March 25, 2003





Dear  Stockholder:

     You  are cordially invited to attend the Annual Meeting of the Stockholders
(the  "Annual  Meeting")  of Coastal Bancorp, Inc. (the "Company").  The meeting
will  be  held  at  the  corporate  offices  of  Coastal  Bancorp, Inc., at 5718
Westheimer,  Houston,  Texas,  in  the  Coastal  Banc auditorium, Suite 1101, on
Thursday,  April  24,  2003,  at  12:00  noon,  Central  Time.

     The  attached  Notice  of  Annual Meeting and Proxy Statement describes the
formal  business  to  be  transacted  at the meeting.  Stockholders will vote to
elect  two  directors  and  to  ratify the selection of KPMG LLP by the Board of
Directors  to  act  as  the  Company's independent public accountants for fiscal
2003.  The Company's Board of Directors believes that these proposals are in the
best  interests  of  the  Company  and  its  stockholders  and  recommends  that
stockholders  vote  "FOR"  the  proposals  at the Annual Meeting.  Directors and
officers  of the Company and representatives of the Company's independent public
accountants  will  be  present at the Annual Meeting to respond to any questions
that  our  stockholders  may  have.

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

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

                                        Sincerely,

                                   /s/  Manuel  J.  Mehos
                                   ----------------------

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

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

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD APRIL 24, 2003

     NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Coastal Bancorp, Inc. (the "Company") will be held at the corporate
offices of Coastal Bancorp, Inc., at 5718 Westheimer, Suite 1101, Houston, Texas
77057  at  12:00  noon,  Central  Time,  on April 24, 2003.  At the meeting, the
holders  of the Company's common stock will act on the following matters, all of
which  are  more  completely  set  forth  in  the  accompanying Proxy Statement:

     (1)     To  elect  two  directors  of the Company to serve until the annual
meeting  of stockholders in the year 2006 and until their successors are elected
and  qualified;

     (2)     To  ratify the appointment of KPMG LLP as the Company's independent
public  accountants  for  the  fiscal  year  ending  December  31,  2003;  and,

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

     The Board of Directors has fixed February 25, 2003 for the determination of
the holders of the Company's common stock entitled to notice of, and to vote at,
the  Annual  Meeting  and  any  adjournment or postponement thereof.  Only those
stockholders of record as of the close of business on that date will be entitled
to  vote  at  the  Annual  Meeting  or  at any such adjournment or postponement.

                                   BY  ORDER  OF  THE  BOARD  OF
                                   DIRECTORS





                                   /s/  Linda  B.  Frazier
                                   -----------------------
                                   Linda  B.  Frazier
                                   Secretary
Houston,  Texas
March  25,  2003


     YOU  ARE  CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.  EACH SHAREHOLDER
AND  GUEST  MAY  BE  REQUIRED  TO  PRESENT  A  VALID  PICTURE IDENTIFICATION FOR
ADMISSION.  CAMERAS,  RECORDING DEVICES AND OTHER ELECTRONIC DEVICES WILL NOT BE
PERMITTED  AT  THE  MEETING.  IT  IS  IMPORTANT  THAT YOUR SHARES BE REPRESENTED
REGARDLESS OF THE NUMBER YOU OWN.  EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED
TO  COMPLETE,  SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE
PROVIDED.  IF  YOU ATTEND THIS MEETING, YOU MAY VOTE IN PERSON OR BY PROXY.  ANY
PROXY  GIVEN  MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO
THE  EXERCISE  THEREOF.




<PAGE>
                              COASTAL BANCORP, INC.
                       2003 ANNUAL MEETING OF STOCKHOLDERS
                                 PROXY STATEMENT

                                TABLE OF CONTENTS


PROXY  STATEMENT                                                               1
BACKGROUND  INFORMATION                                                        2
VOTING  SECURITIES  AND  BENEFICIAL  OWNERSHIP  THEREOF                        2
INFORMATION  WITH  RESPECT  TO  NOMINEES  FOR  DIRECTOR,  DIRECTORS  WHOSE
  TERMS CONTINUE  AND  EXECUTIVE  OFFICERS                                     6
STOCKHOLDER  NOMINATIONS                                                       8
BOARD  OF DIRECTORS MEETINGS AND COMMITTEES OF COASTAL BANCORP, INC. AND
  COASTAL BANC  SSB                                                            8
BOARD  FEES                                                                    9
2002  NON-EMPLOYEE  DIRECTOR  STOCK  PURCHASE  PLAN                           10
SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE                  10
REPORT  OF  THE  AUDIT  COMMITTEE                                             10
COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION              13
EXECUTIVE  OFFICERS  WHO  ARE  NOT  DIRECTORS                                 13
EXECUTIVE  COMPENSATION                                                       14
REPORT  OF  COMPENSATION  COMMITTEE  OF  THE  BOARD OF DIRECTORS ON
  COMPENSATION DURING  FISCAL  2002                                           14
SUMMARY  COMPENSATION  TABLE                                                  16
EXECUTIVE  SEVERANCE  AGREEMENTS                                              17
AGGREGATE  OPTIONS  GRANTED  IN  LAST  FISCAL  YEAR                           19
AGGREGATE  OPTIONS  EXERCISED  IN  LAST YEAR AND FISCAL YEAR - END OPTION
  VALUES                                                                      20
DISCLOSURE  OF  EQUITY  COMPENSATION  PLAN  INFORMATION                       20
COMPARATIVE  STOCK  PERFORMANCE  GRAPH                                        21
TRANSACTIONS  WITH  MANAGEMENT                                                23
PROPOSAL  TO  RATIFY  THE  SELECTION  OF  INDEPENDENT  PUBLIC ACCOUNTANTS     23
FEES  BILLED  TO  THE  COMPANY  BY  KPMG  LLP  DURING  FISCAL  2002           23
STOCKHOLDER  PROPOSALS                                                        24
PROXY  SOLICITATION                                                           25
OTHER  MATTERS                                                                25
ANNUAL  REPORT  AND  FINANCIAL  STATEMENTS                                    25

APPENDIX
--------
AUDIT  COMMITTEE  CHARTER                                                    A-1


<PAGE>





                              COASTAL BANCORP, INC.


                                 PROXY STATEMENT


                         ANNUAL MEETING OF STOCKHOLDERS


     This  Proxy Statement is furnished to the holders of the common stock, $.01
par  value  per  share  (the  "Common  Stock"),  of  Coastal  Bancorp, Inc. (the
"Company") in connection with the solicitation of proxies on behalf of the Board
of  Directors  of  the Company, to be used at the Annual Meeting of Stockholders
(the  "Annual  Meeting") to be held at the corporate offices of Coastal Bancorp,
Inc.,  at  5718 Westheimer, Houston, Texas in the Coastal Banc auditorium, Suite
1101,  at  12:00 noon, Central Time, on April 24, 2003 and at any adjournment or
postponement  thereof for the purposes set forth in the Notice of Annual Meeting
of  Stockholders.  This Proxy Statement is expected to be mailed to stockholders
on  or  about  March  25,  2003.

     Each  proxy  solicited  hereby,  if  properly  signed  and  returned to the
Company,  will be voted in accordance with the instructions contained therein if
it is not revoked prior to its use.  IF NO CONTRARY INSTRUCTIONS ARE GIVEN, EACH
PROXY  RECEIVED  WILL BE VOTED:  (I) FOR THE ELECTION OF THE BOARD'S NOMINEES AS
DIRECTORS  OF  THE  COMPANY;  (II) FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF
KPMG  LLP  AS  THE  COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING  DECEMBER 31, 2003; AND (III) UPON THE TRANSACTION OF SUCH OTHER BUSINESS
AS  MAY  PROPERLY  COME  BEFORE  THE ANNUAL MEETING, IN ACCORDANCE WITH THE BEST
JUDGMENT  OF  THE  PERSONS APPOINTED AS PROXIES.  ANY HOLDER OF COMMON STOCK WHO
RETURNS  A  SIGNED  PROXY  BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER IN
WHICH  SUCH  SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE VOTED IN FAVOR OF THE
MATTERS  SET  FORTH  IN  THE  PRECEDING  SENTENCE.

     Any  stockholder  giving  a  proxy  has  the power to revoke it at any time
before  it  is exercised by (i) filing with the Secretary of the Company written
notice  of  revocation thereof (Linda B. Frazier, Coastal Bancorp, Inc., Coastal
Banc  Plaza,  5718  Westheimer,  Suite  600,  Houston,  Texas  77057-5745), (ii)
submitting  a duly executed proxy bearing a later date; or (iii) by appearing at
the  Annual  Meeting  and giving the Secretary notice of his or her intention to
vote  in  person.  Proxies  solicited hereby may be exercised only at the Annual
Meeting and any adjournment or postponement thereof and will not be used for any
other  meeting.

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

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


                        VOTING SECURITIES AND BENEFICIAL
                                OWNERSHIP THEREOF

     Only  holders  of  record  of  the  Company's  Common Stock at the close of
business on February 25, 2003 (the "Record Date") will be entitled to notice of,
and  to  vote  at, the Annual Meeting.  On the Record Date, there were 5,146,130
shares  of Common Stock outstanding and the Company had no other class of voting
equity  securities  outstanding.  Only  holders  of Company Common Stock will be
entitled  to  vote  at the Annual Meeting and each share of Common Stock will be
entitled  to  one  vote  on all matters properly presented.  Stockholders of the
Company are not permitted to cumulate their votes for the election of directors.

