UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


          [  X  ]     Quarterly  Report  Under  Section  13  or  15  (d)  of
               the  Securities  Exchange  Act  of  1934
               For  the  Quarterly  Period  Ended  September  30,  1999

          [    ]     Transition  Report  Pursuant  to  Section  13  or 15 (d) of
               the  Securities  Exchange  Act  of  1934
               For  the  Transition  Period  from  _________  to  _________


                        Commission File Number:  0-24526
                                                --------

                              COASTAL BANCORP, INC.
                              ---------------------
             (Exact name of Registrant as specified in its charter)


                            Texas         76-0428727
                 ---------------------     --------------
(State  or  other  jurisdiction  of     (I.R.S.  Employer
incorporation  or  organization)     Identification  No.)

                           5718 Westheimer, Suite 600
                                Houston, Texas 77057
                            ------------------------
                     (Address of principal executive office)

                                   (713) 435-5000
                               ------------------
                         (Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to  be  filed  by  Section  13  or 15 (d) of the Securities Exchange Act of 1934
during  the  preceding 12 months (or for such shorter period that the Registrant
was  required  to  file  such  reports), and (2) has been subject to such filing
requirements  for  the  past  90  days.

                                  YES     X     NO
                                      ------        ------

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
Common  Stock,  as  of  the  latest  practicable  date.

          COMMON STOCK OUTSTANDING:   6,327,803 AS OF OCTOBER 31, 1999


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES

                                Table of Contents



PART  I.     FINANCIAL  INFORMATION
--------     ----------------------
<TABLE>
<CAPTION>


<S>     <C>                                                                       <C>
Item 1  Financial Statements
        Consolidated Statements of Financial Condition at September 30, 1999
        (unaudited) and December 31, 1998                                          1

        Consolidated Statements of Income for the Nine-Month Periods Ended
        September 30, 1999 and 1998 (unaudited)                                    2

        Consolidated Statements of Income for the Three-Month Periods Ended
        September 30, 1999 and 1998 (unaudited)                                    3

        Consolidated Statements of Comprehensive Income for the Nine-Month
        Periods Ended September 30, 1999 and 1998 (unaudited)                      4

        Consolidated Statements of Cash Flows for the Nine-Month Periods
        Ended September 30, 1999 and 1998 (unaudited)                              5

        Notes to Consolidated Financial Statements                                 7

        Management's Discussion and Analysis of Financial Condition and Results
Item 2  of Operations                                                             18

Item 3  Quantitative and Qualitative Disclosures About Market Risk                25

</TABLE>



PART  II.     OTHER  INFORMATION
---------     ------------------
<TABLE>
<CAPTION>

<S>     <C>                                                  <C>
Item 1  Legal Proceedings                                    26
Item 2  Changes in Securities                                26
Item 3  Default upon Senior Securities                       26
Item 4  Submission of Matters to a Vote of Security Holders  26
Item 5  Other Information                                    26
Item 6  Exhibits and Reports on Form 8-K                     27
</TABLE>




SIGNATURES


<PAGE>



ITEM  1.     FINANCIAL  STATEMENTS
--------     ---------------------
<TABLE>
<CAPTION>

                                 COASTAL BANCORP, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                    (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                September 30,      December 31,
                                                                    1999               1998
                                                               ---------------      ------------
ASSETS                                                           (Unaudited)
-------------------------------------------------------------
<S>                                                            <C>                         <C>
Cash and cash equivalents                                      $        31,375     $   45,453
Federal funds sold                                                       4,800             --
Loans receivable (note 4)                                            1,749,303      1,538,149
Mortgage-backed securities held-to-maturity (notes 3 and 8)            931,179      1,154,116
Mortgage-backed securities available-for-sale, at fair value
 (notes 3 and 8)                                                       101,613         96,609
U.S. Treasury security held-to-maturity                                    299             --
U.S. Treasury security available-for-sale, at fair value                    --          2,016
Mortgage loans held for sale                                             3,880             --
Accrued interest receivable                                             15,952         15,518
Property and equipment                                                  31,674         33,116
Stock in the Federal Home Loan Bank of Dallas (FHLB)                    52,775         49,819
Goodwill                                                                28,405         30,687
Mortgage servicing rights                                                3,215          4,049
Prepaid expenses and other assets                                       12,146         12,629
                                                               ---------------     ----------
                                                               $     2,966,616     $2,982,161
                                                               ===============     ==========
</TABLE>

<TABLE>
<CAPTION>

     LIABILITIES,  MINORITY  INTEREST  AND  STOCKHOLDERS'  EQUITY
     ------------------------------------------------------------

<S>                                                                 <C>          <C>
Liabilities:
 Deposits (note 5)                                                  $1,601,001   $1,705,004
 Advances from the FHLB (note 6)                                     1,029,853      966,720
 Securities sold under agreements to repurchase (note 6)               100,000      100,000
 Senior notes payable, net (note 7)                                     46,900       50,000
 Advances from borrowers for taxes and insurance                        10,269        3,340
 Other liabilities and accrued expenses                                 16,009       15,583
                                                                    -----------  -----------
     Total liabilities                                               2,804,032    2,840,647
                                                                    -----------  -----------

Minority interest - 9.0% noncumulative preferred stock of Coastal
 Banc ssb (note 10)                                                     28,750       28,750

Commitments and contingencies (notes 4 and 8)

Stockholders' equity (notes 1, 3, 9, 11 and 14):
 Preferred stock, no par value; authorized shares 5,000,000;
   9.12% Cumulative, Series A, 1,100,000 shares issued and
   outstanding in 1999                                                  27,500           --
 Common stock, $.01 par value; authorized shares
   30,000,000; 7,579,252 and 7,568,255 shares issued
   in 1999 and 1998, respectively                                           76           76
 Additional paid-in capital                                             32,250       33,696
 Retained earnings                                                      95,478       88,144
 Accumulated other comprehensive income (loss) -
   unrealized loss on securities available-for-sale                     (1,007)      (1,374)
 Treasury stock at cost (1,283,679 and 499,600 shares in 1999
   and 1998)                                                           (20,463)      (7,778)
                                                                    -----------  -----------
     Total stockholders' equity                                        133,834      112,764
                                                                    -----------  -----------
                                                                    $2,966,616   $2,982,161
                                                                    ===========  ===========
</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                            Nine Months Ended
                                                                             September 30,
                                                                          -------------------
                                                                            1999            1998
                                                                     -------------------  ---------
                                                                         (Unaudited)
<S>                                                                  <C>                  <C>
Interest income:
 Loans receivable                                                    $     98,766         $ 87,495
 Mortgage-backed securities                                                48,633           67,938
 FHLB stock, federal funds sold and other interest-earning assets           2,348            2,007
                                                                     ------------         ---------
                                                                          149,747          157,440
                                                                     ------------         ---------

Interest expense:
 Deposits                                                                  48,637           48,166
 Advances from the FHLB:
   Short-term                                                              12,449           11,567
   Long-term                                                               22,755           15,613
 Other borrowed money                                                       5,482           29,807
 Senior notes payable                                                       3,600            3,750
                                                                     ------------         ---------
                                                                           92,923          108,903
                                                                     ------------         ---------

   Net interest income                                                     56,824           48,537
Provision for loan losses                                                   4,366            2,350
                                                                     ------------         ---------
   Net interest income after provision for loan losses                     52,458           46,187
                                                                     ------------         ---------

Noninterest income:
 Loan fees and service charges on deposit accounts                          5,755            3,894
 Loan servicing income, net                                                   470              571
 Writedown of purchased mortgage loan premium                                  --             (709)
 Other                                                                      1,198              996
                                                                     ------------         ---------
                                                                            7,423            4,752
                                                                     ------------         ---------

Noninterest expense:
 Compensation, payroll taxes and other benefits                            21,682           16,156
 Office occupancy                                                           8,495            6,437
 Data processing                                                            2,550            1,806
 Amortization of goodwill                                                   2,282            1,517
 Insurance premiums                                                           907              912
 Real estate owned                                                            333              693
 Other                                                                      6,585            5,872
                                                                     ------------         ---------
                                                                           42,834           33,393
                                                                     ------------         ---------

     Income before provision for Federal income taxes and minority
     interest                                                              17,047           17,546

Provision for Federal income taxes (note 12)                                5,242            1,944
                                                                     ------------         ---------
     Income before minority interest                                       11,805           15,602
Minority interest - preferred stock dividends of Coastal Banc ssb
 (Series A) (note 10)                                                       1,941            1,941
                                                                     ------------         ---------
     Net income                                                      $      9,864         $ 13,661
                                                                     ============         =========
     Net income available to common stockholders                     $      8,907         $ 13,661
                                                                     ============         =========

Basic earnings per share (note 9)                                    $       1.36         $   1.81
                                                                     ============         =========

Diluted earnings per share (note 9)                                  $       1.33         $   1.75
                                                                     ============         =========
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                            Three Months Ended
                                                                              September 30,
                                                                           --------------------
                                                                            1999           1998
                                                                    --------------------  -------
                                                                        (Unaudited)
<S>                                                                 <C>                   <C>
Interest income:
 Loans receivable                                                   $      34,938         $31,468
 Mortgage-backed securities                                                15,144          21,740
 FHLB stock, federal funds sold and other interest-earning assets             788             971
                                                                    -------------         -------
                                                                           50,870          54,179
                                                                    -------------         -------

