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

                                  FORM 10-Q


          [  X  ]        Quarterly  Report  Under  Section  13  or 15 (d) of
               the  Securities  Exchange  Act  of  1934
               For  the  Quarterly  Period  Ended  JUNE  30,  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: 4,971,532 AS OF JUNE 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 June 30, 1997 
        (unaudited) and December 31, 1996                                     1

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

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

        Consolidated Statements of Cash Flows for the Six-Month Periods 
        Ended June 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)


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

Cash and amounts due from depository institutions        $ 27,807    $ 27,735
Federal funds sold                                          6,300          --
Loans receivable (note 4)                               1,336,632   1,229,748
Mortgage-backed securities held-to-maturity (note 3)    1,322,884   1,344,587
Mortgage-backed securities available-for-sale, at 
  market value                                            179,662     180,656
U.S. Treasury security available-for-sale, 
  at market value                                              --          11
Mortgage loans held for sale                                  357         298
Accrued interest receivable                                15,118      14,690
Property and equipment                                     20,401      14,987
Stock in the Federal Home Loan Bank of Dallas (FHLB)       20,171      25,971
Goodwill                                                   16,648      15,596
Mortgage servicing rights                                   6,207       6,810
Prepaid expenses and other assets                          11,895      14,818
                                                     ------------  ----------
                                                      $ 2,964,082 $ 2,875,907
                                                     ============ ===========
</TABLE>


<TABLE>

<CAPTION>

     LIABILITIES  AND  STOCKHOLDERS'  EQUITY


<S>                                                        <C>          <C>

Liabilities:
 Savings deposits (note 5)                           $1,364,759   $1,310,835 
 Advances from the FHLB (note 6)                        397,936      409,720 
 Securities sold under agreements to 
  repurchase (note 6)                                   998,399      966,987 
 Senior notes payable (note 7)                           50,000       50,000 
 Advances from borrowers for taxes and insurance         10,482        4,676 
 Other liabilities and accrued expenses                  15,062       10,791 
                                                     -----------  -----------
   Total liabilities                                  2,836,638    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; 4,971,532 and 4,966,941 shares 
  issued and outstanding in 1997 and 1996                   50           50 
 Additional paid-in capital                             32,667       32,604 
 Retained earnings                                      69,561       64,597 
 Unrealized gain (loss) on securities 
  available-for-sale                                    (3,584)      (3,103)
                                                    -----------  -----------
   Total stockholders' equity                           98,694       94,148 
                                                    -----------  -----------
                                                    $2,964,082   $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>


                                                         Six Months Ended
                                                             June 30,
                                                         ------------------
                                                        1997           1996
                                                     -----------  ----------
                                                            (Unaudited)

<S>                                                      <C>            <C>

Interest income:
 Mortgage-backed securities                            $ 46,401   $48,310
 Loans receivable                                        52,430    47,738
 Federal funds sold, certificates of deposit and 
  other investments                                         671       706
                                                    -----------  --------
                                                         99,502    96,754
                                                    -----------  --------

Interest expense:
 Savings deposits                                        30,545   29,767 
 Other borrowed money                                    27,776   27,026 
 Senior notes payable                                     2,500    2,500 
 Advances from the FHLB:
   Short-term                                             3,712    2,636 
   Long-term                                              6,057    6,680 
                                                    -----------  --------
                                                         70,590   68,609 
                                                      ---------  --------

   Net interest income                                   28,912   28,145 
Provision for loan losses                                   900    1,025 
                                                      ---------  --------
   Net interest income after provision for 
      loan losses                                        28,012   27,120 
                                                      ---------  --------

Noninterest income:
 Loan fees and service charges on 
   deposit accounts                                       1,875    1,590 
 Loan servicing income, net                                 764      752 
 Gain on sale of branch office                               --      521 
 Gain on sales of mortgage-backed securities 
   available-for-sale, net                                   --       (4)
 Other                                                      380      246 
                                                     ----------  --------
                                                          3,019    3,105 
                                                     ----------  --------

Noninterest expense:
 Compensation, payroll taxes and other benefits           9,318    8,106 
 Office occupancy                                         3,264    2,836 
 Insurance premiums                                         545    1,477 
 Data processing                                          1,110    1,294 
 Amortization of goodwill                                   882      897 
 Real estate owned                                          482      386 
 Other                                                    3,850    4,041 
                                                      ---------  --------
                                                         19,451   19,037 
                                                      ---------  --------