     The  presence  in  person  or  by  proxy  of  at  least  a  majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum  at  the  Annual Meeting. Directors will be elected by a plurality of the
votes  cast  at  the  Annual  Meeting.  The  affirmative  vote  of a majority in
interest  of  those  present  (in  person  or by proxy) at the Annual Meeting is
required  to  approve  the  proposal  to ratify the appointment of the Company's
independent  public  accountants.

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


<PAGE>
     At  February  25,  2003, directors, executive officers and their affiliates
beneficially  owned  1,193,727  shares  of  Common  Stock or 21.46% of the total
shares  of Common Stock outstanding on such date.  It is anticipated that all of
such  shares  will  be  voted  for the election of the nominees of the Company's
Board  of Directors and in favor of the proposal to ratify the selection of KPMG
LLP  as  the  Company's  independent  public  accountants.

     The following table sets forth the beneficial ownership of the Common Stock
as  of  February 25, 2003, with respect to (i) any person or entity who is known
to  the  Company  to  be the beneficial owner of 5% or more of the Common Stock;
(ii) each nominee for director; (iii) each director of the Company; (iv) each of
the  executive  officers named in the summary compensation table (see "Executive
Compensation  - Summary Compensation Table") and (v) all directors and executive
officers  of  the  Company and its wholly-owned subsidiary, Coastal Banc Holding
Company,  Inc.  ("HoCo")  and  its subsidiary, Coastal Banc ssb, as a group. The
address  for  all  directors and executive officers of the Company, HoCo and the
Bank  is  Coastal  Banc Plaza, 5718 Westheimer, Suite 600, Houston, Texas 77057.
Except  as set forth below, as of February 25, 2003, the Company was aware of no
other  person  or  entity  unaffiliated with the Company that was the beneficial
owner  of  5%  or  more  of  the  Common  Stock.

<TABLE>
<CAPTION>


                                           AMOUNT OF SHARES OF
                                              COMMON STOCK
NAME                                       BENEFICIALLY OWNED
(AND ADDRESS) OF                            AS OF FEBRUARY 25,               PERCENT OF
BENEFICIAL OWNER                                 2003(1)                       CLASS
<S>                                       <C>                                <C>
----------------------------------------------------------------------------------------
Manuel J. Mehos, Chairman of the Board,
President and Chief Executive Officer
Coastal Bancorp, Inc., Coastal Banc
Holding Company, Coastal Banc ssb and
Coastal Banc Mortgage Corp., Chief
Executive Officer of CoastalBanc Financial
Corp. and Co-Chairman of Coastal Banc
Capital Corp.                                  671,750 (4)                     12.08%

Tontine Partners, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166                       513,850 (2) (6)                  9.24

First Manhattan Co.
437 Madison Avenue
New York, New York 10022                       510,427 (2)                      9.18

Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401                 436,150 (2)                      7.84

Systematic Financial Management, L.P.
300 Frank W. Burr Blvd.
Glenpointe East, 7th Floor
Teaneck, New Jersey  07666                     359,230 (2)                      6.46
                                                            (continued on next page)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                           AMOUNT OF SHARES OF
                                              COMMON STOCK
NAME                                       BENEFICIALLY OWNED
(AND ADDRESS) OF                            AS OF FEBRUARY 25,               PERCENT OF
BENEFICIAL OWNER                                 2003(1)                       CLASS
<S>                                       <C>                                <C>
----------------------------------------------------------------------------------------

DePrince, Race & Zollo, Inc.
201 South Orange Avenue, Suite 850
Orlando, Florida  32801                        358,650 (2)                       6.45

D. Fort Flowers, Jr., Director
Coastal Bancorp, Inc. and Coastal Banc ssb     274,890 (3)                       4.94

Catherine N. Wylie, Sr. Executive Vice
President and Chief Financial Officer
Coastal Bancorp, Inc., Coastal Banc
Holding Company, Inc., Coastal Banc ssb,
Coastal Banc Mortgage Corp., the President
of Coastal Banc Capital Corp. and President
of CoastalBanc Financial Corp. and Coastal
Banc Insurance Agency, Inc.                     95,954 (4) (5)                   1.72

Gary R. Garrett, Co-Chairman
Coastal Banc Capital Corp. and President
of Coastal Banc Mortgage Corp                   80,586 (4)                       1.45

David R. Graham, Executive Vice President
-Commercial Real Estate Lending
Coastal Banc ssb                                31,321 (4)                          *

Robert E. Johnson, Jr., Director
Coastal Bancorp, Inc. and Coastal Banc ssb      20,448                              *

Michael A. Presley, Director
Coastal Banc Capital Corp. and Executive
Vice President of Coastal Banc Mortgage Corp.    9,000                              *

Robert V. New, Executive Vice President
and Chief Banking Officer
Coastal Banc ssb                                 3,750 (4)                          *

Dennis S. Frank, Director
Coastal Bancorp, Inc. and Coastal Banc ssb       3,237                              *

Robert Edwin Allday, Director
Coastal Bancorp, Inc. and Coastal Banc ssb       2,420                              *

Clayton T. Stone, Director
Coastal Bancorp, Inc. and Coastal Banc ssb         371                              *
(continued on next page)
<PAGE>

                                           AMOUNT OF SHARES OF
                                              COMMON STOCK
NAME                                       BENEFICIALLY OWNED
(AND ADDRESS) OF                            AS OF FEBRUARY 25,               PERCENT OF
BENEFICIAL OWNER                                 2003(1)                       CLASS
<S>                                       <C>                                <C>
----------------------------------------------------------------------------------------
All directors and executive
officers of the Company and the
Bank as a group (11 persons)                 1,193,727 (4)                      21.46
</TABLE>


_____________________________
*     Represents  less  than  1.0%  of  the  Common  Stock  beneficially  owned.


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

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

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

(4)     Under  applicable  regulations,  a  person  is deemed to have beneficial
ownership  of any shares of Common Stock which may be acquired within sixty (60)
days  of  the Record Date pursuant to the exercise of outstanding stock options.
Shares  of  Common  Stock  which  are  subject to stock options are deemed to be
outstanding  for  the  purpose of computing the percentage of outstanding Common
Stock  owned  by such person or group but not deemed outstanding for the purpose
of  computing the percentage of Common Stock owned by any other person or group.
The amounts set forth in the table include 80,172, 14,212, 228,250, 3,750, 7,500
and  82,809  shares  which may be received upon the exercise of stock options by
Messrs.  Garrett,  Graham,  Mehos,  New,  Presley  and  Ms. Wylie, respectively,
pursuant to stock options.  For all directors and executive officers as a group,
the  number  of  shares  includes  416,693  shares  of  Common  Stock subject to
outstanding  stock  options.

(5)     Ms.  Wylie is also the beneficial owner of 2,000 shares of the Company's
9.12%  Cumulative  Preferred  Stock,  Series A and 500 shares of Coastal Capital
Trust  I  9.0%  Trust  Preferred  Stock.

(6)     Based  on  information  disclosed  by the group of reporting persons set
forth herein on a Schedule 13G filed with the Securities and Exchange Commission
on  February  4, 2003, the following entities may be deemed to be the beneficial
owners  of  the  common  stock:  Tontine  Partners, L.P., 36,450 shares; Tontine
Overseas  Associates,  L.L.C.,  47,500  shares;  and Tontine Financial Partners,
L.P.,  429,900  shares.  The address for these entities is the same as set forth
in  the  chart  above.



<PAGE>
             INFORMATION WITH RESPECT TO THE NOMINEES FOR DIRECTOR,
              DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS


ELECTION  OF  DIRECTORS

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

     As  of  June  30, 2002, James C. Niver resigned from the Board of Directors
for  personal  reasons.  The  Board  of Directors filled the vacancy left by Mr.
Niver's resignation by electing Mr. Clayton T. Stone to the Board effective July
1,  2002  to  serve until this Annual Meeting.  Mr. Stone is currently a nominee
for  director  to  be  elected  at  this  Annual  Meeting.

     Two directors are to be elected at this Annual Meeting to hold office until
the  Annual Meeting in 2006 or until their successors are elected and qualified.
These  directors  have consented to serve if elected.  The information set forth
below  relating to a director's tenure is as of the date he was first elected as
director  of either the Association or the Company, where applicable.  There are
no arrangements or understandings between the Company and any person pursuant to
which  such person has been selected as a nominee, and no director is related to
any  other  director  or  executive officer of the Company or the Bank by blood,
marriage  or  adoption.

INFORMATION  WITH  RESPECT  TO  CONTINUING  DIRECTORS

     Information concerning those members of the Board whose terms do not expire
in  2003,  including  age,  tenure  and  principal position with the Company and
principal  occupation  during  the past five years, as well as the year his term
will  expire,  is  set  forth  below:

     R.  EDWIN  ALLDAY.  Age  52.  Director  since  1986.  Mr.  Allday  is  a
self-employed  consultant  who  provides  management-consulting  services  for
non-profit organizations.  From September 1993 to January 1999, Mr. Allday was a
senior  consultant  with The Dini Partners, Inc., Houston, Texas, a company that
provides counseling in philanthropy and non-profit company management.  His term
as  a  director  of  the  Company  will  expire  in  2004.

