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  March  31,  2002

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

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

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


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

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

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

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

                                YES     X     NO

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

           COMMON STOCK OUTSTANDING:   5,849,962 AS OF APRIL 30, 2002


<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES

                                Table of Contents



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

<CAPTION>
<S>     <C>                                                                       <C>
Item 1  Financial Statements (unaudited)
        Consolidated Statements of Financial Condition at March 31, 2002
        and December 31, 2001                                                      1

        Consolidated Statements of Income for the Three-Month Periods Ended
        March 31, 2002 and 2001                                                    2

        Consolidated Statements of Comprehensive Income for the Three-Month
        Periods Ended March 31, 2002 and 2001                                      3

        Consolidated Statements of Cash Flows for the Three-Month Periods
        Ended March 31, 2002 and 2001                                              4

        Notes to Consolidated Financial Statements                                 6

Item 2  Management's Discussion and Analysis of Financial Condition and Results
        of Operations                                                             16

Item 3  Quantitative and Qualitative Disclosures About Market Risk                20
</TABLE>

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

<CAPTION>

<S>     <C>                                                  <C>
Item 1  Legal Proceedings                                    21
Item 2  Changes in Securities and Use of Proceeds            21
Item 3  Default upon Senior Securities                       21
Item 4  Submission of Matters to a Vote of Security Holders  21
Item 5  Other Information                                    21
Item 6  Exhibits and Reports on Form 8-K                     21
</TABLE>




SIGNATURES

<PAGE>



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

<TABLE>

<CAPTION>

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


                                                                      March 31,              December 31,
ASSETS                                                                  2002                     2001
------------------------------------------------------               ----------              ------------
                                                                    (Unaudited)
<S>                                                     <C>          <C>         <C>           <C>
Cash and cash equivalents                                            $   32,564                $   41,537
Federal funds sold                                                        3,510                    16,710
Loans receivable held for sale (note 4)                                  19,308                        --
Loans receivable (note 4)                                             1,831,258                 1,863,601
Mortgage-backed securities available-for-sale (note 3)                  468,491                   514,068
U.S. Treasury securities available-for-sale                               1,529                    42,827
Accrued interest receivable                                              11,456                    13,243
Property and equipment                                                   27,018                    27,461
Stock in the Federal Home Loan Bank of Dallas (FHLB)                     40,328                    40,032
Goodwill and other intangible assets (note 5)                            21,277                    21,811
Prepaid expenses and other assets                                        16,510                    16,601
                                                                     ----------                ----------
                                                                     $2,473,249                $2,597,891
                                                                     ==========                ==========
</TABLE>


<TABLE>

<CAPTION>

     LIABILITIES  AND  STOCKHOLDERS'  EQUITY
     ---------------------------------------


<S>                                                               <C>                          <C>
Liabilities:
 Deposits (note 6)                                                   $1,639,557               $1,660,386
 Advances from the FHLB (note 7)                                        625,936                  690,877
 Senior Notes payable, net (note 8)                                          --                   43,875
 Advances from borrowers for taxes and insurance                          5,481                    4,259
 Other liabilities and accrued expenses                                  13,616                   12,310
                                                                     ----------                ----------
     Total liabilities                                                2,284,590                2,411,707
                                                                     ----------                ----------
Minority interest - 9.0% noncumulative preferred stock of
 Coastal Banc ssb (note 11)                                              28,750                   28,750

Commitments and contingencies (notes 4 and 9)

Stockholders' equity (notes 1, 3, 10, 12 and 13):
 Preferred stock, no par value; authorized shares 5,000,000;
   9.12% Cumulative, Series A, 1,100,000 shares issued and
   outstanding                                                          27,500                    27,500
 Common stock, $.01 par value; authorized shares
   30,000,000; 7,847,805 shares issued and 5,848,910 shares
   outstanding at March 31, 2002; 7,835,178 shares issued
   and 5,835,178 shares outstanding at December 31, 2001                    78                        78
 Additional paid-in capital                                             35,424                    35,366
 Retained earnings                                                     129,830                   127,425
 Accumulated other comprehensive loss -
   net unrealized loss on securities available-for-sale                 (1,595)                   (1,590)
 Treasury stock at cost (1,998,895 shares in 2002 and 2,000,000
        shares in 2001)                                                (31,328)                  (31,345)
                                                                    -----------               -----------
     Total stockholders' equity                                        159,909                   157,434
                                                                    -----------               -----------
                                                                    $2,473,249                $2,597,891
                                                                    ===========               ===========
</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
                                                                                                       March 31,
                                                                                                  ------------------
                                                                                                 2002            2001
                                                                                              ----------      ---------
<S>                                                          <C>                   <C>
                                                                                                       (Unaudited)
Interest income:
Loans receivable                                                                                $29,967         $43,001
Mortgage-backed securities                                                                        4,964          16,258
FHLB stock, federal funds sold and other interest-earning assets                                    475             906
                                                                                              ----------      ---------
                                                                                                 35,406          60,165
                                                                                              ----------      ---------
Interest expense:
Deposits                                                                                         11,041          19,921
Advances from the FHLB                                                                            5,268          16,763
Senior Notes payable                                                                                378           1,173
Other borrowed money                                                                                 --               3
                                                                                              ----------      ---------
                                                                                                 16,687          37,860
                                                                                              ----------      ---------
Net interest income                                                                              18,719          22,305
Provision for loan losses (note 4)                                                                  900             900
                                                                                              ----------      ---------
Net interest income after provision for loan losses                                              17,819          21,405
                                                                                              ----------      ---------
Noninterest income:
Service charges on deposit accounts                                                               1,995           1,761
Loan fees                                                                                           307             240
Loss on derivative instruments (note 9)                                                            (24)           (564)
Gain (loss) on real estate owned                                                                     22              19
Other                                                                                               209             366
                                                                                              ----------      ---------
                                                                                                  2,509           1,822
                                                                                              ----------      ---------
Noninterest expense:
Compensation, payroll taxes and other benefits                                                    7,861           7,598
Office occupancy                                                                                  2,580           2,676
Data processing                                                                                     423             854
Amortization of goodwill and other intangible assets (note 5)                                       534             702
Other                                                                                             2,852           2,852
                                                                                              ----------      ---------
                                                                                                 14,250          14,682
                                                                                              ----------      ---------
Income before provision for Federal income taxes, minority
    interest and cumulative effect of accounting change                                           6,078           8,545
Provision for Federal income taxes                                                                1,698           2,614
                                                                                              ----------      ---------
Income before minority interest and cumulative effect of
    accounting change                                                                             4,380           5,931
Minority interest - preferred stock dividends of Coastal Banc ssb                                   647             647
                                                                                              ----------      ---------
Income before cumulative effect of accounting change                                              3,733           5,284
Cumulative effect of change in accounting for derivative instruments, net of tax (note 9)            --            (104)
                                                                                              ----------      ---------
Net income                                                                                       $3,733          $5,180
                                                                                              ==========      =========
Net income available to common stockholders                                                      $3,106          $4,553
                                                                                              ==========      =========
Basic earnings per  share before cumulative effect of accounting change                           $0.53           $0.81
                                                                                              ==========      =========
Basic earnings per share (notes 5 and 10)                                                         $0.53           $0.80
                                                                                              ==========      =========
Diluted earnings per share before cumulative effect of accounting change                          $0.51           $0.78
                                                                                              ==========      =========
Diluted earnings per share (notes 5 and 10)                                                       $0.51           $0.76
                                                                                              ==========      =========
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                      March 31,
                                                                ----------------------
                                                                   2002          2001
                                                                ----------     --------
                                                                       (Unaudited)
<S>                                                          <C>                   <C>
Net income                                                        $ 3,733       $ 5,180