       Income before provision for Federal 
          income taxes                                   11,580   11,188 

Provision for Federal income taxes                        4,229    4,090 
                                                     ----------  --------
     Net income before preferred stock dividends          7,351    7,098 
Preferred stock dividends of Coastal Banc ssb 
  (Series A)                                              1,294    1,294 
                                                     ----------  --------
     Net income after preferred stock dividends     $     6,057  $ 5,804 
                                                     ==========  ========

Net earnings per share (note 9)                      $     1.19   $  1.16 
                                                     ==========  ========

</TABLE>


See  accompanying  Notes  to  Consolidated  Financial  Statements

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


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


Interest income:
 Mortgage-backed securities                       $    23,209  $23,813
 Loans receivable                                      26,415   24,058
 Federal funds sold, certificates of deposit 
   and other investments                                  274      329
                                                   ----------  -------
                                                       49,898   48,200
                                                   ----------  -------

Interest expense:
 Savings deposits                                      15,379   14,685
 Other borrowed money                                  13,996   13,029
 Senior notes payable                                   1,250    1,250
 Advances from the FHLB:
   Short-term                                           1,856    1,517
   Long-term                                            3,153    3,421
                                                   ----------  -------
                                                       35,634   33,902
                                                   ----------  -------

   Net interest income                                 14,264   14,298
Provision for loan losses                                 450      450
                                                   ----------  -------
   Net interest income after provision for 
     loan losses                                       13,814   13,848
                                                   ----------  -------

Noninterest income:
 Loan fees and service charges on deposit accounts        981      795
 Loan servicing income, net                               357      359
 Gain on sale of branch office                             --      521
 Other                                                    212      135
                                                   ----------  -------
                                                        1,550    1,810
                                                   ----------  -------

Noninterest expense:
 Compensation, payroll taxes and other benefits         4,693    4,219
 Office occupancy                                       1,653    1,419
 Insurance premiums                                       274      731
 Data processing                                          597      696
 Amortization of goodwill                                 445      449
 Real estate owned                                        243      133
 Other                                                  1,989    2,250
                                                 ------------  -------
                                                        9,894    9,897
                                                 ------------  -------

       Income before provision for Federal 
           income taxes                                 5,470    5,761

Provision for Federal income taxes                      2,004    2,103
                                                  -----------  -------
     Net income before preferred stock dividends        3,466    3,658
Preferred stock dividends of Coastal Banc ssb 
     (Series A)                                           647      647
                                                  -----------  -------
     Net income after preferred stock dividends   $     2,819  $ 3,011
                                                  ===========  =======

Net earnings per share (note 9)                    $     0.55  $  0.60
                                                  ===========  =======
</TABLE>




See  accompanying  Notes  to  Consolidated  Financial  Statements

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


                                                         Six Months Ended
                                                             June 30,
                                                        ------------------ 
                                                       1997             1996
                                                     ----------  ------------
                                                          (Unaudited)

<S>                                                     <C>              <C>

Cash flows from operating activities:
 Net income before preferred stock dividends         $   7,351   $     7,098 
 Adjustments to reconcile net income to net 
   cash provided by operating activities:
 Depreciation and amortization of property 
   and equipment, purchased loans servicing 
   rights, capitalized excess servicing fees 
   and prepaid expenses and other assets                3,397         2,796 
 Net premium amortization                                 516           719 
 Provision for loan losses                                900         1,025 
 Amortization of goodwill                                 882           897 
 Originations and purchases of mortgage loans 
   held for sale                                       (6,549)      (12,784)
 Sales of mortgage loans held for sale                  6,490        11,547 
 Loss on sales of mortgage-backed securities 
   available-for-sale                                      --             4 
 Gain on sale of branch office                             --          (521)
 Decrease (increase) in:
   Accrued interest receivable                           (428)        1,008 
   Other, net                                           8,936           818 
 Stock dividends from the FHLB                           (644)         (537)
                                                      --------  ------------

   Net cash provided by operating activities           20,851        12,070 
                                                      --------  ------------

