EXHIBIT 13




COASTAL  BANCORP,  INC.
AND  SUBSIDIARIES

FINANCIAL  HIGHLIGHTS
DECEMBER  31,  1997,  1996  AND  1995

<TABLE>
<CAPTION>

                                                                                December 31,
                                                                                ------------    
(dollars in thousands, except per share data)                  1997                   1996                 1995
-----------------------------------------------------     -----------            -----------          -----------
<S>                                                    <C>    <C>                 <C>  <C>             <C>  <C>
FOR THE YEAR ENDED
 Net interest income                                       $   56,933             $   56,426           $   43,932 
 Provision for loan losses                                      1,800                  1,925                1,664 
 Noninterest income                                             6,384                  6,091                5,162 
 SAIF insurance special assessment (1)                             --                  7,455                   -- 
 Other noninterest expense                                     39,544                 37,927               29,823 
 Net income available to common stockholders                   11,563                  6,951                8,542 
 Diluted earnings per share before the 1996 SAIF
   insurance special assessment (2)                              2.25                   2.34                 1.71 
 Diluted earnings per share                                      2.25                   1.38                 1.71 
-----------------------------------------------------     -----------            -----------          -----------

AT YEAR END
 Total assets                                              $2,911,410             $2,875,907           $2,786,528 
 Loans receivable                                           1,261,435              1,229,748            1,098,555 
 Mortgage-backed securities held-to-maturity                1,345,090              1,344,587            1,395,753 
 Mortgage-backed securities available-for-sale                169,997                180,656              186,414 
 Savings deposits                                           1,375,060              1,310,835            1,287,084 
 Borrowed funds                                             1,332,235              1,376,707            1,306,018 
 Senior Notes payable                                          50,000                 50,000               50,000 
 Preferred Stock of the Bank                                   28,750                 28,750               28,750 
 Stockholders' equity                                         104,830                 94,148               91,679 
 Book value per common share                                    20.67                  18.70                18.27 
 Tangible book value per common share                           17.74                  15.70                14.71 
-----------------------------------------------------     -----------            -----------          -----------

SIGNIFICANT RATIOS FOR THE YEAR ENDED
 Return on average assets before the 1996 SAIF
   insurance special assessment (2)                              0.49%                  0.51%                0.45%
 Return on average equity before the 1996 SAIF
   insurance special assessment (2)                             11.68                  12.53                 9.71 
 Interest rate spread including noninterest-bearing
   savings deposits                                              1.85                   1.89                 1.61 
 Interest rate spread                                            1.67                   1.72                 1.46 
 Net interest margin                                             2.02                   2.06                 1.82 
 Average equity to average total assets                          3.41                   3.30                 3.56 
 Noninterest expense to average total assets before
   the 1996 SAIF insurance special assessment (2)                1.36                   1.35                 1.21 
-----------------------------------------------------     -----------            -----------          -----------

ASSET QUALITY RATIOS AT YEAR END
 Nonperforming assets to total assets                            0.71%                  0.56%                0.68%
 Nonperforming loans to total loans receivable                   1.38                   1.04                 1.33 
 Allowance for loan losses to nonperforming loans               42.72                  53.59                39.00 
 Allowance for loan losses to total loans receivable             0.59                   0.56                 0.52 
-----------------------------------------------------     -----------            -----------          -----------
</TABLE>

(1)     On September 30, 1996, Coastal recorded the one-time Savings Association
Insurance  Fund ("SAIF") insurance special assessment (the "special assessment")
of  $7.5  million  as  a  result of the Deposit Insurance Funds Act of 1996 (the
"Act")  being  signed  into law.  The special assessment pursuant to the Act was
65.7  basis  points  on  the  SAIF  assessment  base  as  of  March  31,  1995.

(2)      These ratios are calculated before the after-tax (as applicable) effect
of  the  special  assessment  of  $4.8  million  recorded on September 30, 1996.


CORPORATE  PROFILE

Coastal  Bancorp,  Inc., headquartered in Houston, Texas, is the holding company
for Coastal Banc Holding Company, Inc. ("HoCo"), a Delaware unitary savings bank
holding  company.    HoCo  is  the  parent  company  to  Coastal  Banc  ssb,  a
Texas-chartered,  state  savings  bank.    Coastal  Banc  ssb operates 37 branch
offices  in metropolitan Houston, Austin, Corpus Christi and small cities in the
south  east  quadrant of Texas.  At December 31, 1997, Coastal Banc ssb had $2.9
billion  in  assets  and  was  considered to be a "well capitalized" institution
according  to  Federal  Deposit  Insurance  Corporation  ("FDIC")  guidelines.



TABLE  OF  CONTENTS
(Page numbers in printed Annual Report)
<TABLE>
<CAPTION>
<S>                                                           <C>
Letter from the Chairman and Chief Executive Officer            2

Selected Consolidated Financial and Other Data . . .            8

Management's Discussion and Analysis . . . . . . . .           11

Independent Auditors' Report . . . . . . . . . . . .           25

Consolidated Financial Statements. . . . . . . . . .           26

Notes to Consolidated Financial Statements . . . . .           31

Stock Prices . . . . . . . . . . . . . . . . . . . .           53

Stockholder Information. . . . . . . . . . . . . . .           54

</TABLE>





CHAIRMAN'S  LETTER

Since  Coastal  Bancorp, Inc. ("Coastal") went public in 1992, all of our annual
reports  have shared two traits:  each had a large wave on its cover and each of
my  letters  to Coastal's shareholders ended with the promise that our principal
goal  is to maximize shareholder return.  The 1997 Annual Report is no exception
-  the large wave on the cover is still building and you can anticipate how this
letter  will  end.    But this year's letter has a new twist because the biggest
Coastal news for 1997 is shareholder return.  So shareholder return gets opening
coverage  as  well  as  closing  coverage  this  year.

Coastal  stock  price was up $12.00 per share, or 52% in 1997!  That increase is
by  far a record dollar and percentage increase for Coastal. At the end of 1997,
Coastal's  stock price closed at $34.875 per share, also a record high.  Part of
the  reason  for  the  increase  was  a roaring bull market in 1997 coupled with
strong  investor demand for bank stocks.  But contributing equally to the strong
stock  performance is investor recognition of Coastal's successful transition to
full  service  commercial  banking.

This  unprecedented Coastal stock performance occurred during a year of somewhat
disappointing  earnings.  Core earnings for 1997 were short of management's goal
by  roughly  25  cents  per share and were in line with 1996 core earnings.  The
earnings  shortfall  was  directly  attributable  to  temporary  changes  in the
wholesale  funding  market in the second half of the year coupled with unusually
high  mortgage prepayments on an adjustable rate whole loan package purchased in
June  of  1997.    As a result, Coastal's net interest margin suffered almost 20
basis  points  of  erosion  in  the third and fourth quarters.  In early January
1998, however, both problems have eased and Coastal has started on the path back
to  spreads  achieved  in  the  first  half  of  1997.

We  are  pleased,  however,  that investors have focused on Coastal's continuing
success  in  our  shift  to  commercial banking rather than the temporary market
phenomena.    After  a detailed discussion of 1997 earnings, I will describe the
progress we made toward our ongoing strategic goals and tell you about Coastal's
future opportunities in the new banking business, which is evolving rapidly into
a  more  multidimensional  enterprise.

1997  EARNINGS

Earnings  for  1997  were  $14.2 million or $2.25 per share, a 1.6% decline from
1996 earnings of $14.4 million or $2.34 per share before the after-tax effect of
the  one-time  Savings  Association  Insurance  Fund ("SAIF") special assessment
imposed in 1996 by the FDIC (the "1996 special assessment").  Earnings for 1996,
after  the  special assessment, were $9.5 million or $1.38 per share.  Per share
data  during  1997  and  1996  were  based on 5.1 million and 5.0 million common
shares  outstanding  (used  in  the  diluted  earnings  per  share calculation).

The  special  assessment  was  a  one-time  assessment charged (pursuant to 1996
federal  legislation)  by  the  FDIC  on September 30, 1996, to all SAIF-insured
financial  institutions  at  the  rate of $0.657 per $100 of SAIF deposits as of
March  31, 1995.  The assessment was intended to restore the SAIF to its minimum
required  level  and  eventually  equalize FDIC insurance premiums for both Bank
Insurance Fund and SAIF members.  As a result of the legislation, Coastal's FDIC
insurance  premiums  dropped  to approximately $0.0648 per $100 of deposits from
the  rate  of  $.23  per  $100  of  deposits  which  was  in effect prior to the
legislation.    The  1996  special assessment, after taxes, was $4.8 million, or
$0.96  per  share.

Despite  the  net  interest margin compression experienced in the second half of
the  year,  core  revenues  once  again reached a new record high.  Net interest
income  after  provision  for  loan  losses  reached  $55.1 million during 1997,
compared  to  $54.5  million  in 1996, and loan fees, service charges on deposit
accounts and loan servicing income reached $5.4 million during 1997, compared to
$5.0  million  during 1996.  However, noninterest expenses reached $39.5 million
during  1997,  compared to $37.9 million during 1996 (excluding the 1996 special
assessment).    At  December 31, 1997, Coastal had total assets of $2.9 billion,
total  deposits  of  $1.4  billion in 37 branch offices and common stockholders'
equity  of  $104.8  million.

The higher wholesale funding costs and resulting net interest margin compression
during  the second half of the year were primarily attributable to an anomaly in
the  spread between the London Interbank Offered Rate ("LIBOR") and the Treasury
rate  (the  "TED  spread").    For  example, the TED spread historically (6 year
average)  has  been  40  basis points, but for the fourth quarter of 1997 was 63
basis points which would have equated to an additional 9 cents per share for the
quarter  had  the  spread been consistent with the 6 year average.  In addition,
Coastal  experienced  unusually high payoffs related to an adjustable rate whole
loan  package  purchased in the second quarter of the year.  As a result, higher
than  normal  amortization  of  purchased  mortgage loan premiums coupled with a
higher  borrowing  cost  caused  compression  in  Coastal's net interest margin.
However,  as  previously  stated,  both  the  wholesale  funding anomaly and the
mortgage  payoff  trend  appear  to  be  improving  in  early  1998.

THE  BALANCE  SHEET  SHOWS  SIGNS  OF  OUR  COMMERCIAL  STRATEGY

Closer  examination of the changes in components of the balance sheet at the end
of  1997 will reveal evidence that Coastal's strategic direction into commercial
loans  and  commercial  deposits  is producing tangible results.  Management was
somewhat  disappointed  that  the  rapid  decline  in the mortgage portfolio and
unusually  high  funding  costs  overshadowed  growth  in  commercial  loans and
increases  in  low  cost  business  deposits.

Consider this:  The single family mortgage portfolio had principal reductions of
$243.0  million  in  1997  but  for  the year only decreased $101.5 million from
$791.3  million  at the end of 1996 to $689.8 million at the end of 1997.  Total
loans, however, increased during the same period by over $30 million, from $1.23
billion  at  the  end  of  1996  to $1.26 billion at the end of 1997.  Thus, all
categories  of  commercial  loans  experienced  sufficient  growth to offset the
$101.5  million  decrease in single family mortgage loans and still provided for
overall  loan  growth.    Furthermore,  even though single family mortgage rates
declined  during  1997, the weighted average yield on the loan portfolio at year
end  increased  from  8.23%  at December 31, 1996 to 8.30% at December 31, 1997,
fulfilling  our  primary objective of higher yielding, floating index loans that
come  with  a  shift  to  commercial  banking.

And  consider  this:    Evidence  of  Coastal's  campaign  to  promote  low rate
commercial  transaction  accounts  - another primary objective of our commercial
banking  strategy - lies in the deposit numbers.  Wholesale borrowing costs were
substantially  higher in 1997 when compared to 1996, but Coastal's year end 1997
weighted-average cost of deposits was 4.67%, unchanged from 1996.  As of the end
of 1997, certificates of deposit at rates above 5% increased by over $50 million
while certificates of deposit at rates below 5% actually decreased in comparison
to year end 1996.  Coastal's overall cost of deposits did not increase, however,
because  low  cost  transaction  accounts  increased  by  almost  $50  million.

Coastal  commenced  its strategic shift into commercial banking in 1996 with the
primary  objectives  of  increasing Coastal's net interest margin and fee income
while  decreasing  Coastal's  vulnerability  to  volatile market interest rates.
After  two  full years of introducing commercial bank services and products, you
can  clearly  see the results of our strategy within the changing composition of
the  loan  and  deposit  portfolios.    But this is just the beginning.  We will
continue to allocate more resources to commercial customers because, so far, the
results  are  a  strategic  success.

TIME  TO  CHANGE  THE  BANKING  FORMULA

Now  that  we  have  a commercial platform and commercial customers, we are real
bankers,  right?  Coastal will make commercial loans at prime, graciously accept
their business deposits without paying interest, earn a healthy spread and juicy
account fees, and live happily ever after, right?  We wish.  But it doesn't work
that  way  any  more.   In today's market, a typical commercial customer expects
either a fixed rate loan or a loan at a small spread tied to LIBOR.  They expect
the  deposits to be swept at the end of each day to an interest-bearing account,
which  may  be  located  at  their  friendly  neighborhood  brokerage  house.
Eventually,  that  brokerage  house  will  find a way to finance the rest of the
customer's  needs.

Traditional  banking  profit  strategies  are  commonly based on the view that a
fixed  formula  amount  of  marginal  overhead  sustains a predictable amount of
spread  income  and  fee  income.    This approach is flawed because overhead is
perceived  as  a  machine  that generates a given amount of loans, deposits and,
thus, spread income, which will remain on the balance sheet for a minimum period
of  time.    Any  further  growth  requires a formula-derived amount of marginal
overhead  growth.

As  long  as  a  constant  level  of interest rate spread can be maintained, the
traditional  formula  works  and  the required level of returns on equity can be
achieved.  The trouble is, when the yield on new loans is declining and the cost
of  deposits  is  climbing,  the formula no longer works.  Thus, the incremental
overhead  must  produce  increasingly more loans and deposits for the formula to
work.    All  because  the  spreads produced by loans and the amount of time the
loans  and  deposits  remain  on  the  balance  sheet  are  both  declining.

Profits  per  the  typical  commercial banking customer have been roughly cut in
half,  and  they remain on the books for a much shorter period of time.  This is
nothing  more  than  a  gross  margin  squeeze;  therefore,  it must be fixed by
increasing  total  revenues  per  customer  and  reducing  marginal expenses per
customer.    Banks  must  sell  more  services per business customer, reduce the
turnover  and,  most  importantly,  offer  business  customers  services  that
traditionally  have  not been the domain of the banking industry.  Based on this
new  formula,  Coastal's  strategy  employs technology to increase the number of
business  customers per dollar of overhead.  Then we migrate down the customers'
balance  sheets  to  provide  services  heretofore  provided  by  that  friendly
neighborhood  brokerage  firm.

TECHNOLOGY  BRIDGES  LOCAL  PRESENCE

With  the  exception  of  commercial  loans  to  medium  sized  businesses, most
traditional  banking  loans  have  reached  a level of standardization whereby a
local presence doesn't provide a bank much of a competitive advantage.  Consumer
loans, mortgage loans, and small business loans are sold through the mail and on
the  Internet.    Commercial real estate mortgage loans are provided by national
conduits  and  mortgage  Real  Estate Investment Trusts. Non-local creditors now
offer  commercial  construction  loans.

Coastal  will  continue  to  offer  and profitably produce all of these types of
loans.    Several  of  these  categories  are  a  big  part  of our current loan
portfolio.    However, at this mature stage of the loan cycle, they are becoming
increasingly  difficult  to  originate  at  a  profitable  yield  without taking
additional  credit  risk  -  not  an  option  for  Coastal.

Medium-sized  business  banking  loans,  on  the other hand, have not completely
turned  into standardized commodities without geographical ties.  Location still
counts  for  something.    Credit  decisions  and  loan  pricing  rely  on  less
standardized  information, and someone from the lending organization must have a
certain  amount  of  continuous  contact  with  the  customer.

However,  we  still have to solve the dilemma of reduced customer profitability,
particularly given the intense competition of today's mature lending cycle.  The
best way to maintain profit growth in this environment is by producing many more
customers  with  the same amount of overhead.  Rather than take more credit risk
with  a  fewer  customers,  Coastal  chooses  to take less credit risk with more
customers.    But  to  do  this,  a  revolutionary  platform for processing more
customers  faster  (but  at  the  same  level  of  risk)  was  needed.

Last  year in my letter to you I described the Portfolio Control Center ("PCC"),
Coastal's  new  concept  for  originating, underwriting and approving commercial
loans.    The  PCC,  operating  full time, applies Internet and network computer
technology  to an interactive, dynamic process for taking a commercial loan from
application  to closing in less time and incorporating more comprehensive credit
information.  The PCC allows the loan officer to manage more new customers and a
larger  portfolio  of  existing  customers.

In  last  year's letter, the PCC was a concept.  Today it is a reality.  The PCC
became  fully  operational  during  the  fourth  quarter  of  1997.  The bulk of
Coastal's  commercial  loan  production  now  originates  through the PCC.  As a
result,  loan  velocity  has  substantially  improved  and the loan officers are
getting  immediate  feedback,  freeing  their  time  to  pursue  more customers.

"SOUTH"  BALANCE  SHEET  SERVICES

But  increasing  the  number  of  business  customers  is  only half the battle.
Coastal  must provide a larger universe of services to its business customers in
order  to  maintain  adequate profitability per customer over a longer period of
time.   Providing products principally for the "north" side of the balance sheet
-  working  capital  loans, cash management, etc. - is not enough.  It's time to
begin  the  migration  south  on the customer balance sheet and provide services
that  traditionally  were  the  domain  of  the investment bankers - alternative
financing,  raising  capital,  merger  and acquisition services, etc.  The local
advantage  we  have  in  business  banking  will  provide a similar advantage in
investment  banking.

This strategy has a dual purpose: First, it provides an avenue for Coastal to be
able  to  provide most balance sheet services, rather than saying "I'm sorry, we
don't  do  that."    Second,  for  the  long term it provides Coastal a means to
become  less reliant on credit risk to produce earnings growth.  Let me explain.

The  traditional  investment  banking  balance  sheet  is more of a virtual bank
balance  sheet: The credit risk passes through to other investors but a snapshot
of  the  transaction (spread, fee, gain, loss) at the time of funding remains in
retained  earnings.    On  the  other  hand,  the traditional bank balance sheet
maintains  the  credit risk of its customers on its balance sheet and the spread
remains throughout the life of the relationship.  Investment banks must continue
to replenish their balance sheets with new transactions, therefore they must pay
the  necessary  expenses.  Banks don't have to replenish as often, but sometimes
pay  in  the  form  of  credit  losses.

As  long as Coastal has low cost deposits, loan spreads on a risk-adjusted basis
will  continue  to  be  profitable.  But as business customers continue to sweep
their  deposits into interest-bearing accounts and spreads continue to contract,
certain  types  of credit risk may not be justifiable.  The "credit expense" for
some  of  our  potential  customers  reduces  the  margin  on  the  spread to an
unacceptable  level.    Operating  only as a traditional bank, we would turn the
customer  away.  But with certain investment banking capabilities, Coastal could
keep  the  customer,  pass  the  credit  risk  through  to  other investors, and
replenish  the  balance  sheet  with  another  transaction.

The  important  change  to note here is that Coastal will have a choice.  Today,
our  only  choice  is  whether  to  take  credit  risk.  Equipped with these new
capabilities,  Coastal  will be able to increase the number and type of business
customers,  increase the revenue potential from each customer, and better manage
the  credit  expense  imbedded  in  our  balance  sheet.

During  the  fourth  quarter  of 1997, Coastal formed Coastal Banc Capital Corp.
("CBCC").    The initial purpose of this corporation is to trade whole mortgages
and purchase mortgages for Coastal's balance sheet.  Ultimately CBCC is intended
to  operate  as  an  investment banking company.  This phase of our business may
take  some time to develop.  Once developed, Coastal will be equipped to satisfy
the  non-traditional needs of our local customers.  With the growth of CBCC, all
local  businesses  will  become  a  potential  revenue  source.

LOW  COST  DEPOSITS  IN  LOW  COST  BRANCHES

To  more  effectively manage the delivery of a full complement of new commercial
products  introduced  during  1997,  Coastal  reallocated  its  branch  banking
resources  according to market needs.  Adhering to its successful formula of low
overhead and low risk, management implemented a three-tier branch system.  Group
1  branches  offer  Coastal's  full line of commercial and retail products, both
lending and deposits.  Group 2 branches offer full commercial and retail deposit
services,  but only retail lending services.  Group 3 branches offer only retail
services.

The  strategy  allowed  the  successful  introduction of new commercial products
without  a  significant  increase  in  overall  branch  overhead.   However, one
experimental  aspect  of  the new program presented an important lesson in small
community  business  banking.    Under  the  new  guidelines,  six branches were
initially  established  as  Group  1 branches, three of which were in small-city
markets  where Coastal did not have an established commercial customer base.  By
the end of 1997, the experiment revealed to management that unless a branch in a
small  city  market has an established clientele, the amount of resources needed
to  properly  establish a commercial customer base is prohibitive for a low-cost
operator such as Coastal.  Therefore, during 1998, Coastal has reduced its Group
1  branches  to  four  branches  in  the  Houston,  Austin and Victoria markets.

During  1997, Coastal acquired a $54.6 million branch in Port Arthur, Texas from
Wells  Fargo Bank (Texas).  Coastal will continue to seek strategic acquisitions
of  whole  banks  and  branches  of banks within our markets and adjacent to our
markets.    However,  at  present,  acquisition prices have become prohibitively
expensive.    Until  acquisition  prices  become  more  reasonable  for Coastal,
management  will  develop  new  branch  locations  that  have  the best business
potential  and complement Coastal's existing branch structure.  Two new branches
are  planned  for 1998, one in Austin and one in Houston.  Due to certain budget
parameters,  we  are  limited  to establishing a maximum of two new branches per
year.

As  I  previously discussed, the primary reason Coastal maintained a low cost of
deposits  in 1997 while new certificates of deposits were issued at higher rates
was  a  significant  increase  in  transaction  accounts  such  as money market,
checking  and  business  checking  accounts.  The acquisition of the Port Arthur
branch,  checking  and  money  market account promotional campaigns coupled with
strategic  initiatives to convert commercial loan customers to checking and cash
management  customers  made  a  significant positive impact on Coastal's cost of
deposits,  sensitivity  to interest rate changes and deposit product fee income.
Fees on deposit products, both retail and commercial, increased by 26.4% to $2.3
million  in  1997  as  compared  to  $1.8  million  in  1996.

In  this mature stage of the lending cycle, quality loan growth will continue to
be  challenging.   Since Coastal does not plan to lower its credit standards for
the  sake  of loan growth and earnings growth, the most effective and safest way
to  improve earnings is to reduce Coastal's cost of deposits.  A major strategic
focus for Coastal in 1998 will be to continue the promising trend in transaction
accounts  established  in  1997  and introduce additional strategies for further
reducing Coastal's cost of deposits.  We will improve our certificate of deposit
pricing  strategies  with  the  goal  of reducing rates in Coastal's least price
sensitive  markets.    We  will  aggressively  market commercial cash management
accounts  and introduce an off-balance sheet sweep account in the second quarter
of  1998  in order to attract more commercial depositors.  And we will implement
new  product  and customer-level profitability measurements.  A principal factor
in  measuring  profitability  will  be  the amount by which the measured product
reduces  Coastal's  cost  of  funds.

STEPPING  INTO  A  NEW  BANKING  ERA

On  the  weekend  of  July  4,  1997,  Coastal  moved  into  its  new  corporate
headquarters,  Coastal  Banc  Plaza,  a few miles southwest of downtown Houston.
The timing was appropriate.  By mid-1997, Coastal had shed its thrift veneer and
established  itself  as  a  leading  independent banking institution in Houston.

Now Coastal will confront its biggest challenge.  Since we were founded in 1986,
Coastal has fed on the remnants of collapsed markets in Texas.  We bought loans,
deposits  and  banks when everyone else was skeptical.  We ventured into lending
markets  in  Texas  before  everyone  was absolutely sure it was safe.  Now, the
world  of finance has arrived in Texas and crowded Coastal's domain.  Our former
banking  frontier  is  now  a  bustling  metropolis  of out-of-state financiers.

Notwithstanding  the  crowd,  we have found a way to win: geography, technology,
velocity and "yes."   Geography because we are local, and have been for a while.
Our  customer's  individual banker will not change every six months.  Technology
because  we  use it for local delivery of custom commercial products rather than
for  building and selling volumes of standardized products.  Velocity because we
use  geography and technology to respond immediately.  And "yes," because we are
migrating  south  down  our  customers'  balance  sheets.  It will take a little
while,  but  one  day  Coastal  will  provide  financial services for the entire
customer  balance  sheet.  One day our response to all commercial customers will
be:  "Yes,  we  can  do  that  for  you."

Each  year I re-state Coastal's commitment to the four operating principles that
brought  us  to where we are today.  They have served us well since 1986, and if
you  examine  our  present  strategy,  you  will  find  those  principles firmly
entrenched.    We  talked  about  reducing  our  cost  of  funds,  selling  more
transaction  accounts, and using technology to deliver more commercial loans per
overhead  dollar,  but we reallocate resources to do so rather than spending new
resources.    Translation:    Maintain  a  low  cost operation.  We increase the
proportion  of transaction deposit accounts and floating index commercial loans.
Translation:    Minimize  interest rate risk.  We strive to make more loans with
less credit risk and introduce services that will eventually provide us a credit
risk  choice.    Translation:  Minimize credit risk.  But these three principles
are  designed  and  strictly  adhered  to  in  order  to  execute, in all market
conditions,  our  most important principle and overall Coastal objective (I told
you  it  would  end  this  way  again):  Maximize  shareholder  return.