Other comprehensive income (loss), net of tax:
 Unrealized gains (losses) on securities available-for-sale
   arising during period                                               (5)          607
                                                                ----------     --------
Total comprehensive income                                        $ 3,728       $ 5,787
                                                                ==========     ========
</TABLE>



See  accompanying  Notes  to  Consolidated  Financial  Statements

<PAGE>
                     COASTAL BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31,
                                                                                --------------------
                                                                                  2002          2001
                                                                               ---------     ---------
                                                                                     (Unaudited)

<S>                                                                   <C>                   <C>
Cash flows from operating activities:
 Net income                                                                  $      3,733   $   5,180
 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                  2,165       1,979
 Net amortization (accretion) of premiums, discounts and loan fees                  1,243        (127)
 Provision for loan losses                                                            900         900
 Amortization of goodwill and other intangibles                                       534         702
 Originations and purchases of mortgage loans held for sale                       (10,233)     (5,207)
 Sales of mortgage loans held for sale                                                 --       5,233
 Stock dividends from the FHLB                                                       (296)       (821)
 Loss on derivative instruments                                                        24         724
 Decrease (increase) in:
   Accrued interest receivable                                                      1,787         489
   Other, net                                                                       2,166     (26,229)
                                                                               ----------      -------
   Net cash provided (used) by operating activities                                 2,023     (17,177)
                                                                               ----------      -------
Cash flows from investing activities:
 Net (increase) decrease in federal funds sold                                     13,200      (7,281)
 Principal repayments on mortgage-backed securities held-to-maturity                   --       7,422
 Principal repayments on mortgage-backed securities
   available-for-sale                                                              44,648       2,299
 Principal repayments on U.S. Treasury securities                                  41,000         100
 Purchases of loans receivable                                                    (81,333)    (92,955)
 Sales of loans receivable                                                         10,111          --
 Net (increase) decrease in loans receivable                                       91,642      (9,449)
 Net purchases of property and equipment                                             (588)       (286)
 Purchases of FHLB stock                                                               --      (2,903)
                                                                               ----------      -------
   Net cash provided (used) by investing activities                               118,680    (103,053)
                                                                               ----------      -------

</TABLE>



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

<CAPTION>



                                                                                  Three Months Ended
                                                                                       March 31,
                                                                                  -------------------
                                                                                   2002          2001
                                                                                ---------      -------
                                                                                     (Unaudited)
<S>                                                                    <C>                   <C>
Cash flows from financing activities:
 Net increase (decrease) in deposits                                      $        (20,829)  $    22,214
 Advances from the FHLB                                                          1,490,900     3,516,099
 Principal payments on advances from the FHLB                                   (1,555,841)   (3,448,259)
 Net increase in advances from borrowers for taxes and insurance                     1,222         1,756
 Exercise of stock options for purchase of common stock, net                            40           752
 Issuance of treasury shares                                                            35            --
 Redemption of Senior Notes payable                                                (43,875)           --
 Dividends paid                                                                     (1,328)       (1,201)
                                                                                 ----------       -------
   Net cash provided by financing activities                                      (129,676)       91,361
                                                                                ----------        -------

   Net decrease in cash and cash equivalents                                        (8,973)      (28,869)
 Cash and cash equivalents at beginning of period                                   41,537        69,730
                                                                                  ----------      -------
 Cash and cash equivalents at end of period                                 $       32,564   $    40,861
                                                                                  ==========     ========

 Supplemental schedule of cash flows-interest paid                          $       17,932   $    35,821

 Supplemental schedule of noncash investing and financing activities:
   Transfer of loans to the held for sale category                          $        9,075   $        --
   Foreclosures of loans receivable                                                  1,924           593

</TABLE>
See  accompanying  Notes  to  Consolidated  Financial  Statements

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



(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 accounting principles
generally  accepted in the United States of America.  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  period  ended  March  31,  2002  are not
necessarily indicative of the results that may be expected for the entire fiscal
year  or  any  other  interim  period.

     On  August  27,  1998, December 21, 1998, February 25, 1999, April 27, 2000
and  July  27,  2000, the Board of Directors authorized five 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 March 31, 2002, 2,000,000 shares had been repurchased in the open
market  at  an  average repurchase price of $15.67 per share for a total cost of
$31.3  million,  with no shares from the July 27, 2000 authorization having been
repurchased  to date.  Book value per common share at March 31, 2002 was $21.91.

     On April 25, 2002, Coastal announced that it had entered into a transaction
that  will  complete  the  authorized  repurchase  plan.  See  Note  15.

(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 subsidiaries, CoastalBanc Financial Corp. and Coastal Banc Insurance Agency,
Inc.  (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.

