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

                                  FORM 10-Q


          [  X  ]     Quarterly  Report  Under  Section  13  or 15 (d) of
                      the  Securities  Exchange  Act  of  1934
                      For  the  Quarterly  Period  Ended  SEPTEMBER  30,  1997

          [     ]     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 ISSUED AND OUTSTANDING: 4,992,203 AS OF SEPTEMBER 30, 1997


<PAGE>
                    COASTAL BANCORP, INC. AND SUBSIDIARIES

                              Table of Contents



PART  I.          FINANCIAL  INFORMATION
<TABLE>

<CAPTION>



<S>     <C>                                                                     <C>

Item 1  Financial Statements
        Consolidated Statements of Financial Condition at September 30, 1997
        (unaudited) and December 31, 1996                                        1

        Consolidated Statements of Income for the Nine-Month Periods Ended
        September 30, 1997 and 1996 (unaudited)                                  2

        Consolidated Statements of Income for the Three-Month Periods 
        Ended September 30, 1997 and 1996 (unaudited)                            3

        Consolidated Statements of Cash Flows for the Nine-Month Periods
        Ended September 30, 1997 and 1996 (unaudited)                            4

        Notes to Consolidated Financial Statements                               6

Item 2  Management's Discussion and Analysis of Financial Condition 
        and Results of Operations                                               14

</TABLE>






PART  II.          OTHER  INFORMATION
<TABLE>

<CAPTION>



<S>     <C>                                                    <C>

Item 1  Legal Proceedings                                      20
Item 2  Changes in Securities                                  20
Item 3  Default upon Senior Securities                         20
Item 4  Submission of Matters to a Vote of Securities Holders  20
Item 5  Other Information                                      20
Item 6  Exhibits and Reports on Form 8-K                       20
</TABLE>




SIGNATURES

5

ITEM  1.          FINANCIAL  STATEMENTS

<TABLE>

<CAPTION>

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


                                                             September 30,   December 31,
                                                                 1997            1996
                                                           ---------------  -------------
ASSETS                                                        (Unaudited)
----------------------------------------------------------                         
<S>                                                              <C>              <C>

Cash and amounts due from depository institutions          $        38,886  $      27,735
Federal funds sold                                                   5,000             --
Loans receivable (note 4)                                        1,298,795      1,229,748
Mortgage-backed securities held-to-maturity (note 3)             1,325,681      1,344,587
Mortgage-backed securities available-for-sale, at market 
   value                                                           168,976        180,656
U.S. Treasury security available-for-sale, at market value              --             11
Mortgage loans held for sale                                            --            298
Accrued interest receivable                                         15,388         14,690
Property and equipment                                              22,597         14,987
Stock in the Federal Home Loan Bank of Dallas (FHLB)                20,478         25,971
Goodwill                                                            16,191         15,596
Mortgage servicing rights                                            5,879          6,810
Prepaid expenses and other assets                                   11,689         14,818
                                                           ---------------  -------------
                                                           $     2,929,560  $   2,875,907
                                                           ===============  =============
</TABLE>


<TABLE>

<CAPTION>

     LIABILITIES  AND  STOCKHOLDERS'  EQUITY


<S>                                                            <C>          <C>

Liabilities:
 Savings deposits (note 5)                                     $1,392,234   $1,310,835 
 Advances from the FHLB (note 6)                                  383,002      409,720 
 Securities sold under agreements to repurchase (note 6)          943,493      966,987 
 Senior notes payable (note 7)                                     50,000       50,000 
 Advances from borrowers for taxes and insurance                   12,317        4,676 
 Other liabilities and accrued expenses                            18,108       10,791 
   Total liabilities                                            2,799,154    2,753,009 
                                                               -----------  -----------

9.0% noncumulative preferred stock of Coastal Banc ssb             28,750       28,750 

Commitments and contingencies (notes 4 and 8)

Stockholders' equity (notes 2 and 10):
 Preferred stock, no par value; authorized shares 5,000,000;
   no shares issued                                                    --           -- 
 Common stock, $.01 par value; authorized shares 30,000,000;
   4,992,203 and 4,966,941 shares issued and outstanding in
   1997 and 1996                                                       50           50 
 Additional paid-in capital                                        32,977       32,604 
 Retained earnings                                                 71,680       64,597 
 Unrealized gain (loss) on securities available-for-sale           (3,051)      (3,103)
   Total stockholders' equity                                     101,656       94,148 
                                                               -----------  -----------
                                                               $2,929,560   $2,875,907 
                                                               ===========  ===========
</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                  Nine Months Ended
                                                                    September 30,
                                                                 -------------------      
                                                                 1997            1996
                                                           -------------------  ---------
                                                                      (Unaudited)

<S>                                                            <C>                  <C>

Interest income:
 Mortgage-backed securities                                 $       69,395      $ 71,826 
 Loans receivable                                                   80,249        72,059 
 Federal funds sold, certificates of deposit and other 
   investments                                                       1,109         1,111 
                                                                   150,753       144,996 
                                                            -------------------  ---------

Interest expense:
 Savings deposits                                                   46,659        44,687 
 Other borrowed money                                               41,985        38,609 
 Senior notes payable                                                3,750         3,750 
 Advances from the FHLB:
   Short-term                                                        5,798         4,527 
   Long-term                                                         9,450        11,264 
                                                            -------------------  ---------
                                                                   107,642       102,837 
                                                            -------------------  ---------

   Net interest income                                              43,111        42,159 
Provision for loan losses                                            1,350         1,475 
   Net interest income after provision for loan losses              41,761        40,684 
                                                            -------------------  ---------

Noninterest income:
 Loan fees and service charges on deposit accounts                   2,913         2,526 
 Loan servicing income, net                                          1,097         1,160 
 Gain on sale of branch office                                          --           521 
 Gain on sales of mortgage-backed securities 
   available-for-sale, net                                             237            (4)
 Other                                                                 515           321 
                                                                     4,762         4,524 
                                                            -------------------  ---------

Noninterest expense:
 Compensation, payroll taxes and other benefits                     14,024        12,183 
 Office occupancy                                                    5,288         4,360 
 Insurance premiums                                                    819         2,105 
 Data processing                                                     1,676         1,788 
 Amortization of goodwill                                            1,361         1,340 
 Real estate owned                                                     628           665 
 Other                                                               5,830         6,189 
 SAIF insurance special assessment                                      --         7,455 
                                                            -------------------  ---------
                                                                    29,626        36,085 
                                                            -------------------  ---------

       Income before provision for Federal income taxes             16,897         9,123 

Provision for Federal income taxes                                   6,182         3,454 
                                                            -------------------  ---------
     Net income before preferred stock dividends                    10,715         5,669 
Preferred stock dividends of Coastal Banc ssb (Series A)             1,941         1,941 
                                                            -------------------  ---------
     Net income after preferred stock dividends             $        8,774      $  3,728 
                                                            ===================  =========