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


COASTAL  BANCORP,  INC.  AND  SUBSIDIARIES
SELECTED  CONSOLIDATED  FINANCIAL  AND  OTHER  DATA

The  following selected consolidated summary financial and other data of Coastal
Bancorp,  Inc.  and subsidiaries ("Coastal") does not purport to be complete and
should  be  read  in  conjunction with, and is qualified in its entirety by, the
more detailed information contained in the Consolidated Financial Statements and
Notes  thereto  included  elsewhere  herein.

<TABLE>
<CAPTION>

                                                                                At December 31,
                                                              1997        1996        1995        1994        1993
                                                          ----------  ----------  ----------  ----------  ----------
                                                           (in thousands except per share data and selected ratios)
<S>                                                            <C>         <C>         <C>         <C>         <C>
Balance Sheet Data
 Total assets                                             $2,911,410  $2,875,907  $2,786,528  $2,299,769  $1,928,550
 Mortgage-backed securities held-to-maturity (1)           1,345,090   1,344,587   1,395,753   1,605,839   1,324,904
 Mortgage-backed securities available-for-sale               169,997     180,656     186,414      32,249          --
 Loans receivable (1)                                      1,261,435   1,229,748   1,098,555     587,032     450,104
 Guaranteed Assets (2)                                            --          --          --          --      68,928
 Savings deposits                                          1,375,060   1,310,835   1,287,084   1,139,622   1,023,105
 Securities sold under agreements to repurchase              791,760     966,987     993,832     645,379          --
 Advances from the Federal Home Loan Bank of
   Dallas ("FHLB")                                           540,475     409,720     312,186     386,036     788,867
 Senior Notes payable                                         50,000      50,000      50,000          --          --
 Preferred Stock of the Bank                                  28,750      28,750      28,750      28,750      28,750
 Stockholders' equity                                        104,830      94,148      91,679      84,680      79,254
</TABLE>


<TABLE>
<CAPTION>
                                                                   For  the  Year  Ended  December  31,
                                                             1997       1996       1995       1994       1993 
                                                          ---------  ---------  ---------  ---------  ---------
                                                         (in thousands except per share data and selected ratios)
<S>                                                          <C>        <C>        <C>        <C>        <C>
Operating Data (10)
 Interest income                                          $201,356   $194,611   $170,286   $129,037   $ 90,024 
 Interest expense                                          144,423    138,185    126,354     88,519     53,578 
                                                          --------   --------   --------   --------   ---------
 Net interest income                                        56,933     56,426     43,932     40,518     36,446 
 Provision for loan losses                                   1,800      1,925      1,664        934      1,151 
                                                          --------   --------   --------   --------   ---------
 Net interest income after provision for loan losses        55,133     54,501     42,268     39,584     35,295 
 Gain (loss) on sales of mortgage-backed securities
   available-for-sale, net                                     237         (4)        81        192         -- 
 Gain on sale of branch office                                  --        521         --         --         -- 
 Other noninterest income                                    6,147      5,574      5,081      6,539      3,888 
 SAIF insurance special assessment (3)                          --     (7,455)        --         --         -- 
 Other noninterest expense                                 (39,544)   (37,927)   (29,823)   (25,731)   (22,882)
                                                          --------   --------   --------   --------   ---------
 Income before provision for Federal income taxes,
   minority interest and cumulative effect of
   accounting change                                        21,973     15,210     17,607     20,584     16,301 
 Provision for Federal income taxes                         (7,822)    (5,671)    (6,477)    (4,333)    (4,925)
 Minority interest in income of consolidated
   subsidiary                                                   --         --         --       (211)      (643)
 Cumulative effect of change in accounting for
   income taxes (4)                                             --         --         --         --        973 
 Net income before preferred stock dividends                14,151      9,539     11,130     16,040     11,706 
                                                          --------   --------   --------   --------   ---------
 Preferred stock dividends of the Bank                      (2,588)    (2,588)    (2,588)    (2,588)      (395)
 Net income available to common stockholders                11,563      6,951      8,542     13,452     11,311 
                                                          ========   ========   ========   ========   =========
 Diluted earnings per share before cumulative effect
   of accounting change (4)                                   2.25       1.38       1.71       2.64       1.92 
 Diluted earnings per share                                   2.25       1.38       1.71       2.64       2.10 
</TABLE>


COASTAL  BANCORP,  INC.  AND  SUBSIDIARIES
SELECTED  CONSOLIDATED  FINANCIAL  AND  OTHER  DATA

<TABLE>
<CAPTION>


                                                          At or For the Year Ended December 31,
                                                          -------------------------------------
                                                         1997     1996     1995     1994     1993
                                                       -------  -------  -------  -------  -------
<S>                                                      <C>      <C>      <C>      <C>      <C>
Selected Ratios
Performance Ratios (5) (10):
 Return on average assets before the
  1996 SAIF insurance
  special assessment (6)                                 0.49%    0.51%    0.45%    0.71%    0.75%
 Return on average assets after the
  1996 SAIF insurance special
  assessment                                             0.49     0.34     0.45     0.71     0.75 
 Return on average equity before the
  1996 SAIF insurance
  special assessment (6)                                11.68    12.53     9.71    16.57    15.16 
 Return on average equity after the
  1996 SAIF insurance special
  assessment                                            11.68     7.50     9.71    16.57    15.16 
 Dividend payout ratio before the
  1996 SAIF insurance special
  assessment (6)                                        19.83    16.82    18.56     8.83       -- 
 Dividend payout ratio after the
   1996 SAIF insurance special
   assessment                                           19.83    28.55    18.56     8.83       -- 
 Average equity to average total assets                  3.41     3.30     3.56     3.59     4.77 
 Net interest margin (7)                                 2.02     2.06     1.82     1.84     2.42 
 Interest rate spread including
  noninterest-bearing savings
  deposits (7)                                           1.85     1.89     1.61     1.68     2.30 
 Interest rate spread (7)                                1.67     1.72     1.46     1.57     2.21 
 Noninterest expense to average total
  assets before the 1996
  SAIF insurance special assessment (6)                  1.36     1.35     1.21     1.14     1.46 
 Noninterest expense to average total
   assets after the 1996 SAIF
   insurance special assessment                          1.36     1.61     1.21     1.14     1.46 
 Average interest-earning assets to
  average interest-bearing
  liabilities                                          106.72   106.75   106.78   106.71   105.91 
 Ratio of earnings to combined fixed
  charges and preferred stock dividends
  before the 1996 SAIF insurance special
   assessment (6):
   Excluding interest on deposits                       1.23X    1.25X    1.21X    1.33X    1.64X 
   Including interest on deposits                        1.13     1.14     1.12     1.19     1.28 
 Ratio of earnings to combined fixed
   charges and preferred stock dividends
   after the 1996 SAIF insurance special
   assessment:
   Excluding interest on deposits                        1.23     1.15     1.21     1.33     1.64 
   Including interest on deposits                        1.13     1.09     1.12     1.19     1.28 
Asset Quality Ratios:
 Nonperforming assets to total assets (8)                0.71%    0.56%    0.68%    0.30%    0.22%
 Nonperforming loans to total loans receivable           1.38     1.04     1.33     1.04     0.91 
 Allowance for loan losses to nonperforming loans       42.72    53.59    39.00    35.37    37.32 
 Allowance for loan losses to total loans receivable     0.59     0.56     0.52     0.37     0.34 
Bank Regulatory Capital Ratios (9):
 Tangible capital to adjusted total assets                N/A      N/A      N/A      N/A     5.11 
 Tier 1 capital to total assets                          5.52     5.35     5.30     4.54     5.17 
 Tier 1 risk-based capital to risk-weighted assets      11.46    11.77    12.36    12.37      N/A
 Total risk-based capital to risk-weighted assets       11.98    12.30    12.84    12.63    18.63 
Other Data:
 Full-time employee equivalents                           451      433      390      298      288 
 Number of full service offices                            37       37       40       34       26 
</TABLE>


<PAGE>   FOOTNOTES TO SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

(1)          Mortgage-backed securities held-to-maturity are net of premiums and
discounts.    Loans receivable are net of loans in process, premiums, discounts,
unearned  interest  and  loan  fees  and  the  allowance  for  loan  losses.

(2)          Guaranteed  Assets  were  governed  by  the Assistance Agreement in
connection  with  the  Southwest Plan Acquisition in 1988.  Coastal and the FDIC
terminated the Assistance Agreement, effective March 31, 1994, pursuant to which
Coastal  transferred substantially all the Guaranteed Assets back to the FDIC in
exchange  for  cash.

(3)       On September 30, 1996, Coastal recorded the special assessment of $7.5
million  as  a  result of the Act being signed into law.  The special assessment
pursuant  to  the  Act  was  65.7 basis points on the SAIF assessment base as of
March 31, 1995.  See Note 18 of the Notes to Consolidated Financial Statements.

(4)     Coastal adopted the Financial Accounting Standards Board's Statement No.
109  as  of January 1, 1993.  The cumulative effect of this change in accounting
for income taxes of $973,000 was determined as of January 1, 1993.  Prior years'
financial  statements were not restated to apply the provisions of Statement No.
109.

(5)          Ratio, yield and rate information are based on year-to-date average
balances.

(6)       These ratios are calculated before the after-tax effect of the special
assessment  of  $4.8 million recorded on September 30, 1996.  See Note 18 of the
Notes  to  Consolidated  Financial  Statements.

(7)        Net interest margin represents net interest income as a percentage of
average  interest-earning  assets.    Interest  rate  spread  including
noninterest-bearing  savings  deposits  represents  the  difference  between the
weighted  average yield on interest-earning assets and the weighted average rate
on  interest-bearing  liabilities  and  noninterest-bearing  savings  deposits.
Interest  rate  spread  represents  the  difference between the weighted average
yield  on  interest-earning  assets  and  the  weighted  average  rate  on
interest-bearing  liabilities.

(8)       Nonperforming assets consist of nonaccrual loans, real estate acquired
by  foreclosure  and  repossessed  assets  but  do not include Guaranteed Assets
acquired  in  the  Southwest  Plan  Acquisition.    See  Note  2  above.

(9)          Prior to the conversion of the Bank to a state savings bank in July
1994,  Office  of  Thrift  Supervision  ("OTS") regulations required the Bank to
maintain  tangible  capital  equal  to  at  least 1.5% of adjusted total assets,
minimum  core  or Tier 1 capital equal to at least 3.0% of adjusted total assets
and  a  minimum ratio of total capital to risk-weighted assets of 8.0%.  Current
FDIC  regulations  require the Bank to maintain Tier 1 capital equal to at least
4.0%  of  total  assets,  Tier  1  risk-based  capital equal to at least 4.0% of
risk-weighted  assets  and  total  risk-based  capital equal to at least 8.0% of
risk-weighted  assets.

(10)        Certain 1996, 1995, 1994 and 1993 balances have been reclassified to
conform  to  the 1997 presentation.  Such reclassifications had no effect on net
income  or  total  stockholders'  equity.

COASTAL  BANCORP,  INC.  AND  SUBSIDIARIES
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS

GENERAL
     Coastal  Bancorp, Inc. was incorporated on March 8, 1994 in connection with
the  proposed  reorganization  of  Coastal  Banc  Savings  Association  (the
"Association")  into the holding company form of organization, which occurred on
July  29, 1994.  In addition, effective July 29, 1994, the Association converted
to  a Texas-chartered savings bank known as Coastal Banc ssb (the "Bank").  As a
result of the reorganization, Coastal Bancorp, Inc. ("Bancorp") became the owner
of  100%  of  the  voting  stock of the Bank and each share of the Association's
common  stock  now represents one share of common stock of Bancorp.  The holders
of  the 9.0% Noncumulative Preferred Stock, Series A, of the former Coastal Banc
Savings  Association  now  own  an  equal number of shares of 9.0% Noncumulative
Preferred  Stock,  Series  A,  of  the  Bank.

     On  November  30,  1996,  Coastal  Banc  Holding Company, Inc. ("HoCo") was
created  as  a  Delaware unitary savings bank holding company in accordance with
the  terms of an agreement and plan of reorganization dated August 19, 1996 (the
"Agreement").    Pursuant  to  the  terms  of  the  Agreement, the Bank became a
wholly-owned  subsidiary  of  HoCo  and HoCo became a wholly-owned subsidiary of
Bancorp.

     On  September  30,  1996,  Coastal  recorded the special assessment of $7.5
million  ($4.8  million  after  applicable  income taxes) as a result of the Act
being  signed  into  law.    The special assessment pursuant to the Act was 65.7
basis  points  on  the SAIF deposit assessment base as of March 31, 1995.  Other
provisions  of  the  Act  provided for a reduction of the SAIF deposit insurance
premium  rates  beginning  in  the  fourth  quarter  of  1996.
     On  June  30,  1995, Bancorp issued $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes are redeemable at Coastal's option, in whole or
in  part,  on  or  after  June  30,  2000,  at par, plus accrued interest to the
redemption  date.    Of  the  proceeds  received from the issuance of the Senior
Notes,  $44.9  million  was  used to purchase the 11.13% Noncumulative Preferred
Stock,  Series  B,  of  the  Bank  which  is  now  owned  by  HoCo.

FINANCIAL  CONDITION
     Total  assets  increased  1.23%  or $35.5 million from December 31, 1996 to
December  31,  1997.    The net increase resulted primarily from the increase in
loans  receivable  of  $31.7  million,  an increase in cash and amounts due from
depository  institutions  of  $9.4  million  and  an  increase  in  property and
equipment  of  $7.3  million  offset  by  a  decrease  of  $10.7  million  in
mortgage-backed securities available-for-sale.  The increase in loans receivable
consisted  primarily  of  increases  of  $62.3  million, $45.1 million and $11.3
million,  in  commercial real estate mortgage loans, commercial loans secured by
residential  mortgage  loans  held  for  sale,  and  commercial loans secured by
mortgage  servicing rights, respectively, offset by a $101.6 million decrease in
first  lien  residential  mortgage loans due to principal reductions and payoffs
received.    The  increase  in  property  and equipment was due primarily to the
acquisition  of  assets  related  to  the  relocation  of  Coastal's  corporate
headquarters  in  July  of  1997.    The  relocation  consolidated  Coastal's
administrative, primary lending and mortgage servicing offices.  The decrease in
mortgage-backed  securities  available-for-sale was primarily due to the sale of
$11.3  million  of  securities  in  this  category.  At December 31, 1997, loans
receivable  as  a  percentage  of total assets increased to 43.3% as compared to
42.8%  at  December 31, 1996, as part of management's plan to increase the loans
receivable  portfolio  to approximately 50% of total assets within three to five
years.

     Savings  deposits increased 4.9% or $64.2 million from December 31, 1996 to
December  31,  1997.  This increase was primarily due to a branch acquisition of
$54.6  million  in  deposits completed on June 21, 1997.  Advances from the FHLB
increased  by  31.9%  or  $130.8 million and securities sold under agreements to
repurchase  decreased 18.1% or $175.2 million from December 31, 1996 to December
31,  1997.    The  reallocation  of  borrowings  during such period was directly
attributable  to  Coastal's  change in funding sources to take advantage of more
favorable  interest  rates  and  the deployment of cash received from the branch
acquisition.

     Common  stockholders' equity increased 11.4% or $10.7 million from December
31,  1996  to  December  31,  1997  due  to  1997 net income available to common
stockholders  of $11.6 million and a $829,000 decrease in the unrealized loss on
securities available-for-sale, offset by common stock dividends declared of $2.3
million.

RESULTS  OF  OPERATIONS  FOR  THE  THREE  YEARS  ENDED  DECEMBER  31,  1997
     The  results of operations of Coastal Bancorp, Inc. and subsidiaries depend
primarily  on  its net interest income, which is the difference between interest
income  on  interest-earning assets and interest expense on its interest-bearing
liabilities.    Coastal's  interest-earning  assets  consist  principally  of
mortgage-backed  securities,  loans receivable and other investments.  Coastal's
interest-bearing  liabilities  consist primarily of savings deposits, securities
sold  under  agreements  to  repurchase,  advances  from the FHLB and its Senior
Notes.    Coastal's  net  income  is  also  affected by its level of noninterest
income,  including  loan  fees  and  service  charges  on deposit accounts, loan
servicing  income,  and  gains on sales of assets, as well as by its noninterest
expense,  including  compensation and benefits and occupancy costs and, in 1996,
the  special  assessment.

     The following table sets forth, for the periods and at the dates indicated,
information  regarding  Coastal's average balance sheets.  Ratio, yield and rate
information  is  based  on  year-to-date  average  balances.


<TABLE>
<CAPTION>

                                                        At                        Year Ended
                                                 December 31, 1997            December  31,1997
                                                      Yield/            Average                Yield/
                                                       Rate             Balance    Interest     Rate
                                                 -----------------     ---------   --------    -------
                                                                  (Dollars in thousands)
<S>                                                   <C>                <C>         <C>         <C>
ASSETS
Interest-earning assets:
Loans receivable                                        8.30%          $1,281,493  $ 106,962     8.35%
Mortgage-backed securities                              6.25            1,514,541     92,755     6.12 
U.S. Treasury security                                    --                    3         --       -- 
Securities purchased under agreements to resell
 and federal funds sold                                   --                4,024        251     6.24 
FHLB stock                                              6.00               21,663      1,292     5.96 
Interest-earning deposits in other depository
 institutions                                           5.89                2,416         96     3.97 
                                                       ------          ----------   --------    ------
   Total interest-earning assets                        7.17            2,824,140    201,356     7.13 
                                                       ------          ----------   -------     ------
Noninterest-earning assets (1)                                             81,400
                                                                       ---------- 
  Total assets (2)                                                     $2,905,540
                                                                       ==========

LIABILITIES AND  STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing savings deposits                       5.04%           $1,253,142  $  62,912     5.02%
Securities sold under agreements to repurchase
 and federal funds purchased                            6.00               974,297     55,189     5.66 
Advances from the FHLB                                  5.95               368,896     21,322     5.78 
Senior Notes payable                                   10.00                50,000      5,000    10.00 
                                                       ------          ----------    --------    ----- 
  Total interest-bearing liabilities                    5.60             2,646,335    144,423     5.46 
                                                       ------           ----------   --------    ------
Noninterest-bearing liabilities                                            131,431
                                                                        ----------
  Total liabilities                                                      2,777,766
Preferred Stock of the Bank                                                 28,750
Stockholders' equity                                                        99,024
                                                                        ----------
  Total liabilities and stockholders' equity                            $2,905,540
                                                                        ==========
Net interest income; interest rate spread               1.57%                       $  56,933     1.67%
                                                      =======                       =========     =====

Net interest-earning assets; net interest yield on
 interest-earning assets                                                $  177,805                2.02%
                                                                        ==========               ======
Ratio of average interest-earning assets to average
 interest-bearing liabilities                                               1.07x
                                                                        ==========


                                                          Year Ended December 31, 1996
                                                    Average                           Yield/
                                                    Balance          Interest          Rate
                                                    -------          --------          ----
                                                             (Dollars  in  thousands)
<S>                                                 <C>  <C>          <C>  <C>         <C>
ASSETS
Interest-earning assets:
Loans receivable                                 $ 1,156,933       $ 97,935           8.47%
Mortgage-backed securities                         1,556,966         95,155           6.11 
U.S. Treasury security                                 1,002             54           5.39 
Securities purchased under
 agreements to resell
 and federal funds sold                                   --             --             -- 
FHLB stock                                            21,853          1,288           5.89 
Interest-earning deposits in other
 depository institutions                               4,149            179           4.31 
                                                 -----------        -------           -----
   Total interest-earning assets                   2,740,903        194,611           7.10 
                                                 -----------       --------          ------
Noninterest-earning assets (1)                        71,344
                                                 -----------
  Total assets (2)                               $ 2,812,247
                                                 ===========

LIABILITIES AND  STOCKHOLDERS'
 EQUITY
Interest-bearing liabilities:
Interest-bearing savings deposits                $ 1,199,651       $ 60,076           5.01%
Securities sold under agreements
 to repurchase
 and federal funds purchased                         930,706         51,360           5.52 
Advances from the FHLB                               387,296         21,749           5.62 
Senior Notes payable                                  50,000          5,000          10.00 
                                                 -----------        -------          ------
  Total interest-bearing liabilities               2,567,653        138,185           5.38 
                                                 -----------       --------          ------
Noninterest-bearing liabilities                      123,160
                                                 -----------
  Total liabilities                                2,690,813
Preferred Stock of the Bank                           28,750
Stockholders' equity                                  92,684
                                                 -----------                       
  Total liabilities and
  stockholders' equity                           $ 2,812,247
                                                 ===========                       
Net interest income; interest rate spread                          $ 56,426           1.72%
                                                                   ========          ======

Net interest-earning assets;
net interest yield on
 interest-earning assets                         $   173,250                          2.06%
                                                 ===========                         ======

Ratio of average interest-earning
assets to average
 interest-bearing liabilities                          1.07x
                                                 ===========                       


                                                            Year  Ended  December  31,  1995
                                                          Average                       Yield/
                                                          Balance          Interest      Rate
                                                          -------          --------     ------
                                                                   (Dollars  in  thousands)
<S>                                                       <C>  <C>          <C>  <C>       <C>
ASSETS
Interest-earning assets:
Loans receivable                                           $   765,404       $ 66,405   8.68%
Mortgage-backed securities                                   1,625,044        102,194   6.29 
U.S. Treasury security                                             667             39   5.85 
Securities purchased under
 agreements to resell and
 federal funds sold                                                 --             --     -- 
FHLB stock                                                      20,297          1,318   6.49 
Interest-earning deposits in other
 depository institutions                                         3,958            330   8.34 
                                                           -----------       --------  ------
   Total interest-earning assets                             2,415,370        170,286   7.05 
                                                           -----------       --------  ------
Noninterest-earning assets (1)                                  56,370
                                                           -----------
  Total assets (2)                                         $ 2,471,740
                                                           ===========                       

LIABILITIES AND  STOCKHOLDERS'
 EQUITY
Interest-bearing liabilities:
Interest-bearing savings deposits                          $ 1,116,788      $  56,716   5.08%
Securities sold under agreements to
 repurchase and federal funds purchased                        752,427         45,022   5.98 
Advances from the FHLB                                         367,895         22,116   6.01 
Senior Notes payable                                            25,000          2,500  10.00 
                                                           -----------      ---------  ------
  Total interest-bearing liabilities                         2,262,110        126,354   5.59 
                                                           -----------       --------  ------
Noninterest-bearing liabilities                                 92,919
                                                           -----------                       
  Total liabilities                                          2,355,029
Preferred Stock of the Bank                                     28,750
Stockholders' equity                                            87,961
                                                           -----------                       
  Total liabilities and stockholders' equity               $ 2,471,740
                                                           ===========                       
Net interest income; interest rate spread                                    $ 43,932   1.46%
                                                                             ========  ======

Net interest-earning assets; net
 interest yield on interest-earning assets                 $   153,260                  1.82%
                                                           ===========                 ======

Ratio of average interest-earning assets to average
 interest-bearing liabilities                                    1.07x
                                                           ===========                       
</TABLE>

(1)      Includes goodwill, accrued interest receivable, property and equipment,
cash,  mortgage  servicing  rights,  prepaid  expenses  and  other  assets.
(2)      Nonaccruing loans are included in total assets, but are immaterial.



     The following table analyzes net interest income in terms of changes in the
volume  of  interest-earning assets and interest-bearing liabilities and changes
in  yields  and  rates.    The  table  reflects  the  extent to which changes in
Coastal's  interest  income  and interest expense are attributable to changes in
volume  (change in volume multiplied by  prior  year  rate)  and changes in rate
(changes  in rate multiplied by prior year volume).  Changes attributable to the
combined  impact  of  volume  and  rate  have  been allocated proportionately to
changes  due  to  volume  and  changes  due  to  rate.