Interest expense:
 Deposits                                                                  15,759          17,167
 Advances from the FHLB:
   Short-term                                                               5,350           3,988
   Long-term                                                                7,623           7,753
 Other borrowed money                                                       1,391           6,766
 Senior notes payable                                                       1,186           1,250
                                                                    -------------         -------
                                                                           31,309          36,924
                                                                    -------------         -------

   Net interest income                                                     19,561          17,255
Provision for loan losses                                                   1,360             450
                                                                    -------------         -------
   Net interest income after provision for loan losses                     18,201          16,805
                                                                    -------------         -------

Noninterest income:
 Loan fees and service charges on deposit accounts                          2,031           1,428
 Loan servicing income, net                                                   184             171
 Other                                                                        355             453
                                                                    -------------         -------
                                                                            2,570           2,052
                                                                    -------------         -------

Noninterest expense:
 Compensation, payroll taxes and other benefits                             7,277           6,059
 Office occupancy                                                           2,856           2,406
 Data processing                                                              788             625
 Amortization of goodwill                                                     768             574
 Insurance premiums                                                           292             387
 Real estate owned                                                             56             270
 Other                                                                      2,499           2,154
                                                                    -------------         -------
                                                                           14,536          12,475
                                                                    -------------         -------

     Income before provision for Federal income taxes
     and minority interest                                                  6,235           6,382

Provision for Federal income taxes (note 12)                                1,843           1,994
                                                                    -------------         -------
     Income before minority interest                                        4,392           4,388
Minority interest - preferred stock dividends of Coastal Banc ssb
 (Series A) (note 10)                                                         647             647
                                                                    -------------         -------
     Net income                                                     $       3,745         $ 3,741
                                                                    =============         =======
     Net income available to common stockholders                    $       3,118         $ 3,741
                                                                    =============         =======

Basic earnings per share (note 9)                                   $        0.50         $  0.50
                                                                    =============         =======

Diluted earnings per share (note 9)                                 $        0.48         $  0.48
                                                                    =============         =======
</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                  Nine Months Ended
                                                                    September 30,
                                                                -------------------
                                                                   1999           1998
                                                            --------------       -------
                                                              (Unaudited)
<S>                                                         <C>                  <C>

Net income                                                  $      9,864         $13,661

Other comprehensive income, net of tax:
 Unrealized holding gains on securities available-for-sale
 arising during period                                               367           1,491
                                                            ------------         -------

Total comprehensive income                                  $     10,231         $15,152
                                                            ============         =======

</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                Nine Months Ended
                                                                                  September 30,
                                                                               -------------------
                                                                               1999         1998
                                                                        -------------------------
                                                                            (Unaudited)
<S>                                                                     <C>                  <C>
Cash flows from operating activities:
 Net income                                                             $     9,864   $  13,661
 Adjustments to reconcile net income to net
   cash provided by operating activities:
 Depreciation and amortization of property and equipment,
   mortgage servicing rights and prepaid expenses and other assets            7,383       6,381
 Net premium amortization                                                     1,239       2,352
 Provision for loan losses                                                    4,366       2,350
 Amortization of goodwill                                                     2,282       1,517
 Originations and purchases of mortgage loans held for sale                  (6,237)    (26,536)
 Sales of mortgage loans held for sale                                        2,025      26,287
 Stock dividends from the FHLB                                               (2,040)     (1,536)
 Decrease (increase) in:
   Accrued interest receivable                                                 (434)        306
   Other, net                                                                 1,479      (6,056)
                                                                        ------------  ----------

   Net cash provided by operating activities                                 19,927      18,726
                                                                        ------------  ----------

Cash flows from investing activities:
 Net increase in federal funds sold                                          (4,800)     (4,300)
 Purchases of mortgage-backed securities held-to-maturity                    (3,080)     (8,203)
 Purchases of mortgage-backed securities available-for-sale                 (26,489)         --
 Purchase of U.S. Treasury securities held-to-maturity                         (299)         --
 Principal repayments on mortgage-backed securities held-to-maturity        226,497     118,427
 Principal repayments on mortgage-backed securities
   available-for-sale                                                        22,059      20,249
 Proceeds from maturity of U.S. Treasury securities available-for-sale        2,000      25,000
 Proceeds from sales of mortgage-backed securities available-for-sale            --      26,250
 Purchases of loans receivable                                             (374,290)   (319,630)
 Net decrease in loans receivable                                           153,737     204,384
 Net purchases of property and equipment                                     (2,379)     (3,477)
 Purchases of FHLB stock                                                     (2,608)    (19,770)
 Proceeds from sales of FHLB stock                                            1,692          --
 Cash and cash equivalents received in business combination
   transaction                                                                   --     120,085
                                                                        -------------  ----------

   Net cash provided (used) by investing activities                         (7,960)    159,015
                                                                        ------------  ----------

</TABLE>



<PAGE>

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

                                                                                  Nine Months Ended
                                                                                     September 30,
                                                                                   -------------------
                                                                                   1999          1998
                                                                             -------------  ------------
                                                                              (Unaudited)
<S>                                                                      <C>                  <C>
Cash flows from financing activities:
 Net decrease in deposits                                              $         (103,846)  $   (26,009)
 Advances from the FHLB                                                         6,448,344     3,435,277
 Principal payments on advances from the FHLB                                  (6,385,211)   (3,023,505)
 Securities sold under agreements to repurchase and federal funds
   purchased                                                                      319,340     3,948,611
 Purchases of securities sold under agreements to repurchase and
   federal funds purchased                                                       (319,340)   (4,495,659)
 Net increase in advances from borrowers for taxes and insurance                    6,929         7,217
 Proceeds from issuance of preferred stock, net                                    25,942            --
 Exercise of stock options for purchase of common stock, net                          112           517
 Purchase of Treasury Stock                                                       (12,685)       (3,271)
 Repurchase of Senior Notes                                                        (3,100)           --
 Dividends paid                                                                    (2,530)       (1,815)
                                                                       -------------------  ------------
   Net cash used by financing activities                                          (26,045)     (158,637)
                                                                       -------------------  ------------

   Net decrease in cash and cash equivalents                                      (14,078)       19,104
 Cash and cash equivalents at beginning of period                                  45,453        37,096
                                                                       -------------------  ------------
 Cash and cash equivalents at end of period                            $           31,375   $    56,200
                                                                       ===================  ============

 Supplemental schedule of cash flows-interest paid                     $           92,736   $   105,971
                                                                       ===================  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                                    $            3,494   $     2,937
                                                                       ===================  ============


In connection with the branch office purchase in 1998, Coastal
recorded the following assets and liabilities:
 Loans receivable                                                      $               --   $   176,157
 U.S. Treasury securities                                                              --        26,942
 Goodwill                                                                              --        17,254
 Property and equipment                                                                --        10,743
 Accrued interest receivable and other assets                                          --         5,438
 Savings deposits                                                                      --       355,425
 Accrued interest payable and other liabilities                                        --         1,194
                                                                       ===================  ============

</TABLE>

See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  BASIS  OF  PRESENTATION

     The  accompanying unaudited Consolidated Financial Statements were prepared
in accordance with the instructions for Form 10-Q and, therefore, do not include
all  disclosures  necessary  for a complete presentation of financial condition,
results  of  operations,  and  cash  flows in conformity with generally accepted
accounting principles.  All adjustments which are, in the opinion of management,
of  a  normal  recurring nature and are necessary for a fair presentation of the
interim financial statements, have been included.  The results of operations for
the  periods  ended  September  30,  1999  are not necessarily indicative of the
results  that  may  be  expected for the entire fiscal year or any other interim
period.

     Coastal  Bancorp,  Inc.  and  subsidiaries adopted the Financial Accounting
Standards  Boards  Statement No. 130 ("Statement 130"), "Reporting Comprehensive
Income"  as  of  January  1, 1998.  Statement 130 requires the disclosure of all
components  of  comprehensive  income,  which  includes  net  income  and  other
comprehensive  income.  Other comprehensive income includes all nonowner related
changes  to  stockholders'  equity,  which  is  the  unrealized  gain  (loss) on
securities  available-for-sale.  These  amounts  have  been  disclosed  in  the
consolidated  statements  of  comprehensive  income.

     On April 23, 1998, the Board of Directors declared a 3:2 stock split on the
common  stock  of  Coastal  Bancorp,  Inc.  payable  on  June  15,  1998  to the
stockholders of record at the close of business on May 15, 1998.  All applicable
common  stock  share  data have been adjusted to include the effect of the stock
split  for  all  periods  presented.

     On  August  27, 1998, December 21, 1998 and February 25, 1999, the Board of
Directors  authorized  three  separate repurchase plans for up to 500,000 shares
each of the outstanding shares of common stock through an open-market repurchase
program and privately negotiated repurchases, if any.  As of September 30, 1999,
1,283,679  shares had been repurchased in the open market at an average price of
$15.94  per  share  for  a  total  cost  of  $20.5  million.

(2)  PRINCIPLES  OF  CONSOLIDATION

     The  accompanying  unaudited  Consolidated Financial Statements include the
accounts  of Coastal Bancorp, Inc. and its wholly-owned subsidiary, Coastal Banc
Holding  Company,  Inc.  and its wholly-owned subsidiaries, Coastal Banc ssb and
its  subsidiary,  CoastalBanc  Financial  Corp.  (collectively, the "Bank"), and
Coastal  Banc  Capital  Corp.  (collectively  with Coastal Bancorp, Inc. and the
Bank,  "Coastal").  All  significant intercompany balances and transactions have
been  eliminated  in  consolidation.