Net earnings per share (note 9)                             $         1.71      $   0.74 
                                                            ===================  =========
</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                      Three Months Ended
                                                                        September 30,
                                                                      -------------------- 
                                                                      1997       1996
                                                             --------------------  --------
                                                                           (Unaudited)
<S>                                                               <C>              <C>


Interest income:
 Mortgage-backed securities                                  $         22,994   $23,516 
 Loans receivable                                                      27,819    24,321 
 Federal funds sold, certificates of deposit and other 
    investments                                                           438       405 
                                                                       51,251    48,242 
                                                             --------------------  --------

Interest expense:
 Savings deposits                                                     16,114    14,920 
 Other borrowed money                                                 14,209    11,583 
 Senior notes payable                                                  1,250     1,250 
 Advances from the FHLB:
   Short-term                                                          2,086     1,891 
   Long-term                                                           3,393     4,584 
                                                             --------------------  --------
                                                                      37,052    34,228 
                                                             --------------------  --------

   Net interest income                                                14,199    14,014 
Provision for loan losses                                                450       450 
   Net interest income after provision for loan losses                13,749    13,564 
                                                             --------------------  --------

Noninterest income:
 Loan fees and service charges on deposit accounts                     1,038       936 
 Loan servicing income, net                                              333       408 
 Gain on sale of mortgage-backed securities available-for-sale           237        -- 
 Other                                                                   135        75 
                                                                       1,743     1,419 
                                                             --------------------  --------

Noninterest expense:
 Compensation, payroll taxes and other benefits                        4,706     4,077 
 Office occupancy                                                      2,024     1,524 
 Insurance premiums                                                      274       628 
 Data processing                                                         566       494 
 Amortization of goodwill                                                479       443 
 Real estate owned                                                       146       279 
 Other                                                                 1,980     2,148 
 SAIF insurance special assessment                                        --     7,455 
                                                             --------------------  --------
                                                                      10,175    17,048 
                                                             --------------------  --------

       Income before provision for Federal income taxes                5,317    (2,065)

Provision for Federal income taxes                                     1,953      (636)
                                                             --------------------  --------
     Net income before preferred stock dividends                       3,364    (1,429)
Preferred stock dividends of Coastal Banc ssb (Series A)                 647       647 
                                                             --------------------  --------
     Net income after preferred stock dividends              $         2,717   $(2,076)
                                                             ====================  ========

Net earnings per share (note 9)                              $          0.52   $ (0.42)
                                                             ====================  ========
</TABLE>



See  accompanying  Notes  to  Consolidated  Financial  Statements

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

<CAPTION>



                                                                    Nine Months Ended
                                                                      September 30,
                                                                   -------------------        
                                                                  1997           1996
                                                           -------------------  ------------
                                                                        (Unaudited)

<S>                                                                 <C>            <C>

Cash flows from operating activities:
 Net income before preferred stock dividends                  $   10,715   $     5,669 
 Adjustments to reconcile net income to net cash provided
   by operating activities:
 Depreciation and amortization of property and equipment,
   purchased loan servicing rights, capitalized excess 
   servicing fees and prepaid expenses and other assets            5,334         4,490 
 Net premium amortization                                          1,458           788 
 Provision for loan losses                                         1,350         1,475 
 Amortization of goodwill                                          1,361         1,340 
 Originations and purchases of mortgage loans held for sale       (8,063)      (17,094)
 Sales of mortgage loans held for sale                             8,361        16,642 
 (Gain) loss on sales of mortgage-backed securities 
   available-for-sale                                               (237)            4 
 Gain on sale of branch office                                        --          (521)
 Decrease (increase) in:
   Accrued interest receivable                                      (698)          771 
   Other, net                                                      7,133        11,022 
 Stock dividends from the FHLB                                      (951)         (911)
                                                          -------------------  ------------

   Net cash provided by operating activities                      25,763        23,675 
                                                          -------------------  ------------

Cash flows from investing activities:
 Net increase in federal funds sold                               (5,000)           -- 
 Purchases of mortgage-backed securities held-to-maturity        (20,257)           -- 
 Purchase of U.S. Treasury security available-for-sale                --           (11)
 Principal repayments on mortgage-backed securities               39,140        40,731 
 Principal repayments on mortgage-backed securities
   available-for-sale                                                452           562 
 Proceeds from maturity of U.S. Treasury security 
   available-for-sale                                                 11         4,000 
 Proceeds from sales of mortgage-backed securities 
   available-for-sale                                             11,545           860 
 Purchases of loans receivable                                  (120,024)     (160,362)
 Net decrease in loans receivable                                 44,400        44,601 
 Net purchases of property and equipment                          (9,224)       (2,807)
 Purchase of FHLB stock                                           (2,556)       (7,924)
 Proceeds from sales of FHLB stock                                 9,000         5,000 
 Cash and cash equivalents received (paid) in business 
   combination transaction, net of disposition transaction        52,098        11,745 
                                                           -------------------  ------------

   Net cash used by investing activities                            (415)      (63,605)
                                                           -------------------  ------------

                                                                             (continued)
</TABLE>



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

<CAPTION>



                                                                   Nine Months Ended
                                                                     September 30,
                                                                  -------------------        
                                                                 1997              1996
                                                           -------------------  ------------
                                                                       (Unaudited)

<S>                                                               <C>                  <C>

Cash flows from financing activities:
 Net increase (decrease) in savings deposits                   $    26,744   $    10,206 
 Advances from the FHLB                                          2,539,800     2,709,932 
 Principal payments on advances from the FHLB                   (2,566,518)   (2,555,207)
 Securities sold under agreements to repurchase                  7,722,507     6,885,085 
 Purchases of securities sold under agreements to repurchase    (7,741,112)   (6,999,802)
 Exercise of stock options for purchase of common stock, net           373            71 
 Net increase in advances from borrowers for taxes and insurance     7,641         6,046 
 Dividends paid                                                     (3,632)       (3,429)
                                                           -------------------  ------------
   Net cash provided by financing activities                       (14,197)       52,902 
                                                           -------------------  ------------

   Net increase in cash and cash equivalents                        11,151        12,972 
 Cash and cash equivalents at beginning of period                   27,735        10,044 
                                                           -------------------  ------------
 Cash and cash equivalents at end of period                    $    38,886   $    23,016 
                                                           ===================  ============

 Supplemental schedule of cash flows-interest paid             $   105,216   $   105,311 
                                                           ===================  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                            $     3,883   $     3,614 
                                                           ===================  ============


