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  June  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.

                             X    YES           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:   6,303,798 AS OF JULY 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 June 30, 1999
        (unaudited) and December 31, 1998                                          1

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

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

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

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

        Notes to Consolidated Financial Statements                                 7

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

Item 3  Quantitative and Qualitative Disclosures About Market Risk                26

</TABLE>



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


<S>     <C>                                                  <C>
Item 1  Legal Proceedings                                    27
Item 2  Changes in Securities                                27
Item 3  Default upon Senior Securities                       27
Item 4  Submission of Matters to a Vote of Security Holders  27
Item 5  Other Information                                    28
Item 6  Exhibits and Reports on Form 8-K                     28
</TABLE>



SIGNATURES

<PAGE>



ITEM  1.     FINANCIAL  STATEMENTS
--------     ---------------------

<TABLE>
<CAPTION>

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


                                                                 June 30,                December 31,
                                                                   1999                      1998
                                                               ------------           ---------------
ASSETS                                                          (Unaudited)
-------------------------------------------------------------   -------------------------------------
<S>                                                            <C>           <C>           <C>
Cash and cash equivalents                                      $     37,178                $   45,453
Federal funds sold                                                    2,900                        --
Loans receivable (note 4)                                         1,673,727                 1,538,149
Mortgage-backed securities held-to-maturity (notes 3 and 8)         977,813                 1,154,116
Mortgage-backed securities available-for-sale, at fair value
 (notes 3 and 8)                                                    104,125                    96,609
U.S. Treasury security available-for-sale, at fair value              2,004                     2,016
Mortgage loans held for sale                                             90                        --
Accrued interest receivable                                          15,507                    15,518
Property and equipment                                               32,279                    33,116
Stock in the Federal Home Loan Bank of Dallas (FHLB)                 51,166                    49,819
Goodwill                                                             29,173                    30,687
Mortgage servicing rights                                             3,442                     4,049
Prepaid expenses and other assets                                    12,232                    12,629
                                                               ------------                ----------
                                                               $  2,941,636                $2,982,161
                                                               ============                ==========
</TABLE>

<TABLE>
<CAPTION>

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

<S>                                                                 <C>          <C>
Liabilities:
 Deposits (note 5)                                                  $1,624,615   $1,705,004
 Advances from the FHLB (note 6)                                       987,009      966,720
 Securities sold under agreements to repurchase (note 6)               100,000      100,000
 Senior notes payable, net (note 7)                                     47,900       50,000
 Advances from borrowers for taxes and insurance                         8,020        3,340
 Other liabilities and accrued expenses                                 14,015       15,583
                                                                    -----------  -----------
     Total liabilities                                               2,781,559    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; 7,574,277 and 7,568,255 shares issued
   in 1999 and 1998, respectively                                           76           76
 Additional paid-in capital                                             32,275       33,696
 Retained earnings                                                      92,863       88,144
 Accumulated other comprehensive income (loss) -
   unrealized loss on securities available-for-sale                     (1,101)      (1,374)
 Treasury stock at cost (1,272,679 and 499,600 shares in 1999
   and 1998)                                                           (20,286)      (7,778)
                                                                    -----------  -----------
     Total stockholders' equity                                        131,327      112,764
                                                                    -----------  -----------
                                                                    $2,941,636   $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>


                                                                            Six Months Ended
                                                                                June 30,
                                                                           ----------------------
                                                                                1999        1998
                                                                           ----------------------
                                                                                  (Unaudited)
<S>                                                                        <C>            <C>
Interest income:
 Loans receivable                                                          $    63,828  $ 56,027
 Mortgage-backed securities                                                     33,489    46,198
 FHLB stock, federal funds sold and other interest-earning assets                1,560     1,036
                                                                           -----------  ---------
                                                                                98,877   103,261
                                                                           -----------  ---------

Interest expense:
 Deposits                                                                       32,878    30,999
 Advances from the FHLB:
   Short-term                                                                    7,099     7,579
   Long-term                                                                    15,132     7,860
 Other borrowed money                                                            4,091    23,041
 Senior notes payable                                                            2,414     2,500
                                                                           -----------  ---------
                                                                                61,614    71,979
                                                                           -----------  ---------

   Net interest income                                                          37,263    31,282
Provision for loan losses                                                        3,006     1,900
                                                                           -----------  ---------
   Net interest income after provision for loan losses                          34,257    29,382
                                                                           -----------  ---------

Noninterest income:
 Loan fees and service charges on deposit accounts                               3,724     2,466
 Loan servicing income, net                                                        286       400
 Writedown of purchased mortgage loan premium                                       --      (709)
 Other                                                                             843       543
                                                                           -----------  ---------
                                                                                 4,853     2,700
                                                                           -----------  ---------

Noninterest expense:
 Compensation, payroll taxes and other benefits                                 14,405    10,097
 Office occupancy                                                                5,639     4,031
 Data processing                                                                 1,762     1,181
 Amortization of goodwill                                                        1,514       943
 Insurance premiums                                                                615       525
 Real estate owned                                                                 277       423
 Other                                                                           4,086     3,718
                                                                           -----------  ---------
                                                                                28,298    20,918
                                                                           -----------  ---------

     Income before provision (benefit) for Federal income taxes
     and minority interest                                                      10,812    11,164

