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,  1996

          [        ]     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.)

                         8 Greenway Plaza, Suite 1500
                              Houston, Texas 77046
                   (Address of principal executive office)

                                 (713) 623-2600
                       (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: 4,963,859 AS OF SEPTEMBER 30, 1996


<PAGE>
                            COASTAL BANCORP, INC.

                              Table of Contents



PART  I.          FINANCIAL  INFORMATION
<TABLE>

<CAPTION>



<S>     <C>                                                                             <C>

Item 1  Financial Statements


Consolidated Statements of Financial Condition at September 30, 1996 (unaudited) and
December 31, 1995                                                                          1

Consolidated Statements of Income for the Nine-Month Periods Ended September 30, 
1996 and 1995 (unaudited)                                                                  2

Consolidated Statements of Income for the Three-Month Periods Ended September 30,
1996 and 1995 (unaudited)                                                                  3

Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 
1996 and 1995 (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,
                                                                      1996            1995
                                                             ---------------  -------------
ASSETS                                                             (Unaudited)
--------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>

Cash and amounts due from depository institutions             $        23,016  $       9,870
Certificates and time deposits                                             --            174
                                                              ---------------  -------------

 Cash and cash equivalents                                             23,016         10,044
Loans receivable (note 4)                                           1,210,054      1,098,555
Mortgage-backed securities held-to-maturity (note 3)                1,354,523      1,395,753
Mortgage-backed securities available-for-sale, at market value        179,771        186,414
U.S. Treasury security available-for-sale, at market value                 11          3,997
Mortgage loans held for sale                                            1,168            731
Accrued interest receivable                                            14,772         15,538
Property and equipment                                                 14,114         13,439
Stock in the Federal Home Loan Bank of Dallas (FHLB)                   25,594         21,759
Goodwill                                                               15,968         17,972
Purchased loan servicing rights                                         6,987          8,140
Capitalized excess servicing fees                                         144            183
Prepaid expenses and other assets                                      13,326         14,003
                                                              ---------------  -------------
                                                              $     2,859,448  $   2,786,528
                                                              ===============  =============
</TABLE>


<TABLE>

<CAPTION>

     LIABILITIES  AND  STOCKHOLDERS'  EQUITY


<S>                                                            <C>          <C>

Liabilities:
 Savings deposits (note 5)                                     $1,308,518   $1,287,084 
 Advances from the FHLB (note 6)                                  466,911      312,186 
 Securities sold under agreements to repurchase (note 6)          879,115      993,832 
 Senior notes payable (note 7)                                     50,000       50,000 
 Advances from borrowers for taxes and insurance                   12,556        6,510 
 Other liabilities and accrued expenses                            22,971       16,487 
   Total liabilities                                            2,740,071    2,666,099 
                                                               -----------  -----------

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;
   4,963,859 and 4,957,870 shares issued and outstanding in
   1996 and 1995                                                       50           50 
 Additional paid-in capital                                        32,563       32,492 
 Retained earnings                                                 61,870       59,631 
 Unrealized gain (loss) on securities available-for-sale           (3,856)        (494)
   Total stockholders' equity                                      90,627       91,679 
                                                               -----------  -----------
                                                               $2,859,448   $2,786,528 
                                                               ===========  ===========
</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,
                                                                       -------------------      
                                                                        1996            1995
                                                               -------------------  --------
                                                                            (Unaudited)
<S>                                                                    <C>              <C>

Interest income:
 Mortgage-backed securities                                           $   71,826   $ 76,708
 Loans receivable                                                         70,721     44,810
 Investment securities, certificates, time deposits and other investments  1,111      1,167
                                                              -------------------  --------
                                                                         143,658    122,685
                                                              -------------------  --------

Interest expense:
 Savings deposits                                                         44,687     41,512
 Other borrowed money                                                     38,157     32,801
 Senior notes payable                                                      3,750      1,250
 Advances from the FHLB:
   Short-term                                                              4,979        877
   Long-term                                                              11,264     16,158
                                                              -------------------  --------
                                                                         102,837     92,598
                                                              -------------------  --------

   Net interest income                                                    40,821     30,087
Provision for loan losses (note 4)                                         1,475        967
   Net interest income after provision for loan losses                    39,346     29,120
                                                             -------------------  --------

Noninterest income:
 Loan fees and service charges                                             3,864      2,416
 Loan servicing income                                                     2,313      2,669
 Gain on sale of branch office (note 11)                                     521         --
 Gain(loss) on sales of mortgage-backed securities available-for-sale, net    (4)        --
 Other                                                                        321        323
                                                               -------------------  --------
                                                                            7,015      5,408
                                                              -------------------  --------

Noninterest expense:
 Compensation, payroll taxes and other benefits                            12,183      8,580
 Office occupancy                                                           4,360      3,228
 Insurance premiums                                                         2,105      2,379
 Amortization of purchased loan servicing rights                            1,153      1,121
 Data processing                                                            1,788      1,277
 Amortization of goodwill                                                   1,340        871
 Real estate owned                                                            665        290
 Other                                                                      6,189      4,629
 SAIF insurance special assessment (note 13)                                7,455         --
                                                               -------------------  --------
                                                                           37,238     22,375
                                                               -------------------  --------

       Income before provision for Federal income taxes                     9,123     12,153

Provision for Federal income taxes                                          3,454      4,506
                                                              -------------------  --------
     Net income before preferred stock dividends                            5,669      7,647

Preferred stock dividends of Coastal Banc ssb                               1,941      1,941
                                                               -------------------  --------
     Net income after preferred stock dividends                $            3,728   $  5,706
                                                               ===================  ========
Net earnings per share (note 9)                                $             0.74   $   1.14
                                                               ===================  ========
</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,
                                                                       --------------------  
                                                                         1996           1995
                                                                       --------------------  
                                                                              (Unaudited)

<S>                                                                     <C>              <C>

Interest income:
 Mortgage-backed securities                                            $    23,516   $26,023
 Loans receivable                                                           23,856    16,882
 Investment securities, certificates, time deposits and other investments      405       391
                                                               --------------------  -------
                                                                            47,777    43,296
                                                               --------------------  -------

