EXHIBIT 99.3


   STATEMENT OF FACTORS UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     From  time  to  time, Coastal Bancorp, Inc. ("Coastal" or "we," "us," "our"
and  other  terms  referring  to Coastal Bancorp, Inc. and Coastal Banc ssb) has
made  and  will  make  forward-looking  statements.  These  statements  can  be
identified by the fact that they do not relate strictly to historical or current
facts.  Forward-looking  statements  often  use  words  such  as  "anticipate,"
"target,"  "expect,"  "estimate,"  "intend,"  "plan," "goal," "believe" or other
words  of  similar  meaning.  Forward-looking  statements give Coastal's current
expectations  or  forecasts  of  future  events,  circumstances or results.  Our
disclosure  in  this  report,  including  in  the Section entitled "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations"
("MD&A"),  contains forward-looking statements. We also may make forward-looking
statements  in  its  other  documents  filed  with  the  Securities and Exchange
Commission  (the  "SEC")  and in other written materials. In addition, Coastal's
senior  management  may  make  forward-looking  statements  orally  to analysts,
investors,  representatives  of  the  media  and  others.  Any  forward-looking
statements  made  by  or on behalf of Coastal speak only as of the date they are
made.  We  do  not undertake to update forward-looking statements to reflect the
impact  of circumstances or events that arise after the date the forward-looking
statement  was made. The reader should, however, consult any further disclosures
of  a forward-looking nature we may make in our Annual Reports on Form 10-K, our
Quarterly  Reports  on  Form  10-Q  and  our  Current  Reports  on Form 8-K. All
forward-looking  statements,  by  their  nature,  are  subject  to  risks  and
uncertainties.  Coastal's actual future results may differ materially from those
set forth in our forward-looking statements. Factors that might cause our future
financial  performance  to  vary  from  that  described  in  our forward-looking
statements include the credit, market, operational, liquidity, interest rate and
other  risks  discussed in the MD&A section of this report and in other periodic
reports  filed  with  the  SEC. In addition, the following discussion sets forth
certain  risks  and  uncertainties that we believe could cause our actual future
results  to  differ  materially  from  expected  results. However, other factors
besides  those  listed  below  or discussed in Coastal's reports to the SEC also
could  adversely affect our results, and the reader should not consider any such
list  of  factors  to be a complete set of all potential risks or uncertainties.
This  discussion  is  provided as permitted by the Private Securities Litigation
Reform  Act  of  1995.

WE  ARE  VULNERABLE  TO  CHANGES  IN  INTEREST  RATES.

     Our  ability  to  make  a profit, like that of most financial institutions,
substantially  depends  upon  our  net  interest income, which is the difference
between  the  interest  income  we  earn on our interest-earning assets, such as
loans  and  investment  securities,  and  the  interest  expense  we  pay on our
interest-bearing  liabilities,  such  as deposits and borrowings. Certain assets
and  liabilities,  however,  may react in different degrees to changes in market
interest rates.  Further, interest rates on some types of assets and liabilities
may  fluctuate prior to changes in broader market interest rates, while rates on
other  types  may  lag  behind.  Additionally,  some  of  our  assets,  such  as
adjustable rate mortgages, have features, including payment and rate caps, which
restrict  changes  in  their  interest  rates.

     Factors  such  as inflation, recession, unemployment, money supply, acts of
terrorism,  international  disorders,  instability  in  domestic  and  foreign
financial  markets,  and  other  factors  beyond our control may affect interest
rates.  Changes in market interest rates will also affect the level of voluntary
prepayments  on  our  loans  and  the receipt of payments on our mortgage-backed
securities  resulting  in  the  receipt  of proceeds that may be reinvested at a
lower rate than the loan or mortgage-backed security being prepaid.  Although we
pursue  an  asset-liability  management  strategy  designed  to  manage our risk
resulting  from  changes in market interest rates, changes in interest rates can
still  have  a  material  adverse  effect  on  our  profitability.





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OUR  EXPOSURE TO CREDIT RISK WILL INCREASE AS WE INCREASE OUR COMMERCIAL BANKING
ACTIVITIES.

     As  we  increase  our  focus  on commercial business banking and attempt to
increase  our net interest margin, a gradual increase in our consolidated credit
risk  is  likely  to  occur.  One  of  our  main  strategies  is  to  replace
lower-yielding  first  lien  single-family  residential  mortgage  loans  and
mortgage-backed  securities  with  commercial  and  consumer  loans.  Generally,
commercial  loans  (including commercial and multi-family real estate loans) are
considered  to  be  riskier  than  first  lien,  single-family residential loans
because  they  have  larger  balances  to  a single borrower or group of related
borrowers  and  because  their  repayment generally relies on the success of the
borrowing  enterprise.  In  addition,  consumer  loans  are  usually  secured by
depreciating  assets  (such  as cars and boats) and collections are dependent on
the  borrowers'  continuing  financial  stability,  which  is  more likely to be
adversely  affected  by  job  loss,  divorce,  illness  and personal bankruptcy.
Accordingly,  we  expect higher loan losses on this type of lending.  If we have
to  provide  for loan losses that are higher than our historical experience, our
results  of  operations  and  financial  condition  could be adversely affected.

OUR  ALLOWANCE  FOR  LOAN  LOSSES  MAY  BE  INADEQUATE  TO COVER LOSSES ACTUALLY
INCURRED,  WHICH  COULD  HAVE  A  MATERIAL  ADVERSE  EFFECT  ON  OUR  RESULTS OF
OPERATIONS  AND  FINANCIAL  CONDITION.