Provision (benefit) for Federal income taxes (note 12)                           3,399       (50)
                                                                           -----------  ---------
     Income before minority interest                                             7,413    11,214
Minority interest - preferred stock dividends of Coastal Banc ssb
 (Series A) (note 10)                                                            1,294     1,294
                                                                           -----------  ---------
     Net income                                                            $     6,119  $  9,920
                                                                           ===========  =========
     Net income available to common stockholders                           $     5,789  $  9,920
                                                                           ===========  =========

Basic earnings per share (note 9)                                          $      0.87  $   1.31
                                                                           ===========  =========

Diluted earnings per share (note 9)                                        $      0.85  $   1.27
                                                                           ===========  =========
</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
                                                                                    June 30,
                                                                           ----------------------
                                                                                  1999      1998
                                                                           -------------  -------
                                                                                   (Unaudited)
<S>                                                                        <C>            <C>
Interest income:
 Loans receivable                                                          $      32,824  $29,087
 Mortgage-backed securities                                                       15,739   22,752
 FHLB stock, federal funds sold and other interest-earning assets                    788      534
                                                                           -------------  -------
                                                                                  49,351   52,373
                                                                           -------------  -------

Interest expense:
 Deposits                                                                         16,068   15,492
 Advances from the FHLB:
   Short-term                                                                      3,093    3,624
   Long-term                                                                       7,573    3,913
 Other borrowed money                                                              2,573   11,812
 Senior notes payable                                                              1,197    1,250
                                                                           -------------  -------
                                                                                  30,504   36,091
                                                                           -------------  -------

   Net interest income                                                            18,847   16,282
Provision for loan losses                                                            675      450
                                                                           -------------  -------
   Net interest income after provision for loan losses                            18,172   15,832
                                                                           -------------  -------

Noninterest income:
 Loan fees and service charges on deposit accounts                                 1,910    1,142
 Loan servicing income, net                                                          152      160
 Other                                                                               351      351
                                                                           -------------  -------
                                                                                   2,413    1,653
                                                                           -------------  -------

Noninterest expense:
 Compensation, payroll taxes and other benefits                                    7,290    5,157
 Office occupancy                                                                  2,837    2,042
 Data processing                                                                     863      573
 Amortization of goodwill                                                            761      474
 Insurance premiums                                                                  312      260
 Real estate owned                                                                   123      171
 Other                                                                             2,632    1,906
                                                                           -------------  -------
                                                                                  14,818   10,583
                                                                           -------------  -------

     Income before provision for Federal income taxes
     and minority interest                                                         5,767    6,902

Provision for Federal income taxes (note 12)                                       1,773    2,276
                                                                           -------------  -------
     Income before minority interest                                               3,994    4,626
Minority interest - preferred stock dividends of Coastal Banc ssb
 (Series A) (note 10)                                                                647      647
                                                                           -------------  -------
     Net income                                                            $       3,347  $ 3,979
                                                                           =============  =======
     Net income available to common stockholders                           $       3,017  $ 3,979
                                                                           =============  =======

Basic earnings per share (note 9)                                          $        0.47  $  0.53
                                                                           =============  =======

Diluted earnings per share (note 9)                                        $        0.46  $  0.51
                                                                           =============  =======
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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


                                                                    Six Months Ended
                                                                        June 30,
                                                            ---------------------------
                                                                   1999          1998
                                                            ------------------  -------
                                                                      (Unaudited)
<S>                                                         <C>                 <C>


Net income                                                     $    6,119       $ 9,920

Other comprehensive income, net of tax:
 Unrealized holding gains on securities available-for-sale
 arising during period                                                273           698
                                                               ---------------  -------

Total comprehensive income                                     $    6,392       $10,618
                                                               ===============  =======

</TABLE>



See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                                  Six Months Ended
                                                                                       June 30,
                                                                              ----------------------
                                                                                  1999         1998
                                                                             -----------------------
                                                                                     (Unaudited)

<S>                                                                   <C>                 <C>
Cash flows from operating activities:
 Net income                                                               $       6,119   $   9,920
 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                4,928       4,087
 Net premium amortization                                                           747       1,985
 Provision for loan losses                                                        3,006       1,900
 Amortization of goodwill                                                         1,514         943
 Originations and purchases of mortgage loans held for sale                      (2,358)    (11,299)
 Sales of mortgage loans held for sale                                            1,936      11,050
 Stock dividends from the FHLB                                                   (1,337)       (882)
 Decrease (increase) in:
   Accrued interest receivable                                                       11        (536)
   Other, net                                                                      (496)      2,459
                                                                              ----------  ----------

   Net cash provided by operating activities                                     14,070      19,627
                                                                              ----------  ----------

Cash flows from investing activities:
 Net increase in federal funds sold                                              (2,900)         --
 Purchases of mortgage-backed securities held-to-maturity                        (3,080)         --
 Purchases of mortgage-backed securities available-for-sale                     (26,489)         --
 Principal repayments on mortgage-backed securities held-to-maturity            179,796      61,518
 Principal repayments on mortgage-backed securities
   available-for-sale                                                            19,406      11,392
 Purchases of loans receivable                                                 (235,485)   (273,600)
 Net decrease in loans receivable                                                93,384     116,140
 Net purchases of property and equipment                                         (1,722)     (2,180)
 Purchases of FHLB stock                                                            (10)     (3,011)
                                                                              ----------  ----------