Interest expense:
 Savings deposits                                                           14,920    14,496
 Other borrowed money                                                       11,440    11,529
 Senior notes payable                                                        1,250     1,250
 Advances from the FHLB:
   Short-term                                                                2,034       355
   Long-term                                                                 4,584     5,229
                                                              --------------------  -------
                                                                            34,228    32,859
                                                              --------------------  -------

   Net interest income                                                      13,549    10,437
Provision for loan losses (note 4)                                             450       237
   Net interest income after provision for loan losses                      13,099    10,200
                                                              --------------------  -------

Noninterest income:
 Loan fees and service charges                                               1,401       832
 Loan servicing income                                                         747       856
 Other                                                                          75       128
                                                               --------------------  ------
                                                                             2,223     1,816
                                                               --------------------  ------
Noninterest expense:
 Compensation, payroll taxes and other benefits                              4,077     2,882
 Office occupancy                                                            1,524     1,108
 Insurance premiums                                                            628       825
 Amortization of purchased loan servicing rights                               339       430
 Data processing                                                               494       416
 Amortization of goodwill                                                      443       293
 Real estate owned                                                             279       110
 Other                                                                       2,148     1,736
 SAIF insurance special assessment (note 13)                                 7,455        --
                                                               --------------------  -------
                                                                            17,387     7,800
                                                               -------------------  --------

       Income (loss) before provision for Federal income taxes              (2,065)    4,216

Provision (benefit) for Federal income taxes                                  (636)    1,521
                                                              --------------------  --------
     Net income (loss) before preferred stock dividends                     (1,429)    2,695

Preferred stock dividends of Coastal Banc ssb                                  647       647
                                                               --------------------  -------
     Net income (loss) after preferred stock dividends         $            (2,076)  $ 2,048
                                                                          ========    ======

Net earnings (loss) per share (note 9)                         $             (0.42)  $  0.41
                                                                          ========    ======
</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,
                                                                         -------------------       
                                                                                1996             1995
                                                                         -------------------  ----------
                                                                             (Unaudited)

<S>                                                                      <C>             <C>

Cash flows from operating activities:
 Net income before preferred stock dividends                           $   5,669   $   7,647 
 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                                  4,490      3,632 
 Net premium amortization (discount accretion)                              788        (435)
 Provision for loan losses                                                1,475         967 
 Amortization of goodwill                                                 1,340         871 
 Originations and purchases of mortgage loans held for sale             (17,094)     (8,616)
 Sales of mortgage loans held for sale                                    16,642       7,935 
 Loss on sales of mortgage-backed securities available-for-sale                4          -- 
 Gain on sale of branch office                                              (521)         -- 
 Decrease (increase) in:
   Accrued interest receivable                                               771     (2,933)
   Other, net                                                             11,022       8,028 
 Stock dividends from the FHLB                                              (911)      (970)
                                                             -------------------  ----------

   Net cash provided by operating activities                              23,675      16,126 
                                                             -------------------  ----------

Cash flows from investing activities:
 Purchases of mortgage-backed securities                                     --      (1,598)
 Purchase of U.S. Treasury security available-for-sale                       (11)         -- 
 Principal repayments on mortgage-backed securities                       40,731      24,023 
 Principal repayments on mortgage-backed securities
   available-for-sale                                                        562          -- 
 Proceeds from maturity of U.S. Treasury security available-for-sale       4,000          -- 
 Proceeds from sales of mortgage-backed securities available-for-sale        860          -- 
 Purchases of loans receivable                                         (160,362)   (211,191)
 Net (increase) decrease in loans receivable                             44,601      (7,113)
 Net purchases of property and equipment                                 (2,807)     (2,170)
 Purchase of FHLB stock                                                   5,000      (2,984)
 Proceeds from sales of FHLB stock                                       (7,924)      3,245 
 Net cash and cash equivalents received in branch office
   sales/acquisitions                                                    11,745          -- 
                                                             -------------------  ----------
                                                                                         -- 
   Net cash used by investing activities                                (63,605)   (197,788)
                                                             -------------------  ----------

</TABLE>



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

<CAPTION>



                                                                        Nine Months Ended
                                                                          September 30,
                                                                       -------------------        
                                                                     1996              1995
                                                           -------------------  ------------
                                                                           (Unaudited)

<S>                                                                <C>                   <C>

Cash flows from financing activities:
 Net increase in savings deposits                            $       10,206   $    18,326 
 Advances from the FHLB                                           2,709,932       286,924 
 Principal payments on advances from the FHLB                    (2,555,207)     (274,414)
 Securities sold under agreements to repurchase                   6,885,085     6,793,888 
 Purchases of securities sold under agreements to repurchase     (6,999,802)   (6,692,971)
 Proceeds from issuance of senior notes payable, net                     --        47,635 
 Exercise of stock options for purchase of common stock, net             71            56 
 Net increase in advances from borrowers for taxes and insurance      6,046         6,476 
 Dividends paid                                                      (3,429)       (3,130)
                                                           -------------------  ------------
   Net cash provided by financing activities                         52,902       182,790 
                                                           -------------------  ------------

   Net increase in cash and cash equivalents                         12,972         1,128 
 Cash and cash equivalents at beginning of period                    10,044         6,388 
                                                           -------------------  ------------
 Cash and cash equivalents at end of period              $           23,016   $     7,516 
                                                           ===================  ============

 Supplemental schedule of cash flows--interest paid      $          105,311   $    91,221 
                                                           ===================  ============

 Supplemental schedule of noncash investing and financing activities:
   Foreclosures of loans receivable                      $            3,614   $     2,304 
                                                           ===================  ============

   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>


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


6

(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  period  ended  September  30,  1996 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  ssb  and  subsidiaries  (collectively,  Coastal).    Coastal  Banc ssb's
subsidiaries  include  CoastalBanc  Financial  Corp.,  CoastalBanc  Investment
Corporation,  CBS  Builders,  Inc.,  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.