<TABLE>
<CAPTION>

                                       Year  Ended  December  31,        Year Ended December 31,
                                            1997  vs  1996                   1996  vs  1995
                                     -----------------------------    ----------------------------
                                     Increase  (Decrease)  Due  To     Increase (Decrease) Due To
                                     -----------------------------    ----------------------------
                                       Volume     Rate       Net      Volume      Rate       Net
                                      --------  ---------  --------  ---------  --------  ---------
                                                            (in thousands)
<S>                                      <C>       <C>        <C>       <C>        <C>       <C>
INTEREST INCOME
 Loans receivable                     $10,431   $ (1,404)  $ 9,027   $ 33,176   $(1,646)  $ 31,530 
 Mortgage-backed securities            (2,558)       158    (2,400)    (4,182)   (2,857)    (7,039)
 U.S. Treasury security                   (27)       (27)      (54)        18        (3)        15 
 Securities purchased under
   agreements to resell and federal
   funds sold                             126        125       251         --        --         -- 
 FHLB stock                               (11)        15         4         97      (127)       (30)
 Interest-earning deposits in
   other depository institutions          (70)       (13)      (83)        15      (166)      (151)
                                      --------  ---------  --------  ---------  --------  ---------

     Total                              7,891     (1,146)    6,745     29,124    (4,799)    24,325 
                                      --------  ---------  --------  ---------  --------  ---------

INTEREST EXPENSE
 Interest-bearing savings deposits      2,714        122     2,836      4,152      (792)     3,360 
 Securities sold under agreements
   to repurchase and federal
   funds purchased                      2,484      1,345     3,829     10,010    (3,672)     6,338 
 Advances from the FHLB                (1,042)       615      (427)     1,122    (1,489)      (367)
 Senior Notes payable                      --         --        --      2,500        --      2,500 
                                      --------  ---------  --------  ---------  --------  ---------

     Total                              4,156      2,082     6,238     17,784    (5,953)    11,831 
                                      --------  ---------  --------  ---------  --------  ---------

 Net change in net interest income .  $ 3,735   $ (3,228)  $   507   $ 11,340   $ 1,154   $ 12,494 
                                      ========  =========  ========  =========  ========  =========
</TABLE>


NET  INCOME
     Coastal  reported  net  income  before  preferred  stock dividends of $14.2
million  for  the year ended December 31, 1997, $14.4 million for the year ended
December  31,  1996, before the after-tax effect of the 1996 special assessment,
and $11.1 million for the year ended December 31, 1995, respectively, a decrease
of  $234,000 or 1.6% in 1997 and an increase of $3.3 million or 29.2% in 1996 in
each  case  in  comparison to the prior year.  The $234,000 decrease in 1997 was
primarily due to a $507,000 increase in net interest income, a $125,000 decrease
in  the  provision for loan losses and a $293,000 increase in noninterest income
offset  by  a  $1.6  million increase in noninterest expense (excluding the 1996
special  assessment).    The increase in noninterest income is due to a $568,000
increase  in  loan fees and service charges on deposit accounts, a $237,000 gain
on sales of mortgage-backed securities available-for-sale in 1997 and a $164,000
increase  in  other  noninterest  income,  offset by a $159,000 decrease in loan
servicing income and the $521,000 gain on the sale of a branch office recognized
in 1996.    The $1.6 million increase in noninterest expense (excluding the 1996
special  assessment) was primarily due to the overall compensation and occupancy
expenses related to an increase in personnel hired for the expansion of the loan
products  offered  and the continuing development of commercial business lending
programs.  In addition, occupancy expenses also increased due to the acquisition
of  assets  and  other expenses related to the relocation of Coastal's corporate
headquarters  and  consolidation  of  its  administrative,  primary  lending and
mortgage  servicing  offices in the third quarter of 1997.  These increases were
somewhat  offset  by  the $1.1 million decrease in insurance premiums (primarily
deposit  insurance  premiums).   In addition, other noninterest expense and data
processing  expense  decreased  $646,000  and  $202,000,  respectively.

     The $3.3 million increase in net income before preferred stock dividends in
1996  was  primarily  due  to a $12.5 million increase in net interest income, a
$929,000  increase  in  noninterest income, offset by a $8.1 million increase in
noninterest expense before the $7.5 million special assessment.  The increase in
noninterest  income  was  primarily  a result of increased loan fees and service
charges  on  deposit accounts of $952,000 and the $521,000 gain on the sale of a
branch  office,  partially  offset  by  a  decrease  in loan servicing income of
$391,000.    The increase in noninterest expense before the $7.5 million special
assessment  was primarily due to increased operating expenses as a result of the
Texas  Capital  Bancshares,  Inc.  ("Texas  Capital") acquisition on November 1,
1995.    The  increased noninterest expense was also due to overall compensation
and  occupancy  expenses related to the expansion of the loan product base being
offered  by  Coastal  to  its  customers,  primarily  relating to the continuing
development  of  commercial  business  lending  programs, the May 1996 bank data
processing  conversion  and  the  June  1996 conversion of the five former Texas
Capital  locations to the new data processing system. Coastal converted its bank
data  processing  system  to  a PC based client server technology throughout its
branch  network  to  enable  the branch offices to offer a more expanded product
base  (including loan and deposit products) and to automate and upgrade the work
flow  in  the  customer contact areas, allowing branch office employees a better
opportunity to serve their customers.  The cost during the period related to the
data  processing  conversion  was  approximately  $360,000.    Net income before
preferred  stock  dividends  and  after  the  after-tax  effect  of  the special
assessment  was  $9.5  million  for  the  year  ended  December  31,  1996.

NET  INTEREST  INCOME
     Net  interest income amounted to $56.9 million in 1997, a $507,000, or 0.9%
increase  over  1996.    The increase in net interest income was due to a slight
increase  in  average  net interest-earning assets of $4.6 million offset by the
overall decrease in interest rate spread, defined to exclude noninterest-bearing
deposits,  from  1.72%  in 1996 to 1.67% in 1997.  Management also calculates an
alternative  net  interest  spread  which includes noninterest-bearing deposits.
Under  this  calculation,  the net interest spreads for 1997 and 1996 were 1.85%
and 1.89%, respectively.  Net interest rate spread is affected by the changes in
the  amount  and  composition  of  interest-earning  assets and interest-bearing
liabilities  and  their  concomitant  interest  rates.   The decrease in the net
interest  spread  in 1997 was primarily due to the increase in the average yield
on  interest-earning  assets  from 7.10% in 1996 to 7.13% in 1997, offset by the
increase  in  the  average  interest  rates on interest-bearing liabilities from
5.38%  in 1996 to 5.46% in 1997.   During 1997, Coastal experienced a tightening
in  net  interest income due primarily to higher borrowing costs and the anomaly
that  the  spread  between  the  London Interbank Offered Rate ("LIBOR") and the
Treasury rate (the "TED" spread) has been much wider than usual.  The TED spread
historically  (6  year  average)  has  been 40 basis points, but for 1997 was 56
basis  points, which would equate to an additional $1.4 million in net income or
$0.27 per share (after tax) for the year had the spread been consistent with the
6  year  average.  While management believes that the higher borrowing costs are
temporary  due  to  the  TED  spread  and  usual  year-end  pricing, efforts are
continuing  to  replace  borrowings  with  lower  cost  deposits and to maintain
reasonable  operating expenses during this period.  In addition, interest income
for  the  last  six months of 1997 was reduced by the additional amortization of
premium  on  purchased  mortgage  loans  of  approximately  $1.3  million.  This
amortization was attributable to prepayments related to an adjustable rate whole
loan  package  purchased in the second quarter of the year.  Management believes
the  prepayments  could  continue  at  least  through the first quarter of 1998,
depending  on  interest  rate  movements.

     Net  interest income amounted to $56.4 million in 1996, a $12.5 million, or
28.4%  increase  over  1995.  This increase in net interest income was due to an
increase in average net interest-earning assets of $20.0 million and an increase
in  interest  rate spread, defined to exclude noninterest-bearing deposits, from
1.46%  in  1995  to  1.72%  in  1996.    The  net  interest  spread  including
noninterest-bearing  deposits  for  1996  and  1995  was  1.89%  and  1.61%,
respectively.  The increase in the net interest spread in 1996 was primarily due
to  the  decrease  in the average interest rates on interest-bearing liabilities
from  5.59%  in 1995 to 5.38% in 1996 and a slight increase in the average yield
on  interest-earning  assets  from  7.05%  in  1995  to  7.10%  in  1996.

     Total  interest  income  amounted  to  $201.4  million  during 1997, a $6.7
million,  or  3.5%  increase  from  1996.   A $9.0 million, or 9.2%, increase in
interest  earned on loans receivable during 1997 resulted from a $124.6 million,
or  10.8%,  increase in the average balance of loans receivable offset partially
by  a  decrease of 12 basis points in the yield earned compared to 1996.  A $2.4
million,  or  2.5%,  decrease  in  interest earned on mortgage-backed securities
during 1997 was due to a $42.4 million, or 2.7%, decrease in the average balance
of mortgage-backed securities due to principal payments received and the sale of
$11.3  million  of  mortgage-backed securities available-for-sale.  In addition,
interest  earned  on  federal  funds  sold,  certificates  of deposits and other
investments  increased  slightly  by  $118,000,  or  7.8%,  due primarily to the
increase  in  the  average balance of such assets, through growth and the branch
acquisition,  of  $1.1  million  during  1997.

     Total  interest  income  amounted  to  $194.6  million during 1996, a $24.3
million,  or  14.3%, increase from 1995.  A $31.5 million, or 47.5%, increase in
interest earned on loans receivable during 1996 resulted primarily from a $391.5
million,  or  51.2%,  increase in the average balance of loans receivable offset
partially by a decrease in the yield earned of 21 basis points compared to 1995.
A  $7.0  million,  or  6.9%,  decrease  in  interest  earned  on mortgage-backed
securities  during  1996  was  due  to a $68.1 million, or 4.2%, decrease in the
average balance of mortgage-backed securities due to principal payments received
and  a  decrease  in the yield earned of 18 basis points.  In addition, interest
earned  on  federal  funds  sold, certificates of deposits and other investments
decreased  $166,000, or 9.8%, due to the lower average yield earned during 1996.

     Total  interest expense amounted to $144.4 million in 1997, a $6.2 million,
or 4.5%, increase from 1996.  Interest expense on other borrowed money increased
$3.8  million,  or  7.5%,    due  to the $43.6 million, or 4.7%, increase in the
average  balance  of  securities sold under agreements to repurchase and federal
funds  purchased  and  a  14 basis point increase in the interest rates paid.  A
$2.8  million,  or  4.7%, increase in interest on savings deposits was primarily
due  to  a  $53.5  million,  or  4.5%,  increase  in  the  average  balance  of
interest-bearing  savings  deposits.  Interest expense on advances from the FHLB
decreased  $427,000,  or  2.0%,  due  to  the decrease in the average balance of
advances  from  the  FHLB  of $18.4 million, or 4.8%, offset by a 16 basis point
increase  in  the  average  rates  paid.

     Total  interest  expense  amounted  to  $138.2  million  in  1996, an $11.8
million,  or  9.4%,  increase  from 1995.  A $6.3 million, or 14.1%, increase in
interest  paid  on  other borrowed money was due to a $178.3 million increase in
the  average  balance  of  securities  sold  under  agreements to repurchase and
federal  funds  purchased  offset by a 46 basis point decrease in interest rates
paid.  A $3.4 million, or 5.9% increase in interest paid on savings deposits was
due  to  a  $82.9  million,  or  7.4%,  increase  in  the  average  balance  of
interest-bearing  deposits  offset by a 7 basis point decrease in interest rates
paid.   The interest expense of $5.0 million on the Senior Notes payable in 1996
was  due  to the issuance of $50.0 million of the 10.0% Senior Notes on June 30,
1995.  These increases were somewhat offset by the $367,000 decrease in interest
paid  on advances from the FHLB.  The decrease in interest paid on advances from
the FHLB was due to a 39 basis point decrease in interest rates paid offset by a
$19.4  million  increase  in  the  average  balance.

PROVISION  FOR  LOAN  LOSSES
     Management  established  provisions  for  loan losses of $1.8 million, $1.9
million  and  $1.7 million for the years ended December 31, 1997, 1996 and 1995,
respectively.    Provisions for loan losses, currently $450,000 per quarter, are
charged  to  earnings  to  bring  the total allowance for loan losses to a level
deemed  appropriate  by  management  based  on  such  factors as historical loss
experience,  the  volume and type of lending conducted by Coastal, the amount of
nonperforming  assets,  industry  standards,  regulatory  policies,  generally
accepted  accounting  principles,  general  economic conditions, particularly as
they  relate  to  Coastal's  lending  areas,  and  other  factors related to the
collectibility of Coastal's loan portfolio.  Coastal's asset quality ratios have
remained  relatively  consistent  from  December  31, 1995 to December 31, 1997.
Nonperforming loans as a percentage of total loans receivable was 1.4%, 1.0% and
1.3%  at December 31, 1997, 1996 and 1995, respectively.  The allowance for loan
losses  as  a  percentage  of  nonperforming loans was 42.7%, 53.6% and 39.0% at
December  31,  1997, 1996 and 1995, respectively.  The allowance for loan losses
as  a  percentage  of total loans receivable was 0.6%, 0.6% and 0.5% at December
31,  1997,  1996  and  1995,  respectively.

     Coastal's management believes that its present allowance for loan losses is
adequate, based upon, among other factors, its low level of nonperforming assets
and  minimal  loss experience.  Management will continue to review its loan loss
policy as Coastal's loan portfolio grows and diversifies to determine if changes
to  the  policy  are  necessary.


<PAGE>
NONINTEREST  INCOME
     Total  noninterest income amounted to $6.4 million during 1997, an increase
of  $293,000,  or  4.8%,  over  1996.    The  increase  in noninterest income is
primarily  due  to  an  increase of $568,000 in loan fees and service charges on
deposit  accounts,  a  $237,000  gain  on  sales  of  mortgage-backed securities
available-for-sale  in 1997 and a $164,000 increase in other noninterest income,
offset by the decrease of $159,000 in loan servicing income, due to the reducing
servicing  portfolio,  and  the  $521,000  gain  on  the sale of a branch office
recorded  in  1996.    The  increase in loan fees and service charges on deposit
accounts  consisted  of  an  increase  of  $87,000  in  loan fees and a $481,000
increase  in  service charges on deposit accounts, primarily due to the increase
in  transaction  type  deposit  accounts  from  1996 to 1997 and the 1997 branch
acquisition  which  consisted  of  53.5% transaction type deposit accounts.  The
gain  on  the  sales  of  mortgage-backed  securities available-for-sale was the
result of the sale of securities with a book value of $11.3 million during 1997.

     Total  noninterest income amounted to $6.1 million during 1996, an increase
of  $929,000,  or  18.0%,  over  1995.    The increase in noninterest income was
primarily  due  to  an  increase of $952,000 in loan fees and service charges on
deposit  accounts  and  a  $521,000  gain  recorded as a result of the sale of a
branch  office  in  May  1996 offset by a decrease of $391,000 in loan servicing
income  in  1996  from  1995.   The increase in loan fees and service charges on
deposit  accounts  consisted  of  a $46,000 increase in loan fees and a $906,000
increase  in  service  charges  on  deposit  accounts primarily due to the Texas
Capital  acquisition.   Coastal also experienced slight decreases of $85,000 and
$68,000  in  the  gain  (loss)  on  sales  of  mortgage-backed  securities
available-for-sale  and  other  noninterest  income,  respectively.

NONINTEREST  EXPENSE
     Total  noninterest  expense  amounted  to  $39.5  million  during  1997, an
increase  of  $1.6  million,  or  4.3%,  over 1996 before the effect of the 1996
special  assessment.   Compensation, payroll taxes and other benefits and office
occupancy  increased  $2.2 million and $1.3 million, respectively, primarily due
to  the  overall  increase  in  personnel  hired  for  the expansion of the loan
products  offered  and  the  continuing  development  of the commercial business
lending  programs.    In  addition, occupancy expenses also increased due to the
acquisition  of assets and other expenses related to the relocation of Coastal's
corporate  headquarters and consolidation of its administrative, primary lending
and  mortgage  servicing  offices  in  the  third  quarter of 1997.  Of the $1.3
million increase in occupancy expenses, approximately $128,000 were nonrecurring
expenses incurred due to the relocation.  The amortization of goodwill increased
$56,000 during 1997 due primarily to the 1997 branch acquisition and the related
goodwill  recorded.    These increases were somewhat offset by decreases of $1.1
million, $646,000 and $202,000 in insurance premiums, other noninterest expenses
and  data  processing expense, respectively.  The decrease in insurance premiums
was  due  to  the decrease in deposit insurance premiums pursuant to the reduced
assessment  rates applicable to Coastal as a result of the passage of the Act in
1996.    The  decrease  in  data  processing  expenses  was primarily due to the
expenses  incurred  in  1996  related  to  the  May  1996  bank  data processing
conversion  and  the conversion in June of 1996 of the five former Texas Capital
locations  acquired  in  1995  to  the  new  data  processing  system.

     Total  noninterest  expense,  excluding the $7.5 million special assessment
(before  applicable  income  taxes),  amounted  to $37.9 million during 1996, an
increase  of $8.1 million, or 27.2%, over 1995.  Compensation, payroll taxes and
other  benefits  and  office  occupancy  expense increased $4.5 million and $1.4
million  to  $16.5  million and $6.0 million, respectively, primarily due to the
operation  of  the five offices acquired from Texas Capital on November 1, 1995,
two  de novo branches opened in March 1995 and staffing increases related to the
expansion  of  the  loan  product base available to customers and the continuing
development  of the commercial business lending programs and to the overtime and
contract labor utilized for the data processing conversion.  The amortization of
goodwill  increased  by  $511,000,  also  due  primarily  to  the  Texas Capital
acquisition.    Data  processing  expenses  increased  $678,000 due to the Texas
Capital  acquisition,  the  May  1996  bank  data  processing conversion and the
conversion  in  June 1996 of the former Texas Capital locations acquired in 1995
to  the  new  data  processing  system.    Expenses related to real estate owned
increased  by $484,000 and other expenses (including advertising) increased $1.5
million,  or  23.8%,  over  the  prior  year.  Insurance premiums decreased $1.0
million,  or  32.2%,  due to the $636,000 refund of the fourth quarter 1996 SAIF
assessment  payment as a result of the re-capitalization of SAIF pursuant to the
Act and an overall decrease in assessment rate applicable in 1996 as compared to
the  rate  applicable  in  1995.

PROVISION  FOR  FEDERAL  INCOME  TAXES
     Coastal  generated  no regular Federal taxable income in 1997, 1996 or 1995
primarily  due  to the utilization of the net operating loss carryovers acquired
from the associations obtained in connection with the Southwest Plan Acquisition
and  because  payments  to Coastal pursuant to the Assistance Agreement in prior
years  were  excludable from taxable income, which resulted in Coastal reporting
losses  each  year  for  tax  purposes.    However, pursuant to the terms of the
Assistance  Agreement,  the  FSLIC  Resolution  Fund ("FRF") retained all of the
future  tax  benefits to be derived from the Federal income tax treatment of the
assistance  payments  received  from the FRF and from the utilization of the net
operating loss carryovers acquired.  The amount of tax benefit to Coastal during
these  years  (which  corresponds  to  the amount of Federal taxes which Coastal
would  have  paid in these years but for the tax-exempt nature of the assistance
payments  from the FRF and the utilization of the net operating loss carryovers)
is  recorded in Coastal's Consolidated Statements of Operations as its provision
for  Federal  income  taxes, which also includes alternative minimum taxes paid.
The  alternative  minimum taxes recorded during these years will be available as
credit  carryforwards  to  reduce  future  Federal  regular income taxes over an
indefinite  period.

     The  provisions  for  Federal  income taxes were $7.8 million in 1997, $5.7
million  in  1996  and  $6.5  million  in 1995.  Although the termination of the
Assistance  Agreement  was  effective  March  31, 1994, the FRF will continue to
receive  the  future  Federal  income  tax  benefits  of  the net operating loss
carryforwards  acquired.

ASSET  AND  LIABILITY  MANAGEMENT
     Coastal's asset and liability management process is utilized to measure and
manage  its interest rate risk exposure, which is Coastal's primary market risk.
Interest  rate  risk  can  be  defined as the exposure of Coastal's net interest
income to adverse movements in interest rates.  The principal determinant of the
exposure  of  Coastal's  earnings to interest rate risk is the timing difference
between  the  repricing or maturity of Coastal's interest-earning assets and the
repricing or maturity of its interest-bearing liabilities.  In order to minimize
interest  rate  risk  and  achieve  an  acceptable  interest rate spread between
interest-earning  assets  and interest-bearing liabilities, Coastal endeavors to
match  the  timing  of  the  repricing  or  maturities as well as the basis (for
example,  LIBOR  or  cost  of  funds rate) of its interest-earning assets to its
interest-bearing  liabilities.    Coastal  also  uses interest rate swap and cap
agreements  to  aid in minimizing exposure to interest rate fluctuations.  These
strategies  are  described  below.

     Coastal's  asset  and  liability  management  strategy  is  formulated  and
monitored by the Asset/Liability Committee of the Board of Directors of the Bank
(the  "Board").   The Board's written policies and procedures are implemented by
the  Asset/Liability  Subcommittee  (the  "Subcommittee"),  a management-staffed
committee  composed  of  the  Chief  Executive and Chief Lending Officers of the
Bank,  in  addition  to  members  of  the  Bank's Portfolio Control Center.  The
Subcommittee  meets  regularly to review, among other things, the sensitivity of
Coastal's  assets  and  liabilities  to  interest  rate changes, including those
transactions  attributable  to altering the interest rate risk, the purchase and
sale activity and maturities of investments and borrowings.  A representative of
the  Subcommittee  also  meets  with  members of Coastal's banking, treasury and
marketing  areas to participate in pricing and funding decisions with respect to
Coastal's overall asset and liability composition.  In accordance therewith, the
Subcommittee  reviews  Coastal's  liquidity,  cash  flow  needs,  maturities  of
investments,  deposits  and  borrowings,  interest  rate  matching, core deposit
activity,  current  market  conditions  and  interest  rates on both a local and
national  level.

     To  effectively  measure and manage interest rate risk, the Asset/Liability
Committee  of the Board and the Subcommittee regularly review interest rate risk
by forecasting the impact of alternative interest rate scenarios on net interest
income  and  on  Coastal's economic value of equity ("EVE"), which is defined as
the  difference  between  the  market  value  of  Coastal's  existing assets and
liabilities,  including  the  effects  of  off-balance sheet instruments, and by
evaluating  such  impact  against  the  guidelines  established by the Board for
allowable  changes  in  net  interest  income  and  EVE.    Coastal utilizes the
market-value  analysis  to  address  the change in the equity value of Coastal's
balance  sheet  arising  from  movements  in interest rates by computing the net
present value of Coastal's assets, liabilities and off-balance sheet instruments
using  selected interest rate scenarios.  The extent to which assets have gained
or  lost  value in relation to the gains or losses of liabilities determines the
appreciation  or depreciation in equity on a market-value basis.  Economic value
analysis  is intended to evaluate the impact of immediate and sustained interest
rate  shifts  of  the  current  yield curve upon the market value of the current
balance  sheet.

     From  these  analyses,  interest  rate  risk  is quantified and appropriate
strategies  are  formulated  and  implemented  on  an  ongoing  basis.  Based on
Coastal's  December  31,  1997  interest  rate  sensitivity position, management
believes  that  at  December  31,  1997 an immediate 100 basis point increase in
interest  rates  could cause a short term decrease in net interest income due to
timing  differences  but would not have a significant impact over a twelve month
period.    There can be no assurance that this conclusion will not change as the
assumptions  utilized  by  management to reach such conclusion change over time.

     The  following  table  presents an analysis of the sensitivity in Coastal's
net  interest  income  over  a  four-quarter  period  and  the  EVE based on the
indicated changes in interest rates at December 31, 1997 and 1996.  The interest
rate  scenarios  presented  in  the table include interest rates at December 31,
1997  and  1996 and, for the net interest income calculation, as adjusted by the
indicated  changes in interest rates over a four-quarter period, and for the EVE
calculation, as adjusted by instantaneous and parallel changes in interest rates
of  upward  and downward of up to 200 basis points.  Each rate scenario reflects
unique  prepayment  and  repricing  assumptions.

<PAGE>
<TABLE>
<CAPTION>
                                                Estimated  Change  In
      Change                     Net  Interest  Income               EVE
In  Interest  Rates                   December 31,               December 31,
(in  basis  points)               1997          1996          1997          1996
-------------------              -------      ------         -------     -------
 <S>                               <C>          <C>            <C>           <C>
+200                              (7.41)%      0.96%         (21.07)%    (36.81)%
+100                              (3.76)      (0.35)          (6.52)     (17.02)
   0                                 --          --             --          -- 
-100                               3.52        1.57            0.18        7.02 
-200                               7.25        1.37           (6.54)       3.78 
</TABLE>


     There  are  limitations  inherent  in  any methodology used to estimate the
exposure  to  changes in market interest rates.  Therefore, this analysis is not
intended  to  be  a forecast of the actual effect of a change in market interest
rates  on  Coastal.   Management of Coastal believes that all of the assumptions
used  in  this analysis to evaluate the vulnerability of Coastal's operations to
changes  in interest rates take into account historical experience and considers
them  reasonable; however, the interest rate sensitivity of Coastal's assets and
liabilities  and the estimated effects of changes in interest rates on Coastal's
net  interest  income  and  EVE  indicated  in  the  above  analysis  could vary
substantially if different assumptions were used or if actual experience differs
from  the  historical  experience  on  which  it  is  based.

     The  EVE  is  significantly  impacted by the estimated effect of prepayment
risk  on  the value of mortgage-backed securities, loans receivable and mortgage
servicing rights as market interest rates change.  Prepayment risk arises due to
the possibility that the cash flow experience of an asset may change as interest
rates  change.    When  interest  rates  increase,  assets will generally not be
prepaid and conversely, when interest rates decrease, prepayments increase.  The
magnitude  of  the  risk  that  a  higher yielding asset will prepay is a direct
function  of interest rate variability over the life of the assets.  Prepayments
affect  Coastal's  net  spread  and  the  duration  match  of  its  assets  and
liabilities.   Coastal has prepayment risk on its mortgage-backed securities and
loans  receivable  held at a premium and on its mortgage servicing rights due to
the  fact that the amortization of the capitalized premiums on those assets will
accelerate  when  the  underlying  loans  are  prepaid.    Coastal  attempts  to
anticipate  its  prepayment  risk by extrapolation from past prepayment behavior
after adjusting for expected interest rate levels and other economic factors and
utilizes  these  assumptions  when  analyzing  its  risk  exposure.