   Net cash provided (used) by investing activities                              22,900     (89,741)
                                                                              ----------  ----------

</TABLE>



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


                                                                                 Six Months Ended
                                                                                     June 30,
                                                                       --------------------------------
                                                                              1999             1998
                                                                       ------------------  ------------
                                                                                   (Unaudited)

<S>                                                                    <C>                 <C>
Cash flows from financing activities:
 Net decrease in deposits                                              $      (80,285)     $   (16,198)
 Advances from the FHLB                                                     2,763,444        1,948,839
 Principal payments on advances from the FHLB                              (2,743,155)      (1,864,476)
 Securities sold under agreements to repurchase and federal funds
   purchased                                                                  319,340        3,602,376
 Purchases of securities sold under agreements to repurchase and
   federal funds purchased                                                   (319,340)      (3,616,424)
 Net increase in advances from borrowers for taxes and insurance                4,680            5,463
 Proceeds from issuance of preferred stock, net                                26,024               --
 Exercise of stock options for purchase of common stock, net                       54              471
 Purchase of Treasury Stock                                                   (12,508)              --
 Repurchase of Senior Notes                                                    (2,100)              --
 Dividends paid                                                                (1,399)          (1,209)
                                                                       ---------------     ------------
   Net cash provided (used) by financing activities                           (45,245)          58,842
                                                                       ---------------     ------------

   Net decrease in cash and cash equivalents                                   (8,275)         (11,272)
 Cash and cash equivalents at beginning of period                              45,453           37,096
                                                                       ---------------     ------------
 Cash and cash equivalents at end of period                            $       37,178      $    25,824
                                                                       ===============     ============

 Supplemental schedule of cash flows-interest paid                     $       62,969      $    70,583
                                                                       ===============     ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                                    $        2,583      $     2,020
                                                                       ===============     ============

</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  June 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 June 30, 1999,
1,272,679  shares had been repurchased in the open market at an average price of
$15.94  per  share  for  a  total  cost  of  $20.3  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  June  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              $   699,805        $ 4,276      $  (8,114)     $ 695,967
 REMICS - Non-agency              190,125            110         (2,458)       187,777
 FNMA certificates                 59,805             60         (1,657)        58,208
 GNMA certificates                 18,004             --            (54)        17,950
 Non-agency securities             10,074             29           (148)         9,955
                              -----------        -------      ----------     ---------
                              $   977,813        $ 4,475      $ (12,431)     $ 969,857
                              ===========        =======      ==========     =========

Available-for-sale:
 REMICS - Agency              $    78,756        $    --      $  (1,576)     $  77,180
 REMICS - Non-agency                  576             --             (9)           567
 GNMA certificates                 26,489             --           (111)        26,378
                              -----------        -------      ----------     ---------
                              $   105,821        $    --      $  (1,696)     $ 104,125
                              ===========        =======      ==========     =========
</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  June  30, 1999 and December 31, 1998 were as follows
(dollars  in  thousands):

<TABLE>
<CAPTION>

                                                    June 30, 1999     December 31, 1998
                                                   ---------------    -----------------
                                                     (Unaudited)
<S>                                                <C>                 <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $      786,734       $  690,510
 Commercial                                               300,758          257,723
 Multifamily                                              124,906          119,447
 Residential construction                                 132,099          115,714
 Acquisition and development                               85,469           75,932
 Commercial construction                                   58,331           40,344
Commercial loans, secured by residential mortgage
 loans held for sale                                      117,899          173,124
Commercial loans, secured by mortgage servicing
 rights                                                     1,690            3,867
Commercial, financial and industrial                      110,300           92,218
Loans secured by savings deposits                          13,060           13,164
Consumer and other loans                                   69,524           66,989
                                                   ---------------      -----------
                                                        1,800,770        1,649,032
Loans in process                                         (114,008)         (99,790)
Allowance for loan losses                                 (13,384)         (11,358)
Unearned interest and  loan fees                           (2,954)          (3,493)
Premium to record purchased loans, net                      3,303            3,758
                                                   ---------------      -----------
                                                   $    1,673,727      $ 1,538,149
                                                   ===============      ===========
Weighted average yield                                       8.09%            8.55%
                                                   ===============      ===========
</TABLE>


     At  June  30,  1999,  Coastal  had  outstanding commitments to originate or
purchase  $116.4  million  of  real  estate  mortgage  and  other  loans and had
commitments  under  lines  of credit to originate primary construction and other
loans  of  approximately $172.7 million.  In addition, at June 30, 1999, Coastal
had  $7.6  million of outstanding letters of credit.  Management anticipates the
funding  of  these  commitments  through  normal  operations.

     At  June  30,  1999 and December 31, 1998, the carrying value of loans that
were  considered  to  be  impaired  totaled approximately $12.2 million and $1.7
million,  respectively  and  the  related  allowance  for  loan  losses on those
impaired  loans  totaled $3.1 million and $880,000 at June 30, 1999 and December
31, 1998, respectively. The average recorded investment in impaired loans during
the  six months ended June 30, 1999 and 1998 was $10.6 million and $1.7 million,
respectively.