(3)          MORTGAGE-BACKED  SECURITIES  HELD-TO-MATURITY

     Mortgage-backed  securities  held-to-maturity  at  September  30,  1996
(unaudited)  are  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>

REMICS - Agency           $    936,290  $       4,444  $     (36,867)  $    903,867
REMICS - Non-agency            281,154            792        (12,947)       268,999
FNMA certificates               81,204             28         (1,668)        79,564
GNMA certificates               35,205             33            (37)        35,201
Non-agency securities           20,627            247           (112)        20,762
Interest-only securities            43             --             (8)            35
                                                                          ---------
                          $  1,354,523  $       5,544  $     (51,639)  $  1,308,428
                             =========     ==========     ===========     =========
</TABLE>



     Mortgage-backed  securities  held-to-maturity at December 31, 1995 are 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>

REMICS - Agency           $    948,027  $       4,298  $     (13,430)  $    938,895
REMICS - Non-agency            291,124          1,039         (6,641)       285,522
FNMA certificates               92,977             44           (232)        92,789
GNMA certificates               39,520            618             --         40,138
Non-agency securities           24,049            300            (93)        24,256
Interest-only securities            56             --             (6)            50
                                                                          ---------
                          $  1,395,753  $       6,299  $     (20,402)  $  1,381,650
                             =========     ==========     ===========     =========
</TABLE>


12
                                                                   (continued)
(4)          LOANS  RECEIVABLE

     Loans  receivable  at  September  30,  1996  and December 31, 1995 are as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                                                                                     September 30, 1996      December 31, 1995
                                                                                     -------------------     ------------------
                                                                       (Unaudited)
<S>                                                   <C>           <C>                  <C>  <C>

Real estate mortgage loans:
 First-lien mortgage, primarily residential                  $         793,434   $   742,880 
 Multifamily                                                           122,530        95,297 
 Residential construction                                               80,952        33,935 
 Acquisition and development                                            31,677        15,517 
 Commercial                                                            112,451       122,622 
 Commercial construction                                                 6,778            -- 
Commercial loans, secured by residential mortgage loans held for sale   47,352        48,822 
Commercial loans, secured by purchased loan servicing rights            24,895        21,548 
Commercial, financial and industrial                                    21,424        19,860 
Loans secured by savings deposits                                        8,437         8,292 
Consumer and other loans                                                14,096        10,316 
                                                                ---------------   ----------
                                                                     1,264,026     1,119,089 

Loans in process                                                       (45,498)     (11,526)
Allowance for loan losses                                               (6,625)      (5,703)
Unearned loan fees                                                      (2,235)      (1,939)
Premium (discount) to record purchased loans, net                          386       (1,366)
                                                                    -----------     --------

                                                             $       1,210,054   $ 1,098,555 
                                                                 =============     =========

Weighted average yield                                                    8.27%        8.52%
                                                                 =============     =========

</TABLE>



     At  September  30, 1996, Coastal had outstanding commitments to originate
or  purchase  $59.0  million  of  real estate mortgage and other loans and had
commitments  under  lines  of  credit  to  originate  construction  and  other
commercial  loans  of  approximately $90.7 million.  In addition, at September
30,  1996,  Coastal  had  letters  of  credit  of  $1.3  million outstanding. 
Management  anticipates  the  funding  of  these  commitments  through  normal
operations.

     At September 30, 1996, the carrying value of loans that are considered to
be  impaired  totaled  approximately $603,000 (all of which are on nonaccrual)
and  the  related  allowance  for  loan losses on those impaired loans totaled
$372,000.    The average recorded investment in impaired loans during the nine
months  ended September 30, 1996 was $856,000.  There were no loans considered
impaired  during  the  nine  months  ended  September  30,  1995.


<PAGE>
     An  analysis  of  activity  in the allowance for loan losses for the nine
months  ended  September  30,  1996  and  1995  is  as follows (in thousands):
<TABLE>

<CAPTION>



                                   Nine months ended September 30,
                                  ---------------------------------     
                                                1996                  1995
                                  ---------------------------------  -------
                                             (Unaudited)
<S>                               <C>                                <C>

Balance, beginning of period      $                          5,703   $2,158 
Provision for loan losses                                    1,475      967 
Charge-offs, net of recoveries                                (553)    (321)
Acquisition allowance adjustment                                --    1,043 
                                  ---------------------------------  -------

Balance, end of period            $                          6,625   $3,847 
                                  =================================  =======
                                </TABLE>



     Coastal  services  for  others loans receivable which are not included in
the  Consolidated  Financial Statements.  The total amounts of such loans were
$802.3  million  and  $900.7  million  at September 30, 1996 and  December 31,
1995,  respectively.

     Coastal adopted the Financial Accounting Standards Board's Statement 122,
"Accounting  for  Mortgage  Servicing Rights -- an amendment of FASB Statement
No.  65"  (Statement 122) effective January 1, 1996.  Statement 122 eliminates
the accounting distinction between rights to service mortgage loans for others
that  are  acquired  through  loan  origination  activities and those acquired
through  purchase  transactions.    Under  Statement  122, if Coastal sells or
securitizes  loans  and  retains  the  mortgage  servicing  rights, Coastal is
required  to  allocate  a  portion  of  the  cost of the mortgage loans to the
mortgage  servicing  rights  and  recognize  the  cost allocated as a separate
asset.    The  adoption  of  Statement 122 had no material impact on Coastal's
consolidated  financial  statements  for  the  nine months ended September 30,
1996.