     A  more  conventional  but  limited  asset  and  liability  monitoring tool
involves analyzing the extent to which assets and liabilities are "interest rate
sensitive"  and  measuring  an  institution's  interest  rate sensitivity "gap."
While  this conventional gap measure may be useful, it is limited in its ability
to  predict  trends  in  future  earnings  and to predict the effect of changing
interest rates.  It makes no assumptions about changes in prepayment tendencies,
deposit  or  loan  maturity preferences or repricing time lags that may occur in
response to a change in the interest rate environment.  An asset or liability is
said  to  be  interest  rate  sensitive within a specific time period if it will
mature  or reprice within that time period.  The interest rate sensitivity "gap"
is  defined  as  the  difference  between  interest-earning  assets  and
interest-bearing  liabilities  maturing or repricing within a given time period.
A  gap  is considered positive when the amount of interest rate sensitive assets
exceeds  the amount of interest rate sensitive liabilities.  A gap is considered
negative when the amount of interest rate sensitive liabilities exceeds interest
rate sensitive assets.  During a period of rising interest rates, a negative gap
would  tend  to adversely affect net interest income, while a positive gap would
tend  to  result  in  an  increase  in  net interest income.  During a period of
falling  interest  rates,  a  negative  gap  would tend to increase net interest
income, while a positive gap would tend to adversely affect net interest income.
Given  Coastal's  current  position  based  on  this  "gap"  analysis,  however,
Coastal's net interest spread would benefit over time from a gradual increase in
interest  rates,  in  which  its  assets may be redeployed at higher yields.  If
interest  rates  were  to  fall,  yields  earned  on  interest  rate  sensitive
investments  would  be reduced, while longer term fixed liability costs, such as
Coastal's  certificates  of  deposits, would not immediately change.  While this
interest-sensitivity  analysis  takes  into  account repricing and maturities of
assets  and liabilities, it fails to consider the interest rate sensitivities of
those  asset  and  liability  accounts.

     The  following  table  summarizes  the  contractual maturities or repricing
characteristics  of  Coastal's  interest-earning  assets  and  interest-bearing
liabilities adjusted for the effects of interest rate swaps and caps at December
31,  1997.    The principal balance of adjustable rate assets is included in the
period  in which they are first scheduled to adjust rather than in the period in
which they mature.  Other material assumptions are set forth in the footnotes to
the  table.

<TABLE>
<CAPTION>
                                                                    As of December 31, 1997
                                                                                    More  than
                                                               Three  months      three  months
                                                                  or  less       to  one  year
                                                               --------------------------------
                                                                   (Dollars  in  thousands)
<S>                                                              <C>  <C>          <C>  <C>
INTEREST-SENSITIVE ASSETS
 Loans, net (1)(2):
   First lien mortgage-single family fixed rate                  $      665        $   1,094 
   First lien mortgage-single family adjustable
     rate                                                            56,558          383,485 
   First lien mortgage-multifamily fixed rate                         6,075            7,724 
   First lien mortgage-multifamily variable rate                    106,583               -- 
   Construction and acquisition and
     development, net of loans in process                            71,848               86 
   Commercial real estate                                           120,797            1,343 
   Commercial                                                       146,867            1,120 
   Consumer and other                                                 7,447            4,537 
 Mortgage-backed securities held-to-maturity(1)(2)                1,131,883               -- 
 Mortgage-backed securities available-for-sale
   (1)(2)                                                           169,997               -- 
 Other interest-earning assets (3)                                   32,038               -- 
                                                                 -----------       ----------
     Total interest-sensitive assets                              1,850,758          399,389 
                                                                 -----------       ----------
 Noninterest-sensitive assets
     Total assets

INTEREST-SENSITIVE LIABILITIES:
 Savings deposits (4):
   Interest-bearing checking accounts                            $   69,972        $      -- 
   Savings accounts                                                  25,555               -- 
   Money market accounts                                            165,986               -- 
   Certificate accounts (including discount)                        257,263          524,117 
 Securities sold under agreements to repurchase                     647,048          144,712 
 Advances from the FHLB                                             307,100           13,819 
 Senior Notes payable                                                    --               -- 
                                                                 -----------       ----------
     Total interest-sensitive liabilities                         1,472,924          682,648 
                                                                 -----------       ----------
 Noninterest-sensitive liabilities
     Total liabilities
 Preferred Stock of the Bank
 Common stockholders' equity
     Total liabilities and stockholders'
     equity

Gap during the period                                            $  377,834        $(283,259)
Effect of interest rate swaps and caps(5)                            84,847          (43,400)
                                                                 -----------       ----------
Cumulative gap after effect of interest rate swaps
 and caps                                                        $  462,681        $ 136,022 
                                                                 ===========       ==========

Interest-sensitive assets as a % of interest-sensitive
 liabilities (cumulative)                                            125.65%          104.39%
Interest-sensitive assets as a % of total
 assets (cumulative)                                                  63.57            77.29 
Ratio of gap after effect of interest rate swaps and caps
 to total assets                                                      15.89           (11.22)
Ratio of cumulative gap after effect of interest rate
 swaps and caps to total assets                                       15.89             4.67 



                                                                      As of December 31, 1997
                                                                -----------------------------------
                                                                  More than            More  than
                                                                one  year  to        three years to
                                                                 three  years         five  years
                                                                -----------------------------------
                                                                     (Dollars  in  thousands)
<S>                                                               <C>  <C>          <C>  <C>
INTEREST-SENSITIVE ASSETS
 Loans, net (1)(2):
   First lien mortgage-single family fixed rate                  $    3,553        $    7,051 
   First lien mortgage-single family adjustable
     rate                                                            60,158            14,980 
   First lien mortgage-multifamily fixed rate                         8,023               674 
   First lien mortgage-multifamily variable rate                         --                -- 
   Construction and acquisition and
     development, net of loans in process                             6,223               422 
   Commercial real estate                                            16,848             7,013 
   Commercial                                                         2,062             9,620 
   Consumer and other                                                 5,143             4,272 
 Mortgage-backed securities held-to-maturity(1)(2)                       --                 1 
 Mortgage-backed securities available-for-sale
   (1)(2)                                                                --                -- 
 Other interest-earning assets (3)                                       --                -- 
                                                                 -----------       -----------
     Total interest-sensitive assets                                102,010            44,033 
                                                                 -----------       -----------
 Noninterest-sensitive assets
     Total assets

INTEREST-SENSITIVE LIABILITIES:
 Savings deposits (4):
   Interest-bearing checking accounts                            $       --        $       -- 
   Savings accounts                                                      --                -- 
   Money market accounts                                                 --                -- 
   Certificate accounts (including discount)                        216,762            13,445 
 Securities sold under agreements to repurchase                          --                -- 
 Advances from the FHLB                                             128,421            78,343 
 Senior Notes payable                                                    --            50,000 
                                                                 -----------       -----------
     Total interest-sensitive liabilities                           345,183           141,788 
                                                                 -----------       -----------
 Noninterest-sensitive liabilities
     Total liabilities
 Preferred Stock of the Bank
 Common stockholders' equity
     Total liabilities and stockholders'
     equity

Gap during the period                                            $ (243,173)       $  (97,755)
Effect of interest rate swaps and caps(5)                           (21,920)               -- 
                                                                 -----------       -----------
Cumulative gap after effect of interest rate swaps
 and caps                                                        $ (129,071)       $ (226,826)
                                                                 ===========       ===========

Interest-sensitive assets as a % of interest-sensitive
 liabilities (cumulative)                                             94.06%            90.68%
Interest-sensitive assets as a % of total
 assets (cumulative)                                                  80.79             82.30 
Ratio of gap after effect of interest rate swaps and caps
 to total assets                                                      (9.11)            (3.36)
Ratio of cumulative gap after effect of interest rate
 swaps and caps to total assets                                       (4.43)            (7.79)



                                                                       As of December 31, 1997
                                                                -----------------------------------
                                                                   More  than          More  than
                                                                five  years  to      ten  years  to
                                                                   ten  years         twenty  years
                                                                -----------------------------------
                                                                       (Dollars in thousands)
<S>                                                                  <C>  <C>          <C>  <C>
INTEREST-SENSITIVE ASSETS
 Loans, net (1)(2):
   First lien mortgage-single family fixed rate                  $   19,267        $   71,073 
   First lien mortgage-single family adjustable
     rate                                                             4,403                -- 
   First lien mortgage-multifamily fixed rate                         1,185                -- 
   First lien mortgage-multifamily variable rate                         --                -- 
   Construction and acquisition and
     development, net of loans in process                               591             1,149 
   Commercial real estate                                             6,201            26,068 
   Commercial                                                           913                -- 
   Consumer and other                                                 1,039               981 
 Mortgage-backed securities held-to-maturity(1)(2)                       --                -- 
 Mortgage-backed securities available-for-sale
   (1)(2)                                                                --                -- 
 Other interest-earning assets (3)                                       --                -- 
                                                                 -----------       -----------
     Total interest-sensitive assets                                 33,599            99,271 
                                                                 -----------       -----------
 Noninterest-sensitive assets
     Total assets

INTEREST-SENSITIVE LIABILITIES:
 Savings deposits (4):
   Interest-bearing checking accounts                            $       --        $       -- 
   Savings accounts                                                      --                -- 
   Money market accounts                                                 --                -- 
   Certificate accounts (including discount)                            178                -- 
 Securities sold under agreements to repurchase                          --                -- 
 Advances from the FHLB                                               7,041             5,751 
 Senior Notes payable                                                    --                -- 
                                                                 -----------       -----------
     Total interest-sensitive liabilities                             7,219             5,751 
                                                                 -----------       -----------
 Noninterest-sensitive liabilities
     Total liabilities
 Preferred Stock of the Bank
 Common stockholders' equity
     Total liabilities and stockholders'
     equity

Gap during the period                                            $   26,380        $   93,520 
Effect of interest rate swaps and caps(5)                           (19,527)               -- 
                                                                 -----------       -----------
Cumulative gap after effect of interest rate swaps
 and caps                                                        $ (219,973)       $ (126,453)
                                                                 ===========       ===========

Interest-sensitive assets as a % of interest-sensitive
 liabilities (cumulative)                                             91.70%            95.24%
Interest-sensitive assets as a % of total
 assets (cumulative)                                                  83.46             86.87 
Ratio of gap after effect of interest rate swaps and caps
 to total assets                                                      (0.24)             3.21 
Ratio of cumulative gap after effect of interest rate
 swaps and caps to total assets                                       (7.56)            (4.34)



                                                                  As  of  December  31,  1997
                                                                ------------------------------
                                                                    Over
                                                                twenty  years        Totals
                                                                ------------------------------
                                                                   (Dollars  in  thousands)

<S>                                                                 <C>  <C>        <C>  <C>
INTEREST-SENSITIVE ASSETS
 Loans, net (1)(2):
   First lien mortgage-single family fixed rate                  $  66,125       $   168,828
   First lien mortgage-single family adjustable
     rate                                                              169           519,753
   First lien mortgage-multifamily fixed rate                           --            23,681
   First lien mortgage-multifamily variable rate                        --           106,583
   Construction and acquisition and
     development, net of loans in process                               --            80,319
   Commercial real estate                                               --           178,270
   Commercial                                                           --           160,582
   Consumer and other                                                   --            23,419
 Mortgage-backed securities held-to-maturity(1)(2)                 213,206         1,345,090
 Mortgage-backed securities available-for-sale
   (1)(2)                                                               --           169,997
 Other interest-earning assets (3)                                      --            32,038
                                                                 ---------       -----------
     Total interest-sensitive assets                               279,500         2,808,560
                                                                 ---------                  
 Noninterest-sensitive assets                                                        102,850
                                                                                 -----------
     Total assets                                                                $ 2,911,410
                                                                                 ===========

INTEREST-SENSITIVE LIABILITIES:
 Savings deposits (4):
   Interest-bearing checking accounts                            $      --       $    69,972
   Savings accounts                                                     --            25,555
   Money market accounts                                                --           165,986
   Certificate accounts (including discount)                            --         1,011,765
 Securities sold under agreements to repurchase                         --           791,760
 Advances from the FHLB                                                 --           540,475
 Senior Notes payable                                                   --            50,000
                                                                 ---------       -----------
     Total interest-sensitive liabilities                               --         2,655,513
                                                                 ---------                  
 Noninterest-sensitive liabilities                                                   122,317
                                                                                 -----------
     Total liabilities                                                             2,777,830
 Preferred Stock of the Bank                                                          28,750
 Common stockholders' equity                                                         104,830
                                                                                 -----------
     Total liabilities and stockholders'
     equity                                                                      $ 2,911,410
                                                                                 ===========

Gap during the period                                            $ 279,500
Effect of interest rate swaps and caps(5)                               --
                                                                 ---------                  
Cumulative gap after effect of interest rate swaps
 and caps                                                        $ 153,047
                                                                 =========                  

Interest-sensitive assets as a % of interest-sensitive
 liabilities (cumulative)                                           105.76
Interest-sensitive assets as a % of total
 assets (cumulative)                                                 96.47
Ratio of gap after effect of interest rate swaps and caps
 to total assets                                                      9.60
Ratio of cumulative gap after effect of interest rate
 swaps and caps to total assets                                       5.26
</TABLE>

(1)     Fixed-rate mortgage loans, consumer loans and fixed-rate mortgage-backed
securities  are  based  on  contractual  maturities  (assuming  no  periodic
amortization).

(2)     Variable  and  adjustable  rate  mortgage loans and adjustable rate
mortgage-backed  securities  are  included  in the period in which they  reprice
(assuming  no  periodic  amortization).

(3)     Includes  interest-bearing  deposit  accounts  and  FHLB  stock.

(4)     Interest-bearing checking accounts, savings accounts and money market
accounts  are all assumed to be interest-rate sensitive.  Fixed-rate certificate
accounts  are  based  on  contractual  maturities.

(5)     Amounts represent the notional principal amount of the interest rate
swaps  and  certain  interest  rate cap agreements which are designed to protect
Coastal  against  rising  interest  rates,  which  are currently "in the money."


<PAGE>
INTEREST  RATE  RISK  MANAGEMENT
     Coastal  enters  into  interest  rate swap and interest rate cap agreements
with  selected  broker/dealers  who  are primarily government securities dealers
("Brokers")  to  reduce  its exposure to floating interest rates on a portion of
its  adjustable  rate  liabilities.

     An  interest  rate swap is an agreement where one party (generally Coastal)
agrees  to  pay  a  fixed  rate  of interest on a notional principal amount to a
second  party  (generally  the Broker) in exchange for receiving from the second
party  a  variable  rate  of  interest  on  the  same  notional  amount  for  a
predetermined  period of time.  No actual assets are exchanged in a swap of this
type  and interest payments are generally netted.  Coastal enters into this type
of transaction in order to maintain a spread position between certain assets and
liabilities  in the event that interest rates increase.  If Coastal pays a fixed
rate  and  receives a variable rate, the variable rate to be received by Coastal
will  reprice  at the same time and at a similar rate as the funding liabilities
which  are  altered  by  the  swap and will thereby offset, to a certain degree,
increases  in  funding  costs.  Under any other interest rate scenario, the swap
will  have  a  negative  impact  on  net  interest  income.

     At  December 31, 1997, Coastal was a party to interest rate swap agreements
which have an aggregate notional amount of $45.8 million and expire from 1998 to
2005.    With  respect  to such agreements, Coastal makes weighted-average fixed
interest payments ranging from 6.00 to 6.93%, and receives payments based on the
floating  three-month  LIBOR.    Coastal  records net interest income or expense
relating  to the swap agreements on a monthly basis in interest expense on other
borrowed  money.    The net effect of the interest rate swaps to Coastal for the
year  ended  December 31, 1997 was to increase interest expense by approximately
$431,000.    See  Note  15  of  the  Notes to Consolidated Financial Statements.

     An  interest rate cap is a guarantee given by one party, referred to as the
issuer  (the  Broker), to another party, referred to as the purchaser (Coastal),
in  exchange  for  the payment of a premium, that if interest rates rise above a
specified  rate  on  a specified interest rate index, the issuer will pay to the
purchaser  the difference between the then current market rate and the specified
rate  on  a  notional  principal  amount for a predetermined period of time.  No
funds  are  actually  borrowed  or  repaid.  The principal purpose of purchasing
these caps is to prevent the occurrence of a negative spread relating to certain
adjustable  rate  mortgage-backed  securities  and loans receivable in Coastal's
portfolio  during  a  period in which the cost of funds borrowed to acquire such
assets rises above the contractual interest rate ceiling on the asset purchased.
Interest  rate  caps  generally  decrease  the  interest  margin because Coastal
receives  no  payment from the issuer (until the rate index rises above the rate
cap)  but  continues  to  amortize  the  prepaid premium.  At December 31, 1997,
Coastal  had  interest  rate  cap  agreements,  which  expire from 1998 to 2001,
covering an aggregate notional amount of $231.2 million, of which $118.2 million
are covering certain of Coastal's loans receivable, and are triggered, depending
on  the  particular contract, whenever the defined floating rate exceeds 5.0% to
12.5%.    The purchase price or premium of the interest rate cap agreements paid
by  Coastal is capitalized and included in prepaid expenses and other assets and
is  amortized  over  the  life of the agreements using the straight-line method.
For  the  year  ended  December  31, 1997, the interest rate caps resulted in an
overall  decrease  in interest income of approximately $218,000.  See Note 15 of
the  Notes  to  Consolidated  Financial  Statements.

LIQUIDITY  AND  CAPITAL  RESOURCES
     Coastal's  assets  approximated $2.9 billion at December 31, 1997 and 1996.
Stockholders'  equity  amounted  to  $104.8  million,  or  $20.93  per share, at
December 31, 1997.  The regulatory capital of Coastal's subsidiary, Coastal Banc
ssb,  exceeded  all  three  of  the  Bank's  regulatory  capital requirements at
December  31,  1997.   At December 31, 1997, the Bank's core capital amounted to
5.52%  of adjusted total assets, compared to the requirement of 4.0%, its Tier 1
risk-based capital amounted to 11.46% of risk-adjusted assets as compared to the
requirement  of  4.0%  and  its  total  risk-based capital amounted to 11.98% of
risk-adjusted  assets,  compared  to  a  requirement  of  8.0%.

     Coastal's  primary  sources  of  funds  consist of savings deposits bearing
market  rates  of  interest,  securities sold under agreements to repurchase and
federal  funds  purchased,  advances  from  the  FHLB and principal and interest
payments  on loans receivable and mortgage-backed securities.  On June 21, 1997,
Coastal  acquired  a branch which resulted in the assumption of $54.6 million in
savings  deposits.    Coastal uses its funding resources principally to meet its
ongoing  commitments  to  fund  maturing deposits and deposit withdrawals, repay
borrowings,  purchase  mortgage-backed  securities  and  loans  receivable, fund
existing and continuing loan commitments, maintain its liquidity, meet operating
expenses  and  fund  acquisitions of other banks and thrifts, either on a branch
office  or  whole  bank  acquisition  basis.   At December 31, 1997, Coastal had
binding  commitments to originate or purchase loans totaling approximately $50.2
million  and had $47.9 million of undisbursed loans in process.  In addition, at
December  31,  1997,  Coastal had commitments under lines of credit to originate
primarily  construction  and  other  loans  of  approximately $119.3 million and
letters  of  credit  outstanding  of  $1.7  million.    Scheduled  maturities of
certificates  of  deposit  during  the twelve months following December 31, 1997
totaled $781.5 million.  Management believes that Coastal has adequate resources
to  fund  all  its  commitments.

INFLATION  AND  CHANGING  PRICES
     The  Consolidated  Financial  Statements  and related data presented herein
have  been prepared in accordance with generally accepted accounting principles,
which  require  the  measurement  of financial position and operating results in
terms  of  historical  dollars,  without  considering  changes  in  the relative
purchasing  power  of  money over time due to inflation.  Unlike most commercial
companies,  substantially  all  of  the  assets  and  liabilities of Coastal are
monetary  in nature.  As a result, interest rates have a more significant impact
on  Coastal's  performance  than  the  effects  of  general levels of inflation.
Interest  rates  do  not necessarily move in the same direction or with the same
magnitude  as  the  prices  of  goods  and  services.

YEAR  2000
     Coastal  formally  initiated  a project during the first quarter of 1997 to
ensure that its operational and financial systems will not be adversely affected
by  year  2000 software problems.  A year 2000 project team has been formed with
representatives  from  all  areas of Coastal including executive management.  An
inventory  of  all  core systems and products that could be affected by the year
2000  date  change  has  been  developed.  The software for Coastal's systems is
primarily  provided  through  third  party service bureaus and software vendors.
Coastal  is  requiring  its  software  providers  and vendors to demonstrate and
represent  that the products provided are or will be year 2000 compliant and has
planned  an  internal  program  of  testing  for  compliance  beginning in 1998.
Management  does  not  expect  the costs of bringing Coastal's systems into year
2000  compliance  to  have a material impact on Coastal's consolidated financial
position.

RECENT  ACCOUNTING  STANDARDS
     A  discussion of recently issued accounting pronouncements and their impact
on  the  Consolidated  Financial  Statements  is  provided  in  Note  2  to  the
Consolidated  Financial  Statements.

FORWARD-LOOKING  INFORMATION
     The  above  discussion  should  be read in conjunction with the information
contained  in  the Consolidated Financial Statements and the Notes thereto.  The
above  information  contains  "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), and are
subject  to  the  safe  harbor created by the Reform Act.  The words "estimate,"
"project,"  "anticipate,"  "expect,"  "intend,"  "believe," "plans," and similar
expressions  are  intended to identify forward-looking statements.  Because such
forward-looking  statements involve risks and uncertainties, there are important
factors  that  could  cause  actual  results  to  differ  materially  from those
expressed  or implied by such forward-looking statements.  Factors, all of which
are  difficult  to  predict and many of which are beyond the control of Coastal,
that  could  cause  actual  results  to  differ  materially include, but are not
limited to:  risks related to Coastal's acquisition strategy, including risks of
adversely changing results of operations and factors affecting Coastal's ability
to  consummate  further  acquisitions;  changes in general economic and business
conditions;  changes  in  market  rates  of  interest;  changes  in the laws and
regulations  applicable  to  Coastal;  the  risks  associated  with  the  Bank's
non-traditional  lending  (loans  other  than single-family residential mortgage
loans  such  as multifamily, real estate acquisition and development, commercial
real  estate and commercial loans); and changes in business strategies and other
factors  as  discussed in Coastal's Annual Report on Form 10-K as filed with the
Securities  and  Exchange  Commission.

<PAGE>
Coastal  Bancorp,  Inc.  and  Subsidiaries
DIRECTORS  AND  OFFICERS


BOARD  OF  DIRECTORS OF COASTAL BANCORP, INC., COASTAL BANC SSB AND SUBSIDIARIES
(AS  NOTED)

MANUEL  J.  MEHOS
Chairman of the Board, President and Chief Executive Officer of Coastal Bancorp,
Inc.;  Chairman  of  the Board, President and Chief Executive Officer of Coastal
Banc Holding Company, Inc.; Chairman of the Board of Coastal Banc Capital Corp.,
a wholly-owned subsidiary of Coastal Banc Holding Company, Inc.; Chairman of the
Board,  President  and  Chief  Executive  Officer  of  the  Bank, a wholly-owned
subsidiary  of  Coastal  Banc  Holding Company, Inc.; and President of CBS Asset
Corp.,  and  Chief  Executive  Officer  of  CoastalBanc  Financial  Corp.,  each
wholly-owned  subsidiaries  of  the  Bank

R.  EDWIN  ALLDAY
Consultant  for  The  Dini Partners, Inc., a company that provides counseling in
philanthropy  and  non-profit  management,  Houston,  Texas

D.  FORT  FLOWERS,  JR.
President  of  Sentinel  Trust  Company,  a  Texas  Limited  Banking Association
providing  fiduciary  and  investment  management services to affluent families,
their closely held corporations and foundations, Houston, Texas, and Director of
The  Ohio  Bank,  Findlay,  Ohio

DENNIS  S.  FRANK
Chief  Executive  Officer and President of Silvergate Bancorp, a thrift and loan
holding  company,  and  of  Silvergate Thrift and Loan, La Mesa, California, and
President  and  Chief  Executive  Officer  of  DSF  Management  Corp., a private
investment  company,  Houston,  Texas

ROBERT  E.  JOHNSON,  JR.
Partner,  law  firm  of  Johnson  &  Johnson,  Austin,  Texas

JAMES  C.  NIVER
Retired,  former  President  of  Century Land Company, a residential real estate
development  company,  Houston,  Texas

CLAYTON  T.  STONE
Executive Vice President of Hines Interests Limited Partnership, Aspen, Colorado



CORPORATE  OFFICERS  OF  COASTAL  BANCORP,  INC.

MANUEL  J.  MEHOS
Chairman  of  the  Board,  President  and  Chief  Executive  Officer

CATHERINE  N.  WYLIE
Executive  Vice  President,  Chief  Financial  Officer  and  Treasurer

LINDA  B.  FRAZIER
Vice  President  and  Secretary



CORPORATE  OFFICERS  OF  COASTAL  BANC  HOLDING  COMPANY,  INC.

MANUEL  J.  MEHOS
Chairman  of  the  Board,  President  and  Chief  Executive  Officer

CATHERINE  N.  WYLIE
Director,  Executive  Vice  President,  Chief  Financial  Officer  and Treasurer

LINDA  B.  FRAZIER
Director,  Vice  President  and  Secretary

BARBARA  A.  STEEN
Director,  Assistant  Treasurer  and  Assistant  Secretary



CORPORATE  OFFICERS  OF  COASTAL  BANC  SSB

MANUEL  J.  MEHOS
President  and  Chief  Executive  Officer

JOHN  D.  BIRD
Executive  Vice  President  -  Chief  Administrative  Officer

GARY  R.  GARRETT
Executive  Vice  President  -  Chief  Lending  Officer

DAVID  R.  GRAHAM
Executive  Vice  President  -  Real  Estate  Lending  Group

SANDRA  S.  ORR
Executive  Vice  President  -  Chief  Investment  Officer

NANCY  S.  VADASZ
Executive  Vice  President  -  Market  and  Product  Strategies

CATHERINE  N.  WYLIE
Executive  Vice  President  -  Chief  Financial  Officer


                                     COASTAL

                             A HISTORICAL VIEWPOINT

     Coastal  was  acquired  by  an  investor group in 1986 as a vehicle to take
advantage  of  the  failures  and  consolidation in the Texas banking and thrift
industries.  At February 28, 1986 (the date of the change in ownership), Coastal
had  one  full  service  office and total assets of approximately $10.7 million.