     We maintain an allowance for loan losses in an amount management believe is
sufficient to provide for known and inherent risks in our loan portfolio.  If we
incur actual losses on our loans in excess of our allowance for loan losses, our
profitability  may  be  adversely  affected.

THE  CONCENTRATION  OF OUR LOAN PORTFOLIO IN TEXAS AND CALIFORNIA SUBJECTS US TO
RISK  TO  THE  EXTENT  THE  CALIFORNIA  AND TEXAS ECONOMIES EXPERIENCE PROBLEMS.

     A substantial portion of the loans we originate and purchase are secured by
properties  located  in  Texas  and  California  or are made to businesses which
operate  in  those  states.  As  a  result,  a large  number of borrowers may be
affected  by  adverse  changes  in  the  economic  conditions occurring in those
states.

     The  Texas  economy  has  been  historically  sensitive to business cycles,
particularly  those in the oil and gas industry. Unfavorable economic conditions
in  Texas  could significantly increase the number of borrowers which are unable
to  pay  their  loans  on a timely basis and cause a decline in the value of the
properties  securing our loans which could have an adverse effect on our results
of  operations  and  financial  condition.

     The California economy experienced a major slowdown in 2001 which continued
in  2002. Economic conditions in California are subject to various uncertainties
at  this time, including the long-term impact of the electrical power crisis and
the  decline  in  the  technology  sector.  If economic conditions in California
continue  to  decline, we expect that our level of problem assets could increase
accordingly.

WE  MAY  FAIL  TO  IDENTIFY  OR  CONSUMMATE  ADDITIONAL  ACQUISITIONS.

     Our business strategy has historically relied, in part, upon our ability to
obtain  low  cost  deposits, expand into new markets and enhance our presence in
existing  markets  by  identifying  and  acquiring  branches  of other financial
institutions  or  whole  banks  that  meet our acquisition criteria. In pursuing
these  opportunities,  we compete with other financial institutions with similar
acquisition  strategies,  many  of which are larger than we are and have greater
financial  and  other  resources  than  we  have.  We will compete for potential
acquisitions  based  on  a  number  of  factors,  including  price,  terms  and
conditions,  size,  access  to  capital  and our ability to offer cash, stock or
other  forms  of  consideration.  We  cannot  assure you that we will be able to
identify  suitable  acquisition  candidates  or,  once  a  suitable  acquisition
candidate  is  identified, that we will be able to consummate the acquisition on
terms  and  conditions  acceptable  to  us  or  at  all.



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WE  MAY  FAIL  TO  INTEGRATE  OUR  ACQUISITIONS  SUCCESSFULLY.

     We  have  grown  through  the  acquisition  of  branches of other financial
institutions  or of whole banks. To a certain extent, our success is tied to our
ability  to  integrate  the operations, management, products and services of the
entities  we  acquire.  After  each  acquisition,  we  must  expend  substantial
managerial,  operating,  financial  and  other  resources  to  integrate  these
entities.  In  particular,  we must install and standardize adequate operational
and  control  systems,  deploy  or modify certain equipment, implement marketing
efforts  in  new as well as existing locations and employ and maintain qualified
personnel.  Our  operating  results  may  be  adversely  affected  if we fail to
properly  integrate  companies  we  acquire.

COMPETITION  WITH  OTHER  FINANCIAL  INSTITUTIONS  COULD  ADVERSELY  AFFECT  OUR
PROFITABILITY.

     We  face substantial competition in purchasing and originating loans and in
attracting  deposits. This competition in purchasing and originating loans comes
principally  from  banks, other savings institutions, mortgage banking companies
and  other  lenders  and  purchasers  of  loans.  Many  of our competitors enjoy
competitive advantages including greater financial resources, a wider geographic
presence  or  more  accessible  branch  office  locations,  the ability to offer
additional services or more favorable pricing alternatives and lower origination
and  operating  costs.  This  competition  could  result  in a decrease in loans
originated  or  purchased  by  us  that  could  adversely  affect our results of
operations,  and  financial  condition.

     In  attracting  deposits,  we  compete with insured depository institutions
such  as  savings institutions, credit unions and banks, as well as institutions
offering  uninsured  investment alternatives including money market funds. These
competitors  may  offer  higher interest rates than we do, which could result in
either  our  attracting  fewer deposits or in our being required to increase our
rates in order to attract deposits. Increased deposit competition could increase
our  cost  of  funds  and  adversely  affect  our  ability to generate the funds
necessary for our lending operations, thereby adversely affecting our results of
operations  and  financial  condition.

CHANGES  IN  STATUTES  AND  REGULATIONS  COULD  ADVERSELY  AFFECT  US.

     We are subject to extensive regulation and supervision by federal and state
authorities.  Such  supervision  and  regulation  establish  a  comprehensive
framework  of  activities  in  which an institution may engage, and are intended
primarily  for  the  protection  of  the  federal deposit insurance fund and our
depositors.  This  regulatory  structure  also  provides  our  regulators  with
significant  discretion  in the performance of their supervisory and enforcement
duties.  Any change in such regulation, whether by our regulators or as a result
of  legislation subsequently enacted by the Congress of the United States or the
Texas  legislature,  could  have  a substantial impact on our operations and us.
Additional  legislation  and regulations may be enacted or adopted in the future
that  could  significantly  affect  our  powers, authority and operations, which
could  have  a  material  adverse  effect  on  our  operations.