     D.  FORT  FLOWERS,  JR.  Age  41.  Director since 1992.  Mr. Flowers is the
President  and  a  Director  of  Sentinel Trust Company, a Texas Limited Banking
Association,  Houston,  Texas,  providing  fiduciary  and  investment management
services  to affluent families, their closely held corporations and foundations,
a  position  he  has held since January 1997.  Mr. Flowers is a Director and the
Vice  Chairman  of  the  Board  of  New Covenant Trust Company, a National Trust
Company.  Mr.  Flowers  was Chairman of the Board of DIFCO, Inc., a railroad car
engineering  and manufacturing company from before the time he became a director
until  August  1997  when  that company was sold.  His term as a director of the
Company  will  expire  in  2004.

<PAGE>

     DENNIS  S. FRANK.  Age 47.  Director since 1988.  Mr. Frank is the Chairman
of  the  Board,  Chief  Executive  Officer  and  President of Silvergate Capital
Corporation,  a  financial  institution  holding  company controlling Silvergate
Bank,  La  Jolla,  California  a  position  he  has  held  since  December 1996.
Additionally,  he  has  been  the President of DSF Management Company, a private
investment  company, located in Houston, Texas, since March 1994.  His term as a
director  of  the  Company  will  expire  in  2004.

     ROBERT  E.  JOHNSON,  JR.  Age  49.  Director since 1986.  Mr. Johnson is a
partner  in  the  law  firm  of Johnson & Johnson, Austin, Texas.  His term as a
director  of  the  Company  will  expire  in  2005.


INFORMATION  WITH  RESPECT  TO  THE  NOMINEES  FOR  DIRECTOR

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

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

     MANUEL  J. MEHOS.  Age 49.  Director since 1986.  Mr. Mehos is the Chairman
of the Board, President and Chief Executive Officer of the Company, Coastal Banc
Holding  Company,  Inc., Coastal Banc Mortgage Corp. and the Bank as well as the
Chief  Executive  Officer  of CoastalBanc Financial Corp., a Bank subsidiary and
the  Co-Chairman of Coastal Banc Capital Corp., an affiliate of the Bank.  He is
also  a Director and President of CoastalBanc Investment Corporation, which is a
wholly-owned  subsidiary  of  the Bank.  The Company, the Bank, its subsidiaries
and  affiliates  are  located  in  Houston,  Texas.  CoastalBanc  Investment
Corporation  is  presently  inactive.  If elected, his term as a director of the
Company  will  expire  in  2006.

     CLAYTON  T.  STONE.  Age 69.  Director from August 1995 until November 1998
and  July  2002  to  present.  Mr.  Stone has been an officer of Hines Interests
Limited  Partnership  for  22  years, serving as Executive Vice President for 15
years.  During  a  ten-year  retirement period from Hines, Mr. Stone served as a
consultant to various clients in real estate investments and litigation advisory
services.  If  elected,  his  term  will  expire  in  2006.


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




STOCKHOLDER  NOMINATIONS

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

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

     The  Company's Board of Directors has responsibility for establishing broad
corporate  policies  and  overall  performance  of  Coastal.  However, it is not
involved in the day-to-day operating details of the Company's business.  Members
of  the  Board  are  kept  informed  of  the  Company's business through various
documents  and  reports provided by the Chairman of the Board and other Officers
of the Company and by participating in Board and Board Committee meetings.  Each
Director has access to all books, records and reports of Coastal, and members of
management  are  available  at  all  times  to  answer any Director's questions.

     Regular meetings of the Board of Directors of the Company are held at least
quarterly  and  special meetings may be called at any time as necessary.  During
the  year  ended  December  31, 2002, the Board of Directors of the Company held
eight  (8)  meetings.  All  incumbent directors of the Company attended at least
seventy-five percent (75%) of the Board meetings held during the period in which
he  served  as  a  director  in  2002.

     The  Board of Directors of the Company is authorized by its Bylaws to elect
members  of  the  Board  to  committees  of  the Board which may be necessary or
appropriate  for  the  conduct  of  the  business  of the Company.  The Board of
Directors as a whole acts as a Nominating Committee.  This is the only Committee
of  the  Company.

     Regular  meetings  of  the Board of Directors of the Bank are held at least
quarterly  and  special meetings may be called at any time as necessary.  During
the  year  ended December 31, 2002, the Board of Directors of the Bank held nine
(9)  meetings.  All  incumbent  directors  of  the  Bank  attended  at  least
seventy-five  percent  (75%)  of  the  aggregate  of  the  total number of Board
meetings  held  during the period in which he served as a director and the total
number  of  meetings held by committees of the Board of Directors of the Bank on
which  he  served in 2002.  The members of the Board of Directors of the Company
are  also  the  members  of  the  Board  of  Directors  of  the  Bank.

     The  Board  of  Directors  of the Bank is authorized by its Bylaws to elect
members  of  the  Board  to  committees  of  the Board which may be necessary or
appropriate  for the conduct of the business of the Bank.  At December 31, 2002,
the  Bank  had  various  committees,  including  an  Audit,  Compensation,
Asset/Liability  and  Directors'  Loan  Review  Committee.

     Audit  Committee.  The  Audit  Committee of the Bank's Board is responsible
for  reviewing the reports of the independent public accountants and examination
reports  of  regulatory  authorities,  monitoring  the  internal audit functions
(whether  in-house or outsourced), which reports directly to this Committee, and
generally  overseeing  compliance with internal policies and procedures pursuant
to the Audit Committee Charter (the "Charter").  The Audit Committee members are
Messrs.  Flowers  (Chairman), Allday and Johnson.  The members are "independent"
as  defined  in  Rule  4200(a)(14)  of the listing standards of the Nasdaq Stock
Market.  This  Committee  met  seven  (7) times during 2002.  See "Report of the
Audit  Committee."

     Compensation  Committee.  The  Compensation  Committee  reviews  the
compensation  of  senior  executive  officers  and  recommends  to  the  Board
adjustments  in  such  compensation  based on a number of factors, including the
profitability  of  the  Bank.  Messrs.  Johnson  (Chairman),  Flowers  and Stone
comprise  the Compensation Committee, which met five (5) times during 2002.  See
"Executive  Compensation  - Report of the Compensation Committee of the Board of
Directors  on  Compensation  During  Fiscal  2002."

     Asset/Liability  Committee.  The Asset/Liability Committee met one (1) time
in  2002  to  review  and analyze the investment securities portfolio, ascertain
that  the  Bank's  interest  rate  risk  policy  is followed and to confirm that
policies  and  procedures  for  all  investment  securities  are  adequate  and
appropriate.  The  Committee  also  makes  interest  rate  risk  assessments and
formulates  asset/liability  management  policy.  This  Committee  consists  of
Messrs.  Frank  (Chairman),  Allday  and  Mehos.

     Directors' Loan Review Committee.  The Directors' Loan Review Committee met
twelve (12) times in 2002 to approve and/or review certain loans.  The Committee
can  approve any class or type of loan which is authorized for investment by the
Board.  Specified  loan  authority limits are further delegated to the Portfolio
Control  Center  ("PCC")  or  an individual officer of the Bank.  The Directors'
Loan  Review  Committee consists of Messrs. Stone (Chairman), Flowers and Mehos.

BOARD  FEES

     During  2002,  each  non-employee  director of the Company and the Bank was
paid  a  fee  of  $4,000  for  attendance  at  each Board meeting, $500 for each
committee  meeting  attended  and  $1,000 for each Loan Review Committee meeting
attended  in  the  months  in  which the Board met and $500 for the other months
attended.  When  the  Board of Directors of the Company meets on the same day as
the  Board  of  Directors  of the Bank, only one attendance fee is paid for that
date.  No  fees  are paid for non-attendance; attendance by conference telephone
is  similarly  not  compensated.  Directors  are  also reimbursed for reasonable
travel  expenses.  Directors  who are also employees of the Company and the Bank
receive  no  fees  for  attendance  at  Board  or  committee  meetings.

2002  NON-EMPLOYEE  DIRECTOR  STOCK  PURCHASE  PLAN

     On  January  24,  2002,  the Board of Directors of the Company approved the
2002  Non-Employee  Director  Stock  Purchase  Plan (the "Stock Purchase Plan").
This  Stock  Purchase  Plan  provides eligible members of the Company's Board of
Directors  with  an opportunity to purchase shares of the Company's common stock
with  up  to  half  of their Director and Committee fees.  The maximum number of
shares  of  common  stock  that may be issued over the term of the Plan will not
exceed  twenty-five  thousand  (25,000)  shares.  A  total  of 3,556 shares were
issued  during  2002  under  the  2002  Non-Employee  Stock  Purchase  Plan.

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

     Section  16(a)  of  the  Securities  Exchange  Act of 1934, as amended (the
"Exchange  Act")  requires that the Company's officers, directors and beneficial
owners  of  more  than 10% of any class of equity securities of the Company file
reports  to  indicate ownership and changes in ownership with the Securities and
Exchange  Commission  and  to  furnish  the Company with copies of such reports.