     In May 1988, Coastal became the first acquirer of failed or failing savings
institutions  under  the  Federal  government's  "Southwest  Plan."    In  this
transaction,  Coastal  acquired  from  the  Federal  Savings  and Loan Insurance
Corporation,  as receiver for four insolvent savings associations, 14 additional
branch  offices  and  approximately  $543.4 million of assets and assumed $543.4
million  in  deposits  and other liabilities.  Since completion of the Southwest
Plan  acquisition and through 1997, Coastal entered into six branch acquisitions
and  one  whole  bank  acquisition:   two with an instrumentality of the Federal
government  and  five  with  private institutions.  In each transaction, Coastal
agreed  to  acquire certain assets in consideration of the assumption of certain
deposit  liabilities  with  respect  to each institution.  In 1996, Coastal also
exchanged  three  branches  for one resulting in a net deposit increase of $26.0
million and sold one branch in separate transactions.  All of these transactions
resulted  in  the  net  assumption  of  $1.6  billion  of  deposits  and the net
acquisition  of 46 branch offices.  Coastal has also opened six de novo branches
since  inception.    Coastal  has  been  able to achieve operating economies and
improve efficiency by closing an aggregate of 16 branch offices and transferring
the  deposits  to  other  offices  located  in  the  same  market  area.

     At  December  31,  1997,  Coastal  had  total  assets of approximately $2.9
billion  and total deposits of approximately $1.4 billion with 37 branch offices
in  metropolitan  Houston,  Austin, Corpus Christi and small cities in the south
east  quadrant  of  Texas.



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


The  Board  of  Directors
Coastal  Bancorp,  Inc.:


     We  have  audited  the  accompanying  consolidated  statements of financial
condition  of Coastal Bancorp, Inc. and subsidiaries as of December 31, 1997 and
1996 and the related consolidated statements of operations, stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1997.    These  consolidated  financial statements are the responsibility of the
Company's  management.    Our  responsibility  is to express an opinion on these
consolidated  financial  statements  based  on  our  audits.

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

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material respects, the financial condition of Coastal
Bancorp,  Inc. and subsidiaries at December 31, 1997 and 1996 and the results of
their  operations  and  their cash flows for each of the years in the three-year
period  ended December 31, 1997 in conformity with generally accepted accounting
principles.




/s/  KPMG  Peat  Marwick  LLP
-----------------------------
January  15,  1998
Houston,  Texas



<TABLE>
<CAPTION>
                         COASTAL BANCORP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                               DECEMBER 31, 1997 AND 1996
                            (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                          <C>  <C>         <C>  <C>
ASSETS                                                             1997             1996
------------------------------------------------------       ----------       ----------
Cash and amounts due from depository institutions            $   37,096       $   27,735
Loans receivable (Notes 6 and 11)                             1,261,435        1,229,748
Mortgage-backed securities held-to-maturity
 (market value of $1,324,968 in 1997 and
 $1,308,598 in 1996) (Notes 5, 11, 12, 14 and 15)             1,345,090        1,344,587
Mortgage-backed securities available-for-sale,
 at market value (Notes 5, 11, 12 and 14)                       169,997          180,656
U.S. Treasury security available-for-sale, at
 market value                                                        --               11
Mortgage loans held for sale                                         --              298
Accrued interest receivable (Note 7)                             14,813           14,690
Property and equipment (net of accumulated
 depreciation and amortization of $8,100 in
 1997 and $7,009 in 1996)                                        22,250           14,987
Stock in the Federal Home Loan Bank
 of Dallas ("FHLB")                                              27,801           25,971
Goodwill (net of accumulated amortization
 of $11,270 in 1997 and $9,430 in 1996)                          15,717           15,596
Mortgage servicing rights (Note 8)                                5,653            6,810
Prepaid expenses and other assets (Notes 9, 15 and 17)           11,558           14,818
                                                             ----------       ----------
                                                             $2,911,410       $2,875,907
                                                             ==========       ==========
     LIABILITIES  AND  STOCKHOLDERS'  EQUITY
     ---------------------------------------
Liabilities:
 Savings deposits (Note 10)                                  $1,375,060        $1,310,835 
 Advances from the FHLB (Note 11)                               540,475           409,720 
 Securities sold under agreements to
 repurchase (Note 12)                                           791,760           966,987 
 Senior Notes payable (Note 13)                                  50,000            50,000 
 Advances from borrowers for taxes and insurance                  3,975             4,676 
 Other liabilities and accrued expenses                          16,560            10,791 
                                                             -----------       -----------
   Total liabilities                                          2,777,830         2,753,009 
                                                             -----------       -----------

9.0% noncumulative preferred stock of Coastal
 Banc ssb (Note 22)                                              28,750            28,750 

Commitments and contingencies (Notes 6, 15, 19 and
 24)

Stockholders' equity (Notes 5, 19, 21 and 23):
 Preferred Stock, no par value; authorized shares
   5,000,000;
   no shares issued                                                  --                -- 
 Common Stock, $.01 par value; authorized shares
   30,000,000;
   5,008,926 and 4,966,941 shares issued and
     outstanding in
   1997 and 1996                                                     50                50 
 Additional paid-in capital                                      33,186            32,604 
 Retained earnings                                               73,868            64,597 
 Unrealized loss on securities available-for-sale                (2,274)           (3,103)
                                                             -----------       -----------
   Total stockholders' equity                                   104,830            94,148 
                                                             -----------       -----------
                                                             $2,911,410        $2,875,907 
                                                             ===========       ===========
</TABLE>

See  accompanying  notes  to  Consolidated  Financial  Statements.


<TABLE>
<CAPTION>
                         COASTAL BANCORP, INC. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                      YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                   1997           1996            1995
                                                --------       ---------       --------
<S>                                              <C>  <C>       <C>  <C>        <C>  <C>
Interest income:
 Mortgage-backed securities                     $ 92,755       $ 95,155        $102,194
 Loans receivable                                106,962         97,935          66,405
 Federal funds sold, certificates of
   deposits and other  investments                 1,639          1,521           1,687
                                                --------       ---------       --------
                                                 201,356        194,611         170,286
                                                --------       ---------       --------

Interest expense:
 Savings deposits                                 62,912         60,076          56,716
 Other borrowed money                             55,189         51,360          45,022
 Senior Notes payable                              5,000          5,000           2,500
 Advances from the FHLB:
   Short-term                                      8,562          6,622           1,703
   Long-term                                      12,760         15,127          20,413
                                                --------       ---------       --------
                                                 144,423        138,185         126,354
                                                --------       ---------       --------

   Net interest income                            56,933         56,426          43,932
Provision for loan losses (Note 6)                 1,800          1,925           1,664
                                                --------       ---------       --------
   Net interest income after
     provision for loan losses                    55,133         54,501          42,268
                                                --------       ---------       --------

Noninterest income:
 Loan fees and service charges                     4,018          3,450           2,498
   on deposit accounts
 Loan servicing income, net                        1,406          1,565           1,956
 Gain on sale of branch office (Note 3)               --            521              --
 Gain (loss) on sales of mortgage-backed
   securities available-for-sale, net                237             (4)             81
 Other                                               723            559             627
                                                --------       ---------       --------
                                                   6,384          6,091           5,162
                                                --------       ---------       --------

Noninterest expense:
 Compensation, payroll taxes
   and other benefits                             18,754         16,547          12,029
 Office occupancy                                  7,312          6,002           4,590
 Insurance premiums                                1,091          2,199           3,244
 Data processing                                   2,245          2,447           1,769
 Amortization of goodwill                          1,840          1,784           1,273
 Other                                             8,302          8,948           6,918
 SAIF insurance special
   assessment (Note 18)                               --          7,455              --
                                                --------       ---------       --------
                                                  39,544         45,382          29,823
                                                --------       ---------       --------

     Income before provision                      21,973         15,210          17,607
       for Federal income taxes

Provision for Federal income taxes (Note 17)       7,822          5,671           6,477
                                                --------       ---------       --------
     Net income before preferred                  14,151          9,539          11,130
       stock dividends

Preferred stock dividends of Coastal
 Banc ssb                                          2,588          2,588           2,588
                                                --------       --------        --------
     Net income available to
       common stockholders                      $ 11,563       $  6,951        $  8,542
                                                ========       =========       ========
Basic earnings per share (Note 21)              $   2.32       $   1.40        $   1.72
                                                ========       =========       ========
Diluted earnings per share (Note 21)            $   2.25       $   1.38        $   1.71
                                                ========       =========       ========
</TABLE>


See  accompanying  notes  to  Consolidated  Financial  Statements.

<PAGE>
<TABLE>
<CAPTION>
                                COASTAL BANCORP, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                            (IN THOUSANDS)

                                                                              Unrealized
                                                                               loss on
                                                  Additional                  securities
                                         Common    paid-in     Retained     available-for-
                                         Stock     capital     earnings          sale          Total
                                        -------  -----------  ----------    --------------     ------
<S>                                        <C>         <C>          <C>            <C>           <C>
Balance - December 31, 1994             $    50  $    32,434  $  52,674         $    (478)  $ 84,680 
Dividends on preferred stock
 of Coastal Banc ssb                         --           --     (2,588)               --     (2,588)
Dividends on Common Stock                    --           --     (1,585)               --     (1,585)
Exercise of stock options
 (Note 19)                                   --           58         --                --         58 
Unrealized loss on securities
 transferred to available-for-
 sale (Note 5)                               --           --         --            (1,556)    (1,556)
Change in net unrealized holding
 gain (loss) on securities available-
 for-sale (Note 5)                           --           --         --             1,540      1,540 
Net income for 1995                          --           --     11,130                --     11,130 
                                        -------  -----------  ----------  ----------------  ---------

Balance - December 31, 1995                  50       32,492     59,631              (494)    91,679 
Dividends on preferred stock
 of Coastal Banc ssb                         --           --     (2,588)               --     (2,588)
Dividends on Common Stock                    --           --     (1,985)               --     (1,985)
Exercise of stock options
 (Note 19)                                   --          112         --                --        112 
Change in net unrealized holding
 gain (loss) on securities available-
 for-sale (Note 5)                           --           --         --            (2,609)    (2,609)
Net income for 1996                          --           --      9,539                --      9,539 
                                        -------  -----------  ----------  ----------------  ---------

Balance - December 31, 1996                  50       32,604     64,597            (3,103)    94,148 
Dividends on preferred stock
 of Coastal Banc ssb                         --           --     (2,588)               --     (2,588)
Dividends on Common Stock                    --           --     (2,292)               --     (2,292)
Exercise of stock options
 (Note 19)                                   --          582         --                --        582 
Change in net unrealized holding
 gain (loss) on securities available-
 for-sale (Note 5)                           --           --         --               829        829 
Net income for 1997                          --           --     14,151                --     14,151 
                                        -------  -----------  ----------  ----------------  ---------
Balance - December 31, 1997             $    50  $    33,186  $  73,868   $        (2,274)  $104,830 
                                        =======  ===========  ==========  ================  =========

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                             COASTAL BANCORP, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                          YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                         (IN THOUSANDS)

                                                                 1997         1996        1995 
                                                              ----------  ----------  ----------
<S>                                                                <C>         <C>         <C>
Cash flows from operating activities:
 Net income before preferred stock dividends                  $  14,151   $   9,539   $  11,130 
 Adjustments to reconcile net income to net cash provided
   by operating activities:
 Depreciation and amortization of property and equipment,
   mortgage servicing rights and prepaid expenses
   and other assets                                               7,485       6,098       5,191 
 Net premium amortization (discount accretion)                    3,025       1,146      (2,236)
 Provision for loan losses                                        1,800       1,925       1,664 
 Amortization of goodwill                                         1,840       1,784       1,273 
 Originations and purchases of mortgage loans held for sale      (8,063)    (19,739)     (8,812)
 Sales of mortgage loans held for sale                            8,361      20,158       8,268 
 (Gain) loss on sales of mortgage-backed securities
   available-for-sale                                              (237)          4         (81)
 Gain on sale of branch office                                       --        (521)         -- 
 Decrease (increase) in:
   Accrued interest receivable                                     (123)        853      (4,852)
   Other, net                                                     9,668      (3,024)      6,003 
 Stock dividends from the FHLB                                   (1,287)     (1,288)     (1,318)
                                                                -------     --------    --------
   Net cash provided by operating activities                     36,620      16,935      16,230 
                                                                -------     --------    --------

Cash flows from investing activities:
 Purchases of mortgage-backed securities held-to-maturity       (56,136)         --     (52,741)
 Purchase of U.S. Treasury security available-for-sale               --         (11)         -- 
 Principal repayments on mortgage-backed securities
 held-to-maturity                                                55,549      50,616       35,742
 Principal repayments on mortgage-backed securities
   available-for-sale                                               627         879         103 
 Proceeds from maturity of U.S. Treasury security
   available-for-sale                                                11       4,000          -- 
 Proceeds from sales of mortgage-backed securities
   available-for-sale                                            11,545         860      72,379 
 Purchases of loans receivable                                 (135,202)   (190,612)   (416,569)
 Net decrease in loans receivable                                94,670      53,678       6,623 
 Purchases of property and equipment, net                        (9,825)     (4,273)     (3,579)
 Purchase of FHLB stock                                          (9,543)     (7,924)     (2,984)
 Proceeds from sales of FHLB stock                                9,000       5,000       3,245 
 Capitalization of mortgage servicing rights                       (116)         --          -- 
 Cash and cash equivalents received in business combination
   transactions, net of disposition transaction in 1996          52,093      11,652      34,311 
                                                                -------     --------    --------
   Net cash provided (used) by investing activities              12,673     (76,135)   (323,470)
                                                                -------     --------    --------

</TABLE>

See  accompanying  notes  to  Consolidated  Financial  Statements.


<TABLE>
<CAPTION>

                                 COASTAL BANCORP, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                                             (IN THOUSANDS)

                                                                   1997           1996          1995 
                                                              -------------  ------------  ------------
<S>                                                                <C>            <C>           <C>
Cash flows from financing activities:
 Net decrease (increase) in savings deposits                  $      9,539   $    12,497   $   (10,336)
 Advances from the FHLB                                          3,560,603     3,629,022       746,899 
 Principal payments on advances from the FHLB                   (3,429,848)   (3,531,488)     (820,749)
 Proceeds from securities sold under agreements
   to repurchase and
   federal funds purchased                                       9,834,639     9,276,713     8,648,728 
 Repayments of securities sold under agreements
   to repurchase and
   federal funds purchased                                     (10,009,866)   (9,303,558)   (8,300,275)
 Proceeds from issuance of Senior Notes payable, net                    --            --        47,635 
 Exercise of stock options for purchase of common stock, net           582           112            58 
 Net increase (decrease) in advances from borrowers
   for taxes and Insurance                                            (701)       (1,834)        3,109 
 Dividends paid                                                     (4,880)       (4,573)       (4,173)
                                                              ------------     ---------   ------------
   Net cash provided (used) by financing activities                (39,932)       76,891       310,896 
                                                              ------------     ---------   ------------

   Net increase in cash and cash equivalents                         9,361        17,691         3,656 
 Cash and cash equivalents at beginning of year                     27,735        10,044         6,388 
                                                              ------------     ---------   ------------
 Cash and cash equivalents at end of year                     $     37,096   $    27,735   $    10,044 
                                                              ============   ===========   ============

 Supplemental schedule of cash flows--interest paid           $    142,532   $   139,926   $   123,030 
                                                              ============   ===========   ============

 Supplemental schedule of noncash investing and
   financing activities:
   Transfer of mortgage-backed securities to available-
   for-sale category                                          $         --   $        --   $   226,591 
                                                              ============   ===========   ============
   Foreclosures of loans receivable                           $      4,226   $     4,363   $     3,394 
                                                              ============   ===========   ============

</TABLE>

See  accompanying  notes  to  Consolidated  Financial  Statements.



                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1997 and 1996

(1)  ORGANIZATION  AND  BACKGROUND

ORGANIZATION
Coastal  Bancorp,  Inc.  was  incorporated  on  March  8,  1994  as a first-tier
subsidiary of Coastal Banc Savings Association (the "Association") in connection
with  the  proposed  reorganization  of the Association into the holding company
form  of  organization.   The reorganization of the Association into the holding
company  form of organization occurred on July 29, 1994.  In addition, effective
July 29, 1994, the Association converted to a Texas-chartered savings bank known
as  Coastal  Banc ssb.  As a result of the reorganization, Coastal Bancorp, Inc.
("Bancorp")  became  the  owner of 100% of the voting stock of Coastal Banc ssb.
The  holders  of the 9.0% Noncumulative Preferred Stock, Series A, of the former
Coastal  Banc  Savings Association now own an equal number of shares of the 9.0%
Noncumulative  Preferred  Stock,  Series  A,  of  Coastal  Banc  ssb.

On November 30, 1996, Coastal Banc Holding Company, Inc. ("HoCo") was created as
a  Delaware unitary savings bank holding company in accordance with the terms of
an agreement and plan of reorganization dated August 19, 1996 (the "Agreement").
Pursuant  to  the terms of the Agreement, Coastal Banc ssb became a wholly-owned
subsidiary  of  HoCo  and  HoCo  became  a  wholly-owned  subsidiary of Bancorp.

The reorganizations were accounted for in a manner similar to that in pooling of
interests  accounting  and all financial statements issued after consummation of
the  reorganization reflect the consolidated operations as if the reorganization
had  taken  place  prior  to  the periods covered by such consolidated financial
statements.

BACKGROUND
Coastal  Banc ssb was acquired by an investor group in 1986 as a vehicle to take
advantage  of  the  failures  and  consolidation in the Texas banking and thrift
industries.  Coastal Banc ssb acquired deposits in transactions with the federal
government  and  other  private institutions as a base for developing an ongoing
thrift  and  banking business.  Coastal Banc ssb's first acquisition was in 1988
under  the  Federal Savings and Loan Insurance Corporation's ("FSLIC") Southwest
Plan,  whereby  the  FSLIC  provided  financial and other forms of assistance in
connection  with  the  acquisition  of insolvent FSLIC-insured institutions (the
"Acquired  Associations").

(2)  SUMMARY  OF SIGNIFICANT  ACCOUNTING  POLICIES  AND  BASIS  OF  PRESENTATION

The  following  significant  accounting  policies, together with those disclosed
elsewhere  in  the  Consolidated  Financial  Statements  or  notes  thereto, are
followed  by  Coastal Bancorp, Inc. and subsidiaries in preparing and presenting
the  consolidated  financial  statements.

BASIS  OF  CONSOLIDATED  FINANCIAL  STATEMENTS
The  consolidated  financial statements include the accounts of Coastal Bancorp,
Inc.,  its  wholly-owned  subsidiary,  HoCo  and  its wholly-owned subsidiaries,
Coastal  Banc ssb and subsidiaries and Coastal Banc Capital Corp. (collectively,
"Coastal").    Coastal  Banc  ssb's  subsidiaries  include CoastalBanc Financial
Corp.,  CBS  Mortgage  Corp. and CBS Asset Corp. (collectively with Coastal Banc
ssb,  the  "Bank").  All significant intercompany balances and transactions have
been  eliminated  in  consolidation.

Certain  amounts  within  the accompanying consolidated financial statements and
the  related  notes  have  been  reclassified  to  conform  to  the current year
presentation.    Such  reclassifications  had  no  effect on net income or total
stockholders'  equity.

USE  OF  ESTIMATES
The  preparation  of  the  consolidated  financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
disclosure  of contingent assets and liabilities at the date of the consolidated
financial  statements and the reported amounts of income and expenses during the
reporting  period.    Actual  results  may  differ  from  those  estimates.

CASH  AND  CASH  EQUIVALENTS
Cash  and  cash  equivalents  are  comprised  primarily  of  cash  on  hand  and
interest-earning  and  noninterest-earning  deposits  in  other  banks.

INVESTMENT  AND  MORTGAGE-BACKED  SECURITIES
Coastal  classifies securities as either held-to-maturity or available-for-sale.
Securities  are  classified  as  held-to-maturity  when Coastal has the positive
intent  and  ability  to  hold  such  securities  to  maturity.    Securities
held-to-maturity  are recorded at amortized cost.  Securities available-for-sale
are  securities other than those held-to-maturity or trading and are recorded at
fair value, with unrealized gains and losses excluded from earnings and recorded
as  a  separate  component  of  stockholders'  equity.

On  January  1, 1994, Coastal adopted the Financial Accounting Standards Board's
Statement  of  Financial  Accounting  Standards  No.  115  ("Statement  115"),
"Accounting for Certain Investments in Debt and Equity Securities."  In November
1995,  the  Financial  Accounting  Standards Board issued the Special Report, "A
Guide  to  Implementation of Statement 115 on Accounting for Certain Investments
in  Debt  and Equity Securities."  Provisions in this Special Report granted all
entities  a  one-time  opportunity,  until  no  later than December 31, 1995, to
reassess  the  appropriateness of the classifications of all securities held and
to  account for any resulting reclassifications at fair value in accordance with
Statement  115.    The  provisions  of the Special Report also directed that any
reclassifications  as a result of this one-time reassessment would not call into
question the intent to hold other debt securities to maturity in the future.  In
accordance  with this Special Report, on November 20, 1995, Coastal reclassified
approximately  $226,591,000  of  mortgage-backed  securities  to  the
available-for-sale  category  and  recorded  an unrealized loss of approximately
$1,556,000  in  stockholders'  equity.

Realized  gains  and  losses  on securities classified as available-for-sale are
recorded in earnings in the year of sale based on the specific identification of
each  individual  security  sold.

Coastal records investment and mortgage-backed securities transactions as of the
settlement  date.  There were no pending transactions as of December 31, 1997 or
1996.

Premiums  and  discounts  on  investment  and  mortgage-backed  securities  are
amortized  or  accreted  as  a  yield adjustment over the life of the securities
using  the  interest  method,  with the amortization or accretion being adjusted
when  the  prepayments  are  received.

TRADING  ACCOUNT  SECURITIES
Trading  account  securities  are recorded at market value; however, at December
31,  1997  and  1996,  there  were no trading account securities held.  Gains or
losses  on the revaluation or sale of trading account securities are included in
noninterest  income.

LOANS  RECEIVABLE
Loans  receivable  are  stated at the principal balance outstanding adjusted for
loans in process, the allowance for loan losses, unearned interest and loan fees
and  the  premium  to  record  purchased loans.  Interest on loans receivable is
primarily  computed on the outstanding principal balance at appropriate rates of
interest.    The  net premium to record purchased loans is being amortized using
the  level  yield  method,  adjusted  for  prepayments.

It  is  the general policy of Coastal to stop accruing interest income and place
the  recognition  of  interest  on  a cash basis when any loan is past due as to
principal  and interest more than 90 days.  When a loan is placed on nonaccrual,
any  interest  previously  accrued but not collected is reversed against current
interest  income.

Coastal  adopted Statement of Financial Accounting Standards No. 114 ("Statement
114"),  "Accounting  by  Creditors  for  Impairment  of  a  Loan," as amended by
Statement  118,  effective  January  1,  1995.    Under Statement 114, a loan is
impaired  when  it  is  "probable" that a creditor will be unable to collect all
amounts  due  (i.e.,  both  principal and interest) according to the contractual
terms  of  the  loan  agreement.  Statement 114 requires that the measurement of
impaired  loans  be  based  on (i) the present value of the expected future cash
flows  discounted  at  the  loan's  effective  interest  rate,  (ii)  the loan's
observable  market  price,  or  (iii)  the  fair value of the loan's collateral.
Statement  114  does  not  apply  to large groups of smaller balance homogeneous
loans  that  are  collectively  evaluated  for impairment.  Coastal collectively
reviews  all  first-lien  residential  loans  under  $500,000 as a group and all
consumer  and  other  loans as a group for impairment, excluding loans for which
foreclosure is probable.  The adoption of Statement 114, as amended by Statement
118,  had  no  material impact on Coastal's consolidated financial statements as
Coastal's  existing policy of measuring loan impairment was generally consistent
with  methods  prescribed  in  these  standards.

Coastal considers a loan to be impaired when, based upon current information and
events,  it  is  probable that Coastal will be unable to collect all amounts due
according  to  the  contractual  terms  of  the  loan agreement.  In determining
impairment,  Coastal  considers, among other things, large non-homogeneous loans
which  may  include  nonaccrual  loans  or  troubled  debt  restructurings,  and
performing  loans which exhibit, among other characteristics, high loan-to-value
ratios,  low  debt  coverage  ratios,  or  indications  that  the  borrowers are
experiencing  increased  levels  of  financial  difficulty.    Coastal bases the
measurements  of  collateral-dependent impaired loans on the fair value of their
collateral.  The amount by which the recorded investment in the loan exceeds the
measure  of  the fair value of the collateral securing the loan is recognized by
recording  a  valuation  allowance.

<PAGE>

ALLOWANCE  FOR  LOAN  LOSSES
The allowance for loan losses is maintained at a level determined to be adequate
by  management to absorb future losses on loans receivable.  The adequacy of the
allowance  is based on management's evaluation of the loans receivable portfolio
and  its  consideration  of  such  factors  as  historical  loss  experience,
identification  of  adverse situations which may affect the ability of borrowers
to repay, assessment of current and future economic conditions and the estimated
net  realizable  value  of  the  underlying  collateral.   While management uses
available  information  to estimate losses on loans receivable, future additions
to  the  allowance may be necessary based on changes in economic conditions.  In
addition,  various regulatory agencies, as an integral part of their examination
process, periodically review Coastal's allowance for loan losses.  Such agencies
may  require  Coastal  to  recognize  additions  to the allowance based on their
judgments  about information available to them at the time of their examination.

