, allow such Naked Right to be exercised to
the  extent  exercisable  on  the  date of termination of employment at any time
within  three  months after the date of termination of employment, unless either
the  Naked  Right  or this Section 9 otherwise provides for earlier termination.

     (i)     If  a  Right  Holder becomes disabled within the meaning of Section
22(e)(3) of the Code while employed by the Company of any Subsidiary thereof (or
a  corporation or a parent or Subsidiary of such corporation issuing or assuming
a  Naked  Right)  or ceases to be employed thereby due to Retirement, his or her
Naked  Rights  may  be  exercised,  to  the  extent  exercisable  on the date of
termination  of  employment,  at  any  time  within  one  year after the date of
termination  of  employment  due  to Disability or Retirement, unless either the
Naked  Right  or  this  Section  9  otherwise  provides for earlier termination.

     (j)  Except  as otherwise limited by the Program Administrators at the time
of  the  grant  of  a  Naked Right, if a Right Holder dies while employed by the
Company or any Subsidiary thereof (or a corporation or a parent or Subsidiary of
such  corporation  issuing  or  assuming  a Naked Right), or within three months
after ceasing to be an Employee thereof, his or her Naked Right shall expire one
year  after  the date of death unless by its term it expires sooner. During this
one year or shorter period, the Naked Right may be exercised, to the extent that
it  remains  unexercised  on the date of death, by the person or persons to whom
the Right Holder's Naked Rights shall pass by will or by the laws of descent and
distribution,  but  only  to  the  extent  that  the Right Holder is entitled to
exercise  the  Naked  Right  at  the  date  of  death.


<PAGE>
     (k)  Naked  Rights  granted pursuant to the terms of this Section 9 may not
be  sold, pledged, hypothecated, assigned or transferred in any manner otherwise
than  by will or the laws of descent or distribution and may be exercised during
the  lifetime  of  a  Right  Holder  only  by  that  Right  Holder.

     (l)  All Naked Rights granted pursuant to the terms of this Section 9 shall
be  adjusted  in the manner prescribed by Article 6 of the General Provisions of
this  Program.


<PAGE>
                                   COASTAL BANCORP, INC.
                         1999 STOCK COMPENSATION PROGRAM

PLAN  IV  -  PERFORMANCE  SHARE  PLAN

     SECTION 1.  PURPOSE.  The purpose of this Coastal Bancorp, Inc. Performance
                 --------
Share  Plan ("Performance Plan") is to promote the growth and general prosperity
of  the  Company  by  permitting the Company to grant Performance Shares to help
attract  and  retain  superior  personnel  for  positions  of  substantial
responsibility  with the Company and any Subsidiary and to provide key Employees
with  an additional incentive to contribute to the success of the Company.  This
Performance Plan is Part IV of the Coastal Bancorp, Inc. 1999 Stock Compensation
Program.

     SECTION  2.  TERMS  AND  CONDITIONS.  The  Program Administrators may grant
                  -----------------------
Performance  Shares  to  any  Employee  eligible  under Article 4 of the General
Provisions.  Each Performance Share grant confers upon the recipient thereof the
right  to  receive  a  specified number of shares of Common Stock of the Company
contingent  upon  the  achievement  of specified performance objectives within a
specified  period.  The  Program  Administrators  shall  specify the performance
objective  and the period of duration of the Performance Share grant at the time
that  such  Performance  Share is granted.  Any Performance Shares granted under
this  Plan  shall  constitute an unfunded promise to make future payments to the
affected  Employee upon the completion of specified conditions.  The grant of an
opportunity  to  receive  Performance  Shares  shall  not  entitle  the affected
Employee  to  any  rights  to  specific fund(s) or assets of the Company, or any
parent  or  Subsidiary  thereof.

     SECTION 3.  CASH IN LIEU OF STOCK.  In lieu of some or all of the shares of
                 ----------------------
Common  Stock  earned  by  achievement  of  the specified performance objectives
within  the  specified period, the Program Administrators may distribute cash in
an  amount  equal  to the Fair Market Value of the Common Stock at the time that
the  Employee  achieves  the  performance objective within the specified period.
Such  Fair  Market  Value  shall  be  determined by Article 15(i) of the General
Provisions, on the business day next preceding the date of payment.  The Program
Administrators  shall  be  authorized  to make payment in shares of Common Stock
only  if  Section  83 of the Code would apply to the transfer of Common Stock to
the  Employee.

     SECTION  4.  PERFORMANCE  OBJECTIVE  PERIOD.  The  duration  of  the period
                  -------------------------------
within  which  to  achieve the performance objectives is to be determined by the
Program  Administrators.  The period may not be less than one year nor more than
five  years  from  the  date  the  performance  share  is  granted.

     SECTION 5.  NON-TRANSFERABLE.  A participating Employee may not transfer or
                 -----------------
assign  a  performance  share.

     SECTION  6.  PERFORMANCE  SHARE  RIGHTS  UPON  DEATH  OR  TERMINATION  OF
                  ------------------------------------------------------------
EMPLOYMENT.  If  a  participating  Employee  dies or terminates service with the
         --
Company,  or  any Subsidiary thereof (or a corporation or a parent or Subsidiary
of  such corporation issuing or assuming a Performance Share in a transaction to
which  Section  424(a)  of  the  Code  applies,)  prior to the expiration of the
performance  objective  period,  any  Performance  Shares  granted to him or her
during  that  period  are  terminated.


                     END OF 1999 STOCK COMPENSATION PROGRAM



template1