     Based  upon a review of the copies of such forms, the Company believes that
during  the  year ended December 31, 2002, all Section 16(a) filing requirements
applicable  to  the Company's officers and directors and to beneficial owners of
more  than  10%  of  the  Company's  equity  securities  were  complied  with.

REPORT  OF  THE  AUDIT  COMMITTEE

     The  following Report of the Audit Committee of the Board of Directors does
not  constitute  soliciting  material  and  should  not  be  deemed  filed  or
incorporated by reference into any other Company filing under the Securities Act
of  1933,  as amended (the "Securities Act"), or the Exchange Act, except to the
extent  the  Company specifically incorporates this Report by reference therein.

     During  fiscal 2002, the Audit Committee of the Board of Directors ratified
and  approved  the Audit Committee Charter (the "Charter"), which was originally
approved by the Board of Directors on August 24, 2000.  The complete text of the
Charter,  which reflects standards set forth in SEC regulations and the rules of
the  Nasdaq  Stock  Market, is reproduced in Appendix A to this proxy statement.

     As  set  forth  in  more  detail in the Charter, the Audit Committee's (the
"Committee")  primary  duties  and  responsibilities  are  to:

-     Monitor  the integrity of the Company's financial statements, consolidated
accounting and financial controls and financial reporting process and systems of
internal  compliance.
-     Monitor  the  selection,  independence  and  performance  of the Company's
independent public accountants and internal auditing, compliance and loan review
functions;  and
-     Provide  an  avenue of communication among independent public accountants,
management,  the  internal  audit function (whether in-house or outsourced), the
Audit  Committee  and  the  Board  of  Directors.

     The  Committee  has implemented procedures to ensure that during the course
of  each  fiscal  year  it  devotes  the  attention  that  it deems necessary or
appropriate  to  each of the matters assigned to it under the Charter.  To carry
out  its responsibilities, the Committee met seven (7) times during fiscal 2002.

     In overseeing the preparation of the Company's financial statements for the
year  ended December 31, 2002, the Committee met separately with both management
and  KPMG  LLP,  the  Company's  independent  public  accountants, to review and
discuss  the  financial  statements  prior  to  their  issuance  and  to discuss
significant  accounting  issues.  Management  advised  the  Committee  that  all
financial  statements  were  prepared  in  accordance with accounting principles
generally  accepted in the United States of America, and the Committee discussed
the  financial  statements with management and KPMG LLP.  The Committee's review
included  discussion with the independent public accountants of matters required
to  be  discussed  pursuant  to  Statement  on  Auditing  Standards  No.  61
(Communications  With  Audit  Committees).

     The  Committee  also  discussed  with  KPMG  LLP  matters  relating  to its
independence  including  disclosures required to be made to the Committee by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees).

     In addition, the Committee reviewed major initiatives and programs aimed at
strengthening the effectiveness of the Company's internal control structure.  As
a part of the process, the Committee continued to monitor the scope and adequacy
of  the  Company's internal auditing program reviewing staffing levels and steps
taken to implement recommended improvements in internal procedures and controls.

     On the basis of these reviews and discussions, the Committee recommended to
the  Board  of  Directors  that the Board approve the inclusion of the Company's
audited financial statements in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, for filing with the Securities and Exchange
Commission.

     Management  is  responsible  for  the Company's financial reporting process
including  its  system  of  internal  control,  and  for  the  preparation  of
consolidated  financial  statements  in  accordance  with  generally  accepted
accounting  principles.  The  Company's independent auditors are responsible for
auditing those financial statements.  The Audit Committee's responsibility is to
monitor and review these processes.  It is not the Audit Committee's duty or its
responsibility  to  conduct  auditing  or accounting reviews or procedures.  The
members of the Audit Committee are not employees of the Company and they may not
be,  and  do  not  represent  themselves  to  be  or to serve as, accountants or
auditors  by  profession  or  experts  in  the fields of accounting or auditing.
Therefore,  the  Audit  Committee  relied,  without independent verification, on
management's  representation  that  the  financial statements have been prepared
with  integrity  and  objectivity  and  in conformity with accounting principles
generally accepted in the United States of America and on the representations of
the  independent  auditors  included  in their report on the Company's financial
statements.  The  Audit  Committee's  oversight  does  not  provide  the  Audit
Committee  with an independent basis to determine that management has maintained
appropriate  accounting  and  financial  reporting  principles  or  policies, or
appropriate  internal controls and procedures designed to assure compliance with
accounting  standards  and  applicable  laws  and  regulations.

<PAGE>
     Furthermore,  the  Audit  Committee's  considerations  and discussions with
management  and  the  independent  auditors  do  not  assure  that the Company's
financial  statements  are  presented  in  accordance with accounting principles
generally  accepted  in  the  United  States  of  America, that the audit of the
Company's financial statements has been carried out in accordance with generally
accepted  auditing  standards or that the Company's independent accountants are,
in  fact,  "independent."



                                        By  the  Committee:
                                        D.  Fort  Flowers,  Jr.  (Chairman)
                                        R.  Edwin  Allday
                                        Robert  E.  Johnson,  Jr.












                      [THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     None of the members of the Board's Compensation Committee is or has been an
officer  or  employee  of the Company nor on any other committee of the board of
directors  of another entity performing similar functions.  No transactions with
the  Company  affecting  the  members  of  the  Compensation Committee, or their
affiliates,  occurred  during  fiscal  2002.

EXECUTIVE  OFFICERS  WHO  ARE  NOT  DIRECTORS

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


                              Position with the Company and/or
                              the Bank and other subsidiaries
Name                 Age      Principal Occupation During Last Five Years
----                 ---     ---------------------------------------------------
Gary  R.  Garrett     55      Co-Chairman  of  Coastal  Banc  Capital  Corp., an
                              affiliate  of  the  Bank,  as  of January 2002 and
                              President  of  Coastal  Banc  Mortgage  Corp,  an
                              affiliate of the Bank since July 2002. Previous to
                              this he was Senior Executive Vice President of the
                              Bank from July 1999 until December 2001; Executive
                              Vice  President  of  the  Bank from August 1993 to
                              July  1999; Chief Lending Officer of the Bank from
                              1995  to  December  2001;  and  Senior  Vice
                              President-Mortgage  Lending  of  the  Bank  from
                              October  1991  to  August  1993.

David  R.  Graham     59      Executive  Vice President of the Bank since August
                              1993; Senior Vice President-Commercial Real Estate
                              Lending  of the Bank from May 1988 to August 1993;
                              and  a  Director  of  CoastalBanc  Financial Corp.

Robert  V.  New       51      Executive Vice President and Chief Banking Officer
                              of  the  Bank since December 2001. From 1988 until
                              December  2001,  Mr.  New held various Senior Vice
                              President  positions  at  Bank  of America/Nations
                              Bank  and  NCNB.

Michael  A.  Presley  49      President  of  Coastal  Banc  Capital  Corp.,  an
                              affiliate  of  the  Bank  since  August  1997  and
                              Executive  Vice President of Coastal Banc Mortgage
                              Corp.,  an  affiliate of the Bank since July 2002.
                              From  February 1992 until August 1997, Mr. Presley
                              held  the  position  of  First  Vice  President at
                              Morgan  Keegan  &  Co.

<PAGE>

Catherine  N.  Wylie  49      Senior  Executive  Vice  President of the Company,
                              Coastal  Banc  Holding  Company, Inc. and the Bank
                              since  July  1999  and  a Director of Coastal Banc
                              Holding  Company,  Inc., and of each of the Bank's
                              subsidiaries;  Chief  Financial  Officer  of  the
                              Company  and  the  Bank  since October 1993; Chief
                              Operations  Officer  since  May  1999;  Senior
                              Executive  Vice  President of Coastal Banc Holding
                              Company,  Inc. from November 1996 to July 1999, of
                              the Company from July 1994 to July 1999 and of the
                              Bank  from August 1993 to July 1999; Controller of
                              the  Bank  from  April  1989 to October 1993; also
                              President/Treasurer of CoastalBanc Financial Corp.
                              since  October  1990;  also
                              President/Secretary/Treasurer  of  Coastal  Banc
                              Insurance  Agency, Inc. since June 2000. Director,
                              Senior  Executive  Vice  President,  Treasurer and
                              Principal  of  Coastal  Banc  Capital  Corp.,  an
                              affiliate  of  the  Bank,  since  August  1997.
                              Director,  Senior  Executive  Vice  President  and
                              Treasurer  of  Coastal  Banc  Mortgage Corp. since
                              July  2002.


                             EXECUTIVE COMPENSATION

     The  following  Report  of  the  Compensation  Committee  of  the  Board of
Directors  on  Compensation  During  Fiscal 2002 and the stock performance graph
included elsewhere in this Proxy Statement do not constitute soliciting material
and  should  not  be  deemed  filed  or incorporated by reference into any other
Company  filing  under  the  Securities  Act, or the Exchange Act, except to the
extent  the  Company  incorporates  this  Report  or  the  performance graphs by
reference  therein.