SALES  OF  LOANS  RECEIVABLE
Loans  are  sold  periodically  to  institutional  and  private investors.  When
Coastal sells whole mortgage loans, gains or losses on such sales are recognized
at  the  time  of  sale  and  are determined by the difference between net sales
proceeds  and  the  unpaid principal balance of the loans sold, adjusted for any
yield  differential,  servicing  fees  and  servicing costs applicable to future
years.    Coastal continues to collect loan payments and provide normal services
to  the  borrower  under  loan  servicing agreements with the investors on those
loans  sold  with  servicing  retained.    The investor is paid its share of the
principal  and  interest  collected,  net  of a service fee retained by Coastal.

MORTGAGE  LOANS  HELD  FOR  SALE
Mortgage  loans  held  for  sale  are  carried at the lower of cost or market as
determined  by outstanding commitments from investors or current investor market
yield  requirements  calculated  on  the  aggregate  loan  basis.

LOAN  FEES
Loan origination and commitment fees, as well as certain direct loan origination
and  commitment  costs, are deferred and amortized into income over the lives of
the  related  loans using the level yield method.  When the loans receivable are
sold,  the  remaining  loan  fees  are recognized as income in the period of the
sale.

STOCK  IN  THE  FEDERAL  HOME  LOAN  BANK  OF  DALLAS
As  a  member  of  the FHLB System, Coastal is required to purchase and maintain
stock  in  the  FHLB  in  an  amount equal to the greater of 1% of the aggregate
unpaid balance of loans and securities secured by single family and multi-family
properties,  .3%  of  total assets, or 5% of total FHLB advances.  FHLB stock is
redeemable  at  par  value  at  the  discretion  of  the  FHLB.

GOODWILL
Goodwill  resulting from acquisitions is amortized on a straight-line basis over
the estimated period of benefit, not to exceed fifteen years.  Coastal evaluates
the  recorded  goodwill  amounts for impairment on an ongoing basis to determine
whether  events  and  circumstances  have developed that warrant revision of the
estimated  benefit  periods.

PROPERTY  AND  EQUIPMENT
Property  and  equipment  are recorded at cost less accumulated depreciation and
amortization.    Coastal  computes  depreciation  and  amortization  on  a
straight-line  basis  over the estimated useful lives (15-30 years for buildings
and  3-10  years  for  furniture  and  equipment)  of  the  respective  assets.
Leasehold improvements are amortized on a straight-line basis over the lesser of
the  terms  of the respective lease or the estimated useful lives of the related
assets.

MORTGAGE  SERVICING  RIGHTS
Coastal  adopted  the  Financial  Accounting Standards Board's Statement No. 122
("Statement  122"), "Accounting for Mortgage Servicing Rights -- an amendment of
FASB  Statement No. 65" effective January 1, 1996.  Statement 122 eliminated the
accounting  distinction between rights to service mortgage loans for others that
are  acquired  through  loan  origination  activities and those acquired through
purchase transactions.  On January 1, 1997, Coastal adopted Financial Accounting
Standards  Board's Statement No. 125, "Accounting for Transfers and Servicing of
Financial  Assets and Extinguishment of Liabilities," which supersedes Statement
122, and requires, among other things, that the book value of loans be allocated
between  mortgage servicing rights and the related loans at the time of the loan
sale  or  securitization,  if  servicing  is  retained.

The  amount  capitalized as mortgage servicing rights is amortized in proportion
to,  and  over  the  period  of,  estimated  net  servicing  revenues.   Coastal
periodically  evaluates  the carrying value of the mortgage servicing rights for
impairment  based on the fair value of those rights.  The fair value of mortgage
servicing rights is determined by discounting the present value of the estimated
future  net servicing revenues using a discount rate commensurate with the risks
involved  based  on  management's  best  estimate of remaining loan lives.  This
method  of valuation incorporates assumptions that market participants would use
in  their estimate of future servicing income and expense, including assumptions
about  prepayments,  defaults  and  interest  rates.   For purposes of measuring
impairment, the loans underlying the mortgage servicing rights are stratified on
the  basis  of  interest  rate  and  type  (fixed or adjustable).  The amount of
impairment  is  the  amount  by  which  the  mortgage  servicing  rights, net of
accumulated  amortization,  exceed  their  fair value by strata.  Impairment, if
any,  is  recognized  through  a  valuation  allowance  and  a charge to current
operations.

REAL  ESTATE  OWNED
Real  estate  owned  represents  real estate acquired through foreclosure and is
initially  recorded  at  the  lower of unpaid principal balance adjusted for any
acquisition  premiums  or  discounts  remaining  less  any  applicable valuation
allowance  or  estimated fair value less estimated selling costs.  Subsequent to
foreclosure,  real estate owned is carried at the lower of the new cost basis or
fair  value,  with  any  further  declines  in fair value charged to operations.

FEDERAL  INCOME  TAXES
Bancorp  files  a consolidated federal income tax return with HoCo, Coastal Banc
Capital  Corp.,  the  Bank  and  all  of  the  Bank's wholly-owned subsidiaries.
Federal income taxes are allocated on the basis of each entity's contribution to
consolidated  taxable  income.

Income  taxes  are accounted for under the asset and liability method.  Deferred
tax  assets  and  liabilities  are  recognized  for  the future tax consequences
attributable  to differences between the financial statement carrying amounts of
existing  assets  and  liabilities and their respective tax bases.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities of a
change  in  tax  rates  is  recognized in income in the period that includes the
enactment  date.

OFF-BALANCE  SHEET  INSTRUMENTS  USED  FOR  INTEREST  RATE  RISK  MANAGEMENT
Coastal  enters  into  interest  rate  swap  and  cap  agreements  to manage its
sensitivity  to  interest rate risk.  For interest rate risk management swap and
cap agreements, interest income or interest expense is accrued over the terms of
the  agreements  and  transaction  fees  are  deferred and amortized to interest
income or expense over the terms of the agreements.  The fair values of interest
rate  swap  and  cap  agreements  used for interest rate risk management are not
recognized  in  the  consolidated  financial  statements.

STOCK  OPTIONS
Prior  to January 1, 1996, Coastal accounted for its stock compensation programs
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense would be recorded on the date of grant only if the
current  market  price  of the underlying stock exceeded the exercise price.  On
January  1,  1996,  Coastal  adopted  the Financial Accounting Standards Board's
Statement  No. 123 ("Statement 123"), "Accounting for Stock-Based Compensation,"
which  permits entities to recognize as expense over the vesting period the fair
value  on the date of grant of all stock-based awards.  Alternatively, Statement
123  also allows entities to continue to apply the provisions of APB Opinion No.
25 and provide pro forma net income and pro forma earnings per share disclosures
for  employee  stock  option  grants  made  in  1995  and future years as if the
fair-value  based method defined in Statement 123 had been applied.  Coastal has
elected  to  continue  to apply the provisions of APB Opinion No. 25 and provide
the  pro  forma  disclosure  provisions  of  Statement  123.

EARNINGS  PER  SHARE
Statement  of  Financial  Accounting  Standards  No.  128,  "Earnings per Share"
("Statement  128")  was  issued  in  February  1997.   Statement 128 establishes
standards  for  computing and presenting earnings per share ("EPS") and replaces
the presentation of primary EPS with a presentation of basic EPS.  Statement 128
also  requires  dual  presentation  of  basic  and diluted EPS for entities with
complex  capital  structures  as  well  as  a  reconciliation  of  the basic EPS
computation  to  the  diluted  EPS  computation.  Statement 128 is effective for
financial  statements  issued  for  periods  ending  after  December  15,  1997,
including  interim periods.  Coastal adopted Statement 128 in 1997, accordingly,
all  prior  period EPS data presented in the accompanying consolidated financial
statements  has  been  restated to conform to the requirements of Statement 128.

Basic EPS is calculated by dividing net income available to common stockholders,
by the weighted average number of common shares outstanding.  The computation of
diluted  EPS  assumes  the  issuance of common shares for all dilutive potential
common  shares  outstanding during the reporting period.  The dilutive effect of
stock  options  are  considered  in earnings per share calculations if dilutive,
using  the  treasury  stock  method.

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
For purposes of reporting cash flows, cash and cash equivalents include cash and
amounts  due  from  depository  institutions.

RECENT  ACCOUNTING  PRONOUNCEMENTS
Statement  of  Financial  Accounting  Standards  No.  127,  "Deferral of Certain
Provisions  of  FASB  Statement  No.  125,"  requires that certain provisions of
Statement  of  Financial  Accounting Standards No. 125 ("Statement 125") are not
effective  until  January  1,  1998.   The deferred provisions relate to secured
borrowings and collateral for all transactions and transfers of financial assets
for  repurchase  agreements,  dollar  rolls,  securities  lending,  and  similar
transactions.    Implementation  of the deferred portion of Statement 125 should
have  no  material  effect  on  Coastal's  Consolidated  Financial  Statements.

Statement  of  Financial  Accounting Standards No. 130, "Reporting Comprehensive
Income"  ("Statement  130") requires that all components of comprehensive income
and  total  comprehensive  income  be reported on one of the following:  (1) the
statement  of  operations,  (2)  the statement of stockholders' equity, or (3) a
separate  statement  of comprehensive income.  Comprehensive income is comprised
of  net  income  and  all  changes  to stockholders' equity, except those due to
investments  by  owners (changes in paid-in capital) and distributions to owners
(dividends).    Statement  130  is  effective  for  fiscal years beginning after
December  15, 1997.  The implementation of Statement 130 should have no material
impact  on  Coastal's  Consolidated  Financial  Statements.

Statement  of Financial Accounting Standards No. 131, "Disclosure About Segments
of  an  Enterprise  and  Related  Information" ("Statement 131") requires public
companies  to report certain information about their operating segments in their
annual  financial  statements  and quarterly reports issued to shareholders.  It
also  requires  public  companies  to  report  certain  information  about their
products  and  services,  the  geographic areas in which they operate, and their
major  customers.    Statement 131 is effective for fiscal years beginning after
December  15,  1997.    Implementation  of Statement 131 should have no material
effect  on  Coastal's  Consolidated  Financial  Statements.

(3)  ACQUISITION  AND  DISPOSITION  TRANSACTIONS 

PORT ARTHUR BRANCH  ACQUISITION
On  June  21,  1997,  Coastal consummated the purchase of the Port Arthur, Texas
branch  of  Wells  Fargo  Bank  (Texas).    Summarized  below are the assets and
liabilities  recorded  at  fair  value  at  the  date  of  the  acquisition  (in
thousands):

<TABLE>
<CAPTION>
<S>                                                 <C>  <C>
Cash                                                 $52,093
Goodwill                                               1,961
Property and equipment                                   693
                                                     -------
  Total assets                                       $54,747
                                                     =======

Deposits                                              54,563
Accrued interest payable and other liabilities           184
                                                     -------
  Total liabilities                                  $54,747
                                                     =======
</TABLE>


BRANCH  SWAP
On  September  5,  1996,  Coastal  consummated  the  exchange  of certain branch
locations with Compass Bank.  Coastal sold its three San Antonio branches having
deposits  of  approximately  $53.8  million  to  Compass  Bank and purchased the
Compass  Bay  City  branch  having  deposits  of  approximately  $79.8  million.

Summarized  below  are  the net assets and liabilities recorded at fair value at
the  date  of  the  swap  (in  thousands):

<TABLE>
<CAPTION>
<S>                             <C>  <C>
Cash and cash equivalents       $25,274 
Loans receivable                  1,173 
Goodwill                             72 
Property and equipment             (103)
Other assets                          5 
                                --------
                                $26,421 
                                ========

Deposits                         25,992 
Other liabilities                   429 
                                --------
                                $26,421 
                                ========
</TABLE>


<PAGE>
SAN  ANGELO  BRANCH  SALE
On  May 24, 1996, Coastal consummated the sale of its San Angelo location, which
had  approximately  $14.9  million  in  deposits,  to  First State Bank, N.A., a
subsidiary of Independent Bankshares, Inc., headquartered in Abilene, Texas.  As
a result of this sale, Coastal recorded a $521,000 gain before applicable income
taxes.    Coastal  acquired this location in the 1994 acquisition of Texas Trust
Savings  Bank,  FSB.  In connection with the sale of this branch office, Coastal
recorded  the  following  reductions  of  assets and liabilities (in thousands):

<TABLE>
<CAPTION>
<S>                                                      <C>  <C>
Savings deposits sold                                     $14,850
Accrued interest payable and other liabilities sold            69
Loans receivable sold                                         155
Property and equipment sold                                   438
Reduction of goodwill                                         179
</TABLE>


TEXAS  CAPITAL  BANCSHARES,  INC.  ACQUISITION
On  November  1, 1995, Coastal consummated the acquisition of all the issued and
outstanding  common stock of Texas Capital Bancshares, Inc. for a purchase price
of approximately $21.1 million.  Summarized below are the assets and liabilities
recorded  at  fair  value  at  the  date  of  the  acquisition  (in  thousands):

<TABLE>
<CAPTION>
<S>                                                    <C>  <C>
Cash and cash equivalents, net of purchase price       $ 34,311
Loans receivable                                        103,319
Goodwill                                                  9,769
U.S. Treasury security available-for-sale                 3,993
Property and equipment                                    2,782
Real estate owned                                         2,430
Other assets                                              2,471
                                                       --------

  Total assets                                         $159,075
                                                       ========

Deposits                                                157,209
Other liabilities                                         1,866
                                                       --------

  Total liabilities                                    $159,075
                                                       ========
</TABLE>

The  acquisitions  described  above  have  been  accounted for as purchases and,
accordingly,  all  assets and liabilities acquired were adjusted to and recorded
at  estimated  fair  values  as  of  the  acquisition  dates.

The  transactions described above are not material to the consolidated financial
position or results of operations of Coastal; therefore pro forma information is
not  presented.


<PAGE>

(4)  SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND FEDERAL FUNDS SOLD

An  analysis  of  securities  purchased  under agreements to resell ("repurchase
agreements")  and  federal funds sold for the year ended December 31, 1997 is as
follows  (dollars  in  thousands):

<TABLE>
<CAPTION>
<S>                                              <C>  <C>
Repurchase agreements:
  Balance outstanding at December 31, 1997       $    -- 
  Maximum outstanding at any month-end                -- 
  Average balance outstanding                      1,973 
  Average interest rate                             6.89%

Federal funds sold:
  Balance outstanding at December 31, 1997       $    -- 
  Maximum outstanding at any month-end            10,500 
  Average balance outstanding                      2,051 
  Average interest rate                             5.61%
</TABLE>

The  securities underlying the repurchase agreements are delivered by entry into
Coastal's  account  maintained  at a third-party custodian designated by Coastal
under  a  written  custodial  agreement  that  explicitly  recognizes  Coastal's
interest  in  the  securities.

There  were  no  repurchase  agreements or federal funds sold outstanding during
1996  or  1995.

(5)  MORTGAGE-BACKED  SECURITIES

Mortgage-backed securities at December 31, 1997 are as  follows  (in thousands):

<TABLE>
<CAPTION>
                                                     Gross             Gross      
                                 Amortized         Unrealized        Unrealized          Market
                                   Cost              Gains             Losses             Value 
                                 ---------        ----------       ------------       ----------
<S>                              <C>  <C>          <C>  <C>          <C>  <C>           <C>  <C>
Held-to-maturity:
REMICS - Agency                $   950,689       $     5,022       $   (20,478)       $   935,233
REMICS - Non-agency                279,131               701            (5,610)           274,222
FNMA certificates                   71,887               144              (683)            71,348
GNMA certificates                   28,808               566                --             29,374
Non-agency securities               14,555               239               (23)            14,771
Interest-only securities                20                --                --                 20
                               -----------       -----------       ------------       -----------
                               $ 1,345,090       $     6,672       $   (26,794)       $ 1,324,968
                               ===========       ===========       ============       ===========


<S>                              <C>  <C>          <C>  <C>    <C>  <C>        <C>  <C>
Available-for-sale:
REMICS - Agency                  $ 171,167        $      579       $    (4,044)       $   167,702
REMICS - Non-agency                  2,328                --               (33)             2,295
                               -----------       -----------       ------------       -----------
                                 $ 173,495        $      579       $    (4,077)       $   169,997
                               ===========       ===========       ============      ============
</TABLE>


<PAGE>

Mortgage-backed securities at December 31, 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                     Gross             Gross      
                                 Amortized         Unrealized        Unrealized          Market
                                   Cost              Gains             Losses             Value 
                                 ---------       ------------       ------------       ----------
<S>                               <C>  <C>          <C>  <C>          <C>  <C>           <C>  <C>
Held-to-maturity:
REMICS - Agency                $   932,488       $     4,730       $   (31,142)       $   906,076
REMICS - Non-agency                278,612               834            (9,958)           269,488
FNMA certificates                   79,628                72            (1,072)            78,628
GNMA certificates                   34,031               282                --             34,313
Non-agency securities               19,790               363               (95)            20,058
Interest-only securities                38                --                (3)                35
                               -----------       -----------       ------------       -----------
                               $ 1,344,587       $     6,281       $   (42,270)       $ 1,308,598
                               ===========       ===========       ============       ===========


<S>                               <C>  <C>         <C>  <C>           <C>  <C>           <C>  <C>
Available-for-sale:
REMICS - Agency                  $ 182,467           $ 1,207          $ (5,946)         $ 177,728
REMICS - Non-agency                  2,962                --               (34)             2,928
                               -----------       -----------       ------------       -----------
                                 $ 185,429           $ 1,207          $ (5,980)         $ 180,656
                               ===========       ===========       ============       ===========
</TABLE>


As discussed in Note 2 to the Consolidated Financial Statements, pursuant to the
Financial  Accounting  Standards  Board's  Special  Report,  "A  Guide  to
Implementation  of  Statement  115 on Accounting for Certain Investments in Debt
and  Equity  Securities,"  Coastal  reclassified,  in  1995,  approximately
$226,591,000  of  mortgage-backed  securities to the available-for-sale category
and  recorded  an  unrealized  loss of approximately $1,556,000 in stockholders'
equity.    Proceeds  from sales of mortgage-backed securities available-for-sale
during  1997,    1996  and  1995  were  approximately  $11,545,000, $860,000 and
$72,379,000,  respectively.  Gross gains of approximately $237,000 were realized
on these sales in 1997 and gross losses of approximately $4,000 were realized on
these sales in 1996.  Gross gains and gross losses of approximately $209,000 and
$128,000,  respectively,  were  realized  on  these  sales  in  1995.


<PAGE>
(6)  LOANS  RECEIVABLE

Loans receivable at December  31, 1997 and 1996 are  as  follows (in thousands):

<TABLE>
<CAPTION>
                                                                    1997               1996 
                                                             ------------       ------------
<S>                                                             <C>  <C>           <C>  <C>
Real estate mortgage loans:
 First lien mortgage, primarily residential                  $   689,767        $   791,337 
 Multifamily                                                     131,454            139,486 
 Residential construction                                         83,359             77,146 
 Acquisition and development                                      31,619             26,132 
 Commercial                                                      181,315            119,004 
 Commercial construction                                          14,506              3,963 
Commercial loans, secured by residential mortgage
 loans held for sale                                              98,679             53,573 
Commercial loans, secured by mortgage servicing rights            32,685             21,380 
Commercial, financial and industrial                              30,877             21,965 
Loans secured by savings deposits                                  8,695              8,849 
Consumer and other loans                                          15,030             14,400 
                                                             ------------       ------------
                                                               1,317,986          1,277,235 

Loans in process                                                 (47,893)           (38,742)
Allowance for loan losses                                         (7,412)            (6,880)
Unearned interest and loan fees                                   (2,926)            (2,344)
Premium to record purchased loans, net                             1,680                479 
                                                             ------------       ------------

                                                             $ 1,261,435        $ 1,229,748 
                                                             ============       ============

Weighted average yield                                              8.30%              8.23%
                                                             ============       ============

</TABLE>


In  the  normal  course  of  business,  Coastal enters into various transactions
which,  in  accordance  with  generally  accepted accounting principles, are not
included  on  the  balance  sheets.    These  transactions  are  referred  to as
"off-balance sheet commitments."  Coastal enters into these transactions to meet
the financing needs of its customers.  These transactions include commitments to
extend  credit  which  involve  elements of credit risk in excess of the amounts
recognized  in the balance sheets.  Coastal minimizes its exposure to loss under
these  commitments  by  subjecting  them  to  credit  approval  and  monitoring
procedures.

Coastal  enters  into  contractual  commitments  to extend credit, normally with
fixed  expiration  dates  or  termination  clauses,  at  specified rates and for
specific  purposes.   Customers use credit commitments to ensure that funds will
be  available  for  working  capital  purposes,  for capital expenditures and to
ensure  access to funds under specified terms and conditions.  Substantially all
of  Coastal's  commitments  to  extend  credit  are  contingent  upon  customers
maintaining  specific  credit standards at the time of loan funding.  Management
assesses the credit risk associated with certain commitments to extend credit in
determining  the  level  of  the  allowance  for  loan  losses.

At  December  31,  1997,  Coastal  had  outstanding  commitments to originate or
purchase  approximately  $50,174,000  of first lien mortgage and other loans and
had  commitments  under  lines of credit to originate primarily construction and
other  loans  of approximately $119,308,000.  In addition, at December 31, 1997,
Coastal  had  letters  of  credit  of  approximately  $1,711,000  outstanding.

A  portion  of  Coastal's  first  lien  mortgage  loan  portfolio  is pledged as
collateral  to  secure  advances  from  the  FHLB  (Note  11).

Included  in  loans  receivable at December 31, 1997 and 1996 are loans totaling
approximately $17,351,000 and $12,839,000, respectively, which are on nonaccrual
(loans  which  are  90  days  or  more  delinquent or on which the collection of
interest  is  considered  doubtful).   During the years ended December 31, 1997,
1996  and  1995,  Coastal  recognized  interest income on these nonaccrual loans
(outstanding  as  of  the  period  end) of approximately $827,000, $507,000, and
$303,000,  respectively,  whereas approximately $925,000, $816,000 and $499,000,
respectively,  in  additional  interest  income would have been recorded if such
loans  had  been  performing  in  accordance  with  their  original  terms.

At  December  31, 1997 and 1996, the carrying value of loans that are considered
to  be  impaired  under  Statement  114  totaled  approximately  $2,029,000  and
$725,000,  respectively  (all  of  which  are  on  nonaccrual)  and  the related
allowance  for  loan  losses  on  those  impaired  loans  totaled $1,138,000 and
$524,000,  respectively.    The  average  recorded  investment in impaired loans
during  the  years  ended  December  31,  1997,  1996 and 1995 was approximately
$897,000, $846,000 and $311,000, respectively.  For the years ended December 31,
1997,  1996  and  1995,  Coastal  did  not  recognize  interest  income on loans
considered  impaired.

An  analysis  of  activity  in  the  allowance for loan losses is as follows (in
thousands):

<TABLE>
<CAPTION>

                                              Years ended December 31,
                                          1997          1996          1995 
                                       --------       -------       -------
<S>                                    <C>  <C>       <C>  <C>      <C>  <C>
Balance, beginning of year             $ 6,880        $5,703        $2,158 
Provision for loan losses                1,800         1,925         1,664 
Charge-offs, net of recoveries          (1,268)         (748)         (387)
Acquisition allowance adjustment            --            --         2,268 
                                       --------       -------       -------

Balance, end of year                   $ 7,412        $6,880        $5,703 
                                       ========       =======       =======
</TABLE>


The adoption of Statement 114, as amended by Statement 118, effective January 1,
1995,  did  not result in additional provisions for loan losses during the years
ended  December  31,  1997,  1996  or  1995.

<PAGE>
(7)  ACCRUED  INTEREST  RECEIVABLE

Accrued  interest  receivable  at  December  31, 1997 and 1996 is as follows (in
thousands):

<TABLE>
<CAPTION>
                                          1997          1996
                                         -------       -------
<S>                                     <C>  <C>      <C>  <C>
Mortgage-backed securities               $ 6,684       $ 6,606
Loans receivable                           8,124         8,084
Federal fund sold, certificates of
  deposits and other investments               5            --
                                         -------       -------

                                         $14,813       $14,690
                                         =======       =======
</TABLE>


(8)  MORTGAGE  SERVICING  RIGHTS

Coastal  services  for  others  loans  receivable  which are not included in the
consolidated  financial  statements.    The  total  amounts  of  such loans were
approximately $675,737,000, $776,694,000, and $900,702,000 at December 31, 1997,
1996  and  1995,  respectively.  At December 31, 1997 and 1996, Coastal serviced
approximately  $2,177,000  and  $2,750,000  of  loans  sold  with  recourse,
respectively.

An  analysis  of  activity  of  mortgage  servicing  rights  for the years ended
December  31,  1997,  1996  and  1995  is  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                                           Years  ended  December  31,
                                       1997            1996             1995
                                     --------        --------        ---------
<S>                                  <C>  <C>        <C>  <C>        <C>  <C>
Balance at beginning of period       $  6,810        $  8,323        $  9,925 
Additions                                 116              --              -- 
Amortization                           (1,273)         (1,513)         (1,597)
Adjustments                                --              --              (5)
                                     ---------       ---------       ---------
Balance at end of period             $  5,653        $  6,810        $  8,323 
                                     =========       =========       =========
</TABLE>


At  December 31, 1997, the estimated fair value of Coastal's recognized mortgage
servicing  rights  was  $7,402,000.