In connection with the purchase of a branch office in 1997, Coastal
recorded the following assets and liabilities:
 Savings deposits acquired                                     $    54,563   $        -- 
 Goodwill                                                            1,956            -- 
 Accrued interest payable and other liabilities acquired               184            -- 
 Property and equipment acquired                                       693            -- 
                                                           ===================  ============

In connection with the sale of a branch office in 1996, 
Coastal recorded the following reductions of assets 
and liabilities:
 Savings deposits sold                                         $       --   $    14,850 
 Accrued interest payable sold                                         --            65 
 Loans receivable sold                                                 --           155 
 Property and equipment sold                                           --           438 
 Reduction of goodwill                                                 --           179 
                                                           ===================  ============

In connection with the branch swap in 1996, Coastal 
recorded the following net assets and liabilities:
 Net savings deposits acquired                                $        --   $    25,992 
 Net loans receivable acquired                                         --         1,173 
 Net accrued interest payable acquired                                 --           426 
 Net property and equipment sold                                       --           124 
 Net accrued interest receivable acquired                              --             2 
                                                           ===================  ============
</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements
                    COASTAL BANCORP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




(1)          BASIS  OF  PRESENTATION

     The  accompanying  unaudited  Consolidated  Financial  Statements  were
prepared  in accordance with the instructions for Form 10-Q and, therefore, do
not include all disclosures necessary for a complete presentation of financial
condition,  results of operations, and cash flows in conformity with generally
accepted  accounting principles.  All adjustments which are, in the opinion of
management,  of  a  normal  recurring  nature  and  are  necessary  for a fair
presentation  of  the  interim  financial statements, have been included.  The
results  of  operations  for  the  periods  ended  September  30, 1997 are not
necessarily  indicative  of  the  results  that may be expected for the entire
fiscal  year  or  any  other  interim  period.

(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  subsidiaries  (collectively,  Coastal)  and  Coastal  Banc Capital Corp. 
Coastal  Banc  ssb's  subsidiaries  include  CoastalBanc  Financial Corp., CBS
Mortgage  Corp.,  and CBS Asset Corp. (collectively with Coastal Banc ssb, the
Bank).  All  significant  intercompany  balances  and  transactions  have been
eliminated  in  consolidation.

     Certain amounts within the accompanying consolidated financial statements
and  the  related  notes have been reclassified to conform to the current year
presentation.    Such  reclassifications  had no effect on net income or total
stockholders'  equity.

(3)          MORTGAGE-BACKED  SECURITIES

     Mortgage-backed  securities  at  September  30,  1997 (unaudited) 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> <C> <C>        <C> <C>  <C>

Held-to-Maturity:
 REMICS - Agency          $   939,640      $  4,982         $  (28,521)       $   916,101
 REMICS - Non-agency          266,084           716             (7,715)           259,085
 FNMA certificates             74,728           147               (952)            73,923
 GNMA certificates             30,128           684                 --             30,812
 Non-agency securities         15,077           351               (240)            15,188
 Interest-only securities          24            --                 --                 24
                            ---------         -----            -------          ---------
                          $ 1,325,681      $  6,880         $  (37,428)       $ 1,295,133
                            =========         =====            ========         =========

Available-for-sale:
 REMICS - Agency         $    171,165      $    552         $   (5,208)       $  166,509
 REMICS - Non-agency            2,506            --                (39)            2,467
                            ---------         -----            --------         ---------
                         $    173,671      $    552         $   (5,247)       $  168,976
                            =========         =====            ========         =========
</TABLE>



Proceeds  from  sales of mortgage-backed securities available-for-sale for the
nine  months ended September 30, 1997 were approximately $11.5 million.  Gross
gains  of  approximately  $237,000  were  realized  on  these  sales.


     Mortgage-backed  securities at December 31, 1996 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>          <C>  <C>

Held-to-maturity:
 REMICS - Agency           $    932,488  $       4,730  $     (31,142)  $    906,076
 REMICS - Non-agency            278,612            834         (9,958)       269,488
 FNMA certificates               79,628             72         (1,072)        78,628
 GNMA certificates               34,031            282             --         34,313
 Non-agency securities           19,790            363            (95)        20,058
 Interest-only securities            38             --             (3)            35
                              ---------     ----------     -----------     ---------
                           $  1,344,587  $       6,281  $     (42,270)  $  1,308,598
                              =========     ==========     ===========     =========

Available-for-sale:
 REMICS - Agency           $    182,467  $       1,207  $      (5,946)  $    177,728
 REMICS - Non-agency              2,962             --            (34)         2,928
                              ---------     ----------     -----------     ---------
                           $    185,429  $       1,207  $      (5,980)  $    180,656
                              =========     ==========     ===========     =========
</TABLE>



(4)          LOANS  RECEIVABLE

     Loans  receivable  at  September  30,  1997 and December 31, 1996 were as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                                                     September 30, 1997   December 31, 1996
                                                     -------------------  ------------------
                                                        (Unaudited)
<S>                                               <C>              <C>            <C>

Real estate mortgage loans:
 First-lien mortgage, primarily residential      $         760,640   $         791,337
 Commercial                                                174,858             119,004
 Multifamily                                               134,208             139,486
 Residential construction                                   83,695              77,146
 Acquisition and development                                25,633              26,132
 Commercial construction                                    15,429               3,963
Commercial loans, secured by residential mortgage 
  loans held for sale                                       84,452              53,573
Commercial loans, secured by mortgage servicing rights      32,639              21,380
Commercial, financial and industrial                        22,617              21,965
Loans secured by savings deposits                            8,431               8,849
Consumer and other loans                                    13,885              14,400
                                                      --------------        ------------
                                                         1,356,487            1,277,235
Loans in process                                           (50,716)             (38,742)
Allowance for loan losses                                   (7,082)              (6,880)
Unearned loan fees                                          (2,705)              (2,344)
Premium to record purchased loans, net                       2,811                  479
                                                     ---------------         -----------

                                                  $      1,298,795          $  1,229,748
                                                     ================        ===========

Weighted average yield                                       8.36%                  8.37%
                                                     ================        ===========
</TABLE>



     At  September  30, 1997, Coastal had outstanding commitments to originate
or  purchase  $52.0  million  of  real estate mortgage and other loans and had
commitments  under lines of credit to originate primary construction and other
loans  of  approximately  $109.5 million.  In addition, at September 30, 1997,
Coastal  had  $2.0  million  of  outstanding  letters  of  credit.  Management
anticipates  the  funding  of  these  commitments  through  normal operations.

     At  September 30, 1997 and December 31, 1996, the carrying value of loans
that  were  considered  to  be  impaired  totaled  approximately  $912,000 and
$725,000,  respectively,  (all  of  which  are  on nonaccrual) and the related
allowance  for  loan  losses  on  those  impaired  loans  totaled $676,000 and
$524,000,  respectively.    The  average recorded investment in impaired loans
during  the  nine  months  ended  September 30, 1997 and 1996 was $770,000 and
$856,000,  respectively.