Cash flows from investing activities:
 Net increase in federal funds sold                    (6,300)           -- 
 Purchases of mortgage-backed securities 
   held-to-maturity                                      (257)           -- 
 Purchase of U.S. Treasury security 
   available-for-sale                                      --           (11)
 Principal repayments on mortgage-backed 
   securities                                          21,976        24,071 
 Principal repayments on mortgage-backed 
   securities available-for-sale                          255           395 
 Proceeds from maturity of U.S. Treasury 
   security available-for-sale                             11         4,000 
 Proceeds from sales of mortgage-backed securities 
   available-for-sale                                      --           860 
 Purchases of loans receivable                       (113,194)      (43,344)
 Net decrease in loans receivable                       1,872         7,766 
 Net purchases of property and equipment               (6,115)       (2,056)
 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                             52,119       (13,622)
                                                     ---------  ------------

   Net cash used by investing activities              (43,189)      (24,865)
                                                     ---------  ------------

                                                                 (continued)
</TABLE>



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

<CAPTION>



                                                        Six Months Ended
                                                            June 30,
                                                      ------------------ 
                                                       1997          1996
                                                      -------  ------------
                                                         (Unaudited)

<S>                                                     <C>           <C>

Cash flows from financing activities:
 Net increase (decrease) in savings deposits      $     (700)  $     6,690 
 Advances from the FHLB                             2,087,700     1,587,709 
 Principal payments on advances from the FHLB      (2,099,484)   (1,465,999)
 Securities sold under agreements to repurchase     5,192,412     4,769,934 
 Purchases of securities sold under agreements 
   to repurchase                                   (5,161,000)   (4,879,973)
 Exercise of stock options for purchase of 
   common stock, net                                       63            51 
 Net increase in advances from borrowers for taxes
   and insurance                                        5,806         4,559 
 Dividends paid                                        (2,387)       (2,286)
                                                   -----------  ------------
   Net cash provided by financing activities           22,410        20,685 
                                                   -----------  ------------

   Net increase in cash and cash equivalents               72         7,890 
 Cash and cash equivalents at beginning of period      27,735        10,044 
                                                   -----------  ------------
 Cash and cash equivalents at end of period       $    27,807   $    17,934 
                                                   ===========  ============

 Supplemental schedule of cash flows-interest 
   paid                                           $    69,390   $    71,242 
                                                   ===========  ============

 Supplemental schedule of noncash investing 
  and financing activities:
   Foreclosures of loans receivable              $      3,065   $     2,366 
                                                   ===========  ============




In connection with the purchase of a 
 branch office in 1997, Coastal
 recorded the following assets and liabilities:
   Savings deposits acquired                     $     54,563   $        -- 
   Goodwill                                             1,935            -- 
   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 
                                                    ==========  ============
</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 June 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 subsidiary, Coastal Banc ssb
and  subsidiaries  (collectively,  Coastal).   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 June 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>

Held-to-Maturity:
 REMICS - Agency       $    927,739   $  4,326   $  (35,531)  $    896,534
 REMICS - Non-agency        270,185        911      (10,064)       261,032
 FNMA certificates           77,421         65       (1,280)        76,206
 GNMA certificates           31,744        592           --         32,336
 Non-agency securities       15,767        425         (247)        15,945
 Interest-only securities        28         --           --             28
                          ---------      -----     --------     ----------
                       $  1,322,884   $  6,319   $  (47,122)  $  1,282,081
                          =========      =====     ========     ==========

Available-for-sale:
 REMICS - Agency      $    182,471    $  1,102   $   (6,568)   $   177,005
 REMICS - Non-agency         2,706          --          (49)         2,657
                         ---------       -----     --------      ---------
                      $    185,177    $  1,102   $   (6,617)   $   179,662
                         =========       =====     ========      =========
</TABLE>






     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 June 30, 1997 and December 31, 1996 were as follows
(dollars  in  thousands):
<TABLE>

<CAPTION>



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

Real estate mortgage loans:
 First-lien mortgage, primarily residential   $    824,233    $  791,337 
 Multifamily                                       149,950       139,486 
 Residential construction                           81,222        77,146 
 Acquisition and development                        28,759        26,132 
 Commercial                                        149,153       119,004
 Commercial construction                            11,385         3,963 
Commercial loans, secured by residential 
  mortgage loans held for sale                      70,948        53,573 
Commercial loans, secured by mortgage 
  servicing rights                                  32,619        21,380 
Commercial, financial and industrial                23,229        21,965 
Loans secured by savings deposits                    8,603         8,849 
Consumer and other loans                            13,390        14,400 
                                             --------------     --------
                                                 1,393,491     1,277,235 
Loans in process                                   (51,067)      (38,742)
Allowance for loan losses                           (6,862)       (6,880)
Unearned loan fees                                  (2,574)       (2,344)
Premium to record purchased loans, net               3,644           479
                                             --------------   ----------