(9)  REAL  ESTATE  OWNED

Included  in  prepaid expenses and other assets is real estate owned at December
31,  1997  and  1996  of  approximately $3,186,000 and $3,161,000, respectively.

<PAGE>
(10)  SAVINGS  DEPOSITS

Savings deposits and the related weighted average interest rates at December 31,
1997  and  1996  are  summarized  as  follows  (dollars  in  thousands):


<TABLE>
<CAPTION>

                                              1997                          1996
                              ----------------------------    ------------------------------
                                Stated Rate       Amount        Stated Rate       Amount
                              ----------------  ------------  ----------------  ------------
<S>                               <C>               <C>           <C>               <C>
Noninterest-bearing checking             0.00%  $   101,782              0.00%  $    85,259 
Interest-bearing checking       1.49  -  2.00        69,972              2.00        56,862 
Savings accounts                2.18  -  2.75        25,555     2.28  -  2.75        22,135 
Money market demand accounts    2.96  -  4.51       165,986     3.15  -  4.51       151,046 
                                --------------  ------------    -------------   ------------

                                                    363,295                         315,302 
                                                ------------                    ------------

Certificate accounts            2.00  -  2.99         5,142     2.00  -  2.99        12,930 
                                3.00  -  3.99         2,763     3.00  -  3.99         1,905 
                                4.00  -  4.99        64,478     4.00  -  4.99        95,087 
                                5.00  -  5.99       834,727     5.00  -  5.99       776,765 
                                6.00  -  6.99        94,405     6.00  -  6.99        91,128 
                                7.00  -  7.99         7,624     7.00  -  7.99        12,964 
                                8.00  -  8.99         1,854     8.00  -  8.99         3,515 
                                9.00  -  9.99           847     9.00  -  9.99         1,171 
                              10.00  -  10.99            --   10.00  -  10.99           249 
                              11.00  -  11.99            --   11.00  -  11.99            17 
                              ---------------   ------------  ---------------       --------
                                                  1,011,840                         995,731 
                                                ------------                        --------
Discount to record savings
 deposits at fair value, net                            (75)                           (198)
                                                ------------                    ------------

                                                $ 1,375,060                     $ 1,310,835 
                                                ============                    ============

Weighted average rate                                  4.67%                           4.67%
                                                ============                    ============
</TABLE>


The  scheduled  maturities  of certificate accounts outstanding at 
December 31, 1997  were  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                        Year Ended December 31,
                        -----------------------            
<S>                           <C>  <C>
 1998                         $   781,455
 1999                             186,734
 2000                              30,028
 2001                               7,292
 2002                               6,153
Subsequent years                      178
                              -----------
                              $ 1,011,840
                              ===========
</TABLE>


The  aggregate  amount of certificate  accounts  with  balances  of  $100,000 or
more  was  approximately $122,593,000, and $109,371,000 at December 31, 1997 and
1996,  respectively.


<PAGE>
(11)  ADVANCES  FROM  THE  FEDERAL  HOME  LOAN  BANK  OF  DALLAS

Advances  from the FHLB for the years ended December 31, 1997, 1996 and 1995 are
summarized  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>
                                              1997              1996             1995
                                            --------          ---------       ---------
<S>                                         <C>   <C>        <C>   <C>        <C>  <C>
Balance outstanding at end of year           $540,475         $409,720        $312,186 
Average balance outstanding                   368,896          387,296         367,895 
Maximum outstanding at any month-end          540,475          491,930         405,016 
Average interest rate during the year            5.78%            5.62%           6.01%
Average interest rate at end of year             5.95%            5.61%           5.88%
</TABLE>


The scheduled maturities and related weighted average interest rates on advances
from  the  FHLB  at  December  31,  1997  are  summarized as follows (dollars in
thousands):

<TABLE>
<CAPTION>
<S>                       <C>                <C>  <C>
Due during the year    Weighted Average
ended December 31,.    Interest Rate           Amount
-------------------  -----------------       --------
 1998                      5.84%             $320,919
 1999                      6.08               120,411
 2000                      6.16                 8,010
 2001                      6.22                 8,656
 2002                      5.89                69,687
 2004                      6.52                 2,854
 2006                      6.91                 3,115
 2007                      6.78                 1,072
 2009                      8.25                 4,469
 2011                      6.78                 1,282
                     -----------------       --------
                           5.95%             $540,475
                     =================       ========
</TABLE>

At  December  31, 1997, Coastal had a $50,000,000 unused line of credit with the
FHLB.    The  FHLB advances are secured by certain first lien mortgage loans and
mortgage-backed  securities  with  an  aggregate carrying value of approximately
$540,500,000  at  December  31,  1997.


<PAGE>
(12)  SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND FEDERAL FUNDS PURCHASED

Securities sold under agreements to repurchase at December 31, 1997 and 1996 are
as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>
                                  Repurchase   Repurchase   Repurchase
                                  Liability    Liability    Liability
                                   Maturing     Maturing     Maturing
                                   in up to     in 30 to     in over
                                   30 days      90 days      90 days        Total
                                 -----------  -----------  -----------  -----------
<S>                                   <C>          <C>          <C>          <C>
December 31, 1997:
-------------------------------                                                    
Book value of mortgage-backed
 securities sold                 $   693,058  $        --  $   157,530  $  850,588 
Market value of mortgage-backed
 securities sold                     682,669           --      154,427     837,096 
Repurchase liability                 647,048           --      144,712     791,760 

Weighted average interest rate                                                6.00%
Weighted average maturity                                                  75 days 

December 31, 1996:
-------------------------------                                                    
Book value of mortgage-backed
 securities sold                 $   755,512  $   138,720  $   156,987  $1,051,219 
Market value of mortgage-backed
 securities sold                     738,861      136,188      152,233   1,027,282 
Repurchase liability                 695,132      127,143      144,712     966,987 

Weighted average interest rate                                                5.55%
Weighted average maturity                                                 126 days 
</TABLE>


Coastal enters into sales of securities under agreements to repurchase ("reverse
repurchase  agreements"). Fixed coupon reverse repurchase agreements are treated
as financing arrangements, and the obligations to repurchase securities sold are
reflected  as a liability in the consolidated statements of financial condition.
The  dollar  amounts of securities underlying the agreements are recorded in the
respective  asset  accounts.

At  December  31, 1997 and 1996, $791,760,000 and $940,320,000, respectively, of
the  agreements  relating  to  the mortgage-backed securities were agreements to
repurchase the same securities, while $26,667,000, of the agreements at December
31,  1996  were  agreements  to  repurchase  substantially identical securities.
Securities  sold  under  agreements to repurchase at December 31, 1997 mature in
1998.    Securities  sold  under agreements to repurchase averaged approximately
$974,136,000,  $930,706,000  and  $752,427,000  during  1997,  1996  and  1995,
respectively,  and the maximum outstanding amounts at any month-end during 1997,
1996  and  1995  were  approximately  $1,035,576,000,  $1,022,085,000  and
$993,832,000,  respectively.

At December 31, 1997, Coastal had amounts of securities at risk under securities
sold  under  agreements to repurchase with three individual counterparties which
exceeded  ten  percent of stockholders' equity.  The amount at risk with Salomon
Brothers  Inc.  was $12,818,000 with an average maturity of 344 days at December
31,  1997.    The amount at risk with Credit Suisse First Boston Corporation was
$16,621,000  with  an  average  maturity  of  27 days at December 31, 1997.  The
amount  at  risk  with  Goldman,  Sachs  &  Co.  was $23,656,000 with an average
maturity  of  8  days  at  December  31,  1997.

Federal  funds  purchased  averaged approximately $161,000 during the year ended
December  31,  1997.    There were no federal funds purchased outstanding at any
month-end  during  1997  and  there  were no federal funds purchased outstanding
during  the  years  ended  December  31,  1996  or  1995.

(13)  SENIOR  NOTES  PAYABLE

On   June   30,   1995, Coastal  issued  $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes are redeemable at Coastal's option, in whole or
in  part,  on  or  after  June  30,  2000,  at par, plus accrued interest to the
redemption  date.    Interest  on  the  Senior  Notes  is  payable  quarterly.

(14)  INTEREST  RATE  RISK  MANAGEMENT

Coastal's    strategy    to    manage    interest   rate   risk  is  to minimize
interest  rate  risk  rather  than  hedge  market  values.    Generally, Coastal
minimizes  its  exposure  to  interest  rate fluctuations by the origination and
purchase  of  adjustable-rate  mortgage  loans,  adjustable-rate mortgage-backed
securities  and  the use of interest rate swap and interest rate cap agreements.
Coastal's  goal  is  to minimize the timing differences between the repricing or
maturity of its assets and the repricing or maturity of its liabilities, without
speculation  of  interest rates, to alter interest rate risk as much as possible
to  withstand  interest rate changes.  Coastal's approach to minimizing interest
rate  risk is through the structure of its balance sheet whereby asset purchases
are  closely  matched  with  funding sources that have similar rate movement and
repricing  terms.

(15)  FINANCIAL  INSTRUMENTS  WITH  OFF-BALANCE  SHEET  RISK

Coastal  is  a party to financial instruments with off-balance sheet risk in the
normal course of business to reduce its own exposure to fluctuations in interest
rates.    These  financial  instruments  include  interest rate swap agreements,
interest  rate  cap  agreements  and  financial  futures  contracts.

INTEREST  RATE  AGREEMENTS
Coastal  is  a  party  to interest rate swap and interest rate cap agreements in
order  to  reduce  its  exposure  to floating interest rates on a portion of its
variable rate assets and borrowings.  At December 31, 1997, Coastal had interest
rate  swap  and  cap  agreements  on  notional  amounts totaling $45,847,000 and
$231,229,000,  respectively.

Coastal  has  entered into interest rate swap agreements with various investment
companies.    The agreements provide for Coastal to make fixed interest payments
and  receive  payments  based  on  a  floating  LIBOR  index, as defined in each
agreement.

The  weighted  average interest rate of payments received on all of the interest
rate  swap  agreements  was  approximately 5.76% in 1997 and 5.56% in 1996.  The
weighted average interest rate of payments made on all of the interest rate swap
agreements  was  approximately 6.51% in 1997 and 6.35% in 1996.  Payments on the
interest  rate swap agreements are based on the notional principal amount of the
agreements; no funds were actually borrowed or are to be repaid. Coastal records
net interest expense or income related to these agreements on a monthly basis in
"interest  expense  on  other  borrowed  money" in the accompanying consolidated
statements  of operations.  The interest expense related to these agreements was
approximately  $431,000,  $593,000 and $24,000, for the years ended December 31,
1997, 1996 and 1995, respectively.  Coastal had pledged approximately $6,405,000
and  $6,123,000  of  mortgage-backed  securities  to  secure  interest rate swap
agreements  at  December  31,  1997  and  1996,  respectively.


<PAGE>
The  terms of the interest rate swap agreements outstanding at December 31, 1997
and  1996  are  summarized  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                                          Floating    Fair Value
                                                            Rate          at
                                                             at         End of
                        Notional      LIBOR       Fixed    End of       Period
Maturity                 Amount       Index        Rate    Period     gain (loss)
---------------------  ---------   -----------    ------  ---------  ------------
                                                                       (unaudited)
<S>                       <C>          <C>          <C>        <C>        <C>
At December 31, 1997:
1998                   $   4,400    Three-month    6.709%     5.875%  $       (28)
1999                      14,600    Three-month    6.926      5.875          (239)
2000                       4,800    Three-month    6.170      5.906           (99)
                           2,520    Three-month    6.000      5.906            -- 
2005                      19,527    Three-month    6.500      5.879          (230)
                       ---------                                      ------------
                       $  45,847                                      $      (596)
                       =========                                      ============

At December 31, 1996:
1997                   $   5,000    One-month      4.990%     5.633%  $         6 
                           6,000    Three-month    6.493      5.500           (65)
1998                       4,400    Three-month    6.709      5.500          (111)
1999                      14,600    Three-month    6.926      5.500          (619)
2000                       4,800    Three-month    6.170      5.543           (64)
                           2,660    Three-month    6.000      5.617            24 
2005                      23,442    Three-month    6.500      5.500           (15)
                       ---------                                      ------------
                       $  60,902                                      $      (844)
                       =========                                      ============
</TABLE>


Coastal  has  interest  rate  cap agreements with third parties.  The agreements
provide  for  the  third  parties to make payments to Coastal whenever a defined
floating  rate  exceeds  rates  ranging  from  5.00% to 12.50%, depending on the
agreement.    Payments  on  the  interest  rate  cap agreements are based on the
notional  principal amount of the agreements; no funds were actually borrowed or
are  to  be repaid.  The purchase prices of the interest rate cap agreements are
capitalized  and  included  in  "prepaid  expenses  and  other  assets"  in  the
accompanying  consolidated  statements  of financial condition and are amortized
over the life of the agreements using the straight-line method.  The unamortized
portion  of  the  purchase  price  was  approximately $286,000 and $1,070,000 at
December  31,  1997 and 1996, respectively, with the estimated fair value of the
agreements  being  $300,000  and  $639,000  at  December  31,  1997  and  1996,
respectively.    The interest rate cap agreements are used to alter the interest
rate  sensitivity  of  a  portion of Coastal's mortgage-backed securities, loans
receivable  and their related funding sources.  As such, the amortization of the
purchase  price  and  interest  income from the interest rate cap agreements are
recorded in "interest income on mortgage-backed securities or loans receivable,"
as  appropriate, in the accompanying consolidated statements of operations.  The
net  increase  (decrease)  in  interest  income related to the interest rate cap
agreements  was  approximately $(218,000), $(518,000) and $681,000 for the years
ended  December  31,  1997,  1996,  and  1995,  respectively.


<PAGE>
Interest  rate  cap  agreements  outstanding  at  December 31,  1997  expire  as
follows  (dollars  in  thousands):

<TABLE>
<CAPTION>
 Year of               Strike rate                 Notional
expiration                range                    amount
----------           ------------------           ---------
<S>                       <C>                      <C>  <C>
      1998           5.00  -  12.50%              $ 156,400
      1999           7.25  -    11.00                63,564
      2000           8.50  -    9.50                  8,000
      2001           7.50                             3,265
                                                  ---------
                                                  $ 231,229
                                                  =========
</TABLE>


Market  risk,  or  the risk of loss due to movement in market prices or rates is
quantified by Coastal through a risk monitoring process of marking to market the
portfolio to expected market level changes in an instantaneous shock of plus and
minus 200 basis points on a quarterly basis.  This process discloses the effects
on  market  values  of  the assets and liabilities, unrealized gains and losses,
including  off-balance sheet items, as well as potential changes in net interest
income.

The  fluctuation  in  the  market  value, however, has no effect on the level of
earnings of Coastal because the securities are categorized as "held-to-maturity"
and  Coastal  has  the  positive  intent  and ability to hold these to maturity.

Coastal  is  exposed  to  credit  loss  in  the  event  of nonperformance by the
counterparty to the swap or cap and controls this risk through credit monitoring
procedures.  The notional principal amount does not represent Coastal's exposure
to  credit  loss.

FINANCIAL  FUTURES
Coastal  has  used financial futures contracts in its asset/liability management
function  to  alter  the  interest  rate  sensitivity  of Coastal's net interest
income.    In  1992,  Coastal  discontinued  this  hedging  strategy.    The net
unamortized  contract  losses  on closed positions were approximately $1,207,000
and  $1,410,000  at  December  31,  1997  and  1996,  respectively.

(16)  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

Statement  of  Financial  Accounting  Standards No. 107, "Disclosures about Fair
Value  of  Financial Instruments", requires that Coastal disclose estimated fair
values for its financial instruments.  The fair value estimates presented herein
are  based  on  relevant  information available to management as of December 31,
1997  and  1996.    Because the reporting requirements exclude certain financial
instruments  and  all nonfinancial instruments, the aggregate fair value amounts
presented  herein do not represent management's estimate of the underlying value
of  Coastal.    The  fair  value estimates, methods and assumptions used are set
forth  below  for  Coastal's  financial  instruments  (in  thousands):

<PAGE>

<TABLE>
<CAPTION>

                                                  At                              At
                                           December 31, 1997             December 31, 1996
                                     ----------------------------    --------------------------
                                     Carrying            Fair        Carrying        Fair
                                       Value            Value          Value          Value
                                     ----------       -----------  ------------     -----------
<S>                                      <C>              <C>          <C>               <C>   
Financial assets:
 Cash and cash equivalents           $   37,096       $   37,096    $   27,735      $   27,735 
 Loans receivable                     1,261,435        1,283,023     1,229,748       1,247,527 
 Mortgage-backed securities
   held-to-maturity                   1,345,090        1,324,968     1,344,587       1,308,598 
 Securities available-for-sale          169,997          169,997       180,667         180,667 
 Mortgage loans held for sale                --               --           298             301 
 Stock in the FHLB                       27,801           27,801        25,971          25,971 
 Interest rate cap agreements               286              300         1,070             639 
Financial liabilities:
 Savings deposits                     1,375,060        1,377,431     1,310,835       1,313,385 
 Advances from the FHLB                 540,475          541,645       409,720         409,478 
 Securities sold under
   agreements to repurchase             791,760          791,742       966,987         966,881 
 Senior Notes payable                    50,000           50,750        50,000          51,000 
Off-balance sheet instruments:
 Interest rate swap agreements               --             (596)           --            (844)
 Commitments to extend                       --          171,193            --         134,698 
   credit
</TABLE>


CASH  AND  CASH  EQUIVALENTS
Carrying  value  approximates  fair value because of the short maturity of these
instruments  and  absence  of  any  anticipated  credit  concerns.

LOANS  RECEIVABLE
The  fair  values  of loans receivable are estimated for segregated groupings of
loans with similar financial characteristics.  Loans are segregated by type such
as  residential  mortgage,  commercial and consumer.  Residential mortgage loans
are  further  subdivided  into  fixed and adjustable rate loans including single
family,  multifamily  and  construction.

The  fair value of single family residential loans is estimated based on current
investor  market  prices  and yields for mortgage-backed securities with similar
maturities,  interest  rate  indexes  and  prepayment characteristics.  The fair
value  of  multifamily  residential, construction, commercial and consumer loans
are  estimated  using  factors that reflect the credit and interest rate risk in
these  loans.

MORTGAGE-BACKED SECURITIES HELD-TO-MATURITY AND SECURITIES AVAILABLE-FOR-SALE
The  fair  values of mortgage-backed securities are estimated based on published
market  prices  or  market  prices  from investment dealers and companies.  If a
quoted  market  price  is  not  available,  fair value is estimated using quoted
market  prices  for  similar  securities.

MORTGAGE  LOANS  HELD  FOR  SALE
The fair value of mortgage loans held for sale is estimated based on outstanding
commitments  from  investors  or current investor market yields calculated on an
aggregate  loan  basis.

STOCK  IN  THE  FHLB
The  carrying  amount  of  the  stock  in  the  FHLB  approximates  fair  value.

INTEREST  RATE  CAP  AND  SWAP  AGREEMENTS
The  fair  values  of  interest  rate  cap  and swap agreements are based on the
discounted  value  of  the  differences  between  contractual interest rates and
current  market  rates  for  similar  agreements.

SAVINGS  DEPOSITS
The  fair  value  of  deposits  with  short-term  or no stated maturity, such as
noninterest-bearing  checking,  interest-bearing  checking, savings accounts and
money  market demand accounts is equal to the amounts payable as of December 31,
1997  and  1996.    The  fair  value  of  certificate  accounts  is based on the
discounted  value  of  contractual  cash  flows.  The discount rate is estimated
using  the rates currently offered for deposits of similar remaining maturities.

ADVANCES  FROM  THE  FHLB  AND SECURITIES SOLD UNDER  AGREEMENTS  TO  REPURCHASE
The  fair  values  of  advances  from  the  Federal Home Loan Bank of Dallas and
securities  sold  under  agreements  to repurchase are estimated based on quoted
market  prices  for  similar  agreements or current rates offered to Coastal for
borrowings  with  similar  remaining  maturities.

SENIOR  NOTES  PAYABLE
The  fair  value  of  Senior  Notes payable is based on quoted market prices for
similar  securities.

COMMITMENTS  TO  EXTEND  CREDIT
The  fair  value  of  commitments  to  extend  credit is estimated using current
interest  rates  and  committed  interest  rates.

(17)  FEDERAL  INCOME  TAXES

The acquisition of the Acquired Associations under the FSLIC's Southwest Plan on
May  13,  1988  qualified  for  tax-free  reorganization  status  under  Section
368(a)(3)(D)  of  the  Internal  Revenue   Code  of  1986  as  amended  ("IRC").
Accordingly,  the  tax bases of assets of the Acquired Associations carried over
to  Coastal.    In  connection  with this acquisition, the FSLIC Resolution Fund
("FRF")  retained all of the future federal income tax benefits derived from the
federal income tax treatment of certain items, in addition to net operating loss
carryforwards related to the acquisition for which Coastal agreed to pay the FRF
when  actually  realized.   The provisions for federal income taxes recorded for
the  years  ended  December  31,  1997,  1996  and 1995, represent the gross tax
liability  computed  under  these  tax  sharing  provisions before reduction for
actual  federal taxes paid to the Internal Revenue Service.  Alternative minimum
taxes  paid  with the federal return in 1997, 1996 and 1995 will be available as
credit  carryforwards to reduce regular federal tax liabilities in future years,
over  an  indefinite  period.  To the extent these credits were generated due to
the  utilization  of  other  tax benefits retained by the FRF, they will also be
treated  as  tax  benefit  items.    Although  the termination of the Assistance
Agreement  was  effective  March  31, 1994, the FRF will continue to receive the
future  federal  income  tax  benefits from the net operating loss carryforwards
acquired  from  the  Acquired  Associations.


<PAGE>
The components of the provision for federal income tax expense (benefit) for the
years  ended  December  31,  1997,  1996 and 1995 are as follows (in thousands):

<TABLE>
<CAPTION>
                 1997          1996          1995 
               -------       -------       -------
<S>            <C>  <C>      <C>  <C>      <C>  <C>
Current        $7,831        $5,920        $6,665 
Deferred           (9)         (249)         (188)
               -------       -------       -------
               $7,822        $5,671        $6,477 
               =======       =======       =======
</TABLE>


A reconciliation of the expected federal income taxes using a corporate tax rate
of  35%  for  the years ended December 31, 1997, 1996 and 1995 is as follows (in
thousands):

<TABLE>
<CAPTION>
                                            1997          1996         1995
                                          -------       ------       ------
<S>                                       <C>  <C>      <C>  <C>    <C>  <C>
Computed expected tax provision           $7,691        $5,324       $6,162
Net purchase accounting adjustments          282           287          104
Other, net                                  (151)           60          211
                                          -------       ------       ------
                                          $7,822        $5,671       $6,477
                                          =======       ======       ======
</TABLE>


Significant  temporary differences that give rise to the deferred tax assets and
liabilities  as  of  December  31,  1997 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                 1997     1996
                                               -------   ------
<S>                                            <C>  <C>     <C>
Deferred tax assets:
  Loans receivable, principally due to
   purchase accounting discount
   and allowance for loan losses                $1,277  $1,247
  Property and equipment                           134     100
  Real estate owned, principally                   331     320
   due to unrealized writedowns
  Unrealized loss on securities
   available-for-sale                            1,224   1,670
  Goodwill                                         383     268
  Other                                            208     163
                                                ------  ------
                                                 3,557   3,768
                                                ------  ------

Deferred tax liabilities:
  Mortgage-backed securities, principally
   due to deferred hedging losses                  422     494
  FHLB stock                                       703     451
  Other                                            111      47
                                                ------  ------

                                                 1,236     992
                                                ------  ------

Net deferred tax asset                          $2,321  $2,776
                                                ======  ======
</TABLE>


No valuation allowance on deferred tax assets has been established as management
believes  that it is more likely than not that the existing deductible temporary
differences  will  reverse during periods in which Coastal generates net taxable
income.

In  years prior to 1996, Coastal was permitted under the IRC to deduct an annual
addition  to  a  reserve  for  bad  debts  in  determining taxable income.  This
addition  differs  from  the  provision  for loan losses for financial reporting
purposes.    Due to recently enacted legislation, Coastal will no longer be able
to  utilize  a reserve method for determining the bad debt deduction but will be
allowed to deduct actual charge-offs.  Further, Coastal's post-1987 tax bad debt
reserve  will  be recaptured into income.  The reserve will be recaptured over a
six  year period.  At December 31, 1997, Coastal had approximately $3,935,000 of
post-1987  tax  bad  debt reserves, for which deferred taxes have been provided.

Coastal  is  not  required to provide deferred taxes on its pre-1988 (base year)
tax  bad  debt  reserve  of  $928,000.   This reserve may be included in taxable
income  in  future years if the Bank pays dividends in excess of its accumulated
earnings  and  profits (as defined in the IRC) or in the event of a distribution
in  partial  or  complete  liquidation  of  the  Bank.

(18)  SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") INSURANCE SPECIAL ASSESSMENT

On  September  30,  1996, Coastal recorded the  one-time SAIF  insurance special
assessment  (the "special assessment") of $7,455,000 as a result  of the Deposit
Insurance  Funds  Act  of  1996 (the "Act") being signed into law.   The special
assessment pursuant to the Act was 65.7 basis points on the SAIF deposit assess-
ment  base  as  of  March  31,  1995.