<PAGE>
(5)          SAVINGS  DEPOSITS

     Savings  deposits,  their  stated  rates and the related weighted average
interest  rates  at September 30, 1996 and December 31, 1995 are summarized as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



                               Stated Rate        September 30, 1996      December 31, 1995
                             ----------------     -------------------     ------------------
                                                     (Unaudited)
<S>                                  <C>               <C>  <C>                  <C>  <C>

Noninterest-bearing checking          0.00%  $              91,985   $             81,207 
NOW accounts                     1.50  -  2.00              51,867                 47,476 
Savings accounts                 2.28  -  2.75              25,773                 22,374 
Money market demand accounts     2.90  -  4.65             154,179                165,214 
                                                -------------------     ------------------

                                                           323,804                316,271 
                                                -------------------     ------------------

Certificate accounts             2.00  -  2.99              14,949                 10,915 
                                 3.00  -  3.99               1,985                  3,472 
                                 4.00  -  4.99              71,532                108,845 
                                 5.00  -  5.99             757,889                613,098 
                                 6.00  -  6.99             116,858                214,534 
                                 7.00  -  7.99              16,288                  8,776 
                                 8.00  -  8.99               3,759                  4,893 
                                 9.00  -  9.99               1,399                  1,620 
                                10.00  -  10.99                262                  1,297 
                                11.00  -  11.99                 16                  3,718 
                                                           984,937                971,168 
                                                 -------------------     ------------------
Discount to record savings deposits
at fair value, net                                            (223)                  (355)
                                                 -------------------     ------------------

                                             $           1,308,518   $          1,287,084 
                                                 ===================     ==================

Weighted average rate                                        4.60%                  4.82%
                                                 ===================     ==================
</TABLE>



     The scheduled maturities of certificate accounts outstanding at September
30,  1996  were  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



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

 0 to 12 months   $              746,128
 12 to 24 months                 170,176
 24 to 36 months                  40,380
 36 to 48 months                  21,209
 48 to 60 months                   6,840
  Over 60 months                     204
                     -------------------
                  $              984,937
                     ===================
</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, 1996 and December 31, 1995 were
5.39%  and  5.78%, respectively.  The stated interest rates on securities sold
under  agreements  to  repurchase  ranged from 5.13% to 5.46% at September 30,
1996.

     (b)       The weighted average interest rate on advances from the FHLB at
September  30, 1996 and December 31, 1995 were 5.54% and 5.88%, respectively. 
Advances  and  related interest rates and maturities at September 30, 1996 and
December  31,  1995  are  summarized  as  follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



Maturity  Interest rates                 September 30, 1996     December 31, 1995
--------  ---------------                ------------------     -----------------
                           (Unaudited)
<S>       <C>              <C>           <C>                 <C>  <C>

1996       4.23  -  8.06%  $                        212,561  $            225,445
1997       4.93  -  8.31                             34,021                24,293
1998      5.25   -  6.96                             19,712                16,221
1999       4.95  -  8.11                            170,981                19,916
2000       5.57  -  7.76                              8,395                 8,614
2001       6.03  -  6.46                              8,901                 9,025
2004                6.52                              3,284                 3,526
2006                6.91                              3,180                    --
2007       6.80  -  7.94                                492                   270
2009                8.25                              4,731                 4,876
2011                7.24                                653                    --
                                         ------------------     -----------------

                           $                        466,911  $            312,186
                                         ==================     =================
</TABLE>



     FHLB  advances  are  secured  by  certain  first-lien  mortgage loans and
mortgage-backed  securities.

(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, 1996, Coastal had interest rate swap and cap
agreements  totaling  $75.6  million  and  $422.0  million,  respectively.


<PAGE>
     The  terms  of the interest rate swap agreements outstanding at September
30,  1996 (unaudited) and December 31, 1995 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, 1996:
1996                    $     7,300  Three-month  6.130%          5.500%  $           (2)
                              2,750  Six-month    5.630           5.711                2 
1997                          5,000  One-month    4.990           5.500               35 
                              6,000  Three-month  6.493           5.500              (29)
1998                          4,400  Three-month  6.709           5.500              (35)
1999                         14,600  Three-month  6.926           5.500             (177)
2000                          4,800  Three-month  6.170           5.563               71 
                              2,695  Three-month  6.000           5.508               49 
2005                         28,077  Three-month  6.500           5.563              958 
                           --------                                                      
                        $    75,622                                       $          872 
                           ========                                       ===============

At December 31, 1995:
1996                    $     7,300  Three-month  6.130%          5.875%  $          (46)
                              2,750  Six-month    5.630           5.676               (7)
1997                          5,000  One-month    4.990           5.938               26 
                              6,000  Three-month  6.493           5.875             (124)
1998                          4,400  Three-month  6.709           5.875             (150)
1999                         14,600  Three-month  6.926           5.875             (696)
2000                          4,800  Three-month  6.170           5.813             (104)
                              2,800  Three-month  6.000           5.938              (40)
2005                         28,077  Three-month  6.500           5.938           (1,106)
                           --------                                       ---------------
                        $    75,727                                       $       (2,247)
                           ========                                       ===============
</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 receive rate on all of the
interest rate swap agreements was approximately 5.51% and the weighted average
interest  payment  rate  on  all  of  the  interest  rate  swap agreements was
approximately  6.30% for the nine months ended September 30, 1996. 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  $452,000  for  the nine months ended September 30, 1996 and the
net  interest  income  was  approximately  $23,000  for  the nine months ended
September  30,  1995.    Coastal  had  pledged  approximately  $6.2 million of
mortgage-backed  securities  to  secure  interest  rate  swap  agreements  at
September  30,  1996.

     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 4.5% 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 $1.4
million  and  $2.5  million  at  September  30,  1996  and  December 31, 1995,
respectively,  with  the  estimated  fair  value  of the agreements being $1.6
million  and  $1.6  million  at  September  30,  1996  and  December 31, 1995,
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 $379,000 for the nine months ended September
30,  1996  and  the net increase in interest income was approximately $645,000
for  the  nine  months  ended  September  30,  1995.

     Interest  rate cap agreements outstanding at September 30, 1996 expire as
follows  (dollars  in  thousands):
<TABLE>

<CAPTION>



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

1996                  4.5%  $  48,000
1997          5.0  -  9.0     195,650
1998         5.0  -  12.5     152,800
1999        7.25  -  11.0      22,542
2000                  9.5       3,000
                            ---------
                            $ 421,992
                            =========
</TABLE>



     Market  risk,  or  the  risk  of loss due to movement in market prices or
rates,  is  quantified by Coastal through a risk monitoring process of marking
to  market  the portfolio to expected market level changes in an instantaneous
shock  of  plus  and  minus  200 basis points on a 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.