                                           $     1,336,632   $ 1,229,748
                                            ==============    ==========

Weighted average yield                           8.38%             8.37%
                                            ==============  ========== 

</TABLE>



     At  June  30,  1997,  Coastal had outstanding commitments to originate or
purchase  $55.6  million  of  real  estate  mortgage  and  other loans and had
commitments  under lines of credit to originate primary construction and other
loans  of approximately $93.1 million.  In addition, at June 30, 1997, Coastal
had $2.1 million of outstanding letters of credit.  Management anticipates the
funding  of  these  commitments  through  normal  operations.

     At  June 30, 1997 and December 31, 1996, the carrying value of loans that
were  considered  to  be impaired totaled approximately $795,000 and $725,000,
respectively,  (all  of which are on nonaccrual) and the related allowance for
loan  losses  on  those  impaired  loans  totaled  $569,000  and  $524,000,
respectively.    The  average recorded investment in impaired loans during the
six  months  ended  June  30,  1997  and  1996  was  $735,000  and  $939,000,
respectively.

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

<CAPTION>



                                 Six months ended June 30,
                                ---------------------------     
                                     1997        1996
                                   ---------    -------
                                      (Unaudited)
<S>                             <C>                 <C>

Balance, beginning of period    $     6,880     $5,703 
Provision for loan losses               900      1,025 
Charge-offs, net of recoveries         (918)      (385)
                                ------------    -------

Balance, end of period          $     6,862     $6,343 
                                ============    =======
</TABLE>



     Coastal  services  for  others loans receivable which are not included in
the  Consolidated  Financial Statements.  The total amounts of such loans were
$726.0  million  and  $776.7  million at June 30, 1997 and  December 31, 1996,
respectively.



<PAGE>
(5)          SAVINGS  DEPOSITS

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

<CAPTION>



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

Noninterest-bearing checking          0.00%  $   99,479       $  85,259 
NOW accounts                 1.74  -  2.00       64,314          56,862 
Savings accounts             2.28  -  2.75       26,265          22,135 
Money market demand accounts 3.15  -  4.51      161,537         151,046 
                                             ----------     ------------

                                                351,595         315,302 
                                             ----------     ------------

Certificate accounts         2.00  -  2.99        6,957          12,930 
                             3.00  -  3.99        2,268           1,905 
                             4.00  -  4.99       85,786          95,087 
                             5.00  -  5.99      820,574         776,765 
                             6.00  -  6.99       85,131          91,128 
                             7.00  -  7.99        7,986          12,964 
                             8.00  -  8.99        3,371           3,515 
                             9.00  -  9.99          966           1,171 
                            10.00  -  10.99         245             249 
                            11.00  -  11.99          17              17 
                                             ----------     ------------
                                              1,013,301         995,731 
                                             ----------     ------------
Discount to record 
savings deposits at fair value, net                (137)           (198)
                                         --------------     ------------

                                       $      1,364,759   $    1,310,835
                                         ==============     ============

Weighted average rate                           4.70%            4.67%
                                         ==============     ============
</TABLE>



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

<CAPTION>



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

 0 to 12 months   $         717,502
 12 to 24 months            244,868
 24 to 36 months             36,939
 36 to 48 months              8,618
 48 to 60 months              5,222
 Over 60 months                 152
                     --------------
                  $       1,013,301
                     ==============
</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 June 30, 1997 and December 31, 1996 were 5.56% and
5.55%,  respectively.    The  stated  interest  rates on securities sold under
agreements  to  repurchase  ranged  from  5.27%  to  5.66%  at  June 30, 1997.