     An  analysis  of  activity  in the allowance for loan losses for the nine
months  ended  September  30,  1997  and  1996  is  as follows (in thousands):
<TABLE>

<CAPTION>



                                       Nine months ended September 30,
                                     --------------------------- 
                                              1997     1996
                                     ---------------------------
                                                (Unaudited)
<S>                                       <C>            <C>

Balance, beginning of period    $            6,880   $5,703 
Provision for loan losses                    1,350    1,475 
Charge-offs, net of recoveries              (1,148)    (553)
                                          ---------  -------

Balance, end of period          $            7,082   $6,625 
                                          =========  =======
</TABLE>



     Coastal  services  for  others loans receivable which are not included in
the  Consolidated  Financial  Statements. The total amounts of such loans were
$696.0  million  and  $776.7  million  at September 30, 1997 and  December 31,
1996,  respectively.



<PAGE>
(5)          SAVINGS  DEPOSITS

     Savings  deposits,  their  stated  rates and the related weighted average
interest  rates  at September 30, 1997 and December 31, 1996 are summarized as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                                 Stated Rate      September 30, 1997      December 31, 1996
                               ----------------  --------------------     ------------------
                                                           (Unaudited)
<S>                                  <C>               <C>                   <C>  <C>

Noninterest-bearing checking              0.00%  $           110,480   $             85,259 
NOW accounts                     1.74  -  2.00                63,975                 56,862 
Savings accounts                 2.28  -  2.75                25,246                 22,135 
Money market demand accounts     3.15  -  4.51               166,033                151,046 
                                                         ------------           ------------

                                                             365,734                315,302 
                                                         ------------           ------------

Certificate accounts             2.00  -  2.99                 4,971                 12,930 
                                 3.00  -  3.99                 1,516                  1,905 
                                 4.00  -  4.99                72,893                 95,087 
                                 5.00  -  5.99               841,459                776,765 
                                 6.00  -  6.99                94,008                 91,128 
                                 7.00  -  7.99                 7,676                 12,964 
                                 8.00  -  8.99                 2,863                  3,515 
                                 9.00  -  9.99                   975                  1,171 
                                10.00  -  10.99                  245                    249 
                                11.00  -  11.99                   --                     17 
                                                           1,026,606                995,731 
                                                         ------------           ------------
Discount to record savings deposits
at fair value, net                                              (106)                  (198)
                                                         ------------           ------------

                                                       $    1,392,234   $          1,310,835 
                                                         ============           ============

Weighted average rate                                           4.65%                  4.67%
                                                         ============           ============
</TABLE>



     The scheduled maturities of certificate accounts outstanding at September
30,  1997  were  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                     September 30, 1997
                     -------------------
                         (Unaudited)
<S>               <C>  <C>

 0 to 12 months   $              758,902
 12 to 24 months                 219,231
 24 to 36 months                  33,788
 36 to 48 months                   8,907
 48 to 60 months                   5,694
 Over 60 months                       84
                     -------------------
                  $            1,026,606
                     ===================
</TABLE>



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

     (a)          The weighted average interest rates on securities sold under
agreements  to  repurchase  at  September  30, 1997 and December 31, 1996 were
5.59%  and  5.55%, respectively.  The stated interest rates on securities sold
under  agreements  to  repurchase  ranged from 5.56% to 5.73% at September 30,
1997.

     (b)       The weighted average interest rate on advances from the FHLB at
September  30, 1997 and December 31, 1996 were 5.76% and 5.61%, respectively. 
FHLB  advances and related interest rates and maturities at September 30, 1997
and  December  31,  1996  are  summarized  as  follows (dollars in thousands):
<TABLE>

<CAPTION>



Maturity  Interest rates                 September 30, 1997     December 31, 1996
--------  ---------------                ------------------     -----------------
                                                (Unaudited)
<S>       <C>              <C>           <C>                 <C>  <C>

1997       4.93  -  8.31%  $                        166,151  $            189,127
1998       5.25  -  6.96                             19,558                19,674
1999       4.95  -  8.11                            120,530               170,871
2000       5.57  -  7.76                              8,089                 8,320
2001       6.03  -  6.46                              8,706                 8,854
2002                5.57                             47,600                    --
2004                6.52                              2,943                 3,201
2006                6.91                              3,129                 3,167
2007       6.80  -  7.94                                477                   488
2009                8.25                              4,523                 4,681
2011       6.35  -  7.24                              1,296                 1,337
                                         ------------------     -----------------

                           $                        383,002  $            409,720
                                         ==================     =================
</TABLE>



     FHLB  advances  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.

(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 own exposure to fluctuations in
interest  rates.    These  financial  instruments  include  interest rate swap
agreements  and  interest  rate  cap  agreements.

     Coastal is a party to interest rate swap and interest rate cap agreements
in  order  to  reduce  its exposure to floating interest rates by altering the
interest  rate  sensitivity  of  a  portion  of  its  variable-rate assets and
borrowings.    At  September  30, 1997, Coastal had interest rate swap and cap
agreements having notional principal amounts totaling $55.8 million and $267.5
million,  respectively.


<PAGE>
     The  terms  of the interest rate swap agreements outstanding at September
30,  1997 (unaudited) and December 31, 1996 are summarized as follows (dollars
in  thousands):
<TABLE>

<CAPTION>



                                                          Floating Rate    Fair Value at
                           Notional     LIBOR     Fixed         at         End of Period
                                                                          ---------------
Maturity                    Amount      Index      Rate   End of Period     gain (loss)
----------------------     --------  -----------  ------  --------------         
<S>                     <C>  <C>       <C>          <C>     <C>             <C>

At September 30, 1997:
1997                    $     6,000  Three-month  6.493%          5.738%  $           (5)
1998                          4,400  Three-month  6.709           5.738              (33)
1999                         14,600  Three-month  6.926           5.738             (232)
2000                          4,800  Three-month  6.170           5.719               (2)
                              2,555  Three-month  6.000           5.719               15 
2005                         23,442  Three-month  6.500           5.719             (481)
                           --------                                                      
                        $    55,797                                       $         (738)
                           ========                                       ===============

At December 31, 1996:
1997                    $     5,000  One-month    4.990%          5.633%  $            6 
                              6,000  Three-month  6.493           5.500              (65)
1998                          4,400  Three-month  6.709           5.500             (111)
1999                         14,600  Three-month  6.926           5.500             (619)
2000                          4,800  Three-month  6.170           5.543              (64)
                              2,660  Three-month  6.000           5.617               24 
2005                         23,442  Three-month  6.500           5.500              (15)
                           --------                                       ---------------
                        $    60,902                                       $         (844)
                           ========                                       ===============
</TABLE>




     The interest rate swap agreements  provide  for Coastal to make  weighted
average fixed interest payments and receive payments based on a floating LIBOR
index,  as  defined in each agreement.  The weighted average interest received
rate on all of  the interest rate swap agreements was approximately 5.65%  and
the weighted average  interest  payment  rate on all of the interest rate swap
agreements was approximately  6.40% for the  nine  months  ended September 30,
1997. 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" in the accompanying
consolidated statements of income.   The net interest expense related to these
agreements was approximately $338,000 for the nine months ended  September 30,
1997 and approximately  $452,000 for the nine months ended September 30, 1996.
Coastal had pledged approximately  $6.5 million of mortgage-backed  securities
to secure interest  rate  swap  agreements  at  September  30,  1997.