(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 are 5,025,955 and 4,995,012 for the three
months  ended  September  30,  1996  and  1995,  respectively  (unaudited) and
5,019,399 and 4,988,206 for the nine months ended September 30, 1996 and 1995,
respectively  (unaudited).
13

(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,  1996,  the  Bank's  regulatory capital (unaudited) in
relation  to  its  current  existing  regulatory  capital  requirements are 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)         $150,137     5.28%  $      113,719     4.00%  $  36,418     1.28%
Tier 1 risk-based      150,137    11.87           50,597     4.00      99,540     7.87 
Total risk-based       156,762    12.39          101,193     8.00      55,569     4.39 
</TABLE>



     At  September  30,  1996,  the  Bank,  according  to  certain  capital
requirements  outlined  by  the  FDIC  was  categorized as "well capitalized".

(11)          SALE  OF  SAN  ANGELO  BRANCH

     On May 24, 1996, Coastal consummated the sale of its San Angelo location,
which  had approximately $14.9 million in deposits, to First State Bank, N.A.,
a subsidiary of Independent Bankshares, Inc., headquartered in Abilene, Texas.
 As  a result of this sale, Coastal recorded a $521,000 gain before applicable
income taxes.  Coastal acquired this location in the 1994 acquisition of Texas
Trust  Savings  Bank,  FSB.

(12)          BRANCH  SWAP

     On  September 5, 1996, Coastal consummated the exchange of certain branch
locations  with  Compass  Bank.    Coastal sold its three San Antonio branches
having  deposits  of approximately $53.8 million to Compass Bank and purchased
the  Compass  Bay  City Branch having deposits of approximately $79.8 million.

(13)          SAVINGS  ASSOCIATION  INSURANCE  FUND  (SAIF) SPECIAL ASSESSMENT

     On  September  30,  1996,  Coastal  recorded  the  one-time  SAIF deposit
insurance  special  assessment  (the  special assessment) of $7.5 million as a
result  of the Deposit Insurance Funds Act of 1996 (the Act) being signed into
law.   The special assessment pursuant to the Act was 65.7 basis points on the
SAIF  deposit  assessment  base as of March 31, 1995.  Other provisions of the
Act  provide for a future reduction of the SAIF deposit insurance premium rate
from  the  current  rate  of 23 basis points to approximately 6.4 basis points
beginning  in  1997.

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

Financial  Condition

     Total  assets  increased  2.6% or $72.9 million from December 31, 1995 to
September  30, 1996.  The net increase resulted primarily from the increase in
loans  receivable  of  $111.5  million  and  an  increase  in amounts due from
depository  institutions  of  $13.0  million,  offset  by  a  decrease  in
mortgage-backed  securities held-to-maturity of $41.2 million due to principal
repayments  received.  The increase in loans receivable from December 31, 1995
to September 30, 1996 consisted primarily of increases of $50.6 million, $27.2
million  and  $18.2  million  in  first-lien  residential  mortgage  loans,
multifamily mortgage loans and residential construction loans (net of loans in
process),  respectively.   The net increase in first-lien residential mortgage
loans  was  due  to  loan  purchases  of  $157.8  million  offset by principal
reductions  and  payoffs.    At  September  30,  1996,  loans  receivable as a
percentage of total assets increased to 42.3% as compared to 39.4% at December
31,  1995  as  part  of  management's  plan  to  increase the loans receivable
portfolio  to  approximately  50%  of  total  assets.

     Savings  deposits  increased  slightly  by  1.7%  or  $21.4  million from
December  31,  1995 to September 30, 1996, primarily due to increased deposits
of  $26.0 million as a result of the branch swap with Compass Bank consummated
on  September  5,  1996,  offset  by decreased deposits of approximately $14.9
million  due  to  the  sale    of the San Angelo  branch  on May 24, 1996, in 
addition to other  increases in net deposits  of $10.3 million.  Advances from
the  FHLB  increased  by  $154.7  million  or  50.0% and securities sold under
agreements  to  repurchase decreased 11.5% or $114.7 million from December 31,
1995 to September 30, 1996.  The reallocation of borrowings during such period
was  directly  attributable  to  Coastal's  change  in funding sources to take
advantage of more favorable interest rates.  The net increase in advances from
the FHLB together with securities sold under agreements to repurchase was used
to  fund the increase in the loans receivable portfolio.  Stockholders' equity
decreased 1.2% or $1.1 million from December 31, 1995 to September 30, 1996 as
a  result  of  net income, which included the $4.8 million after-tax effect of
the  one-time  Savings  Association  Insurance  Fund  (SAIF) deposit insurance
special  assessment (the special assessment), offset by dividends declared and
a  $3.4  million  increase  in  the  unrealized  loss  on  securities
available-for-sale.