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

<TABLE>
<CAPTION>

                                     Six Months Ended June 30,
                                     -----------------------
                                           1999       1998
                                      ------------  -------
                                                (Unaudited)
<S>                           <C>         <C>           <C>
Balance, beginning of period          $    11,358   $7,412
Provision for loan losses                   3,006    1,900
Charge-offs                                (1,107)    (692)
Recoveries                                    127      230
                                      ------------  -------

Balance, end of period                $    13,384   $8,850
                                      ============  =======
</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.  As  of June 30, 1999, Coastal has allocated $2.4 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.  At this time, Coastal is unable to determine the timing,
probability,  or  the  amount of any loss which might result from the default by
the  Mortgage  Banker.  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.

     Coastal  services for others loans receivable which are not included in the
Consolidated  Financial  Statements. The total amounts of such loans were $453.2
million and $519.2 million at June 30, 1999 and December 31, 1998, respectively.




<PAGE>
(5)  DEPOSITS

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

<TABLE>
<CAPTION>

                                      Stated Rate        June 30, 1999    December 31, 1998
                                     ---------------    --------------    -----------------
                                                          (Unaudited)
<S>                                   <C>               <C>                  <C>
Noninterest-bearing checking                   0.00%     $   90,163        $   95,398
Interest-bearing checking             1.00  -  2.00          51,131            63,067
Savings accounts                      1.49  -  2.75          49,707            48,571
Money market demand accounts          0.00  -  4.57         335,347           339,481
                                                         -------------     -----------
                                                            526,348           546,517

Certificate accounts                  2.00  -  2.99           1,782             6,538
                                      3.00  -  3.99         100,840            38,614
                                      4.00  -  4.99         515,576           272,325
                                      5.00  -  5.99         420,078           747,585
                                      6.00  -  6.99          50,890            83,277
                                      7.00  -  7.99           8,414             8,727
                                      8.00  -  8.99             103               699
                                      9.00  -  9.99             270               305
                                      over  10.00                19                18
                                                         -------------     -----------
                                                          1,097,972         1,158,088
                                                         -------------     -----------

Premium to record purchased deposits                            295               399
                                                         -------------     -----------

                                                      $   1,624,615        $1,705,004
                                                         =============     ===========

Weighted average rate                                          3.87%             4.11%
                                                         =============     ===========
</TABLE>


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

<CAPTION>



                   June 30, 1999
                  ---------------
                    (Unaudited)
<S>               <C>
 0 to 12 months   $       949,269
 13 to 24 months          110,158
 25 to 36 months           18,767
 37 to 48 months           11,884
 49 to 60 months            7,643
 Over 60 months               251
                  ---------------
                  $     1,097,972
                  ===============
</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  June  30,  1999 and December 31, 1998 was 4.93%.

     The  weighted  average interest rates on advances from the FHLB at June 30,
1999  and  December  31, 1998 were 5.08% and 5.24%, respectively.  The scheduled
maturities and related weighted average interest rates on advances from the FHLB
at  June  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>
1999                                                5.05%           $711,816
2000                                                5.53              12,158
2001                                                5.89              12,792
2002                                                5.02             168,773
2003                                                5.22                 786
2004                                                5.75               5,392
2005                                                5.57                 129
2006                                                6.85               3,169
2007                                                6.65               1,128
2008                                                4.72              52,776
2009                                                8.14               4,290
2010                                                5.66                 187
2011                                                6.62               1,395
2012                                                5.68                 217
2013                                                5.71               6,840
2014                                                5.43               2,987
2018                                                5.28               2,174
                                                                    --------

                                                                    $987,009
                                                                    ========
</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
first  quarter  of  1999,  Coastal,  after  receipt  of  an  unsolicited  offer,
repurchased  $2.1  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 June
30,  1999,  Coastal  had  interest  rate swap and cap agreements having notional
principal  amounts  totaling  $64.7  million  and  $178.9 million, respectively.

     The terms of the interest rate swap agreements outstanding at June 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 June 30, 1999:
1999. . . . . . . . .  $  14,600  Three-month  6.926%          5.028%  $          (80)
2000. . . . . . . . .      4,800  Three-month  6.170           5.176             (100)
2000. . . . . . . . .      2,310  Three-month  6.000           5.328               (8)
2003. . . . . . . . .     22,926  One-month    5.345           4.930              161
2004. . . . . . . . .      3,881  One-month    5.635           4.988              102
2005. . . . . . . . .     16,225  Three-month  6.500           5.051              (33)
                       ---------                                       ---------------
                       $  64,742                                       $           42
                       =========                                       ===============

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 5.15% and
the  weighted  average  interest  payment  rate on all of the interest rate swap
agreements  was  approximately  6.35%  for  the  six months ended June 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 $310,000 for the six months ended June 30, 1999 and
approximately  $185,000  for  the  six  months ended June 30, 1998.  Coastal had
pledged  approximately  $6.4  million  of  mortgage-backed  securities to secure
interest  rate  swap  agreements  at  June  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  $102,000  and  $115,000  at  June 30, 1999 and December 31, 1998,
respectively, with the estimated fair value of the agreements being $520,000 and
$888,000  at  June  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 $12,000 and
$30,000  for  the  six  months  ended  June  30,  1999  and  1998, respectively.