     Coastal  has  interest  rate cap agreements with various  counterparties.
The  agreements  provide  for  the  counterparties to make payments to Coastal
whenever  a  defined  floating  rate exceeds rates ranging from 5.0% to 12.5%,
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  
<PAGE>
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
$427,000  and  $1.1  million  at  September  30,  1997  and December 31, 1996,
respectively,  with  the estimated fair value of the agreements being $458,000
and  $639,000  at September 30, 1997 and December 31, 1996, 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  $202,000  and $379,000 for the nine months ended September
30,  1997  and  1996  respectively.

    Interest  rate cap agreements outstanding at September 30, 1997 (unaudited)
expire as follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



Year of      Strike rate    Notional
expiration      range        amount
----------  --------------  ---------
<S>         <C>             <C>

1997                  5.0%  $  43,000
1998         5.0  -  12.5     156,400
1999        7.25  -  11.0      56,789
2000         8.5  -   9.5       8,000
2001                  7.5       3,265
                            ---------
                            $ 267,454
                            =========
</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  mortgage-backed securities portfolio to expected market level
changes  in  an  instantaneous  shock  of plus and minus 200 basis points on a
monthly  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  controls  this  risk through credit
monitoring  procedures.    The  notional  principal  amount does not represent
Coastal's  exposure  to  credit  loss.

<PAGE>

(9)          NET  EARNINGS  PER  SHARE

     Net  earnings  per  share  is  calculated  by  dividing  net income after
preferred  stock dividends by the weighted average number of common shares and
common  stock  equivalents.   Stock options outstanding are regarded as common
stock  equivalents  and  are,  therefore,  considered  in  earnings  per share
calculations  if  dilutive.  Common  stock  equivalents are computed using the
treasury  stock  method.    The  weighted average number of shares used in the
computation  of  earnings  per  share is 5,166,732 and 5,025,955 for the three
months  ended  September  30,  1997  and  1996,  respectively  (unaudited) and
5,129,312 and 5,019,399 for the nine months ended September 30, 1997 and 1996,
respectively  (unaudited).

     In  February  1997,  the  Financial  Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standards  No. 128, "Earnings Per Share"
(Statement  128).   Statement 128 supersedes APB Opinion No. 15, "Earnings Per
Share" and specifies the computation, presentation and disclosure requirements
for  earnings  per  share (EPS) for entities with publicly held common stock. 
Statement  128 replaces the presentation of primary and fully diluted EPS with
basic  EPS  and  diluted  EPS,  respectively.   Statement 128 is effective for
financial statements for both interim and annual periods ending after December
15,  1997.    After  adoption,  all  prior-period  EPS  data presented will be
restated  to conform with Statement 128.  The adoption of Statement 128 is not
expected  to  have  a  material  impact  on  Coastal's  consolidated financial
statements.

(10)          STATUTORY  CAPITAL  REQUIREMENTS

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

     At  September  30,  1997,  the  Bank's  regulatory capital (unaudited) in
relation  to  its  current  existing  regulatory  capital requirements were as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                       Actual                Requirement               Excess
                      --------               -----------               -------      
Capital Requirement    Dollar   Percent        Dollar     Percent      Dollar   Percent
--------------------  --------  --------     -----------  --------     -------  --------
<S>                   <C>       <C>       <C>  <C>          <C>       <C>  <C>      <C>

Tier 1 (core)         $158,450     5.38%  $      117,756     4.00%  $   40,694     1.38%
Tier 1 risk-based      158,450    11.37           55,720     4.00      102,730     7.37 
Total risk-based       165,532    11.88          111,441     8.00       54,091     3.88 
</TABLE>



     At  September  30,  1997,  the  Bank,   according  to   certain   capital
requirements  outlined  by  the  FDIC,  was categorized as "well capitalized".

(11)          BRANCH  ACQUISITION

     On  June 21, 1997, Coastal announced the completion of the acquisition of
the  Wells  Fargo  Bank  (Texas)  branch  located at 441 Austin Avenue in Port
Arthur,  Texas.    At  the  date  of acquisition, the Port Arthur location had
approximately  $54.6  million  in  deposits  which were assumed.  In addition,
approximately  $693,000 of  operating  assets were purchased by Coastal in the
transaction.


                                      20
ITEM  2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

Financial  Condition

     Total  assets  increased  1.9% or $53.7 million from December 31, 1996 to
September  30,  1997.  The net increase resulted primarily from an increase in
loans  receivable  of $69.0 million, an increase in Federal funds sold of $5.0
million,  an  increase  in  property  and equipment of $7.6 million, offset by
decreases  of $18.9 million, $11.7 million and $5.5 million in mortgage-backed
securities held-to-maturity, mortgage-backed securities available-for-sale and
stock  in the Federal Home Loan Bank of Dallas, respectively.  The increase in
loans  receivable  was  primarily  due  to a bulk loan purchase of residential
mortgage  loans  totalling  $97.5  million in June of 1997 (resulting from the
investment  of  the  cash  received from the branch acquisition that closed on
June 21, 1997) and the increase in Federal funds sold was due to Coastal's use
of  this  overnight  investment  alternative for excess funds beginning in the
second  quarter  of  1997.    The  increase  in property and equipment was due
primarily  to the acquisition of assets related to the relocation of Coastal's
corporate  headquarters.  The relocation, which was finalized during the third
quarter  of  1997,  consolidated Coastal's administrative, primary lending and
mortgage  servicing  offices.    The  decrease  in  mortgage-backed securities
held-to-maturity  was  due  to  principal  payments received.  The decrease in
mortgage-backed securities available-for-sale was primarily due to the sale of
$11.3  million  of  securities  in this category and approximately $452,000 in
principal  payments  received.

     Savings  deposits  increased  by  6.2% or $81.4 million from December 31,
1996  to  September  30,  1997.  This increase was primarily due to the branch
acquisition  of  $54.6  million  in deposits completed on June 21, 1997 and an
increase in existing deposits.  Securities sold under agreements to repurchase
decreased  2.4% or $23.5 million and advances from the FHLB decreased by $26.7
million  or  6.5% from December 31, 1996 to September 30, 1997.  Stockholders'
equity  increased 8.0% or $7.5 million from December 31, 1996 to September 30,
1997  as  a  result  primarily  of  net  income  and a $52,000 decrease in the
unrealized loss on securities available-for-sale offset by dividends declared.