<PAGE>
(3)  MORTGAGE-BACKED  SECURITIES

     Mortgage-backed  securities  at  September  30,  1999  (unaudited)  were as
follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                                    Gross        Gross
                                      Amortized   Unrealized    Unrealized      Fair
                                         Cost        Gains        Losses        Value
                               -------------------------------------------------------------
<S>                              <C>             <C>          <C>            <C>
Held-to-Maturity:
 REMICS - Agency                   $   664,813      $ 3,625     $  (7,741)     $ 660,697
 REMICS - Non-agency                   183,850           76        (3,106)       180,820
 FNMA certificates                      57,614           21        (1,916)        55,719
 GNMA certificates                      16,983           18           (13)        16,988
 Non-agency securities                   7,919           --          (146)         7,773
                                   -----------      -------     ----------     ---------
                                   $   931,179      $ 3,740     $ (12,922)     $ 921,997
                                   ===========      =======     ==========     =========

Available-for-sale:
 REMICS - Agency                   $    77,364      $    --     $  (1,314)     $  76,050
 REMICS - Non-agency                       392           --            (6)           386
 GNMA certificates                      25,407           --          (230)        25,177
                                   -----------      -------     ----------     ---------
                                   $   103,163      $    --     $  (1,550)     $ 101,613
                                   ===========      =======     ==========     =========
</TABLE>


     Mortgage-backed securities at December 31, 1998 were as follows (dollars in
thousands):

<TABLE>
<CAPTION>

                                                    Gross        Gross
                                      Amortized   Unrealized    Unrealized      Fair
                                         Cost        Gains        Losses        Value
                               -------------------------------------------------------------
<S>                              <C>             <C>          <C>            <C>
Held-to-maturity:
 REMICS - Agency                    $   839,593     $ 3,770     $ (10,349)  $   833,014
   REMICS - Non-agency                  218,500         598        (2,186)      216,912
 FNMA certificates                       63,199         147          (810)       62,536
 GNMA certificates                       21,311          16           (23)       21,304
 Non-agency securities                   11,512         113           (23)       11,602
 Interest-only securities                     1          --            --             1
                                    -----------     -------     ----------  -----------
                                    $ 1,154,116     $ 4,644     $ (13,391)  $ 1,145,369
                                    ===========     =======     ==========  ===========

Available-for-sale:
 REMICS - Agency                    $    97,695     $    --     $  (2,115)  $    95,580
 REMICS - Non-agency                      1,037          --            (8)        1,029
                                    -----------     -------     ----------  -----------
                                    $    98,732     $    --     $  (2,123)  $    96,609
                                    ===========     =======     ==========  ===========
</TABLE>



<PAGE>

(4)  LOANS  RECEIVABLE

     Loans  receivable  at  September  30,  1999  and  December 31, 1998 were as
follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                                    September 30, 1999   December 31, 1998
                                                   --------------------  -----------------
                                                       (Unaudited)
<S>                                                <C>                   <C>                <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $           863,953         $  690,510
 Commercial                                                    310,852            257,723
 Multifamily                                                   156,050            119,447
 Residential construction                                      147,809            115,714
 Acquisition and development                                    90,129             75,932
 Commercial construction                                        56,786             40,344
Commercial loans, secured by residential mortgage
 loans held for sale                                            65,206            173,124
Commercial loans, secured by mortgage servicing
 rights                                                            690              3,867
Commercial, financial and industrial                           113,021             92,218
Loans secured by savings deposits                               13,491             13,164
Consumer and other loans                                        66,303             66,989
                                                   --------------------        -----------
                                                             1,884,290          1,649,032
Loans in process                                              (118,449)           (99,790)
Allowance for loan losses                                      (14,364)           (11,358)
Unearned interest and  loan fees                                (3,043)            (3,493)
Premium to record purchased loans, net                             869              3,758
                                                   --------------------        -----------

                                                   $         1,749,303         $1,538,149
                                                   ====================        ===========

Weighted average yield                                            8.10%              8.55%
                                                   ====================        ===========
</TABLE>


     At  September 30, 1999, Coastal had outstanding commitments to originate or
purchase  $117.6  million  of  real  estate  mortgage  and  other  loans and had
commitments  under  lines  of credit to originate primary construction and other
loans  of  approximately  $167.1  million.  In  addition, at September 30, 1999,
Coastal  had  $7.5  million  of  outstanding  letters  of  credit.  Management
anticipates  the  funding  of  these  commitments  through  normal  operations.

     At  September  30,  1999 and December 31, 1998, the carrying value of loans
that were considered to be impaired totaled approximately $12.7 million and $1.7
million,  respectively  and  the  related  allowance  for  loan  losses on those
impaired  loans  totaled  $5.3  million  and  $880,000 at September 30, 1999 and
December  31,  1998,  respectively.  The average recorded investment in impaired
loans during the nine months ended September 30, 1999 and 1998 was $11.1 million
and  $1.8  million,  respectively.


<PAGE>
     An  analysis  of  activity  in  the  allowance for loan losses for the nine
months  ended  September  30,  1999  and  1998  is  as  follows  (in thousands):

<TABLE>
<CAPTION>

                                       Nine Months Ended September 30,
                                       -------------------------------
                                               1999        1998
                                           ------------  --------
                                          (Unaudited)
<S>                           <C>            <C>           <C>
Balance, beginning of period             $    11,358   $ 7,412
Provision for loan losses                      4,366     2,350
Allowance of acquired entity                      --     2,257
Charge-offs                                   (1,572)   (1,235)
Recoveries                                       212       259
                                         ------------  --------

Balance, end of period                   $    14,364   $11,043
                                         ============  ========
</TABLE>


     On  August  11,  1998,  Coastal  approved  the  purchase of a $10.0 million
participation  in  a  warehouse  loan aggregating $25.0 million to MCA Financial
Corp.,  and certain of its affiliates, of Southfield, Michigan (collectively the
"Mortgage Banker").  The lead lender ("Lead Lender") in this facility is a major
commercial  bank and the loan is secured by subprime residential loans.  In late
January  1999, due to a lack of liquidity, the Mortgage Banker ceased operations
and  shortly  thereafter  was  seized  by  the  Michigan  Bureau  of  Financial
Institutions.  A  conservator  was  appointed  to  take  control of the Mortgage
Banker's  books and records, marshal that company's assets and continue its loan
servicing  operations.  A  voluntary  petition  under  Chapter  11  of  the U.S.
Bankruptcy  Code was filed in the U.S. Bankruptcy Court for the Eastern District
of  Michigan  for  the  Mortgage  Banker  on  or about February 11, 1999, by the
conservator,  who  has  been  appointed the "debtor-in-possession", to allow the
conservator time to develop a plan of reorganization while protecting the assets
of  the  Mortgage  Banker.

     Coastal  has  hired  special  bankruptcy  counsel  to  represent it in this
situation  and  has  been involved in discussions with the Lead Lender regarding
the  status  of the loan.  Although Coastal has been informed by the Lead Lender
that  Coastal's  loan is collateralized by residential loans, Coastal, as of the
date  hereof,  has  been unable to verify the extent to which the collateral, if
any, is sufficient to prevent Coastal from incurring a loss or the amount of any
loss,  should  one occur.  Effective December 31, 1998, Coastal placed this loan
on  nonaccrual  with  an allocation of $1.5 million of the general allowance for
loan  losses.  As  of  September 30, 1999, Coastal has allocated $3.4 million of
the  general  allowance to this loan. Coastal is working with the Lead Lender to
obtain  the  release of the collateral from the bankruptcy court and prepare the
collateral  for  sale.  To  date, Coastal has received approximately $250,000 in
principal  reductions  from  the  bankruptcy  trustee. Coastal remains unable to
determine  the timing, probability, or the amount of any loss which might result
from the default by the Mortgage Banker due to the limited information available
from  the  bankruptcy  trustee  as  to  the  value of the underlying collateral.
Coastal  is  continuing to monitor this situation and will make additions to the
overall  allowance for loan losses as considered necessary based on its existing
policy.

     During  the  third  quarter  of 1999, Coastal purchased approximately $10.1
million  of  the  underlying  loans  securing  a $13.2 million warehouse line of
credit.  Coastal  is  currently  servicing  the purchased loans and has recorded
these loans as part of the loans receivable portfolio at September 30, 1999.  As
of  September  30,  1999,  the  remaining balance on this warehouse line of $1.0
million is on nonaccrual with an allocation of $1.0 million of the allowance for
loan  losses.

     Coastal  services for others loans receivable which are not included in the
Consolidated  Financial  Statements. The total amounts of such loans were $427.3
million  and  $519.2  million  at  September  30,  1999  and  December 31, 1998,
respectively.