     REPORT  OF  THE  COMPENSATION  COMMITTEE  OF  THE  BOARD  OF  DIRECTORS  ON
COMPENSATION  DURING  FISCAL 2002.  Officers of the Company are also Officers of
the  Bank  and  do  not  receive separate compensation for their services to the
Company.

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

     The  Committee  evaluates  the base salaries of the Bank's senior executive
officers  annually.  A  senior  executive  officer's  base  salary is determined
mid-year  and  is  based upon longevity with the Bank, the effectiveness of such
individual  in  performing  his  or her duties, peer averages at the position in
question  and  the Bank's overall performance.  No particular weight is assigned
to  these  variables.  The  base  salary  component  alone, while designed to be
competitive  with  peer group averages, is not designed to produce top levels of
compensation  for the Bank's senior executive officers when compared to its peer
group.  The  incentive component, as described below, which requires the Company
to  achieve  returns  at a pre-specified level before additional compensation is
paid,  is  the  element which is designed to make total compensation for each of
the  Bank's  senior  executive officers comparable or better than the comparable
executive  compensation  for  the  senior  executive officers in the Bank's peer
group.  Based upon the foregoing, Mr. Mehos, the Chief Executive Officer, earned
$360,000  in  base  salary  during  2002.

     The  amount  of  incentive  compensation  is  related  to  the  financial
performance  of the Company.  No cash incentive compensation will be paid to the
Bank's  senior  executive  officers  unless the Committee determines the Bank is
safe  and sound in the following areas:  capital adequacy, earnings composition,
earnings  capability,  liquidity, risk management (classified assets), strategic
planning,  and compliance with laws and regulations.  During 2002, the Committee
paid  incentive awards totaling $497,013 to the senior executive officers of the
Bank.  See  "Summary  Compensation  Table."

     During  2002,  the  Compensation Committee reviewed employee performance to
determine  whether  to  issue  stock  compensation.  The  Compensation Committee
authorizes grants of stock options, stock grants and other types of stock awards
permitted  under  the  Company's  stock  compensation  programs  based  on
recommendations  from  the  Company's Chief Executive Officer.  The Compensation
Committee  has  the  discretion  to determine, among other things, to whom stock
compensation  is  granted,  the  form  of  the  compensation,  the amount of the
compensation, the vesting period, if any and the exercise price, if any.  During
2002,  the  Committee  granted  incentive stock options to purchase an aggregate
36,031 shares of Company common stock to four employees under the Company's 1999
Stock  Compensation  Plan.





                                        By  the  Committee:
                                        Robert  E.  Johnson,  Jr.
                                        D.  Fort  Flowers,  Jr.
                                        Clayton  T.  Stone







                      [THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
                           SUMMARY COMPENSATION TABLE

     To  meet  the  goal  of  providing  shareholders  a  concise, comprehensive
overview  of  compensation  awarded, earned or paid in the reporting period, the
Summary Compensation Table is utilized by the Company.  The Summary Compensation
Table  includes  individual  compensation  information with respect to the Chief
Executive  Officer and the five other most highly compensated executive officers
of  the  Company  and  its  subsidiaries and affiliates whose total compensation
exceeded  $100,000  for  services  rendered  in all capacities during the fiscal
years  ended  December  31,  2002,  2001  and  2000.

<TABLE>
<CAPTION>
                                                       ANNUAL
                                                     COMPENSATION
                                        ---------------------------------------
                                                                                  LONG  TERM
                                                                     OTHER           AWARDS       ALL
NAME  AND  PRINCIPAL                                                 ANNUAL      STOCK OPTIONS   OTHER
POSITION(1)                    YEAR      SALARY(2)      BONUS(3) COMPENSATION(4)  GRANTED(5)  COMPENSATION(6)
--------------------          -----     ----------     --------- --------------  ------------ ---------------
<S>                           <C>       <C>             <C>           <C>            <C>           <C>

Manuel  J.  Mehos              2002     $ 360,000      $ 257,013      $ 5,500        15,000        *
Chairman  of  the  Board       2001       360,000        269,230        4,285            --        *
President  and  Chief          2000       343,200        255,947        2,558        26,000        *
Executive  Officer  of  the
Company  and  the  Bank

Gary  R.  Garrett              2002       234,000             --        6,293            --        *
President, Coastal             2001       234,000        134,614        8,250            --        *
Banc  Mortgage  Corp.          2000       234,000        127,973        6,070        13,000        *

David  R.  Graham              2002       165,000         41,000        5,500         5,000        *
Executive  Vice  President     2001       148,890         39,873        4,722            --        *
- Commercial  Real  Estate     2000       142,138         34,258        2,800         5,000        *
Lending of the Bank

Robert  V.  New (7)            2002       180,000         90,000        2,860         5,000        *
Executive  Vice  President     2001            --             --           --        10,000       --
and Chief Banking Officer of   2000            --             --           --            --       --
the  Bank

Michael  A.  Presley  (8)      2002       282,481             --        5,689            --        *
Executive Vice President,      2001       440,165             --        5,129            --        *
Coastal Banc  Mortgage Corp.   2000       240,509             --        2,734            --        *

Catherine  N.  Wylie           2002       275,000        150,000       10,500        11,031        *
Sr. Executive Vice President,  2001       250,000        134,614       13,250            --        *
Chief Financial Officer and    2000       234,000        127,973       25,810        13,000        *
Chief  Operations  Officer  of
the  Company  and  the  Bank
</TABLE>
______________________

(1)     Principal  positions  are  for  fiscal  2002.
(2)     Does not include amounts attributable to miscellaneous benefits received
by  executive  officers  of  the  Bank, including use of Bank-owned vehicles and
reimbursement  of  educational  expenses.  In  the  opinion of management of the
Company,  the  costs  to  the  Bank of providing such benefits to any individual
executive  officer  during  the  year ended December 31, 2002 did not exceed the
lesser  of  $50,000  or 10% of the total of annual salary and bonus reported for
the  individual.
(3)     Includes  lump  sum  cash  bonuses earned for the fiscal year stated and
paid,  in  some  cases,in  the  subsequent  year.
(4)     Includes,  for  the  named  individuals, employer matching contributions
accrued  pursuant  to  the  Company's  Profit  Sharing  (401(k))  Plan,  any car
allowances and educational reimbursements.  The amounts set for the in the table
include  $5,500 $6,293, $5,500, $2,860, $5,689 and $5,500 which were 401(k) Bank
matched  funds  for  Messrs. Mehos, Garrett, Graham, New, Presley and Ms. Wylie,
respectively.  The  amounts  also  include  $5,000  for  Ms.  Wylie's  annual
compensation  paid  from  CoastalBanc  Financial  Corp.
(5)     Free  standing  stock  options;  see  "Aggregate Options Granted in Last
Fiscal  Year."
(6)     Asterisk  (*)  denotes  amount  less than $50,000 or 10% of total annual
salary  and  bonus.
(7)     Mr.  New  began  employment  with  the  Bank  on  December  31,  2001.
(8)     Mr.  Presley  is  not  an  officer  of  the  Bank  or the Company but is
Executive  Vice  President  of  Coastal Banc Mortgage Corp., an affiliate of the
Bank.  His salary consists 100% of commissions on the sale of whole loan related
assets  to  the  Bank  and  to  other  third  party  entities.


EXECUTIVE  SEVERANCE  AGREEMENTS

     Other  than  as  set  forth  below,  the  Company  has not entered into any
employment contracts with any of its officers.  On May 31, 1999, the Company and
the Bank extended the term of the executive severance agreements (the "Executive
Severance Agreements") with Mr. Garrett and Ms. Wylie (together the "Employees",
each,  individually  an  "Employee")  for  a  continuous term of thirty-six (36)
months,  subject  to annual review of such provision.  On February 22, 2001, the
Company  and  the  Bank  entered  into an Executive Severance Agreement with Mr.
Mehos.  On  August 22, 2002, the Company and the Bank entered into the same type
of  agreement  with Mr. New.  The Executive Severance Agreements provide for the
payment  of  certain  severance  benefits to Messrs. Mehos, Garrett, New and Ms.
Wylie  in the event of a trigger event under the Executive Severance Agreements,
which  means (i) the occurrence of a change in control of the Company as defined
below, or (ii) the voluntary termination within 90 days of an event which occurs
during  the  "Protected  Period"  (i.e.,  the period six months before and three
years  after  a  change  of  control  or  after  the expiration of the Executive
Severance  Agreement) and constitutes "Good Reason" (as defined below), or (iii)
termination  of the Employee's employment for any reason other than "Just Cause"
during  the  Protected Period.  If a trigger event occurs, the Employees will be
entitled to (x) payment by the Company or the Bank for a trigger event described
in (i) above of one times the annual salary and bonus for incentive compensation
(not  including stock compensation plans) paid to the Employee during his or her
immediately  preceding  year  of employment or (y) the payment by the Company or
the Bank for a trigger event described in (ii) or (iii) above of an amount equal
to  2.99  times  their  annual  salary (except for Mr. New's Executive Severance
Agreement  which sets forth an amount equal to 2.0 times his annual salary) plus
bonuses  paid  during  the  immediately preceding year; and (z) the Company will
cause  any  and all outstanding options to purchase stock of the Company held by
each  Employee  to  become  immediately  vested  and  exercisable  in full.  The
Executive  Severance Agreement also provides that the Company will reimburse the
Employee  for  all  costs  and  expenses,  including  reasonable attorney's fees
incurred  by  the Employee to enforce rights or benefits under such agreements.