Results  of Operations for the Nine Months Ended September 30, 1997 and 1996

     General

     For the nine months ended September 30, 1997, net income before preferred
stock  dividends  increased  1.9%  to $10.7 million from $10.5 million for the
nine  months  ended  September  30,  1996,  calculated before the $4.8 million
after-tax  effect  of  the  one-time Savings Association Insurance Fund (SAIF)
deposit  insurance  special  assessment  (the "1996 special assessment").  Net
income  before  preferred  stock  dividends  (and after the effect of the 1996
special  assessment) increased 89.0% or $5.0 million for the nine months ended
September  30,  1997  from  the  nine  months  ended  September 30, 1996.  Net
interest  income increased by $952,000 for the nine months ended September 30,
1997  as  compared  to  the  nine months ended September 30, 1996. Noninterest
income  increased  during  such  period  by  $238,000  and noninterest expense
(before  the  $7.5  million  1996  special  assessment) increased by $996,000.

     Interest  Income

     Interest  income  for  the nine months ended September 30, 1997 increased
$5.8  million  or  4.0%  from  the  nine months ended September 30, 1996.  The
increase  was  primarily due to an increase of $8.2 million in interest earned
on  loans  receivable  over  the  prior  comparable  period.   The increase in
interest  income  on  loans receivable was due to a $100.9 million increase in
the  average  balance of loans receivable and an increase in the average yield
from  8.49% for the nine months ended September 30, 1996 to 8.68% for the nine
months  ended  September 30, 1997. This increase was somewhat offset by a $2.4
million  decrease  in  interest income on mortgage-backed securities primarily
due  to  a lower average balance and a slight decrease in the average yield on
mortgage-backed  securities from 6.12% for the nine months ended September 30,
1996  to  6.10%  for  the  nine  months  ended September 30, 1997 and a $2,000
decrease in interest income on Federal funds sold, certificates of deposit and
other  investments.    Total interest-earning assets for the nine months ended
September  30,  1997 averaged $2.8 billion as compared to $2.7 billion for the
nine  months  ended  September  30,  1996.

     Interest  Expense

     Interest  expense  on interest-bearing liabilities was $107.6 million for
the  nine  months  ended September 30, 1997, as compared to $102.8 million for
the  same period in 1996.  The increase in interest expense was due to a $99.6
million increase in the average balance of interest-bearing liabilities during
such  period  and an increase in the average rate paid from 5.38% for the nine
month  period  ended  September  30,  1996  to 5.42% for the nine months ended
September  30,  1997.    The  increase in average interest-bearing liabilities
consisted  of a $54.6 million increase in interest-bearing savings deposits, a
$65.3 million increase in securities sold under agreements to repurchase and a
$216,000  increase  in  Federal  funds  purchased  offset  by  a $20.5 million
decrease  in  FHLB  advances.

     Net  Interest  Income

     Net interest income was $43.1 million for the nine months ended September
30,  1997  as  compared  to  $42.1  million  for the same period in 1996.  The
increase  in net interest income was due to the slightly improved net interest
rate  spread  (Spread)  percentage.    Spread,  defined  to  exclude
noninterest-bearing  deposits,  increased from 1.72% for the nine months ended
September  30,  1996  to  1.83% for the nine months ended September 30, 1997. 
Management  also  calculates  an  alternative  Spread  which  includes
noninterest-bearing  deposits. Under this calculation, the alternative Spreads
for  the  nine  months ended September 30, 1997 and 1996 were 2.00% and 1.89%,
respectively. Net interest margin (Margin) was 2.07% for the nine month period
ended September 30, 1997 compared to 2.06% for the nine months ended September
30,  1996.  Margin  represents  net interest income as a percentage of average
interest-earning assets.  Margin and Spread are affected by the changes in the
amount  and  composition  of  interest-earning  assets  and  interest-bearing
liabilities.    The  increase  in  the  Spread  was  primarily due to a slight
increase  in  the  average yield on interest-earning assets from 7.10% for the
nine  months  ended  September  30, 1996 to 7.25% for the same period in 1997,
offset  by  a decrease of $47.9 million in average net interest-earning assets
from  the  nine  months  ended  September  30,  1996  to the nine months ended
September  30,  1997.

     The  slight  improvement  in  the  Spread  level  is  consistent  with
management's  goal  of  achieving 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 the London
Interbank  Offered  Rate  (LIBOR)  and  local  and  regional  prime rates.  To
continue  the  improvement  in  both the Margin and Spread levels, efforts are
being made to replace LIBOR based borrowings with lower cost deposits, and, in
addition,  management  intends to gradually increase commercial business loans
to  approximately  15%  of  total  assets  and  commercial  business
(noninterest-bearing)  deposits  to approximately 10% of total deposits within
three  to  five  years.

     Provision  for  Loan  Losses

     Provision  for  loan  losses  was  $1.4 million for the nine months ended
September  30,  1997  as  compared  to  $1.5 million for the nine months ended
September  30, 1996.  The slight decrease in the provision for loan losses was
due  to  management's  satisfaction with the current allowance for loan losses
established  based  on  Coastal's  loan  loss  policy.  The allowance for loan
losses  as  a  percentage  of  total loans was 0.55% at September 30, 1997 and
0.57%  at  September 30, 1996.  Although no assurance can be given, management
believes  that  the  present allowance for loan losses is adequate considering
historical  loss  experience,  delinquency  trends  and  current  economic
conditions.  Management will continue to review its loan loss allowance policy
as  Coastal's  loan portfolio grows and diversifies to determine if changes to
the  policy  and  resulting  allowance  for  loan  losses  are  necessary.

     Noninterest  Income

     For  the  nine  months  ended  September  30,  1997,  noninterest  income
increased  $238,000  or 5.3% to $4.8 million, compared to $4.5 million for the
nine  months ended September 30, 1996.  The increase in noninterest income was
due  to  a  $387,000  increase  in  loan  fees and service charges, a $241,000
increase in the gain on sales of mortgage-backed securities available-for-sale
and  a  $194,000  increase in other noninterest income, offset by the $521,000
gain  on  the  sale  of  a branch office recorded during the nine months ended
September  30,  1996  and a decrease of $63,000 in loan servicing income.  The
increase  in loan fees and service charges was due primarily to an increase of
$374,000  in  service  charges  on  deposit  accounts.