(5)  DEPOSITS

     Deposits,  their  stated  rates  and  the related weighted average interest
rates,  at  September  30,  1999 and December 31, 1998 are summarized as follows
(dollars  in  thousands):

<TABLE>
<CAPTION>

                                       Stated Rate       September 30, 1999         December 31, 1998
                                      --------------     ------------------         -----------------
                                                             (Unaudited)
<S>                                   <C>             <C>                        <C>
Noninterest-bearing checking                   0.00%    $        88,982               $   95,398
Interest-bearing checking             1.00  -  2.00              57,627                   63,067
Savings accounts                      1.49  -  2.75              48,647                   48,571
Money market demand accounts          0.00  -  4.57             336,572                  339,481
                                                       ----------------               -----------

                                                                531,828                  546,517
                                                       ----------------               -----------

Certificate accounts                  2.00  -  2.99                 807                    6,538
                                      3.00  -  3.99              69,756                   38,614
                                      4.00  -  4.99             510,961                  272,325
                                      5.00  -  5.99             440,251                  747,585
                                      6.00  -  6.99              38,476                   83,277
                                      7.00  -  7.99               8,457                    8,727
                                      8.00  -  8.99                 104                      699
                                      9.00  -  9.99                  99                      305
                                      over  10.00                    20                       18
                                                       ----------------               -----------
                                                              1,068,931                1,158,088
                                                       ----------------               -----------

Premium to record purchased deposits                                242                       399
                                                      -----------------                       ---

                                                      $      1,601,001                $1,705,004
                                                      =================               ===========

Weighted average interest rate                                    3.85%                     4.11%
                                                      =================               ===========
</TABLE>


     The  scheduled  maturities of certificate accounts outstanding at September
30,  1999  were  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                   September 30, 1999
                  --------------------
                      (Unaudited)
<S>               <C>
 0 to 12 months   $            928,028
 13 to 24 months               107,134
 25 to 36 months                16,572
 37 to 48 months                12,136
 49 to 60 months                 4,803
 Over 60 months                    258
                  --------------------
                  $          1,068,931
                  ====================
</TABLE>



<PAGE>
(6)  SECURITIES  SOLD  UNDER  AGREEMENTS  TO REPURCHASE AND ADVANCES FROM THE
     FHLB

     The  weighted  average  and  stated interest rates on securities sold under
agreements  to repurchase at September 30, 1999 and December 31, 1998 was 4.93%.

     The  weighted average interest rates on advances from the FHLB at September
30,  1999  and  December  31,  1998  were  5.45%  and  5.24%, respectively.  The
scheduled  maturities  and  related  weighted average interest rates on advances
from  the  FHLB  at  September  30,  1999  are summarized as follows (dollars in
thousands)  (unaudited):

<TABLE>
<CAPTION>

                                                               Weighted Average
Due during the year ended December 31,       Interest Rate         Amount
--------------------------------------     -----------------  -----------------
<S>                                     <C>                <C>     <C>
1999                                                5.46%          $  295,600
2000                                                5.43              402,078
2001                                                6.05               32,211
2002                                                5.31              268,731
2003                                                5.22                  778
2004                                                5.75                5,336
2005                                                5.57                  129
2006                                                6.85                3,154
2007                                                6.66                1,111
2008                                                5.71                2,751
2009                                                8.14                4,227
2010                                                5.66                  187
2011                                                6.62                1,379
2012                                                5.68                  217
2013                                                5.71                6,829
2014                                                5.43                2,977
2018                                                5.28                2,158
                                                                   ----------
                                                                   $1,029,853
                                                                   ==========
</TABLE>



Advances  from  the  FHLB  are  secured by certain first-lien mortgage loans and
mortgage-backed  securities  owned  by  Coastal.

(7)  SENIOR  NOTES  PAYABLE

     On  June  30,  1995, Coastal issued $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes are redeemable at Coastal's option, in whole or
in  part,  on  or  after  June  30,  2000,  at par, plus accrued interest to the
redemption date.  Interest on the Senior Notes is payable quarterly.  During the
nine  months  ended  September  30,  1999, Coastal, after receipt of unsolicited
offers,  repurchased  $3.1  million  of  the  Senior  Notes  outstanding at par.


<PAGE>
(8)  FINANCIAL  INSTRUMENTS  WITH  OFF-BALANCE  SHEET  RISK

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

     Coastal  utilizes  interest  rate  swap and interest rate cap agreements to
reduce  exposure  to  floating  interest  rates  by  altering  the interest rate
sensitivity  of  a  portion  of  its  variable-rate  assets  and borrowings.  At
September  30,  1999,  Coastal  had interest rate swap and cap agreements having
notional  principal  amounts  totaling  $62.8  million  and  $177.2  million,
respectively.

     The terms of the interest rate swap agreements outstanding at September 30,
1999  (unaudited)  and  December  31, 1998 are summarized as follows (dollars in
thousands):

<TABLE>
<CAPTION>

                                                                         Fair Value at
                                                        Floating Rate       End of
                        Notional      LIBOR     Fixed         At            Period
Maturity                 Amount       Index      Rate   End of Period    (gain (loss))
----------------------  ---------  -----------  ------  --------------  ---------------
<S>                     <C>        <C>          <C>     <C>             <C>
At September 30, 1999:
1999 . . . . . . . . .  $  14,600  Three-month  6.926%          5.478%  $          (22)
2000 . . . . . . . . .      4,800  Three-month  6.170           5.513              (15)
2000 . . . . . . . . .      2,275  Three-month  6.000           5.509               (1)
2003 . . . . . . . . .     21,016  One-month    5.345           5.371              162
2004 . . . . . . . . .      3,862  One-month    5.635           5.380              101
2005 . . . . . . . . .     16,225  Three-month  6.500           5.051             (268)
                        ---------                                       ---------------
                        $  62,778                                       $          (43)
                        =========                                       ===============

At December 31, 1998:
1999 . . . . . . . . .  $  14,600  Three-month  6.926%          5.399%  $         (218)
2000 . . . . . . . . .      4,800  Three-month  6.170           5.226             (164)
2000 . . . . . . . . .      2,380  Three-month  6.000           5.281              (38)
2005 . . . . . . . . .     16,225  Three-month  6.500           5.261             (707)
                        ---------                                       ---------------
                        $  38,005                                       $       (1,127)
                        =========                                       ===============
</TABLE>


     The  interest  rate  swap  agreements  provide  for  Coastal  to make fixed
interest  payments  and  receive  payments  based  on a floating LIBOR index, as
defined  in  each  agreement.  The  weighted  average  interest rate of payments
received on all of the interest rate swap agreements was approximately 5.19% and
the  weighted  average  interest  payment  rate on all of the interest rate swap
agreements was approximately 6.24% for the nine months ended September 30, 1999.
Payments  on  the  interest  rate  swap  agreements  are  based  on the notional
principal amount of the agreements; no funds were actually borrowed or are to be
repaid.  The  interest  rate swap agreements are used to alter the interest rate
sensitivity  of  a  portion  of  Coastal's  variable-rate  borrowings.  As such,
Coastal  records net interest expense or income related to these agreements on a
monthly  basis in "interest expense on other borrowed money" in the accompanying
consolidated  statements  of  income.  The net interest expense related to these
agreements  was  approximately  $441,000 for the nine months ended September 30,
1999  and  approximately  $278,000 for the nine months ended September 30, 1998.
Coastal  had pledged approximately $6.3 million of mortgage-backed securities to
secure  interest  rate  swap  agreements  at  September  30,  1999.

     Coastal  has  interest  rate  cap  agreements  with  third  parties.  The
agreements  provide for the third parties to make payments to Coastal whenever a
defined floating rate exceeds rates ranging from 7.0% to 11.0%, depending on the
agreement.  Payments  on  the  interest  rate  cap  agreements  are based on the
notional  principal amount of the agreements; no funds were actually borrowed or
are  to  be repaid.  The purchase prices of the interest rate cap agreements are
capitalized  and  included  in  "prepaid  expenses  and  other  assets"  in  the
accompanying  consolidated  statements  of financial condition and are amortized
over the life of the agreements using the straight-line method.  The unamortized
portion  of  the  purchase  price  of  the  interest  rate  cap  agreements  was
approximately  $96,000 and $115,000 at September 30, 1999 and December 31, 1998,
respectively, with the estimated fair value of the agreements being $606,000 and
$888,000  at  September  30,  1999  and  December  31,  1998, respectively.  The
interest  rate cap agreements are used to alter the interest rate sensitivity of
a  portion  of  Coastal's mortgage-backed securities, loans receivable and their
related  funding  sources.  As  such, the amortization of the purchase price and
interest  income from the interest rate cap agreements are recorded in "interest
income  on  mortgage-backed  securities or loans receivable," as appropriate, in
the  accompanying  consolidated  statements  of  income.  The  net  decrease  in
interest  income  related  to the interest rate cap agreements was approximately
$19,000  and  $38,000  for  the  nine  months ended September 30, 1999 and 1998,
respectively.

     Interest  rate cap agreements outstanding at September 30, 1999 (unaudited)
expire  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

Year of       Strike Rate    Notional
Expiration       Range        Amount
----------  ---------------  ---------
<S>         <C>              <C>
1999        8.50  -  11.00%  $  18,595
2000         8.50  -  9.50      11,620
2001         7.00  -  9.00      34,509
2002         8.75  -  9.00      13,525
2003         8.00  -  8.50      99,000
                             ---------
                             $ 177,249
                             =========
</TABLE>


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

     The fluctuation in the market value, however, has no effect on the level of
earnings of Coastal because the securities are categorized as "held-to-maturity"
or  "available-for-sale."