(19)  STOCK  COMPENSATION  PROGRAMS

In  December  1991,  the  Board of Directors adopted the 1991 Stock Compensation
Program  ("the 1991 Program") for the benefit of officers and other selected key
employees of Coastal.  The 1991 Program was approved by stockholders in December
1991.    Four  kinds  of  rights,  evidenced by four plans, are contained in the
Program  and  are  available  for  grant:  incentive stock options, compensatory
stock  options,  stock  appreciation  rights  and performance share awards.  The
maximum  aggregate  number  of  shares of Common Stock available pursuant to the
Program  was  equal  to 10% of Coastal's issued and outstanding shares of Common
Stock.   Coastal reserved the shares for future issuance under the Program.  The
stock options were granted at a price not less than the fair market value on the
date  of  the  grant, are exercisable ratably over a four year period and may be
outstanding  for a period up to ten years from the date of grant.  Generally, no
stock  option may be exercised until the employee has remained in the continuous
employ  of  Coastal  for  six  months  after  the  option  was  granted.

On  March  23,  1995, the Board of Directors adopted the 1995 Stock Compensation
Program  ("the  New  Program").  The New Program is substantially similar to the
1991 Program and was approved by stockholders in April 1995.  The Board reserved
255,261  shares  of  Common  Stock  for  issuance  under  the  New  Program.

Coastal applies APB Opinion No. 25 and related interpretations in accounting for
its  stock  compensation  programs.   Accordingly, no compensation cost has been
recognized  for  its  stock  option rights.  Had Coastal determined compensation
cost  based  on  the  fair  value  at the grant date for its stock options under
Statement 123, Coastal's net income available to common stockholders and diluted
earnings  per  share  would have been reduced to the pro forma amounts indicated
below.


<PAGE>
<TABLE>
<CAPTION>
                                          Years ended December 31,
                                     --------------------------------- 
                                       1997         1996         1995
                                     -------       ------       ------
<S>                                  <C>  <C>     <C>  <C>     <C>  <C>
Net income available to common
 stockholders (in thousands):
  As reported                        $11,563       $6,951       $8,542
  Pro forma                          $11,169       $6,739       $8,446
Diluted earnings per share:
  As reported                        $  2.25       $ 1.38       $ 1.71
  Pro forma                          $  2.17       $ 1.34       $ 1.69
</TABLE>


Pro forma net income and diluted earnings per share reflect only options granted
in  1997, 1996 and 1995.  Therefore, the full impact of calculating compensation
cost for stock options under Statement 123 is not reflected in the pro forma net
income  or  diluted  earnings  per  share  amounts  presented  above  because
compensation  cost  is reflected over the options' vesting period of 4 years and
compensation  cost  for  options  granted  prior  to  January  1,  1995  is  not
considered.

The  fair value of each option grant is estimated on the date of grant using the
Black-Scholes  option-pricing  model  with  the  following  weighted  average
assumptions  used  for  grants  in  1997,  1996  and  1995:

<TABLE>
<CAPTION>
                                  1997              1996             1995 
                             ------------        ------------     ------------
<S>                               <C>                <C>              <C>
Assumptions:
  Expected annual dividends  $0.48/share         $0.40/share      $0.32/share 
  Expected volatility              22.30%           20.97%          23.24%
  Risk-free interest rate           6.87%            6.46%           6.38%
  Expected life                 10 years           10 years        10 years 
</TABLE>


<PAGE>
A  summary  of the status of the stock options as of December 31, 1997, 1996 and
1995  and  changes  during  the  years  then  ended  is  as  follows:

<TABLE>
<CAPTION>

                                     1997                   1996                   1995 
                                  ---------              ---------              ---------     
                                       Weighted-              Weighted-              Weighted-
                             Number     Average    Number      Average    Number     Average
                              of        Exercise     of       Exercise      of       Exercise
                             Shares      Price     Shares      Price      Shares       Price
                           ---------  ----------  ---------  ----------  ---------  ----------
<S>                        <C>        <C>         <C>        <C>         <C>        <C>
Outstanding at beginning
 of year                    340,087   $   14.989   242,907   $   13.828   178,611   $   13.084
Granted                     125,400       23.526   112,000       17.383    77,446       15.500
Exercised                   (41,985)      13.869    (9,071)      12.372    (5,249)      11.088
Forfeited                   (10,605)      20.291    (5,749)      16.733    (7,901)      15.214
                            --------  ----------   --------  ----------  ---------  ----------
Outstanding at end
 of year                    412,897   $   17.559   340,087   $   14.989   242,907   $   13.828
                            ========  ==========   ========  ==========  =========  ==========

Options exercisable at
 end of year                253,861                209,999                151,141 
                            =======                =======                =======          

Weighted-Average fair
 value of options
 granted during the year
 (per share)               $   9.28               $   6.56               $   7.83 
                            =======                =======                =======          
</TABLE>


The  following table summarizes information about stock options outstanding
at  December  31,  1997:

<TABLE>
<CAPTION>
                                              Options outstanding
                           ----------------------------------------------------------
                                                Weighted-Average    Weighted-average
                                   Number          Remaining           Exercise Price
 Range of Exercise Prices       Outstanding     Contractual Life  
-------------------------  -------------------  ----------------  -------------------
<S>                        <C>                         <C>                  <C>
10.625 to $12.875                      90,136         5.0 years         $   11.564
15.500 to $18.750                     203,461         7.7 years         $   16.693
22.750 to $30.500                     119,300         9.4 years         $   23.565
                           -------------------       -------------      $  -------
                                      412,897         7.6 years             17.559
                           ===================       =============      $  =======


                                        Options exercisable
                           -------------------------------------------
                                    Number          Weighted-Average
 Range of Exercise Prices         Exercisable        Exercise Price
-------------------------  -------------------------  ----------------
<S>                                   <C>                  <C>
10.625 to $12.875                      90,136          $  11.564
15.500 to $18.750                     135,150          $  16.600
22.750 to $30.500                      28,575          $  23.262
                           -------------------         ---------------
                                       253,861          $ 15.562
                           ===================         ===============
</TABLE>


(20)  EMPLOYEE  BENEFITS

Coastal maintains a 401(k) profit sharing plan.  Coastal's contributions to this
plan  were  approximately  $157,000,  $105,000  and  $94,000 for the years ended
December  31,  1997,  1996  and  1995,  respectively.    Pursuant  to this plan,
employees  can  contribute  up  to 15% of their qualifying compensation into the
plan.    Beginning  January  1,  1990,  Coastal  has matched 25% of the employee
contributions  up  to  15%  of  their  qualifying  compensation.


<PAGE>
(21)  EARNINGS  PER  SHARE

The  following  summarizes  information  related to the computation of basic and
diluted  EPS  for  the  years ended December 31, 1997, 1996 and 1995 (dollars in
thousands,  except  per  share  data).

<TABLE>
<CAPTION>

                                                           1997             1996             1995
                                                       ----------       ----------       ----------
<S>                                                   <C>  <C>         <C>  <C>         <C>  <C>
Net income available to common
  stockholders                                         $   11,563       $    6,951       $    8,542
                                                       ==========       ==========       ==========
Weighted average number of common shares
  outstanding used in basic EPS calculation             4,983,994        4,962,456        4,955,731
Add assumed exercise of outstanding stock
  options as adjustments for dilutive securities          164,436           75,461           35,642
                                                       ----------       ----------       ----------
Weighted average number of common shares
  outstanding used in diluted EPS calculation           5,148,430        5,037,917        4,991,373
                                                       ==========       ==========       ==========
Basic EPS                                              $     2.32       $     1.40       $     1.72
                                                       ==========       ==========       ==========
Diluted EPS                                            $     2.25       $     1.38       $     1.71
                                                       ==========       ==========       ==========
</TABLE>


(22)  COASTAL  BANC  SSB  PREFERRED  STOCK

On  October  21,  1993,  the  Bank issued 1,150,000 shares of 9.0% Noncumulative
Preferred  Stock,  no  par  Series A, at a price of $25 per share to the public.
Dividends  on  the  Preferred  Stock are payable quarterly at the annual rate of
$2.25 per share, when, as and if declared by the Board of Directors of the Bank.
At  any  time on or after December 15, 1998, the Preferred Stock may be redeemed
in  whole  or  in  part  only  at the Bank's option at $25 per share plus unpaid
dividends  (whether  or  not  earned  or declared) for the then current dividend
period  to  the  date  fixed  for  redemption.

(23)  STOCKHOLDERS'  EQUITY

On  April 24, July 24 and October 23, 1997, Coastal declared a dividend of $0.12
per  share of Common Stock outstanding for the stockholders of record of May 15,
August  15,  and  November  15,  1997,  respectively.   Prior to April 24, 1997,
Coastal  declared  a dividend of $0.10 per share of Common Stock outstanding for
the  stockholders  of  record  of  February  15,  1997.

On  January  25,  April  25,  July  25, and October 24, 1996, Coastal declared a
dividend  of $0.10 per share of Common Stock outstanding for the stockholders of
record  of  February 15, May 15, August 15, and November 15, 1996, respectively.

On  January  26,  April  27,  July  27, and October 26, 1995, Coastal declared a
dividend  of $0.08 per share of Common Stock outstanding for the stockholders of
record  on  February 21, May 15, August 15, and November 15, 1995, respectively.

(24)  COMMITMENTS  AND  CONTINGENCIES

Coastal is involved in various litigation arising from acquired entities as well
as in the normal course of business.  In the opinion of management, the ultimate
liability, if any, from these actions should not be material to the consolidated
financial  statements.


<PAGE>
At  December  31,  1997,  the minimum rental commitments under all noncancelable
operating  leases  with initial or remaining terms of more than one year were as
follows  (in  thousands):

<TABLE>
<CAPTION>
<S>                         <C>  <C>
Year ending
December 31,                Amount
---------------------       -------

  1998                      $ 2,376
  1999                        2,225
  2000                        2,182
  2001                        2,134
  2002 and thereafter        18,297
</TABLE>


Rent  expense  for  the years ended December 31, 1997, 1996 and 1995 amounted to
approximately  $2,290,000,  $2,000,000  and  $1,465,000,  respectively.

(25)  REGULATORY  MATTERS

The  Bank  is subject to various regulatory capital requirements administered by
the  Federal  Deposit  Insurance  Corporation ("FDIC").  Failure to meet minimum
capital  requirements  can  initiate  certain mandatory--and possibly additional
discretionary--actions  by  regulators  that, if undertaken, could have a direct
material  effect  on  the  Bank's  financial statements.  Under capital adequacy
guidelines  and  the regulatory framework for prompt corrective action, the Bank
must  meet specific capital guidelines that involve quantitative measures of the
Bank's  assets,  liabilities,  and certain off-balance-sheet items as calculated
under  regulatory  accounting  practices.    The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components,  risk  weightings,  and  other  factors.

Quantitative  measures  established  by  regulation  to  ensure capital adequacy
require  the  Bank  to  maintain  minimum  amounts and ratios (as defined in the
applicable  regulations)  of  Tier  1  (core)  capital  to  total assets, Tier 1
risk-based  capital  to  risk  weighted  assets  and total risk-based capital to
risk-weighted  assets.    Management believes, as of December 31, 1997, that the
Bank  met  capital  adequacy  requirements  to  which  it  is  subject.

As  of December 31, 1997, the most recent notification from the FDIC categorized
the  Bank  as  well  capitalized  under  the  regulatory  framework  for  prompt
corrective action.  To be categorized as well capitalized the Bank must maintain
minimum  Tier  1  (core),  Tier  1 risk-based and total risk-based ratios as set
forth  in  the  table  below.    There  are  no  conditions or events since that
notification  that  management believes have changed the institution's category.


<PAGE>
The  Bank's  regulatory  capital amounts and ratios, as of December 31, 1997 and
1996,  in  relation  to its existing regulatory capital requirements for capital
adequacy  purposes  as  of  such  dates  are  as follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                            Minimum For Capital        Well-Capitalized
                                           Actual            Adequacy Purposes          Requirements
                                    --------------------    ----------------          ---------------   
Capital Requirement                  Amount       Ratio        Amount    Ratio        Amount   Ratio
-------------------------           --------  ----------      --------  ------        -------  ------
<S>                                  <C>       <C>             <C>       <C>            <C>      <C>
As of December 31, 1997:
 Tier 1 (core)                      $160,781      5.52%       $116,570   4.00%       145,713   5.00%
 Tier 1 risk-based                   160,781     11.46          56,136   4.00         84,204   6.00 
 Total risk-based                    168,193     11.98         112,271   8.00        140,339  10.00 

As of December 31, 1996:
 Tier 1 (core)                      $152,932      5.35%       $114,377   4.00%       142,971   5.00%
 Tier 1 risk-based                   152,932     11.77          51,970   4.00         77,955   6.00 
 Total risk-based                    159,812     12.30         103,940   8.00        129,925  10.00 
</TABLE>


(26)  PARENT  COMPANY  FINANCIAL  INFORMATION

Condensed  financial  information  for  Coastal  Bancorp, Inc. is as follows (in
thousands):

<TABLE>
<CAPTION>

                                  Coastal Bancorp, Inc.
                             Statements of Financial Condition
                                        December 31,
                             ---------------------------------
                                        1997           1996
                                    --------       --------
<S>                                 <C>  <C>       <C>  <C>

Assets:
  Cash and cash equivalents         $  1,570       $    871
  Investment in subsidiary           145,550        136,675
  Mortgage-backed securities
   held-to-maturity                    1,761          2,079
  Other assets                         6,731          5,125
                                    --------       --------

Total assets                        $155,612       $144,750
                                    ========       ========

Liabilities and stockholders'
 equity:
  Senior Notes payable              $ 50,000       $ 50,000
  Other liabilities                      782            602
                                    --------       --------
      Total liabilities               50,782         50,602
      Total stockholders'
       equity                        104,830         94,148
                                    --------       --------

Total liabilities and
 stockholders' equity               $155,612       $144,750
                                    ========       ========
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                              Coastal Bancorp, Inc.
                            Statements of Operations
                            ------------------------

                                                Years ended December 31,
                                               1997          1996          1995
                                            -------       -------       -------
<S>                                        <C>  <C>      <C>  <C>      <C>  <C>
Income:
  Dividends from subsidiary                 $ 7,293       $ 7,001       $ 4,093
  Equity in undistributed earnings of
   subsidiary, net of income tax              7,946         3,686         6,332
  Interest income                               131           143            66
                                            -------       -------       -------
        Total income                         15,370        10,830        10,491
                                            -------       -------       -------
Expense:
  Interest expense                            5,000         5,000         2,500
  Noninterest expense                           786           891           464
                                            -------       -------       -------
        Total expense                         5,786         5,891         2,964
                                            -------       -------       -------

  Federal income tax benefit                  1,979         2,012         1,015
                                            -------       -------       -------

        Net income available
         to common stockholders             $11,563       $ 6,951       $ 8,542
                                            =======       =======       =======
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                         Coastal Bancorp, Inc.
                                       Statements of Cash Flows
                                       ------------------------

                                                                          Years ended December 31,
                                                                   1997           1996            1995 
                                                                 --------       --------       ---------
<S>                                                             <C>  <C>       <C>  <C>       <C>  <C>

Cash flows from operating activities:
  Net income available to common stockholders                    $11,563        $ 6,951        $  8,542 
  Adjustments to reconcile net income to net
    cash provided  by operating activities:
      Equity in undistributed earnings of subsidiary              (7,946)        (3,686)         (6,332)
      Net increase in other assets and other liabilities          (1,426)        (1,262)           (890)
                                                                 --------       --------       ---------
          Net cash provided by operating activities                2,191          2,003           1,320 
                                                                 --------       --------       ---------
Cash flows from investing activities:
  Transfer of mortgage-backed securities
    From subsidiary                                                   --             --          (2,517)
  Net decrease in mortgage-backed securities                         318            336             102 
  Investment in subsidiary                                          (100)            --         (44,930)
                                                                 --------       --------       ---------
          Net cash provided (used) by investing activities           218            336         (47,345)
                                                                 --------       --------       ---------
Cash flows from financing activities:
  Exercise of stock options for purchase of
    Common stock                                                     582            112              58 
  Issuance of Senior Notes payable, net                               --             --          47,635 
  Dividends paid                                                  (2,292)        (1,985)         (1,585)
                                                                 --------       --------       ---------
          Net cash provided (used) by financing activities        (1,710)        (1,873)         46,108 
                                                                 --------       --------       ---------
          Net increase in cash and cash equivalents                  699            466              83 
Cash and cash equivalents at beginning of year                       871            405             322 
                                                                 --------       --------       ---------
Cash and cash equivalents at end of year                         $ 1,570        $   871        $    405 
                                                                 ========       ========       =========
</TABLE>


<PAGE>

(27)  SELECTED  QUARTERLY  FINANCIAL  DATA

Selected  quarterly  financial data is presented in the following tables for the
years  ended  December  31, 1997 and 1996 (in thousands, except per share data):

<TABLE>
<CAPTION>

                                            1997 Quarter Ended (unaudited)
                                  March 31,   June 30,   September 30,   December 31,
                                  ----------  ---------  --------------  -------------
<S>                               <C>         <C>        <C>             <C>

Interest income                   $   49,604  $  49,898  $       51,251  $      50,603
Interest expense                      34,956     35,634          37,052         36,781
                                  ----------  ---------  --------------  -------------
Net interest income                   14,648     14,264          14,199         13,822
Provision for loan losses                450        450             450            450
Gain on sales of mortgage-backed
  Securities available-for-sale           --         --             237             --
Noninterest income                     1,469      1,550           1,506          1,622
Noninterest expense                    9,557      9,894          10,175          9,918
                                  ----------  ---------  --------------  -------------
Income before provision
  for Federal income taxes             6,110      5,470           5,317          5,076
Federal income taxes                   2,225      2,004           1,953          1,640
Preferred stock dividends of
  Coastal Banc ssb                       647        647             647            647
                                  ----------  ---------  --------------  -------------
Net income available to common
  Stockholders                    $    3,238  $   2,819  $        2,717  $       2,789
                                  ==========  =========  ==============  =============

Basic earnings per share          $     0.65  $    0.57  $         0.54  $        0.56
                                  ==========  =========  ==============  =============
Diluted earnings per share        $     0.63  $    0.55  $         0.52  $        0.54
                                  ==========  =========  ==============  =============
</TABLE>


<TABLE>
<CAPTION>

                                                          1996 Quarter Ended (unaudited)
                                          March 31,        June 30,        September 30,         December 31,
                                         ----------       ---------       ---------------       -------------
<S>                                      <C>  <C>         <C>  <C>        <C>  <C>              <C>  <C>
Interest income                          $   48,554       $  48,200       $       48,242        $      49,615
Interest expense                             34,707          33,902               34,228               35,348
                                         ----------       ---------       ---------------       -------------
Net interest income                          13,847          14,298               14,014               14,267
Provision for loan losses                       575             450                  450                  450
Gain on sale of branch office                    --             521                   --                   --
Noninterest income                            1,295           1,289                1,419                1,567
Noninterest expense                           9,140           9,897                9,593                9,297
SAIF insurance special assessment                --              --                7,455                   --
                                         ----------       ---------       ---------------       -------------
Income (loss) before provision
  for Federal income taxes                    5,427           5,761               (2,065)               6,087
Federal income taxes                          1,987           2,103                 (636)               2,217
Preferred stock dividends of
  Coastal Banc ssb                              647             647                  647                  647
                                         ----------       ---------       ---------------       -------------
Net income (loss) available to
  Common stockholders                    $    2,793       $   3,011       $       (2,076)       $       3,223
                                         ==========       =========       ===============       =============

Basic earnings (loss) per share          $     0.56       $    0.61       $        (0.42)       $        0.65
                                         ==========       =========       ===============       =============
Diluted earnings (loss) per share        $     0.56       $    0.60       $        (0.41)       $        0.63
                                         ==========       =========       ===============       =============
</TABLE>


STOCK  PRICES  AND  DIVIDENDS

The  following  table  sets  forth the high and low price range and dividends by
quarter for the two years ended December 31, 1997 of the Common Stock of Bancorp
("CBSA")  and  the  Series A Preferred Stock of the Bank ("CBSAP") as listed and
quoted  on  the  NASDAQ  National  Market  System.


COASTAL  BANCORP,  INC.  COMMON  STOCK:

<TABLE>
<CAPTION>
                           1997                          1996
                ----------------------------  -----------------------------
                  High     Low     Dividends    High     Low      Dividends
                -------  -------  ----------  -------  -------  ----------
<S>             <C>      <C>      <C>         <C>      <C>      <C>   
First Quarter   $28.250  $22.375  $    0.100  $18.750  $16.625  $    0.100
Second Quarter   29.750   22.750       0.120   18.875   17.000       0.100
Third Quarter    33.250   29.000       0.120   20.375   16.500       0.100
Fourth Quarter   35.000   28.125       0.120   24.750   19.875       0.100
</TABLE>


COASTAL  BANC  SSB  PREFERRED  STOCK,  SERIES  A:

<TABLE>
<CAPTION>
                           1997                          1996
                ----------------------------  -----------------------------
                  High     Low     Dividends    High     Low      Dividends
                -------  -------  ----------  -------  -------  ----------
<S>             <C>      <C>      <C>         <C>      <C>      <C>   
First Quarter   $25.500  $25.000  $    0.563  $25.750  $24.750  $    0.563
Second Quarter   25.500   24.875       0.563   24.875   24.500       0.563
Third Quarter    26.000   25.125       0.563   25.250   24.625       0.563
Fourth Quarter   25.625   25.000       0.563   25.250   24.875       0.563
</TABLE>




Coastal  Bancorp,  Inc.
STOCKHOLDER  INFORMATION

ANNUAL  MEETING

The  Annual Meeting of Stockholders of Coastal Bancorp, Inc. will be held at the
corporate offices of Coastal Bancorp, Inc. at 5718 Westheimer, Houston, Texas in
the  Coastal  Banc  auditorium,  Suite  1101,  on  April  23, 1998 at 11:00 a.m.


TRANSFER  AGENT  AND  REGISTRAR

ChaseMellon  Shareholder  Services,  L.L.C.
Overpeck  Centre
85  Challenger  Road
Ridgefield  Park,  New  Jersey  07660
(800)  851-9677
www.chasemellon.com


INDEPENDENT  AUDITORS

KPMG  Peat  Marwick  LLP
700  Louisiana  Street,  Suite  2700
Houston,  Texas      77002


SPECIAL  COUNSEL

Elias,  Matz,  Tiernan  &  Herrick  L.L.P.
734  15th  Street,  N.W.
Washington,  D.C.      20005


INQUIRIES,  PUBLICATIONS  AND  FINANCIAL  INFORMATION  (INCLUDING  COPIES OF THE
ANNUAL  REPORT  AND  FORM  10-K)

Manuel  J.  Mehos
Chairman  of  the  Board
   and  Chief  Executive  Officer
or
Catherine  N.  Wylie
Executive  Vice  President
   and  Chief  Financial  Officer

Coastal  Bancorp,  Inc.
Coastal  Banc  Plaza
5718  Westheimer,  Suite  600
Houston,  Texas  77057
(713)  435-5000
www.coastalbanc.com

STOCK  LISTING  AND  OTHER  INFORMATION

     The common stock of Coastal Bancorp, Inc. is listed on the over-the-counter
market  and quoted on the NASDAQ National Market System under the symbol "CBSA."
As  of February 26, 1998, there were 5,035,030 shares of Common Stock of Coastal
Bancorp,  Inc.  issued  and outstanding and the approximate number of registered
stockholders was 29, representing approximately 1,500 beneficial stockholders at
such  record  date.

     On  March  25,  1992,  Coastal Banc Savings Association (the "Association")
issued  2,061,384  shares  of  Common  Stock  at $12.50 per share in its initial
public  offering.    As of such date, the Common Stock of the Association became
registered  under the Securities Exchange Act of 1934 and also became listed for
quotation  on the NASDAQ National Market System.  The Common Stock issued by the
Association  became  the Common Stock of Coastal Bancorp, Inc. on July 29, 1994,
as  a  result  of  the  holding  company  reorganization  of  the  Association.

     On  October  21,  1993,  the  Association  issued  1,150,000 shares of 9.0%
Noncumulative  Preferred Stock, Series A, at $25.00 per share.  As of such date,
the  Preferred  Stock  of the Association became registered under the Securities
Exchange  Act  of 1934.  After the reorganization into a holding company form of
ownership  and  conversion of the Association to a Texas-chartered savings bank,
the  Preferred  Stock  of  the Association became the Preferred Stock of Coastal
Banc  ssb.    The Preferred Stock is redeemable at any time on or after December
15,  1998,  only at the option of the Bank, in whole or in part, at a redemption
price  of  $25.00  per  share  plus accrued and unpaid dividends.  The Preferred
Stock is listed and quoted on the NASDAQ National Market System under the symbol
"CBSAP."    As  of  February  26, 1998, there were 1,150,000 shares of Preferred
Stock  issued  and  outstanding  and  held  by  approximately  197  registered
stockholders,  representing  approximately 1,900 beneficial stockholders at such
record  date.

     Coastal  declared  dividends  on  the  Common  Stock  payable  during 1997.
Quarterly dividends in the amount of $.10 per share were paid on March 15, 1997,
and  quarterly  dividends  in the amount of $.12 per share were paid on June 15,
1997, September 15, 1997 and December 15, 1997.  On March 15, 1998, Coastal paid
a  quarterly  dividend  in  the  amount  of  $.12 per share on its Common Stock.
Coastal  will  continue  to  review its dividend policy in view of the operating
performance  of  the  Bank, and may declare dividends on the Common Stock in the
future if such payments are deemed appropriate and in compliance with applicable
law and regulations.  Prior to the declaration of dividends, Coastal must notify
the  Office  of  Thrift  Supervision,  the  holding  company's  primary  federal
regulator,  which  may  object  to  the  dividends  on  the  basis of safety and
soundness.