     Noninterest  Expense

     For  the  nine  months  ended  September  30,  1997,  noninterest expense
increased  $996,000 or 3.5% to $29.6 million compared to $28.6 million for the
nine  months ended September 30, 1996, calculated before the $7.5 million 1996
special assessment.  Compensation, payroll taxes and other benefits as well as
office  occupancy  expense  increased $1.8 million and $928,000, respectively,
from  the  nine  months  ended  September  30,  1996  to the nine months ended
September  30,  1997,  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, occupancy expenses also
increased  due  to the acquisition of assets and other expenses related to the
relocation  of Coastal's corporate headquarters in the third quarter of 1997. 
This  increase  in  occupancy  expenses  included  approximately  $128,000  of
nonrecurring  expenses  incurred  due  to  the  relocation.   In addition, the
amortization  of goodwill increased by $21,000.  These increases were somewhat
offset  by  a  $1.3 million decrease in insurance premiums.  This decrease was
due  primarily  to the decreased deposit insurance premiums as a result of the
lower  assessment  rates applicable to Coastal in 1997 pursuant to the passage
of  the  Deposit  Insurance  Funds  Act  of  1996.  Other decreases included a
$112,000  decrease  in  data processing expenses (due in part to the 1996 data
processing  conversion  expenses  incurred),  a  $37,000  decrease in the real
estate  owned expenses and a $359,000 decrease in other noninterest expenses. 
The  1996  special  assessment  of  $7.5  million  was included in noninterest
expense  for  the  nine  months  ended  September  30,  1996

     Provision  for  Federal  Income  Taxes

     For  the  nine months ended September 30, 1997, the provision for Federal
income  taxes  was  $6.2  million compared to $3.5 million for the nine months
ended  September  30, 1996 at an average effective rate of approximately 36.6%
and  37.9%,  respectively.

Results of Operations for the Three Months Ended September 30, 1997 and 1996

     General

     For  the  three  months  ended  September  30,  1997,  net  income before
preferred  stock dividends was $3.4 million as was net income before preferred
stock dividends and before the after-tax effect of the 1996 special assessment
for  the  three  months  ended  September 30, 1996.  Net loss before preferred
stock dividends (and after the effect of the 1996 special assessment) was $1.4
million  for  the  three months ended September 30, 1996.  Net interest income
increased  $185,000  for the three months ended September 30, 1997 as compared
to  the  three  months  ended September 30, 1996. Noninterest income increased
during such period by $324,000 primarily due to the $237,000 nonrecurring gain
on  the  sale of mortgage-backed securities that was recorded during the three
months  ended September 30, 1997. Noninterest expense (before the $7.5 million
1996  special  assessment) increased by $582,000 and the provision for federal
income  taxes  increased  by  $2.6  million  from  the 1996 to  the 1997 three
month period.

     Interest  Income

     Interest  income  for the three months ended September 30, 1997 increased
$3.0  million  or  6.2%  from  the three months ended September 30, 1996.  The
increase  was  primarily due to an increase of $3.5 million in interest earned
on  loans  receivable  over  the  prior  comparable  quarter.  The increase in
interest  income  on  loans receivable was due to a $198.3 million increase in
the  average  balance  of loans receivable offset by a decrease in the average
yield  from  8.49%  for the three months ended September 30, 1996 to 8.28% for
the  three  months  ended  September 30, 1997.  Of the decrease in the average
yield on loans receivable, 0.13% was attributable to approximately $439,000 of
additional  amortization  of  purchased mortgage loan premium during the three
months ended September 30, 1997.  This amortization was attributable primarily
to  prepayments  related to an adjustable rate whole loan package purchased in
the  second  quarter of 1997. Management believes the prepayments on this loan
package could continue through the end of the year.  This increase in interest
income  on  loans  receivable  was  somewhat  offset by a $522,000 decrease in
interest income on mortgage-backed securities primarily due to a lower average
balance.   In addition, interest income on Federal funds sold, certificates of
deposit  and  other  investments  increased  $33,000.   Total interest-earning
assets  for the three months ended September 30, 1997 averaged $2.9 billion as
compared  to  $2.7  billion  for  the  three  months ended September 30, 1996.

     Interest  Expense

     Interest  expense  on  interest-bearing liabilities was $37.1 million for
the  three  months  ended September 30, 1997, as compared to $34.2 million for
the same period in 1996.  The increase in interest expense was due to a $142.5
million increase in the average balance of interest-bearing liabilities during
such  period  and  an  increase  in  the average rate paid on interest-bearing
liabilities  from 5.38% for the three months ended September 30, 1996 to 5.47%
for  the  three  months  ended  September  30,  1997.  The increase in average
interest-bearing  liabilities  consisted  of  a  $151.9  million  increase  in
securities sold under agreements to repurchase and a $78.8 million increase in
interest-bearing  savings deposits, offset by a $88.2 million decrease in FHLB
advances.

     Net  Interest  Income

     Net  interest  income  was  $14.2  million  for  the  three  months ended
September  30,  1997  and  $14.0  million for the same period in 1996.  Margin
decreased  from 2.06% for the three months ended September 30, 1996  to  1.98%
for  the  three  months  ended  September  30,  1997.  Margin  represents  net
interest  income  as a percentage of average interest-earning assets.  Spread,
defined to exclude noninterest-bearing deposits, decreased  from 1.70% for the
three months ended September 30, 1996 to 1.66%  for  the  three  months  ended
September 30, 1997.  Management  also  calculates  an alternative Spread which
includes   noninterest-bearing   deposits.     Under  this  calculation,   the
alternative Spreads for the three months ended  September  30,  1997  and 1996
were 1.86% and 1.88%, respectively.  Margin and Spread  are  affected  by  the
changes   in   the   amount  and  composition  of  interest-earning assets and
interest-bearing liabilities.   The decrease in the  Margin  and  Spread  were
due  to  the  tightening  in  net  interest income experienced  by Coastal due
to higher borrowing costs and the anomaly that  the spread between  LIBOR  and
Treasury rates (the "TED Spread") has been  much wider than  usual.    The TED
Spread historically (6 year average) has been 39 basis points,  but  for  the 
third quarter 1997 was 56 basis points.  The TED Spread effect on  Coastal was
substantial for the quarter ended September 30, 1997 with liabilities affected
by the change in LIBOR totalling approximately $1.6 billion.    The historical
difference  of  17  basis  points would have equated to an additional 8  cents
per  share  for  the  quarter  had  the  TED  Spread been consistent with past
history.    The  average  interest  rates paid on interest-bearing liabilities
increased from 5.38% for the three months  ended September 30, 1996  to 5.47% 
for the same period in 1997.  This increase was slightly offset by an increase
in  the  average  yield  on  interest-earning  assets from 7.08% for the three
months  ended  September 30,  1996  to 7.13% for the same period in 1997.   In
addition,  average net interest-earning assets increased $9.2 million from the
three  months ended September 30, 1996 to the three months ended September 30,
1997.      While  management   believes  that  the  higher borrowing costs are
temporary, efforts  are  being  made  to  replace  borrowings with lower cost
deposits.