     (b)       The weighted average interest rate on advances from the FHLB at
June  30, 1997 and December 31, 1996 were 5.69% and 5.61%, respectively.  FHLB
advances  and  related  interest  rates  and  maturities  at June 30, 1997 and
December  31,  1996  are  summarized  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



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

1997       4.93  -  8.31%  $                   180,630  $            189,127
1998      5.25   -  6.96                        19,598                19,674
1999       4.95  -  8.11                       120,645               170,871
2000       5.57  -  7.76                         8,167                 8,320
2001       6.03  -  6.46                         8,756                 8,854
2002                5.60                        47,600                    --
2004                6.52                         3,031                 3,201
2006                6.91                         3,142                 3,167
2007       6.80  -  7.94                           480                   488
2009                8.25                         4,577                 4,681
2011       6.35  -  7.24                         1,310                 1,337
                                         -------------     -----------------

                           $                   397,936  $            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  June  30,  1997,  Coastal  had  interest  rate swap and cap
agreements having notional principal amounts totaling $60.8 million and $306.7
million,  respectively.


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

<CAPTION>



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

At June 30, 1997:
1997                $ 5,000  One-month    4.990%   5.703%       $       1 
                      6,000  Three-month  6.493    5.813              (14)
1998                  4,400  Three-month  6.709    5.813              (29)
1999                 14,600  Three-month  6.926    5.813             (170)
2000                  4,800  Three-month  6.170    5.598              (39)
                      2,590  Three-month  6.000    5.750               36 
2005                 23,442  Three-month  6.500    5.539              134 
                    --------                                    ----------
                   $ 60,832                                     $     (81)
                    ========                                    ==========

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  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 5.61% and the weighted
average  interest payment rate on all of the interest rate swap agreements was
approximately  6.42%  for  the six months ended June 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
operations.    The  net  interest  expense  related  to  these  agreements was
approximately  $246,000  for  the  six  months  ended  June  30,  1997  and
approximately  $309,000  for  the six months ended June 30, 1996.  Coastal had
pledged  approximately  $6.8  million  of mortgage-backed securities to secure
interest  rate  swap  agreements  at  June  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
$591,000  and  $1.1  million  at  June  30,  1997  and  December  31,  1996,
respectively,  with  the estimated fair value of the agreements being $791,000
and  $639,000  at  June  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 operations.  The
net  decrease  in  interest income related to the interest rate cap agreements
was approximately $201,000 and $283,000 for the six months ended June 30, 1997
and  1996  respectively.

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

<CAPTION>



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

1997         5.0  -  9.0%   $  86,650
1998         5.0  -  12.5     156,400
1999        7.25  -  11.0      52,422
2000         7.5  -  9.5       11,265
                            ---------
                            $ 306,737
                            =========
</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  and  300  basis  points  on  a  quarterly basis.  This process
discloses  the  effects  on  market  values  of  the  assets  and liabilities,
unrealized  gains  and  losses,  including off-balance sheet items, as well as
potential  changes  in  net  interest  income.

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

     Coastal  is  exposed to credit loss in the event of nonperformance by the
counterparty  to  the  swap  or  cap  and  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 5,122,618 and 5,022,070 for the three
months  ended  June  30, 1997 and 1996, respectively (unaudited) and 5,110,292
and  5,016,086  for  the six months ended June 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  June  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)         $156,185   5.49%  $ 113,760     4.00%  $ 42,425     1.49%
Tier 1 risk-based      156,185  11.25      55,548     4.00    100,637     7.25 
Total risk-based       163,047  11.74     111,097     8.00     51,950     3.74 
</TABLE>



     At  June  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 by Coastal, in
addition,  approximately  $693,000  of  operating assets were purchased in the
transaction.



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

Financial  Condition

     Total  assets  increased  3.1% or $88.2 million from December 31, 1996 to
June  30, 1997.  The net increase resulted primarily from an increase in loans
receivable  of  $106.9  million,  an  increase  in  Federal funds sold of $6.3
million,  an  increase  in  property  and equipment of $5.4 million, offset by
decreases  of  $21.7  million  and  $5.8 million in mortgage-backed securities
held-to-maturity  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
will be finalized during the third quarter of 1997, will consolidate Coastal's
administrative,  primarily  lending  and  mortgage  servicing  offices.    The
decrease  in  mortgage-backed securities held-to-maturity was due to principal
payments  received.