Results  of Operations for the Nine Months Ended September 30, 1996 and 1995

     General

     For the nine months ended September 30, 1996, net income before preferred
stock  dividends  and before the after-tax effect of the special assessment of
$4.8  million  increased 37.5% to $10.5 million from $7.6 million for the nine
months  ended September 30, 1995.  Net income before preferred stock dividends
(and  after  the  effect  of  the  special assessment) decreased 25.9% or $2.0
million  for  the  nine  months  ended September 30, 1996 from the nine months
ended September 30, 1995.  Net interest income increased $10.7 million for the
nine  months  ended  September  30,  1996 as compared to the nine months ended
September  30,  1995 as a result of increased interest income of $21.0 million
which  was  partially  offset by increased interest expense of $10.2 million. 
Noninterest income increased during such period by $1.6 million primarily as a
result  of  increased  loan  fees  and service charges of $1.4 million and the
$521,000  gain  on the sale of a branch office, partially offset by a decrease
in  loan  servicing  income  of $356,000.  Noninterest expense before the $7.5
million  special  assessment  increased  by  $7.4  million  primarily  due  to
increased operating expenses as a result of the Texas Capital Bancshares, Inc.
(Texas  Capital)  acquisition  on November 1, 1995.  The increased noninterest
expense was also due to the May 1996 data processing conversion, the June 1996
conversion  of  the  five  former  Texas  Capital  locations  to  the new data
processing system and to overall expenses related to the expansion of the loan
product  base  being  offered  by  Coastal  to  its  customers,  primarily the
continuing  development  of  commercial  business  lending  programs.  Coastal
engaged  in  the data processing system conversion to a PC based client server
technology throughout its branch network to enable the branch offices to offer
a  more  expanded  product  base  (including loan and deposit products) to its
customers  and  to  automate and upgrade the work flow in the customer contact
areas,  allowing  branch  office employees a better opportunity to serve their
customers.    The  cost  during  the  period  related  to  the data processing
conversion  was  approximately  $300,000.    The increased noninterest expense
related  to  the  expansion  of  the  loan  product  base  and  the continuing
development  of  the  commercial  business lending programs has primarily been
staffing  related  and  such  levels  will  continue to increase into 1997, as
management's  goal  is  to  expand its commercial business lending into select
markets  and  to  increase  commercial  business  loans to 15% of total assets
within  three  to  five  years.

     Interest  Income

     Interest  income  for  the nine months ended September 30, 1996 increased
$21.0  million  or  17.1%  from the nine months ended September 30, 1995.  The
increase  was primarily due to an increase of $25.9 million in interest earned
on  loans  receivable  over  the  prior  comparable  period.   The increase in
interest  income  on  loans  receivable  was due primarily to a $416.6 million
increase in the average balance of loans receivable, which was somewhat offset
by  a  decrease  in  the weighted average yield on loans receivable of 3 basis
points during the period.  This increase was offset by a $4.9 million decrease
in  interest  income  on mortgage-backed securities primarily due to the lower
average  balance  and  a  $56,000  decrease  in  interest earned on investment
securities,  certificates  and  time  deposits  and  other investments.  Total
interest-earning  assets for the nine months ended September 30, 1996 averaged
$2.7  billion  as compared to $2.4 billion for the nine months ended September
30,  1995.

     Interest  Expense

     Interest  expense  on interest-bearing liabilities was $102.8 million for
the nine months ended September 30, 1996, as compared to $92.6 million for the
same  period  in  1995.   The increase in interest expense was due to a $327.2
million  increase in interest-bearing liabilities during such period offset by
a decrease in the average rate paid on interest-bearing liabilities from 5.53%
for  the  nine  months  ended  September 30, 1995 to 5.38% for the nine months
ended September 30, 1996.  The average balance of interest-bearing liabilities
increased  to  $2.5  billion for the nine months ended September 30, 1996 from
$2.2  billion  for the nine months ended September 30, 1995, primarily to fund
the  increase  in  the  loans  receivable  portfolio.

     Net  Interest  Income

     Net interest income was $40.8 million for the nine months ended September
30,  1996  as  compared  to  $30.1  million  for the same period in 1995.  The
increase  in  net  interest income was due to improved net interest spread and
net  interest  margin percentages.  Net interest rate spread (Spread), defined
to  exclude  noninterest-bearing  deposits,  increased from 1.37% for the nine
months  ended  September 30, 1995 to 1.66% for the nine months ended September
30,  1996. Management also calculates an alternative net interest spread which
includes  noninterest-bearing  deposits.    Under  this  calculation,  the net
interest spread for the nine months ended September 30, 1996 and September 30,
1995 were 1.83% and 1.50%, respectively.  Spread is 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 the increase in
the  average  yield  on interest-earning assets from 6.90% for the nine months
ended  September  30, 1995 to 7.04% for the same period in 1996 and a decrease
in  the  average interest rates on interest-bearing liabilities from 5.53% for
the nine months ended September 30, 1995 to 5.38% for the same period in 1996,
in  addition  to  the increase in average net interest-earning assets of $24.8
million from the nine months ended September 30, 1995 to the nine months ended
September  30,  1996.  Net interest margin for the nine months ended September
30, 1996 increased to 2.00% from 1.69% for the nine months ended September 30,
1995.

     The  improvement  in  the  net  interest  spread  and  margin  levels  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.    To continue the 
improvement in the net interest spread and
margin  levels,  management's goal is to increase commercial business loans to
15%  of total assets and commercial business deposits to 10% of total deposits
within  three  to  five  years.

     Provision  for  Loan  Losses

     Provision  for  loan  losses  was  $1.5 million for the nine months ended
September 30, 1996 as compared to $967,000 for the nine months ended September
30, 1995.  The increase in the provision for loan losses was due to the change
in  the  composition of the loans receivable portfolio and the increased loans
receivable balance to $1.2 billion at September 30, 1996 as compared to $803.3
million  at  September  30,  1995.    Commercial  loans (including real estate
related  and  business  type loans) increased $119.2 million to $212.9 million
from  September 30, 1995 to September 30, 1996.  The allowance for loan losses
as  a percentage of total loans was 0.55% at September 30, 1996 as compared to
0.48%  at  September 30, 1995.  Although no assurance can be given, management
believes  that  the  present allowance for loan losses is adequate considering
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 are
necessary.

     Noninterest  Income

     For  the  nine  months  ended  September  30,  1996,  noninterest  income
increased  $1.6 million or 29.7% to $7.0 million, compared to $5.4 million for
the  nine months ended September 30, 1995.  The increase in noninterest income
was  primarily  due  to  an  increase of $1.4 million in loan fees and service
charges  and  the $521,000 gain recorded as a result of the branch office sale
in  May 1996 offset by a decrease of $356,000 in loan servicing income in 1996
from  the corresponding period in 1995.  The increase in loan fees and service
charges  consisted of a $724,000 increase in loan fees recorded as a result of
the  increased  origination  activity  of  primarily residential construction,
commercial  loans  secured  by  residential  mortgage  loans  held  for  sale,
multifamily  and  commercial  real  estate  loans  and  a $724,000 increase in
service  charges  on noninterest-bearing demand deposit accounts primarily due
to  the  Texas  Capital  acquisition.