(3)     MORTGAGE-BACKED  SECURITIES

     Mortgage-backed  securities  at  March 31, 2002 were as follows (dollars in
thousands):
<TABLE>

<CAPTION>



                                                 Gross      Gross
                                Amortized     Unrealized  Unrealized    Market
                                  Cost          Gains       Losses       Value
                                -----------      -------    -------     --------
<S>                     <C>        <C>          <C>         <C>      <C>       <C>
Available-for-sale:
 Agency securities              $   375,007      $   200    $(1,907)    $373,300
 CMOs - Non-agency                   93,517           43       (807)      92,753
 Non-agency securities                2,420           18         --        2,438
                                -----------      -------    -------     --------
                                $   470,944      $   261    $(2,714)    $468,491
                                ===========      =======    ========    ========
</TABLE>
<PAGE>

     Mortgage-backed securities at December 31, 2001 were as follows (dollars in
thousands):
<TABLE>

<CAPTION>
                                                Gross        Gross
                                 Amortized    Unrealized   Unrealized    Market
                                   Cost          Gains       Losses      Value
                                -----------      -------    -------     --------
<S>                     <C>        <C>          <C>         <C>      <C>       <C>
Available-for-sale:
 Agency securities              $   406,437      $   319    $(2,455)    $404,301
 CMOs - Non-agency                  107,488           82       (418)     107,152
 Non-agency securities                2,590           34         (9)       2,615
                                -----------      -------    -------     --------
                                $   516,515      $   435    $(2,882)    $514,068
                                ===========      =======    ========    ========
</TABLE>

     Effective  September  30,  2001,  Coastal  transferred  all  of  its
mortgage-backed  securities held-to-maturity to the available-for-sale category.
This  was  due to management's intent to restructure a portion of the asset base
to  be  less  vulnerable  to market interest rate fluctuations. In late November
2001,  Coastal entered into a transaction in which it sold $844.9 million of its
mortgage-backed  securities.  Also  in  November,  Coastal used a portion of the
proceeds of that sale to purchase approximately $512.3 million of primarily pass
through  mortgage-backed  securities.  All  of  the securities purchased and the
remaining  securities  not  sold were placed in the available-for-sale category.


(4)     LOANS  RECEIVABLE

     Loans  receivable  at  March 31, 2002 and December 31, 2001 were as follows
(dollars  in  thousands):
<TABLE>
<CAPTION>
                                                    March 31, 2002           December 31, 2001
                                                   ----------------          -----------------
<S>                                                <C>               <C>                <C>
Real estate mortgage loans:
 First-lien mortgage, primarily residential        $       856,775               $  880,624
 Commercial                                                333,082                  319,377
 Multifamily                                               120,578                  124,616
 Residential construction                                  153,796                  136,035
 Acquisition and development                               134,077                  140,009
 Commercial construction                                   232,776                  222,026
Commercial loans, secured by residential mortgage
 loans held for sale                                         8,176                   11,508
Commercial, financial and industrial                       122,091                  116,029
Loans secured by deposits                                   19,206                   21,238
Consumer and other loans                                    38,447                   43,384
                                                   ----------------              -----------
                                                         2,019,004                2,014,846
                                                   ----------------              -----------
Loans in process                                          (169,541)                (131,064)
Allowance for loan losses                                  (14,485)                 (15,385)
Unearned interest and  loan fees                            (2,893)                  (2,959)
Discount on purchased loans, net                              (827)                  (1,837)
                                                   ----------------              -----------
                                                   $     1,831,258               $1,863,601
                                                   ===============               ===========
Weighted average yield                                      6.49%                     6.90%
                                                   ===============               ===========
</TABLE>



     At  March  31,  2002,  Coastal  had outstanding commitments to originate or
purchase  $27.7  million  of  real  estate  mortgage  and  other  loans  and had
commitments  under  lines  of credit to originate primary construction and other
loans  of  approximately $91.6 million.  In addition, at March 31, 2002, Coastal
had  $15.7 million of outstanding letters of credit.  Management anticipates the
funding  of  these  commitments  through  normal  operations.

     At  March  31, 2002 and December 31, 2001, the carrying value of loans that
were  considered  to  be  impaired  totaled  approximately $3.0 million and $3.8
million,  respectively,  and  the  related  allowance  for  loan losses on those
impaired  loans totaled $478,000 and $554,000 at March 31, 2002 and December 31,
2001,  respectively.  Of  the  impaired loans outstanding, fourteen loans with a
balance  of $922,000 at March 31, 2002 and nineteen loans with a balance of $1.3
million at December 31, 2001 did not have specific portions of the allowance for
loan  losses  allocated  to  them at each respective date.  The average recorded
investment  in  impaired  loans during the three months ended March 31, 2002 and
2001  was  $3.5  million  and  $4.9  million,  respectively.

     An  analysis  of  activity  in  the allowance for loan losses for the three
months  ended  March  31,  2002  and  2001  is  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                                                      Three Months Ended March 31,
                                                      ----------------------------
                                                            2002        2001
                                                          --------    --------
<S>                           <C>                           <C>       <C>
Balance, beginning of period                              $15,385     $14,507
Provision for loan losses                                     900         900
Charge-offs                                                (1,890)     (1,260)
Recoveries                                                     90          35
                                                          --------    --------
Balance, end of period                                    $14,485     $14,182
                                                          ========    ========
</TABLE>

     During the first quarter of 2002, management made the decision to liquidate
a  portion  of  its under-performing single-family mortgage loans.  On March 22,
2002,  Coastal  sold  $10.8  million  of these under-performing loans to a third
party investor.  Prior to the sale, Coastal wrote these loans down to fair value
and  recorded  a  charge-off  to  the allowance for loan losses of $761,000.  In
addition,  as  of  March  31,  2002,  Coastal  wrote  down  to  fair  value  and
reclassified $9.1 million of other under-performing single-family mortgage loans
to  the  held  for sale category that were under a contract for sale to the same
third  party  investor.  The  loans  that were reclassified to the held for sale
category  were  written  down  to  fair  value  as  of  March 31, 2002 through a
charge-off  to the allowance for loan losses of $691,000.  As of April 30, 2002,
$3.1  million  of  these  loans  held  for  sale  had  been  sold.