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

<PAGE>
(9)  EARNINGS  PER  SHARE

     The  following  summarizes  information related to the computation of basic
and  diluted  earnings  per  share  ("EPS") for the nine-and three-month periods
ended  September 30, 1999 and 1998 (dollars in thousands, except per share data)
(unaudited):

<TABLE>
<CAPTION>

                                                                    Nine Months Ended
                                                                      September 30,
                                                                   -----------------
<S>                                           <C>                <C>          <C>
                                                                       1999         1998
                                                                 -----------  ----------
Net income                                                       $    9,864   $   13,661
Preferred stock dividends                                              (957)          --
                                                                 -----------  ----------
Net income available to common stockholders                      $    8,907   $   13,661
                                                                 ===========  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation                        6,543,873    7,534,947
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                        158,128      252,887
                                                                 -----------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                      6,702,001    7,787,834
                                                                 ===========  ==========
Basic EPS                                                        $     1.36   $     1.81
                                                                 ===========  ==========
Diluted EPS                                                      $     1.33   $     1.75
                                                                 ===========  ==========
</TABLE>



<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                    September 30,
                                                                   ------------------
<S>                                           <C>                 <C>          <C>
                                                                        1999         1998
                                                                  -----------  ----------
Net income                                                        $    3,745   $    3,741
Preferred stock dividends                                               (627)          --
                                                                  -----------  ----------
Net income available to common stockholders                       $    3,118   $    3,741
                                                                  ===========  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation                         6,299,145    7,499,625
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                         169,267      226,704
                                                                  -----------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                       6,468,412    7,726,329
                                                                  ===========  ==========
Basic EPS                                                         $     0.50   $     0.50
                                                                  ===========  ==========
Diluted EPS                                                       $     0.48   $     0.48
                                                                  ===========  ==========
</TABLE>



     The  weighted  average number of common shares outstanding has been reduced
by  the  treasury  stock  held  by  Coastal.  As of September 30, 1999 and 1998,
Coastal  had  1,283,679  and  205,000  common  shares in treasury, respectively.


<PAGE>
(10) COASTAL  BANC  SSB  PREFERRED  STOCK

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

(11)  STATUTORY  CAPITAL  REQUIREMENTS

     The  applicable  regulations  require federally insured institutions, which
are not the highest rated, to have a minimum regulatory tier 1 (core) capital to
total  assets  ratio  equal to a minimum of 4.0%, a tier 1 risk-based capital to
risk-weighted assets ratio of 4.0% and total risk-based capital to risk-weighted
assets  ratio  of  8.0%.

     At  September  30,  1999,  the  Bank's  regulatory  capital  (unaudited) in
relation  to  its  existing regulatory capital requirements for capital adequacy
purposes  was  as  follows  (dollars  in  thousands):

<TABLE>
<CAPTION>

                                                    Minimum For Capital       Well-Capitalized
                                  Actual             Adequacy Purposes         Requirements
                           ------------------      -------------------     ------------------
<S>                       <C>             <C>                 <C>            <C>        <C>
Capital Requirement          Amount     Ratio          Amount    Ratio        Amount    Ratio
--------------------      ----------  --------        --------  ------       --------  ------

  Tier 1 (core)          $   167,543     5.79%       $115,760   4.00%       $144,701   5.00%
  Tier 1 risk-based          167,543     9.54          70,222   4.00         105,333   6.00
  Total risk-based           181,907    10.36         140,444   8.00         175,555  10.00
</TABLE>


     As  of  September  30,  1999, the most recent notification from the Federal
Deposit  Insurance Corporation ("FDIC") categorized the Bank as well capitalized
under  the regulatory framework for prompt corrective action.  To be categorized
as  well  capitalized,  the  Bank  must  maintain  minimum Tier 1 (core), Tier 1
risk-based  and  total risk-based ratios as set forth in the table above.  There
are  no  conditions  or  events since that notification that management believes
have  changed  the  institution's  category.

(12)  FEDERAL  INCOME  TAXES

     In  March  1998,  Coastal  announced  that  it had successfully resolved an
outstanding  tax  benefit  issue with the FDIC as Manager of the Federal Savings
and  Loan  Insurance  Corporation  Resolution Fund.  The resolution of the issue
resulted  in  Coastal  recording  a $3.7 million, or 47 cents per diluted share,
reversal  of  accrued  income  taxes  during the nine months ended September 30,
1998;  resulting  in a one-time positive effect on net income. The resolution of
the  tax  benefit  issue  also  contributes  an ongoing quarterly tax benefit of
$226,000  or  approximately 3 cents per diluted share, as of September 30, 1999.
This  tax  benefit  is  expected  to  continue  through  the  end  of  2002.

(13)  RECENT  ACCOUNTING  STANDARDS

     The  Financial  Accounting  Standards  Board  ("FASB")  Statement  No. 137,
"Accounting  for Derivative Instruments and Hedging Activities - Deferral of the
Effective  Date  of  FASB  Statement No. 133, an Amendment of FASB Statement No.
133"  ("Statement  137")  was  issued  in  June  1999.  Statement 137 defers the
effective date of FASB Statement 133, "Accounting for Derivative Instruments and
Hedging  Activities" ("Statement 133") for one year.  Statement 133, as amended,
is  now  effective  for  all fiscal quarters of all fiscal years beginning after
June  15,  2000.

     Statement  133  generally  requires  that  derivatives  embedded  in hybrid
instruments  be  separated  from  their  host  contracts  and  be  accounted for
separately  as  derivative  contracts.  For  instruments existing at the date of
adoption,  Statement  133  provides  an  entity  the option of not applying this
provision to such hybrid instruments entered into before January 1, 1998 and not
substantially  modified  thereafter.  Consistent  with  the  deferral  of  the
effective  date for one year, Statement 137 provides an entity the option of not
applying  this  provision  to  hybrid instruments entered into before January 1,
1998  or  1999  and not substantially modified thereafter. Coastal is evaluating
the  impact, if any, Statement 133 may have on its future consolidated financial
statements.

(14)  COASTAL  BANCORP,  INC.  PREFERRED  STOCK

     On  May 11, 1999, Coastal Bancorp, Inc. ("Bancorp") issued 1,100,000 shares
of  9.12%  Series A Cumulative Preferred Stock, no par value, to the public at a
price  of $25 per share.  Dividends on the preferred stock are payable quarterly
at  the  annual rate of $2.28 per share.  The preferred stock is callable on May
15,  2003 at Bancorp's option.  The $26.0 million net proceeds has been used for
repurchases  in  the  open  market  of Bancorp's outstanding common stock and of
Bancorp's  outstanding  10% Senior Notes, with the remaining being invested on a
short-term  basis.  Pursuant  to  Coastal's tax benefit agreement with the FDIC,
Coastal  receives  a tax benefit for dividends declared on this preferred stock.
The ongoing quarterly tax benefit will be approximately $219,000, or 3 cents per
diluted  share,  and  is  expected  to  continue  through  the  end  of  2002.



<PAGE>

ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS
             -------------------------------------------------------------------

Financial  Condition
--------------------

     Total  assets  decreased  0.5%  or  $15.5 million from December 31, 1998 to
September  30,  1999.  The  net  decrease  resulted primarily from a decrease of
$222.9  million  in  mortgage-backed  securities held-to-maturity, a decrease of
$14.1  million  in  cash  and  cash  equivalents, offset by an increase in loans
receivable  of  $211.2  million  and  an  increase in mortgage-backed securities
available-for-sale  of $5.0 million.  The decrease in mortgage-backed securities
held-to-maturity  was due to principal payments received.  The increase in loans
receivable  was  primarily  due to residential mortgage loan purchases of $353.0
million and $10.2 million of consumer loan purchases from correspondent lenders,
offset  by  principal  payments  received  and  a  decrease of $107.9 million in
commercial  loans,  secured by residential mortgage loans held for sale, because
of  Coastal's  decreased  emphasis  on  this  type  of lending.  The increase in
mortgage-backed  securities  available-for-sale was due to the purchase of $26.5
million  offset  by  principal  payments  received.

     Deposits  decreased  $104.0  million  or  6.1%  from  December  31, 1998 to
September  30,  1999 and advances from the FHLB increased 6.5% or $63.1 million.
Stockholders'  equity increased 18.7% or $21.1 million from December 31, 1998 to
September  30,  1999  as  a result of the $26.0 million in net proceeds received
from  the  issuance  of the 9.12% Series A Cumulative Preferred Stock on May 11,
1999  ("Bancorp  Preferred  Stock"),  net  income of $9.9 million and a $367,000
decrease  in accumulated other comprehensive loss, offset by additional treasury
stock  acquired  of  $12.7  million  and  dividends  declared.


Results  of  Operations  for  the  Nine Months Ended September 30, 1999 and 1998
--------------------------------------------------------------------------------

     General
     -------

     For  the  nine months ended September 30, 1999, net income was $9.9 million
compared  to $13.7 million for the nine months ended September 30, 1998.  During
the  first  nine  months  of  1999, net income was negatively impacted by a $1.7
million  additional  provision for loan losses recorded during the first quarter
of the year. The additional provision for loan losses was due in part to a $10.0
million participation in a warehouse loan to MCA Financial Corp., and certain of
its  affiliates,  of  Southfield, Michigan (collectively the "Mortgage Banker"),
that,  during January 1999, was placed on nonaccrual effective December 31, 1998
with  an  allocation  of  $1.5 million of the general allowance, due to the fact
that  the  Mortgage  Banker  ceased  operations in late January 1999 and shortly
thereafter  was  seized  by  the  Michigan  Bureau  of  Financial  Institutions.
Coastal,  as  of  the date hereof, has been unable to verify the extent to which
the  collateral,  if any, is sufficient to prevent Coastal from incurring a loss
or  the amount of any loss, should one occur.  As of September 30, 1999, Coastal
has  allocated  $3.4  million of the general allowance to this loan.  Coastal is
working  with  the lead lender in the participation to obtain the release of the
collateral  from  the  bankruptcy  court and prepare the collateral for sale. To
date,  Coastal  has received approximately $250,000 in principal reductions from
the  bankruptcy  trustee.  Coastal  remains  unable  to  determine  the  timing,
probability,  or  the  amount of any loss which might result from the default by
the Mortgage Banker due to the limited information available from the bankruptcy
trustee  as to the value of the underlying collateral.  Coastal is continuing to
monitor this situation and will make additions to the overall allowance for loan
losses  as  it  deems  necessary  based  on its existing policy.  The additional
provision  for  loan  losses is also attributable to other changes and growth in
Coastal's  loan  portfolio,  including the commercial type loans acquired in the
1998  acquisition  of  12  branch offices from Pacific Southwest Bank (the "1998
Branch  Acquisition").