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

<TABLE>
<CAPTION>

Year of       Strike Rate    Notional
Expiration       Range        Amount
----------  ---------------  ---------
<S>         <C>              <C>
1999        7.25  -  11.00%  $  33,520
2000         8.50  -  9.50      11,620
2001         7.00  -  9.00      34,780
2003         8.00  -  8.50      99,000
                             ---------
                             $ 178,920
                             =========
</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 six-and three-month periods ended
June  30,  1999  and  1998  (dollars  in  thousands,  except  per  share  data)
(unaudited):

<TABLE>
<CAPTION>


                                                                    Six Months Ended
                                                                        June 30,
                                                                -----------------------
<S>                                           <C>               <C>          <C>
                                                                      1999         1998
                                                                -----------  ----------
Net income                                                      $    6,119   $    9,920
Preferred stock dividends                                             (330)          --
                                                                -----------  ----------
Net income available to common stockholders                     $    5,789   $    9,920
                                                                ===========  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation                       6,650,424    7,550,276
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                       153,238      265,364
                                                                -----------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                     6,803,662    7,815,640
                                                                ===========  ==========
Basic EPS                                                       $     0.87   $     1.31
                                                                ===========  ==========
Diluted EPS                                                     $     0.85   $     1.27
                                                                ===========  ==========
</TABLE>


<TABLE>
<CAPTION>

                                                                    Three Months Ended
                                                                         June 30,
                                                               --------------------------
<S>                                           <C>                 <C>          <C>
                                                                        1999         1998
                                                                  -----------  ----------
Net income                                                        $    3,347   $    3,979
Preferred stock dividends                                               (330)          --
                                                                  -----------  ----------
Net income available to common stockholders                       $    3,017   $    3,979
                                                                  ===========  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation                         6,384,779    7,559,922
Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                         150,981      277,562
                                                                  -----------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                       6,535,760    7,837,484
                                                                  ===========  ==========
Basic EPS                                                         $     0.47   $     0.53
                                                                  ===========  ==========
Diluted EPS                                                       $     0.46   $     0.51
                                                                  ===========  ==========
</TABLE>

     The  weighted  average number of common shares outstanding has been reduced
in 1999 by the treasury stock held by Coastal.  As of June 30, 1999, Coastal had
1,272,679  common  shares  in  treasury.

(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  June 30, 1999, the Bank's regulatory capital (unaudited) in relation to
its  existing regulatory capital requirements for capital adequacy purposes were
as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>


                                                  Minimum For Capital       Well-Capitalized
                               Actual              Adequacy Purposes          Requirements
                        -------------------      --------------------      ------------------
Capital Requirement        Amount    Ratio          Amount    Ratio         Amount    Ratio
--------------------    ---------  --------      ---------    -------      ---------  -------
<S>                    <C>         <C>           <C>         <C>           <C>      <C>
 Tier 1 (core)          $ 164,394    5.71%        $115,120    4.00%        $143,900   5.00%
 Tier 1 risk-based        164,394    9.59           68,597    4.00          102,896   6.00
 Total risk-based         177,778   10.37          137,194    8.00          171,493  10.00
</TABLE>



     As  of June 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 six months ended June 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 June 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 may be used for
acquisitions,  although there are presently no agreements or understandings with
respect  to  any  such  acquisition; repurchases in the open market of Bancorp's
outstanding  common stock; repurchases in the open market of the outstanding 10%
Senior  Notes  Due 2002; and capital contributions to the Bank to support growth
and  to  provide  working  capital.  The  proceeds  were invested temporarily in
short-term  investments.  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 1.4% or $40.5 million from December 31, 1998 to June
30, 1999.  The net decrease resulted primarily from a decrease of $176.3 million
in  mortgage-backed  securities  held-to-maturity, a decrease of $8.3 million in
cash  and  cash equivalents, offset by an increase in loans receivable of $135.6
million and an increase in mortgage-backed securities available-for-sale of $7.5
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 $225.3 million and $10.2 million of
consumer loan purchases from correspondent lenders, offset by principal payments
received  and  a  decrease  of  $55.2  million  in  commercial loans, secured by
residential  mortgage  loans  held  for  sale, because of the decreased activity
during  the period by these types of customers.  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 $80.4 million or 4.7% from December 31, 1998 to June 30,
1999  and advances from the FHLB increased 2.1% or $20.3 million.  Stockholders'
equity  increased 16.5% or $18.6 million from December 31, 1998 to June 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  $6.1  million  and  a $273,000 decrease in
accumulated  other  comprehensive  loss,  offset  by  additional  treasury stock
acquired  of  $12.5  million  and  dividends  declared.


Results  of  Operations  for  the  Six  Months  Ended  June  30,  1999  and 1998
--------------------------------------------------------------------------------

General
-------

     For  the  six  months  ended  June  30,  1999,  net income was $6.1 million
compared  to  $9.9  million  for the six months ended June 30, 1998.  During the
first  six  months  of 1999, net income was reduced by a $1.7 million additional
provision  for loan losses (above the planned quarterly provision of $675,000 or
$1.4  million  for  the  six  month  period).  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, 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  June 30, 1999, Coastal has allocated $2.4 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.  At  this  time,  Coastal is unable to
determine  the timing, probability, or the amount of any loss which might result
from  the default by the Mortgage Banker.  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  loans  acquired in the 1998 acquisition of 12 branch
offices  from  Pacific  Southwest  Bank  (the  "Valley  Acquisition").  Although
management  believes  that  the  allowance  for  loan losses at June 30, 1999 is
adequate, based on the above specific situation with the Mortgage Banker and the
continuing  changes  in  the loan portfolio, Coastal is planning to increase the
quarterly  provision for loan losses to at least $900,000 beginning in the third
quarter  of  1999.