(5)     GOODWILL  AND  OTHER  INTANGIBLE  ASSETS

          On  January 1, 2002, Coastal adopted Statement of Financial Accounting
Standards  No.  141,  "Business Combinations" ("Statement 141") and Statement of
Financial  Accounting  Standards No. 142, "Goodwill and Other Intangible Assets"
("Statement  142").  Statement 141 eliminates the pooling of interests method of
accounting  for  business  combinations and requires that the purchase method of
accounting  be used for all business combinations.  Statement 141 also requires,
upon  adoption  of  Statement 142, that Coastal evaluate its existing intangible
assets and goodwill that were acquired in a prior purchase business combination,
and  make  any  necessary  reclassifications  in  order  to conform with the new
criteria  in  Statement  141 for recognition apart from goodwill.  Statement 142
changes  the  accounting  for  goodwill  from  an  amortization  method  to  an
impairment-only  approach.

     At  January  1,  2002, Coastal had unamortized goodwill that was subject to
the  transition  provisions  of  Statements  141  and  142 in the amount of $5.5
million.  Amortization  expense  related  to  this goodwill was $152,000 for the
quarter  ended March 31, 2001 and $618,000 for the year ended December 31, 2001.
The  remaining  $16.3 million of goodwill at January 1, 2002 was reclassified to
other  intangible  assets, as those amounts were originally recorded as goodwill
pursuant  to Statement of Financial Accounting Standards No. 72, "Accounting for
Certain Acquisitions of Banking or Thrift Institutions" ("Statement 72") and are
not  subject  to  the  non-amortization  provisions  of  Statement  142.

     At  March  31, 2002 and December 31, 2001, other intangible assets amounted
to  $15.8  million  and  $16.3  million net of accumulated amortization of $12.3
million  and  $11.7 million, respectively.  The estimated aggregate amortization
expense  on these other intangible assets for each of the five succeeding fiscal
years  is  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>

Year ended December 31,
-----------------------
<S>                      <C>
2002                     $2,167
2003                      1,802
2004                      1,442
2005                      1,281
2006                      1,281
</TABLE>

     In  connection  with  the  adoption of these statements, Coastal tested for
impairment  in  accordance with the provisions of Statement 142 during the first
quarter  of 2002 and did not recognize any transitional impairment losses as the
cumulative  effect  of  a  change  in  accounting  principle.  Pursuant  to  the
transition  provisions  of  Statement  142,  presented below are as adjusted net
income  and  earnings per share numbers to exclude the amortization expense (net
of  any tax effect) recognized in the period prior to the implementation related
to  the  goodwill  that  is  no  longer  being  amortized.
<TABLE>
<CAPTION>

                                                  Three Months Ended
                                                       March 31,
<S>                               <C>                 <C>     <C>
                                                    2002      2001
                                                   ------    ------
Net income:
As reported                                        $3,733     $5,180
Add back:  goodwill amortization                       --        152
                                                   ------     ------
As adjusted                                        $3,733     $5,332
                                                   ======     ======

Basic earnings per share:
As reported                                        $ 0.53     $ 0.80
Add back:  goodwill amortization                       --       0.02
                                                   ------     ------
As adjusted                                        $ 0.53     $ 0.82
                                                   ======     ======

Diluted earnings per share:
As reported                                        $ 0.51     $ 0.76
Add back:  goodwill amortization                       --       0.02
                                                   ------     ------
As adjusted                                        $ 0.51     $ 0.78
                                                   ======     ======
</TABLE>

<PAGE>
(6)     DEPOSITS

     Deposits,  their  stated  rates  and  the related weighted average interest
rates, at March 31, 2002 and December 31, 2001, are summarized below (dollars in
thousands).  Effective  January 1, 1998, Coastal implemented a program whereby a
portion  of  the  balances  in noninterest-bearing and interest-bearing checking
accounts  is  reclassified to money market demand accounts under Federal Reserve
Regulation  D.  The  amount of such reclassification, reflected in the following
table, was approximately $236.8 million ($118.3 million from noninterest-bearing
and  $118.6  million from interest-bearing) at March 31, 2002 and $243.3 million
($113.0  million  from  noninterest-bearing  and  $130.3  million  from
interest-bearing)  at  December  31,  2001.

<TABLE>

<CAPTION>



                                  Stated Rate                    March 31, 2002  December 31, 2001
                                ---------------                  -------------- -------------------
<S>                             <C>              <C>             <C>                  <C>
Noninterest-bearing checking              0.00%                 $       47,156     $   47,712
Interest-bearing checking        0.50  -  1.00                          20,330         15,894
Savings accounts                 0.50  -  1.24                          48,201         45,234
Money market demand accounts     0.00  -  2.23                         506,951        505,789
                                                                      --------       ---------
                                                                       622,638        614,629
                                                                      --------       ---------
Certificate accounts            Less than 2.00                          48,513         29,707
                                 2.00  -  2.99                         359,264        171,523
                                 3.00  -  3.99                         224,739        263,006
                                 4.00  -  4.99                         304,495        356,314
                                 5.00  -  5.99                          61,148        155,949
                                 6.00  -  6.99                          18,579         68,979
                                 7.00  -  7.99                             111            209
                                 8.00  -  8.99                              70             70
                                                                     ---------     -----------
                                                                     1,016,919      1,045,757
                                                                    -----------    -----------
                                                                $    1,639,557     $1,660,386
                                                                    ==========     ===========
Weighted average interest rate                                            2.60%          3.02%
                                                                    ==========     ===========
</TABLE>



     Prior  to  the  reclassification  as  discussed  above, noninterest-bearing
checking  accounts,  interest-bearing  checking accounts and money market demand
accounts  were  as  follows  at  March  31,  2002  and  December  31,  2001:

<TABLE>
<CAPTION>
                                 March 31, 2002      December 31, 2001
                                 ---------------      ----------------
<S>                           <C>              <C>           <C>
Noninterest-bearing checking        $ 118,259             $ 160,738
Interest-bearing checking             118,583               146,144
Money market demand accounts          236,842               262,513
</TABLE>