     Net  income  for the first nine months of 1998 was positively affected by a
one-time  income  benefit  of  $2.6 million (net) or 33 cents per diluted share.
This  benefit  was  the  result  of the resolution of an outstanding tax benefit
issue  with the Federal Deposit Insurance Corporation ("FDIC") as manager of the
Federal Savings and Loan Insurance Corporation Resolution Fund. The $3.7 million
one-time  tax benefit was offset by the recording of an additional provision for
loan  losses  of $1.0 million and a writedown of purchased mortgage loan premium
of  $709,000.  The  resolution  of  the  one-time  tax  benefit  issue  is  also
contributing  an  ongoing  quarterly  tax benefit of $226,000 or approximately 3
cents  per diluted share which is estimated to continue through the end of 2002.

     Net  interest  income  increased  $8.3  million  and  noninterest  income
(excluding  the  writedown of purchased mortgage loan premium in 1998) increased
$2.0  million  from  the nine months ended September 30, 1998 to the nine months
ended  September  30,  1999.  These increases were offset by the increase in the
provision  for  loan  losses  of  $2.0  million  and the increase in noninterest
expense  of $9.4 million.  The provision for federal income taxes (excluding the
one-time  effect  of  the $3.7 million reversal of accrued income taxes in 1998)
decreased  $381,000  due  to  the  decreased income before provision for federal
income  taxes  and minority interest and the tax benefit received by Coastal for
the  dividends  on  the  recently  issued  Bancorp  Preferred  Stock.

     Interest  Income
     ----------------

     Interest income for the nine months ended September 30, 1999 decreased $7.7
million  or 4.9% from the nine months ended September 30, 1998.  The decrease is
due  to  a  decrease in average interest-earning assets of $108.3 million, and a
decrease in the average yield from 7.22% for the nine months ended September 30,
1998  to 7.14% for the nine months ended September 30, 1999.  Interest income on
loans receivable increased $11.3 million due to a $224.4 million increase in the
average  balance,  offset slightly by a decrease in the average yield from 8.39%
for  the  nine  months  ended September 30, 1998 to 8.16% for the same period in
1999.  Interest income on mortgage-backed securities decreased $19.3 million due
to  a  $345.2  million  decrease  in  the  average balance and a decrease in the
average  yield  from 6.16% for the nine months ended September 30, 1998 to 5.77%
for  the  same  period  in  1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased $341,000.  Total interest-earning assets for
the  nine months ended September 30, 1999 averaged $2.8 billion compared to $2.9
billion  for  the  nine  months  ended  September  30,  1998.

     Interest  Expense
     -----------------

     Interest  expense on interest-bearing liabilities was $92.9 million for the
nine months ended September 30, 1999, as compared to $108.9 million for the same
period  in  1998.  The decrease in interest expense was due to a decrease in the
average rate paid on interest-bearing liabilities from 5.36% for the nine months
ended  September  30, 1998 to 4.78% for the nine months ended September 30, 1999
and  a  $117.6  million  decrease  in  the  average  balance of interest-bearing
liabilities.  The  0.58%  decrease  in the average rate paid on interest-bearing
liabilities  was  primarily  due to the lower cost deposits acquired in the 1998
Branch  Acquisition, the new pricing strategies for certificates of deposit that
reduced  Coastal's  cost  of  retail deposits and lower wholesale funding costs.
The  decrease  in  average interest-bearing liabilities consisted primarily of a
$568.6 million decrease in securities sold under agreements to repurchase offset
by  a  $264.6  million  increase  in advances from the FHLB and a $188.6 million
increase  in  interest-bearing  deposits.  The  reallocation  of borrowings from
securities sold under agreements to repurchase to FHLB advances was done to take
advantage  of  more  favorable  interest  rates.

     Net  Interest  Income
     ---------------------

     Net  interest  income was $56.8 million for the nine months ended September
30,  1999  and  $48.5  million for the same period in 1998.  Net interest margin
("Margin")  was  2.71%  for the nine months ended September 30, 1999 compared to
2.23%  for  the  nine  months  ended  September 30, 1998.  Margin represents net
interest  income  as  a  percentage  of  average  interest-earning  assets.  Net
interest  spread  ("Spread"),  defined  to exclude noninterest-bearing deposits,
increased  from  1.86% for the nine months ended September 30, 1998 to 2.36% for
the  nine  months  ended  September  30,  1999.  Management  also  calculates an
alternative  Spread which includes noninterest-bearing deposits to show a spread
that  considers  the  cost of all deposits as part of the overall cost of funds.
Under  this  calculation,  the  alternative  Spreads  for  the nine months ended
September  30,  1999  and  1998  were 2.62% and 2.05%, respectively.  Margin and
Spread  are  affected  by  the  changes  in  the  amount  and  composition  of
interest-earning  assets and interest-bearing liabilities.  The overall increase
in  Margin and Spread was primarily due to the decrease in the average rate paid
on  interest-bearing  liabilities  of  0.58%.  This decrease in the average rate
paid  on interest-bearing liabilities was slightly offset by a 0.08% decrease in
the  average  yield  on  interest-earning  assets.  Average net interest-earning
assets  increased  $9.2 million from the nine months ended September 30, 1998 to
the  nine  months  ended  September  30,  1999.

     Management's  goal  is  to  achieve  a  more  desirable  asset/liability
composition  which  is  less  vulnerable  to  market interest rate fluctuations,
primarily through the addition of loans tied to variable rates such as LIBOR and
local  and  regional  prime rates and through the efforts to replace LIBOR based
borrowings  with lower cost retail deposits.  In addition, management intends to
gradually increase commercial business loans and noninterest-bearing deposits as
a  percentage  of  total  assets  and  deposits,  respectively.

     Provision  for  Loan  Losses
     ----------------------------

     The  provision  for  loan losses was $4.4 million for the nine months ended
September  30, 1999 compared to $2.4 million for the nine months ended September
30,  1998.  The increase in the provision for loan losses was in part due to the
$10.0  million  warehouse  loan  participation  placed  on  nonaccrual effective
December  31, 1998, as discussed previously, as well as other changes and growth
in Coastal's loan portfolio, including the commercial type loans acquired in the
1998 Branch Acquisition.  The allowance for loan losses as a percentage of total
loans  was  0.82%  at  September  30,  1999  and  0.71%  at  September 30, 1998.

     Although  no assurance can be given, management believes that the allowance
for loan losses at September 30, 1999 is adequate considering the above specific
situation  with  a  Mortgage  Banker,  the  changing  composition  of  the loans
receivable portfolio, historical loss experience, delinquency trends and current
economic  conditions. Management will continue to review its loan loss allowance
policy as Coastal's loan portfolio grows and diversifies to determine if changes
to  the  policy  and  resulting  allowance  for  loan  losses  are  necessary.

     Noninterest  Income
     -------------------

     For the nine months ended September 30, 1999, noninterest income (excluding
the writedown of purchased mortgage loan premium in 1998) increased $1.9 million
to  $7.4  million,  compared to $5.5 million for the nine months ended September
30,  1998.  The  increase in noninterest income was primarily due to an increase
of  $1.9  million  in  loan  fees  and service charges on deposit accounts and a
$202,000  increase  in  other noninterest income.  The increase in loan fees and
service  charges  on  deposit  accounts  consisted of a $2.2 million increase in
service  charges  on  deposit  accounts  due to the increase in transaction type
deposit  accounts,  including  those  acquired  in  the 1998 Branch Acquisition,
offset  somewhat  by  a  $296,000  decrease  in loan fees.  These increases were
partially  offset  by  a  $101,000  decrease in loan servicing income due to the
declining  loan  servicing  portfolio.

     Noninterest  Expense
     --------------------

     For the nine months ended September 30, 1999, noninterest expense increased
$9.4  million  from  the  nine  months  ended September 30, 1998.  Compensation,
payroll  taxes  and other benefits as well as office occupancy expense increased
$5.5  million  and  $2.1  million,  respectively,  from  the  nine  months ended
September 30, 1998 to the nine months ended September 30, 1999, primarily due to
the staffing increases related to the expansion of the loan product base and the
continuing  development  of commercial business lending programs, in addition to
the  staffing and occupancy expenses related to the operation of the 12 branches
acquired  in  the  1998  Branch  Acquisition.  In  addition, the amortization of
goodwill  increased  $765,000  and  data  processing  expense increased $744,000
primarily  due  to  the  effect  of  the  branches  added  in  the  1998  Branch
Acquisition.  Other  changes  included  a  $713,000  increase in other operating
expenses, a $360,000 decrease in real estate owned expense and a $5,000 decrease
in  insurance  premiums.