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

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

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

     Effective  June  28,  2001,  the Company terminated the automatic extension
provision  of  Mr. Garrett's Severance Agreement, with the resulting effect that
it  will  terminate  no  later  than  June  27,  2004.  The  Executive Severance
Agreements  for  Ms. Wylie and Mr. Mehos were renewed for an additional one year
term  subject to the terms of the May 31, 1999 modification and remain in effect
for  the  modified  period  ending  on  the  earlier of (i) a rolling three year
period, or (ii) the date on which the Employee voluntarily terminates his or her
employment  with  the  Company  or  the  Bank.  Mr.  New's  Executive  Severance
Agreement  began on August 22, 2002 and remains in effect for 2002 ending on the
earlier  of  (i)  a  rolling  three  year  period,  or (ii) the date on which he
voluntarily terminates his employment with the Company or the Bank. Any payments
made  to  the  Employee  pursuant  to  the  Executive  Severance  Agreement,  or
otherwise, are subject to and conditioned upon their compliance with the Federal
Deposit  Insurance  Act  and  any regulations promulgated by the Federal Deposit
Insurance  Corporation  thereunder.

AGGREGATE  OPTIONS  GRANTED  IN  LAST  FISCAL  YEAR

     The  following table sets forth individual grants of options that were made
during  the  last  fiscal  year  to  the executive officers named in the Summary
Compensation  Table.  This  table is intended to allow stockholders to ascertain
the number and size of option grants made during the fiscal year, the expiration
date  of  the  grants and the potential realizable present value of such options
under  specified  assumptions.  The  Grant  Date Present Value is a hypothetical
value of the options as of their date of grant and has been calculated using the
Black-Scholes  option-pricing model, as permitted by SEC rules, based upon a set
of  assumptions set forth in the footnote to the table.  It should be noted that
this  model  is only one method of valuing options, and the Company's use of the
model  should  not be interpreted as an endorsement of its accuracy.  The actual
value  of  the  options  may  be significantly different, and the value actually
realized,  if any, will depend upon the excess of the market value of the common
stock  over  the  option  exercise  price  at  the  time  of  exercise, which is
unpredictable.



<TABLE>
<CAPTION>

                                        PERCENT OF
                         OPTIONS      TOTAL OPTIONS
                         GRANTED        GRANTED TO        EXERCISE                GRANT DATE
                         (NO. OF         EMPLOYEES         PRICE      EXPIRATION   PRESENT
   NAME                 SHARES)(1)    IN FISCAL YEAR     PER SHARE       DATE      VALUE(2)
-------------------    ----------    ---------------     ---------    ----------  ----------
<S>                    <C>           <C>                 <C>           <C>        <C>

Manuel  J.  Mehos         15,000          41.63%         $  30.90       06-27-12   $131,565
Catherine  N.  Wylie       3,531           9.80             30.44       02-11-12     30,970
Catherine  N.  Wylie       7,500          20.81             30.90       06-27-12     65,783
Robert  V.  New            5,000          13.88             30.90       06-27-12     43,855
David  R.  Graham          5,000          13.88             30.96       05-24-12     43,855
Gary  R.  Garrett             --             --                --          --            --
                       ----------    ---------------
                          36,031         100.00%
                       ==========    ===============
</TABLE>
______________________
(1)     Total  options granted in 2002 were 36,031 shares.  The options vest 25%
during  the first calendar year and an additional 25% for each of the next three
years.
(2)     The  potential  realizable  value of the grant of options is the present
value  of  the grant at the date of grant using a variation of the Black-Scholes
option-pricing  model.  Assumptions  used  to calculate the present value of the
options  granted  in  2002,  were  as  follows:  an  expected volatility rate of
26.99%,  a  risk  free  rate  of return of 1.606%, a dividend yield of $0.48 per
share per year and the expiration date of ten years, respectively.  The approach
used  in developing the assumptions upon which the Black-Scholes valuations were
calculated  is  consistent  with  the  requirements  of  Statement  of Financial
Accounting  Standards  No.  123,  "Accounting  for  Stock  Based  Compensation."



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

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

                                      VALUE                                       VALUE OF UNEXERCISED
                        SHARES       REALIZED        NUMBER OF UNEXERCISED       IN-THE-MONEY OPTIONS AT
                     ACQUIRED ON      UPON        OPTIONS AT FISCAL YEAR-END       FISCAL YEAR-END(3)
NAME                   EXERCISE     EXERCISE(2)   EXERCISABLE  UNEXERCISABLE   EXERCISABLE  UNEXERCISABLE
------------------   -----------   ---------      --------------------------   --------------------------
<S>                  <C>           <C>            <C>          <C>             <C>          <C>
Manuel  J.  Mehos          --     $      --         228,250      17,750          $4,217,208  $   130,712
Gary  R.  Garrett          --            --          80,172       3,250           1,472,777       57,200
David  R.  Graham          --            --          14,212       5,250             203,300       29,737
Robert  V.  New            --            --           3,750      11,250              10,438       31,312
Michael  A. Presley        --            --           7,500         --               90,150           --
Catherine  N.  Wylie   12,745(1)    283,707          82,809      11,523           1,474,299       62,258
</TABLE>
_____________________

(1)     Ms.  Wylie  exercised  options  to  acquire  12,745  shares  of  stock.
(2)     Value  Realized  Upon  Exercise  is  the difference between the exercise
price  and  the  market  price  at  the  time  of  exercise.
(3)     In  accordance  with SEC rules, values are calculated by subtracting the
exercise  price  from the fair market value of the underlying common stock.  For
purposes  of  this  table,  fair  market value is deemed to be $32.35 per share,
which  was  the  closing  sale  price of the common stock on the Nasdaq National
Market  on  December  31,  2002.


               DISCLOSURE OF EQUITY COMPENSATION PLAN INFORMATION
                             AS OF DECEMBER 31, 2002
The  following  table provides information on all existing Stock Option Plans as
of  December  31,  2002.

<TABLE>
<CAPTION>

                      NUMBER OF SECURITIES       WEIGHTED-AVERAGE EXERCISE     NUMBER OF SECURITIES
                         TO BE ISSUED UPON          PRICE OF OUTSTANDING     REMAINING AVAILABLE FOR
                      EXERCISE OF OUTSTANDING          OPTIONS, WARRANTS      FUTURE ISSUANCE UNDER
PLAN CATEGORY       OPTIONS, WARRANTS AND RIGHTS          AND RIGHTS        EQUITY COMPENSATION PLANS
-------------       ---------------------------- -----------------------    -------------------------
<S>                  <C>                         <C>                       <C>
Equity compensation
  plans approved by
  stockholders               604,654 (1)                  $ 15.64                      31,046
Equity  compensation
  plans  not  approved
  by  stockholders             3,556 (2)                    30.53                      21,444
                             -------                       ------                      ------
Total                        608,210                        15.73                      52,490
                             =======                       ======                      ======
</TABLE>
(1)     Includes  the  1991,  1995  and  1999  Employee  Stock  Option  Plans.
(2)     Includes  the  2002  Non-Employee  Stock  Option  Plan.

<PAGE>
COMPARATIVE  STOCK  PERFORMANCE  GRAPH

     The stock performance graph below compares the cumulative total stockholder
return of the Company's Common Stock from December 31, 1997 to December 31, 2002
with  the  cumulative  total  return  of  the National Association of Securities
Dealers  Automated  Quotations  ("Nasdaq")  Market  Index  and  certain  thrift
institutions  traded  on  the Nasdaq, as compiled by SNL Securities, L.P. in its
OTC  Thrift  Index,  assuming an investment of $100 on December 31, 1997 and the
reinvestment of all dividends.  In 1997, the Company paid quarterly dividends in
the  amount  of $.10 per share on March 15, 1997 and quarterly dividends of $.12
per  share on June 15, 1997, September 15, 1997 and December 15, 1997.  In 1998,
the  Company  split  the  stock  3:2  at which time the $.12 per share dividend,
adjusted  for  the  split was $.08 per share.  During 1998 and 1999, the Company
paid  quarterly  dividends  in the amount of $.08 per share, as adjusted for the
stock  split, on March 15, 1998, June 15, 1998, September 15, 1998, December 15,
1998,  March  15, 1999, June 15, 1999, September 15, 1999 and December 15, 1999.
During  2000,  the  Company  paid  quarterly dividends in the amount of $.08 per
share  on  March  15,  2000 and June 15, 2000.  Quarterly dividends paid for the
September  15,  2000  and December 15, 2000 periods were $.10 per share.  During
2001,  the  Company  paid quarterly dividends in the amount of $.10 per share on
March  15,  2001 and dividends in the amount of $.12 per share on June 15, 2001,
September  15,  2001  and  December  15,  2001.  During  2002,  the Company paid
quarterly  dividends in the amount of $.12 per share on March 15, 2002, June 15,
2002,  September  15,  2002  and  December  15,  2002.












                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

           COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURN PERFORMANCE
                              COASTAL BANCORP, INC.