<PAGE>

     The  scheduled  maturities of certificate accounts outstanding at March 31,
2002  were  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>
                           March 31, 2002
                           ---------------
<S>                        <C>
 0 through 12 months       $       932,927
 13 through 24 months               47,114
 25 through 36 months               24,624
 37 through 48 months                4,895
 49 through 60 months                7,307
 Over 60 months                         52
                           ---------------
                           $     1,016,919
                           ================
</TABLE>



(7)     ADVANCES FROM THE FHLB

     The  weighted average interest rates on advances from the FHLB at March 31,
2002  and  December  31, 2001 were 3.19% and 3.46%, respectively.  The scheduled
maturities and related weighted average interest rates on advances from the FHLB
at  March  31,  2002  are  summarized  as  follows  (dollars  in  thousands):
<TABLE>
<CAPTION>
                                            Weighted Average
Due during the year ending December 31,       Interest Rate            Amount
---------------------------------------     -----------------         -------
<S>                                      <C>                <C>     <C>
2002                                                 2.34%          $382,717
2003                                                 4.17            101,799
2004                                                 4.37             39,806
2005                                                 4.45             70,142
2006                                                 5.64              7,880
2007                                                 6.65              1,211
2008                                                 5.51              2,286
2009                                                 8.02              3,744
2010                                                 6.73                987
2011                                                 6.55              1,306
2012                                                 5.76                292
2013                                                 5.75              7,637
2014                                                 5.44              2,943
2015                                                 6.67              1,692
2018                                                 5.05              1,494
                                                                    --------
                                                     3.19%          $625,936
                                                    ======          ========
</TABLE>



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


<PAGE>
(8)     SENIOR  NOTES  PAYABLE

     On  June  30,  1995, Coastal issued $50.0 million of 10.0% Senior Notes due
June 30, 2002.  The Senior Notes became redeemable at Coastal's option, in whole
or  in  part,  on June 30, 2000, at par, plus accrued interest to the redemption
date.  Interest  on  the  Senior  Notes  was payable quarterly.  During 2001 and
1999,  Coastal  repurchased  in  the  open  market  $3.0  and  $3.1  million,
respectively,  of  the  Senior  Notes  outstanding at par.  On February 1, 2002,
Coastal  redeemed  all of the remaining Senior Notes outstanding ($43.9 million)
at  par  plus  accrued  interest  to  the  redemption  date.

(9)     DERIVATIVE  INSTRUMENTS

     Coastal  is  a  party  to  derivative  instruments  in the normal course of
business  to  reduce  its  exposure  to  fluctuations  in interest rates.  These
derivative instruments have included interest rate swap agreements where Coastal
makes  fixed  interest  payments and receives payments based on a floating index
and interest rate cap agreements, as described below.  Coastal utilizes interest
rate  swap  and  interest  rate  cap  agreements  as described below.  Effective
January 1, 2001, Coastal adopted Statement of Financial Accounting Standards No.
133,  "Accounting  for  Derivative  Instruments  and  for  Hedging  Activities"
("Statement  133.")  Statement  133  requires  companies  to  recognize  all
derivatives  as  either  assets  or  liabilities  in  the statement of financial
condition and measure all derivatives at fair value.  The interest rate swap and
cap  agreements  held  by  Coastal  on  December 31, 2000 were determined to not
qualify  for  hedge  accounting,  therefore  on implementation of Statement 133,
Coastal  recorded a transition adjustment to record these derivative instruments
at  fair  value.  On  January  1, 2001, Coastal recorded a transition adjustment
loss of $160,000, or $104,000 net of the tax effect, as the cumulative effect of
the  change in accounting for derivative instruments to record the fair value of
Coastal's  derivative instruments in the consolidated statements of income.  For
the  quarters ended March 31, 2002 and 2001, Coastal recorded an additional fair
value  loss  on  these  derivative  instruments  of  $24,000  and  $564,000,
respectively.  The  large  decrease  in the fair value of derivatives during the
first  quarter of 2001 was primarily due to interest rate swap agreements, which
were  totally  liquidated  in  June 2001.  As of March 31, 2002 and December 31,
2001,  interest  rate  cap agreements were Coastal's only derivative instruments
and  were  recorded  at  fair  value  pursuant  to  Statement  133.

     The  interest  rate  cap agreements provide for applicable third parties to
make  payments to Coastal whenever a defined floating rate exceeds rates ranging
from  8.0%  to  9.0%, 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 fair value of the
interest rate cap agreements was $6,000 at March 31, 2002, which is the recorded
book  value  of such agreements due to the implementation of Statement 133.  The
interest  rate cap agreements are used to alter the interest rate sensitivity of
a  portion  of  Coastal's  mortgage-backed  securities and loans receivable.  As
such,  the  amortization  of  any  purchase  price  and interest income from the
interest  rate cap agreements is recorded in interest income in the accompanying
consolidated  statements of income, as applicable.  The net decrease in interest
income  related to the interest rate cap agreements was approximately $6,000 for
the  three months ended March 31, 2002 and 2001, respectively.  No payments were
made  to  Coastal under the interest rate cap agreements during the three months
ended  March  31,  2002  or  2001.


<PAGE>
     Interest  rate  cap  agreements  outstanding  at  March  31, 2002 expire as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



  Year of    Strike Rate      Notional
Expiration      Range          Amount
----------  --------------    ---------
<S>         <C>               <C>
2002        8.75  -  9.00%    $  16,600
2003        8.00  -  9.00       107,637
                              ---------
                              $ 124,237
                              =========
</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
its  assets and liabilities 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.