     Savings  deposits  increased  slightly  by  4.1%  or  $53.9  million from
December  31,  1996  to June 30, 1997.  This increase was primarily due to the
branch  acquisition  of  $54.6 million in deposits completed on June 21, 1997,
offset  by  a  slight  decrease  in  existing deposits.  Securities sold under
agreements to repurchase increased 3.3% or $31.4 million and advances from the
FHLB  decreased  by  $11.8  million or 2.9% from December 31, 1996 to June 30,
1997.    The reallocation of the borrowings outstanding during such period was
directly attributable to Coastal's change in funding sources to take advantage
of  more favorable interest rates. Stockholders' equity increased 4.8% or $4.5
million  from  December 31, 1996 to June 30, 1997 as a result primarily of net
income  offset  by  a  $481,000  increase in the unrealized loss on securities
available-for-sale  and  by  dividends  declared.

Results  of  Operations  for  the  Six  Months  Ended June 30, 1997 and 1996

     General

     For the six months ended June 30, 1997, net income before preferred stock
dividends  increased 3.6% to $7.4 million from $7.1 million for the six months
ended  June  30, 1996.  Net interest income increased slightly by $767,000 for
the  six  months  ended June 30, 1997 as compared to the six months ended June
30, 1996. Noninterest income decreased during such period by $86,000 primarily
due  to the $521,000 nonrecurring gain on the sale of a branch office that was
recorded  during  the  six  months  ended  June 30, 1996.  Noninterest expense
increased  by  $414,000  and  the provision for Federal income taxes increased
$139,000.

     Interest  Income

     Interest  income  for  the  six months ended June 30, 1997 increased $2.7
million  or  2.8%  from  the six months ended June 30, 1996.  The increase was
primarily  due  to  an  increase  of  $4.7 million in interest earned on loans
receivable  over the prior comparable period.  The increase in interest income
on  loans  receivable  was  due  to  a  $119.2 million increase in the average
balance  of  loans receivable offset by a slight decrease in the average yield
from  8.50% for the six months ended June 30, 1996 to 8.44% for the six months
ended  June  30,  1997. This increase was offset by a $1.9 million decrease in
interest income on mortgage-backed securities primarily due to a lower average
balance and a decrease in the average yield on mortgage-backed securities from
6.15% for the six months ended June 30, 1996 to 6.09% for the six months ended
June 30, 1997 and a $35,000 decrease in interest income on Federal funds sold,
certificates  of deposit and other investments.  Total interest-earning assets
for  the  six  months ended June 30, 1997 averaged $2.8 billion as compared to
$2.7  billion  for  the  six  months  ended  June  30,  1996.

<PAGE>
     Interest  Expense

     Interest  expense  on  interest-bearing liabilities was $70.6 million for
the  six months ended June 30, 1997, as compared to $68.6 million for the same
period  in  1996.  The increase in interest expense was due to a $73.2 million
increase  in  the  average balance of interest-bearing liabilities during such
period  at the average rate paid of 5.38% for both the six month periods ended
June  30, 1997 and 1996.  The increase in average interest-bearing liabilities
consisted  of a $37.7 million increase in interest-bearing savings deposits, a
$21.6  million  increase  in securities sold under agreements to repurchase, a
$13.6  million  increase  in  FHLB advances and a $326,000 increase in Federal
funds  purchased.

     Net  Interest  Income

     Net  interest  income was $28.9 million for the six months ended June 30,
1997  as  compared to $28.1 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 1.73% for the six months ended June 30, 1996 to 1.75%
for  the  six  months  ended  June  30,  1997.  Management  also calculates an
alternative  Spread  which  includes noninterest-bearing deposits.  Under this
calculation,  the  alternative  Spreads for the six months ended June 30, 1997
and  1996 were 1.91% and 1.90%, respectively. Net interest margin (Margin) was
2.07%  for  both  the  six  month periods ended June 30, 1997 and 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 7.11% for the six months ended June 30,
1996  to  7.13%  for  the  same  period  in  1997.    In addition, average net
interest-earning  assets decreased $4.6 million from the six months ended June
30,  1996  to  the  six  months  ended  June  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, 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 $900,000 for the six months ended June 30,
1997  as compared to $1.0 million for the six months ended June 30, 1996.  The
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  0.51%  at  June  30,  1997 and 0.56% at June 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  six  months  ended  June 30, 1997, noninterest income decreased
$86,000  or  2.8% to $3.0 million, compared to $3.1 million for the six months
ended  June 30, 1996.  The decrease in noninterest income was primarily due to
the  $521,000 nonrecurring gain on the sale of a branch office recorded during
the  six  months ended June 30, 1996.  This decrease was somewhat offset by an
increase  of $285,000 in loan fees and service charges and a $134,000 increase
in  other  noninterest  income.  The increase in loan fees and service charges
was  due  primarily  to  an increase of $245,000 in service charges on deposit
accounts.