     Net  income  for  the first six 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  $6.0  million  and  noninterest  income
(excluding  the  writedown of purchased mortgage loan premium in 1998) increased
$1.4  million  from  the  six months ended June 30, 1998 to the six months ended
June 30, 1999.  These increases were offset by the increase in the provision for
loan  losses  of  $1.1  million  and the increase in noninterest expense of $7.4
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 $230,000
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  six  months  ended June 30, 1999 decreased $4.4
million or 4.3% from the six months ended June 30, 1998.  The decrease is due to
a  decrease  in average interest-earning assets of $81.4 million, and a decrease
in  the average yield from 7.19% for the six months ended June 30, 1998 to 7.09%
for  the  six  months  ended June 30, 1999.  Interest income on loans receivable
increased  $7.8 million due to a $231.4 million increase in the average balance,
offset slightly by a decrease in the average yield from 8.35% for the six months
ended  June  30,  1998 to 8.12% for the same period in 1999.  Interest income on
mortgage-backed  securities  decreased  $12.7  million  due  to a $336.1 million
decrease  in  the average balance and a decrease in the average yield from 6.19%
for  the  six  months  ended June 30, 1998 to 5.79% for the same period in 1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased $524,000.  Total interest-earning assets for
the  six  months  ended  June  30,  1999  averaged $2.8 billion compared to $2.9
billion  for  the  six  months  ended  June  30,  1998.

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

     Interest  expense on interest-bearing liabilities was $61.6 million for the
six months ended June 30, 1999, as compared to $72.0 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 5.37% for the six months ended
June  30,  1998  to  4.75%  for  the  six months ended June 30, 1999 and a $87.2
million  decrease  in  the average balance of interest-bearing liabilities.  The
0.62%  decrease  in  the  average  rate paid on interest-bearing liabilities was
primarily due to the lower cost deposits acquired in the Valley 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 $665.8 million decrease in
securities  sold  under  agreements  to  repurchase  offset  by a $328.8 million
increase  in  advances  from  the  FHLB  and  a  $251.7  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  $37.3 million for the six months ended June 30,
1999  and  $31.3  million  for  the  same  period  in 1998.  Net interest margin
("Margin")  was  2.67%  for the six months ended June 30, 1999 compared to 2.18%
for  the  six months ended June 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
1.82%  for  the six months ended June 30, 1998 to 2.34% for the six months ended
June  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 six months ended June 30, 1999 and 1998 were 2.59%
and  2.00%,  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 0.62%.
This  decrease  in  the  average  rate  paid on interest-bearing liabilities was
slightly  offset  by  a  0.10% decrease in the average yield on interest-earning
assets.  Average net interest-earning assets increased $5.8 million from the six
months  ended  June  30,  1998  to  the  six  months  ended  June  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  to  approximately 15% of total
assets  and  noninterest-bearing deposits to approximately 10% of total deposits
within  three  to  five  years.

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

     The  provision  for  loan  losses was $3.0 million for the six months ended
June  30,  1999 compared to $1.9 million for the six months ended June 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  loans acquired in the Valley Acquisition.  The
allowance  for  loan losses as a percentage of total loans was 0.80% at June 30,
1999  and  0.63%  at  June  30,  1998.

     Although  no assurance can be given, management believes that the allowance
for  loan  losses  at  June  30,  1999  is  adequate  considering  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.  As  noted previously, based on the above specific
situation  with  the  Mortgage  Banker  and  the  continuing changes in the loan
portfolio,  Coastal  is  planning  to  increase the quarterly provision for loan
losses  to  at  least  $900,000  beginning  in  the  third  quarter  of  1999.

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

     For  the  six months ended June 30, 1999, noninterest income (excluding the
writedown  of purchased mortgage loan premium in 1998) increased $1.5 million to
$4.9  million,  compared to $3.4 million for the six months ended June 30, 1998.
The  increase  in  noninterest  income  was primarily due to an increase of $1.3
million  in  loan  fees  and  service charges on deposit accounts and a $300,000
increase  in  other  noninterest  income.  The increase in loan fees and service
charges  on  deposit  accounts  consisted  of a $1.4 million increase in service
charges  on  deposit  accounts  due  to the increase in transaction type deposit
accounts, including those acquired in the Valley Acquisition, offset somewhat by
a  $187,000  decrease  in loan fees.  These increases were partially offset by a
$114,000  decrease  in loan servicing income due to the declining loan servicing
portfolio.