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

(10)     EARNINGS  PER  SHARE

     The  following  summarizes  information related to the computation of basic
and  diluted  earnings per share ("EPS") for the three-month periods ended March
31,  2002  and  2001  (dollars  in  thousands,  except  per  share  data):

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
<S>                                           <C>                 <C>         <C>
                                                                      2002        2001
                                                                  ----------  ----------

Net income                                                        $    3,733  $    5,180
Preferred stock dividends                                                627         627
                                                                  ----------  ----------
Net income available to common stockholders                       $    3,106  $    4,553
                                                                  ==========  ==========
Weighted average number of common shares
 outstanding used in basic EPS calculation                         5,841,945   5,717,043

Add assumed exercise of outstanding stock
 options as adjusted for dilutive securities                         268,877     284,778
                                                                  ----------  ----------
Weighted average number of common shares
 outstanding used in diluted EPS calculation                       6,110,822   6,001,821
                                                                  ==========  ==========
Basic EPS                                                         $     0.53  $     0.80
                                                                  ==========  ==========
Diluted EPS                                                       $     0.51  $     0.76
                                                                  ==========  ==========
</TABLE>

     The  weighted  average number of common shares outstanding has been reduced
by  the  treasury stock held by Coastal.  As of March 31, 2002 and 2001, Coastal
had  1,998,895  and  2,000,000  common  shares  in  treasury,  respectively.


<PAGE>


(11)     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.

(12)     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, at a price of $25
per  share  to the public ("Bancorp Preferred Stock").  Dividends on the Bancorp
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.  Pursuant
to Coastal's tax benefit agreement with the FDIC, Coastal receives a tax benefit
for  dividends  paid  on  the  Bancorp  Preferred  Stock.

(13)     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  March  31,  2002,  the  Bank's  regulatory  capital  in relation to its
existing  regulatory  capital  requirements for capital adequacy purposes was as
follows  (dollars  in  thousands):
<TABLE>
<CAPTION>



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

 Tier 1 (core)           $  163,734        6.59%    $ 99,415     4.00%     $124,269     5.00%
 Tier 1 risk-based          163,734        9.61       68,155     4.00       102,233     6.00
 Total risk-based           178,219       10.46      136,311     8.00       170,388    10.00
</TABLE>

     As of March 31, 2002, 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.


<PAGE>
(14)     RECENT  ACCOUNTING  STANDARDS

     In  August  2001,  Statement  of  Financial  Accounting  Standards No. 144,
"Accounting  for  the  Impairment  or Disposal of Long-Lived Assets" ("Statement
144")  was  issued.  Statement  144 addresses financial accounting and reporting
for  the  impairment  or  disposal of long-lived assets.  Statement 144 requires
that  long-lived assets be reviewed for impairment whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of  an  asset  may  not be
recoverable.  Recoverability  of  assets  to  be  held and used is measured by a
comparison  of the carrying amount of an asset to future net cash flows expected
to  be  generated  by the asset.  If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which  the  carrying  amount  of  the asset exceeds the fair value of the asset.
Statement  144  requires  companies to separately report discontinued operations
and  extends  that  reporting  to  a component of an entity that either has been
disposed  of  (by  sale,  abandonment,  or  in  a  distribution to owners) or is
classified as held for sale.  Assets to be disposed of are reported at the lower
of  the  carrying  amount  or  fair value less costs to sell.  Statement 144 was
adopted  by  Coastal  on  January 1, 2002, and did not have a material effect on
Coastal's  Consolidated  Financial  Statements.

(15)     SUBSEQUENT  EVENTS

     On April 25, 2002, Coastal announced that it had entered into a transaction
that  will  complete its previously authorized stock repurchase plan.  Under the
repurchase  plan,  management  had  the authority to repurchase up to a total of
2,500,000  shares  of  its  common  stock.  On April 23, 2002, Coastal agreed to
repurchase  the  final  500,000 shares under the plan from a director of Coastal
for $30.00 per share.  The purchase price represents approximately a 5% discount
to  the price at market close on April 23, 2002.  The transaction is expected to
settle  on  or  about  June  30,  2002.

     On  May  1, 2002, Coastal filed a Form S-3 Registration Statement under the
Securities  and  Exchange  Act  of  1933 related to the proposed offering of $50
million  in  Trust  Preferred  Securities.



<PAGE>



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

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

     Total  assets  decreased  4.8%  or $124.6 million from December 31, 2001 to
March  31,  2002.  The  net  decrease resulted primarily from decreases of $45.6
million,  $41.3  million,  $32.3  million,  $13.2  million  and  $9.0 million in
mortgage-backed  securities  available-for-sale, U.S. Treasury securities, loans
receivable,  federal  funds  sold  and  cash and cash equivalents, respectively.
These  decreases  were  only  slightly offset by an increase of $19.3 million in
loans  receivable  held  for sale.  There were also small changes in other asset
categories.  The  decrease  in mortgage-backed securities available-for-sale was
due  to  significant prepayments received (35% on an annualized basis) resulting
from  a continuing low interest rate enviornment.  The decrease in U.S. Treasury
securities  was  due  to  the  maturity  of one security during the period.  The
decrease in loans receivable was also due to significant prepayments received on
the  single-family  mortgage  loan  portfolio ($78.7 million), the sale of $10.8
million of under-performing mortgage loans, the reclassification of $9.1 million
of  other  under-performing loans to the held for sale category and decreases in
other  loan  categories, somewhat offset by purchases of mortgage loans totaling
$81.3  million  during  the quarter ended March 31, 2002.  The increase in loans
receivable  held  for  sale  was  due  to  the  $9.1 million reclassification as
mentioned previously and the purchases of $10.2 million in loans to be resold by
Coastal  Banc  Capital  Corp.

     Deposits  decreased  $20.8  million or 1.3% from December 31, 2001 to March
31,  2002  and  advances  from  the  FHLB  decreased  9.4% or $64.9 million.  In
addition,  during  the  quarter  ended  March  31,  2002,  Coastal  redeemed the
remaining  Senior Notes payable outstanding of $43.9 million at par plus accrued
interest.  Stockholders' equity increased 1.6% or $2.5 million from December 31,
2001 to March 31, 2002 as a result of net income, offset by a $5,000 increase in
accumulated  other  comprehensive  loss  and  dividends  declared.

Results  of  Operations  for  the  Three  Months  Ended  March 31, 2002 and 2001
--------------------------------------------------------------------------------

General
-------

     For  the  three  months  ended  March 31, 2002, net income was $3.7 million
compared  to  $5.2  million  for  the  three  months  ended March 31, 2001.  The
decrease was primarily due to a $3.6 million decrease in net interest income, as
a  result  of  overall lower interest rates, higher than expected prepayments on
Coastal's  mortgage-backed  securities  available-for-sale  and loans receivable
(35%  on  an  annualized  basis  for  mortgage-backed  securities  and  40%  for
single-family  mortgage loans) and Coastal's overall smaller asset size compared
to  the  same  period  in 2001.  This decrease was somewhat offset by a $687,000
increase in noninterest income (primarily due to the $564,000 fair value loss on
derivative  instruments  recorded  in  2001), a $432,000 decrease in noninterest
expense,  a $916,000 decrease in the provision for Federal income taxes, and the
$104,000 (net of tax) cumulative transition adjustment loss due to the change in
accounting  for  derivative  instruments  recorded  in  2001.