     Noninterest  Expense

     For  the  six  months  ended June 30, 1997, noninterest expense increased
$414,000 or 2.2% to $19.5 million compared to $19.0 million for the six months
ended  June  30, 1996.  Compensation, payroll taxes and other benefits as well
as office occupancy expense increased $1.2 million and $428,000, respectively,
from the six months ended June 30, 1996 to the six months ended June 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,  real  estate owned expenses increased by $96,000. 
These  increases  were  somewhat  offset  by  a $932,000 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 $184,000 decrease in data processing expenses (due
in  part  to the 1996 data processing conversion expenses incurred), a $15,000
decrease  in  the  amortization  of  goodwill and a $191,000 decrease in other
noninterest  expenses.

     Provision  for  Federal  Income  Taxes

     For  the six months ended June 30, 1997, the provision for Federal income
taxes  was $4.2 million compared to $4.0 million for the six months ended June
30,  1996  at  an  average  effective  rate  of  approximately  36.5%.

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

     General

     For  the  three  months  ended June 30, 1997, net income before preferred
stock dividends decreased 5.3% to $3.5 million from $3.7 million for the three
months  ended  June  30,  1996.  Net interest income decreased $34,000 for the
three  months  ended  June 30, 1997 as compared to the three months ended June
30,  1996.  Noninterest  income  decreased  during  such  period  by  $260,000
primarily due to the $521,000 nonrecurring gain on the sale of a branch office
that  was  recorded  during  the three months ended June 30, 1996. Noninterest
expense  decreased  by  $3,000  and  the  provision  for  federal income taxes
decreased  by  $99,000.

     Interest  Income

     Interest  income  for the three months ended June 30, 1997 increased $1.7
million  or  3.5% from the three months ended June 30, 1996.  The increase was
primarily  due  to  an  increase  of  $2.4 million in interest earned on loans
receivable over the prior comparable quarter.  The increase in interest income
on  loans  receivable  was  due  to  a  $113.2 million increase in the average
balance  of  loans receivable offset by a slight decrease in the average yield
from  8.49%  for  the  three months ended June 30, 1996 to 8.47% for the three
months  ended  June 30, 1997.  This increase was offset by a $604,000 decrease
in  interest  income  on  mortgage-backed  securities primarily due to a lower
average  balance  and  a  $55,000 decrease in interest income on Federal funds
sold,  certificates  of deposit and other investments.  Total interest-earning
assets  for  the  three  months  ended  June 30, 1997 averaged $2.8 billion as
compared  to  $2.7  billion  for  the  three  months  ended  June  30,  1996.

     Interest  Expense

     Interest  expense  on  interest-bearing liabilities was $35.6 million for
the  three  months  ended  June 30, 1997, as compared to $33.9 million for the
same  period  in  1996.    The increase in interest expense was due to a $68.8
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  5.32% for the three months ended June 30, 1996 to 5.45% for
the  three  months  ended  June  30,  1997.    The  increase  in  average
interest-bearing  liabilities  consisted  of  a  $37.9  million  increase  in
securities  sold  under  agreements to repurchase, a $36.8 million increase in
interest-bearing  savings  deposits,  a  $648,000  increase  in  Federal funds
purchased  offset  by  a  $6.5  million  decrease  in  FHLB  advances.

     Net  Interest  Income

     Net interest income was $14.3 million for the three months ended June 30,
1997  and for the same period in 1996.  Net interest margin (Margin) decreased
from  2.10%  for  the  three months ended June 30, 1996 to 2.05% for the three
months  ended  June  30,  1997.    Margin  represents net interest income as a
percentage  of  average  interest-earning  assets.    Net interest rate spread
(Spread),  defined  to  exclude  noninterest-bearing  deposits, decreased from
1.76%  for  the three months ended June 30, 1996 to 1.71% for the three months
ended  June  30, 1997.  Management also calculates an alternative Spread which
includes  noninterest-bearing  deposits.    Under  this  calculation,  the
alternative  Spreads  for  the  three months ended June 30, 1997 and 1996 were
1.88%  and 1.93%, 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 primarily due to the
increase  in  the  average interest rates paid on interest-bearing liabilities
from  5.32%  for  the  three  months ended June 30, 1996 to 5.45% for the same
period in 1997, offset by an increase in the average yield on interest-earning
assets  from  7.08%  for the three months ended June 30, 1996 to 7.16% for the
same  period  in  1997.    In  addition,  average  net interest-earning assets
decreased  $6.3 million from the three months ended June 30, 1996 to the three
months  ended  June  30,  1997.