<PAGE>
     Provision  for  Federal  Income  Taxes
     --------------------------------------

     The  provision for federal income taxes for the nine months ended September
30,  1999  was  $5.2  million compared to the provision for federal income taxes
(excluding  the  one-time  effect of the $3.7 million reversal of accrued income
taxes) for the nine months ended September 30, 1998 of $5.6 million.  The slight
decrease  was  due  to  the decreased income before provision for federal income
taxes  and  minority  interest  and  the tax benefit received by Coastal for the
dividends on the recently issued Bancorp Preferred Stock.  Pursuant to Coastal's
tax  benefit  agreement  with  the  FDIC, Coastal receives a tax benefit for the
dividends  on  the  Bancorp  Preferred Stock.  The ongoing quarterly tax benefit
will be approximately $219,000, or 3 cents per diluted share, and is expected to
continue  through  the  end  of  2002.

Results  of  Operations  for  the Three Months Ended September 30, 1999 and 1998
--------------------------------------------------------------------------------

     General
     -------

     For the three months ended September 30, 1999 and 1998, net income was $3.7
million.  Net  interest  income  increased  $2.3  million and noninterest income
increased  $518,000  from the three months ended September 30, 1998 to the three
months  ended September 30, 1999. These increases were offset by the increase in
the  provision  for  loan  losses  of  $910,000  and the increase in noninterest
expense  of  $2.1  million.  The  provision  for  federal income taxes decreased
$151,000  primarily due to the tax benefit received by Coastal for the dividends
on  the  recently  issued  Bancorp  Preferred  Stock.

     Interest  Income
     ----------------

     Interest  income  for  the  three months ended September 30, 1999 decreased
$3.3  million  or  6.1%  from  the  three  months ended September 30, 1998.  The
decrease  is  due  to  a  decrease  in average interest-earning assets of $161.3
million  and  a  decrease  in  the average yield from 7.28% for the three months
ended September 30, 1998 to 7.23% for the three months ended September 30, 1999.
Interest  income  on  loans  receivable  increased  $3.5 million due to a $210.7
million  increase  in  the average balance, offset slightly by a decrease in the
average  yield from 8.47% for the three months ended September 30, 1998 to 8.23%
for  the  same  period  in  1999.  Interest income on mortgage-backed securities
decreased  $6.6  million due to a $363.0 million decrease in the average balance
and  a  decrease  in  the  average  yield  from 6.12% for the three months ended
September  30,  1998  to  5.72%  for  the  same  period  in  1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  decreased  $183,000,  due to a decrease in the average
balance  of  these  assets.  Total  interest-earning assets for the three months
ended  September 30, 1999 averaged $2.8 billion compared to $3.0 billion for the
three  months  ended  September  30,  1998.

     Interest  Expense
     -----------------

     Interest  expense on interest-bearing liabilities was $31.3 million for the
three months ended September 30, 1999, as compared to $36.9 million for the same
period  in  1998.  The decrease in interest expense was due to a decrease in the
average  rate  paid  on  interest-bearing  liabilities  from 5.33% for the three
months  ended  September  30, 1998 to 4.78% for the three months ended September
30,  1999  and  a  $177.2  million  decrease  in  the  average  balance  of
interest-bearing  liabilities.  The  0.55%  decrease in the average rate paid on
interest-bearing  liabilities was due to the lower cost deposits acquired in the
1998  Branch Acquisition, the new pricing strategies for certificates of deposit
that  reduced  Coastal's  cost  of  retail  deposits and lower wholesale funding
costs.  The decrease in average interest-bearing liabilities consisted primarily
of  a  $377.5 million decrease in securities sold under agreements to repurchase
offset  somewhat  by  a  $138.4 million increase in advances from the FHLB and a
$64.4  million  increase  in  interest-bearing  deposits.  The  reallocation  of
borrowings  from securities sold under agreements to repurchase to FHLB advances
was  done  to  take  advantage  of  more  favorable  interest  rates.

     Net  Interest  Income
     ---------------------

     Net  interest income was $19.6 million for the three months ended September
30,  1999  and  $17.3 million for the same period in 1998.  Margin was 2.78% for
the three months ended September 30, 1999 compared to 2.32% for the three months
ended September 30, 1998.  Margin represents net interest income as a percentage
of  average  interest-earning  assets.  Spread,  defined  to  exclude
noninterest-bearing  deposits,  increased  to  2.45%  for the three months ended
September  30,  1999  from  1.95% for the three months ended September 30, 1998.
Management  also  calculates  an  alternative  Spread  which  includes
noninterest-bearing  deposits  to  show  a spread that considers the cost of all
deposits  as  part  of  the  overall  cost of funds. Under this calculation, the
alternative  Spreads for the three months ended September 30, 1999 and 1998 were
2.72% and 2.16%, respectively.  Margin and Spread are affected by the changes in
the  amount  and  composition  of  interest-earning  assets and interest-bearing
liabilities.  The overall increase in Margin and Spread was primarily due to the
decrease  in  the  average  rate  paid on interest-bearing liabilities of 0.55%,
somewhat  offset  by  a  0.05% decrease in the average yield on interest-earning
assets.  Average  net  interest-earning  assets increased $15.9 million from the
three  months  ended  September 30, 1998 to the three months ended September 30,
1999.

     Management's  goal  is  to  achieve  a  more  desirable  asset/liability
composition  which  is  less  vulnerable  to  market interest rate fluctuations,
primarily through the addition of loans tied to variable rates such as LIBOR and
local  and  regional  prime rates and through the efforts to replace LIBOR based
borrowings  with lower cost retail deposits.  In addition, management intends to
gradually  increase  the  percentage  of  commercial  business  loans  and
noninterest-bearing  deposits  to  total  assets  and  deposits,  respectively.

     Provision  for  Loan  Losses
     ----------------------------

     The  provision  for loan losses was $1.4 million for the three months ended
September 30, 1999 compared to $450,000 for the three months ended September 30,
1998.  The  increase  in  the  provision  for loan losses was due in part to the
$10.0  million  warehouse  loan  participation  placed  on  nonaccrual effective
December  31,  1998, as discussed previously as well as other changes and growth
in Coastal's loan portfolio, including the commercial type loans acquired in the
1998 Branch Acquisition.  The allowance for loan losses as a percentage of total
loans  was  0.82%  at  September  30,  1999  and  0.71%  at  September 30, 1998.

     Noninterest  Income
     -------------------

     For the three months ended September 30, 1999, noninterest income increased
$518,000  to  $2.6  million, compared to $2.1 million for the three months ended
September  30, 1998.  The increase in noninterest income was primarily due to an
increase  of $603,000 in loan fees and service charges on deposit accounts.  The
increase  in  loan  fees  and service charges on deposit accounts consisted of a
$712,000  increase in service charges on deposit accounts due to the increase in
transaction  type  deposit accounts, including those acquired in the 1998 Branch
Acquisition,  offset  somewhat  by  a  $109,000  decrease  in  loan  fees.

     Noninterest  Expense
     --------------------

     For  the  three  months  ended  September  30,  1999,  noninterest  expense
increased  $2.1  million  from  the  three  months  ended  September  30,  1998.
Compensation,  payroll  taxes  and  other  benefits  as well as office occupancy
expense increased $1.2 million and $450,000, respectively, from the three months
ended September 30, 1998 to the three months ended September 30, 1999, primarily
due  to the staffing increases related to the expansion of the loan product base
and  the  continuing  development  of  commercial  business lending programs, in
addition  to the staffing and occupancy expenses related to the operation of the
12  branches  acquired  in  the  1998  Branch  Acquisition.  In  addition,  the
amortization  of  goodwill  increased  $194,000  and  data  processing  expense
increased $163,000 primarily due to the effect of the branches added in the 1998
Branch  Acquisition.  Other  changes included a $214,000 decrease in real estate
owned  expense, a $95,000 decrease in insurance premiums and a $345,000 increase
in  other  operating  expenses.

<PAGE>
     Provision  for  Federal  Income  Taxes
     --------------------------------------

     The provision for federal income taxes for the three months ended September
30,  1999  was  $1.8 million compared to $2.0 million for the three months ended
September  30, 1998.  The decrease was primarily due to the tax benefit received
by  Coastal  for  the  dividends on the recently issued Bancorp Preferred Stock.
Pursuant  to  Coastal's  tax benefit agreement with the FDIC, Coastal receives a
tax benefit for dividends on the Bancorp Preferred Stock.  The ongoing quarterly
tax benefit will be approximately $219,000, or 3 cents per diluted share, and is
expected  to  continue  through  the  end  of  2002.

     Liquidity  and  Capital  Resources
     ----------------------------------

     Coastal's primary sources of funds consist of deposits bearing market rates
of  interest,  advances  from  the  FHLB,  securities  sold  under agreements to
repurchase,  federal  funds purchased and principal payments on loans receivable
and  mortgage-backed securities.  Coastal uses its funding resources principally
to  meet  its  ongoing  commitments  to  fund  maturing  deposits  and  deposit
withdrawals,  repay  borrowings,  purchase  loans receivable and mortgage-backed
securities,  fund  existing  and  continuing  loan  commitments,  maintain  its
liquidity,  meet  operating  expenses  and  fund acquisitions of other banks and
thrifts, either on a branch office or whole bank acquisition basis. At September
30,  1999,  Coastal  had  binding  commitments  to  originate  or purchase loans
totaling  approximately  $117.6  million  and  had $118.4 million of undisbursed
loans  in process. Scheduled maturities of certificates of deposit during the 12
months  following  September  30,  1999  totaled $928.0 million at September 30,
1999.  Management  believes  that  Coastal has adequate resources to fund all of
its  commitments.  In addition, Coastal has historically experienced a retention
rate  of  maturing certificates of deposit of $5,000 or greater of approximately
80%.