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

     Due  to  the  overall lower interest rate environment, higher than expected
prepayments  and  Coastal's  overall smaller asset size, interest income for the
three  months  ended  March  31,  2002 decreased $24.8 million or 41.1% from the
three  months  ended  March  31,  2001.  The  decrease  was comprised of a $13.0
million  decrease  in  interest  income  on  loans  receivable,  a $11.3 million
decrease  in  interest  income  on  mortgage-backed  securities  and  a $431,000
decrease  in  interest  income  on  FHLB  stock,  federal  funds  sold and other
interest-earning  assets.

     When  comparing  the two periods, average interest-earning assets decreased
$579.4 million and the average yield decreased 2.14% from 8.04% in 2001 to 5.90%
in  2002.  The  $579.4  million  decrease  in  average  interest-earning  assets
consisted  primarily  of  a  $480.6  million  decrease in the average balance of
mortgage-backed securities and a $112.4 million decrease in the average balances
of  loans  receivable.  The  decrease  in average mortgage-backed securities was
largely  due  to  the  sale  of  those  securities  in  late  November 2001.  To
strategically restructure a portion of its asset base to make it less vulnerable
to  market  interest rate and price fluctuations, Coastal sold $844.9 million of
mortgage-backed  securities  and  purchased  $512.3  million  of  primarily pass
through  securities at a premium.  This transaction had the effect of shortening
the  duration of the mortgage-backed securities portfolio, thereby lessening the
extension  risk  to  Coastal.

     In  addition  to  the  reduction  in  Coastal's  asset  size  due  to  the
restructuring,  during the first three months of 2002, due to the continuing low
interest  rate  environment,  Coastal experienced higher than expected principal
prepayments  of  $44.6  million  (or  35%  on  an  annualized  basis)  on  its
mortgage-backed  securities portfolio and $78.7 million (or 40% on an annualized
basis)  on  its single-family mortgage loan portfolio, which resulted in greater
premium  amortization  on  those  assets  that  were  purchased  at  a  premium.

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

     Interest  expense on interest-bearing liabilities was $16.7 million for the
three  months  ended  March  31, 2002, as compared to $37.9 million for the same
period  in  2001.  The  decrease  in interest expense was again due to the lower
overall  interest  rate  environment  and  Coastal's overall smaller asset size.
When  compaing  the  two  periods,  the  average  rate  paid on interest-bearing
liabilities  decreased  to  3.15%  for  2002  from  5.54%  for  2001 and average
interest-bearing  liabilities  decreased  $613.7 million.  The 2.39% decrease in
the  average  rate paid on interest-bearing liabilities was due primarily to the
2.25%  decrease  in  the  rate  paid  on  interest-bearing  deposits and a 2.44%
decrease  in  the rates paid on advances from the FHLB.  The decrease in average
interest-bearing  liabilities consisted primarily of a $51.5 million decrease in
average  interest-bearing  deposits  and  a  $530.4  million decrease in average
advances  from  the  FHLB  due  to  Coastal's  smaller asset size because of the
restructuring  mentioned previously, in addition to the redemption of the Senior
Notes  on  February  1,  2002.

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

     Net  interest income was $18.7 million for the three months ended March 31,
2002  and  $22.3  million  for the same period in 2001.  As discussed above, the
decrease  was  due  to the overall lower interest rate environment and Coastal's
overall  smaller  asset  size.  When  comparing  the  two  periods,  average
interest-earning  assets  decreased  $579.4 million and average interest-bearing
liabilities  decreased  $613.7  million  due  to  the  restructuring  and  the
prepayments  discussed  above.  Net interest margin ("Margin") was 3.10% for the
three  months  ended March 31, 2002 compared to 2.98% for the three months ended
March  31,  2001.  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 2.75% for the three months
ended  March  31,  2002  from  2.50%  for the three months ended March 31, 2001.
Management  also  calculates  an  alternative  Spread  which  includes
noninterest-bearing  deposits.  Under  this calculation, the alternative Spreads
for  the  three  months  ended  March  31,  2002  and 2001 were 2.97% and 2.77%,
respectively.  Margin  and  Spread are affected by the changes in the amount and
composition  of  interest-earning  assets  and  interest-bearing  liabilities.

     Management's  overall  goal  is  to continue to improve the asset/liability
composition  to  be  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.

Provision  for  Loan  Losses  and  Asset  Quality
-------------------------------------------------

     The provision for loan losses was $900,000 for the three months ended March
31,  2002  and  for  the  three months ended March 31, 2001.  At March 31, 2002,
Coastal  had  nonperforming loans totaling $16.6 million, which is a decrease of
$8.1  million,  or 33%, when compared to December 31, 2001.  Nonperforming loans
are  those loans on nonaccrual status as well as those loans greater than ninety
days  delinquent  and  still  accruing  interest.  The decrease in nonperforming
loans  is  mainly  due  to  Coastal's  decision  to  liquidate  a portion of its
under-performing  single-family mortgage loans during the first quarter of 2002.
On March 22, 2002, Coastal sold $10.8 million of these under-performing loans to
a  third  party  investor.  Prior to the sale, Coastal wrote these loans to fair
value  and  recorded  a charge-off to the allowance for loan losses of $761,000.