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

     For  the six months ended June 30, 1999, noninterest expense increased $7.4
million  from  the  six months ended June 30, 1998.  Compensation, payroll taxes
and  other  benefits  as well as office occupancy expense increased $4.3 million
and  $1.6  million, respectively, from the six months ended June 30, 1998 to the
six  months ended June 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 Valley Acquisition.  In addition, the amortization of
goodwill  increased  $571,000  and  data  processing  expense increased $581,000
primarily  due  to  the  Valley  Acquisition.  Other changes included a $368,000
increase  in  other operating expenses, a $90,000 increase in insurance premiums
and  a  $146,000  decrease  in  real  estate  owned  expense.


<PAGE>
Provision  (Benefit)  for  Federal  Income  Taxes
-------------------------------------------------

     The  provision  for  federal income taxes for the six months ended June 30,
1999  was  $3.4  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  six  months  ended  June 30, 1998 of $3.7 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  June  30, 1999 and 1998
--------------------------------------------------------------------------------

General
-------

     For  the  three  months  ended  June  30, 1999, net income was $3.3 million
compared to $4.0 million for the three months ended June 30, 1998.  Net interest
income increased $2.6 million and noninterest income increased $760,000 from the
three  months ended June 30, 1998 to the three months ended June 30, 1999. These
increases  were  offset  by  the  increase  in  the provision for loan losses of
$225,000  and the increase in noninterest expense of $4.2 million. The provision
for  federal  income taxes decreased $503,000 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  three months ended June 30, 1999 decreased $3.0
million  or 5.8% from the three months ended June 30, 1998.  The decrease is due
to a decrease in average interest-earning assets of $88.2 million and a decrease
in  the  average  yield  from  7.27% for the three months ended June 30, 1998 to
7.07%  for  the  three  months  ended  June  30, 1999.  Interest income on loans
receivable  increased  $3.7  million  due  to  a  $254.3 million increase in the
average  balance,  offset slightly by a decrease in the average yield from 8.50%
for  the  three months ended June 30, 1998 to 8.09% for the same period in 1999.
Interest  income  on  mortgage-backed securities decreased $7.0 million due to a
$367.4  million  decrease  in  the average balance and a decrease in the average
yield  from 6.16% for the three months ended June 30, 1998 to 5.68% for the same
period  in  1999.

     In  addition,  interest  income on FHLB stock, federal funds sold and other
interest-earning  assets  increased $254,000.  Total interest-earning assets for
the  three  months  ended  June  30, 1999 averaged $2.8 billion compared to $2.9
billion  for  the  three  months  ended  June  30,  1998.

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

     Interest  expense on interest-bearing liabilities was $30.5 million for the
three  months  ended  June  30,  1999, as compared to $36.1 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 5.35% for the three
months ended June 30, 1998 to 4.71% for the three months ended June 30, 1999 and
a  $105.8  million  decrease  in  the  average  balance  of  interest-bearing
liabilities.  The  0.64%  decrease  in the average rate paid on interest-bearing
liabilities  was  due  to  the  lower  cost  deposits  acquired  in  the  Valley
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 $648.0
million  decrease  in  securities  sold  under  agreements  to repurchase offset
somewhat  by  a  $304.7  million increase in advances from the FHLB and a $239.7
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 $18.8 million for the three months ended June 30,
1999  and  $16.3  million  for  the  same  period  in 1998.  Net interest margin
("Margin")  was 2.70% for the three months ended June 30, 1999 compared to 2.26%
for the three months ended June 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 to 2.36%
for  the  three months ended June 30, 1999 from 1.92% for the three months ended
June  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 June 30, 1999 and 1998 were 2.62%
and  2.09%,  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 0.64%,
somewhat  offset  by  a  0.20% decrease in the average yield on interest-earning
assets.  Average  net  interest-earning  assets increased $17.6 million from the
three  months  ended  June  30,  1998  to  the three months ended June 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  to  approximately 15% of total
assets  and  noninterest-bearing deposits to approximately 10% of total deposits
within  three  to  five  years.

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

     The  provision for loan losses was $675,000 for the three months ended June
30,  1999  compared  to  $450,000 for the three months ended June 30, 1998.  The
increase  in  the  provision  for  loan  losses was primarily due to changes and
growth  in  Coastal's loan portfolio, including the loans acquired in the Valley
Acquisition.  The  allowance  for loan losses as a percentage of total loans was
0.80%  at  June  30,  1999  and  0.63%  at  June  30,  1998.

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

     For  the  three  months  ended  June 30, 1999, noninterest income increased
$760,000  to  $2.4  million, compared to $1.7 million for the three months ended
June  30,  1998.  The  increase  in  noninterest  income was primarily due to an
increase  of $768,000 in loan fees and service charges on deposit accounts.  The
increase  in  loan  fees  and service charges on deposit accounts consisted of a
$797,000  increase in service charges on deposit accounts due to the increase in
transaction  type  deposit  accounts,  including  those  acquired  in the Valley
Acquisition,  offset  somewhat  by  a  $29,000  decrease  in  loan  fees.

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

     For  the  three  months  ended June 30, 1999, noninterest expense increased
$4.2  million  from the three months ended June 30, 1998.  Compensation, payroll
taxes  and  other  benefits  as  well as office occupancy expense increased $2.1
million and $795,000, respectively, from the three months ended June 30, 1998 to
the  three  months  ended June 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  Valley  Acquisition.  In  addition,  the
amortization  of  goodwill  increased  $287,000  and  data  processing  expense
increased  $290,000  primarily  due  to  the  Valley Acquisition.  Other changes
included  a  $52,000  increase in insurance premiums, a $48,000 decrease in real
estate  owned  expense  and  a  $726,000  increase  in other operating expenses.