     As  of  September  30,  1999, Coastal operated 50 retail banking offices in
Texas  cities,  including Houston, Austin, Corpus Christi, the Rio Grande Valley
and small cities in the southeast quadrant of Texas. Management's five year goal
is  to have over $5 billion in assets, over $3 billion in deposits, $2.5 billion
in  loans and 80 branches in cities throughout central and south Texas, although
there  can  be no assurance that this goal can be accomplished through growth or
acquisitions.

     The  Year  2000
     ---------------

     Many  existing  computer  programs, including many utilized by Coastal, use
only  two  digits  to  identify  a  year in the date field.  These programs were
designed  and developed without considering the impact of the upcoming change in
the  century.  Because of the Year 2000 implications, Coastal formally initiated
a  project  during  the first quarter of 1997 to ensure that its operational and
financial systems will not be adversely affected by Year 2000 software problems.
The  Year  2000  project  team,  which  includes  all  levels  of management, is
identifying  the  computer  applications  which  could  fail or create erroneous
results  because  of  the  Year 2000, and is developing alternate ("contingent")
operating systems for these applications.  Coastal has included in its Year 2000
project  the  following  phases:

-     inventory  and  assessment;
-     renovation,  which  includes  repair  or  replacement;
-     validation,  which  includes the testing of computer systems and Coastal's
      connections  with  other  computer  systems  and  service  bureaus;
-     due  diligence  of  third-party  servicers;
-     development  of  contingency  plans.

     Regular  Year  2000 progress reports have been and will continue to be made
to  Coastal's  Board  of  Directors.


<PAGE>
     An inventory of all core systems and products that could be affected by the
Year 2000 date change has been developed by Coastal.  The software for Coastal's
systems  is  primarily provided through third party service bureaus and software
vendors.  Coastal  is  requiring  its  third  party  service  bureaus,  software
providers  and  vendors  to demonstrate and represent that the products provided
are  or will be Year 2000 compliant.  Coastal is performing due diligence on its
customers  and  other  business  partners  by  the implementation and continuous
monitoring  of  processes  for  evaluating its customers' and business partners'
readiness for the Year 2000.  Coastal has an internal compliance testing program
in  place  for  testing  with  the  external  service bureaus and other software
providers,  as  well  as  testing  other internally used systems.  As of July 6,
1999,  all  of Coastal's mission critical core processing systems were confirmed
as  Year 2000 compliant through internal and joint testing of systems, including
those provided by third party servicing bureaus, software providers and vendors.
Coastal  will continue to conduct additional testing on other systems and revise
contingency  plans  through  the  end  of  1999  as  considered  necessary.

     While  Coastal  does  not  believe  that the process of making its computer
systems  Year  2000  ready  will  result  in  an  adverse material impact on its
operations  or  liquidity, a substantial amount of management and staff time has
been and will continue to be devoted to the Year 2000 project.  The direct costs
associated with the Year 2000 issues are estimated not to exceed $300,000 in the
aggregate.  A portion of such costs representing hardware and software purchases
will  be  capitalized and amortized over an estimated three to five year period.

     Planning  and testing will not ensure that any organization will be able to
conduct  business  around and after the Year 2000.  Testing does not ensure that
our customers and other business partners will be able to conduct business.  The
failure of Coastal, its customers and its other business partners to address the
Year  2000  software  problems could have a material adverse effect on Coastal's
financial  condition,  results  of  operations  or  liquidity.

     Coastal  has  implemented  procedures and continues to refine its processes
for  evaluating  its  business  readiness  in addition to developing contingency
plans  to  ensure that alternate operating systems are available in the event of
unforeseen  problems.  The  effect of many business disruptions at the same time
may  impact  Coastal.  Coastal  will continue to review its contingency plans to
reasonably  address  these  incidents.  While  Coastal  has contingency plans in
place  to  address a temporary disruption in services, there can be no assurance
that  any  disruption  or  failure  will  be  only  temporary,  that  Coastal's
contingency  plans  will  function  as  anticipated,  or  that  the  results  of
operations,  financial  condition, or liquidity of Coastal will not be adversely
affected  in  the  event  of  a  prolonged  disruption  or  failure.

     Year  2000  Readiness  Disclosure
     ---------------------------------

     Notice is hereby given that the Year 2000 statements set forth in this Form
10-Q are being designated as a Year 2000 Readiness Disclosure in accordance with
Section  3(9)  of  the  Year  2000  Information  and  Readiness  Disclosure Act.

     Forward-Looking  Information
     ----------------------------

     "Safe  Harbor" Statement under the Private Securities Litigation Reform Act
of  1995:  The  statements contained in this Quarterly Report on Form 10-Q which
are  not  historical  facts  contain forward looking information with respect to
plans,  projections  or  future  performance of Coastal, the occurrence of which
involve  certain  risks and uncertainties detailed in Coastal's filings with the
Securities  and  Exchange  Commission  ("SEC").

     The Management's Discussion and Analysis of Financial Condition and Results
of  Operations set forth in the Form 10-Q should be read in conjunction with the
information  contained  in  the  Consolidated Financial Statements and the Notes
thereto.  Such  discussion  contains  "forward-looking  statements"  within  the
meaning  of  the  Private  Securities Litigation Reform Act of 1995 (the "Reform
Act"),  and  is subject to the safe harbor created by the Reform Act.  The words
"estimate," "project," "anticipate," "expect," "intend," "believe," "plans," and
similar expressions are intended to identify forward-looking statements. Because
such  forward-looking  statements  involve  risks  and  uncertainties, there are
important  factors  that  could  cause  actual results to differ materially from
those  expressed  or implied by such forward-looking statements. Factors, all of
which  are  difficult  to  predict  and  many of which are beyond the control of
Coastal,  that  could cause actual results to differ materially include, but are
not  limited  to:  risks  related  to  Coastal's acquisition strategy, including
risks  of  adversely  changing  results  of  operations  and  factors  affecting
Coastal's  ability  to  consummate  further  acquisitions;  risks  involved  in
Coastal's  ability  to  quickly  and  efficiently  integrate  the  operations of
acquired  entities  with  those  of  Coastal;  changes  in  general economic and
business  conditions;  changes  in market rates of interest; changes in the laws
and  regulations  applicable  to  Coastal;  the risks associated with the Bank's
non-traditional  lending  (loans  other  than single-family residential mortgage
loans  such  as multifamily, real estate acquisition and development, commercial
real  estate,  commercial  business,  warehouse  and  mortgage  servicing rights
loans);  and  changes  in  business strategies and other factors as discussed in
Exhibit 99, attached hereto, and in Coastal's Annual Report on Form 10-K for the
year  ended  December  31,  1998,  as  filed  with  the  SEC  on March 23, 1999.

ITEM  3.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
             ----------------------------------------------------------------

     There  have  been  no  material  changes  in  Coastal's  interest rate risk
position since December 31, 1998. Coastal's principal market risk exposure is to
interest  rates.  See  note 8 of the Notes to Consolidated Financial Statements.


<PAGE>
     PART  II  -  OTHER  INFORMATION

Item  1.     Legal  Proceedings
             ------------------

     Coastal  is involved in routine legal proceedings occurring in the ordinary
course  of  business  which,  in the aggregate, are believed by management to be
immaterial.

Item  2.     Changes  in  Securities
             -----------------------

             a)     Not  applicable.
             b)     Not  applicable.

Item  3.     Default  Upon  Senior  Securities
             ---------------------------------

             Not  applicable.

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders
             -----------------------------------------------------------

             Not  applicable.

Item  5.     Other  Information
             ------------------

             Not  applicable.

Item  6.     Exhibits  and  Reports  on  Form  8-K
             -------------------------------------

             (a)   The  following  exhibits  are  filed  as  part
                   of  this  report:

                   Exhibit  27  -  Financial  Data  Schedule
                   Exhibit  99  -  Forward-Looking  Information
             (b)   Form  8-K  filed  on  July 19, 1999 concerning the launching
                   of Internet Banking  on  Coastal's  web  site.


<PAGE>



                                   SIGNATURES


     Pursuant  to  the  requirement  of the Securities Exchange Act of 1934, the
Registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.




Dated:     11/15/99                       By     /s/  Manuel  J. Mehos
           --------                            --------------------------
                                                Manuel  J.  Mehos
                                                Chairman  of  the  Board
                                                Chief  Executive  Officer





Dated:     11/15/99                       By     /s/  Catherine  N. Wylie
           --------                            ---------------------------
                                                Catherine  N.  Wylie
                                                Chief  Financial  Officer




<PAGE>
                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
                                                          Sequential Page
Exhibit No.   Description                                    Number
-----------  -------------------------------------------  ---------------
<S>          <C>                                          <C>
    27        Financial Data Schedule (for SEC use only).
    99        Forward-Looking Information
</TABLE>

<PAGE>