     Noninterest  Expense

     For  the  nine  months  ended  September  30,  1996, noninterest expense,
excluding the $7.5 million special assessment, increased $7.4 million or 33.1%
to $29.8 million compared to $22.4 million for the nine months ended September
30, 1995.  Compensation, payroll taxes and other benefits and office occupancy
increased  $3.6  million  and $1.1 million, respectively, from the nine months
ended  September  30,  1995  to  the  nine  months  ended  September 30, 1996,
primarily due to the operation of the five offices acquired from Texas Capital
on  November  1,  1995  and  staffing increases related to the data processing
conversion  and  the expansion of the loan product base available to customers
and  continuing  development of the commercial business lending programs.  The
amortization  of  goodwill and expenses related to real estate owned increased
by  $469,000  and  $375,000,  respectively,  also  due  primarily to the Texas
Capital  acquisition.  Data  processing expenses increased $511,000 due to the
Texas  Capital  acquisition,  the  May 1996 data processing conversion and the
conversion in June 1996 of the five former Texas Capital locations acquired in
1995  to  the  new  data  processing  system.    Other  expenses,  including
advertising,  increased  $1.6  million for the nine months ended September 30,
1996  over  the  prior  comparable  period  and  insurance  premiums decreased
slightly  by  $274,000.


<PAGE>
     Provision  for  Federal  Income  Taxes

     For  the  nine months ended September 30, 1996, the provision for Federal
income  taxes  decreased to $3.5 million compared to $4.5 million for the nine
months ended September 30, 1995 due to the decrease in income before provision
for  Federal  income  taxes.

Results of Operations for the Three Months Ended September 30, 1996 and 1995

     General

     For  the  three  months  ended  September  30,  1996,  net  income before
preferred  stock  dividends  and  before  the  after-tax effect of the special
assessment  of  $4.8 million increased 26.8% to $3.4 million from $2.7 million
for  the  three  months  ended  September 30, 1995.  Net loss before preferred
stock  dividends  (and  after  the  effect of the special assessment) was $1.4
million  for  the  three  months  ended  September 30, 1996 as compared to net
income  of  $2.7  million  for the three months ended September 30, 1995.  Net
interest  income  increased  $3.1 million for the three months ended September
30,  1996 as compared to the three months ended September 30, 1995 as a result
of increased interest  income  of $4.5  million  which  was  partially  offset
 by    increased    interest    expense  of  $1.4  million. Noninterest income
increased during such period by $407,000.  Noninterest expense before the $7.5
million  special  assessment  increased  by  $2.1  million  primarily  due  to
increased  operating  expenses as a result of the Texas Capital acquisition on
November  1,  1995.    The  increased  noninterest expense was also due to the
ongoing  expenses related to the May 1996 data processing conversion, the June
1996  conversion  of  the  five former Texas Capital locations to the new data
processing system and to overall expenses related to the expansion of the loan
product  base  being  offered  by  Coastal  to  its  customers,  including the
continuing  development  of  commercial  business  lending  programs.  Coastal
engaged  in  the data processing system conversion to a PC based client server
technology throughout its branch network to enable the branch offices to offer
a  more  expanded  product  base  (including loan and deposit products) to its
customers  and  to  automate and upgrade the work flow in the customer contact
areas,  allowing  branch  office employees a better opportunity to serve their
customers.      The  approximate  cost during the  period related to the  data
processing  conversion  was $73,000. The increased noninterest expense related
to  the  expansion  of the loan product base and the continuing development of
the  commercial  business lending programs has primarily been staffing related
and  should  continue  into  1997,  as  management's  goal  is  to  expand its
commercial  business  lending  into  select markets and to increase commercial
business  loans  to  15%  of  total  assets  within  three  to  five  years.

     Interest  Income

     Interest  income  for the three months ended September 30, 1996 increased
$4.5  million  or  10.4%  from the three months ended September 30, 1995.  The
increase  was  primarily due to an increase of $7.0 million in interest earned
on  loans  receivable  over  the  prior  comparable  quarter.  The increase in
interest  income  on  loans receivable was due to a $341.1 million increase in
the  average  balance  of  loans receivable offset by a slight decrease in the
average  yield  from  8.39%  for  the three months ended September 30, 1995 to
8.33% for the three months ended September 30, 1996.  This increase was offset
by  a  $2.5  million decrease in interest income on mortgage-backed securities
primarily due to the lower average balance.  Total interest-earning assets for
the three months ended September 30, 1996 averaged $2.7 billion as compared to
$2.5  billion  for  the  three  months  ended  September  30,  1995.

     Interest  Expense

     Interest  expense  on  interest-bearing liabilities was $34.2 million for
the  three  months  ended September 30, 1996, as compared to $32.9 million for
the same period in 1995.  The increase in interest expense was due to a $250.9
million increase in the average balance of interest-bearing liabilities during
such  period offset by a decrease in the average rate paid on interest-bearing
liabilities  from 5.65% for the three months ended September 30, 1995 to 5.38%
for  the  three  months  ended  September  30,  1996.  The increase in average
interest-bearing  liabilities  consisted  of  a  $67.6  million  increase  in
securities  sold  under  agreements to repurchase, a $92.3 million increase in
interest-bearing  savings  deposits  and  a  $90.9  million  increase  in FHLB
advances.    The  average balance of interest-bearing liabilities increased to
$2.5  billion  for the three months ended September 30, 1996 from $2.3 billion
for  the three months ended September 30, 1995, primarily to fund the increase
in  the  loans  receivable  portfolio.