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

     The  provision for federal income taxes for the three months ended June 30,
1999  was  $1.8 million compared to $2.3 million for the three months ended June
30,  1998.  The  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 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 June 30,
1999,  Coastal  had  binding commitments to originate or purchase loans totaling
approximately  $116.4  million  and  had  $114.0 million of undisbursed loans in
process.  Scheduled  maturities  of certificates of deposit during the 12 months
following  June  30,  1999  totaled $949.3 million at June 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  June  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  the  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.

     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 will have 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 that 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
Coastal's  Annual  Report  on Form 10-K for the year ended December 31, 1998, as
filed  with  the  SEC  on  March  23,  1999.


<PAGE>
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
             -----------------------------------------------------------

     On  April  22,  1999,  at  the  Annual  Meeting  of Stockholders of Coastal
Bancorp,  Inc.  (the  Company),  the  stockholders  voted  upon and approved the
election  of  two  directors,  the  1999  Stock  Compensation  Program  and  the
ratification  of  the  appointment  of  KPMG  LLP  as  the Company's independent
auditors  for  the  fiscal  year ending December 31, 1999.  With respect to such
matters,  the  results  of the votes were as follows:

     1)     Election  of  directors:

<TABLE>
<CAPTION>

                                 Number of Votes
                            -------------------------
                              In favor      Withheld
                            -------------------------
<S>                     <C>                 <C>
Robert E. Johnson, Jr.        5,864,275      196,708
Paul W. Hobby                 5,864,275      196,708

</TABLE>

     2)     Adoption  of  the  1999  Stock  Compensation  Program:

<TABLE>
<CAPTION>

<S>                             <C>
Number of votes in favor:       4,928,419
Number of votes against:        1,061,585
Number of votes abstaining:        70,979
</TABLE>

     3)     Ratification  of  KPMG LLP as the Company's independent auditors for
            the  year  ending  December  31,  1999:

<TABLE>
<CAPTION>

<S>                             <C>
Number of votes in favor:       5,896,234
Number of votes against:          159,125
Number of votes abstaining:         5,624
</TABLE>


<PAGE>
Item  5.     Other  Information
             ------------------

     Important  Dates  Relating  to  Stockholder  Proposals  for the 2000 Annual
     Meeting  of  Shareholders.
     ---------------------------------------------------------------------------

     As noted in the Company's definitive Proxy Statement for the Annual Meeting
of  Stockholders  held April 22, 1999 under the caption "Stockholder Proposals,"
any  proposal  which a stockholder of the Company wishes to have included in the
Company's  proxy  solicitation  materials  to  be  used  in  connection with the
Company's 2000 Annual Meeting of Shareholders, must be received at the principal
executive  offices  of  the  Company, Coastal Banc Plaza, 5718 Westheimer, Suite
600,  Houston,  Texas  77057,  Attention:  Secretary, no later than November 24,
1999.

     If the notice of such proposal is received after November 24, 1999, it will
not be considered timely pursuant to Proxy Rule 14a-8 and such proposal will not
be  included  in  the  Company's  proxy  soliciting  materials.

     Stockholder  proposals  which  are  not  submitted  for  inclusion  in  the
Company's  proxy  materials pursuant to Rule 14a-8 under the Securities Exchange
Act  of  1934  may be brought before an annual meeting pursuant to the Company's
Articles  of Incorporation, which provide that business must be properly brought
before  the  meeting  by  or  at  the  direction  of  the Board of Directors, or
otherwise properly brought before the meeting by a stockholder.  For business to
be  properly  brought before an annual meeting by a stockholder, the stockholder
must  have  given  timely  notice  thereof  in  writing  to the Secretary of the
Company.  To  be  timely, a stockholder's notice must be delivered to, or mailed
and  received  at,  the  principal executive offices of the Company on or before
January 23, 2000.*  A stockholder's notice shall set forth as to each matter the
stockholder  proposes  to bring before an annual meeting, such information as is
required  by  the  Company's  Articles of Incorporation.  If the proposal is not
made  in  accordance  with  the  terms  of  the  Articles of Incorporation, such
proposal  will  not  be  acted  upon  at  the  2000  Annual  Meeting.

______________
*WHICH  IS THE DATE WHICH IS NOT LESS THAN 60 DAYS PRIOR TO THE ANNIVERSARY DATE
OF  THE  MAILING  OF  PROXY  MATERIALS  BY  THE  COMPANY  IN CONNECTION WITH THE
IMMEDIATE  PRECEDING  ANNUAL  MEETING  OF  STOCKHOLDERS.

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)  Coastal  did not file a report on Form 8-K during the quarter
                  ended June 30,  1999.

<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:     8/16/99                           By  /s/  Manuel J. Mehos
           -------                           --------------------------------
                                             Manuel  J.  Mehos
                                             Chairman  of  the  Board
                                             Chief  Executive  Officer




Dated:     8/16/99                           By   /s/  Catherine  N. Wylie
           -------                                ---------------------------
                                             Catherine  N.  Wylie
                                             Chief  Financial  Officer