     In  addition,  as  of March 31, 2002, Coastal also wrote down to fair value
and  reclassified  $9.1 million of other under-performing single-family mortgage
loans  to  the  held for sale category.  The loans that were reclassified to the
held  for  sale category were written down to fair value through a charge-off to
the allowance for loan losses of $691,000.  Through April 30, 2002, $3.1 million
of these loans held for sale have been subsequently sold to the same third party
investor,  with  the  remainder  being  under a contract for sale.  The ratio of
nonperforming  assets to total assets was 0.86% at March 31, 2002.  The ratio of
nonperforming  assets  to  total assets would have been 0.57% at March 31, 2002,
had  the $9.1 million of these under-performing loans held for sale been sold as
of the end of the quarter.  At March 31, 2002 the allowance for loan losses as a
percentage  of  nonperforming loans (excluding nonperforming loans held for sale
which  are  recorded at fair value) was 156.1% compared to 62.3% at December 31,
2001.

     Although  no assurance can be given, management believes that the allowance
for  loan  losses  at  March  31,  2002  is  adequate  considering  the changing
composition  of  the  loans receivable portfolio, historical and peer group loss
experience, delinquency trends and current economic conditions.  Management will
continue  to  review  its loan loss allowance policy as Coastal's loan portfolio
diversifies  to  determine  if changes to the policy and the resulting allowance
for  loan  losses  are  necessary.

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

     For  the  three  months  ended March 31, 2002, noninterest income increased
$687,000  to  $2.5  million, compared to $1.8 million for the three months ended
March  31,  2001.  The  increase  in noninterest income was primarily due to the
effect  of  the  fair  value loss on derivative instruments of $564,000 recorded
during  the  three  months  ended  March 31, 2001 pursuant to Statement 133.  In
addition,  service charges on deposit accounts increased $234,000 and loans fees
increased  $67,000,  while  other  noninterest  income  decreased  $157,000.

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

     For  the  three  months ended March 31, 2002, noninterest expense decreased
$432,000  from  the three months ended March 31, 2001.  The $432,000 decrease in
noninterest  expense  was  primarily  due to decreases of $431,000, $168,000 and
$96,000  in  data  processing, the amortization of goodwill and other intangible
assets  and  office  occupancy,  respectively,  partially  offset  by a $263,000
increase  in  compensation,  payroll  taxes and other benefits.  The decrease in
data  processing  expense  was due to the conversion to a new mortgage loan data
processing  system  in  the second quarter of 2001, the conversion of the Valley
Region  branches  to  Coastal's  primary deposit and loan data processing system
during  the  third  quarter  of  2001  and the item processing functions brought
in-house  during the third quarter of 2001.  The decrease in the amortization of
goodwill  and  other  intangible  assets  was  due to the implementation of FASB
Statements  141 and 142 on January 1, 2002 (see note 5 to consolidated financial
statements).  The  decrease  in  office  occupancy  was primarily due to certain
assets  becoming  fully  depreciated during 2001.  The increase in compensation,
payroll  taxes and other benefits was due to normal merit increases for existing
staff,  in  addition  to  the  staff increases for the item processing functions
brought  in-house  during  the  third  quarter  of 2001 and additional personnel
needed  to  continue Coastal's focus on commercial banking products and lending,
including  Coastal  Banc  Capital  Corp.  staff.


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

     The provision for Federal income taxes for the three months ended March 31,
2002  was $1.7 million compared to $2.6 million for the three months ended March
31,  2001.  The  decrease  was  due to the decreased income before provision for
federal  income  taxes,  minority  interest  and cumulative effect of accounting
change  in 2001, with the effective tax rate for the periods being approximately
28%  for  quarter  ended March 31, 2002 and 31% for the same period in 2001  The
decrease  in the effective tax rate when comparing the two periods is due to the
elimination  of  the  goodwill  amortization.

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, in addition
to purchasing treasury stock. At March 31, 2002, Coastal had binding commitments
to  originate  or  purchase  loans  totaling approximately $27.7 million and had
$169.5  million  of  undisbursed  loans  in  process.  Scheduled  maturities  of
certificates  of  deposit  during the 12 months following March 31, 2002 totaled
$932.9 million.  Management believes that Coastal has adequate resources to fund
all  of  its  commitments.

     As  of  March 31, 2002, 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 overall goal is
to  continue  to  improve  the  asset/liability composition of Coastal's balance
sheet  to  be  less  vulnerable  to  market  interest  rate  fluctuations.


<PAGE>
Forward-Looking  Information
----------------------------

     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.

     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").  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 changes in market rates of interest, changes in
our  loan  portfolio,  including  the  risks associated with our non-traditional
lending  (loans  other  than  single-family  residential  mortgage loans such as
multifamily,  real  estate  acquisition and development, commercial real estate,
commercial  business,  commercial  construction  and  warehouse  loans),  the
possibility  that  Coastal's  allowance for loan losses proves to be inadequate,
Coastal's  ability to attract core deposits, the concentration of Coastal's loan
portfolio  in  Texas  and  California  to the extent that the economies of those
states  experience  problems, 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  business  strategies, changes in general economic and
business  conditions  and  changes  in  the  laws  and regulations applicable to
Coastal;  and other factors as discussed in Coastal's Annual Report on Form 10-K
for  the  year ended December 31, 2001, as filed with the SEC on March 26, 2002.

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, 2001. Coastal's principal market risk exposure is to
interest  rates.  See  note 9 of the Notes to Consolidated Financial Statements.


<PAGE>
PART  II  -  OTHER  INFORMATION

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

     We  are,  and  have  been  involved,  from time to time, in various claims,
complaints,  proceedings  and litigation relating to activities arising from the
normal  course of our operations.  Based on the facts currently available to us,
we believe that the matters pending at March 31, 2002 are without merit, or will
be  covered  by  insurance,  any  other  matters are of such amounts, which upon
resolution, are not likely to have a material adverse effect on our consolidated
financial  condition,  results  of  operations  or  cash  flows.

Item  2.     Changes  in  Securities  and  Use  of  Proceeds
             -----------------------------------------------

             Not  applicable.

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

             Not  applicable.

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

             Not  applicable.

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

             Not  applicable.

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

             Not  applicable.



<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:     5/15/02                                   By     /s/  Manuel J. Mehos
           -------                                          --------------------
                                                               Manuel  J.  Mehos
                                                        Chairman  of  the  Board
                                                       Chief  Executive  Officer




Dated:     5/15/02                               By     /s/  Catherine  N.Wylie
           -------                                           ------------------
                                                           Catherine  N.  Wylie
                                                      Chief  Financial  Officer