     Net  Interest  Income

     Net  interest  income  was  $13.5  million  for  the  three  months ended
September  30, 1996 as compared to $10.4 million for the same period in 1995. 
The  increase  in  net  interest income was due to the improved Spread and net
interest  margin  percentages.  Spread, defined to exclude noninterest-bearing
deposits,  increased  from 1.41% for the three months ended September 30, 1995
to  1.64%  for  the  three  months  ended September 30, 1996.  Management also
calculates  an  alternative  net  interest  spread  which  includes
noninterest-bearing deposits.  Under this calculation, the net interest spread
for  the  three  months  ended  September 30, 1996 and September 30, 1995 were
1.82%  and  1.57%,  respectively.    Spread  is 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 the decrease in
the  average interest rates on interest-bearing liabilities from 5.65% for the
three  months  ended  September 30, 1995 to 5.38% for the same period in 1996,
offset  by  a  slight decrease in the average yield on interest-earning assets
from 7.06% for the three months ended September 30, 1995 to 7.02% for the same
period  in  1996,  in addition to the increase in average net interest-earning
assets  of $18.9 million from the three months ended September 30, 1995 to the
three  months  ended  September  30,  1996.  Net interest margin for the three
months  ended  September  30, 1996 increased to 1.99% from 1.70% for the three
months  ended  September  30,  1995.

     The  improvement  in  the  net  interest  spread  and  margin  levels  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.    To continue the 
improvement in the net interest spread and
margin  levels,  management's goal is to increase commercial business loans to
15%  of  total  assets  and  a  commercial  business  deposits to 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
September  30,  1996  as  compared  to  $237,000  for  the  three months ended
September  30, 1995.  The increase in the provision for loan losses was due to
the  change  in  the  composition  of  the  loans receivable portfolio and the
increased  loans  receivable  balance to $1.2 billion at September 30, 1996 as
compared to $803.3 million at September 30, 1995.  Commercial loans (including
real  estate  related  and  business loans) increased $119.2 million to
$212.9  million  from September 30, 1995 to September 30, 1996.  The allowance
for loan losses as a percentage of total loans was 0.55% at September 30, 1996
as  compared  to  0.48%  at  September 30, 1995.  Although no assurance can be
given,  management  believes  that  the  present  allowance for loan losses is
adequate  considering 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  are  necessary.

     Noninterest  Income

     For  the  three  months  ended  September  30,  1996,  noninterest income
increased  $407,000 or 22.4% to $2.2 million, compared to $1.8 million for the
three months ended September 30, 1995.  The increase in noninterest income was
primarily  due  to  an  increase  of $569,000 in loan fees and service charges
offset  by  a  decrease of $109,000 in loan servicing income.  The increase in
loan  fees  and  service charges consisted of a $295,000 increase in loan fees
recorded  as  a  result  of  the  increased  origination activity of primarily
residential  construction,  commercial  loans  secured by residential mortgage
loans  held  for  sale,  multifamily  and  commercial  real estate loans and a
$274,000  increase  in  service  charges on noninterest-bearing demand deposit
accounts  primarily  due  to  the  Texas  Capital  acquisition.

     Noninterest  Expense

     For  the  three  months  ended  September  30, 1996, noninterest expense,
excluding the $7.5 million special assessment, increased $2.1 million or 27.3%
to  $9.9 million compared to $7.8 million for the three months ended September
30, 1995.  Compensation, payroll taxes and other benefits and office occupancy
increased $1.2 million and $416,000, respectively, from the three months ended
September 30, 1995 to the three months ended September 30, 1996, primarily due
to  the  operation of the five offices acquired from Texas Capital on November
1,  1995  and staffing increases related to the data processing conversion and
the  expansion  of the loan product base available to customers and continuing
development  of  the  commercial  business lending programs.  In addition, the
amortization  of  goodwill and expenses related to real estate owned increased
by  $150,000  and  $169,000,  respectively, primarily due to the Texas Capital
acquisition.  Data  processing  expenses  increased  $78,000  due to the Texas
Capital  acquisition,  the  May 1996 data processing conversion of Coastal and
the  conversion  in  June  1996  of  the  five  former Texas Capital locations
acquired  in  1995  to the new data processing system.  The expense associated
with the amortization of purchased loan servicing rights and insurance premium
expense decreased by $91,000 and $197,000, respectively, while other expenses,
including advertising, increased $412,000 for the three months ended September
30,  1996  over  the  prior  comparable  quarter.

     Provision  for  Federal  Income  Taxes

     For  the  three  months ended September 30, 1996, the benefit for Federal
income taxes was $636,000 compared to the $1.5 million provision for the three
months  ended  September  30,  1995  due  to the net loss before provision for
Federal  income  taxes.

     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  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,  as  well  as  one or more branches  of both.  At September 30, 1996,
Coastal  had  binding  commitments  to  originate  or  purchase loans totaling
approximately  $59.0  million  and  had  $45.5 million of undisbursed loans in
process.  Scheduled maturities of certificates of deposit during the 12 months
following  September  30,  1996 totaled $746.1 million at September 30, 1996. 
Management  believes  that  Coastal  has adequate resources to fund all of its
commitments.

     As  of  September  30,  1996, Coastal operates 37 branch offices in Texas
cities,  including Houston, Austin, Corpus Christi and small cities in central
and  south  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  southeast  Texas,  although  there can be no
assurance  that  this goal can be accomplished through growth or acquisitions.

<PAGE>

     PART  II  -  OTHER  INFORMATION


Item  1.          Legal  Proceedings

     Coastal is engaged from time to time in various legal actions incident to
its business.  The current legal activities are not believed to be material to
the  financial  condition  of  Coastal  and  its  subsidiaries.

Item  2.          Changes  in  Securities

     a)          Not  applicable.

     b)          Not  applicable.

Item  3.          Default  Upon  Senior  Securities

     Not  applicable.

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

     Not  applicable.

Item  5.          Other  Information

     Not  applicable.

Item  6.          Exhibits  and  Reports  on  Form  8-K

     a)          Not  applicable.

b)          Not  applicable.

                                  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:        10/25/96                         By/s/     Manuel J. Mehos
                                   Manuel  J.  Mehos
                                   Chairman  of  the  Board
                                   Chief  Executive  Officer









Dated:     10/25/96                         By/s/     Catherine N. Wylie
                                   Catherine  N.  Wylie
                                   Chief  Financial  Officer