                               [GRAPHIC  OMITED]
                               -----------------



<TABLE>
<CAPTION>

                                                PERIOD  ENDING
                        ------------------------------------------------------------------
INDEX                   12/31/97   12/31/98   12/31/99    12/31/00    12/31/01    12/31/02
<S>                  <C>           <C>        <C>         <C>         <C>         <C>

Coastal  Bancorp,  Inc.   100.00     76.40      77.82      109.02      133.24       151.53
Nasdaq  -  Total  US      100.00    140.99     261.48      157.42      124.89        86.33
SNL  OTC  Thrift  Index   100.00     87.44      75.20       94.33      121.06       154.43
SNL  $1B-$5B  Thrift
  Index                   100.00     89.76      80.38       97.16      138.52       177.39
SNL  $1B-$5B  Bank
  Index                   100.00     99.77      91.69      104.05      126.42       145.94
</TABLE>

______________
Notes:
(1)     Each  Index  is weighted for all companies that fit the criteria of that
particular  Index.  The  Index  is  calculated  to exclude companies as they are
merged  out  of  existence, and add them to the Index calculation as they become
publicly  traded  companies.  All companies in the particular Index that were in
existence  at  December  31,  2002  are  included  in  the  calculations.
(2)     Each  Index  value measures dividend re-investment by assuming dividends
are  received in cash on the ex-date and re-invested back into the company stock
paying  the dividend on the same day.  The stock price on the ex-date is used to
calculate  how  many  shares  can  be  bought  with  the  dividend.


<PAGE>
TRANSACTIONS  WITH  MANAGEMENT

     Certain  of  the  Company's Directors, Executive Officers and Associates of
Directors  or  Executive  Officers were customers of or had various transactions
with  Coastal  and  its subsidiaries in the ordinary course of business in 2002.
These  transactions  cover  a  wide  range  of banking services, both person and
corporate.  Without  exception,  all  services  were  provided to the Directors,
Executive  Officers  and  their  Associates  at  market  rates  consistent  with
published  for  schedules.  Similar  additional  transactions may be expected to
take  place  in the ordinary course of business in the future.  Although various
laws  and  regulations  governing the Company and its subsidiaries allow Coastal
and  its  subsidiaries  to  make  loans  to  a  limited  extent to its Executive
Officers, any loans and loan commitments and sales of commercial paper involving
Executive Officers, Directors or their affiliates were made on substantially the
same  terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other person and did not involve more than
the  normal  risk  of collectibility or other unfavorable features.  At December
31,  2002,  there  were no loans outstanding to Directors, Executive Officers or
their  associates.

                       PROPOSAL TO RATIFY THE SELECTION OF
                         INDEPENDENT PUBLIC ACCOUNTANTS

     The  Board of Directors of the Company has selected KPMG LLP as independent
public accountants for the Company and the Bank for the year ending December 31,
2003,  and  has  further  directed  that  the  selection  of  independent public
accountants  be  submitted  for  ratification  by the stockholders at the Annual
Meeting.  KPMG  LLP has advised the Company that neither the firm nor any of its
associates  has any relationship with the Company or its subsidiaries other than
the  usual  relationship  that exists between independent public accountants and
clients.  KPMG  LLP  provided  certain non-audit services to the Company and the
Bank  in 2002 which are described below under "Other Fees".  A representative of
KPMG LLP is expected to be present at the Annual Meeting with the opportunity to
make  a  statement  if  he or she so desires and will be available to respond to
appropriate  questions.

FEES  BILLED  TO  THE  COMPANY  BY  KPMG  LLP  DURING  FISCAL  2002

Audit  Fees:
------------

     Fees  paid  by  the  Company  to  KPMG  LLP  for  audit services during the
Company's  fiscal  years  ended  2002  and 2001 for examination of the Company's
annual consolidated financial statements, including those consolidated financial
statements  in  the  Company's quarterly reports on Form 10-Q, were $242,500 and
$246,500,  respectively.

Other  Fees:
------------

     Other  fees  paid  by  the  Company to KPMG LLP during the Company's fiscal
years  ended  2002 and 2001 were $60,000 and $0 for services rendered during the
2002  issuance  of  the 9.0% Trust Preferred Securities, $36,345 and $30,125 for
preparation  of  the  Company's 2001 and 2000 income tax returns and $10,750 and
$10,300  for  the  2001  and 2000 fiscal years audits of the Bank's 401(k) Plan.

     All non-audit services were reviewed by the Audit Committee which concluded
that  the  performance  of  such  service  by  KPMG  LLP was compatible with the
maintenance  of  that  firm's  independence  in  the  conduct  of  its  auditing
functions.  Stockholder  ratification  of  the  selection  of  KPMG  LLP  as the
Company's independent public accountants is not required by the Company's Bylaws
or  other  applicable  legal  requirement.  However, the Board is submitting the
selection  of  KPMG LLP to the stockholders for ratification as a matter of good
corporate  practice.

     In  the  event  that  stockholders  fail to ratify the selection, the Audit
Committee  and  the  Board  will  reconsider whether or not to retain that firm.
Even  if  the  selection is ratified, the Board at its discretion may direct the
appointment  of  a  different independent accounting firm at any time during the
year  if  it  determines that such a change would be in the best interest of the
Company  and  its  stockholders.


     THE  BOARD  OF  DIRECTORS  RECOMMENDS  A  VOTE  "FOR"  RATIFICATION  OF THE
APPOINTMENT  OF  KPMG  LLP  AS  INDEPENDENT  PUBLIC ACCOUNTANTS FOR FISCAL 2003.


                              STOCKHOLDER PROPOSALS

     Any  proposal  which  a  stockholder  wishes  to have presented at the next
Annual  Meeting  of  Stockholders  of  the  Company  and  included  in the proxy
materials  used  by the Company in connection with such meeting must be received
at  the corporate headquarters office of the Company at Coastal Banc Plaza, 5718
Westheimer,  Suite  600,  Houston,  Texas 77057-5745, no later than November 26,
2003.  If  such  proposal  is in compliance with all of the requirements of Rule
14a-8  promulgated  under  the  Exchange  Act,  it will be included in the Proxy
Statement  and set forth on the form of proxy issued for the next Annual Meeting
of Stockholders.  It is urged that any such proposals be sent by certified mail,
return  receipt  requested.

     Stockholder  proposals  which  are  not  submitted  for  inclusion  in  the
Company's  proxy  materials pursuant to Rule 14a-8 under the Exchange Act may be
brought  before  an  annual  meeting  pursuant  to  the  Company's  Articles  of
Incorporation,  which  provide that business must be properly brought before the
meeting  by or at the direction of the Board of Directors, or otherwise properly
brought  before  the  meeting  by  a  stockholder.  For  business to be properly
brought  before  an  annual  meeting  by  a  stockholder  (whether  or not it is
submitted  for inclusion in the Company's proxy materials), the stockholder must
have given timely notice thereof in writing to the Secretary of the Company.  To
be  timely,  a stockholder's notice must be delivered to, or mailed and received
at,  the  principal executive offices of the Company not less than 60 days prior
to  the  anniversary  date  of  the mailing of proxy materials by the Company in
connection  with the immediately preceding annual meeting of stockholders of the
Company.  A  stockholder's  notice  shall  set  forth  as  to  each  matter  the
stockholder  proposes  to  bring  before  an  annual  meeting  such  information
specified  in  the  Company's Articles of Incorporation.  If the proposal is not
made  in  accordance  with  the  terms  of  the  Articles of Incorporation, such
proposal will not be acted upon at the Annual Meeting.  No stockholder proposals
were  received  by  the  Company  in  connection  with  the 2003 Annual Meeting.

<PAGE>
                               PROXY SOLICITATION

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

     The  Company  has  not  retained  a professional proxy solicitation firm to
assist  in  the  solicitation  of  proxies  or  for  related  services.


                                  OTHER MATTERS

     Management  is  not  aware  of  any business to come before the 2003 Annual
Meeting  other  than  those  matters described above in this Proxy Statement and
possibly,  procedural  matters incident to the conduct of the meeting.  However,
if  any  other  matters  should properly come before the meeting, it is intended
that  the  proxies  solicited  hereby  will be voted with respect to those other
matters  in  accordance  with  the  judgment  of the persons voting the proxies.


                     ANNUAL REPORT AND FINANCIAL STATEMENTS

     A  copy of the Company's Annual Report for the year ended December 31, 2002
("Annual  Report") accompanies this Proxy Statement.  The Annual Report is not a
part  of  the  proxy  solicitation  materials.

     UPON  RECEIPT  OF  A  WRITTEN  REQUEST,  THE  COMPANY  WILL  FURNISH TO ANY
STOCKHOLDER,  WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR  THE  YEAR  ENDED DECEMBER 31, 2002, AND ANY EXHIBITS THERETO REQUIRED TO BE
FILED  WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE EXCHANGE ACT.  SUCH
WRITTEN  REQUEST  SHOULD  BE  DIRECTED  TO  CATHERINE  N. WYLIE, CHIEF FINANCIAL
OFFICER,  COASTAL BANCORP, INC., COASTAL BANC PLAZA, 5718 WESTHEIMER, SUITE 600,
HOUSTON, TEXAS 77057-5745. THE FORM 10-K IS NOT A PART OF THE PROXY SOLICITATION
MATERIALS.