     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 the
London  Interbank  Offered  Rate  (LIBOR) and local and regional prime rates. 
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 $450,000 for the three months ended June
30,  1997  and  1996.   The allowance for loan losses as a percentage of total
loans  was  0.51%  at  June  30,  1997 and 0.56% at June 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 June 30, 1997, noninterest income decreased
$260,000  or  14.4%  to  $1.6  million, compared to $1.8 million for the three
months ended June 30, 1996.  The decrease in noninterest income was due to the
$521,000  nonrecurring gain on the sale of a branch office recorded during the
three  months  ended  June  30, 1996.  This decrease was somewhat offset by an
increase  of  $186,000 in loan fees and service charges and a $77,000 increase
in  other  noninterest  income.  The increase in loan fees and service charges
was  due  to  an  increase of $141,000 in service charges on deposit accounts.


<PAGE>
     Noninterest  Expense

     For  the  three months ended June 30, 1997, noninterest expense decreased
$3,000 from the three months ended June 30, 1996.  Compensation, payroll taxes
and  other benefits as well as office occupancy expense increased $474,000 and
$234,000, respectively, from the three months ended June 30, 1996 to the three
months ended June 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, real estate owned expenses
increased  by  $110,000.    These increases were somewhat offset by a $457,000
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  $99,000  decrease in data processing expenses (due in part to the 1996 data
processing  conversion  expenses  incurred),  a  $4,000  decrease  in  the
amortization of goodwill and a $261,000 decrease in other noninterest expense.

     Provision  for  Federal  Income  Taxes

     For  the  three  months  ended  June  30, 1997, the provision for Federal
income  taxes  was  $2.0 million compared to $2.1 million for the three months
ended  June  30,  1996  at  an  average effective rate of approximately 36.5%.

     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  June  30,  1997,  Coastal had binding commitments to originate or purchase
loans  totaling  approximately  $55.6  million  and  had  $51.1  million  of
undisbursed  loans in process. Scheduled maturities of certificates of deposit
during  the  12  months following June 30, 1997 totaled $717.5 million at June
30,  1997. Management believes that Coastal has adequate resources to fund all
of  its  commitments.

     As  of June 30, 1997, Coastal operated 37 retail banking offices in Texas
cities,  including  Houston,  Austin,  Corpus  Christi and small cities in the
south  east 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 as filed with the Securities
and  Exchange  Commission  on  March  26,  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

     On  April  24,  1997,  at  the  Annual Meeting of Stockholders of Coastal
Bancorp,  Inc.  (the  Company),  the  stockholders voted upon and approved the
election of two directors and the ratification of the appointment of KPMG Peat
Marwick  LLP  as  the Company's independent auditors for the fiscal year ending
December  31,  1997.    With respect to such matters, the results of the votes
were  as  follows:

     1)          Election  of  directors:
                                 Number of Votes
                            In favor             Withheld

Manuel  J.  Mehos            3,568,294            4,500
James  C.  Niver             3,568,294            4,500

     2)      Ratification of KPMG Peat Marwick LLP as the Company's independent
auditors:

Number  of  votes  in  favor:            3,568,644
Number  of  votes  against:                  2,325
Number  of  votes  abstaining:               1,825

Item  5.          Other  Information

     Not  applicable.

Item  6.          Exhibits  and  Reports  on  Form  8-K

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

b)      Form 8-K filed on May 5, 1997 to disclose an increase in the dividends
declared  on  common  stock from $0.10 to $0.12 per common share for the first
quarter  of  1997  for shareholders of record on May 15, 1997, payable on June
15,  1997.

                                  SIGNATURES


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




Dated:          8/8/97                  By/s/   Manuel J. Mehos
                                                Manuel  J.  Mehos
                                                Chairman  of  the  Board
                                                Chief  Executive  Officer









Dated:       8/8/97                     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 as filed
with  the  Securities  and  Exchange  Commission  on  March  26,  1997.