      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 deposits.   In addition, management intends
to  gradually increase commercial business loans to approximately 15% of total
assets and commercial business (noninterest-bearing) deposits to approximately
10% of total deposits within three  to  five  years.

     Provision  for  Loan  Losses

     The  provision  for  loan  losses was $450,000 for the three months ended
September 30, 1997 and 1996.  The allowance for loan losses as a percentage of
total  loans  was 0.55% at September 30, 1997 and 0.57% at September 30, 1996.
Although  no  assurance  can  be  given,  management believes that the present
allowance  for loan losses is adequate considering historical loss experience,
delinquency  trends  and current economic conditions. Management will continue
to review its loan loss allowance policy as Coastal's loan portfolio grows and
diversifies  to determine if changes to the policy and resulting allowance for
loan  losses  are  necessary.

     Noninterest  Income

     For  the  three  months  ended  September  30,  1997,  noninterest income
increased  $324,000 or 22.8% to $1.7 million, compared to $1.4 million for the
three months ended September 30, 1996.  The increase in noninterest income was
primarily due to the $237,000 nonrecurring gain on the sale of mortgage-backed
securities  recorded  during  the  three  months  ended September 30, 1997, in
addition  to  an  increase  of $102,000 in loan fees and service charges and a
$60,000  increase  in other noninterest income.  These increases were somewhat
offset  by  a  $75,000  decrease  in  loan  servicing  income.

     Noninterest  Expense

     For  the  three  months  ended  September  30,  1997, noninterest expense
increased  $582,000  from  the three months ended September 30, 1996 excluding
the  effect  of  the 1996 special assessment.  Compensation, payroll taxes and
other  benefits  as  well  as  office occupancy expense increased $629,000 and
$500,000,  respectively, from the three months ended September 30, 1996 to the
three months ended September 30, 1997, 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, occupancy
expenses  also  increased  due to the acquisition of assets and other expenses
related  to  the  relocation  of Coastal's corporate headquarters in the third
quarter  of   1997.     Of  the   $500,000  increase  in  occupancy  expenses,
approximately  $128,000  were nonrecurring expenses due to the relocation.  In
addition,  data processing expenses and the amortization of goodwill increased
$72,000  and $36,000, respectively.  These increases were somewhat offset by a
$354,000 decrease in insurance premiums.  This decrease from the prior related
quarter  was  due  primarily  to the decreased deposit insurance premiums as a
result of the lower assessment rates applicable to Coastal in 1997 pursuant to
the  passage  of  the  Deposit  Insurance  Funds Act of 1996.  Other decreases
included  a  $133,000  decrease  in  real estate owned expenses and a $168,000
decrease  in  other  noninterest expense.  The 1996 special assessment of $7.5
million  was  included  in  noninterest  expense  for  the  three months ended
September  30,  1996.


<PAGE>
     Provision  for  Federal  Income  Taxes

     For  the three months ended September 30, 1997, the provision for Federal
income  taxes  was  $2.0 million compared to an income tax benefit of $636,000
for  the three months  ended September 30, 1996 (resulting from the effect of 
the 1996  special  assessment) at an  average effective rate of approximately 
36.7%  and  30.8%,  respectively.

     Liquidity  and  Capital  Resources

     Coastal's  primary  sources  of funds consist of savings deposits bearing
market  rates  of  interest,  securities  sold under agreements to repurchase,
advances  from  the  FHLB,  Federal  funds purchased and principal payments on
loans  receivable  and  mortgage-backed  securities.  Coastal uses its funding
resources  principally  to  meet  its  ongoing  commitments  to  fund maturing
deposits  and deposit withdrawals, repay borrowings, purchase loans receivable
and mortgage-backed securities, fund existing and continuing loan commitments,
maintain its liquidity, meet operating expenses and fund acquisitions of other
banks  and thrifts, either on a branch office or whole bank acquisition basis.
At  September  30,  1997,  Coastal  had  binding  commitments  to originate or
purchase  loans  totaling approximately $52.0 million and had $50.7 million of
undisbursed  loans in process. Scheduled maturities of certificates of deposit
during  the  12  months following September 30, 1997 totaled $758.9 million at
September 30, 1997. Management believes that Coastal has adequate resources to
fund  all  of  its  commitments.

     As  of  September 30, 1997, Coastal operated 37 retail banking offices in
Texas  cities,  including  Houston, Austin, Corpus Christi 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.

     Forward-Looking  Information

     The  above  discussion should be read in conjunction with the information
contained in the Consolidated Financial Statements and the Notes thereto.  The
above  information contains "forward-looking statements" within the meaning of
the  Private  Securities Litigation Reform Act of 1995 (the "Reform Act"), and
are  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; 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,  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, 1996,  as filed  with  the Securities and  Exchange  Commission  (SEC)  on
March  26,  1997 and  in  Coastal's Quarterly Report on Form 10-Q for the six 
months ended June 30, 1997, as filed with the SEC on August 8, 1997.


<PAGE>
     PART  II  -  OTHER  INFORMATION

Item  1.          Legal  Proceedings

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

Item  2.          Changes  in  Securities

     a)          Not  applicable.

     b)          Not  applicable.

Item  3.          Default  Upon  Senior  Securities

     Not  applicable.

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

     Not  applicable.

Item  5.          Other  Information

     Not  applicable.

Item  6.          Exhibits  and  Reports  on  Form  8-K

     The  following  exhibits  are  filed  as  part  of  this  report:
          Exhibit  27  -  Financial  Data  Schedule  (filed  via  EDGAR)
          Exhibit  99  -  Forward-Looking  Information



                                  SIGNATURES


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




Dated:        11/12/97             By/s/     Manuel J. Mehos
                                   Manuel  J.  Mehos
                                   Chairman  of  the  Board
                                   Chief  Executive  Officer









Dated:     11/12/97                By/s/     Catherine N. Wylie
                                   Catherine  N.  Wylie
                                   Chief  Financial  Officer

                                  Exhibit 27


                           Financial Data Schedule


                              (filed via EDGAR)
                                  Exhibit 99


                         Forward-Looking Information


Forward-Looking  Information

     The  information included in Item 2 (Management's Discussion and Analysis
of  Financial  Condition  and  Results  of  Operations)  should  be  read  in
conjunction  with  the  information  contained  in  the Consolidated Financial
Statements  and  the Notes thereto.  The information 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;  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, 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, 1996,  as  filed  with  the Securities and  Exchange
Commission  (SEC)  on March  26,  1997 and  in  Coastal's Quarterly  Report on
Form  10-Q for the  six months  ended  June 30, 1997, as filed with the SEC on
August 8, 1997.