                              By  Order  of  the  Board  of  Directors



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

March  25,  2003

<PAGE>



     APPENDIX  A

                             AUDIT COMMITTEE CHARTER
                              COASTAL BANCORP, INC.


1.     Audit  Committee  Purpose  and  Authority

The Audit Committee (the "Committee") of Coastal Bancorp, Inc., its subsidiaries
and  affiliates  (the  "Company")  is  appointed  by the Board of Directors (the
"Board")  to  assist  the  Board in fulfilling its oversight responsibilities to
financial  institution  regulators, the shareholders, potential shareholders and
the  investment  community.  The Committee's primary duties and responsibilities
are  to:

     Monitor  the  integrity of the Company's financial statements, consolidated
     accounting  and  financial  controls,  the  financial reporting process, in
     addition  to  the  Company's  systems  of  internal  controls.

     Monitor  the  selection,  independence  and  performance  of  the Company's
     independent  auditors,  the  Company's  internal auditing function (whether
     inhouse  or  outsourced)  and the Company's loan review function. Evaluate,
     and  where  appropriate, replace the independent auditors or the outsourced
     internal  audit  firm,  if  applicable.

     Provide  an  avenue  of  communication  among  the  independent  auditors,
     management, the internal audit function (whether inhouse or outsourced) and
     the  Board.  It  is  the  expectation of the Committee that management will
     fulfill  is  responsibility  of  bringing  any  significant  matters to the
     attention  of  the  Committee.

The  Committee  has  the  authority  to conduct any investigation appropriate to
fulfill its responsibilities and shall have unrestricted access to the personnel
records,  systems  and  facilities  of the Company and the Company's independent
public  accountants,  internal  and  external legal counsel and consultants. The
Committee  shall  have  the  authority to request any officer or employee of the
Company  or  the  Company's  outside counsel or independent auditors to attend a
meeting  of the Committee or to meet with any members of, or consultants to, the
Committee.  The  Committee  has  the  ability  to retain, at the Bank's expense,
special  legal, accounting or other consultants or experts it deems necessary in
the performance of its duties. The Committee may also require that the Company's
legal  counsel  disclose at the Board meetings the existence of any legal matter
that  might have a significant impact on the Company's financial statements, and
notify  the members of the Committee of any significant legal matters that might
arise  between  Board  meetings.

Any  change  in the employment status, title or scope of responsibilities of the
Company's  independent  auditors  or  the  Company's  internal auditing function
(whether  inhouse  or  outsourced) must be approved in writing by the Committee.

<PAGE>

2.     Audit  Committee  Composition  and  Meetings

Committee  members  shall  meet  the  requirements of Section 112 of the Federal
Deposit  Insurance  Corporation  Improvement  Act  of  1991  and  the  National
Association  of  Securities Dealers (NASD).  The Committee shall be comprised of
three  or  more directors as determined and appointed by the Board, each of whom
shall  be  independent  nonexecutive  directors, free from any relationship that
would  interfere  with  the  exercise  of  his  or  her  independent  judgment.

A  director  of  the Company with any of the following relationships will not be
considered  independent:  (i) employment by the Company or any of its affiliates
for the current year or during any part of the past three years; (ii) acceptance
of  any  compensation  from  the  Company  or any of its affiliates in excess of
$60,000.00  during  the  Company's previous fiscal year, other than compensation
for  board  service,  benefits  under  a  tax-qualified  retirement  plan,  or
non-discretionary  compensation;  (iii)  member  of  the  immediate family of an
individual  who is, or has been in any part of the past three years, employed by
the  Company  or any of its affiliates as an executive officer; (iv) partnership
in,  or  a  controlling  shareholder  or  an  executive offer of, any for-profit
business  organization  to  which  the  Company  made, or from which the Company
received,  payments  (other  than  those  arising solely from investments in the
Company's securities) that exceed five percent (5%) of the company's or business
organization's  gross revenues for that year, or $200,000.00, whichever is more,
in  any  of  the  past three years; or (v) employment as an executive officer of
another  entity  where  any  of  the Company's executives serve on that entity's
compensation  committee.

All  members  of  the  Committee shall have a basic understanding of finance and
accounting  and be able to read and understand fundamental financial statements,
and  at  least  two  members  of  the Committee shall have accounting or related
financial  management  expertise.

The  Committee  will meet at least quarterly on the date of a normally scheduled
meeting  of  the  Board.  The  Chairman of the Committee may schedule additional
meetings  as  required.  Meetings  of the Committee will be conducted in private
with  a  member of the internal audit firm/department and/or any other employee,
officer, outside counsel or independent auditors of the Company as the Committee
or  the  Board  deems  necessary  or  appropriate.

3.     Audit  Committee  Responsibilities  and  Duties

Review  Procedures
------------------

     Review  and reassess the adequacy of this charter at least annually. Submit
     the  charter  to  the Board for approval and have the document published at
     least  every  three  years  in  accordance  with  SEC  regulations.

     Review the Company's annual audited financial statements prior to filing or
     distribution.  This  review  may include discussion with management and the
     Company's  independent auditors concerning any significant issues regarding
     accounting  principles, practices and judgments employed in the preparation
     of  the  annual  consolidated  financial  statements.

     In  consultation with management, the independent auditors and the internal
     audit  firm/department  members,  consider  the  integrity of the Company's
     financial  reporting  processes and controls. Discuss significant financial
     risk  exposures  and the steps management has taken to monitor, control and
     report  such  exposures.  Review  significant  findings  prepared  by  the
     independent  auditors  and the internal audit firm/department together with
     management's  responses.

     Review  with  the  financial  management of the Company and the independent
     auditors  any  significant  issues that arise during any interim period for
     which  the  Company  discloses  financial  results.

Independent  Auditors
---------------------

     The  independent  auditors  are ultimately accountable to the Committee and
     the  Board.  The Committee shall review the independence and performance of
     the  auditors  and  annually  recommend  to  the  Board  the appointment or
     discharge  of  the  independent  auditors  when  circumstances  warrant.

     Approve  the  fees  and  other  significant  compensation to be paid to the
     independent  auditors.

     On  an  annual  basis,  the  Committee  shall  meet  separately  with  the
     independent  auditors  to  review  and  discuss  with  them all significant
     relationships  said  independent  auditors  have  with  the Bank that could
     impair  their  independence.

     Review  the  independent  auditor's  engagement  letter.

     Discuss  the  results  of  the year end audit with the independent auditors
     including  those matters required to be communicated to audit committees in
     accordance  with  AICPA  SAS  61.

Internal  Audit  Firm/Department  and  Legal  Compliance
--------------------------------------------------------

     Review  the  budget,  audit  plan, activities, organizational structure and
     qualifications  of  the  internal  audit  firm/department  as  needed.

     Review  significant  reports prepared by the internal audit firm/department
     together  with  management's  responses  and  follow-up  to  those reports.

     Review  all  Suspicious  Activity  Reports and other reports concerning any
     significant  fraud  or regulatory noncompliance that occurs at the Company.

     On  at least an annual basis, review with the Company's general counsel any
     legal  matters  that  could  have  a  significant  impact  on the Company's
     financial  statements.

Other  Audit  Committee  Responsibilities
-----------------------------------------

     Annually prepare a report to shareholders as required by the Securities and
     Exchange Commission. The report should state whether the Committee has: (i)
     reviewed  and  discussed  the audited financial statements with management;
     (ii)  discussed  with  the  independent auditors the matters required to be
     discussed  by  SAS  No.  61, including: (a) the methods used to account for
     significant transactions; (b) the effect of significant accounting policies
     in  controversial  or  emerging  areas  for  which  there  is  a  lack  of
     authoritative  guidance or consensus; (c) the process used by management in
     formulating  particularly  sensitive accounting estimates and the basis for
     the  auditor's conclusions regarding the reasonableness of those estimates;
     and  (d)  disagreements  with management over the application of accounting
     principles,  the  basis  for  management's  accounting  estimates,  and the
     disclosures in the financial statements; (iii) received written disclosures
     from  the  independent auditors regarding their independence as required by
     Independence  Standards  Board  Standard  No.  1,  and  has  discussed  the
     independent  auditors' independence with the independent auditors; and (iv)
     based  on  the foregoing, recommend to the Board that the audited financial
     statements  be  included in the Company's annual report for the last fiscal
     year  for  filing  with  the  SEC.

     Perform  any  other  activities consistent with this charter, the Company's
     by-laws,  and governing law that the Committee or the Board deems necessary
     or  appropriate.

     Review  examination reports rendered by regulatory authorities and evaluate
     the  adequacy  of  management's  response.

4.     Safe  Harbor  Statement

While  the  Committee  has  the  responsibilities  and  powers set forth in this
charter,  it  is  not  the duty of the Committee to plan or conduct audits or to
determine  that the Company's financial statements are complete, accurate and in
accordance  with  generally  accepted  accounting  principles.  That  is  the
responsibility  of  management and the independent auditors.  Nor is it the duty
of  the Committee to conduct investigations or to resolve disagreements, if any,
between  members  of  management.